Sales Tax and Excise Tax Amendments Act, 2001 (S.C. 2001, c. 15)
Full Document:
Assented to 2001-06-14
Sales Tax and Excise Tax Amendments Act, 2001
S.C. 2001, c. 15
Assented to 2001-06-14
An Act to amend the Excise Tax Act
SUMMARY
This enactment mainly implements measures relating to the Goods and Services Tax and Harmonized Sales Tax (GST/HST), including sales tax initiatives proposed in the February 28, 2000 Budget. These measures are aimed principally at improving the operation and fairness of the GST/HST in the affected areas and ensuring that the legislation accords with the policy intent.
This enactment also implements two amendments to the excise tax provisions of the Act. The first is made for greater certainty to clarify the deferral of the existing excise taxes on air conditioners installed in automobiles, and on new heavy automobiles, at the time of importation by a licensed manufacturer or sale to a licensed manufacturer. The second amendment provides discretionary power to the Minister of National Revenue to waive or cancel interest, or penalties calculated in the same manner as interest, under the excise tax system, consistent with the discretion already provided to the Minister in relation to the sales tax and income tax systems.
The principal GST/HST measures included in this enactment are as follows:
(1) Export Distribution Centre and Export Trading House Programs: implements new rules that ensure that the GST/HST does not present an impediment to the establishment of North American distribution centres in Canada by permitting export-oriented non-manufacturing businesses to purchase or import inventory, certain inputs and customers’ goods on a tax-free basis, rather than having to pay the tax and later claim a refund; parallels certain administrative aspects of the new export distribution centre rules in the existing Export Trading House program to ensure consistency between these two measures.
(2) Non-residents and Cross-border Transactions: ensures that no tax is payable on the importation of defective goods imported solely to be replaced under warranty, at no additional cost, by other goods that are subsequently exported; ensures that businesses in Canada can import, on a tax-free basis, non-resident customers’ goods solely for storage or distribution in Canada and subsequent export without incurring cash-flow costs due to the tax; ensures that there is no tax on the service of storing goods for a non-resident business in certain circumstances in which the business is relieved from paying tax on the goods themselves and would otherwise be unable to recover the tax; removes an unnecessary condition on the tax-free treatment of sales of exported railway rolling stock to a non-resident business that would otherwise be unable to recover the tax.
(3) Real Property: implements the New Residential Rental Property Rebate, which is a partial rebate of GST paid in respect of newly constructed or substantially renovated long-term residential rental accommodation; permits a new home used primarily as a place of residence of the owner and also to provide short-term accommodation to the public (e.g., a Bed-and-Breakfast establishment) to qualify for the New Housing Rebate; allows a person who purchased real property and paid tax to recover that tax if the property is returned to the original vendor within one year and pursuant to the original contract; ensures that real property cannot be sold exempt from tax if the seller was previously leasing it to other persons on a taxable basis and was therefore entitled to recover any tax paid on the purchase of the property or improvements to it; clarifies that charities are not required to charge tax on the rental of real property or on any goods rented in conjunction with the real property.
(4) Health: continues in force an existing GST/HST exemption for speech therapy services that are billed by individual practitioners and not covered by the applicable provincial health care plan. The amendment extends the exemption to provide time for the profession to complete a process now under way of becoming regulated in a fifth province.
(5) Education: ensures that similar vocational training across the country is provided the same exempt treatment regardless of how vocational schools are regulated in each province; exempts from tax vocational training supplied by a government entity or agency; allows suppliers of vocational training to elect to treat that training as taxable where it is provided to registrants that are able to recover the tax by way of input tax credits.
(6) Electronic Filing: removes the requirement to apply to the Minister of National Revenue for permission to file GST/HST returns electronically (e.g., over the telephone or the Internet) and therefore allows anyone to do so provided they meet the criteria set out by the Minister.
(7) Miscellaneous Amendments: corrects ambiguities in existing provisions consistent with current industry practice, administrative interpretation and the underlying policy intent.
Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:
SHORT TITLE
Marginal note:Short title
1. This Act may be cited as the Sales Tax and Excise Tax Amendments Act, 2001.
R.S., c. E-15EXCISE TAX ACT
2. (1) Subsection 23(7) of the Excise Tax Act is amended by adding the word “or” at the end of paragraph (b) and by adding the following after paragraph (b):
(c) the sale of a new motor vehicle designed for highway use, or a chassis therefor, to a person described in paragraph (h) of the definition “manufacturer or producer” in subsection 2(1) who is a manufacturer licensed for the purposes of this Part.
Marginal note:R.S., c. 15 (1st Supp.), s. 12(2)
(2) Paragraphs 23(7)(e) and (f) of the Act are repealed.
(3) Subsection (1) and subsection (2), to the extent that it repeals paragraph 23(7)(f) of the Act, are deemed to have come into force on January 1, 1994 and apply to sales made after 1993.
(4) Subsection (2), to the extent that it repeals paragraph 23(7)(e) of the Act, is deemed to have come into force on January 1, 1994 and applies in respect of motor vehicles, or chassis therefor, imported after 1993 by a person described in paragraph (g) of the definition “manufacturer or producer” in subsection 2(1) of the Act who is a manufacturer licensed for the purposes of Part III of the Act.
3. (1) The Act is amended by adding the following after section 87:
Marginal note:Waiver or cancellation of interest or penalty
88. The Minister may waive or cancel any amount otherwise payable to the Receiver General under this Act that is interest or a penalty calculated in the same manner as interest.
(2) Subsection (1) applies to amounts that, but for section 88 of the Act, as enacted by subsection (1), would become payable on or after the day on which this Act is assented to.
Marginal note:1993, c. 27, s. 44(1)
4. (1) The portion of subsection 179(2) of the Act after paragraph (c) is replaced by the following:
subsection (1) does not apply to a supply referred to in subparagraph (a)(i) and, except in the case of a supply of a service of shipping the property, any supply made by the registrant and referred to in that subparagraph is deemed to have been made outside Canada.
Marginal note:1993, c. 27, s. 44(1)
(2) The portion of subsection 179(3) of the Act after paragraph (c) is replaced by the following:
subsection (1) does not apply to a supply referred to in paragraph (a) and, except in the case of a supply of a service of shipping the property, any supply made by the registrant and referred to in that paragraph is deemed to have been made outside Canada.
(3) Section 179 of the Act is amended by adding the following after subsection (6):
Marginal note:Use of railway rolling stock
(7) For the purpose of clause (3)(c)(ii)(C), if the only use of railway rolling stock after physical possession of it is transferred as described in that clause and before it is next exported is for the purpose of transporting tangible personal property or passengers in the course of that exportation and that exportation occurs within sixty days after the day on which the transfer takes place, that use of the rolling stock is deemed to take place entirely outside Canada.
(4) Subsections (1) and (2) apply to supplies for which all of the consideration becomes due after February 28, 2000 or is paid after that day without having become due.
(5) Subsection (3) applies to railway rolling stock the physical possession of which is transferred by a registrant pursuant to a supply by way of sale by the registrant for which all of the consideration becomes due after February 28, 2000 or is paid after that day without having become due.
Marginal note:1993, c. 27, s. 78(1)
5. (1) Subsection 213.2(1) of the Act is replaced by the following:
Marginal note:Import certificate
213.2 (1) The Minister may, on the request of a registrant who imports goods, issue to the registrant, subject to such conditions as the Minister may specify, a written authorization (in this section referred to as an “import certificate”) for the purpose of applying, on and after the effective date specified in the authorization, section 8.1 of Schedule VII in respect of goods of a particular class imported by the registrant, in which event the Minister shall assign to the registrant a number to be disclosed when the goods are accounted for under section 32 of the Customs Act.
(2) Subsection (1) is deemed to have come into force on February 1, 1992.
6. (1) Section 215 of the Act is amended by adding the following after subsection (2):
Marginal note:Value of goods re-imported after processing
(3) The value of goods that are being imported for the first time after having been processed (as defined in subsection 2(1) of the Value of Imported Goods (GST/HST) Regulations) outside Canada shall be determined for the purposes of this Division without regard to section 13 of those Regulations if
(a) the value of the goods would, but for this subsection, be determined for the purposes of this Division under that section; and
(b) they are the same goods, in their processed state, as other goods, or incorporate, as a result of their processing, other goods, that were last imported in circumstances in which no tax was payable under this Division because of section 8.1 or 11 of Schedule VII.
(2) Subsection (1) applies to goods imported after February 1992 except that, with respect to goods imported before January 1, 2001, the reference in subsection 215(3) of the Act, as enacted by subsection (1), to “section 8.1 or 11” shall be read as a reference to “section 8.1”.
7. (1) Section 217 of the Act is amended by striking out the word “or” at the end of paragraph (b.3) and by adding the following after paragraph (c)
(d) a supply of property that is a zero-rated supply only because it is included in section 1.1 of Part V of Schedule VI, if the recipient is not acquiring the property for consumption, use or supply exclusively in the course of commercial activities of the recipient and
(i) an authorization of the recipient to use the certificate referred to in that section is not in effect at the time the supply is made, or
(ii) the recipient does not export the property in the circumstances described in paragraphs 1(b) to (d) of that Part; or
(e) a supply of property that is a zero-rated supply only because it is included in section 1.2 of Part V of Schedule VI, if the recipient is not acquiring the property for consumption, use or supply exclusively in the course of commercial activities of the recipient and
(i) an authorization of the recipient to use the certificate referred to in that section is not in effect at the time the supply is made, or
(ii) the recipient is not acquiring the property for use or supply as domestic inventory or as added property (as those expressions are defined in subsection 273.1(1)).
(2) Subsection (1) applies to supplies made after 2000.
8. (1) Subsection 218.1(1) of the Act is amended by striking out the word “and” at the end of paragraph (b), by adding the word “and” at the end of paragraph (c) and by adding the following after paragraph (c):
(d) every person who is the recipient of a supply that is included in paragraph 217(d) or (e) and that is made in a particular participating province
(2) Section 218.1 of the Act is amended by adding the following after subsection (1):
Marginal note:Delivery in a province
(1.1) Section 3 of Part II of Schedule IX applies for the purpose of paragraph (1)(c).
(3) Subsection (1) applies to supplies made after 2000.
(4) Subsection (2) applies to supplies made after October 4, 2000.
9. (1) Subsection 221(2) of the Act is amended by striking out the word “or” at the end of paragraph (b) and by adding the following after paragraph (b):
(b.1) the supplier and the recipient have made an election under section 2 of Part I of Schedule V in respect of the supply; or
Marginal note:1993, c. 27, s. 85(1)
(2) Subsection 221(3.1) of the Act is repealed.
(3) Subsection (1) applies to supplies made after October 4, 2000.
(4) Subsection (2) applies to supplies made after 2000.
Marginal note:1993, c. 27, s. 86(1)
10. (1) The portion of subsection 221.1(2) of the Act before paragraph (a) is replaced by the following:
Marginal note:Export certificate
(2) The Minister may, on the application of a person who is registered under Subdivision d, authorize the person to use, beginning on a particular day in a fiscal year of the person and subject to such conditions as the Minister may from time to time specify, a certificate (in this section referred to as an “export certificate”) for the purpose of section 1.1 of Part V of Schedule VI, if it can reasonably be expected
Marginal note:1993, c. 27, s. 86(1)
(2) Subsection 221.1(4) of the Act is replaced by the following:
Marginal note:Notice of authorization
(4) If the Minister authorizes a registrant to use an export certificate, the Minister shall notify the registrant in writing of the authorization, its effective date and its expiry date and the number assigned by the Minister that identifies the registrant or the authorization and that must be disclosed by the registrant when providing the certificate for the purpose of section 1.1 of Part V of Schedule VI.
(3) Subsection (1) is deemed to have come into force on January 1, 2001.
(4) Subsection (2) applies to any authorization granted to a person after 2000, whether on the first application of the person or on the renewal of an authorization previously granted.
- Date modified: