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Canada: Pension plans to file GST/HST returns, rebates by 30 June

Canada: Pension plans to file GST/HST returns, rebates

Many pension entities must file goods and services tax (GST) / harmonized sales tax (HST) and Quebec sales tax (QST) final returns soon.

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  • Pension entities that qualify as “selected listed financial institutions” (SLFIs) are required to file SLFI GST/HST and QST final returns by 30 June 2019.
  • Pension entities need to remember that 30 June 2019 is also the last day to file pension entity rebate applications for certain past claim periods.

Over the last few years, the tax authorities have intensified audit activities of SLFI GST/HST and QST final returns and pension entity rebate applications; therefore, pension entities of registered pension plans need to use care to determine that they apply all the correct rules to help minimize errors in their returns and rebate applications. This year, pension entities and managers of pension entities need to consider careful review the GST/HST rules related to master trusts to determine if these rules may affect their SLFI GST/HST and QST final returns or their pension entity rebates.

Background

Pension entities of registered pension plans that qualify as SLFIs for GST/HST purposes are required each year to file a SLFI GST/HST final return. This complicated return requires pension entities to report specific information and data. In general, a pension entity may qualify as a SLFI if it has members resident in an HST-participating province as well as members resident in any other province. Certain exceptions may apply.

Also, many pension entities are eligible to claim a rebate that is essentially equal to 33% of the GST/HST paid by the entity or deemed paid by the entity under the GST/HST rules. Qualifying pension entities may be entitled to claim a rebate for part of the GST/HST paid by master trusts within their pension plan structure. For GST/HST purposes, a master trust includes a trust prescribed as a master trust and a corporation that is exempt from tax under specific measures under Canada’s tax law.

Similar rules apply for QST purposes.

SLFI pension entities: Reminder of deadline for GST/HST and QST final returns

SLFI pension entities with a 31 December year-end must file a SLFI GST/HST final return, or a SLFI GST/HST and QST return, by 30 June 2019 (depending on their facts and circumstances). This year, these SLFI pension entities may have to include amounts in their calculations with regards to rebates related to tax paid by their master trusts.

Pension entities: Claim GST/HST and QST rebate by deadline

Under the GST/HST pension plan rules, qualifying pension entities of registered pension plans may be eligible to claim a 33% rebate for the GST/HST that they have paid to suppliers and employers, as well as the GST/HST they are deemed to have paid under those rules. Since 2016, qualifying pension entities may also be eligible to claim a portion of the GST/HST paid by master trusts if they hold units of those trusts. A qualifying pension entity may file only one rebate application for any particular claim period.

The claim period differs depending on whether the pension entity is registered for GST/HST or not registered. If the pension entity is registered, its claim period is its GST/HST reporting period. The entity must claim its pension entity rebate for a particular claim period within two years of the day it must file its GST/HST return for the claim period. For example, a SLFI pension entity with a 31 December year-end that is registered for GST/HST with annual filing reporting period that has not claimed any pension entity rebates in the past has until 30 June 2019 to file a rebate application for the claim period 1 January 2016 to 31 December 2016.

If the pension entity is not registered for GST/HST, the entity has two claim periods per year:

  • The first six months of its fiscal year
  • The last six months

In this situation, the entity must file its rebate application within two years of the last day of the claim period. For example, a pension entity with a 31 December year-end not registered for GST/HST purposes that has not filed any previous pension entity rebates, has until 30 June 2019 to file a rebate application for the claim period of 1 January 2017 to 30 June 2017.

Calculations of the pension entity rebate also differ based on whether the pension entity is a SLFI or a non-SLFI and whether the pension entity rebate is transferred to a qualifying employer. In the case of a SLFI pension entity, the 33% pension entity rebate will generally apply to the GST and the federal component of the HST paid, or deemed paid, by the pension entity. In that situation, the SLFI pension entity will generally be entitled to claim an adjustment relating to the provincial component of the HST in its SLFI GST/HST final return, unless the pension entity has transferred the rebate to a qualifying employer. Such an adjustment is subject to various rules, including when it may be claimed. If the entity is not a SLFI, the 33% pension entity rebate applies generally to the GST and the HST paid or deemed paid by the entity.

For 2018 rebate claim applications, pension entities need to review whether they are eligible to claim a GST/HST pension entity rebate on part of the GST/HST paid in 2018 by the master trust within their structures. Various conditions and rules apply.

Similar pension plan rules apply for QST purposes.


Read a June 2019 report prepared by the KPMG member firm in Canada

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor 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 on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

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