Ontario Retail Sales Act: transfer of assets between related corporations and partnership rules: September 20, 2004.

On September 20, 2004, the Institute's Toronto Chapter provided the following comments regarding Ontario's proposed changes to Regulation 1013 of the Ontario Retail Sales Tax Act. The letter was prepared under the aegis of the Toronto Chapter's Ontario Tax Committee, whose chair is Robert G. Westlake of General Electric Canada Inc., and the Institute's Canadian Commodity Tax Committee, whose chair is Sherrie Ann Pollock of Royal Bank of Canada.

On behalf of the Toronto Chapter of Tax Executives Institute, I am pleased to provide comments on the proposed changes to Regulation 1013 of the Ontario Retail Sales Tax Act modernizing the rules in respect of transfers of assets between related corporations and partnerships. TEI commends the Ministry for undertaking this review.

Background

Tax Executives Institute is the preeminent association of business tax professionals. TEI's 5,400 members work for 2,800 of the largest companies in Canada, the United States, and Europe. TEI's membership includes representatives from a broad cross-section of the business community, with members employed in all major industries and sectors of the economy. In that sense TEI is unique N we do not represent a particular group or industry. Canadians make up approximately 10 percent of TEI's membership, with our Canadian members belonging to chapters in Toronto Calgary, Montreal, and Vancouver. In addition, many U.S. and European members work for companies with substantial Canadian and, specifically, Ontario operations.

Comments

TEI applauds the Ministry's effort to modernize the retail sales tax rules relating to exempt transfers of assets between related corporations. The proposed changes will bring the regulation into greater alignment with present-day corporate restructuring transactions. Often, Retail Sales Tax is imposed on assets that are moved from one entity to another within a group even though there has been no effective change in the ownership of those assets. The changes will alleviate this problem. Also, TEI supports the alignment of the tax treatment on the transfer of assets between corporations with that for the transfer of assets between partnerships. The move to codify the current administrative policy regarding transfers of assets to partnerships is a positive step.

The changes in respect of beneficial ownership will permit a tax-free transfer of eligible assets between corporations where the ownership of the two may be held by different entities in...