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NEW – GST Closely-Related Group Election Rules

In the past, closely-related Canadian corporations and partnerships, which met certain criteria, were able to jointly elect to relieve the entities’ obligation to pay GST/HST and/or collect GST/HST on commercial transactions with one another.  This form, GST25, had to be completed by all the electing related corporations or partnerships; however, it did not need to be filed with the CRA.

Recently CRA has issued new rules with respect to this election for closely-related corporations and partnerships, such that these elections must now be completed and submitted to the CRA.  This new election form will be referred to as RC4616 and is expected to be released in January 2015.

Additionally, changes to this election include an extension to allow entities, who do not currently meet the conditions to make an election through form GST 25, to elect GST/HST relief through form RC4616.

Since the election is now required to be filed with the CRA, any errors in the elections may be exposed and potential audit issues may be raised by CRA.

Need to know

If your organization has previously made this election, or is planning to make such elections, you should consider reviewing the required conditions before the filing deadline to ensure that your organization still qualifies in light of any changes to your organizational structures or operations (if applicable).

For groups of related entities, which have elections in place before 2015 and that are still in effect as of January 1, 2015, an election form must be submitted to the CRA after 2014, but no later than December 31, 2015.

For groups of related entities, which are filing new elections after 2014, the entities must file the new election form no later than the day that one of the qualifying entities is required to file a GST/HST return for the period which includes the day on which the election becomes effective.

How we can help

Does your organization or group of organizations qualify for this election?

How might the changes in these election rules affect your organization or group of organizations?

Please feel free to contact one of our experienced professionals to help you assess the potential impact of this new election on your business and identify available advantages and benefits.

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Rob Brown

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The information contained in this article is for general use only and should not be viewed as professional advice. Accounting and tax rules and regulations regularly change and individuals should contact a competent professional to obtain accounting and tax advice based on their specific situation.


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