Share your feedback: CRA’s revised policy for applying GST to transfer payments
The Canada Revenue Agency (CRA) has prepared a draft policy memorandum that explains how and when the GST/HST provisions of the Excise Tax Act apply to transfer payments, including those involving municipalities.
It sets out the CRA’s administrative guidelines for determining when a transfer payment provided by a grantor is consideration for a supply made by the grantee.
The CRA’s existing policy (‘GST/HST Technical Information Bulletin B-067, Goods and Services Tax’) and its impact on municipalities was the subject of the 2019 ABmunis resolution sponsored by the Town of Peace River, ‘Taxation of Intermunicipal Cost Sharing Agreements'.
Check out the May 2022 Weekly article, ‘GST on Intermunicipal Cost Sharing Agreements: A Financial Risk', for more details.
Alberta Municipalities is pleased to see the CRA working on a revised policy that will potentially offer more explanation and clarity on the application of GST to transfer payments made from one municipality to another. This policy is significant to the vast majority of local governments in Alberta because cost sharing is mandated within the Intermunicipal Collaboration Framework provisions in the Municipal Government Act.
The CRA is accepting feedback on the draft policy memorandum until August 22, 2022. Click here to read the memorandum and find the contact information for the submission of feedback.