tax alert

Employers and pension plans: Year-end GST/HST obligations

Following changes to the rules for pension plans announced in 2017, this is a reminder that employers must remit the GST/HST due on deemed supplies to a registered pension plan on their final year-end GST/HST return.

Under the new provisions, the rules permitting a pension plan (or a master trust) to claim a GST/HST pension plan entity rebate in respect of the employer’s deemed tax require that the deemed tax must be included on the employer’s correct GST/HST return.

Deemed supplies for employers

Under the rather complex provisions related to pension plans, employers are deemed to have made taxable supplies to a pension plan of any property, services or internal resources of the employer that essentially have been acquired or provided to the pension plan for its consumption, use or supply in the course of the pension plan’s activities. This would include, for example, employer staff time and resources incurred to support the pension plan.

Employers must quantify and remit GST/HST in respect of these deemed supplies on the last day of their fiscal year. This is the case regardless of whether or not a charge is in fact made to the pension plan(s).    

Failure to remit on deemed supplies

As a result of the change, failure to remit the GST/HST on the deemed supplies on the employer’s final year-end GST/HST return could result in a pension plan (or a master trust) being unable to claim the GST/HST on the deemed supplies as part of its pension plan entity rebate.

Please contact one of our firm’s sales tax specialists if you have any questions about the application of these rules.