GST-QST: New election between closely related parties
This election allows closely related corporations to not account for the GST/HST that would otherwise be fully recoverable in respect of these supplies. The election cannot include other parties, such as individuals or trusts. A similar election applies to the QST.
2016 BudgetThe 2016 federal budget proposed to introduce a new voting control requirement. In addition to owning at least 90% of the voting shares of a subsidiary corporation, a corporation must control, directly or indirectly, 90% or more of the votes in respect of every corporate matter of the subsidiary corporation (with limited exceptions).
This measure has been in effect since March 23, 2016 for all elections filed as of that date. For elections in effect on or before Budget Day, the measure will apply as of the day that is one year after Budget Day.
ComplianceEffective January 1, 2015, corporations that wish to make such an election must file form FP 4616 V to Revenu Québec through the first electing party that must file its income tax return.
Late-filed electionsThe Canada Revenue Agency announced guidelines for the late filing of the election form in its July 2016 policy statement P 255, Late-filed Section 156 Elections and Revocations.
Benoit Vallée, CPA, CGA
Senior Manager, Indirect Taxes
Member of the taxation and commodity taxes technical working group