Sales Tax Amendments Act, 2006 (S.C. 2007, c. 18)
Full Document:
Assented to 2007-06-22
Sales Tax Amendments Act, 2006
S.C. 2007, c. 18
Assented to 2007-06-22
An Act to amend the Excise Tax Act, the Excise Act, 2001 and the Air Travellers Security Charge Act and to make related amendments to other Acts
SUMMARY
Part 1 of this enactment mainly implements proposed measures relating to the Goods and Services Tax and Harmonized Sales Tax (GST/HST). Part 2 contains measures relating to the Excise Act, 2001 and other Acts with respect to the taxation of tobacco, spirits and wine. Finally, Part 3 contains measures relating to the Air Travellers Security Charge.
The GST/HST measures, contained in Part 1 of this enactment, are principally aimed at improving the operation and fairness of the GST/HST in the affected areas and ensuring that the legislation accords with the policy intent. In some cases, adjustments have been made to the legislation as originally proposed in response to representations from the tax and business communities.
The principal GST/HST measures are as follows:
(1) Health: confirms the GST/HST exemption for speech-language pathology services; exempts health-related services rendered in the practise of the profession of social work; zero-rates sales and importations of a blood substitute known as plasma expander; restores the zero-rated status of a group of drugs, collectively known as Benzodiazepines; broadens the specially equipped vehicle GST/HST rebate so that this rebate applies to motor vehicles that have been used subsequent to being specially equipped for use by individuals with disabilities.
(2) Charities: ensures that the exemption of supplies by charities of real property under short-term leases and licences extends to any goods supplied together with such real property.
(3) Business Arrangements: provides transitional GST/HST relief on the initial asset transfer by a foreign bank that restructures its Canadian subsidiary into a Canadian branch; removes technical impediments that hinder the use of existing group relief provisions under the GST/HST; simplifies compliance by excluding beverage container deposits that are refundable to the consumer from the GST/HST base; permits an agent to claim a GST/HST deduction for bad debts, and to claim adjustments or refunds of tax, in respect of sales made on behalf of a principal where the agent collects and reports tax; extends the existing agent rules under the GST/HST legislation to persons acting only as billing agents for vendors; better accommodates special import arrangements between businesses in certain situations where goods are supplied outside Canada to a Canadian customer; ensures that GST/HST group relief rules cannot be used to exempt from GST/HST otherwise taxable clearing services that are provided by a group member to a closely related financial institution who will then re-supply those services on an exempt basis to a third-party purchaser outside the group; clarifies the treatment of the right to use certain types of amusement or entertainment devices, such as the playing of a game, when it is provided through the operation of a mechanical coin-operated device that can accept only a single coin of twenty-five cents or less as the total consideration for the supply; confirms the policy intent and Canada Revenue Agency’s existing practice that no GST/HST or provincial sales taxes on a passenger vehicle are included in calculating the maximum allowable value for input tax credit purposes.
(4) Governments: ensures that a small supplier division of a municipality is treated in the same manner as a municipality that is a small supplier; exempts a supply of a right to file or retrieve a document or information stored in an electronic official registry.
(5) HST-related Rules: as announced by the Government of Nova Scotia, limits the availability of the current Nova Scotia HST New Housing Rebate to first-time homebuyers and reduces the maximum rebate available to $1,500; includes in the Act the draft Specified Motor Vehicle (GST/HST) Regulations, which prescribe the value of a specified motor vehicle for the purposes of calculating the 8% provincial component of the HST in circumstances where the vehicle is brought into a participating province and prescribe the manner in which that tax is required to be paid.
(6) Administration: adds a discretionary power for the Minister of National Revenue to accept late-filed applications for the GST New Housing Rebate and the Nova Scotia HST New Housing Rebate for owner-built homes, where exceptional circumstances have prevented an applicant from meeting the normal filing deadline; adds a discretionary power for the Minister of National Revenue to accept late-filed elections between closely related financial institutions for adjustments that they are required to make for the provincial component of the HST; permits the Minister of National Revenue to exchange GST/HST information with foreign governments that are signatories to the Convention on Mutual Administrative Assistance in Tax Matters; adds a discretionary power under the Act for the Chief Statistician of Canada to provide statistical information concerning business activities to the provinces similar to an existing provision in the Income Tax Act.
The measures contained in Part 2 of this enactment amend the Excise Act, 2001 to implement minor refinements that will improve the operation of the Act and more accurately reflect current industry and administrative practices. They also implement related and consequential amendments to the Access to Information Act, the Customs Act, the Customs Tariff and the Excise Tax Act.
The principal measures related to the Excise Act, 2001 are as follows:
(1) Tobacco: extends the requirement to identify the origin of tobacco products to all products, including those for sale at duty-free shops or for export, consistent with the Framework Convention on Tobacco Control, an international treaty on tobacco control; clarifies that cigarettes, tobacco sticks, fine-cut tobacco or cigars, but not packaged raw leaf tobacco, may be supplied to the export market or the domestic duty-free market.
(2) Alcohol: authorizes private laboratories, provincial liquor boards and vintners to possess a still or similar equipment and produce spirits for the purpose of analysing substances containing ethyl alcohol without holding a spirits licence; defers the payment of duty by small vintners selling wine on consignment in retail stores operated by an association of vintners until the wine is sold.
(3) Administration: permits the Minister of National Revenue to exchange excise duty information with foreign governments that are signatories to the Convention on Mutual Administrative Assistance in Tax Matters; adds a discretionary power under the Act for the Chief Statistician of Canada to provide statistical information concerning business activities to the provinces similar to an existing provision in the Income Tax Act.
The measures pertaining to the Air Travellers Security Charge (ATSC), contained in Part 3 of this enactment, include previously announced relief provisions, as well as technical changes to the Air Travellers Security Charge Act.
The principal measures related to the ATSC are as follows:
(1) Relief: relieves, in particular circumstances, the ATSC in respect of air travel sold by resellers or donated by air carriers.
(2) Administration: provides authority for the Governor in Council to add, delete or vary by regulation the schedule of listed airports.
Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:
SHORT TITLE
Marginal note:Short title
1. This Act may be cited as the Sales Tax Amendments Act, 2006.
PART 1R.S., c. E-15AMENDMENTS TO THE EXCISE TAX ACT
Amendments in Respect of the Goods and Services Tax/Harmonized Sales Tax
Marginal note:1990, c. 45, s. 12(1)
2. (1) The definition “closely related group” in subsection 123(1) of the Excise Tax Act is replaced by the following:
“closely related group”
« groupe étroitement lié »
“closely related group” means a group of corporations, each member of which is a registrant resident in Canada and is closely related, within the meaning assigned by section 128, to each other member of the group, and for the purposes of this definition,
(a) a non-resident insurer that has a permanent establishment in Canada is deemed to be resident in Canada, and
(b) credit unions and members of a mutual insurance group are deemed to be registrants;
Marginal note:1990, c. 45, s. 12(1)
(2) The definition logement en copropriété in subsection 123(1) of the French version of the Act is replaced by the following:
« logement en copropriété »
“residential condominium unit”
logement en copropriété Immeuble d’habitation qui est, ou est destiné à être, un espace délimité dans un bâtiment et désigné ou décrit comme étant une unité distincte sur le plan ou la description enregistrés afférents, ou sur un plan ou une description analogues enregistrés en conformité avec les lois d’une province, ainsi que tous droits et intérêts fonciers afférents à la propriété de l’unité.
Marginal note:1997, c. 10, s. 150(6)
(3) Subparagraph (iii) of the description of A in paragraph (a) of the definition “basic tax content” in subsection 123(1) of the Act is replaced by the following:
(iii) the tax under section 165 that would have been payable by the person, in respect of the last acquisition of the property by the person or in respect of improvements to the property acquired by the person after the property was last acquired or imported by the person, in the absence of subsection 153(4), section 167, section 167.11 in the case of property acquired under an agreement for a qualifying supply (as defined in that section) that was not, immediately before that acquisition, capital property of the supplier or the fact that the property or improvements were acquired by the person for consumption, use or supply exclusively in commercial activities,
Marginal note:1997, c. 10, s. 150(6)
(4) Subparagraph (iv) of the description of J in paragraph (b) of the definition “basic tax content” in subsection 123(1) of the Act is replaced by the following:
(iv) the tax under section 165 that would have been payable by the person, in respect of improvements to the property acquired by the person after the property was brought into the participating province, in the absence of subsection 153(4), section 167, section 167.11 in the case of property acquired under an agreement for a qualifying supply (as defined in that section) that was not, immediately before that acquisition, capital property of the supplier or the fact that the improvements were acquired by the person for consumption, use or supply exclusively in commercial activities, or
Marginal note:1990, c. 45, s. 12(1)
(5) The portion of the definition “qualifying subsidiary” in subsection 123(1) of the Act before paragraph (b) is replaced by the following:
“qualifying subsidiary”
« filiale déterminée »
“qualifying subsidiary” of a particular corporation means another corporation not less than 90% of the value and number of the issued and outstanding shares of the capital stock of which, having full voting rights under all circumstances, are owned by the particular corporation, and includes
(a) a corporation that is a qualifying subsidiary of a qualifying subsidiary of the particular corporation,
(6) Subsection 123(1) of the Act is amended by adding the following in alphabetical order:
“listed international agreement”
« accord international désigné »
“listed international agreement” means the Convention on Mutual Administrative Assistance in Tax Matters, concluded at Strasbourg on January 25, 1988, as amended from time to time;
“Superintendent”
« surintendant »
“Superintendent” means the Superintendent of Financial Institutions appointed pursuant to the Office of the Superintendent of Financial Institutions Act;
(7) Subsections (1) and (5) are deemed to have come into force on November 17, 2005.
(8) Subsection (2) is deemed to have come into force on January 1, 2000.
(9) Subsections (3) and (4) and the definition “Superintendant” in subsection 123(1) of the Act, as enacted by subsection (6), are deemed to have come into force on June 28, 1999.
Marginal note:1990, c. 45, s. 12(1)
3. (1) The portion of subsection 128(1) of the Act before subparagraph (a)(i) is replaced by the following:
Marginal note:Closely related corporation
128. (1) For the purposes of this Part, a particular corporation and another corporation are closely related to each other at any time if at that time
(a) not less than 90% of the value and number of the issued and outstanding shares of the capital stock of the other corporation, having full voting rights under all circumstances, are owned by
Marginal note:1990, c. 45, s. 12(1)
(2) The portion of subsection 128(1) of the Act after paragraph (b) is repealed.
Marginal note:1990, c. 45, s. 12(1); 1993, c. 27, s. 12(2)
(3) Subsections 128(2) and (3) of the Act are replaced by the following:
Marginal note:Corporations closely related to the same corporation
(2) If under subsection (1) two corporations are closely related to the same corporation, they are closely related to each other for the purposes of this Part.
Marginal note:Investment funds
(3) For the purposes of this section, an investment fund that is a member of a mutual insurance group is deemed to be a corporation.
(4) Subsections (1) to (3) are deemed to have come into force on November 17, 2005.
Marginal note:1993, c. 27, s. 13(1)
4. (1) Subsection 129.1(1) of the Act is replaced by the following:
Marginal note:Supply by small supplier division
129.1 (1) If a public service body makes a taxable supply through a branch or division of the body and the consideration or a part of the consideration for the supply becomes due to the body at a time when the branch or division is a small supplier division or is paid to the body at such a time without having become due, the consideration or the part of the consideration, as the case may be, shall not be included in calculating the tax payable in respect of the supply or in determining a threshold amount of the body under section 249 and that supply is, for the purposes of this Part, deemed not to have been made by a registrant, except if the supply is
(a) a supply by way of sale of real property;
(b) a supply by way of sale of personal property by a municipality that is capital property of the municipality; or
(c) a supply by way of sale of designated municipal property of a person designated to be a municipality for the purposes of section 259 that is capital property of the person.
(2) Subsection (1) applies to any supply for which consideration becomes due after November 27, 2006 or for which consideration is paid after that day without having become due, but does not apply to any supply made under an agreement in writing entered into before November 28, 2006.
Marginal note:1997, c. 10, s. 12(1)
5. (1) Subsection 150(2) of the Act is replaced by the following:
Marginal note:Exceptions
(2) Subsection (1) does not apply to
(a) property held or services rendered by a member of a closely related group as a participant in a joint venture with another person while an election under section 273 made jointly by the member and the other person is in effect;
(b) an imported taxable supply, as defined in section 217; or
(c) a supply of services in relation to the clearing or settlement of cheques and other payment items under the national payments system of the Canadian Payments Association if the recipient (in this paragraph referred to as the “related purchaser”) is acquiring all or part of those services for the purpose of making a supply of exempt services to
(i) an unrelated party, or
(ii) a supplier that is a member of a closely related group of which the related purchaser is a member and that acquires all or part of the exempt services for the purpose of making a supply of exempt services to an unrelated party or to a supplier described by this subparagraph.
Marginal note:Definitions
(2.1) The following definitions apply in subsection (2).
“exempt services”
« services exonérés »
“exempt services” means services prescribed by section 3 of the Financial Services (GST/HST) Regulations.
“unrelated party”
« tiers non lié »
“unrelated party”, in respect of a supply of services, means a person that is not a member of a closely related group of which the supplier is a member and that is acquiring the services for the purpose of making a supply of services in relation to the clearing or settlement of cheques and other payment items under the national payments system of the Canadian Payments Association.
(2) Subject to subsection (3), subsection (1) is deemed to have come into force on September 14, 2001.
(3) Paragraph 150(2)(c) of the Act, as enacted by subsection (1), does not apply to
(a) services provided before September 14, 2001; or
(b) any supply of services to a related purchaser (within the meaning of that paragraph) if the agreement for the supply of all or part of those services to the unrelated party (as defined in subsection 150(2.1) of the Act, as enacted by subsection (1)) was entered into before September 14, 2001.
(4) For the purposes of Part IX of the Act, if the supply, referred to in paragraph 150(2)(c) of the Act, as enacted by subsection (1), made to the related purchaser (within the meaning of that paragraph) includes the provision of services during a period beginning before September 14, 2001 and ending on or after that day,
(a) the provision of the services (in this subsection referred to as the “excluded services”) that are provided during the part of the period that is before September 14, 2001 and the provision of the services (in this subsection referred to as the “affected services”) that are provided during the remainder of the period are deemed to be a separate supply;
(b) the consideration for the supply of the excluded services is deemed to be equal to the portion of the total consideration for the services provided in the period that can reasonably be attributed to the excluded services; and
(c) the consideration for the supply of the affected services is deemed to be equal to the portion of that total consideration that can reasonably be attributed to the affected services.
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