Canada: GST changes for pension plans | KPMG | GLOBAL

Canada: GST changes for pension plans, drop-shipment certificates, financial institutions

Canada: GST changes for pension plans

Many businesses—including companies that offered registered pension plans to employees or that use drop-shipment certificates for sales of goods to non-residents—will be affected by the Finance Department’s proposed changes to the goods and services tax / harmonized sales tax (GST/HST) rules and regulations.


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The proposals would also affect certain investment plans and financial institutions. 

Finance’s package of almost 300 pages of legislation, regulations, and explanatory notes also includes a 16-page consultation paper (released 22 July 2016) on expanding the “selected listed financial institutions” (SLFI) rules to include certain investment limited partnerships.

Finance will accept comments on the draft legislation until 31 August 2016 and on the consultation paper until 30 November 2016.

In brief

The proposals introduce rules that would bring master trusts of pension entities within the application of the GST/HST pension plan rules. Employers and pension entities that have master trusts within their pension plan structures would see significant changes to their GST/HST obligations and pension entity rebates. 

The proposals also aim to clarify various GST/HST rules related to the drop-shipment rules and certificates. The drop-shipment rules generally provide that when a non-resident business—not registered for GST/HST—makes a supply of goods located in Canada, the GST/HST applies in the same way as it would generally apply if the goods were imported into Canada. The draft legislation thus includes amendments to clarify and modernize the drop-shipment rules. As a result of these technical changes, some Canadian suppliers may be required to collect GST/HST from their non-resident clients. 

Some of the changes apply immediately. Other changes are proposed to be effective for the next fiscal year of the affected entities. Some of the proposed changes will be effective once they are enacted into law.


Read a July 2016 report [PDF 88 KB] prepared by the KPMG member firm in Canada: New GST Rules and Consultations Touch Many Bases

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