Canada: Investors to share data with investment plans for GST/HST compliance

Distributed investment plans need to request in writing specific details from investors by 15 October 2021

Distributed investment plans need to request in writing specific details from investors

Distributed investment plans need to request in writing specific details from investors by 15 October 2021 in order to limit indirect tax costs.

The GST/HST and QST* information sharing rules, which vary based on investor type, make certain that distributed investment plans have the proper information to update their systems and file their GST/HST and QST returns. Certain investors may need to provide specific information to some of their investment plans—even without a formal request.

*GST/HST and QST = goods and services tax / harmonized sales tax and Quebec sales tax 

Distributed investment plans that are selected listed financial institutions (SLFIs) under the GST/HST and QST rules must request in writing information from certain investors. These investors (i.e., “selected investors” and other investors) are required to provide information if they receive such a request, while “qualifying investors” must provide specific information to distributed investment plans annually even if they do not receive a written request. In addition, if a securities dealer receives a written request for information from a distributed investment plan, it must provide specific details with respect to units held by its clients.

Plans that do not collect the required data by 31 December 2021 and have not requested the information from their investors by 15 October 2021 may have to allocate some of their investors to the highest rate HST-participating provinces, which may translate to higher indirect tax costs. In addition, investors may face penalties if they do not share specific details within the deadline under these rules.
 

Read a September 2021 report prepared by the KPMG member firm in Canada

 

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