Comments to proposed Canadian legislation on application of goods & services tax to pension expenses and financial institutions: November 10, 2009.

On November 10, 2009, TEI filed comments with the Canadian Department of Finance concerning proposed legislation relating to the goods and services tax on pension expenses and financial institutions. The comments were prepared under the aegis of the Institute's Canadian Commodity Tax Committee, whose chair is Diana M. Spagnuolo of Imperial Oil Limited. Materially contributing to the preparation of the comments were TEI's Vice President for Canadian Affairs, Sherrie Ann Pollock of RBC Dexia Investor Services, and committee vice chair Carol Felepchuk of TD Bank Finance Group.

On September 23, 2009, the Department of Finance released draft legislation, explanatory notes, and a backgrounder concerning several measures aimed at improving and streamlining the application of the goods and services tax (GST) to pension plans and the financial services sector. The proposal includes changes in the following areas:

* Pension expenses;

* Input tax credit (ITC) allocation methodology;

* Deadline for filing annual return for financial institutions;

* GST/HST Annual Information Schedule (Form GST111); and

* Imported supplies.

Tax Executives Institute is pleased to submit the following comments on these proposals.

Background

Tax Executives Institute is the preeminent association of business tax executives worldwide. The Institute's 7,000 members manage the tax affairs of 3,200 of the leading companies in Canada, the United States, Asia, and Europe and must contend daily with the planning and compliance aspects of Canada's business tax laws. Canadians make up 10 percent of TEI's membership, with our Canadian members belonging to chapters in Calgary, Montreal, Toronto, and Vancouver, which together constitute one of our nine geographic regions. Many of our non-Canadian members (including those in Europe and Asia) work for companies with substantial activities in Canada. TEI's membership encompasses most major industries including manufacturing, distributing, wholesaling, and retailing; real estate; transportation; financial services; telecommunications; and natural resources (including timber and integrated oil companies). TEI concerns itself with issues of tax policy and administration and is dedicated to working with government agencies to reduce the costs and burdens of tax compliance and administration to our common benefit.

Pension Expenses

Pension plan entities are generally not entitled to claim ITCs because they are considered to be involved in...