Subsection 172.1(4) Election for Specified Pension Entity

GST/HST Notices - Notice 281
January 2013

Section 261.01 of the Excise Tax Act provides for a GST/HST rebate for pension entities. In addition, section 172.1 contains deeming rules which require an employer to self-assess tax for deemed taxable supplies in certain circumstances. An explanation of the rules pertaining to these provisions is included in GST/HST Notice257, For discussion purposes only: Draft GST/HST technical information bulletin, The GST/HST Rebate for Pension Entities .

All legislative references in this notice are to the Excise Tax Act . Definitions of the specific terminology used in this notice can be found in Parts I and IV of GST/HST Notice257.

This notice explains the information required to be included in an election made under subsection 172.1(4).

The term "specified pension entity" is defined in subsection 172.1(4), and is relevant in cases where, during the fiscal year of a registrant that is a participating employer (employer), the employer consumes or uses its own resources for pension activities of the pension plan, but not for the purpose of making supplies to a particular pension entity. In this situation, subsection 172.1(7), as discussed in Part IV of GST/HST Notice257, stipulates that a specified pension entity is deemed to have paid tax for purposes of claiming a rebate under section 261.01.

Where a pension plan has only one pension entity, that pension entity is the specified pension entity of the pension plan. If there are two or more pension entities, the employer and one of the pension entities may jointly elect for that pension entity to be the specified pension entity of the pension plan. A participating employer may, at a particular time, have only one specified pension entity for a pension plan, although each employer of a pension plan may have a different pension entity as its specified pension entity.

Subsection 172.1(4) specifies that this election must be made in prescribed form containing prescribed information. Since the election is not required to be filed with the Canada Revenue Agency, it is sufficient that the election be evidenced in writing and retained on the books and records of the parties to the election, for audit purposes.

The following information must be retained by the employer and the pension entity that is a specified pension entity for purposes of subsection 172.1(4):

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