Department of Finance Releases Modified HST Rules For Financial Institutions
On January 28, 2011, the Department of Finance released the long awaited harmonized sales tax (HST) rules relating to the calculation of the provincial component (known as the provincial value-added tax or PVAT) of the HST. In what will be known as the January 28, 2011 Release, the Department of Finance provides a backgrounder, proposed amendments to the Excise Tax Act (which will have to be passed by the House of Commons and Senate) and proposed changes to regulations (which can be promulgated by the governor in Council).
These rules were initially announced in Department of Finance news releases dated May 19, 2010 and June 30, 2010. The January 28, 2011 Release is said to incorporate modifications and changes as a result of consultations with the affected financial services industry. A number of issues raised in the consultations require further research, analysis and stakeholder consultations, which will take place until March 31, 2011.
The HST rules for financial institutions remain very complicated. It is not possible to summarize the 130 pages of new laws and regulations in this blog post. Suffice it to say, each financial institution in Canada or engaged in business in Canada will need to take a look at the January 28, 2011 Release. Many commodity tax specialists spent the week-end trying to get their heads around this new package.
Cyndee Todgham Cherniak is the founding lawyer of LexSage, a boutique international trade law and sales tax firm in Toronto,
