Budget 2013 simplifies GST/HST compliance for employers with
registered pension plans, though it will take some eight additional
pages of not so simple amendments to the ETA. Currently, an
employer must both collect GST/HST on a taxable supply made to a
pension plan and self-assess for GST/HST when the employer
acquires, consumes or uses inputs of property or services for
activities relating to the pension plan. Employers can make a tax
adjustment to avoid any double taxation.
One simplification measure allows the employer to jointly elect
with the pension entity to not collect tax on actual supplies made
to the entity if the employer already self-assesses on deemed
taxable supplies to the entity. The second measure provides a de
minimis threshold below which an employer is not required to
self-assess for GST/HST. The relief from self-assessment extends to
either deemed taxable supplies by the employer to the pension plan,
or to inputs of property or services consumed or used by the
employer relating to the pension plan that are not used to make
supplies to the pension plan. The threshold requires the
employer's GST (or corresponding federal portion of the HST) on
such deemed taxable supplies or on such inputs to be less than
$5,000 per year and less than 10 per cent of such GST/HST paid by
all pension entities of the pension plan.
GST/HST Integrity Measures
Budget 2013 includes several integrity measures.
The first provides the Minister with the right to withhold
GST/HST refunds until a business provides certain business
identification information. It is hoped that the Minister will use
this authority in the promised "fair and judicious
The second measure eliminates a recent structure by which
hospitals, as well as municipalities, universities and colleges,
school authorities and non-profit organizations, have provided paid
parking largely or entirely for free, and thus exempt from GST/HST,
to an associated charity, which then resupplies the paid parking at
full cost to the public under another GST/HST exemption.
The third measure reverses a 2001 Federal Court of Appeal
decision, which held that medical evaluation reports provided to
insurance companies were GST/HST exempt. GST/HST will now apply to
medical examinations, diagnostic services and medical reports that
are not for the purpose of protecting, maintaining or restoring the
health of a person or for palliative care. As a result, such
services will be taxable when provided by medical experts in
determining liability in court proceedings.
Budget 2013 includes two minor tax relieving provisions. The
first expands the scope of the existing exemption from GST/HST for
publicly funded or subsidized homemaker services for individuals
who need assistance due to age, infirmity or disability. The
existing exemption for cleaning, laundering, meal preparation and
child care is expanded to include the personal care services of
bathing, feeding, and assistance with dressing and taking
medication. The second is the elimination of customs duties on baby
clothes and sports equipment, though not bicycles.
Deferral of General Preferential Tariff Removal
The Government previously announced its intention to remove the
General Preferential Tariff (GPT) treatment for imports of products
from 72 countries. The GPT was first implemented in 1974, and
provides duty free or preferential market access to most imported
goods from developing countries, including large economies such as
China, Brazil, Israel and Thailand. Originally, the GPT was set to
expire on June 30, 2014. Budget 2013 contemplates a deferral of the
changes only apply to goods imported into Canada on or after
January 1, 2015.
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