The Canada Revenue Agency has announced that it will no longer respect the right of a nominee or prêt-nom corporation to file GST/HST returns or remit the tax (or receive a refund) on behalf of the joint venture. The joint venture arrangement with a nominee corporation as the operator is a structure typically used in the real estate industry.
This change will go into effect January 1, 2015 so it is critical to review existing arrangements and make changes where necessary.
Note that although Quebec is supposed to be harmonized with the federal laws in the GST area, at present Quebec is following a much more rigid path, particularly when there is one beneficial owner and a nominee in the joint venture. In the latter case, we are advised that Quebec is denying two years of tax credits (which will be allowed to the beneficial owner in its own right) plus a 4% wash penalty.
Tax Target – What’s New in the Tax Sector
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