Trusts governed by a deferred profit sharing plans (DPSPs) are subject to the new GST/HST draft rules for financial institutions.
Most DPSPs are administered by insurance companies through either a trust company subsidiary of the insurer or a “bare trustee” arrangement with an independent trust company, with the insurer acting as agent of the trustee for purposes of administering the DPSP.
The new GST/HST rules impose reporting and self-assessment requirements upon the trustee, and these will be quite complex particularly for DPSPs that are “selected listed financial institutions.”
A number of questions and issues that should be addressed that may have an impact on DPSP sponsors and beneficiaries, including the following:
- Who will undertake responsibility for GST/HST administration
- How will additional GST/HST administrative costs be dealt with?
“DPSP sponsors should be proactive in obtaining information from their providers regarding GST/HST administration requirements and costs,” says Greg Hurst, pension consultant with Greg Hurst & Associates Ltd. “The first reporting and self-assessment deadlines are looming; all plans will have a June 30, 2011 deadline, and some, if they have a fiscal plan year-end between September 23 and December 31, 2010 will have an earlier deadline, perhaps even as early as March 31, 2011.”