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Excise Tax Act (R.S.C., 1985, c. E-15)

Full Document:  

Act current to 2022-09-11 and last amended on 2022-09-01. Previous Versions

PART IXGoods and Services Tax (continued)

DIVISION IInterpretation (continued)

Marginal note:Compound interest

  •  (1) Interest computed at a prescribed rate and any penalty computed at a rate per year under any provision of this Part shall be compounded daily.

  • Marginal note:Idem

    (2) Where, on any day, both penalty computed at a rate per year and interest are required to be compounded, they shall, on that day, be compounded together at a single rate equal to the total of the penalty rate and the interest rate as though both the penalty and interest were interest computed at that single rate.

  • Marginal note:Application of interest

    (3) Where an amendment to this Part, or an amendment or an enactment that relates to this Part,

    • (a) applies to a person who did something or to or for whom something was done,

    • (b) applies to property or a service that was supplied or in respect of which something was done,

    • (c) applies to an event or a transaction that occurred,

    • (d) applies to a period all or part of which is, or

    • (e) comes into force on a particular day that is,

    before the day the amendment or enactment is assented to or promulgated, for the purposes of applying the provisions of this Part that relate to or that provide for the payment, or the liability for payment, of interest in respect of any amount, the amount shall be determined and interest shall be computed thereon as though the amendment or enactment had been assented to or promulgated before the thing was done, the supply was made, the occurrence of the event or transaction, the beginning of the period or the particular day, as the case may be.

  • Marginal note:Exception

    (4) Subsection (3) does not apply for the purposes of computing any penalties under this Part.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1990, c. 45, s. 12
  • 1993, c. 27, s. 11

Marginal note:Negative amounts

 Except as specifically otherwise provided, where an amount or a number is required under this Part to be determined or calculated by or in accordance with an algebraic formula, if the amount or number when so determined or calculated would, but for this section, be a negative amount or number, it shall be deemed to be nil.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1990, c. 45, s. 12

Relationships, Associations, Separate Persons and Residence

Marginal note:Arm’s length

  •  (1) For the purposes of this Part, related persons shall be deemed not to deal with each other at arm’s length and it is a question of fact whether persons not related to each other were, at any particular time, dealing with each other at arm’s length.

  • Marginal note:Related persons

    (2) Persons are related to each other for the purposes of this Part if, by reason of subsections 251(2) to (6) of the Income Tax Act, they are related to each other for the purposes of that Act.

  • Marginal note:Idem

    (3) For the purposes of this Part, a member of a partnership shall be deemed to be related to the partnership.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1990, c. 45, s. 12

Marginal note:Associated persons

  •  (1) A particular corporation is associated with another corporation for the purposes of this Part if, by reason of subsections 256(1) to (6) of the Income Tax Act, the particular corporation is associated with the other corporation for the purposes of that Act.

  • Marginal note:Idem

    (2) A person other than a corporation is associated with a particular corporation for the purposes of this Part if the particular corporation is controlled by the person or by a group of persons of which the person is a member and each of whom is associated with each of the others.

  • Marginal note:Idem

    (3) For the purposes of this Part, a person is associated with

    • (a) a partnership if the total of the shares of the profits of the partnership to which the person and all other persons who are associated with the person are entitled is more than half of the total profits of the partnership, or would be more than half of the total profits of the partnership if it had profits; and

    • (b) a trust if the total of the values of the interests in the trust of the person and all other persons who are associated with the person is more than half of the total value of all interests in the trust.

  • Marginal note:Idem

    (4) For the purposes of this Part, a person is associated with another person if each of them is associated with the same third person.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1990, c. 45, s. 12

Marginal note:Closely related corporation

  •  (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) qualifying voting control in respect of the other corporation is held by, and 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 are owned by,

      • (i) the particular corporation,

      • (ii) a qualifying subsidiary of the particular corporation,

      • (iii) a corporation of which the particular corporation is a qualifying subsidiary,

      • (iv) a qualifying subsidiary of a corporation of which the particular corporation is a qualifying subsidiary, or

      • (v) any combination of the corporations or subsidiaries referred to in subparagraphs (i) to (iv); or

      • (vi) [Repealed, 1993, c. 27, s. 12]

    • (b) the other corporation is a prescribed corporation in relation to the particular corporation.

  • Marginal note:Qualifying voting control

    (1.1) For the purposes of this Part, a person or a group of persons holds qualifying voting control in respect of a corporation at any time if at that time

    • (a) the person, or the members of the group collectively, as the case may be, own shares of the corporation to which are attached not less than 90% of the shareholder votes that may be cast in respect of each matter, other than a matter

      • (i) for which a statute of a country, or of a state, province, or other political subdivision of a country, that applies to the corporation provides, in respect of the vote of the shareholders of the corporation on the matter, that

        • (A) any shareholder of the corporation has voting rights that are different from the voting rights that the shareholder would otherwise have under the letters patent, instrument of continuance or other constating instrument by which the corporation was incorporated or continued, including any amendment to, or restatement of, the constating instrument, or

        • (B) holders of a class or series of shares of the corporation are entitled to vote separately as a class or series, or

      • (ii) that is a prescribed matter or a matter that meets prescribed conditions or arises in prescribed circumstances; or

    • (b) the person or group, as the case may be, is a prescribed person or group in relation to the corporation.

  • 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.

  • Marginal note:Voting right controlled by another person

    (4) For the purposes of subsection (1.1), a particular person is deemed not to own a share at a particular time if

    • (a) another person has a right under a contract, in equity or otherwise, either immediately or in the future and either absolutely or contingently, to control the voting rights attached to the share, unless the right is not exercisable at the particular time because its exercise is contingent on the death, bankruptcy or permanent disability of an individual; and

    • (b) the other person is not closely related to the particular person at the particular time.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1990, c. 45, s. 12
  • 1993, c. 27, s. 12
  • 2007, c. 18, s. 3
  • 2016, c. 12, s. 90

Meaning of small supplier division

  •  (1) In this section and section 129.1, small supplier division of a public service body, at any time, means a branch or division of the body that, at that time,

    • (a) is a branch or division designated by the Minister as an eligible division for the purposes of this section; and

    • (b) would be a small supplier under section 148 if

      • (i) the branch or division were a person separate from the body and its other branches or divisions,

      • (ii) the branch or division were not associated with any other person, and

      • (iii) every supply made by the body through the branch or division were made by the branch or division.

  • Marginal note:Branches of public service bodies

    (2) A public service body that is engaged in one or more activities in separate branches or divisions may apply to the Minister, in prescribed form containing prescribed information, to have a branch or division specified in the application designated by the Minister as an eligible division for the purposes of this section.

  • Marginal note:Designation by Minister

    (3) Where the Minister receives an application under subsection (2), the Minister may, by notice in writing, designate a branch or division specified in the application as an eligible division for the purposes of this section, effective on a day specified in the notice, if the Minister is satisfied that

    • (a) the branch or division can be separately identified by reference to its location or the nature of the activities engaged in by it;

    • (b) separate records, books of account and accounting systems are maintained in respect of the branch or division; and

    • (c) a revocation under subsection (4) pursuant to a request made by the body in respect of the branch or division has not become effective in the 365-day period ending on that day.

  • Marginal note:Revocation of designation

    (4) The Minister may, in writing, revoke a designation under subsection (3) of a branch or division of a public service body where the conditions described in paragraph (3)(a) or (b) are no longer met in respect of the branch or division or the body makes a request in writing to the Minister that the designation be revoked.

  • Marginal note:Notice of revocation

    (5) Where, under subsection (4), the Minister revokes a designation of a branch or division of a public service body, the Minister shall send a notice in writing of the revocation to the body and shall specify in the notice the effective date of the revocation.

  • Marginal note:Supply of property on becoming a small supplier division

    (6) For the purposes of this Part, where a branch or division of a public service body that is a registrant becomes at any time a small supplier division and the body does not, at that time, cease to be a registrant, the body shall be deemed

    • (a) to have made, immediately before that time, a supply of each of its properties, other than capital property or an improvement thereto, that was held immediately before that time for consumption, use or supply in the course of commercial activities of the body and that the body begins, immediately after that time, to hold for consumption, use or supply primarily in the course of activities engaged in by the body through its small supplier divisions; and

    • (b) except where the supply is an exempt supply, to have collected, immediately before that time, tax in respect of the supply equal to the total of all input tax credits in respect of the property that the body was entitled to claim at or before that time.

  • Marginal note:Services and rented properties on becoming a small supplier division

    (7) Where,

    • (a) at any time in a particular reporting period of a public service body that is a registrant, a branch or division of the body becomes a small supplier division,

    • (b) the body does not, at that time, cease to be a registrant, and

    • (c) in or before that period, tax became payable, or was paid without having become payable, by the body and is calculated on consideration, or a part thereof,

      • (i) that is a rent, royalty or similar payment in respect of property and that is reasonably attributable to a period (in this subsection referred to as the “lease period”) after that time, or

      • (ii) that is reasonably attributable to services that are to be rendered after that time,

    the following rules apply:

    • (d) there shall not be included, in determining the input tax credits in respect of that tax that are claimed by the body in the return under section 238 for that or any subsequent reporting period, any portion of the amount determined by the formula

      A × B

      where

      A
      is that tax, and
      B
      is the extent (expressed as a percentage) to which the property is used by the body during the lease period, or the services were acquired or imported by the body for consumption, use or supply, in the course of activities engaged in by the body through the branch or division, and
    • (e) where all or any portion of the amount determined under paragraph (d) was included in determining an input tax credit claimed by the body in a return under section 238 for a reporting period of the body ending before the particular reporting period, that amount or portion thereof shall be added in determining the net tax for the particular reporting period.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1990, c. 45, s. 12
  • 1993, c. 27, s. 13
  • 1994, c. 9, s. 3

Marginal note:Supply by small supplier division

  •  (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.

  • Marginal note:Restriction on input tax credits for purchases

    (2) In determining an input tax credit of a public service body, there shall not be included an amount in respect of tax that, at any time after March 27, 1991, became payable, or was paid without having become payable, by the body, to the extent that the tax

    • (a) is in respect of property (other than capital property or improvements thereto) acquired, imported or brought into a participating province by the body for the purpose of consumption, use or supply in the course of activities engaged in by the body through a small supplier division of the body; or

    • (b) is calculated on consideration, or a part thereof, that is reasonably attributable to services that were, before that time, consumed, used or supplied by the body in the course of activities engaged in by the body through a small supplier division of the body or that are, at that time, intended to be so consumed, used or supplied.

  • (3) [Repealed, 1997, c. 10, s. 151]

  • Marginal note:Change in use of non-capital property

    (4) Where

    • (a) at any time after March 27, 1991, a public service body that is a registrant begins to hold property of the body (other than capital property) for consumption, use or supply primarily in the course of activities engaged in by the body through its small supplier divisions, and

    • (b) immediately before that time, the body was holding the property for consumption, use or supply

      • (i) in the course of commercial activities of the body, and

      • (ii) otherwise than primarily in the course of activities engaged in by the body through its small supplier divisions,

    except where subsection 129(6) or 171(3) applies, the body shall be deemed to have made, immediately before that time, a supply of the property and, except where the supply is an exempt supply, to have collected, immediately before that time, tax in respect of the supply equal to the total of all input tax credits in respect of the property that the body was entitled to claim at or before that time.

  • Marginal note:Idem

    (5) Where

    • (a) a public service body begins, at any time after March 27, 1991, to hold property of the body (other than capital property) for consumption, use or supply primarily in the course of activities engaged in by the body otherwise than through its small supplier divisions,

    • (b) immediately before that time the property was held by the body for consumption, use or supply primarily in the course of activities engaged in by the body through its small supplier divisions, and

    • (c) immediately after that time the property is held by the body for consumption, use or supply in the course of commercial activities engaged in by the body otherwise than through its small supplier divisions,

    except where subsection 171(1) applies, for the purpose of determining an input tax credit of the body, it shall be deemed to have received a supply of the property and to have paid, at that time, tax in respect of the supply equal to the lesser of

    • (d) the amount, if any, by which

      • (i) the total of all amounts each of which is tax that, before that time, was paid or became payable by the body in respect of the last acquisition or importation of the property by the body or that was deemed under subsection 129(6) to have been collected by the body in respect of the property

      exceeds

      • (ii) the total of all input tax credits and rebates that the body was entitled to claim under this Part before that time in respect of that acquisition or importation, and

    • (e) tax calculated on the fair market value of the property at that time.

  • Marginal note:Use of capital property

    (6) For the purposes of determining an input tax credit in respect of capital property of a public service body and for the purposes of Subdivision D of Division II, an activity engaged in by a public service body shall be deemed not to be a commercial activity of the body to the extent that the activity is engaged in through a small supplier division of the body.

  • Marginal note:Application of change in use rules

    (7) Subsections 200(2) and 206(4) and (5) do not apply to a public service body in respect of a reduction in the extent to which property is used in commercial activities of the body where the reduction in use occurs

    • (a) before March 28, 1991; and

    • (b) as a result of the application of subsection (6) but not as a result of a branch or division of the body becoming a small supplier division.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1993, c. 27, s. 13
  • 1997, c. 10, s. 151
  • 2007, c. 18, s. 4
 
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