|
Highlights
BUDGET HIGHLIGHTS
2007 Federal and Provincial Budget Highlights
Jim Vincze, Louis Huang
Jim Vincze and Louis Huang summarize
selected highlights of the federal and provincial sales tax budget measures for
2007. On March 19, 2007, the minority Conservative government tabled its second
Budget. To ensure that exports of intangible personal property ("IPP") are not
subject to GST/HST, it is proposed that supplies of IPP to non-residents who are
not registered for GST/HST be zero-rated under new section 10.1 of Schedule VI,
Part V of the Excise Tax Act. In response to submissions from the tourist
and convention industry concerning the government's announcement on September
25, 2006 to eliminate the Visitor Rebate Program, the government is proposing a
new program. As well, the government announced that it will pursue a more
competitive business tax system which will include encouraging provincial sales
tax harmonization with the GST/HST.
INPUT TAX CREDIT
Chaperone at the Input Tax Credit Party
Jonathan D. Spencer
The January 26, 2007 Notice of Ways
and Means Motion proposes to fundamentally change the process of input tax
credit ("ITC") allocation by financial institutions. As Jonathan Spencer
explains, for fiscal years beginning after March 2007, financial institutions
will need to rework their ITC allocation methods and obtain Canada Revenue
Agency ("CRA") approval for any changes thereto, or be restricted to overhead
ITC recovery rates of 12%, 10% and 15% for banks, insurers, and securities
dealers respectively. In the end, the ITC party may not be over, but it will be
well and truly chaperoned by the CRA. If FIs are inclined to assume that their
current ITC allocation methods are appropriate under the new regime, the real
test may lie in the burden of proof required to successfully appeal the
assessments that are sure to come.
GST SECTION 167 ELECTION
GST Section 156 Election: Closely Related Parties
Dalton J. Albrecht
The "Section 167 Election" has
application in asset sales. Where applicable (sale of a complete business or a
discrete and autonomous part as a going concern), the sale is deemed to be made
for nil consideration. Therefore, GST is
not applicable, provided certain change in use rules do not apply. Dalton
Albrecht examines section 156, which must be contrasted with section 167. Section 167 is an Election
that generally applies where arm's-length parties are selling an established
business or a distinct and discrete part of the business that is capable of
operating on its own with just the assets transferred, or a business that has
been newly established.
| |
Board
Dalton J. Albrecht
Editor-in-Chief
Miller Thomson LLP
Dwaine G. Arnason
PricewaterhouseCoopers LLP
Glenn A. Cranker
Stikeman Elliott LLP
Robert B. Kreklewetz
Millar Kreklewetz LLP
Craig M. McDougall
Felesky Flynn LLP
Jonathan D. Spencer
Thorsteinssons LLP
Jim Vincze
Deloitte & Touche LLP |