GST/HST and QST filing deadlines for financial institutions
GST/HST and QST registrants that are financial institutions may be required to file a GST 111 – Financial Institution Annual Information Return. Those that are also selected listed financial institutions (SLFIs) are required to file an SLFI return.
Financial institutions affected by these requirements include banks, public trustees, and traders/brokers of financial instruments, credit unions, insurers/insurance brokers, an investment plan, a person whose principal business is the lending of money, and persons that are de minimis financial institutions.1
The requirement to file a GST 111 return applies only to reporting institutions.
Are you a reporting institution?
A person is a reporting institution if:2
- the person is a financial institution at any time in the fiscal year;
- the person is a registrant at any time in the fiscal year;3 and
- the total of all amounts included in computing income for income tax purposes for the last taxation year that ends in the fiscal year exceeds $1 million.
Financial institutions
Generally, there are three types of financial institutions:
- Listed financial institutions (LFIs) – You are an LFI if you are any of the persons listed above.
- Selected listed financial institutions – You are an SLFI if you are an LFI and you have a permanent establishment in a participating province and a permanent establishment in any other province at any time during your taxation year.4
- De minimis financial institution – You are a de minimis financial institution if, in your preceding taxation year, your revenue for income tax purposes from interest or a separate fee or charge for a financial service is more than both 10 per cent of your total revenue and $10 million. Alternatively, a person can also be a de minimis financial institution throughout a particular taxation year if, in the preceding taxation year, the total of all amounts that were included in computing the person’s income tax under the Income Tax Act are interest or separate fees in respect of credit cards, lending of money or granting of credit by the person exceeding $1 million.
Total annual income for income tax purposes: does it exceed $1 million?
The $1 million threshold applies to a taxation year that consists of 365 days. If your taxation year is less than 365 days, the $1 million threshold is prorated based on the number of days in your taxation year.
Penalties
A person filing an Annual Information Return may be liable to a penalty equal to the lesser of $1,000 and 1 per cent of the difference between the amount that should have been reported and the amount that was reported.5
SLFI Return
SLFIs are required to file an SLFI return that accounts for their adjusted net tax based on the Special Attribution Method, or SAM formula.6 The main function of the SAM formula is to calculate a blended rate for GST/HST based on the SLFI’s provincial attribution percentage.
As described above, you are an SLFI if you are an LFI and you have a permanent establishment in a participating province and a permanent establishment in any other province at any time during your taxation year. Depending on the type of financial institution you are, as listed in subparagraph 149(1)(a)(i) to (x) of the Excise Tax Act (ETA), a permanent establishment can be a client, an investor, a unit holder or a plan member.
Conclusion
Both the GST – 111 Financial Institution Annual Information Return and the SLFI returns must be filed within six months of a registrant’s fiscal year end.
GST/HST and QST registrants should evaluate their business activities to determine if they are a financial institution and, if so, which of the above categories apply. This is important not only for prospective business activities and to ensure that compliance requirements are met, but also for historical activity and the resulting potential non-compliance. For historical non-compliance, there may be an option to file a voluntary disclosure, depending on the circumstances.
- Referred to in paragraph 149(1) (a) of the Excise Tax Act (ETA).
- Referred to in subsection 273.2(2) of the ETA and section 350.0.2 of the Act Respecting the Quebec Sales Tax (ARQST).
- A “registrant” means a person who is registered, or who is required to be registered, under Subdivision d of Division V in subsection 123(1) of the ETA.
- For some SLFIs, a permanent establishment can go beyond the general definition (i.e. fixed place of business) and can include the location of the financial institution’s customers, investors, unit holders and plan members.
- Referred to in subsections 284.1(1) and 284.1(2) of the ETA.
- Referred to in section 225.2 of the ETA and section 433.16 of the ARQST.
Meet the Author
Sameer Noormohamed
Information is current to December 4, 2019. The information contained in this release is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.