TEI Liaison meeting with Canada Revenue Agency on excise tax questions: December 8, 2009.

• Position: Tax Executives Institute

On December 8, 2009, TEl representatives met with representatives of the Canada Revenue Agency on commodity tax issues. The agenda was prepared under the auspices of TEI's Canadian Commodity Tax Committee, whose chair is Diana M. Spagnuolo of Imperial Oil Limited. Materially participating in the drafting were Carol Felepchuk of TD Bank Financial Group; Martina Krummen of FNC Lavalin Inc.; Phil W. Riley of ArcelorMittal Dofasco Inc.; Richard Taylor of Rogers Communications Inc.; and Michael J. Willis of LaFarge Canada Inc. Mary Lou Fahey, TEl General Counsel, serves as legal staff liaison to the committee. The minutes of the meeting will be posted to TEI's website when they become available.

Tax Executives Institute, Inc. welcomes the opportunity to present the following questions on Canadian Commodity Tax issues, which will be discussed with representatives of the Canada Revenue Agency during TEI's December 8, 2009, liaison meeting. If you have any questions about the agenda, please do not hesitate to contact Sherrie Ann Pollock, TEI's Vice President for Canadian Affairs, at 416.955.7373, sherrieann.pollock@rbcdexia. com; or Diana M. Spagnuolo, Chair of TEI's Canadian Commodity Tax Committee, at 403.237.2948, diana.m.spagnuolo@esso.ca.

Technical Questions

1. Form GST111

   1. Update. TEI members recently submitted the Form GST111, Financial Institution GST/HST Annual Information Schedule. In September, several changes to the form were announced. During the liaison meeting, please provide an overview of the reasons for the changes.

   2. Misdirected Requests to File Form. Several TEI members--who do not work for companies that qualify as financial institutions under subsection 149(1) of the Excise Tax Act (ETA)--have received letters requesting them to file the Form GST111, apparently based on the inclusion of interest and dividend income on their income tax returns. The reporting of such income from a closely related corporation, however, is not included in the calculation under paragraphs 149(1)(b) and (c), which determines whether a registrant qualifies as a financial institution. Responding to these requests is time consuming; indeed, some members report receiving multiple inquiries or inquiries in subsequent years, even after demonstrating they were not required to file.

   During the liaison meeting, we request an update on this program, including how it can be modified to avoid future requests to file the form. In the interim, CRA should suspend requesting the information.

2. Standardized Accounting

   The standardized accounting initiative--under which the federal government is harmonizing various accounting, interest, and penalty provisions administered by CRA--has significantly increased the transfer of funds among taxpayer accounts. The result is a substantial administrative burden on both taxpayers and government agents as they try to unravel the trail and rationale behind the transfers.

   The burden is borne by taxpayers large and small. Large taxpayers have many accounts, often maintained by different areas within a business. Small taxpayers, while perhaps not dealing with the same number of accounts, still face...