CRA Changes 156 Election Process

CRA Changes 156 Election Process

There is a new significant change to the 156 election process for corporations. The purpose of the 156 election is to avoid having to charge GST/HST on transactions between closely related companies. Prior to the change which occurs effective January 1, 2015, companies could enter into the election without notifying CRA. The companies simply kept the election notice on file in case of an audit by CRA.

Starting in 2015, companies entering into the election will now be required to notify CRA. This requirement will apply to new elections as well as elections already in place.

Who can make the election

  • Only closely related parties (meaning there must be at least 90% ownership as in a parent, subsidiary relationship) may enter into the election.
  • All parties must be registered for GST/HST.
  • The election is only available to Canadian corporations and partnerships.
  • At least 90% of property acquired, last manufactured, produced or imported by all parties to the election must be used in the course of a commercial activity; or if the person has no property at least 90% of its sales must be subject to GST/HST.
  • Applicable for parent/sub relationships or sister companies where the parent is a corporation or a partnership.

Timing of election

  • New elections must be filed by the earliest due date of the return which covers the period that includes the first date in which the election is to take place.
  • Existing elections must be filed between January 1 and December 31, 2015.

Election Form

  • A new election form, RC4616 must be used to make the election. This form is not yet available for use.

If you have any questions about the 156 election process, please contact Mona Tessier at