CRA Allows Temporary GST/HST Relief For Joint Ventures

It is quite common for joint ventures holding commercial real estate to appoint a bare trustee or nominee corporation to hold title to the property (often the nominee corporation is the trustee of the bare trust). The co-venturers and the nominee corporation often enter into a GST/HST joint venture election, to allow the nominee corporation to collect and remit GST/HST (e.g., on lease payments) on behalf of the joint venture. The Canada Revenue Agency (CRA) has indicated that it will not permit co-venturers to make the GST/HST election with a bare trust or nominee corporation going forward. Rather, the election must be made with an entity that has "managerial or operational control" of the joint venture, with authority to manage the joint venture's daily activities without requiring the input or approval of the other participants. This restrictive policy may ultimately require many joint ventures to reorganize their structure.