Relief for Employers with Pension Plans

Budget 2013 simplifies GST/HST compliance for employers with registered pension plans, though it will take some eight additional pages of not so simple amendments to the ETA. Currently, an employer must both collect GST/HST on a taxable supply made to a pension plan and self-assess for GST/HST when the employer acquires, consumes or uses inputs of property or services for activities relating to the pension plan. Employers can make a tax adjustment to avoid any double taxation.

One simplification measure allows the employer to jointly elect with the pension entity to not collect tax on actual supplies made to the entity if the employer already self-assesses on deemed taxable supplies to the entity. The second measure provides a de minimis threshold below which an employer is not required to self-assess for GST/HST. The relief from self-assessment extends to either deemed taxable supplies by the employer to the pension plan, or to inputs of property or services consumed or used by the employer relating to the pension plan that are not used to make supplies to the pension plan. The threshold requires the employer's GST (or corresponding federal portion of the HST) on such deemed taxable supplies or on such inputs to be less than $5,000 per year and less than 10 per cent of such GST/HST paid by all pension entities of the pension plan.

GST/HST Integrity Measures

Budget 2013 includes several integrity measures.

The first provides the Minister with the right to withhold GST/HST refunds until a business provides certain business identification information. It is hoped that the Minister will use this authority in the promised "fair and judicious manner."

The second measure eliminates a recent structure by which hospitals, as well as municipalities, universities and colleges, school authorities and non-profit organizations, have provided paid parking largely or entirely for free, and thus exempt from GST/HST, to an associated charity, which then resupplies the paid parking at full cost to the public under another GST/HST exemption.

The third measure reverses a 2001 Federal Court of Appeal decision, which held that medical evaluation reports provided to insurance companies were GST/HST exempt. GST/HST will now apply to medical examinations, diagnostic services and medical reports that are not for the purpose of protecting, maintaining or restoring the health of a person or for palliative care. As a result, such services will be taxable when provided by medical experts in determining liability in court proceedings.

GST/HST Relief

Budget 2013 includes two minor tax relieving provisions. The first expands the scope of the existing exemption from GST/HST for publicly funded or subsidized homemaker services for individuals who need assistance due to age, infirmity or disability. The existing exemption for cleaning, laundering, meal preparation and child care is expanded to include the personal care services of bathing, feeding, and assistance with dressing and taking medication. The second is the elimination of customs duties on baby clothes and sports equipment, though not bicycles.

Deferral of General Preferential Tariff Removal

The Government previously announced its intention to remove the General Preferential Tariff (GPT) treatment for imports of products from 72 countries. The GPT was first implemented in 1974, and provides duty free or preferential market access to most imported goods from developing countries, including large economies such as China, Brazil, Israel and Thailand. Originally, the GPT was set to expire on June 30, 2014. Budget 2013 contemplates a deferral of the changes only apply to goods imported into Canada on or after January 1, 2015.

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