News and Insights

CRA GST/HST Technical Information Bulletin B-105, “Changes to the Definition of Financial Service”

Tax Development Feb 09, 2011

The Canada Revenue Agency has issued this new technical information bulletin which provides information on the legislative amendments set out in Bill C-9, the Jobs and Economic Growth Act, clarifying the application of GST/HST in respect of the definition of “financial service”.  Bill C-9 received Royal Assent on July 12, 2010.  This bulletin replaces the following publications:

  • GST/HST Notice No. 250, “Proposed Changes to the Definition of Financial Services”;
  • GST/HST Policy Statement P-119, “Trailer Commission Servicing Fees”; and
  • GST/HST Policy 239, “Meaning of the Term ‘Arranging for’ as Provided in the Definition of ‘Financial Service’”.  

Financial services as defined in subsection 123(1) of the Excise Tax Act are generally exempt.  The scope of the definition of “financial service” has been clarified by the addition of new definitions of the terms “asset management services” and “management or administrative service”.  In addition, new paragraphs (r.3), (r.4) and (r.5) have been added to the definition of “financial service” to clarify that asset management services, credit management services and preparatory services provided in conjunction with a financial service are not considered to be exempt financial services.  The bulletin includes 18 illustrative examples that provide general guidance on how the amendments apply in respect of the provision of certain services.  

The amendments apply to consideration for asset management, credit management or preparatory services provided under a written agreement, where the consideration for a supply becomes due or is paid without becoming due, after December 14, 2009.  In addition, they will apply to consideration for such services rendered under an agreement that became due or were paid on or before December 14, 2009, unless the supplier did not collect or remit GST/HST, on or before December 14, 2009, in respect of any such services made under that agreement.  

CRA B-105