Proposed GST/HST amendments to Financial Institutions Regulations

On August 4, 2023, the Department of Finance released draft legislative proposals that amend the Selected Listed Financial Institutions (SLFIs) Attribution Method (GST/HST) Regulations. Under the SLFI Regulations, there are various zero-rating rules that can apply when a financial service (such as insurance) is provided to a non-resident. For life or accident and sickness insurance policies, the supply of insurance is only zero-rated when it is issued to an individual who is a non-resident at the “time the policy becomes effective.” As such, when a person’s place of residency changes (from being a Canadian resident to becoming a non-resident) during the term of a policy, the supply is exempt (not zero-rated) and the “net premiums” earned by the insurer are not included in determining the insurer’s provincial attribution percentage (PAP).