As a follow-up to our communication dated February 7, 2014, this
is a reminder of the December 2014 deadline imposed by Canada
Revenue Agency for disallowing joint venture arrangements in which
nominee corporations may file HST/GST returns and remit HST/GST for
the joint venture.
A joint venture election made for HST or GST purposes permits
most purchases and sales made for the account of a qualifying joint
venture (such as co-ownership of rental real estate and various
types of joint venture arrangements in the resources sector) to be
reported on the HST/GST returns of a qualifying
"participant" in the joint venture where the co-venturers
have elected for that participant to be the "operator" of
the joint venture for HST/GST purposes. There is essentially the
same rule for Québec sales tax purposes. Such a "joint
venture election" avoids the inconvenience of reporting the
joint venture results pro rata in all the HST/GST (or QST) returns
of the co-venturers.
It has been common, especially in real estate joint ventures,
for nominee or "bare trustee" corporations to be
designated as the HST/GST operator. The CRA has indicated in a
number of recent interpretations that this practice does not accord
with its interpretation of the applicable provision. However, the
CRA's administrative practice has been to generally refrain
from assessing the co-venturers for their “share” of
the joint venture’s tax remittance obligations, provided that
the right amount of tax has been reported and remitted under the
December 2014 Deadline
In light of the CRA announcement that it is now ceasing its
"administrative tolerance" of such arrangements after
this year, participants in joint ventures that have made the joint
venture election should review those arrangements to assess whether
they comply with the CRA's policies – and if they do not,
give careful consideration to restructuring those arrangements
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The CRA provides new housing rebates for individuals who have purchased or built a new house or have substantially renovated a house or made a major addition to a house who plan on living in it personally or letting a relative live there.
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