New Harmonized Value-added Tax System Regulations (SOR/2010-117)

Marginal note:Progress payments

51 Despite any other provision of this Part, if a taxable supply is made in a specified province under a contract to construct, renovate, alter or repair real property or a ship or other marine vessel,

• (a) any consideration for the supply that becomes due, or is paid without having become due, after October 14, 2009 and before July 1, 2010 as a progress payment that is required under the contract, or as a holdback from such a progress payment, is deemed, for the purpose of applying subsection 165(2) of the Act, to have become due on July 1, 2010 and not to have been paid before that day;

• (b) no tax is payable under subsection 165(2) of the Act in respect of any part of the consideration for the supply that may reasonably be attributed to property delivered and services performed under the contract before July 1, 2010; and

• (c) where paragraph 168(3)(c) of the Act applies in respect of the supply, tax under subsection 165(2) of the Act is payable in respect of the supply and the construction, renovation, alteration or repair is substantially completed before June 2010, for the purpose of applying subsection 165(2) of the Act, the construction, renovation, alteration or repair is deemed to have been substantially completed on June 1, 2010 and not before that day.

Marginal note:Combined supply

52 Where a particular supply that includes a combination of personal property, real property or a service (each of which in this section is referred to as an “element”) is made in a specified province, the consideration for each element is not separately identified and no tax would, if a particular element that is property the ownership or possession of which is transferred to the recipient before July 1, 2010 were supplied separately, be payable under subsection 165(2) of the Act in respect of that particular element, for the purpose of applying tax under that subsection in respect of the supply, the particular element is deemed to have been supplied separately from all of the other elements.

Marginal note:Adjustments

• 53 (1) If a person pays tax as a consequence of the application of subsection 41(5) or (6), 42(5) or (6), 43(6) or (7), 48(4) or 49(4) calculated on the whole or part of the consideration for a taxable supply and that whole or part is subsequently reduced, to the extent that the person did not claim, and would not be, in the absence of this section, entitled to claim, an input tax credit or a rebate in respect of the portion of the tax payable under subsection 165(2), 218.1(1) or 220.08(1) of the Act that was calculated on the amount by which the whole or part was reduced, that portion is deemed, for the purpose of determining a rebate under section 261 of the Act, to be an amount that was not payable or remittable by the person.

• Marginal note:Application

  (2) Subsection (1) does not apply in circumstances in which section 161 of the Act applies.

Marginal note:Definitions

• 54 (1) In this section, direct seller, distributor, exclusive product and independent sales contractor have the same meanings as in section 178.1 of the Act.

• Marginal note:Exclusive products held on July 1, 2010

  (2) If before July 1, 2010, when an approval of the Minister for the application of section 178.3 of the Act to a direct seller is in effect, the direct seller has made a taxable supply by way of sale (other than a zero-rated supply) of an exclusive product of the direct seller to an independent sales contractor of the direct seller that is not a distributor in respect of which an approval granted under subsection 178.2(4) of the Act on application made jointly with the direct seller is in effect and the independent sales contractor holds, at the beginning of that day, the exclusive product for sale in a specified province, for the purpose of applying subsection 165(2) or 220.05(1) of the Act, the direct seller is deemed to have made, and the independent sales contractor is deemed to have received, on July 1, 2010 a supply by way of sale of the exclusive product in accordance with the rules provided in subsection 178.3(1) of the Act.

• Marginal note:Prepayments for exclusive products not delivered by July 1, 2010

  (3) If before July 1, 2010, when an approval of the Minister for the application of section 178.3 of the Act to a direct seller is in effect,

  • (a) the direct seller has made a taxable supply by way of sale (other than a zero-rated supply) of an exclusive product of the direct seller to an independent sales contractor of the direct seller that is not a distributor in respect of which an approval granted under subsection 178.2(4) of the Act on application made jointly with the direct seller is in effect,

  • (b) consideration for the supply becomes due, or is paid without having become due, after October 14, 2009 and before July 1, 2010,

  • (c) the exclusive product is not delivered to the independent sales contractor before July 1, 2010, and

  • (d) the exclusive product is to be held by the independent sales contractor for sale in a specified province,

  for the purpose of applying subsection 165(2) or 220.05(1) of the Act, the direct seller is deemed to have made, and the independent sales contractor is deemed to have received, on July 1, 2010 a supply by way of sale of the exclusive product in accordance with the rules provided in subsection 178.3(1) of the Act.

• Marginal note:Exclusive products held on July 1, 2010

  (4) If before July 1, 2010, when an approval of the Minister for the application of section 178.4 of the Act to a distributor of a direct seller is in effect, the distributor has made a taxable supply by way of sale (other than a zero-rated supply) of an exclusive product of the direct seller to an independent sales contractor of the direct seller that is not a distributor in respect of which an approval granted under subsection 178.2(4) of the Act on application made jointly with the direct seller is in effect and the independent sales contractor holds, at the beginning of that day, the exclusive product for sale in a specified province, for the purpose of applying subsection 165(2) or 220.05(1) of the Act, the distributor is deemed to have made, and the independent sales contractor is deemed to have received, on July 1, 2010 a supply by way of sale of the exclusive product in accordance with the rules provided in subsection 178.4(1) of the Act.

• Marginal note:Prepayments for exclusive products not delivered by July 1, 2010

  (5) If before July 1, 2010, when an approval of the Minister for the application of section 178.4 of the Act to a distributor of a direct seller is in effect,

  • (a) the distributor has made a taxable supply by way of sale (other than a zero-rated supply) of an exclusive product of the direct seller to an independent sales contractor of the direct seller that is not a distributor in respect of which an approval granted under subsection 178.2(4) of the Act on application made jointly with the direct seller is in effect,

  • (b) consideration for the supply becomes due, or is paid without having become due, after October 14, 2009 and before July 1, 2010,

  • (c) the exclusive product is not delivered to the independent sales contractor before July 1, 2010, and

  • (d) the exclusive product is to be held by the independent sales contractor for sale in a specified province,

  for the purpose of applying subsection 165(2) or 220.05(1) of the Act, the distributor is deemed to have made, and the independent sales contractor is deemed to have received, on July 1, 2010 a supply by way of sale of the exclusive product in accordance with the rules provided in subsection 178.4(1) of the Act.

Marginal note:Reciprocal taxation agreements

55 Subsections 41(3) to (6), 42(3) to (6), 43(4) to (7), 48(3), (4), (8) and (9) and 49(3) and (4) do not apply in respect of any consideration for a supply made to a person listed in

• (a) Part II of Schedule A of the reciprocal taxation agreement entered into between the Government of Canada and the Government of Ontario that is in force between July 1, 2006 and June 30, 2010; or

• (b) Schedule A of the reciprocal taxation agreement entered into between the Government of Canada and the Government of British Columbia that is in force between November 1, 2005 and June 30, 2010.

DIVISION 4Special Cases

Marginal note:Employee and shareholder benefits — Ontario

• 56 (1) In respect of the 2010 taxation year, if

  • (a) a benefit amount is required to be included under paragraph 6(1)(a) or (e) of the Income Tax Act in computing an individual’s income from an office or employment and the last establishment of the employer at which the individual ordinarily worked or to which the individual ordinarily reported in the year in relation to that office or employment is located in Ontario, or

  • (b) a benefit amount is required under subsection 15(1) of the Income Tax Act to be included in computing an individual’s income and the individual is resident in Ontario at the end of the year

  the portion of subclause (I) of the description of A in clause 173(1)(d)(vi)(B) of the Act after sub-subclause 2 is adapted as follows:

  8%, and

• Marginal note:Employee and shareholder benefits — British Columbia

  (2) In respect of the 2010 taxation year, if

  • (a) a benefit amount is required to be included under paragraph 6(1)(a) or (e) of the Income Tax Act in computing an individual’s income from an office or employment and the last establishment of the employer at which the individual ordinarily worked or to which the individual ordinarily reported in the year in relation to that office or employment is located in British Columbia, or

  • (b) a benefit amount is required under subsection 15(1) of the Income Tax Act to be included in computing an individual’s income and the individual is resident in British Columbia at the end of the year

  the portion of subclause (I) of the description of A in clause 173(1)(d)(vi)(B) of the Act after sub-subclause 2 is adapted as follows:

  7.5%, and

Marginal note:Election for shorter reporting period

57 Any person that, immediately before July 1, 2010, is resident in a specified province and registered under Subdivision d of Division V of Part IX of the Act may, subject to section 250 of the Act,

• (a) if the reporting period of the person immediately before July 1, 2010 is a fiscal quarter, make an election under section 246 of the Act to have reporting periods that are fiscal months of the person to take effect, despite paragraph 246(1)(a) of the Act, on the first day of any fiscal quarter of the person that begins before July 1, 2011; and

• (b) if the reporting period of the person immediately before July 1, 2010 is a fiscal year,

  • (i) make an election under section 246 of the Act to have reporting periods that are fiscal months of the person to take effect, despite paragraph 246(1)(a) of the Act, on the first day of any fiscal month of the person that begins before July 1, 2011, or

  • (ii) make an election under section 247 of the Act to have reporting periods that are fiscal quarters of the person to take effect, despite paragraph 247(1)(a) of the Act, on the first day of any fiscal quarter of the person that begins before July 1, 2011.

Marginal note:Revocation of election for streamlined accounting

• 58 (1) If a registrant that has made an election under subsection 227(1) of the Act that is in effect on July 1, 2010 is resident in a specified province immediately before July 1, 2010 or has made supplies in a specified province in the one-year period ending immediately before July 1, 2010, the registrant may, despite paragraph 227(4.1)(a) of the Act but subject to paragraph 227(4.1)(b) of the Act, revoke that election under subsection 227(4) of the Act with effect from

  • (a) if the reporting period of the registrant that includes July 1, 2010 is a fiscal year of the registrant, the first day of any fiscal month of the registrant that begins before July 1, 2011; and

  • (b) in any other case, the first day of any reporting period of the registrant that begins before July 1, 2011.

• Marginal note:New reporting period if election

  (2) If a registrant whose reporting period is a fiscal year revokes an election under subsection 227(4) of the Act in accordance with subsection (1) with effect from the first day of a particular fiscal month in a fiscal year of the registrant and that month is not the first fiscal month in that fiscal year,

  • (a) for the purposes of Part IX of the Act, the period beginning on the first day of that fiscal year and ending immediately before the first day of the particular fiscal month and the period beginning on the first day of the particular fiscal month and ending on the last day of that fiscal year are each deemed to be a separate reporting period of the registrant; and

  • (b) for the purposes of subsections 237(1) and (2) of the Act, each of those separate reporting periods is deemed to be a reporting period determined under subsection 248(3) of the Act.

Marginal note:Instalment base following harmonization

• 58.1 (1) Despite subsection 237(2) of the Act, if a registrant (other than a selected listed financial institution) to which subsection 237(1) of the Act applies is resident in a specified province and is not resident in Nova Scotia, New Brunswick or Newfoundland and Labrador and a reporting period of the registrant begins in 2010, for the purpose of determining the amount of instalment payments under subsection 237(1) of the Act, if any, that become payable after the first fiscal quarter of the registrant beginning on or after July 1, 2010, the registrant’s instalment base for the reporting period is equal to the lesser of

  • (a) the amount determined under paragraph 237(2)(a) of the Act, and

  • (b) 240% of the amount determined under paragraph 237(2)(b) of the Act.

• Marginal note:Instalment base following harmonization

  (2) Despite subsection 237(2) of the Act, if a registrant (other than a selected listed financial institution) to which subsection 237(1) of the Act applies is resident in a specified province and in Nova Scotia, New Brunswick or Newfoundland and Labrador and a reporting period of the registrant begins in 2010, for the purpose of determining the amount of instalment payments under subsection 237(1) of the Act, if any, that become payable after the first fiscal quarter of the registrant beginning on or after July 1, 2010, the registrant’s instalment base for the reporting period is equal to the amount determined under paragraph 237(2)(a) of the Act.

• Marginal note:Selected listed financial institutions — instalments in transitional year

  (3) Despite subsection 237(1) of the Act, if a particular reporting period of a selected listed financial institution (other than an investment plan, as defined in subsection 1(1) of the Selected Listed Financial Institutions Attribution Method (GST/HST) Regulations) ends in a particular fiscal year ending in a taxation year of the financial institution and the particular fiscal year begins before July 1, 2010 and ends on or after that day, the instalment to be paid under that subsection within one month after the end of each fiscal quarter ending on or after that day in the particular reporting period is the amount determined under whichever of the following paragraphs the financial institution has elected in prescribed form to determine the instalments for those fiscal quarters under:

  • (a) the lesser of

    • (i) 1/4 of the amount determined under paragraph 237(2)(a) of the Act, and

    • (ii) the amount determined by the formula

      A + (B/4)

      where

      A

      is the total of all amounts, each of which is determined, for a harmonized province, by the formula

      [C × D × (E/F) × (G/365)]/H

      where

      C

      is the financial institution’s instalment base for the particular reporting period determined under paragraph 237(2)(b) of the Act as if the financial institution were not a selected listed financial institution and tax were not imposed under any of subsection 165(2), sections 212.1 and 218.1 and Division IV.1 of Part IX of the Act,

      D

      is the lesser of the financial institution’s percentage for the harmonized province and for the taxation year and the financial institution’s percentage for the harmonized province and for the preceding taxation year, each determined in accordance with the prescribed rules that apply to that financial institution,

      E

      is the tax rate for the harmonized province,

      F

      is 5%,

      G

      is the number of days in the particular reporting period after June 2010, and

      H

      is the number of fiscal quarters ending on or after July 1, 2010 and in the particular reporting period, and

      B

      is the financial institution’s instalment base for the particular reporting period determined under paragraph 237(2)(b) of the Act as if the financial institution were not a selected listed financial institution and tax were not imposed under any of subsection 165(2), sections 212.1 and 218.1 and Division IV.1 of Part IX of the Act;

  • (b) the amount determined by the formula

    A + (B/4)

    where

    A

    is the total of all amounts, each of which is determined, for a harmonized province, by the formula

    [C × D × (E/F) × (G/365)]/H

    where

    C

    is the financial institution’s instalment base for the particular reporting period determined under paragraph 237(2)(b) of the Act as if the financial institution were not a selected listed financial institution and tax were not imposed under any of subsection 165(2), sections 212.1 and 218.1 and Division IV.1 of Part IX of the Act,

    D

    is the financial institution’s percentage for the harmonized province and for the preceding taxation year, determined in accordance with the prescribed rules that apply to that financial institution,

    E

    is the tax rate for the harmonized province,

    F

    is 5%,

    G

    is the number of days in the particular reporting period after June 2010, and

    H

    is the number of fiscal quarters ending on or after July 1, 2010 and in the particular reporting period, and

    B

    is the financial institution’s instalment base for the particular reporting period determined under paragraph 237(2)(b) of the Act as if the financial institution were not a selected listed financial institution and tax were not imposed under any of subsection 165(2), sections 212.1 and 218.1 and Division IV.1 of Part IX of the Act;

  • (c) the lesser of

    • (i) 1/4 of the amount determined under paragraph 237(2)(a) of the Act, and

    • (ii) the amount determined by the formula

      A + B + (C/4)

      where

      A

      is the total of all amounts, each of which is determined, for a harmonized province, by the formula

      [[(D – E) × F × (G/H) × (I/365)] – J]/K

      where

      D

      is the total of

      • (A) all tax (other than an amount of tax that is prescribed under any of section 40, paragraphs 55(2)(a), 60(a) and 63(a) and section 67 of the Selected Listed Financial Institutions Attribution Method (GST/HST) Regulations) that became payable under any of subsection 165(1) and sections 212, 218 and 218.01 of the Act by the financial institution during the particular reporting period or that was paid by the financial institution during the particular reporting period without having become payable,

      • (B) all amounts each of which is tax under subsection 165(1) of the Act in respect of a supply (other than a supply to which clause (C) applies) made to the financial institution that would, but for an election made under section 150 of the Act, have become payable by the financial institution during the particular reporting period, and

      • (C) all amounts each of which is an amount, in respect of a supply made during the particular reporting period of property or a service to which an election made by the financial institution and another person under subsection 225.2(4) of the Act applies, equal to tax calculated on the cost to the other person of supplying the property or service to the financial institution excluding any remuneration to employees of the other person, the cost of financial services and tax under Part IX of the Act,

      E

      is the total of

      • (A) all input tax credits (other than input tax credits in respect of an amount of tax that is prescribed under any of section 40, paragraphs 55(2)(a), 60(a) and 63(a) and section 67 of the Selected Listed Financial Institutions Attribution Method (GST/HST) Regulations) of the financial institution for the particular reporting period or preceding reporting periods of the financial institution claimed by the financial institution in the return under Division V of Part IX of the Act filed by the financial institution for the particular reporting period, and

      • (B) all amounts each of which would be an input tax credit of the financial institution for the particular reporting period of the financial institution in respect of property or a service if tax became payable during the particular reporting period in respect of the supply of the property or service equal to the amount included for the particular reporting period under clause (B) or (C) of the description of D in respect of the supply,

      F

      is the lesser of the financial institution’s percentage for the harmonized province and for the taxation year and the financial institution’s percentage for the harmonized province and for the preceding taxation year, each determined in accordance with the prescribed rules that apply to that financial institution,

      G

      is the tax rate for the harmonized province,

      H

      is 5%,

      I

      is the number of days in the particular reporting period after June 2010,

      J

      is the total of

      • (A) all tax (other than an amount of tax that is prescribed under any of section 40, paragraph 55(2)(a) and section 67 of the Selected Listed Financial Institutions Attribution Method (GST/HST) Regulations) under subsection 165(2) of the Act in respect of supplies made in the harmonized province to the financial institution or under section 212.1 of the Act in respect of goods imported by the financial institution for use in the harmonized province that became payable by the financial institution during the fiscal quarter or that was paid by the financial institution during the fiscal quarter without having become payable, and

      • (B) all amounts each of which is an amount, in respect of a supply made during the fiscal quarter of property or a service to which an election made by the financial institution and another person under subsection 225.2(4) of the Act applies, equal to tax payable by the other person under any of subsection 165(2), sections 212.1 or 218.1 or Division IV.1 of Part IX of the Act that is included in the cost to the other person of supplying the property or service to the financial institution, and

      K

      is the number of fiscal quarters ending on or after July 1, 2010 and in the particular reporting period,

      B

      is the total of all amounts that became collectible and all other amounts collected by the financial institution in the fiscal quarter as or on account of tax under subsection 165(2) of the Act, and

      C

      is the financial institution’s instalment base for the particular reporting period determined under paragraph 237(2)(b) of the Act as if the financial institution were not a selected listed financial institution and tax were not imposed under any of subsection 165(2), sections 212.1 and 218.1 and Division IV.1 of Part IX of the Act; or

  • (d) the amount determined by the formula

    A + B + (C/4)

    where

    A

    is the total of all amounts, each of which is determined, for a harmonized province, by the formula

    [[(D – E) × F × (G/H) × (I/365)] – J]/K

    where

    D

    is the total of

    • (i) all tax (other than an amount of tax that is prescribed under any of section 40, paragraphs 55(2)(a), 60(a) and 63(a) and section 67 of the Selected Listed Financial Institutions Attribution Method (GST/HST) Regulations) that became payable under any of subsection 165(1) and sections 212, 218 and 218.01 of the Act by the financial institution during a reporting period (in this paragraph referred to as the “earlier reporting period”) of the financial institution ending in the 12-month period preceding the particular reporting period or that was paid by the financial institution during the earlier reporting period without having become payable,

    • (ii) all amounts each of which is tax under subsection 165(1) of the Act in respect of a supply (other than a supply to which subparagraph (iii) applies) made to the financial institution that would, but for an election made under section 150 of the Act, have become payable by the financial institution during the earlier reporting period, and

    • (iii) all amounts each of which is an amount, in respect of a supply made during the earlier reporting period of property or a service to which an election made by the financial institution and another person under subsection 225.2(4) of the Act applies, equal to tax calculated on the cost to the other person of supplying the property or service to the financial institution excluding any remuneration to employees of the other person, the cost of financial services and tax under Part IX of the Act,

    E

    is the total of

    • (i) all input tax credits (other than input tax credits in respect of an amount of tax that is prescribed under any of section 40, paragraphs 55(2)(a), 60(a) and 63(a) and section 67 of the Selected Listed Financial Institutions Attribution Method (GST/HST) Regulations) of the financial institution for the earlier reporting period or preceding reporting periods of the financial institution claimed by the financial institution in the return under Division V of Part IX of the Act filed by the financial institution for the earlier reporting period, and

    • (ii) all amounts each of which would be an input tax credit of the financial institution for the earlier reporting period of the financial institution in respect of property or a service if tax became payable during the earlier reporting period in respect of the supply of the property or service equal to the amount included for the earlier reporting period under subparagraph (ii) or (iii) of the description of D in respect of the supply,

    F

    is the financial institution’s percentage for the harmonized province and for the preceding taxation year, determined in accordance with the prescribed rules that apply to that financial institution,

    G

    is the tax rate for the harmonized province,

    H

    is 5%,

    I

    is the number of days in the particular reporting period after June 2010,

    J

    is the total of

    • (i) all tax (other than an amount of tax that is prescribed under any of section 40, paragraph 55(2)(a), and section 67 of the Selected Listed Financial Institutions Attribution Method (GST/HST) Regulations) under subsection 165(2) of the Act in respect of supplies made in the harmonized province to the financial institution or under section 212.1 of the Act in respect of goods imported by the financial institution for use in the harmonized province that became payable by the financial institution during the fiscal quarter or that was paid by the financial institution during the fiscal quarter without having become payable, and

    • (ii) all amounts each of which is an amount, in respect of a supply made during the fiscal quarter of property or a service to which an election made by the financial institution and another person under subsection 225.2(4) of the Act applies, equal to tax payable by the other person under any of subsection 165(2), sections 212.1 or 218.1 or Division IV.1 of Part IX of the Act that is included in the cost to the other person of supplying the property or service to the financial institution, and

    K

    is the number of fiscal quarters ending on or after July 1, 2010 and in the particular reporting period,

    B

    is the total of all amounts that became collectible and all other amounts collected by the financial institution in the fiscal quarter as or on account of tax under subsection 165(2) of the Act, and

    C

    is the financial institution’s instalment base for the particular reporting period determined under paragraph 237(2)(b) of the Act as if the financial institution were not a selected listed financial institution and tax were not imposed under any of subsection 165(2), sections 212.1 and 218.1 and Division IV.1 of Part IX of the Act.

• Marginal note:Information requirements

  (4) For the purposes of this section, subsections 169(4) and (5) and 223(2) of the Act apply with respect to any amount that is included in the description of J in paragraphs (3)(c) and (d) as if that amount were an input tax credit.

• Marginal note:Exclusions

  (5) No amount of tax paid or payable by a selected listed financial institution in respect of property or services acquired, imported or brought into a harmonized province otherwise than for consumption, use or supply in the course of an endeavour, as defined in subsection 141.01(1) of the Act, of the financial institution is to be included in determining the instalment to be paid by the financial institution under subsection (3).