GST/HST Proposed Amendments

The Minister of Finance recently released draft legislation relating to the goods and services tax/harmonized sales tax (GST/HST) insofar as it relates to the financial services sector.

Among many proposed measures, the following were announced:

1. An amendment to the rules which apply to taxable imports of services and intangibles between separate branches of the same person;
2. A new rule which requires the Financial Institution with a presence outside Canada to self-assess GST/HST on certain expenses incurred outside Canada which relate to its Canadian activities;
3. Financial Institutions are entitled to claim input tax credits to recover GST/HST paid on inputs used to make taxable supplies but cannot claim input tax credits to recover GST/HST paid on inputs used to make exempt supplies. Where an input is used to make both taxable and exempt supplies, the Financial Institution must apply a method to allocate the use of that input. Amendments are proposed which will provide greater