Investment Plans—Act Now to Obtain Investor GST Details | KPMG | CA
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Investment Plans - Act Now to Obtain Investor GST Details

Investment Plans—Act Now to Obtain Investor GST Details

Get ready for October 15 deadline


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Many distributed investment plans should request specific ownership details from their investors no later than October 15, 2018. These plans must collect this information to help them comply with their upcoming GST/HST and QST obligations. Investors that hold units in distributed investment plans are required to respond to these requests and share specific details as per the GST/HST and QST legislation's information-sharing rules. In addition, some investors should also be preparing to provide details to distributed investment plans in which they hold units even if not specifically requested by the plans. The distributed investment plans need these details from their investors to prepare their calculations and update their systems so they can fulfill their 2019 GST/HST and QST obligations.

Which investors have info-sharing obligations?
Many investors have to provide specific details only if they receive a request from the distributed investment plans. However, some investors are subject to other rules and must provide details to these plans by November 15, 2018 even if they do not receive a written request.

The specific details that must be requested and/or provided under the GST/HST and QST information-sharing rules, as well as the specific deadlines, depend on the type of investor:

  • "Qualifying investors" must provide certain details to distributed investment plans by November 15, 2018 even if they do not receive written requests from the plans.
  • If they receive a written request, "selected investors", as well as other investors, must provide the required information by the day that is the later of November 15, 2018, or 45 days after the person receives the request.

Securities dealers that sell or distribute units of distributed investment plans must also comply with specific GST/HST and QST information-sharing rules.

Investors that do not comply with the information-sharing rules may face costly penalties of up to $10,000 for each failure.

The GST/HST information-sharing rules help ensure that distributed investment plans that are selected listed financial institutions (SLFIs) have the data they need to meet their GST/HST obligations for the coming year. The investor information is used in calculating the plans' provincial attribution percentages. Plans that do not collect the data by December 31 and that have not requested the required information from their investors by October 15 may have their provincial attribution percentages affected due to specific calculations under the SLFI rules.

Similar information-sharing rules apply for QST purposes. However, based on the definitions and specific circumstances of investors, some investors may be considered "qualifying investors" for GST/HST purposes but not for QST purposes, and vice versa. Because some investors may have different obligations under the two sets of rules, investors should carefully consider both sets of rules. Distributed investment plans include various types of investment plans, including mutual funds and segregated funds.

Requesting data from "selected investors" and other investors
To meet its obligations under the GST/HST and QST information-sharing rules, a distributed investment plan must understand the various types of investors, as described above, and the specific details that it must request from them.

Who is a selected investor?

A selected investor is generally a person, other than an individual and a distributed investment plan, that is resident in Canada and holds units of a total value of less than $10 million in the plan as of September 30 of the calendar year. Selected investors can include corporations, partnerships, other types of investment plans and various other entities.

What information must be requested?

If an investment plan makes a written request, persons that qualify as "selected investors" must generally provide:

  • Their address, as determined under the GST/HST rules as of September 30, and
  • The number of units (or the number of units in each series, other than an exchange-traded series) held by the investor on September 30 in the particular investment plan.

Some investors that are not "selected investors" need to carefully determine their "investor percentages" under the GST/HST information-sharing rules, a concept that may be new to them if they are not SLFIs under the GST/HST rules.

Similar rules apply for QST purposes.


Selected investors and other investors that receive written requests for information from distributed investment plans must generally reply with that information by the later of November 15 or 45 days after the day they received the request.

Providing specific details - Rules for "qualifying investors"
In general, a "qualifying investor" means an investment plan, including pension entities of registered pension plans, which meets certain conditions. Under the GST/HST rules, an investment plan, other than a distributed investment plan, is considered to be a "qualifying investor" in a particular distributed investment plan if the investment plan is resident in Canada, holds units of the particular distributed investment plan valued at less than $10 million as of September 30, 2018 and meets one of these criteria:

  • The investment plan is not a "qualifying small investment plan" on September 30 or is not excluded from the SLFI definition on the basis that less than 10% of its members reside in participating provinces (see the GST/HST SLFI rules for further details)
  • The investment plan is a SLFI
  • The investment plan is a member of an affiliated group and the members hold units with a total value of $10 million or more of the particular distributed investment plan, or at least one member of the affiliated group is a SLFI.

A "qualifying small investment plan" is generally an investment plan that has $10,000 or less of GST and/or of the federal component of the HST paid and deemed paid in the previous year. However, if a qualifying small investment plan qualifies as a SLFI, that plan would generally be considered a qualifying investor.

Similar rules apply for QST purposes.

KPMG observation
The definition of "qualifying investor" is very broad. As such, many investment plans that are residents in Canada, other than distributed investment plans, and that hold less than $10 million in a particular distributed investment plan are considered "qualifying investors".

What information must qualifying investors provide?

Under the GST/HST rules, qualifying investors that hold units of a distributed investment plan must generally provide the following information to the plan by November 15, 2018, even if they do not receive a written request from the investment plan:

  • A notice that they are a qualifying investor in the investment plan for 2018
  • The number of units (or number of units in each series, other than an exchange-traded series) they held in the investment plan on September 30, 2018
  • Their "investor percentage" for each HST-participating province as of September 30, 2018.

Similar rules apply for QST purposes.

The information-sharing rules also include specific rules for securities dealers. Contact your KPMG adviser for details.

Investors must carefully review their obligations to determine the appropriate information to provide to investment distributed plans and respond to any written requests from the plans on time or face significant penalties. Failing to provide information as required under the GST/HST and QST information-sharing rules by the relevant deadlines attracts a penalty for each failure to provide information of the lesser of $10,000 or 0.01% of the total value of the units held by the investor in the distributed investment plan.

We can help
KPMG can help investors determine their GST/HST and QST obligations and the specific information that they must provide to distributed investment plans. We can also help investment managers of distributed investment plans determine the information that they are required to request from investors on the plan's behalf. For more information, contact your KPMG adviser.

Information is current to September 25, 2018. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500

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