The election under section 156 the Excise Tax Act
(Canada) permits Canadian corporations and Canadian partnerships
that are registrants engaged exclusively in commercial activities
and that are members of the same qualifying group to jointly elect
to treat taxable supplies (subject to certain exceptions) between
them as having been made for no consideration. This generally
allows intercompany supplies of property and services (subject to
certain exceptions) between the parties to the election to be made
without collecting GST/HST. Prior to 2015, the election was not
required to be filed and the parties simply retained the election
in prescribed form in their books and records. However, legislative
amendments effective January 1, 2015 provide for a new regime that
now requires the election to be filed with the Canada Revenue
Agency (CRA) rather than simply kept on file.
What You Need To Know
Elections with Effective Date
Prior to 2015: An election with an effective date prior to
2015 must be filed with the CRA by the fast-approaching deadline of
December 31, 2015 to remain valid for supplies made in 2015 and
future years. The election must be completed and filed using Form
RC4616 (which replaces the previous Form GST25) and the original
effective date should be indicated on the form. For greater
certainty, even if Form GST25 was filed prior to January 1, 2015
this will not alleviate the need to file Form RC4616.
CRA announced a simplified method
that permits specified members of a qualifying group that have
existing elections, each with a different effective date that is
prior to January 1, 2015, to file only one Form RC4616 identifying
December 31, 2014 as the effective date (covering all members
instead of each filing separately). If this simplified method is
chosen, the parties should retain each Form GST25 that was
originally completed in their books and records as this may be
required for audit purposes relating to supplies made on or after
the original effective date and before December 31, 2014.
Elections with Effective Date
After 2014: An election with an effective date after 2014
must be made using Form RC4616 and must be filed with CRA by the
earliest date on which any member of the qualifying group making
the election is required to file a GST/HST return for the reporting
period that includes the effective date of the election.
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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