For any taxpayer that made an election pursuant to section 156 of the Excise Tax Act before January 1, 2015, the final deadline for filing Form RC 4616 is December 31, 2015. Until this year, there was never a requirement to file any documentation with the Canada Revenue Agency (the “CRA”) when making this election, but due to changes announced in the 2014 Federal Budget, the election is now available in more circumstances, but with these new filing requirements.
If the necessary conditions are satisfied and Form RC 4616 is properly filed, every taxable supply made between electing group members will be deemed to have been made for no consideration pursuant to section 156 of the Excise Tax Act. Accordingly, a validly made election should alleviate the financial impact of charging and collecting GST/HST and claiming input tax credits in respect of supplies made between members of the closely related group.
Failing to file Form RC 4616 will invalidate any previously made section 156 election and could result in the application of significant GST/HST, penalties and interest. As Form RC4616 is required to be filed (not simply retained in the records of the closely related group as was the case with the now obsolete GST Form 25), it is more readily available to the CRA for review. Accordingly, it is essential to consider whether all group members continue to qualify for the election and to review any prior transactions that may have relied on a section 156 election prior to filing a Form RC 4616.
The regular deadline to file Form RC 4616, in respect of any section 156 election made on or after January 1, 2015, is the earliest due date for the GST/HST return in respect of the reporting periods of the electing group members that includes the date that the section 156 election was made.