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

Full Document:  

Act current to 2019-06-20 and last amended on 2019-06-17. Previous Versions

PART IXGoods and Services Tax (continued)

DIVISION IIGoods and Services Tax (continued)

SUBDIVISION DCapital Property (continued)

Marginal note:Sale of passenger vehicle

  •  (1) If a registrant (other than a municipality), at a particular time in a reporting period of the registrant, makes a taxable supply by way of sale of a passenger vehicle (other than a vehicle that is designated municipal property of a person designated at the particular time to be a municipality for the purposes of section 259) that, immediately before the particular time, was used as capital property in commercial activities of the registrant, the registrant may, despite section 170, paragraph 199(2)(a) and subsections 199(4) and 202(1), claim an input tax credit for that period equal to the amount determined by the formula

    A × (B - C)/B

    where

    A
    is the basic tax content of the vehicle at the particular time;
    B
    is the total of
    • (a) the tax that was payable by the registrant in respect of the last acquisition or importation of the vehicle by the registrant,

    • (b) where the registrant brought the vehicle into a participating province after it was last acquired or imported by the registrant, the tax that was payable by the registrant in respect of bringing it into that province, and

    • (c) the tax that was payable by the registrant in respect of improvements to the vehicle acquired, imported or brought into a participating province by the registrant after the property was last acquired or imported; and

    C
    is the total of all input tax credits that the registrant was entitled to claim in respect of any tax included in the total for B.
  • Marginal note:Ceasing to use passenger vehicle, etc.

    (2) For the purposes of this Part, where a registrant who is an individual or a partnership acquired or imported a passenger vehicle or an aircraft for use as capital property exclusively in commercial activities of the registrant and the registrant begins, at any time, to use the vehicle or aircraft otherwise than exclusively in commercial activities of the registrant, the registrant shall be deemed to have

    • (a) made, immediately before that time, a taxable supply by way of sale of the vehicle or aircraft; and

    • (b) collected, at that time, tax in respect of the supply equal to the basic tax content of the vehicle or aircraft immediately before that time.

  • Marginal note:Sale of passenger vehicle, etc.

    (3) Despite paragraph 141.1(1)(a), for the purposes of this Part, a supply shall be deemed not to be a taxable supply if

    • (a) an individual or a partnership (other than a municipality) who is a registrant makes, at a particular time, the supply by way of sale of a passenger vehicle or an aircraft (other than a vehicle or an aircraft that is designated municipal property of a person designated at the particular time to be a municipality for the purposes of section 259) that is capital property of the registrant; and

    • (b) at any time after the individual or partnership became a registrant and before the particular time, the registrant did not use the vehicle or aircraft exclusively in commercial activities of the registrant.

  • Marginal note:Sale of passenger vehicle by a municipality

    (4) If a registrant (other than an individual or a partnership) that is a municipality or a person designated to be a municipality for the purposes of section 259, at a particular time in a reporting period of the registrant, makes a taxable supply by way of sale of a passenger vehicle (other than a vehicle of a person designated to be a municipality for the purposes of section 259 that is not designated municipal property of the person) that, immediately before the particular time, was capital property of the registrant, the registrant may, despite section 170, paragraph 199(2)(a) and subsections 199(4) and 202(1), claim an input tax credit for that period equal to the lesser of

    • (a) the amount determined by the formula

      A × (B – C)/B

      where

      A
      is the basic tax content of the vehicle at the particular time,
      B
      is the total of
      • (i) the tax that was payable by the registrant in respect of the last acquisition or importation of the vehicle by the registrant,

      • (ii) if the registrant brought the vehicle into a participating province after it was last acquired or imported by the registrant, the tax that was payable by the registrant in respect of bringing it into that province, and

      • (iii) the tax that was payable by the registrant in respect of improvements to the vehicle acquired, imported or brought into a participating province by the registrant after the property was last acquired or imported, and

      C
      is the total of all input tax credits that the registrant was entitled to claim in respect of any tax included in the total for B, and
    • (b) the tax that is or would, in the absence of section 167, be payable in respect of the taxable supply.

  • [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. 70
  • 1997, c. 10, s. 193
  • 2004, c. 22, s. 36

Marginal note:Application

  •  (1) This section does not apply to personal property of a financial institution having a cost to the institution of $50,000 or less.

  • Marginal note:Personal property of a financial institution

    (2) Where a financial institution is a registrant, subsections 206(2) to (5) apply, with such modifications as the circumstances require, to personal property acquired or imported by the institution for use as capital property of the institution, and to improvements to personal property that is capital property of the institution, as if the personal property were real property.

  • Marginal note:Credit on sale

    (3) Where a financial institution is a registrant, subsection 193(1) applies, with such modifications as the circumstances require, to personal property (other than a passenger vehicle) acquired or imported by the institution for use as capital property of the institution, as if the personal property were real property.

  • [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. 71

Marginal note:Financial institution making election for exempt supplies

  •  (1) Where an election made by a registrant under subsection 150(1) becomes effective at a particular time, the registrant was a financial institution immediately before the particular time and, as a result of the election becoming effective, the registrant reduces at the particular time the extent to which personal property of the registrant is used as capital property in commercial activities of the registrant, subsections 193(1) and 206(4) and (5) apply, with such modifications as the circumstances require, to the reduction in use, as if the property were real property.

  • Marginal note:Registrant becoming financial institution

    (2) Where a registrant at any time becomes a financial institution and, immediately before that time, the registrant was using personal property of the registrant as capital property of the registrant, the following rules apply:

    • (a) where, immediately before that time, the registrant was not using the property primarily in commercial activities of the registrant and, immediately after that time, the property is for use in commercial activities of the registrant, the registrant shall be deemed, for the purposes of this Part, to have changed at that time the extent to which the property is used in commercial activities of the registrant, and subsection 206(2) applies, with such modifications as the circumstances require, to the change in use as if the property were real property that was not used immediately before that time in commercial activities of the registrant; and

    • (b) where, immediately before that time, the registrant was using the property primarily in commercial activities of the registrant and, immediately after that time, the property is not for use exclusively in commercial activities of the registrant, the registrant shall be deemed, for the purposes of this Part, to have changed at that time the extent to which the property is used in commercial activities of the registrant, and subsections 193(1) and 206(4) and (5) apply, with such modifications as the circumstances require, to the change in use as if the property were real property used immediately before that time exclusively in commercial activities of the registrant.

  • Marginal note:Registrant ceasing to be financial institution

    (3) Where a registrant at any time ceases to be a financial institution and, immediately before that time, the registrant was using personal property of the registrant as capital property of the registrant, the following rules apply:

    • (a) where, immediately before that time, the registrant was using the property as capital property but not exclusively in commercial activities of the registrant and, immediately after that time, the property is for use primarily in commercial activities of the registrant, the registrant shall be deemed, for the purposes of this Part, to have begun at that time to use the property exclusively in commercial activities of the registrant, and subsections 206(2) and (3) apply, with such modifications as the circumstances require, to the change in use as if the property were real property; and

    • (b) where, immediately before that time, the registrant was using the property as capital property in commercial activities of the registrant and, immediately after that time, the property is not for use primarily in commercial activities of the registrant, the registrant shall be deemed, for the purposes of this Part, to have ceased at that time to use the property in commercial activities of the registrant, and subsections 193(1) and 206(4) apply, with such modifications as the circumstances require, to the change in use as if the property were real property.

  • Marginal note:Acquisition of a business

    (4) Notwithstanding section 197, where

    • (a) in acquiring a business or part of a business from a registrant, a financial institution that is a registrant is deemed under subsection 167(1) to have acquired property for use exclusively in commercial activities of the institution, and

    • (b) immediately after the time possession of the property is transferred to the institution under the agreement for the supply of the business or part, the property is for use by the institution as capital property of the institution but not exclusively in commercial activities of the institution,

    subsections 193(1) and 206(4) and (5) apply, with such modifications as the circumstances require, to the change in use of the property as if the property were real property.

  • Marginal note:Acquisition of asset

    (4.1) Despite section 197, subsection 193(1) applies to the supplier of a supply of capital personal property that is made under an agreement for a qualifying supply (as defined in subsection 167.11(1)), and subsections 206(4) and (5) apply to the recipient of the supply of capital personal property, with any modifications that the circumstances require, as if the property were real property if

    • (a) the supplier and the recipient are both registrants at the time the qualifying supply is made and they make a joint election referred to in subsection 167.11(2) in respect of the qualifying supply;

    • (b) in acquiring the property, the recipient is deemed under subsection 167.11(3) to have acquired the property for use exclusively in commercial activities of the recipient; and

    • (c) immediately after the earlier of the time the ownership of the property and the time the possession of the property is transferred to the recipient under the agreement for the qualifying supply, the property is for use by the recipient as capital property of the recipient but not exclusively in commercial activities of the recipient.

  • Marginal note:Idem

    (5) Notwithstanding section 197, where

    • (a) in acquiring a business or part of a business from a registrant, a financial institution that is a registrant is deemed under subsection 167(1) to have acquired property but not for use in commercial activities of the institution,

    • (b) possession of the property is transferred to the institution under the agreement for the supply of the business or part after 1993, and

    • (c) immediately after the transfer, the property is for use by the institution as capital property of the institution in commercial activities of the institution,

    subsection 206(2) applies, with such modifications as the circumstances require, to the change in use of the property as if the property were real property.

  • Marginal note:Acquisition of asset

    (5.1) Despite section 197, subsection 206(2) applies to the recipient of a supply of capital personal property that is made under an agreement for a qualifying supply (as defined in subsection 167.11(1)), with any modifications that the circumstances require, as if the property were real property if

    • (a) the supplier and the recipient of the capital personal property are both registrants at the time the qualifying supply is made and they make a joint election referred to in subsection 167.11(2) in respect of the qualifying supply;

    • (b) in acquiring the property, the recipient is deemed under subsection 167.11(3) to have acquired the property for use exclusively in activities of the recipient that are not commercial activities; and

    • (c) immediately after the earlier of the time the ownership of the property and the time the possession of the property is transferred to the recipient under the agreement for the qualifying supply, the property is for use by the recipient as capital property of the recipient in commercial activities of the recipient.

  • Marginal note:Amalgamation

    (6) Where

    • (a) a particular corporation that is not a financial institution is merged or amalgamated with one or more other corporations to form a corporation (in this subsection referred to as the “new corporation”) that is a financial institution in circumstances to which section 271 applies,

    • (b) the new corporation is a registrant, and

    • (c) personal property that was capital property of the particular corporation becomes at any time the property of the new corporation as a consequence of the merger or amalgamation,

    subsection (2) applies to the property as if the new corporation became a financial institution at that time.

  • Marginal note:Winding-up

    (7) Where

    • (a) a particular corporation that is not a financial institution is wound up at a particular time in circumstances to which section 272 applies,

    • (b) not less than 90% of the issued shares of each class of the capital stock of the corporation were, immediately before the particular time, owned by another corporation (in this subsection referred to as the “new corporation”) that is a financial institution,

    • (c) the new corporation is a registrant, and

    • (d) personal property that was capital property of the particular corporation becomes at any time the property of the new corporation as a consequence of the winding-up,

    subsection (2) applies to the property as if the new corporation became a financial institution at the particular time.

  • [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. 71
  • 2007, c. 18, s. 17
 
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