Clause 106 deals with what is called the holding corporation rule in the GST/HST legislation.
In certain circumstances, this holding corporation rule allows a holding corporation to claim ITCs, or input tax credits, with respect to some expenses in relation to a subsidiary or a related company.
There are two amendments. The first one clarifies which expenses can give rise to those ITCs, and the second amendment expands the rule. Right now, the holding corporation rule only applies if the holding company is a corporation. We're expanding the rules to allow the benefit of these rules for a holding entity that is a trust or a partnership, because one particularity of the GST/HST legislation is that “trust” and “partnership” are treated as separate legal entities; because we opened those rules, there are a few little technical changes that are meant to improve the text.