A common problem that many organizations face when managing GST-HST-QST, is that managers are not always fully aware of indirect tax consequences. The sheer complexity of the major Canadian indirect tax legislation, the Excise Tax Act, is only increasing. New GST-HST rules on "place of supply" and "pension fund expenses", a complex compliance system surrounding the recapture of input tax credit, are evidence to that effect.

In addition indirect taxes are transactional taxes that are widespread and are rarely centralised in the same section of the accounting cycle. Issues only increase when organisations work with different accounting software.

With technological advancements, computer downloads are used by fiscal authorities to perform audits. These tools enable tax auditors to be more efficient in pinpointing compliance issues out of massive transactional databases. Assessment costs could have been avoided had the correct tax insights been provided.

Technological tools should be used to manage indirect taxes, limit clerical errors; Ad Valorem launched the online employee expense software Advataxes designed to boost productivity, as it addresses indirect tax compliance within a mobile-friendly online employee expense software.

An indirect tax check-list should include the following:

Compliance

You have to be aware that there are two major zones that represent a risk to the compliance process:

  • internal changes such as acquisition, new accounting system and outsourcing a portion of the accounting function
  • external changes such as amendments to tax laws, jurisprudence or new reporting policies

Missed opportunities

Your organisation will support a larger administrative and tax burden should you forgo planning, for instance:

  • Did you know that there are more than 20 tax elections available for GST-HST purposes only?
  • Did you know that the premium of an insurance coverage originating from a foreign insurer or foreign broker may be subject to a 10% federal tax? Yet there is no such tax when dealing with Canadian insurers/brokers

Representation

If your organization is facing a structural issue on an indirect tax matter you should know that government representatives are welcoming the dialogue. There are various methods of approach:

  • provide comments on draft fiscal documentation or pre-budget consultation
  • submit your issues through your business association or through the tax technical committee of your local chapter of the Tax Executive Institute
  • directly liaise with tax authorities

The bottom line is that you should get involved.

Since time is of the essence, our website is structured to help address indirect tax issues quickly and efficiently.

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