TEI comments on possible changes to the GST/HST Nil Consideration election.

• Position: TECHNICAL SUBMISSIONS

On September 19, 2014, TEI submitted a letter to the Canadian Revenue Agency (CRA) and Canadian Department of Finance on proposed changes to the section 156 election for nil consideration. The election allows supplies between qualifying members of a closely related group to be made free of GST/HST. The Institute's letter welcomed the expansion of the election to include certain new members of a closely related group, and expressed concerns with new requirements that will mandate filing of all section 156 elections with CRA highlighting the associated administrative burden such a system would impose on businesses and CRA. The letter was prepared under the aegis of TEI's Canadian Commodity Tax Committee, whose chair is Richard Taylor of Rogers Communications Inc. Contributing substantially to the development of TEI's comments were Dwaine Arnason of Shell Canada Ltd., Carole S. Levesque of Shaw Communications Inc., and Kevin Thom of ConocoPhillips Canada. Daniel B De Jong of the Institute's legal staff coordinated the development of the Institute's comments.

On February 11, 2014, the Federal Budget announced a number of changes to section 156 "Election for Nil Consideration" of the Excise Tax Act ("ETA"), which allows supplies between qualifying members of a closely related group to be made free of GST/ HST. Tax Executives Institute ("TEI" or "the Institute") commends the continued efforts of the Department of Finance ("Finance") and Canada Revenue Agency ("CRA") to resolve long-standing issues with the application of section 156. Specifically, we welcome the expansion of the election to include new members of a closely related group that have not yet acquired property or made any taxable supplies. Making the election available to these entities will help streamline the GST/HST filing requirements occurring as a result of internal reorganizations and other transactions. While generally helpful to both taxpayers and the Government, a number of the amendments to section 156 remain troublesome and could have unintended consequences resulting in narrowed availability of the election and an increased compliance burden. This letter identifies those areas of concern and provides suggested changes that would improve the administration of the election to the benefit of all stakeholders. TEI would be pleased to assist with transitional and other issues that may arise as the Government implements these changes.

TEI is the preeminent international association of in-house tax professionals worldwide. The Institutes nearly 7,000 professionals manage the tax affairs of more than 3,000 of the leading companies across all industry sectors in North America, Europe, and Asia. Canadians constitute approximately...