Generally, for QST purposes, a SLFI entity is a financial institution that has a permanent establishment in Quebec and a permanent establishment in another province. For example, SLFI entities for QST purposes could include banks, securities dealers as well as pension plans and other investment plans.
SLFIs face many new QST rules effective January 1, 2013 and should ensure that they understanding all of these new rules. Not applying these new rules properly could lead to audit disputes.
Frequently asked questions
1. Will SLFIs still have to report to the QRA for any Quebec indirect taxes?
Yes. Only the administration of the QST for SLFIs has been transferred to the CRA. For example, if a SLFI is registered to collect the 5% or 9% tax on insurance premiums, it will continue to work with the QRA for that tax and other Quebec taxes.
2. Can a SLFI add the QST collected to the total GST/HST collected line on its GST/HST return?
No, the QST remains a provincial tax separate from the GST/HST. The QST is not an HST. A SLFI will be required to show the amount of QST collected separate from the GST/HST amounts on the GST/HST and QST return. The CRA has started to send to SLFI new combined GST/HST and QST returns.
3. For which reporting period will the CRA start administering the QST?
According to the CRA's website, SLFIs must send their GST/HST and QST returns and remittances to the CRA for reporting periods ending on or after January 1, 2013. For example, a SLFI with a GST/HST and QST monthly reporting period will have to file its first GST/HST and QST return for the month of January 2013 with the CRA no later than February 28, 2013.
Effective January 1, 2013, a SLFI is required to have the same GST/HST and QST reporting periods. Also, other special rules apply where a QST reporting period of a SLFI straddles January 1, 2013.
As a reminder, a SLFI may also have to make QST instalment payments to the CRA. Before 2013, many financial institutions may not have been required to pay QST instalments. Prior to January 1, 2013, financial institutions were generally entitled to claim input tax refunds for QST paid on expenses related to their previously zero-rated financial services. Effective January 1, 2013, financial services are now QST-exempt supplies and, as such, suppliers of these services are no longer entitled to claim input tax refunds for QST paid on related expenses.
4. Should a SLFI with a question about a QST reporting period before January 1, 2013 contact the QRA or the CRA?
It is our understanding that the QRA will not transfer the QST history of SLFI to the CRA. As such, QST questions of a SLFI with regards to reporting periods ending before January 1, 2013 should be directed to the QRA.
For more information, contact your KPMG adviser.
Information is current to January 29, 2013. 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