Important GST/HST Changes Proposed by the Department of Finance Canada for Investment Limited Partnerships

On September 8, 2017, the Department of Finance Canada released legislative proposals to amend the Excise Tax Act (ETA) to encompass Investment Limited Partnerships (ILPs).

The new legislative proposals have a significant impact on ILPs.

Summary

  • A broad definition of ILPs to include certain limited partnerships whose primary purpose is to invest funds in property consisting primarily of financial instruments.
  • There is deemed supply of management or administrative services at fair market value by the general partner (GP) to the ILP.
  • The requirement for GPs to register for GST/HST purposes and GST/HST will apply in respect of the deemed supply.
  • The new deeming rule has the potential to materially increase the amount of unrecoverable GST/HST paid by many limited partnerships.
  • The complex rules pertaining to listed financial institutions may apply.

To keep in mind

These new rules are proposed to be effective, for all services that are paid or become due, on or after September 8, 2017.

Although there has been no formal release by the ministère des Finances du Québec, it is expected that once the final GST/HST legislation has been issued, the QST legislation will also be amended so that the same rules apply under the QST system.

It is important to review and take the necessary actions considering the proposed GST/HST changes.

Contact person

For further information, please contact Pierre Nadeau, Adm. A, M.Fisc, Indirect Tax manager or your trusted Mazars advisor.

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