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

Full Document:  

Act current to 2022-01-12 and last amended on 2021-07-01. Previous Versions

PART IXGoods and Services Tax (continued)

DIVISION IIGoods and Services Tax (continued)

SUBDIVISION CSpecial Cases (continued)

Property and Services for Financial Services

Marginal note:Financial services – input tax credits

  •  (1) If tax in respect of property or a service acquired, imported or brought into a participating province by a registrant becomes payable by the registrant at a time when the registrant is neither a listed financial institution nor a person that is a financial institution because of paragraph 149(1)(b), for the purpose of determining an input tax credit of the registrant in respect of the property or service and for the purposes of Subdivision D, to the extent (determined in accordance with subsections 141.01(2) and 141.02(6)) that the property or service was acquired, imported or brought into the province, as the case may be, for consumption, use or supply in the course of making supplies of financial services that relate to commercial activities of the registrant,

    • (a) if the registrant is a financial institution because of paragraph 149(1)(c), the property or service is deemed, despite subsections 141.01(2) and 141.02(6), to have been so acquired, imported or brought into the province for consumption, use or supply in the course of those commercial activities except to the extent that the property or service was so acquired, imported or brought into the province for consumption, use or supply in the course of activities of the registrant that relate to

      • (i) credit cards or charge cards issued by the registrant, or

      • (ii) the making of any advance, the lending of money or the granting of any credit; and

    • (b) in any other case, the property or service is deemed, despite subsections 141.01(2) and 141.02(6), to have been so acquired, imported or brought into the province for consumption, use or supply in the course of those commercial activities.

  • Marginal note:Financial service relating to commercial activity

    (2) For the purposes of subsection (1), financial services shall be deemed not to be related to commercial activities of an individual, except to the extent that the revenues and expenses relating to the services are taken into account in determining the individual’s income from a business for the purposes of the Income Tax Act.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1990, c. 45, s. 12
  • 1994, c. 9, s. 11
  • 1997, c. 10, ss. 35, 179
  • 2010, c. 12, s. 60

Marginal note:Definition of unit

  •  (0.1) In this section, unit means

    • (a) in respect of a corporation, a share of the capital stock of the corporation;

    • (b) in respect of a partnership, an interest of a person in the partnership; and

    • (c) in respect of a trust, a unit of the trust.

  • Marginal note:Operating corporations

    (0.2) For the purposes of this section, a particular corporation is at a particular time an operating corporation of another person that is a corporation, partnership or trust if, at the particular time, all or substantially all of the property of the particular corporation is property that was last manufactured, produced, acquired or imported by the particular corporation for consumption, use or supply by the particular corporation exclusively in the course of its commercial activities and

    • (a) if the other person is a corporation or a trust, the particular corporation is, at the particular time, related to the other person; or

    • (b) if the other person is a partnership, the particular corporation is, at the particular time, controlled by

      • (i) the other person,

      • (ii) a corporation that is controlled by the other person,

      • (iii) a corporation that is related to a corporation described in subparagraph (ii), or

      • (iv) a combination of persons described in subparagraphs (i) to (iii).

  • Marginal note:Input tax credit

    (1) Unless subsection (2) applies, if at a particular time a registrant (in this subsection referred to as the “parent”) that is resident in Canada and that is a corporation, partnership or trust acquires, imports or brings into a participating province a particular property or service and if at the particular time a particular corporation is an operating corporation of the parent, the parent is deemed, for the purpose of determining an input tax credit of the parent, to have acquired or imported the particular property or service or brought it into the participating province, as the case may be, for use in the course of commercial activities of the parent to the extent that

    • (a) the parent acquired or imported the particular property or service or brought it into the participating province, as the case may be, for the purpose of

      • (i) selling or otherwise disposing of, purchasing or otherwise obtaining, or holding units or indebtedness of the particular corporation by the parent, or

      • (ii) redeeming, issuing or converting or otherwise modifying units or indebtedness of the particular corporation by the particular corporation;

    • (b) the parent acquired or imported the particular property or service or brought it into the participating province, as the case may be, for the purpose of issuing or selling units or indebtedness of the parent, the parent transfers to the particular corporation the proceeds from the issuance or sale by lending money to the particular corporation or by purchasing or otherwise obtaining from the particular corporation units or indebtedness of the particular corporation, and the proceeds that are transferred to the particular corporation are for use in the course of its commercial activities; or

    • (c) if at the particular time all or substantially all of the property of the parent is property that was manufactured, produced, acquired or imported by the parent for consumption, use or supply exclusively in the course of its commercial activities, property that is units or indebtedness of operating corporations of the parent or a combination of such property, the parent acquired or imported the particular property or service or brought it into the participating province, as the case may be, for the purpose of carrying on, engaging in or conducting an activity of the parent other than

      • (i) an activity that is primarily in respect of units or indebtedness of a person that is neither the parent nor an operating corporation of the parent, or

      • (ii) an activity that is carried on, engaged in or conducted in the course of making an exempt supply by the parent unless the activity is a financial service that is

        • (A) the lending or borrowing of units or indebtedness of an operating corporation of the parent,

        • (B) the issue, granting, allotment, acceptance, endorsement, renewal, processing, variation, transfer of ownership or repayment of units or indebtedness of the parent or an operating corporation of the parent,

        • (C) the provision, variation, release or receipt of a guarantee, acceptance or indemnity in respect of units or indebtedness of the parent or an operating corporation of the parent,

        • (D) the payment or receipt of money as dividends (other than patronage dividends), interest, principal, benefits, or similar receipt or payment of money in respect of units or indebtedness of the parent or an operating corporation of the parent, or

        • (E) the underwriting of units or indebtedness of an operating corporation of the parent.

  • Marginal note:Takeover fees

    (2) For the purposes of this Part, if

    • (a) a registrant that is a corporation resident in Canada (in this subsection referred to as the “purchaser”) acquires, imports or brings into a participating province a particular property or service relating to the acquisition or proposed acquisition by it of all or substantially all of the issued and outstanding shares, having full voting rights under all circumstances, of the capital stock of another corporation, and

    • (b) throughout the period beginning when the performance of the particular service began or when the purchaser acquired, imported or brought into the participating province, as the case may be, the particular property and ending at the later of the times referred to in paragraph (c), all or substantially all of the property of the other corporation was property that was last manufactured, produced, acquired or imported for consumption, use or supply exclusively in the course of commercial activities,

    the particular property or service is deemed to have been acquired, imported or brought into the participating province for use exclusively in the course of commercial activities of the purchaser and, for the purpose of claiming an input tax credit, any tax in respect of the supply of the particular property or service to the purchaser, or the importation or bringing in of the particular property by the purchaser, is deemed to have become payable and been paid by the purchaser on the later of

    • (c) the later of the day the purchaser acquired all or substantially all of the shares and the day the intention to acquire the shares was abandoned, and

    • (d) the day the tax became payable or was paid by the purchaser.

  • Marginal note:Shares, etc., held by corporation

    (3) If at a particular time a particular corporation is an operating corporation of another corporation, all units of the particular corporation owned by, and all indebtedness of the particular corporation owed to, the other corporation are, for the purposes of this section, deemed to be, at the particular time, property that was acquired by the other corporation for use exclusively in the course of its commercial activities.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1990, c. 45, s. 12
  • 1993, c. 27, s. 49
  • 1997, c. 10, s. 180
  • 2000, c. 30, s. 38
  • 2021, c. 23, s. 106
Bets and Games of Chance

Marginal note:Bets and games of chance

 For the purposes of this Part, where a particular person bets an amount on a game of chance, a race or other event or occurrence, the following rules apply:

  • (a) the person with whom the bet is placed is deemed to have made a supply of a service to the particular person;

  • (b) where the bet is placed in a participating province, that supply is deemed to have been made in that province; and

  • (c) the consideration for that supply is deemed to be equal to the amount determined by the formula

    (A/B) × (C - D)

    where

    A
    is 100%,
    B
    is
    • (i) if that supply is made in a participating province, the total of 100%, the rate set out in subsection 165(1) and the tax rate for that province, and

    • (ii) in any other case, the total of 100% and the rate set out in subsection 165(1),

    C
    is the total amount in respect of the bet that is given by the particular person to the person with whom the bet is placed, including any amount given as or on account of tax imposed on the particular person under an Act of the legislature of a province or under this Part, and
    D
    is the amount of any tax imposed under an Act of the legislature of a province on the particular person in respect of the amount that is bet.
  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1990, c. 45, s. 12
  • 1993, c. 27, s. 50
  • 1997, c. 10, s. 181
  • 2006, c. 4, s. 13
Prizes

Marginal note:Prizes

  •  (1) If a commercial activity of a registrant (other than a registrant to whom subsection (5) applies) consists of taking bets or conducting games of chance and, in the course of that activity, the registrant pays an amount of money at any time in a reporting period as a prize or winnings to a bettor or a person playing or participating in the games, for the purpose of determining an input tax credit of the registrant, the registrant shall be deemed to have received at that time a taxable supply of a service for use exclusively in the activity and to have paid, at that time, tax in respect of the supply equal to the amount determined by the formula

    (A/B) × C

    where

    A
    is
    • (a) if the supply is made in a participating province, the total of the rate set out in subsection 165(1) and the tax rate for that province, and

    • (b) in any other case, the rate set out in subsection 165(1),

    B
    is the total of 100% and the percentage determined for A, and
    C
    is the amount of money paid as the prize or winnings.
  • Marginal note:Prizes in competitive events

    (2) Where, in the course of an activity that involves the organization, promotion hosting or other staging of a competitive event, a person gives a prize to a competitor in the event,

    • (a) the giving of the prize shall be deemed, for the purposes of this Part, not to be a supply;

    • (b) the prize shall be deemed, for the purposes of this Part, not to be consideration for a supply by the competitor to the person; and

    • (c) tax payable by the person in respect of any property given as the prize shall not be included in determining any input tax credit of the person for any reporting period.

  • Marginal note:Contributions by competitors

    (3) For the purposes of this Part, where a competitor in a competitive event contributes an amount to the prizes to be given to competitors in the event, the contribution shall be deemed not to be consideration for a supply.

  • Marginal note:Application of subsection (3)

    (4) Subsection (3) does not apply in respect of a contribution that is made as part of a fee or charge paid by a competitor in a competitive event for the right or privilege of participating in the event and that is not separately identified as a contribution to the prizes.

  • Marginal note:Net tax of prescribed registrant

    (5) Where a registrant is a prescribed registrant at any time in a reporting period, the registrant’s net tax for the period shall be determined in a prescribed manner.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1990, c. 45, s. 12
  • 1993, c. 27, s. 51
  • 1994, c. 9, s. 12(F)
  • 2006, c. 4, s. 14

Marginal note:Definitions

  •  (1) In this section,

    distributor

    distributor of an issuer means a person who

    • (a) as agent of the issuer, supplies rights of the issuer on behalf of the issuer,

    • (b) on the person’s own behalf supplies rights of the issuer,

    • (c) accepts, on behalf of the issuer, a bet on a game of chance conducted by the issuer, or

    • (d) makes a specified gaming machine supply to the issuer; (distributeur)

    gaming machine

    gaming machine means a machine by the operation of which by a person, the person plays a game of chance in which the element of chance is provided by means of the machine, but does not include a machine that dispenses a ticket, token or other device evidencing the right to play or participate in, or receive a prize or winnings in, one or more games of chance unless the device is, for each of those games, sufficient evidence, and in the case of a printed device, contains sufficient information, to ascertain whether the holder of the device is entitled to receive a prize or winnings without reference to any other information; (appareil de jeu)

    issuer

    issuer means a registrant who is a prescribed registrant for the purposes of subsection 188(5); (émetteur)

    right

    right of an issuer means a right to play or participate in a game of chance conducted by the issuer; (droit)

    specified gaming machine supply

    specified gaming machine supply means a supply in respect of a gaming machine made to an issuer if

    • (a) the supply is

      • (i) of the machine, or a site at which the machine is operated, made by way of lease, licence or similar arrangement, or

      • (ii) of a service of repairing or maintaining the machine, performing functions necessary to ensure its proper operation or awarding, paying or delivering prizes won in the games of chance played by its operation, and

    • (b) under the agreement for the supply, all or part of the consideration for the supply is determined as a percentage of the proceeds of the issuer from conducting those games. (fourniture reliée aux appareils de jeu)

  • Marginal note:Supply by issuer

    (2) For the purposes of this Part, where an issuer makes a supply of a right of the issuer to a distributor of the issuer,

    • (a) tax shall be deemed not to be payable by the distributor in respect of the supply; and

    • (b) the distributor is not entitled to any rebate under section 261 in respect of the supply.

  • Marginal note:Supply by distributor

    (3) Where a particular distributor of an issuer makes a supply of a right of the issuer,

    • (a) if the recipient of the supply is another distributor of the issuer, the supply shall be deemed, for the purposes of this Part except this section, not to have been made by the particular distributor and not to have been received by the other distributor;

    • (b) if the recipient of the supply is the issuer, the supply shall be deemed, for the purposes of this Part except this section, not to have been made by the particular distributor; and

    • (c) if the recipient of the supply is any other person,

      • (i) the supply shall be deemed, for the purposes of this Part, to be a supply made by the issuer and not by the particular distributor, and

      • (ii) any tax in respect of the supply that is collected by the particular distributor shall be deemed, for the purposes of this Part, to have been collected by the issuer, and not by the particular distributor.

  • Marginal note:Deemed non-supplies

    (4) For the purposes of this Part,

    • (a) supplies made to an issuer by a distributor of the issuer of a service in respect of

      • (i) the supply of rights of the issuer,

      • (ii) the awarding, payment or delivery of prizes won in games of chance conducted by the issuer, or

      • (iii) the maintenance or repair of equipment used by the distributor in the supplying of rights of the issuer,

    • (a.1) supplies made to an issuer by a distributor of the issuer of a service in respect of the acceptance, on behalf of the issuer, of bets on games of chance conducted by the issuer, including supplies of a service of managing, administering and carrying on the day-to-day operations of the issuer’s gaming activities that are connected with a casino of the issuer,

    • (a.2) specified gaming machine supplies made to an issuer by a distributor of the issuer, and

    • (b) supplies made by an issuer to a distributor of the issuer of a service in respect of

      • (i) the supply of rights of the issuer, or

      • (ii) the awarding, payment or delivery of prizes won in games of chance conducted by the issuer,

    shall be deemed not to be supplies.

  • Marginal note:Deemed non-consideration

    (5) For the purposes of this Act,

    • (a) promotional bonuses and prizes given by an issuer to a distributor of the issuer for or in respect of the supply by the distributor of rights of the issuer, and

    • (b) amounts paid to an issuer by a distributor of the issuer for or on account of damages to property of the issuer,

    shall be deemed not to be consideration for a supply.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1993, c. 27, s. 52
  • 2000, c. 30, s. 39
 
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