Canadian Tax Adviser
March 25, 2013
How KPMG Can Help Securities Dealers
Securities dealers are in the midst of another round of changes to indirect tax laws and administrative policies. These changes include the imminent return to GST and PST in British Columbia, recent changes to the Quebec Sales Tax (QST) affecting financial services and increased CRA audit activities related to GST/HST on various transactions including cross-border charges from related entities.
Many changes like these over the last few years are making it difficult to calculate and pay the right amount of taxes and fully comply with all the GST/HST, provincial sales tax/retail sales tax (PST/RST) and QST rules. Significant amounts of money may be lost to non-compliance penalties or audit disputes, or simply left as unclaimed recoveries.
Good time to deal with challenges
With these and other changes happening and the CRA increasing its audit activities, it may be a good time to have an indirect tax review for your compliance issues and recovery opportunities, and to help ensure that your systems and processes can deal with these challenges.
KPMG has prepared a checklist to help you determine the benefits of an indirect tax review and assess the impact on your organization of the recent changes and the ones that are coming up soon.
Have you considered the impact of the following key changes and issues on your systems, processes, returns, budgets and intercompany transactions?
- The significant 2010 changes to the Special Attribution Method (SAM) and its numerous adjustments
- The new QST rules, which introduced a new QST SAM formula, changed the tax status of financial services to QST-exempt services and eliminated the ability to recover QST paid on related expenses
- The self-assessment rules on cross-border deductible expenses
- The B.C. transition back to GST and PST with all its compliance issues and obligations (e.g., separate returns, PST self-assessment rules)
- The legislative changes to “arranging for” financial services and the CRA’s related administrative policy that could affect the tax status of your supplies and purchases
- The new QST annual information return requirements with severe non-compliance penalties
- The recent changes to the place of supply rules that could affect the GST/HST and QST you must collect on your taxable supplies
- The new remittance and reporting obligations under the GST/HST and QST pension plan rules for employers and their pension plans
- The possibility of reviewing your allocation method for input tax credits to determine whether you can make improvements before filing your 2012 GST annual return or your first 2013 GST return.
How KPMG can help
KPMG can help you meet these challenges so you will be able to assure stakeholders that you are addressing risks. We can:
- Assist you in ensuring that you have made all the proper changes for the new QST rules
- Assist you in preparing for the return to GST and PST in B.C.
- Assist you in preparing for and managing CRA audits, including issues related to the self-assessment rules
- Review your GST/HST returns, provincial attribution and supporting documentation to help you correct compliance issues and identify GST/HST recoveries
- Review your allocation methodology to determine whether the method can be improved prior to filing your 2012 return or first 2013 return
- Review your processes for completing your GST/HST annual information return and similar upcoming new QST return and reconcile information with your GST/HST and QST returns, corporate income tax returns and other documentation
- Assist you in recovering or in making changes to reduce overpayments of GST/HST, QST and PST/RST on an ongoing basis
- Assist you in making changes to your systems and processes so you can meet your filing requirements
- Recommend and help implement tax planning opportunities, including structuring transactions with third parties or related entities.
It is critical that securities dealers deal with these issues now as their compliance and tax costs may increase due to the many tax changes and CRA audit activities. KPMG’s Indirect Tax team simplifies this process for you. We can assist you in managing the GST/HST, QST and PST/RST changes and trends affecting the financial services industry and bring you our in-depth knowledge and experience to help you assess the impact of the changes and take appropriate action.
For more information, contact your KPMG adviser.