Tax Insights: GST/HST pension plan compliance obligations

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Issue 2014-30

This Tax Insights discusses Goods and Services Tax/Harmonized Sales Tax (GST/HST) compliance issues relevant to employers that have registered pension plans.

For fiscal years commencing after September 23, 2009, most employers that have a registered pension plan (RPP) are required to remit GST/HST relating to expenses they incur and ‘in house’ activities they perform in respect of their RPPs.

Section 172.1 of the Excise Tax Act deems a ‘participating employer’ that is a GST registrant to have made a taxable supply to a ‘pension entity’ of a RPP in the three situations outlined in the table below

When the deemed supply rules apply, the employer:

  • is deemed to have collected GST/HST on the last day of the employer’s fiscal year, on the fair market value of the supply
  • must:
    • analyze the ‘employer resources’ (e.g. salary costs, overhead costs and any other relevant costs that relate to pension activities) that were consumed or used in relation to pension activities
    • remit the applicable GST/HST that it is deemed to have collected in its GST/HST return that includes the last day of its fiscal year