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

SUBDIVISION DCapital Property

Marginal note:Prescribed property

195 For the purposes of this Part, where a person acquires or imports prescribed property or brings it into a participating province for use as capital property of the person, the property is deemed to be personal property and not real property.

Marginal note:Residential complex not capital property

• 195.1 (1) For the purposes of this Part, other than sections 148 and 249, a residential complex shall be deemed not to be, at a particular time, capital property of a builder of the complex unless

  • (a) at or before the particular time, the construction or substantial renovation of the complex was substantially completed; and

  • (b) at or after the time the construction or substantial renovation of the complex was substantially completed and at or before the particular time, the builder received an exempt supply of the complex or was deemed under section 191 to have received a taxable supply of the complex.

• Marginal note:Addition not capital property

  (2) For the purposes of this Part, other than sections 148 and 249, an addition to a multiple unit residential complex shall be deemed not to be, at a particular time, capital property of a builder of the addition unless

  • (a) at or before the particular time, the construction of the addition was substantially completed; and

  • (b) at or after the time the construction of the addition was substantially completed and at or before the particular time, the builder received an exempt supply of the complex or was deemed under subsection 191(4) to have received a taxable supply of the addition.

Marginal note:Last acquisition or importation

• 195.2 (1) For the purposes of this Part (other than Division III and Schedule VII), an importation of property shall not be considered in determining the last acquisition or importation of the property

  • (a) where tax under Division III was not paid on the property in respect of that importation because the property was included in section 1 or 9 of Schedule VII or the property was included in section 8 of that Schedule and was classified under heading 98.13 or 98.14 of Schedule I to the Customs Tariff, or would have been so classified but for Note 11(a) to Chapter 98 of that Schedule;

  • (b) where tax under Division III on the property in respect of that importation was calculated on a value determined under the Value of Imported Goods (GST/HST) Regulations, other than section 8 or 12 or a prescribed section of those Regulations; or

  • (c) in prescribed circumstances.

• Marginal note:Importation of improvement

  (2) For the purposes of this Part (other than Division III and Schedule VII), where a person imports capital property of the person that was improved outside Canada and tax under Division III is payable on a value, determined under the Value of Imported Goods (GST/HST) Regulations, that does not exceed the value of the improvement, the importation shall be deemed to be an importation of the improvement.

• Marginal note:Application before 1991

  (3) For the purposes of determining the last acquisition or importation of property, this Part shall be deemed to have been in force at all times before 1991.

Marginal note:Intended and actual use

• 196 (1) For the purposes of this Part, where a person at any time acquires or imports property for use to a particular extent in a particular way, the person shall be deemed to use the property immediately after that time to the particular extent in the particular way.

• Marginal note: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.

Marginal note:Appropriation to use as capital property

196.1 For the purposes of this Part, where a registrant, at a particular time, appropriates property of the registrant for use as capital property of the registrant or in improving capital property of the registrant and, immediately before the particular time, the property was not capital property of the registrant or an improvement to capital property of the registrant,

• (a) the registrant shall be deemed

  • (i) to have made, immediately before the particular time, a supply of the property by way of sale, and

  • (ii) where the property was last acquired or imported by the registrant before the particular time for consumption, use or supply, or was consumed or used before the particular time, in the course of commercial activities of the registrant, to have collected, at the particular time, tax in respect of the supply calculated on the fair market value of the property at the particular time; and

• (b) the registrant shall be deemed to have received, at the particular time, a supply of the property by way of sale and to have paid, at the particular time, tax in respect of the supply equal to

  • (i) where the property was last acquired or imported by the registrant before the particular time for consumption, use or supply, or was consumed or used before the particular time, in the course of commercial activities of the registrant and the supply is not an exempt supply, tax calculated on the fair market value of the property at the particular time, and

  • (ii) in any other case, the basic tax content of the property at the particular time.

Marginal note:Insignificant changes in use

197 For the purposes of subsections 206(2), (3) and (5), 207(2) and 208(2) and (3), where in any period

• (a) beginning on the later of

  • (i) the day a registrant last acquired or imported property for use as capital property of the registrant, and

  • (ii) the day subsection 206(3) or (5), 207(2) or 208(3) last applied to the property, and

• (b) ending at any time after that day,

the extent to which the registrant changed the use of the property in commercial activities of the registrant is less than 10% of the total use of the property, the registrant shall be deemed to have used the property throughout that period to the same extent and in the same way as the registrant used the property at the beginning of that period, unless the registrant is an individual who began in that period to use the property primarily for the personal use and enjoyment of the individual or a related individual.

Marginal note:Use in supply of financial services

198 For the purposes of this Part, to the extent that a registrant who is neither a listed financial institution nor a person who is a financial institution because of paragraph 149(1)(b) uses property as capital property of the registrant in the making of supplies of financial services that relate to commercial activities of the registrant,

• (a) where the registrant is a financial institution because of paragraph 149(1)(c), the registrant is deemed to use the property in those commercial activities only to the extent that the registrant does not use the property in 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 registrant is deemed to use the property in those commercial activities.

Marginal note:Basic tax content of property of a municipality

• 198.1 (1) In the case of property of a municipality that is not a listed financial institution, the basic tax content of the property at any time after January 30, 2004 shall be determined by applying the following rules:

  • (a) in determining the value of A in paragraph (a) of the definition basic tax content in subsection 123(1), an amount of tax described by any of subparagraphs (i) to (v) of the description of A may be included only if the tax

    • (i) became payable, or would have become payable in the absence of the circumstances described in subparagraph (iii) or (iv) of that description, after January 2004 under subsection 165(1) or section 212 or 218 in respect of the property, or

    • (ii) was payable, or would have been payable in the absence of the circumstances described in subparagraph (iii) or (iv) of that description, under subsection 165(2), 212.1(2) or 218.1(1) or Division IV.1 in respect of the property;

  • (b) in determining the value of B in paragraph (a) of the definition basic tax content in subsection 123(1), any reference in the description of B to tax referred to in a subparagraph of the description of A shall be read to include an amount of tax only if the tax is included in the determination of the value of A in accordance with paragraph (a) of this subsection;

  • (c) in determining the value of J in paragraph (b) of the definition basic tax content in subsection 123(1),

    • (i) paragraphs (a) and (b) of this subsection shall be applied in determining the basic tax content referred to in subparagraph (i) of the description of J, and

    • (ii) an amount of tax described by any of subparagraphs (iii) to (vi) of the description of J may be included only if the tax

      • (A) became payable, or would have become payable in the absence of the circumstances described in subparagraph (iv) or (v) of that description, after January 2004 under subsection 165(1) or section 212 or 218 in respect of the improvements to the property, or

      • (B) was payable, or would have been payable in the absence of the circumstances described in subparagraph (iv) or (v) of that description, under subsection 165(2), 212.1(2) or 218.1(1) or Division IV.1 in respect of improvements to the property; and

  • (d) in determining the value of K in paragraph (b) of the definition basic tax content in subsection 123(1), any reference in the description of K to tax referred to in a subparagraph of the description of J shall be read to include an amount of tax only if the tax is included in the determination of the value of J in accordance with paragraph (c) of this subsection.

• Marginal note:Application to designated municipality

  (2) In subsection (1), municipality includes a person designated to be a municipality for the purposes of section 259 and, in the case of a person so designated, property means property that, on January 31, 2004, was property of the person and was consumed, used or supplied by the person otherwise than exclusively in the course of activities that are not activities specified in the designation.

198.2 [Repealed, 1997, c. 10, s. 188]

Capital Personal Property

Marginal note:Application

• 199 (1) This section does not apply in respect of

  • (a) property of a registrant that is a financial institution or a prescribed registrant; or

  • (b) a passenger vehicle or an aircraft of a registrant who is an individual or a partnership.

• Marginal note:Acquisition of capital personal property

  (2) Where a registrant acquires or imports personal property or brings it into a participating province for use as capital property,

  • (a) the tax payable by the registrant in respect of the acquisition, importation or bringing in of the property shall not be included in determining an input tax credit of the registrant for any reporting period unless the property was acquired, imported or brought in, as the case may be, for use primarily in commercial activities of the registrant; and

  • (b) where the registrant acquires, imports or brings in the property for use primarily in commercial activities of the registrant, the registrant is deemed, for the purposes of this Part, to have acquired, imported or brought in the property, as the case may be, for use exclusively in commercial activities of the registrant.

• Marginal note:Beginning use of personal property

  (3) For the purposes of this Part, where a registrant last acquired or imported personal property for use as capital property of the registrant but not for use primarily in commercial activities of the registrant and the registrant begins, at a particular time, to use the property as capital property primarily in commercial activities of the registrant, except where the registrant becomes a registrant at the particular time, the registrant shall be deemed

  • (a) to have received, at the particular time, a supply of the property by way of sale; and

  • (b) except where the supply is an exempt supply, to have paid, at the particular time, tax in respect of the supply equal to the basic tax content of the property at the particular time.

• Marginal note:Improvement to capital personal property

  (4) Where a registrant acquires, imports or brings into a participating province an improvement to personal property that is capital property of the registrant, tax payable by the registrant in respect of the acquisition, importation or bringing in shall not be included in determining an input tax credit of the registrant unless, at the time that tax becomes payable or is paid without having become payable, the capital property is used primarily in commercial activities of the registrant.

• Marginal note:Use of musical instrument

  (5) For the purposes of subsections (2) and (3) and 200(2) and (3), where an individual who is a registrant uses a musical instrument that is capital property of the individual in an employment of the individual or in a business carried on by a partnership of which the individual is a member, that use is deemed to be use in commercial activities of the individual.

Marginal note:Application

• 200 (1) This section does not apply in respect of

  • (a) property of a registrant that is a financial institution or a prescribed registrant; or

  • (b) a passenger vehicle or an aircraft of a registrant who is an individual or a partnership.

• Marginal note:Ceasing use of personal property

  (2) For the purposes of this Part, where a registrant last acquired or imported personal property for use as capital property primarily in commercial activities of the registrant and the registrant begins, at a particular time, to use the property primarily for other purposes, the registrant shall be deemed

  • (a) to have made, immediately before the particular time, a supply of the property by way of sale and to have collected, at the particular time, tax in respect of the supply equal to the basic tax content of the property at the particular time; and

  • (b) to have received, at the particular time, a supply of the property by way of sale and to have paid, at the particular time, tax in respect of the supply equal to the basic tax content of the property at the particular time.

• Marginal note:Sale of personal property

  (3) Despite paragraph 141.1(1)(a) but subject to section 141.2, for the purposes of this Part, if a registrant (other than a government) makes a supply by way of sale of personal property that is capital property of the registrant and, before the earlier of the time that ownership of the property is transferred to the recipient and the time that possession of the property is transferred to the recipient under the agreement for the supply, the registrant was last using the property otherwise than primarily in commercial activities of the registrant, the supply is deemed to have been made in the course of activities of the registrant that are not commercial activities.

• Marginal note:Sale of personal property of a government

  (4) Despite subsection 141.1(1) but subject to section 141.2, for the purposes of this Part, if a supplier that is a government makes a supply by way of sale of particular personal property that is capital property of the supplier,

  • (a) if

    • (i) it is the case that

      • (A) the supplier is an agent of Her Majesty in right of Canada that is prescribed for the purposes of the definition specified Crown agent in subsection 123(1),

      • (B) the supplier is an agent of Her Majesty in right of a province that is prescribed for the purposes of that definition and the particular property is prescribed property, or

      • (C) the supplier is an agent of Her Majesty in right of a province and, if the particular property was last acquired or imported by the supplier after 1990 for consumption, use or supply in the course of particular activities of the supplier, the particular property was so acquired or imported in a period during which, because of an agreement under section 32 of the Federal-Provincial Fiscal Arrangements Act entered into by the government of the province, the supplier generally paid tax in respect of property or services acquired or imported for consumption, use or supply in the course of the particular activities and did not recover that tax pursuant to any entitlement under that Act or the Constitution Act, 1867,

    • (ii) the supplier is a registrant, and

    • (iii) before the earlier of the time that ownership of the particular property is transferred to the recipient of the supply and the time possession of the particular property is transferred to the recipient under the agreement for the supply, the supplier was last using the particular property otherwise than primarily in commercial activities of the supplier,

    the supply is deemed to have been made in the course of activities of the supplier that are not commercial activities; and

  • (b) if none of clauses (a)(i)(A) to (C) apply, the supply is deemed to have been made in the course of commercial activities of the supplier.