Finance committee  The intent behind that “closely related” test is to identify when you have a group of corporations that essentially act as one entity because the overall control of everything is under the same person, essentially. These rules were working well and still work well, but given the fact that there are more and more complex corporate structures and types of shares put forward by corporations, there are a few scenarios that went to the CRA to ask whether, in certain situations, the closely related test was met when technically, according to the old working of the legislation, it could have been met but it was not the intent.

Finance committee  I have not heard about the three sisters in Alberta, but—

Finance committee  —what I want to point out is that this “closely related” test is specific to the GST. It's not like the “related” test in income tax, whereby your brothers and sisters are “related”. We're talking here about 90% ownership of the value of the shares that have full voting control.

Finance committee  I assume that in this fictitious example the person was qualifying under the closely related test before and will not qualify now. In that case, there are three different relieving rules that exist under the act that will not be available. There is one rule that allows a group of financial institutions to treat some intercompany supplies as financial service, and financial service is not subject to tax under the GST.

Finance committee  Good afternoon. My name is Pierre Mercille. I am the senior legislative chief of the Department of Finance Sales Tax Division. As you said, part 2 of the bill deals with the goods and services tax, or GST, and the harmonized sales tax, or HST. Part 2 starts at clause 89 and ends at clause 99.

Finance committee  A not-for-profit building.

Finance committee  Yes. The entity in charge runs the building on a not-for-profit basis.

Finance committee  Usually, if the challenge to the court has been finally determined by the court, an amendment to the legislation would not apply to it. But if not, yes, and this was the intention of this amendment, to clarify the long-standing position of the government in that respect.

Finance committee  The intent of the amendment is to ensure that the provision applies as it is intended. The taxpayers put forward a situation where they wanted a relief to apply where it was not the long-standing policy to apply, in a case where a taxpayer was operating a health care facility but was also operating an apartment building in which there was not the level of service for the residents that is normally received in what is usually called a nursing home.

Finance committee  Let me just add to that. This situation was put forward and essentially now, the long-standing policy of the legislation was not met in that particular situation, or there was a risk that it was not met. There is no final decision on what interpretation a court would take on that position.

Finance committee  There was a position put forward by a taxpayer and essentially there are steps to go through. There is an internal appeal to the CRA where the taxpayer talks with the CRA, and when there is still a disagreement, there is always a recourse to the court that is available to the taxpayer.

Finance committee  Yes.

Finance committee  I don't know the particular situation of Ronald McDonald, whether they are a charity, so I'm not commenting on that. I'm just commenting on the fact that if it's similar to a hotel room, normally it's taxable.

Finance committee  Yes, I will make the request to the department.

Finance committee  Maybe, maybe not. It's always a question of facts in those situations. But the way you described it, it sounds more like a hotel than actually—