June 30 GST/HST Deadlines — Don’t be Caught by Surprise
June 3, 2013
Many businesses may not realize that they face some important GST/HST filing deadlines on June 30, 2013, in addition to their regular GST/HST returns. Employers offering registered pension plans to employees, large businesses and financial institutions (FIs) may be required to complete and file complex GST/HST returns, many of which have significant penalties for non-compliance.
Some businesses may be surprised to discover that they are required to file these additional GST/HST returns by this date. They may have to fulfill these requirements because they meet the broad definition of an FI and must therefore file appropriate returns to avoid penalties. Some of these large businesses can include, for example, large retailers or construction businesses because of their credit card operations or because of large deposits or loans that generate a certain amount of financial revenue.
Complete all GST/HST returns
Businesses should also remember that the CRA may compare completed form GST111 with other filed returns and question any discrepancies. If you have already filed some of these returns and other types of GST/HST returns for 2010 and 2011, you may also wish to review these returns for any inconsistencies.
Employers — Claim pension plan
Financial institutions — File
GST494 final return
Many FIs across Canada qualify as SLFIs and are required to file the GST494 final return. These SLFIs generally include, among other FIs, banks, insurers, securities dealers, investment plans as well as segregated funds.
How do final SLFI rules apply
to your business?
Different allocation rules can apply for different types of FIs, including pension plans and other investments plans, banks, trust and loan corporations, insurers and other corporations. Some of these rules came into force in 2010, and others in 2011.
In addition, SLFIs must remember that they have to include on the GST494 final return an amount of self-assessed GST on cross-border charges with related entities.
To review and complete your 2010, 2011, and 2012 GST494 final return, you must understand the final SLFI rules as they apply specifically to your business’ facts and circumstances, and you will also have to:
· Track the GST and the different provincial components of the HST paid in your systems
· Calculate your provincial attribution percentages and make sure you obtain and use the appropriate information for the type of SLFI
· Understand the special elections for consolidated filings and transfers of amounts under the SLFI rules, if applicable
· Understand and apply the numerous adjustments, including the adjustments related to the recaptured input tax credit requirements (also known as RITCs), section 150 elections and inter-company transactions, and the 2010 and 2011 transitional adjustments.
Some managers are eligible to elect with qualifying investment plans to have the managers take care of some of these plans’ compliance requirements, including filing the GST/HST returns and remitting tax owed. When these managers complete these plans’ GST494 final returns, they should ensure that they reconcile the returns with the blended rates used throughout the year as discrepancies could cause issues.
Finally, SLFIs as well as FIs will have to carefully understand and apply the sharing of information requirements as published in the final rules to property calculate their provincial attribution percentage. Under the sharing of information requirements, unit holders are required by law to provide information to various investment plans. Some investment plans are required to make a written request to certain unit holders. However, some other unit holders are required by law to submit some information without receiving a written request from the plans. You must carefully understand these requirements in light of significant penalties that may apply for failure to provide information as required by the law.
Pension entities — File GST494
final returns and calculate partial pension plan rebates
Under the GST/HST pension plan rules, a qualifying pension entity is generally entitled to a partial rebate of the GST/HST paid on goods and services purchased by the pension entity and also a partial rebate of the tax it is deemed to have paid under the pension plan rules (i.e., GST/HST paid by the employer on “deemed” supplies). The process for claiming the rebate will depend on whether the pension entity qualifies as a SLFI.
While the pension plan rebate for a qualifying pension entity that is not a SLFI generally includes the GST/HST components of the tax paid or deemed paid, the 33% partial rebate for qualifying SLFI pension entities will only apply to the GST and the GST component of HST paid or deemed paid. The partial rebate for the provincial component of the HST would be claimed either in the rebates transferred to qualifying employers or, subject to more special rules, as adjustments used to calculate amounts for GST494 final returns that are generally due June 30.
Other issues may arise depending on your circumstances, such as additional adjustments or remittances for the employers and the pension entities.
As a reminder, pension entities that are registered for GST/HST purposes and that have annual reporting periods generally have until June 30, 2013 to file unclaimed pension plan rebates for 2010. Similar rules apply for Quebec Sales Tax (QST).
Large businesses and FIs —
File detailed GST/HST annual information returns
Large businesses that qualify as an FI under the broad definition of FI for GST/HST purposes may find extracting the required information from their systems to be extremely complicated. Planning is key — this return requires a significant amount of detail which may be difficult to extract without a great deal of time and effort.
Some SLFIs that are qualifying investment plans are excluded from having to file the GST111 return. However, these investment plans are generally required to file other GST/HST returns, including the GST494 final return. A careful review of the facts and circumstances will help determine the filing requirements.
We can help
Information is current to June 03, 2013. The information contained in this TaxNewsFlash-Canada 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.
KPMG LLP, an Audit, Tax and Advisory firm (kpmg.ca) and a Canadian limited liability partnership established under the laws of Ontario, is the Canadian member firm of KPMG International Cooperative (“KPMG International”). KPMG member firms around the world have 145,000 professionals, in 152 countries.
The independent member firms of the KPMG network are affiliated with KPMG International, a Swiss entity. Each KPMG firm is a legally distinct and separate entity, and describes itself as such.
KPMG's Canadian Web site is located at http://www.kpmg.ca/
© 2013 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.