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ILPs — Don’t miss your June 30 GST/HST deadline

ILPs — Don’t miss your June 30 GST/HST deadline

Many ILPs were reclassified as SLFIs in 2019 and now face annual GST/HST and QST final returns

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As a reminder, investment limited partnerships (ILPs) must file annual GST/HST and QST final returns for selected listed financial institutions (SLFIs) for their 2019 fiscal year by June 30, 2020. Please note, this is the first year that many ILPs will be required to file these returns, since these entities were reclassified as SLFIs effective January 1, 2019, under the GST/HST and QST rules. Affected entities should start gathering all the required data to fulfill their tax compliance obligations now, to help ensure the accuracy and timeliness of these returns.

Some ILPs elected to apply the SLFI rules effective January 1, 2018 (instead of January 1, 2019) and started to file these returns last year. These entities should consider whether they should adjust last year's processes to help alleviate some of the complexity of their calculations for their upcoming GST/HST and QST returns.

Filing annual GST/HST and QST final returns

To get ready to file their annual GST/HST and QST final returns for SLFIs by June 30, 2020, ILPs will be required, among other tax compliance obligations, to:

  • Calculate their special attribution percentages based on information previously collected from their investors
  • Determine all the GST/HST and QST paid during 2019, including taxes paid to their general managers
  • Cross-check details on their returns against information provided to the tax and regulatory authorities in other filings

For more information, see TaxNewsNow "Financial Institutions – Prepare now for GST/HST annual returns", dated April 28, 2020.

Background

Which investment limited partnerships qualify as a SLFI?

Significant GST/HST and QST changes for ILPs were introduced in 2017 and 2018. As part of these changes, an ILP now generally qualifies as a SLFI if it has a permanent establishment in an HST province as well as a permanent establishment in any other province for GST/HST purposes. Similarly, it would also generally qualify as a SLFI for QST purposes if it had a permanent establishment in Quebec and in another province. An ILP will generally be considered to have a permanent establishment in a province if it is qualified, under the laws of Canada or a province, to sell or distribute its units (i.e., interests in the partnership) in the province or if a person who holds its units (i.e., a partner) is resident in that province.

New GST/HST and QST obligations

ILPs are now subject to the GST/HST and QST SLFI rules effective January 1, 2019; however, some ILPs elected to apply the SLFI rules as of January 1, 2018.

Since ILPs that qualify as SLFIs are deemed to have a December 31 fiscal year-end for GST/HST and QST purposes, the deadline to file the annual GST/HST and QST final return by June 30 applies to all SLFI ILPs (i.e., within six month after their fiscal-year end).

General partners

Also, as of September 8, 2017, general partners that provide management or administrative services to ILPs must collect GST/HST on the fair market value of such services. Similar rules apply for QST purposes. These tax amounts will be included in the calculations related to their annual GST/HST and QST final returns for SLFIs.

We can help

KPMG can help you determine how the SLFI rules apply to your entities and may affect your business. We can also assist you with your indirect tax compliance obligations, including the GST/HST and/or QST returns. In addition, we can help identify areas where you may be able to manage certain tax costs and any elections that should be considered.

KPMG's Financial Institutions Indirect Tax Compliance Team, composed of multi-disciplinary professionals who specialize in indirect tax compliance, can assist you with your indirect tax obligations. For more information, please contact your KPMG adviser or one of the following Indirect Tax professionals:

Walter Sisti, National Leader - Indirect Tax Services
T: 416-777-3920
E: wsisti@kpmg.ca

Annette Beshwaty
T: 514-840-2349
E: abeshwaty@kpmg.ca

Simon Proulx
T: 647-777-5318
E: sproulx@kpmg.ca

Christian Thibault
T: 416-777-3927
E: cthibault@kpmg.ca

Information is current to May 19, 2020. 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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