What is a section 156 election that lets closely related Ontario corporations skip charging HST between themselves?

A section 156 election is a joint election under the Excise Tax Act that lets qualifying closely related corporations, and certain partnerships, treat most taxable supplies made between them as though they were made for no consideration, meaning no GST/HST has to be charged, collected, or remitted on those specific intercompany transactions, even though the same supplies would normally attract tax between unrelated parties.

It's aimed squarely at corporate groups, think a holding company and its operating subsidiary, or sister companies under common ownership, where charging and tracking HST on every internal transaction, management fees, inventory transfers, shared services, would otherwise create pure administrative friction and cash-flow timing costs without changing anyone's ultimate tax position, since the group would generally be entitled to full input tax credits anyway.

The election doesn't apply to every kind of supply between related entities, some specific supplies are excluded even where the corporations otherwise qualify, and it only works where the parties meet the "closely related" test and any other conditions for the specific type of election being made. Because getting the eligibility and scope wrong can mean HST should have been charged on transactions that were treated as tax-free, this needs to be set up and reviewed properly by a tax advisor, not assumed to apply to every related-company transaction.