The 2013 federal budget introduced changes to the GST/HST rules for pension plans. Businesses, pension plan administrators and advisors have awaited measures that would help simplify the rules and ease the compliance burden for employers and pension plans.
Two budget measures provide some relief:
These new rules, discussed in more detail below, could provide relief to two main categories of employers:
Before implementing the changes and/or making the election, employers and pension entities must examine the new measures carefully to assess their effect on current and future years.
An employer that participates in a registered pension plan is required to account for GST/HST under the general GST/HST rules on actual taxable supplies that it makes to a pension entity (i.e., pension trust or corporation). However, on an annual basis, the employer is also required to account for tax on deemed taxable pension supplies. The employer is deemed to have made a taxable supply and to have collected GST/HST to the extent that the employer has acquired property or services for use in activities related to the pension plan.