Raising of Capital
Please note that the following Policy Statement, although correct at the time of issue, may not have been updated to reflect any subsequent legislative changes.
GST/HST Policy Statement P-108
DATE OF ISSUE
January 26, 1994
SUBJECT
Raising of Capital
LEGISLATIVE REFERENCE(S)
Subsections 185(1) and 169(1) of the ETA.
NATIONAL CODING SYSTEM FILE NUMBER(S)
11585-19
EFFECTIVE DATE
January 1, 1991
TEXT
This policy statement will discuss the claiming of ITC by a non-financial institution with respect to the initial raising of capital.
Issue and Decision:
Should a person, who is a non-financial institution, be allowed to claim ITC's with respect to taxable inputs that were acquired for use in the course of making a supply of a financial service (i.e., the initial issuance of a financial instrument) which are related to its commercial activity?
Subsections 185(1) and 169(1) of the ETA allow a non-financial institution to claim ITCs with respect to inputs acquired for use in the raising of capital that are related to its commercial activity.
Example Ruling
FACTS
- A corporation was formed for the purposes of acquiring, owning and operating a nine-storey commercial building in Toronto.
- Shares are to be offered at a subscription price of $100.00 per share.
Payments for subscriptions for the shares will be held by XYZ Trust Co. in trust for subscribers.
- Taxable inputs with respect to this offering included legal and accounting fees totalling $195,000 and the cost of printing certificates ($5,000).
GST totalling $14,000 was paid with respect to these expenses.
RULING REQUESTED
Will the corporation, who is a non-financial institution, be allowed to claim ITCs with respect to taxable inputs that were acquired for use in the course of making a supply of a financial service (i.e., the issuance of corporate shares) which are related to its commercial activity?
RULING PROVIDED
Pursuant to subsections 185(1) and 169(1) of the Excise Tax Act, the corporation may claim $14,000 in ITCs with respect to taxable inputs acquired for use in the issuance of the corporate shares which are related to its commercial activity.
Page details
- Date modified: