Bill C-62: An Act to amend the Excise Tax Act

Second Session, Fortieth Parliament, 57-58 Elizabeth II, 2009 STATUTES OF CANADA 2009CHAPTER 32 An Act to amend the Excise Tax Act ASSENTED TO 15th DECEMBER, 2009 BILL C-62 RECOMMENDATION Her Excellency the Governor General recommends to the House of Commons the appropriation of public revenue under the circumstances, in the manner and for the purposes set out in a measure entitled “An Act to amend the Excise Tax Act”. SUMMARY This enactment amends the Excise Tax Act (the “Act”) to implement, effective July 1, 2010, the new fully harmonized value-added tax framework in Ontario and British Columbia. It also facilitates the new framework to accommodate any province’s decision to have the provincial component of the harmonized value-added tax under the Act apply in that province by achieving a common understanding with Canada in respect of such a new framework, including the provision of rules and mechanisms to ensure (a) the proper imposition of the provincial component of the harmonized value-added tax in respect of that province; (b) the proper application of any element of provincial tax policy flexibility contemplated under the common understanding, including rate flexibility for the provincial component of the harmonized value-added tax, rebate flexibility in respect of the provincial component of the harmonized value-added tax and the temporary recapture of certain input tax credits in respect of the provincial component of the harmonized value-added tax; (c) the proper functioning and application of the Act in all respects, including provisions flowing from the provincial tax policy flexibility contemplated under the common understanding and the addition of every province that chooses to join the new framework; and (d) the proper administration and enforcement of, and compliance with, the Act. Also available on the Parliament of Canada Web Site at the following address:http://www.parl.gc.ca .vis1 {position: absolute;display:block;} .vis2 {position: static;} 57-58 ELIZABETH II —————— CHAPTER 32 An Act to amend the Excise Tax Act [Assented to 15th December, 2009] Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows: SHORT TITLE Short title 1. This Act may be cited as the Provincial Choice Tax Framework Act. R.S., c. E-15 EXCISE TAX ACT 2. (1) The definitions “participating prov- ince” and “tax rate” in subsection 123(1) of the Excise Tax Act are replaced by the following: “participating province”« province participante » “participating province” means (a) a province or area referred to in Schedule VIII, but does not include the Nova Scotia offshore area or the Newfoundland offshore area except to the extent that offshore activities are carried on in that area, and (b) if there is a sales tax harmonization agreement with the government of a province relating to the new harmonized value-added tax system and the province is a prescribed province, that province; “tax rate”« taux de taxe » “tax rate”, for or in relation to a participating province, means (a) if there is a sales tax harmonization agreement with the government of the participating province relating to the new harmonized value-added tax system, the rate that is prescribed for the participating prov- ince, (b) if the participating province is an offshore area referred to in the definition “participating province”, the rate that is prescribed for the participating province, and (c) in the absence of a rate that is prescribed for the participating province, the rate set opposite the name of the participating province in Schedule VIII; (2) The portion of paragraph (b) of the definition “basic tax content” in subsection 123(1) of the Act before the first formula is replaced by the following: (b) if the person brought the property into a participating province from another province for consumption, use or supply in the participating province in circumstances in which the person was required to pay tax in respect of the property under section 220.05, or would have been required to pay that tax but for the fact that the property was brought into that province for consumption, use or supply exclusively in commercial activities or the person was exempt from paying that tax under any other Act or law, the amount determined by the formula (3) Paragraph (d) of the definition “direct cost” in subsection 123(1) of the Act is replaced by the following: (d) if the property was brought into a participating province from another province, any tax under this Part payable by the supplier in respect of the bringing in of the property into the participating province, and (4) Subsection 123(1) of the Act is amended by adding the following in alphabetical order: “harmonization date”« date d’harmonisation » “harmonization date” for a participating prov- ince means (a) April 1, 1997 in the case of Nova Scotia, New Brunswick, Newfoundland and Labrador, the Nova Scotia offshore area or the Newfoundland offshore area, (b) July 1, 2010 in the case of Ontario or British Columbia, and (c) the prescribed date in the case of another participating province; “new harmonized value-added tax system”« nouveau régime de la taxe à valeur ajoutée harmonisée » “new harmonized value-added tax system” has the same meaning as in subsection 277.1(1); “sales tax harmonization agreement”« accord d’harmonisation de la taxe de vente » “sales tax harmonization agreement” has the same meaning as in subsection 2(1) of the Federal-Provincial Fiscal Arrangements Act; (5) Subsections (1) to (4) come into force, or are deemed to have come into force, on July 1, 2010. 3. (1) Section 132.1 of the Act is amended by adding the following after subsection (2): Permanent establishment in a province (3) A prescribed person, or a person of a prescribed class, is deemed, under prescribed circumstances and for prescribed purposes, to have a permanent establishment in a prescribed province. (2) Subsection (1) applies in respect of any fiscal year of a person that ends on or after July 1, 2008. 4. (1) Subsection 149(5) of the Act is amended by striking out “and” at the end of paragraph (e), by adding “and” at the end of paragraph (f) and by adding the following after paragraph (f): (g) a prescribed person, or a person of a prescribed class, but only where the person would be a selected listed financial institution for a reporting period in a fiscal year that ends in a taxation year of the person if the person were a listed financial institution included in subparagraph 149(1)(a)(ix) during the taxation year and the preceding taxation year of the person. (2) Subsection (1) applies in respect of any taxation year of a person that ends on or after July 1, 2008. 5. (1) Subsection 169(3) of the Act is amended by striking out “or” at the end of paragraph (a), by adding “or” at the end of paragraph (b) and by adding the following after paragraph (b): (c) the amount is a prescribed amount. (2) Subsection (1) applies in respect of any reporting period of a person that ends on or after July 1, 2010. 6. (1) Subclause (I) of the description of A in clause 173(1)(d)(ii)(B) of the French version of the Act is replaced by the following: (I) si l’un ou l’autre des faits suivants s’avère : 1. l’avantage est à inclure, en application des alinéas 6(1)a) ou e) de la Loi de l’impôt sur le revenu, dans le calcul du revenu du particulier tiré d’une charge ou d’un emploi et le dernier établissement de l’employeur auquel le particulier travaillait ou se présentait habituellement au cours de l’année dans le cadre de cette charge ou de cet emploi est situé dans une province participante, 2. l’avantage est à inclure, en application du paragraphe 15(1) de cette loi, dans le calcul du revenu du particulier et celui-ci réside dans une province participante à la fin de l’année, la somme de 4 % et du pourcentage déterminé selon les modalités réglementaires relativement à la province ou, en l’absence d’un tel pourcentage, la somme de 4 % et du taux de taxe applicable à la province, (2) The portion of subclause (I) of the description of A in clause 173(1)(d)(vi)(B) of the English version of the Act after sub-subclause 2 is replaced by the following: the total of 4% and the percentage determined in prescribed manner in respect of the participating prov- ince or, in the absence of a percentage determined in prescribed manner in respect of the participating province, the total of 4% and the tax rate for the participating province, and (3) Subsections (1) and (2) come into force, or are deemed to have come into force, on July 1, 2010. 7. (1) Subparagraph (i) of the description of B in paragraph 174(e) of the French version of the Act is replaced by the following: (i) dans les circonstances prévues par règlement relativement à une province participante, le pourcentage déterminé selon les modalités réglementaires, (2) Subparagraph (i) of the description of B in paragraph 174(f) of the English version of the Act is replaced by the following: (i) in prescribed circumstances relating to a participating province, the percent- age determined in prescribed manner, and (3) Subsections (1) and (2) apply to any allowance paid by a person on or after July 1, 2010. 8. (1) Section 178.3 of the Act is amended by adding the following after subsection (6): Adjustment in respect of participating provinces (6.1) In determining the net tax of a direct seller for a reporting period of the direct seller that includes a prescribed time, the direct seller shall add or may deduct, as the case may require, an amount determined in prescribed manner if (a) the direct seller makes a supply in a participating province of an exclusive product of the direct seller in circumstances in which an amount is required under paragraph (1)(d) to be added in determining the net tax of the direct seller; (b) tax payable under subsection 165(2) in respect of the supply is included in the amount required under paragraph (1)(d) to be added in determining the net tax of the direct seller; (c) an independent sales contractor of the direct seller makes a supply of the exclusive product in another participating province; and (d) prescribed conditions, if any, are satisfied. (2) Subsection (1) applies in respect of any reporting period of a direct seller that ends on or after July 1, 2010. 9. (1) Section 178.4 of the Act is amended by adding the following after subsection (6): Adjustment in respect of participating provinces (6.1) In determining the net tax of a distributor of a direct seller for a reporting period of the distributor that includes a prescribed time, the distributor shall add or may deduct, as the case may require, an amount determined in prescribed manner if (a) the distributor makes a supply of an exclusive product of the direct seller in a participating province in circumstances in which an amount is required under paragraph (1)(d) to be added in determining the net tax of the distributor; (b) tax payable under subsection 165(2) in respect of the supply is included in the amount required under paragraph (1)(d) to be added in determining the net tax of the distributor; (c) a particular independent sales contractor of the direct seller (other than the distributor) makes a supply of the exclusive product in another participating province; and (d) prescribed conditions, if any, are satisfied. (2) Subsection (1) applies in respect of any reporting period of a distributor of a direct seller that ends on or after July 1, 2010. 10. (1) Sub-subclause (I)1 of the description of A in subparagraph 183(6)(a)(ii) of the Act is replaced by the following: 1. the property is situated in a participating province at the partic- ular time, it was seized or repossessed before the day that is three years after the harmonization date for that province and tax would not have been payable had the property been purchased in Canada from the person at the time it was seized or repossessed, or (2) Clause (i)(A) of the description of A in paragraph 183(7)(b) of the French version of the Act is replaced by the following: (A) le créancier a saisi le bien, ou en a repris possession, dans une province participante avant le jour qui suit de trois ans la date d’harmonisation applicable à la province et la fourniture taxable est soit effectuée à l’étranger, soit une fourniture détaxée, (3) Clause (i)(A) of the description of A in paragraph 183(7)(d) of the English version of the Act is replaced by the following: (A) the property was seized or repossessed in a participating province by the creditor before the day that is three years after the harmonization date for that province and the partic- ular supply is either made outside Canada or is a zero-rated supply, or (4) Clause 183(8)(b)(i)(A) of the French version of the Act is replaced by the following: (A) le créancier a saisi le bien, ou en a repris possession, dans une province participante avant le jour qui suit de trois ans la date d’harmonisation applicable à la province et la fourniture taxable est soit effectuée à l’étranger, soit une fourniture détaxée, (5) Clause 183(8)(d)(i)(A) of the English version of the Act is replaced by the following: (A) the property was seized or repossessed in a participating province by the creditor before the day that is three years after the harmonization date for that province and the particular supply is either made outside Canada or is a zero-rated supply, or (6) Subsections (1) to (5) come into force, or are deemed to have come into force, on July 1, 2010. 11. (1) Subclause (A)(I) of the description of A in subparagraph 184(5)(a)(ii) of the Act is replaced by the following: (I) the property is situated in a participating province at the partic- ular time, it was transferred before the day that is three years after the harmonization date for that prov- ince and tax would not have been payable had the property been purchased in Canada from the person at the time it was transferred, or (2) Clause (i)(A) of the description of A in paragraph 184(6)(b) of the French version of the Act is replaced by the following: (A) la personne a détenu le bien la dernière fois dans une province participante avant de le transférer à l’assureur, le bien a été ainsi transféré avant le jour qui suit de trois ans la date d’harmonisation applicable à la province et la fourniture taxable est soit effectuée à l’étranger, soit une fourniture détaxée, (3) Clause (i)(A) of the description of A in paragraph 184(6)(d) of the English version of the Act is replaced by the following: (A) the property was last held by the person in a participating province before being transferred to the insurer, the property was so transferred before the day that is three years after the harmonization date for that province and the particular supply is either made outside Canada or is a zero-rated supply, or (4) Clause 184(7)(b)(i)(A) of the French version of the Act is replaced by the following: (A) la personne a détenu le bien la dernière fois dans une province participante avant de le transférer à l’assureur, le bien a été ainsi transféré avant le jour qui suit de trois ans la date d’harmonisation applicable à la province et la fourniture taxable est soit effectuée à l’étranger, soit une fourniture détaxée, (5) Clause 184(7)(d)(i)(A) of the English version of the Act is replaced by the following: (A) the property was last held by the person in a participating province before being transferred to the insurer, the property was so transferred before the day that is three years after the harmonization date for that province and the particular supply is either made outside Canada or is a zero-rated supply, or (6) Subsections (1) to (5) come into force, or are deemed to have come into force, on July 1, 2010. 12. (1) Subsection 196(2) of the Act is replaced by the following: Intended and actual use (2) For the purposes of this Part, if a person at any time brings capital property of the person into a particular participating province from another province and the person was using the property to a particular extent in a particular way immediately after the property or a portion of the property was last acquired, imported or brought into a participating province by the person, the person is deemed to bring it into the particular participating province for use to the particular extent in the particular way. (2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2010. 13. (1) The description of A in paragraph 202(4)(b) of the Act is amended by striking out “and” at the end of subparagraph (ii) and by replacing subparagraph (iii) with the following: (iii) in the case of an acquisition or importation in respect of which tax is payable under subsection 165(2), section 212.1 or subsection 218.1(1) calculated at the tax rate for a participating province, the amount determined by the formula G/H where G is the total of the rate set out in subsection 165(1) and the tax rate for the participating province, and H is the total of 100% and the percent- age determined for G, and (iv) in any other case, the amount determined by the formula I/J where I is the rate determined in prescribed manner, and J is the total of 100% and the percent- age determined for I, and (2) Subsection (1) applies to any taxation year of a registrant that ends on or after July 1, 2010. 14. (1) Subsection 218.1(1) of the Act is replaced by the following: Tax in participating province 218.1 (1) Subject to this Part, (a) every person that is resident in a participating province and is the recipient of an imported taxable supply that is a supply of intangible personal property or a service that is acquired by the person for consumption, use or supply in participating provinces to an extent that is prescribed, shall, for each time an amount of consideration for the supply becomes due or is paid without having become due and for each participating province, pay to Her Majesty in right of Canada, in addition to the tax imposed by section 218, tax equal to the amount determined by the formula A × B × C where A      is the tax rate for the participating province, B      is the value of that consideration that is paid or becomes due at that time, and C      is the extent (expressed as a percentage) to which the person acquired the property or service for consumption, use or supply in the participating province; and (b) every person that (i) is a registrant and is the recipient of a supply, included in paragraph (b) of the definition “imported taxable supply” in section 217, of property the physical possession of which is transferred to the registrant in a particular participating province, (ii) is the recipient of a supply, included in any of paragraphs 217(b.1) to (b.3), of property that is delivered or made available to the person in a particular participating province and is either resident in that province or is a registrant, or (iii) is the recipient of a supply that is included in paragraph 217(c.1), (d) or (e) and that is made in a particular participating province shall pay to Her Majesty in right of Canada, each time an amount of consideration for the supply becomes due or is paid without having become due, in addition to the tax imposed by section 218, tax equal to the amount determined by the formula A × B × C where A      is the tax rate for the particular participating province, B      is the value of that consideration that is paid or becomes due at that time, and C      is (A) in the case of an imported taxable supply of tangible personal property, 100%, and (B) in any other case, the extent (expressed as a percentage) to which the person acquired the property or service for consumption, use or supply in the particular participating province. (2) Subsection 218.1(2) of the Act is amended by striking out “or” at the end of paragraph (a), by adding “or’’ at the end of paragraph (b) and by adding the following after paragraph (b): (c) is a prescribed amount. (3) Subsections (1) and (2) come into force, or are deemed to have come into force, on July 1, 2010. 15. (1) The definition “specified provincial tax” in section 220.01 of the Act is amended by striking out “and” at the end of paragraph (b), by adding “and” at the end of paragraph (c) and by adding the following after paragraph (c): (d) in the case of a vehicle registered in any other participating province, a prescribed tax. (2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2010. 16. (1) Section 220.04 of the Act is replaced by the following: Selected listed financial institutions 220.04 If tax under this Division would, in the absence of this section, become payable by a person when the person is a selected listed financial institution, that tax is not payable unless it is a prescribed amount of tax. (2) Subsection (1) applies in respect of tax under Division IV.1 of the Act that would, in the absence of section 220.04 of the Act, as enacted by subsection (1), become payable on or after July 1, 2010. 17. (1) Subsection 220.05(1) of the Act is replaced by the following: Tax in participating province 220.05 (1) Subject to this Part, if at a particular time a person brings tangible personal property into a participating province from another province, the person shall pay tax to Her Majesty in right of Canada equal to the amount determined in prescribed manner. (2) Subsection 220.05(3) of the Act is replaced by the following: Non-taxable property (3) No tax is payable under subsection (1) (a) in respect of property that is included in Part I of Schedule X and is not prescribed property; or (b) in prescribed circumstances. (3) Subsections (1) and (2) come into force, or are deemed to have come into force, on July 1, 2010. 18. (1) Subsection 220.06(3) of the Act is replaced by the following: Non-taxable property (3) No tax is payable under subsection (1) (a) in respect of property that is a specified motor vehicle that is required to be registered under the laws of a participating province relating to the registration of motor vehicles, or that is included in Part I of Schedule X and is not prescribed property; or (b) in prescribed circumstances. (2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2010. 19. (1) Subsection 220.08(1) of the Act is replaced by the following: Tax in participating province 220.08 (1) Subject to this Part, every person that is resident in a participating province and is the recipient of a taxable supply made in a particular province of intangible personal property or a service that is acquired by the person for consumption, use or supply in whole or in part in any participating province that is not the particular province shall pay to Her Majesty in right of Canada, each time an amount of consideration for the supply becomes due or is paid without having become due, tax equal to the amount determined in prescribed manner. (2) Subsection 220.08(3) of the Act is replaced by the following: Non-taxable supplies (3) No tax is payable under subsection (1) (a) in respect of a supply of intangible personal property or a service that is included in Part II of Schedule X and is not a prescribed supply; or (b) in prescribed circumstances. (3) Subsections (1) and (2) come into force, or are deemed to have come into force, on July 1, 2010. 20. (1) Paragraph (b) of the description of A in subsection 225.2(2) of the Act is replaced by the following: (b) all amounts each of which is tax under subsection 165(1) in respect of a supply (other than a supply to which paragraph (c) applies) made by a person (other than a prescribed person or a person of a prescribed class) to the financial institution that would, in the absence of an election made under section 150, have become payable by the financial institution during the particular reporting period, and (2) Subsection 225.2(4) of the Act is replaced by the following: Election (4) If a person, other than a prescribed person or a person of a prescribed class, and a selected listed financial institution have made jointly an election under section 150, the person and the financial institution may make jointly an election under this subsection to have paragraph (c) of the description of A in subsection (2) apply to every supply to which subsection 150(1) applies that is made by the person to the financial institution at a time the election made under this subsection is in effect. (3) The portion of subsection 225.2(5) of the English version of the Act before paragraph (a) is replaced by the following: Form and manner of filing (5) An election under subsection (4) relating to supplies made by a person to a selected listed financial institution shall (4) Paragraph 225.2(6)(c) of the Act is replaced by the following: (c) the day the person becomes a prescribed person, or a person of a prescribed class, for the purposes of subsection (4), and (5) Section 225.2 of the Act is amended by adding the following after subsection (8): Regulations — selected listed financial institutions (9) The Governor in Council may make regulations (a) requiring any person or any class of persons to provide to a person any information that is required to allow a selected listed financial institution to determine the value of an element of a formula in subsection (2) or 237(5) or in any other provision of this Part or of a regulation made under this Part, specifying what information is to be prov- ided, prescribing compliance measures in respect of that provision of information, and prescribing joint and several, or solidary, liability or penalties for failing to provide that information when and as required; (b) allowing a person and a selected listed financial institution to make an election in respect of the filing of the returns of the person or the financial institution, specifying the circumstances in which that election may be revoked, prescribing compliance measures or other requirements in respect of that filing, and prescribing joint and several, or solidary, liability or penalties in respect of that filing; or (c) requiring any selected listed financial institution to register under subdivision d for the purposes of this Part or deeming any selected listed financial institution to be a registrant for the purposes of this Part. (6) Subsections (1) to (5) apply in respect of any reporting period of a person that ends on or after July 1, 2010. 21. (1) The Act is amended by adding the following after section 231: No adjustment of provincial component of tax 231.1 The amount of tax under subsection 165(2) in respect of a supply that is equal to the amount in respect of the supply that may be deducted under subsection 234(3) by a person shall not be included in determining the amount that may be deducted or that is required to be added, as the case may be, under section 231 or 232 in determining the net tax of the person for any reporting period of the person. (2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2010. 22. (1) Subsection 234(1) of the Act is replaced by the following: Deduction for rebate 234. (1) If, in the circumstances described in subsection 252.41(2), 254(4), 254.1(4) or 258.1(3) or in circumstances prescribed for the purposes of subsection 256.21(3), a particular person pays to or credits in favour of another person an amount on account of a rebate and transmits the application of the other person for the rebate to the Minister in accordance with subsection 252.41(2), 254(5), 254.1(5), 256.21(4) or 258.1(4), as the case requires, the particular person may deduct the amount in determining the net tax of the particular person for the reporting period in which the amount is paid or credited. (2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2010. 23. (1) The Act is amended by adding the following after section 236: Definitions 236.01 (1) The following definitions apply in this section. “large business”« grande entreprise » “large business” means a prescribed person or a person of a prescribed class. “specified property or service”« bien ou service déterminé » “specified property or service” means a prescribed property or service, or property or a service of a prescribed class. “specified provincial input tax credit”« crédit de taxe sur les intrants provincial déterminé » “specified provincial input tax credit” means (a) the portion of an input tax credit of a large business in respect of a specified property or service that is attributable to tax under subsection 165(2), section 212.1 or 218.1 or Division IV.1 in respect of the acquisition, importation or bringing into a participating province of the specified property or service; and (b) a prescribed amount in respect of an input tax credit of a large business that is attributable to tax under subsection 165(2), section 212.1 or 218.1 or Division IV.1 or in respect of an amount that would be such an input tax credit if prescribed conditions were satisfied in prescribed circumstances. Recapture of specified provincial input tax credits (2) If a sales tax harmonization agreement with the government of a participating province relating to the new harmonized value-added tax system allows for the recapture of input tax credits, in determining the net tax for the reporting period of a large business that includes a prescribed time, the large business shall add all or part, as determined in prescribed manner, of a specified provincial input tax credit of the large business. Deduction of amounts (3) If a sales tax harmonization agreement with the government of a participating province relating to the new harmonized value-added tax system allows for the recapture of input tax credits, in determining the net tax for the reporting period of a large business that includes a prescribed time, the large business may deduct in prescribed circumstances an amount determined in prescribed manner. Simplified method (4) The Governor in Council may make regulations respecting (a) the methods that may be used by a large business to determine the amount that is required to be added under subsection (2) to, or that may be deducted under subsection (3) from, the net tax for a reporting period of the large business, including any conditions for the use of those methods; (b) the reporting and accounting for such an amount; and (c) compliance measures, including penalties, or other measures and requirements in respect of such an amount. (2) Subsection (1) applies in respect of any reporting period of a person that ends on or after July 1, 2010. 24. (1) Paragraph (b) of the description of A in subsection 236.2(2) of the Act is replaced by the following: (b) the total of all amounts each of which is the product obtained when the consideration paid or payable by the registrant for a supply made in a participating province of an item of inventory acquired by the registrant in the year that is a zero-rated supply only because it is included in section 1.1 of Part V of Schedule VI, other than a supply in respect of which the registrant is required under subsection (1) to add an amount in determining net tax for any reporting period, is multiplied by the total of the rate set out in subsection 165(1) and the tax rate for that participating province, and (2) Subsection (1) applies in respect of any supply made on or after July 1, 2010. 25. (1) Paragraph (b) of the description of A in subsection 236.3(2) of the Act is replaced by the following: (b) the total of all amounts each of which is the product obtained when the consideration paid or payable by the registrant for a supply made in a participating province of property acquired by the registrant in the year that is a zero-rated supply only because it is included in section 1.2 of Part V of Schedule VI, other than a supply in respect of which the registrant is required under subsection (1) to add an amount in determining net tax for any reporting period, is multiplied by the total of the rate set out in subsection 165(1) and the tax rate for that participating province, and (2) Subsection (1) applies in respect of any supply made on or after July 1, 2010. 26. (1) The description of F in subsection 253(1) of the Act is replaced by the following: F      is the percentage determined in prescribed manner, and (2) The description of H in subsection 253(1) of the Act is replaced by the following: H      is the total of the rate set out in subsection 165(1) and the percentage determined in prescribed manner, and (3) The description of E in subparagraph 253(2)(a)(ii) of the Act is replaced by the following: E      is the percentage determined in prescribed manner, and (4) The description of G in subparagraph 253(2)(a)(ii) of the Act is replaced by the following: G      is the total of the rate set out in subsection 165(1) and the percent- age determined in prescribed manner, and (5) The description of E in subparagraph 253(2)(c)(ii) of the Act is replaced by the following: E      is the percentage determined in prescribed manner, and (6) The description of G in subparagraph 253(2)(c)(ii) of the Act is replaced by the following: G      is the total of the rate set out in subsection 165(1) and the percent- age determined in prescribed manner, and (7) Subsections (1) to (6) apply to any rebate in respect of 2010 and subsequent years. 27. (1) The portion of subsection 256(2.1) of the Act after paragraph (d) is replaced by the following: the Minister shall, subject to subsection (3), pay a rebate to the particular individual, in addition to the rebate, if any, payable under subsection (2) to the particular individual, equal to the amount determined in prescribed manner or, if no manner is prescribed, the lesser of $1,500 and 18.75% of the total tax in respect of the province paid by the particular individual. (2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2010. 28. (1) The Act is amended by adding the following after section 256.2: Housing rebates — participating provinces 256.21 (1) If a sales tax harmonization agreement with the government of a participating province allows for rebates in respect of residential property relating to the new harmonized value-added tax system in respect of that participating province, the Minister shall pay in prescribed circumstances a rebate in respect of prescribed property to a prescribed person, or a person of a prescribed class, equal to an amount determined in prescribed manner. Application for rebate (2) A rebate in respect of an amount shall not be paid under subsection (1) to a person unless the person files an application for the rebate within the prescribed time. Payment or credit of rebates (3) In the case of a rebate under subsection (1) (other than a rebate prescribed under subsection (6)), in prescribed circumstances, a prescribed person, or a person of a prescribed class, may pay or credit the amount of a rebate under subsection (1) to an individual of a prescribed class if the individual submits to the person in prescribed manner an application in prescribed form containing prescribed information. Forwarding of application (4) If an application in respect of a rebate is submitted to a person under subsection (3) (a) the person shall transmit the application to the Minister in prescribed manner on or before the day on or before which the person’s return under Division V for the reporting period in which the rebate is paid or credited is required to be filed; and (b) interest under subsection 297(4) is not payable in respect of the rebate. Joint and several liability — subsection (3) (5) If a particular person pays or credits an amount of a rebate to another person under subsection (3), and the particular person knows or ought to know that the other person is not entitled to the rebate or that the amount paid or credited exceeds the rebate to which the other person is entitled, the particular person and the other person are jointly and severally, or solidarily, liable to pay the amount of the rebate or excess to the Receiver General under section 264. Assignment (6) In the case of a rebate that is payable under subsection (1) in relation to the transition of a province to the new harmonized value-added tax system and that is prescribed for the purposes of this subsection, a person that is prescribed for the purposes of subsection (1) may, despite section 67 of the Financial Administration Act and any other provision of a law of Canada or a province, assign the rebate in prescribed circumstances to a prescribed person or a person of a prescribed class. Form and manner of assignment (7) An assignment made under subsection (6) of a rebate in respect of a participating province shall be made in prescribed form containing prescribed information and the form shall be filed with the Minister in prescribed manner on or before the day that is four years after the harmonization date for the participating province. Effect of assignment (8) An assignment made under subsection (6) is not binding on Her Majesty in right of Canada and, without limiting the generality of the foregoing, (a) the Minister is not required to pay to the assignee the assigned amount; (b) the assignment does not create any liability of Her Majesty in right of Canada to the assignee; and (c) the rights of the assignee are subject to all equitable and statutory rights of set-off in favour of Her Majesty in right of Canada. Joint and several liability — subsection (6) (9) If an amount of a rebate is assigned to a particular person by another person under subsection (6) and the particular person knows or ought to know that the other person is not entitled to the rebate or that the amount assigned exceeds the rebate to which the other person is entitled, the particular person and the other person are jointly and severally, or solidarily, liable to pay the amount of the rebate or excess to the Receiver General under section 264. Assessment (10) The Minister may at any time assess an assignee in respect of any amount payable by reason of subsection (9) and sections 296 to 311 apply with any modifications that the circumstances may require. (2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2010. 29. (1) The definition “specified provincial percentage” in subsection 259(1) of the Act is amended by striking out “and” at the end of paragraph (e) and by replacing paragraph (f) with the following: (f) despite any of paragraphs (a) to (e), if there is a sales tax harmonization agreement with the government of a participating province that allows for rebates in respect of public service bodies relating to the new harmonized value-added tax system in respect of the participating province and if the participating province is prescribed for the purposes of this paragraph, in the case of a person of a prescribed class resident in the participating province, the prescribed per- centage for that class in respect of the participating province, and (g) in any other case, 0%; (2) Paragraph 259(3)(b) of the Act is replaced by the following: (b) in the case of a person of a prescribed class resident in a participating province, the amount determined in prescribed manner for the purpose of the new harmonized value-added tax system or, in any other case, the amount equal to the specified provincial percentage of the non-creditable tax charged in respect of property or a service (other than a prescribed property or service) for the claim period. (3) The portion of paragraph 259(4)(b) of the Act before the formula is replaced by the following: (b) in the case of a person of a prescribed class resident in a participating province, the amount determined in prescribed manner for the purpose of the new harmonized value-added tax system or, in any other case, all amounts, each of which is an amount determined by the formula (4) The portion of subsection 259(4.1) of the Act before paragraph (a) is replaced by the following: Apportionment of rebate (4.1) Subject to subsections (4.2) and (4.21), if a person is a charity, a public institution or a qualifying non-profit organization, and is a selected public service body, the rebate, if any, payable to the person under subsection (3) or (4) in respect of property or a service for a claim period is equal to, in the case of a person of a prescribed class resident in a participating province, the amount determined in prescribed manner for the purpose of the new harmonized value-added tax system and, in any other case, the total of (5) Subsections (1) to (4) apply for the purposes of determining a rebate under section 259 of the Act of a person for claim periods ending on or after July 1, 2010, except that the rebate shall be determined as if those subsections had not come into force for the purposes of determining a rebate of a person for the claim period that includes that day in respect of (a) an amount of tax that became payable by the person before that day; (b) an amount that is deemed to have been paid or collected by the person before that day; or (c) an amount that is required to be added in determining the person’s net tax (i) as a result of a branch or division of the person becoming a small supplier before that day, or (ii) as a result of the person ceasing before that day to be a registrant. 30. (1) Subsection 259.1(6) of the Act is repealed. (2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2010. 31. (1) Subsection 261.1(1) of the Act is replaced by the following: Rebate in respect of goods removed from a participating province 261.1 (1) If a supply by way of sale of property that is tangible personal property (other than property included in paragraph 252(1)(a) or (c)), a mobile home or a floating home is made in a particular participating province to a person that is resident in Canada, if the person removes the property from the participating province to another province within thirty days after it is delivered to the person and if prescribed conditions are satisfied, the Minister shall, subject to section 261.4, pay a rebate to the person equal to the amount determined in prescribed manner. (2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2010. 32. (1) Section 261.2 of the Act is replaced by the following: Rebate in respect of goods imported at a place in a province 261.2 If a person that is resident in a particular participating province pays tax under subsection 212.1(2) in respect of property that the person imports at a place in another province for consumption or use exclusively in any province (other than the particular participating province) and if prescribed conditions are satisfied, the Minister shall, subject to section 261.4, pay a rebate to the person equal to the amount determined in prescribed manner. (2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2010. 33. (1) Subsection 261.3(1) of the Act is replaced by the following: Rebate in respect of intangible personal property or services supplied in a participating province 261.3 (1) If a person that is resident in Canada is the recipient of a supply made in a participating province of intangible personal property or a service that is acquired by the person for consumption, use or supply in whole or in part outside the participating province and if prescribed conditions are satisfied, the Minister shall, subject to section 261.4, pay a rebate to the person equal to the amount determined in prescribed manner. (2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2010. 34. (1) Subsection 261.31(2) of the Act is replaced by the following: Rebate for management services supplied to investment plans, etc. (2) If a listed financial institution described in subparagraph 149(1)(a)(vi) or (ix), other than a selected listed financial institution, is the recipient of a supply of a specified service, tax under subsection 165(2), 218.1(1) or 220.08(1) is payable in respect of the supply and prescribed conditions are satisfied, the Minister shall, subject to section 261.4, pay a rebate to the financial institution equal to the amount determined in prescribed manner. (2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2010. 35. (1) Section 261.4 of the Act is amended by adding “and” at the end of paragraph (c) and by replacing paragraphs (d) and (e) with the following: (d) prescribed circumstances, if any, exist. (2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2010. 36. (1) The portion of subsection 272.1(2) of the Act before paragraph (b) is replaced by the following: Acquisitions by member (2) Despite subsection (1), if property or a service is acquired, imported or brought into a participating province by a member of a partnership for consumption, use or supply in the course of activities of the partnership but not on the account of the partnership, the following rules apply: (a) except as otherwise provided in subsection 175(1), the partnership is deemed (i) not to have acquired or imported the property or service, and (ii) where the property was brought by the member into a participating province, not to have so brought it into that province; (2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2010. 37. (1) Section 277.1 of the Act is replaced by the following: Definition of “new harmonized value-added tax system” 277.1 (1) In this section, “new harmonized value-added tax system” means the system under this Part and Schedules V to X providing for the payment, collection and remittance of tax imposed under any of subsection 165(2) and sections 212.1, 218.1 and 220.05 to 220.08 and of amounts paid as or on account of that tax and the provisions of this Part relating to tax under those provisions or to input tax credits, rebates or refunds in respect of any such tax, or any such amounts, paid or deemed to be paid. New harmonized value-added tax system regulations — transition (2) The Governor in Council may make regulations, in relation to the transition by a province to the new harmonized value-added tax system, (a) prescribing rules in respect of whether, how and when that system applies and rules in respect of other aspects relating to the application of that system in relation to the province, including (i) rules that apply for the purpose of determining the amount of instalment payments under section 237, (ii) circumstances in which an election under this Part may be made or revoked at an earlier time than would otherwise be permitted under this Part, and (iii) rules deeming, in specified circumstances and for specified purposes, the status of anything to be different than what it would otherwise be, including when tax or consideration became due or was paid or collected, when property was delivered or made available, when a service was performed and when tax is required to be reported and accounted for; (b) respecting information that must be included by a specified person in a written agreement or other document in respect of a specified supply of real property and prescribing tax consequences in respect of such a supply, and penalties, for failing to do so or for providing incorrect information; (c) deeming, in specified circumstances, a specified person to have collected a specified amount of tax, or to have paid a specified amount of tax, for specified purposes, as a consequence of making a supply by way of sale in respect of a residential complex; (d) prescribing rules under which a person of a specified class that is the recipient of a specified supply in respect of real property is required to report and account for tax that is payable under subsection 165(2) in respect of that supply; (e) prescribing compliance measures, including anti-avoidance rules; and (f) generally to effect the transition to, and implementation of, that system in relation to the province. New harmonized value-added tax system regulations — provincial tax policy flexibility (3) The Governor in Council may make regulations (a) prescribing rules in respect of whether, how and when a change in the tax rate for a participating province applies and rules in respect of a change to another parameter affecting the application of the new harmonized value-added tax system in relation to a participating province (in this subsection any such change in the tax rate or to another parameter is referred to as the “provincial tax policy flexibility”), including (i) rules that apply for the purpose of determining the amount of instalment payments under section 237, (ii) circumstances in which an election under this Part may be made or revoked at an earlier time than would otherwise be permitted under this Part, and (iii) rules deeming, in specified circumstances and for specified purposes, the status of anything to be different than what it would otherwise be, including when tax or consideration became due or was paid or collected, when property was delivered or made available, when a service was performed and when tax is required to be reported and accounted for; (b) if an amount is to be determined in prescribed manner in relation to the new harmonized value-added tax system, specifying the circumstances or conditions under which the manner applies; (c) providing for rebates, refunds, adjustments or credits relating to the provincial tax policy flexibility; (d) specifying circumstances and any terms or conditions that must be met for the payment of rebates in respect of the provincial tax policy flexibility; (e) prescribing amounts and rates to be used to determine any rebate, refund, adjustment or credit that relates to, or is affected by, the new harmonized value-added tax system, excluding amounts that would otherwise be included in determining any such rebate, refund, adjustment or credit, and specifying circumstances under which any such rebate, refund, adjustment or credit shall not be paid or made; (f) amending the definition “basic tax content” in subsection 123(1) to take into account the provincial tax policy flexibility or the addition of a province to the new harmonized value-added tax system; and (g) prescribing compliance measures, including anti-avoidance rules, in respect of the provincial tax policy flexibility. New harmonized value-added tax system regulations — general (4) For the purpose of facilitating the implementation, application, administration and enforcement of the new harmonized value-added tax system or the transition by a province to the new harmonized value-added tax system, the Governor in Council may make regulations (a) adapting any provision of this Part, of Schedules V to X or of the regulations made under this Part to the new harmonized value-added tax system or modifying any provision of this Part, Schedules V to X or those regulations to adapt it to the new harmonized value-added tax system; (b) defining, for the purposes of this Part, Schedules V to X or the regulations made under this Part, or any provision of this Part, Schedules V to X or those regulations, in its application to the new harmonized value-added tax system, words or expressions used in this Part, Schedules V to X or those regulations including words or expressions defined in a provision of this Part, Schedules V to X or those regulations; and (c) providing that a provision of this Part, of Schedules V to X or of the regulations made under this Part, or a part of such a provision, does not apply to the new harmonized value-added tax system. Conflict (5) If a regulation made under this Part in respect of the new harmonized value-added tax system states that it applies despite any provision of this Part, in the event of a conflict between the regulation and this Part, the regulation prevails to the extent of the conflict. (2) Subsection (1) is deemed to have come into force on March 26, 2009. 38. (1) Section 278.1 of the Act is amended by adding the following after subsection (2): Mandatory filing of return by electronic transmission (2.1) If a person is, in respect of a reporting period of the person, a prescribed person or a person of a prescribed class, the person shall file its return for the reporting period by way of electronic filing in the manner specified by the Minister for the person. (2) Subsection (1) applies in respect of any return for a reporting period that ends on or after July 1, 2010. 39. The Act is amended by adding the following after section 280.1: Failure to file by electronic transmission 280.11 In addition to any other penalty under this Part, every person that fails to file a return under Division V for a reporting period as required by subsection 278.1(2.1) is liable to a penalty equal to an amount determined in prescribed manner. 40. Paragraph 281.1(2)(b) of the Act is replaced by the following: (b) penalty payable by the person under section 280.1, 280.11 or 284.01 in respect of a return for the reporting period. 41. The Act is amended by adding the following after section 284: Failure to provide information 284.01 Every person that fails to report an amount prescribed by regulation, or to provide information prescribed by regulation, as and when required in a return prescribed by regulation, or that misstates such an amount or such information in such a return, is liable to pay a penalty, in addition to any other penalty under this Part, equal to an amount determined in prescribed manner for each such failure or misstatement by the person. 42. Subsection 326(3) of the Act is replaced by the following: Saving (3) A person that is convicted under this section of failing to comply with a provision of this Part or a regulation made under this Part is not liable to pay a penalty imposed under any of sections 280.1, 280.11 and 283 to 284.01 or under a regulation made under this Part for the same failure, unless a notice of assessment for the penalty was issued before the information or complaint giving rise to the conviction was laid or made. 43. Subsection 327(3) of the Act is replaced by the following: Penalty on conviction (3) A person that is convicted of an offence under this section is not liable to pay a penalty imposed under any of sections 280.1, 280.11 and 283 to 285.1 or under a regulation made under this Part for the same evasion or attempt unless a notice of assessment for that penalty was issued before the information or complaint giving rise to the conviction was laid or made. 44. (1) Schedule VIII to the Act is replaced by the Schedule VIII set out in the schedule to this Act. (2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2010. SCHEDULE (Section 44) SCHEDULE VIII (Subsection 123(1)) PARTICIPATING PROVINCES AND APPLICABLE TAX RATES Participating Province Tax Rate 1. Ontario 8% 2. Nova Scotia 8% 3. New Brunswick 8% 4. British Columbia 7% 5. Newfoundland and Labrador 8% 6. Nova Scotia offshore area 8% 7. Newfoundland offshore area 8% Published under authority of the Speaker of the House of CommonsAvailable from:Publishing and Depository ServicesPublic Works and Government Services Canada