Tax Rebate Discounting Act (R.S.C., 1985, c. T-3)

Act current to 2016-09-18

Tax Rebate Discounting Act

R.S.C., 1985, c. T-3

An Act relating to the discounting of overpayments of tax under the Income Tax Act and related payments

Marginal note:Short title

 This Act may be cited as the Tax Rebate Discounting Act.

  • 1977-78, c. 25, s. 1.
Marginal note:Interpretation
  •  (1) In this Act,

    client

    client

    client means a person from whom a discounter acquires a right to a refund of tax to which that person is entitled; (client)

    discounter

    escompteur

    discounter means a person who acquires, for a consideration, a right to a refund of tax from a person entitled thereto; (escompteur)

    minimum consideration

    contrepartie minimale

    minimum consideration, in relation to a refund of tax, means an amount equal to

    • (a) where the refund of tax is equal to or less than three hundred dollars, eighty-five per cent of the refund of tax, or

    • (b) where the refund of tax is greater than three hundred dollars, two hundred and fifty-five dollars plus ninety-five per cent of the amount by which the refund of tax is greater than three hundred dollars; (contrepartie minimale)

    Minister

    ministre

    Minister means the Minister of National Revenue; (ministre)

    prescribed

    Version anglaise seulement

    prescribed means

    • (a) in the case of a form, the information to be given on a form or the manner of filing a form, authorized by the Minister, and

    • (b) in any other case, prescribed by regulation; (Version anglaise seulement)

    refund of tax

    remboursement d’impôt

    refund of tax means the amount of

    • (a) an overpayment of tax paid or deemed to have been paid under the Income Tax Act or collected pursuant to an agreement entered into under section 7 of the Federal-Provincial Fiscal Arrangements Act, or of tax deemed to have been paid under an Act of the legislature of a province that imposes a tax on income that is collected by the Minister of National Revenue pursuant to such an agreement,

    • (b) a payment to an individual by virtue of an agreement referred to in paragraph (a) that is other than a refund of an overpayment of tax paid or collected,

    • (c) an overpayment of premiums paid under the Employment Insurance Act, or

    • (d) an overpayment of contributions paid under the Canada Pension Plan,

    and any interest paid on any of those overpayments or payments; (remboursement d’impôt)

    return of income

    déclaration du revenu

    return of income means a return of income pursuant to subsection 150(1) of the Income Tax Act. (déclaration du revenu)

  • Marginal note:Where person acquires right to a refund

    (2) For the purposes of this Act, a person acquires a right to a refund of tax where that person, as between himself and another person, acquires a right to a refund of tax or to an amount equal to the amount of a refund of tax, notwithstanding that, by virtue of section 67 of the Financial Administration Act or any provision of any other Act of Parliament or of the legislature of a province, the refund of tax is not assignable.

  • Marginal note:Enforcement of right to refund

    (3) A right to a refund of tax acquired by a discounter from a client is enforceable only between the client and the discounter and nothing in this Act shall be construed as creating any liability between the discounter and Her Majesty.

  • R.S., 1985, c. T-3, s. 2;
  • R.S., 1985, c. 53 (1st Supp.), s. 1;
  • 1992, c. 1, s. 145(F);
  • 1993, c. 27, s. 226;
  • 1995, c. 1, s. 62, c. 17, s. 66;
  • 1996, c. 23, s. 186;
  • 1998, c. 19, s. 299.
Marginal note:Payment to discounter
  •  (1) Where a discounter has acquired a client’s right to a refund of tax, the Minister of National Revenue may pay the amount of the refund to the discounter.

  • Marginal note:Effect of payment to discounter

    (2) A payment of a client’s refund of tax made by the Minister of National Revenue under subsection (1) to a discounter shall be deemed to have been made to the client as a refund of tax at the time the payment was made to the discounter.

  • Marginal note:Deemed trust

    (3) The amount by which the amount of a refund paid under subsection (1) exceeds the total of

    • (a) that portion of the refund that constitutes interest, and

    • (b) the amount estimated to be the client’s refund of tax at the time the right to the refund was acquired

    shall, if it exceeds ten dollars, be deemed to be held in trust for the client by the discounter until such time as it is paid to the client or to the Receiver General.

  • Marginal note:Where bankruptcy, etc., of discounter

    (4) In the event of any liquidation, assignment or bankruptcy of a discounter, the amount deemed by subsection (3) to be held in trust shall be deemed to be separate from and form no part of the estate in liquidation, assignment or bankruptcy, whether or not that amount has in fact been kept separate and apart from the discounter’s own moneys or from the assets of the estate.

  • 1993, c. 24, s. 149.
Marginal note:Limitation of discount
  •  (1) Any discounter who acquires a right to a refund of tax from a client for a consideration that is less than the minimum consideration in relation to the refund of tax is guilty of an offence.

  • Marginal note:Determination of consideration

    (2) For the purposes of determining the consideration paid or provided by a discounter for the acquisition of a right to a refund of tax from a client, the discount charged by the discounter includes the amount of any fee or charge levied or made by the discounter, or by any person not acting at arm’s length (within the meaning of the Income Tax Act) with the discounter, for the service of preparing the client’s return of income or for any other service directly related to the discounting transaction.

  • Marginal note:Defence

    (3) Subsection (1) does not apply where the refund of tax exceeds the amount estimated to be the refund of tax at the time the right to the refund was acquired if

    • (a) the consideration paid for the right at that time was equal to or greater than the minimum consideration calculated as if the amount estimated to be the refund of tax were the refund of tax; and

    • (b) where the refund of tax, calculated for the purposes of this paragraph without reference to any interest on the overpayment or payment making up the refund, exceeds by ten dollars or more the amount estimated to be the refund of tax, the discounter, forthwith after receipt of the refund, pays or makes every reasonable effort to pay to the client the full amount of the excess and, in the event that the excess is not so paid within thirty days thereafter, forthwith remits the excess, together with a true copy of the notice referred to in paragraph 5(b), to the Receiver General to be held on account of any future tax liability of the client or to be paid to the client on application by the client to the Minister of National Revenue.

  • R.S., 1985, c. T-3, s. 3;
  • R.S., 1985, c. 53 (1st Supp.), s. 2;
  • 1999, c. 31, s. 245(F).
Marginal note:Payment and disclosure
  •  (1) Any discounter who does not, at or before the time a right to a refund of tax is acquired from a client,

    • (a) pay by cash or by a cheque or other bill of exchange drawn on a financial institution in Canada that is payable on demand and negotiable in Canada at the time it is given the amount by which

      • (i) the full amount of the minimum consideration for the right based on the estimated refund of tax

      exceeds the total of

      • (ii) any tax imposed under Part IX of the Excise Tax Act that the discounter is required to collect from the client in respect of a taxable supply deemed under section 158 of that Act to have been made by the discounter to the client, and

      • (iii) any tax imposed under An Act respecting the Quebec sales tax and amending various fiscal legislation, being Chapter 67 of the Statutes of Quebec, 1991, that the discounter is required to collect from the client in respect of a taxable supply deemed under section 39 of that Act to have been made by the discounter to the client,

    • (b) provide the client with

      • (i) a statement in prescribed form describing the discounting transaction, and

      • (ii) if the client has so requested, a true copy of the client’s return of income and any related information return, and

    • (c) obtain from the client an address of record for the purposes of section 5,

    is guilty of an offence.

  • Marginal note:Failure to file disclosure statement

    (2) Any discounter who, having acquired from a client a right to a refund of tax, files a client’s return of income on the client’s behalf without

    • (a) including with the return of income, other than a return of income deemed by subsection 150.1(3) of the Income Tax Act to have been filed for the purposes of section 150 of that Act, a true copy of the statement referred to in subparagraph (1)(b)(i) as provided to the client and signed by the client to acknowledge receipt thereof, and

    • (b) providing to such person and within such period of time as the Minister may specify a true copy of the statement referred to in subparagraph (1)(b)(i) as provided to the client and signed by the client to acknowledge receipt thereof,

    is guilty of an offence.

  • R.S., 1985, c. T-3, s. 4;
  • R.S., 1985, c. 53 (1st Supp.), s. 2;
  • 1993, c. 24, s. 150, c. 27, s. 227;
  • 1998, c. 19, s. 300.
 
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