A platform buyer's shared-services model assumed the new subsidiary was already covered. It was not.
Short answer
No — a standing group election under Excise Tax Act section 156 covers only the members who filed it, and buying a new subsidiary does not add it automatically. Until the acquired company is joined to the election by a fresh joint filing, every intercompany management fee, IT charge or shared service billed to it attracts GST/HST in the ordinary way.
Section 156(2) is opt-in and named: “if at any time after 2014 a person that is a specified member of a qualifying group files an election made jointly by the person and another specified member of the group, every taxable supply made between the person and the other specified member at a time when the election is in effect is deemed to have been made for no consideration.” A qualifying group under s.156(1) means corporations “each member of which is closely related, within the meaning assigned by section 128, to each other member of the group,” and s.128(1) sets the ownership test at “not less than 90% of the value and number of the issued and outstanding shares, having full voting rights under all circumstances, of the capital stock of the other corporation.”
A parent that owns 100% of a newly acquired subsidiary comfortably clears that 90% threshold. It still is not a “specified member” of the election until it is named in one — ownership alone does not file the paperwork.
The cost of missing this usually is not permanent. A subsidiary fully engaged in commercial activities can claim the HST charged on intercompany fees back as an input tax credit, so the real damage is cash-flow drag and compliance overhead for however many months pass before someone notices, not a dead loss. The fix is prospective — file the election going forward — there is no retroactive cure for the period before it was filed.
A 30-minute call is enough to tell you which of these facts applies to your deal.
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