Ottawa, November 17, 2005
2005-079

Archived - Proposed GST/HST Amendments Relating to the Financial Services Sector

Related documents:

• Notice of Ways and Means Motion to Amend the Excise Tax Act
• Legislative Proposals, Draft Regulations and Explanatory Notes Relating to the Excise Tax Act
• Backgrounder 
• Detailed Proposals on the GST/HST Treatment of Imported Supplies

Minister of Finance Ralph Goodale today tabled in the House of Commons a Notice of Ways and Means Motion to amend provisions of the Excise Tax Act relating to the goods and services tax/harmonized sales tax (GST/HST) in the financial services sector.

The amendments propose to:

• Reaffirm the policy intent and provide certainty regarding the treatment of debt collection services by clarifying that such services are not financial services for the purposes of the Act, and that such services are therefore taxable for GST/HST purposes.
• Assist foreign banks in restructuring under the foreign bank branching regime in the Bank Act, by providing transitional GST/HST relief for the initial transfer of assets from a foreign bank's existing Canadian subsidiary to its newly established Canadian branch.
• Make it easier for corporations to elect to obtain GST/HST relief on supplies of goods and services among members of closely related groups.
• Respond to a Tax Court of Canada decision regarding self-assessment provisions for intangible property and services imported into Canada by re-establishing the intended application and policy objectives of these provisions in a way that ensures more consistent treatment between importations and comparable domestic transactions.

The Minister also announced that draft amendments regarding the multi-employer pension plan (MEPP) rebate, originally tabled on October 3, 2003, will not be enacted into law because they are no longer required. These amendments would have extended the MEPP rebate to related employer pension plans. After consulting with the pension industry and the Canada Revenue Agency (CRA), it was determined that these plans could more appropriately be accommodated through modifications to CRA administrative policies that apply the existing GST/HST legislation to pension plans.

The accompanying backgrounder, legislative proposals, draft regulations, explanatory notes and detailed proposals on the GST/HST treatment of imported supplies provide further details on these measures. References in these documents to "Announcement Date" should be read as references to today's date.

Any comments of a technical nature from stakeholders on the proposed amendments should be addressed to the Tax Policy Branch as soon as possible so that they may be considered before the relevant legislation is tabled in Parliament.

These documents can be viewed free of charge on the Department of Finance website. Printed copies are available for $10 from the Department of Finance Distribution Centre at (613) 995-2855.

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