CRA Imposes Deadline for Eliminating HST/GST Joint Venture Reporting by Nominees

Authors: Paul Lamarre, Neal H. Armstrong and Fred Purkey

The Canada Revenue Agency has announced that, after 2014, it will no longer tolerate joint venture arrangements in which nominee corporations file HST/GST returns and remit HST/GST for the joint venture.


A joint venture election made for HST or GST purposes permits most purchases and sales made for the account of a qualifying joint venture (such as co-ownership of rental real estate, and various types of joint venture arrangements in the resources sector) to be reported on the HST/GST returns of a qualifying “participant” in the joint venture where the co-venturers have elected for that participant to be the “operator” of the joint venture for HST/GST purposes. There is essentially the same rule for Québec sales tax purposes. Such a “joint venture election” avoids the inconvenience of reporting the joint venture results pro rata in all the HST/GST (or QST) returns of the co-venturers.

It has been common, especially in real estate joint ventures, for nominee or “bare trustee” corporations to be designated as the HST/GST operator. The CRA has indicated in a number of recent interpretations that this practice does not accord with its interpretation of the applicable provision. However, the CRA’s administrative practice has been to generally refrain from assessing the co-venturers for their “share” of the joint venture’s tax remittance obligations, provided that the right amount of tax has been reported and remitted under the nominee returns.

December 2014 Deadline

In light of the CRA announcement that it now is ceasing its “administrative tolerance” of such arrangements after this year, participants in joint ventures which have made the joint venture election should review those arrangements to assess whether they comply with the CRA’s policies – and if they do not, give careful consideration to restructuring those arrangements before 2015.

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