Ottawa, December 14, 2009

Archived - Government of Canada Responds to Recent Court Decisions on the GST and Financial Services

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The Honourable Jim Flaherty, Minister of Finance, today released a backgrounder containing technical legislative proposals addressing recent court decisions which may have created uncertainty respecting the scope of the definition of "financial service" in the Excise Tax Act.

"It is very important that the Goods and Services Tax (GST) rules be clear in order to reduce the compliance burden on business," said Minister Flaherty. "The information that the Government released today will clarify for financial services businesses their GST responsibilities."

The legislative proposals reaffirm the policy intent and provide certainty respecting the GST (and, where applicable, the Harmonized Sales Tax) treatment of certain administrative and management services and promotional services by clarifying that such services are not financial services under the Excise Tax Act, and are therefore taxable for GST purposes. The proposals specify that:

  • investment management services, including discretionary investment management services, are not financial services;
  • the following activities are not financial services as they do not constitute "the agreeing to provide, or the arranging for," a financial service for the purposes of the definition of "financial service":
    • facilitatory services, comprising market research, product design, promotional services, advertising and the collection of information; and
    • credit management services in respect of a credit or charge card or similar payment card, or a credit, charge or loan account such as credit checking, authorization, valuation, record keeping and monitoring and dealing with payments.

The proposals would apply to all supplies of these services made after today, as well as to past transactions where the suppliers treated these services as taxable.

The accompanying backgrounder provides further details on these measures. References in these documents to an Announcement Date should be read as references to today's date.

The Government will introduce legislation at an early opportunity.

For further information, media may contact:

Annette Robertson
Press Secretary
Office of the Minister of Finance

Jack Aubry
Media Relations
Department of Finance

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