Marginal note:Seizure and repossession
183 (1) Where at any time after 1990 property of a person is, for the purpose of satisfying in whole or in part a debt or obligation owing by the person to another person (in this section referred to as the “creditor”), seized or repossessed by the creditor under a right or power exercisable by the creditor (other than a right or power that the creditor has under, or because of being a party to, a lease, licence or similar arrangement by which the person acquired the property),
(a) for the purposes of this Part, the person shall be deemed to have made, and the creditor shall be deemed to have received, at that time, a supply by way of sale of the property;
(b) for the purposes of this Part (other than sections 193 and 257), that supply shall be deemed to have been made for no consideration;
(c) where the supply referred to in paragraph (a) is a taxable supply of real property, for the purposes of sections 193 and 257, the tax payable in respect of the supply shall be deemed to be equal to tax calculated on the fair market value of the property at that time; and
(d) where the supply referred to in paragraph (a) is a supply of real property included in section 9 of Part I of Schedule V, in section 1 of Part V.1 of that Schedule or in section 25 of Part VI of that Schedule, for the purposes of sections 193 and 257, the supply is deemed to be a taxable supply and the tax payable in respect of the supply is deemed to be equal to tax calculated on the fair market value of the property at that time.
Marginal note:Supply in commercial activity
(2) Subject to subsection (3), where at any time a creditor who has seized or repossessed property, in circumstances in which subsection (1) applies, makes a particular supply (other than an exempt supply) of the property, except where any of subsections (4) to (6) applied at an earlier time in respect of the use of the property by the creditor, the creditor shall be deemed, for the purposes of this Part, to have made the particular supply in the course of a commercial activity of the creditor and anything done by the creditor in the course of, or in connection with, the making of the supply and not in connection with the seizure or repossession shall be deemed to have been done in the course of the commercial activity.
Marginal note:Court seizures
(3) Where a court, for the purposes of satisfying an amount owing under a judgment of the court, orders a sheriff, bailiff or other officer of the court to seize property of the judgment debtor and subsequently makes a supply of the property, the supply of the property by the court shall be deemed, for the purposes of this Part, to be a supply made otherwise than in the course of a commercial activity.
Marginal note:Use of real property
(4) For the purposes of this Part, where a creditor who has seized or repossessed real property in circumstances in which subsection (1) applies or would, but for subsection (11), apply, begins at any time to use the property otherwise than in the making of a supply of the property, the creditor shall be deemed to have made a supply of the property at that time and, except where the supply is an exempt supply,
(a) to have collected, at that time, tax in respect of the supply equal to the amount determined by the formula
(A/B) × C
where
- A
- is
(i) 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
(ii) 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 fair market value of the property at that time; and
(b) to have acquired the property and paid that tax at that time.
Marginal note:Use of personal property seized before 1994
(5) For the purposes of this Part, where a creditor who has seized or repossessed personal property from a person before 1994, in circumstances in which subsection (1) applies or would, but for subsection (11), apply, begins at a particular time to use the property otherwise than in the making of a supply of the property, the following rules apply:
(a) the creditor is deemed to have received, immediately after the particular time, a particular supply by way of sale of the property; and
(b) where tax would have been payable had the property been purchased in Canada from the person at the time it was seized or repossessed, the creditor shall be deemed
(i) to have made, at the particular time, a taxable supply of the property and to have collected, at the particular time, tax in respect of that supply equal to the amount determined by the formula
(A/B) × C
where
- A
- is
(A) if the property is situated in a participating province at the particular time, 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 fair market value of the property at the time it was seized or repossessed, and
(ii) to have paid, immediately after the particular time, tax in respect of the particular supply equal to the amount determined under subparagraph (i).
Marginal note:Use of personal property seized after 1993
(6) For the purposes of this Part, where a creditor who has seized or repossessed personal property from a person after 1993, in circumstances in which subsection (1) applies or would, but for subsection (11), apply, begins at a particular time to use the property otherwise than in the making of a supply of the property,
(a) the creditor is deemed
(i) to have received, immediately after the particular time, a supply by way of sale of the property, and
(ii) except where
(A) that supply is a zero-rated supply, or
(B) in the case of property that was, at the time it was seized or repossessed, specified tangible personal property having a fair market value in excess of the prescribed amount in respect of the property, tax would not have been payable had the property been purchased in Canada from the person at that time,
to have paid, immediately after the particular time, all tax payable in respect of the supply, which is deemed to be equal to the amount determined by the formula
(A/B) × C
where
- A
- is
(I) the rate set out in subsection 165(1) if
1 the property is situated in a participating province at the particular time, it was seized or repossessed before the day that is three years after the harmonization date for that province and tax would not have been payable had the property been purchased in Canada from the person at the time it was seized or repossessed, or
2 the property is situated in a non-participating province at the particular time, and
(II) in any other case, the total of the rate set out in subsection 165(1) and the tax rate for the participating province in which the property is situated at the particular time,
- B
- is the total of 100% and the percentage determined for A, and
- C
- is the fair market value of the property at the time it was seized or repossessed; and
(b) where tax would have been payable had the property been purchased in Canada from the person at the time it was seized or repossessed, the creditor is deemed to have made, at the particular time, a taxable supply of the property and to have collected, at the particular time, all tax payable in respect of that supply, which is deemed to be equal to the amount determined by the formula
(A/B) × C
where
- A
- is
(i) if the property is situated in a participating province at the particular time, the total of the rate set out in subsection 165(1) and the tax rate for that province, and
(ii) 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 fair market value of the property at the time it was seized or repossessed.
Marginal note:Sale of personal property
(7) For the purposes of this Part, where a creditor who has seized or repossessed personal property from a person in circumstances in which subsection (1) applies makes at any time a particular taxable supply of the property by way of sale (other than a supply deemed under this Part to have been made), the creditor was not deemed under subsection (5), (6) or (8) to have received a supply of the property at an earlier time and no tax would have been payable by the creditor had the creditor purchased the property from the person in Canada at the time it was seized or repossessed, except where
(a) the particular supply is made outside Canada or is a zero-rated supply, and
(b) the property was seized or repossessed by the creditor before 1994 or was, at the time of the seizure or repossession, specified tangible personal property having a fair market value in excess of the prescribed amount in respect of the property,
the creditor shall be deemed
(c) to have received a supply by way of sale of the property immediately before that time for consideration equal to the consideration for the particular supply, and
(d) except if the supply deemed under paragraph (c) to have been received is a zero-rated supply, to have paid, immediately before that time, all tax payable in respect of the supply deemed to have been received, which is deemed to be equal to the amount determined by the formula
A - B
where
- A
- is
(i) if
(A) the property was seized or repossessed in a participating province by the creditor before the day that is three years after the harmonization date for that province and the particular supply is either made outside Canada or is a zero-rated supply, or
(B) either the property was seized or repossessed in a non-participating province or the particular supply is a supply (other than a zero-rated supply) made in a non-participating province,
tax under subsection 165(1) calculated on that consideration, and
(ii) in any other case, the total of
(A) tax under subsection 165(1) calculated on that consideration, and
(B) tax under subsection 165(2) calculated on that consideration at the lesser of the tax rate for the participating province in which the particular supply is made and the tax rate for the participating province in which the property was seized or repossessed, and
- B
- is the total of all amounts each of which is an input tax credit or a rebate under this Part that the creditor was entitled to claim in respect of the property or an improvement thereto.
Marginal note:Lease of personal property
(8) For the purposes of this Part, if at a particular time a creditor who has seized or repossessed personal property from a person in circumstances in which subsection (1) applies makes a particular taxable supply of the property by way of lease, licence or similar arrangement for the first lease interval (within the meaning of subsection 136.1(1)) in respect of the arrangement, the creditor was not deemed under subsection (5) or (6) to have received a supply of the property at an earlier time and no tax would have been payable had the property been purchased in Canada from the person at the time it was seized or repossessed, except if
(a) the particular supply is made outside Canada or is a zero-rated supply, and
(b) the property was seized or repossessed by the creditor before 1994 or was, at the time it was seized or repossessed, specified tangible personal property having a fair market value in excess of the prescribed amount in respect of the property,
the creditor shall be deemed
(c) to have received a supply by way of sale of the property immediately before the particular time, and
(d) except if that supply is a zero-rated supply, to have paid, immediately before the particular time, all tax payable in respect of that supply, which is deemed to be equal to
(i) if
(A) the property was seized or repossessed in a participating province by the creditor before the day that is three years after the harmonization date for that province and the particular supply is either made outside Canada or is a zero-rated supply, or
(B) either the property was seized or repossessed in a non-participating province or the particular supply is a supply (other than a zero-rated supply) made in a non-participating province,
tax under subsection 165(1) calculated on the fair market value of the property at the time it was seized or repossessed, and
(ii) in any other case, the total of
(A) tax under subsection 165(1) calculated on that fair market value, and
(B) tax under subsection 165(2) calculated on that fair market value at the lesser of the tax rate for the participating province in which the particular supply is made and the tax rate for the participating province in which the property was seized or repossessed.
Marginal note:Voluntary transfer
(9) For the purposes of this section, where property is at any time voluntarily transferred by a particular person to another person for the purpose of satisfying in whole or in part a debt or obligation in respect of which the particular person is in default, the other person shall be deemed to have seized or repossessed the property from the particular person at that time in circumstances in which subsection (1) applies.
Marginal note:Debt security, etc.
(10) For the purposes of this Part, where
(a) for the purposes of satisfying in whole or in part a debt or obligation owing by a person, a creditor exercises a right under an Act of Parliament or the legislature of a province or an agreement relating to a debt security to cause the supply of property,
(b) subsection (3) does not apply to the supply, and
(c) a receiver (within the meaning assigned by subsection 266(1)) does not have authority in respect of the property,
the creditor shall be deemed to have seized the property immediately before that supply and that supply shall be deemed to have been made by the creditor and not by the person.
Marginal note:Redemption of property
(10.1) For the purposes of this Part, where
(a) for the purposes of satisfying in whole or in part a debt or obligation owing by a person (in this subsection referred to as the “debtor”), a creditor exercises a right under an Act of Parliament or the legislature of a province or an agreement relating to a debt security to cause the supply of property (in this subsection referred to as the “first supply”),
(b) the recipient of the first supply has paid an amount (in this subsection referred to as the “tax amount”) as or on account of tax with respect to that supply, and
(c) under the Act or the agreement, the debtor has a right to redeem the property and the debtor exercises that right,
the following rules apply:
(d) the redemption of the property is deemed to be a supply of the property made by way of sale by the recipient of the first supply to the debtor for no consideration, and
(e) where the property was redeemed from the recipient of the first supply and an amount has been reimbursed by the debtor to the creditor or that recipient on account of the tax amount,
(i) except for the purposes of this section, the debtor is deemed not to have supplied the property to the creditor under subsection (1) or to have received a supply of the property at the time of the redemption,
(ii) the debtor is deemed, for the purposes of section 261, to have paid tax in error at the time of the redemption equal to the amount so reimbursed,
(iii) where the tax amount has been included in determining a rebate or an input tax credit claimed by that recipient in an application or return, the amount of the rebate or the input tax credit shall be added in determining the net tax of that recipient for the reporting period in which the property was redeemed, and
(iv) the tax amount shall not be included in determining a rebate or an input tax credit claimed by that recipient in an application or a return filed after the redemption of the property.
Marginal note:Application of s. 266
(11) Where a creditor
(a) exercises a right or power to seize or repossess property for the purpose of satisfying in whole or in part a debt or obligation owing by a person and is, in respect of the property, a receiver (within the meaning assigned by subsection 266(1)), or
(b) appoints an agent to exercise a right or power to seize or repossess property for the purpose of satisfying in whole or in part a debt or obligation owing by a person and the agent is, in respect of the property, a receiver (within the meaning assigned by subsection 266(1)),
subsections (1), (2) and (7) to (9) do not apply and section 266 applies.
- [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. 47
- 1997, c. 10, ss. 33, 177
- 2000, c. 30, s. 35
- 2006, c. 4, s. 10
- 2009, c. 32, s. 10
- 2017, c. 33, s. 123(F)
- Date modified: