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Maurice Arsenault, Chair, 2011 GST Leaders Forum

The fifth GST Leaders’ Forum (GLF) was held May 4th and 5th at Niagara-on-the-Lake, Ontario. A group of recognized GST accounting and legal service professionals from across Canada was invited to explore some of the most pressing issues they are facing and to share knowledge experience and ideas in an open and professional environment. It was facilitated by the Canadian Institute of Chartered Accountants.

Five leaders facilitated discussions at the forum. The discussions followed four general themes, being GST/HST/QST and Pension Plans, GST/HST and Financial Services, Pot-Pourri of GST/HST Issues and The HST Harmonization – One Year Later. With all these themes, the Forum participants noted a constant: the ever expanding complexity of the GST. In view of this, the GLF agreed that an alert signal must be given and a recommendation must be made to the tax authorities, urging them to put the emphasis, in the near future, on three themes: tolerance, simplification and clarification.

Be it HST Harmonization or Pension Plans and Financial Services, the new rules put in place have brought and will continue to bring difficulties to taxpayers. In view of the confusion created by the new rules, the Forum urges the tax authorities to show tolerance upon auditing the application of the new rules. Errors have to be expected, so the aim should be to quickly contact taxpayers to inform them, not to catch them in default and penalize them. As the saying goes “the only good tax is an old tax”; presumably because the taxpayers have had time to better understand it and get used to it. The taxpayers will indeed need time to adjust to the new rules.

The culprit here is mostly the very ambitious, extremely complex and still incomplete regime on Pension Plans, first announced on January 26, 2007, On January 28, 2011 the Department of Finance issued a Release which included proposed changes and also some “issues that have been raised during consultations but which require further research, analysis and stakeholder consultations”. The Forum strongly suggests that one of the aims of such analysis should be to simplify the rules. If you want compliance, simplify the rules.

In their discussions over the two days, the participants were surprised by how much time was spent on trying to “characterize” a supply. This was particularly true when dealing with the changes to the definition of “financial service” and the new Place of Supply rules for HST. The GLF recommends that special efforts be put into bringing to public notice the new rules and encourage doing so with publications using concrete examples.

Please note that information, interpretations, opinions and recommendations reflected in these documents are those of the GST Leaders’ Forum and do not represent the views of The Canadian Institute of Chartered Accountants, its members or its staff.

Indirect Tax