Excise Tax Act

Marginal note:Definitions

• 232.01 (1) In this section and in section 232.02,

  • (a) employer resource and specified resource have the same meanings as in section 172.1;

  • (b) claim period has the meaning assigned by subsection 259(1); and

  • (c) eligible amount, non-qualifying pension entity, pension rebate amount, provincial pension rebate amount, qualifying employer and qualifying pension entity have the same meanings as in section 261.01.

• Total tax amount

  (2) In this section, total tax amount of a tax adjustment note issued under subsection (3) means the total of the federal component amount and the provincial component amount of the tax adjustment note.

• Marginal note:Tax adjustment note — subsection 172.1(5)

  (3) A person may, on a particular day, issue to a pension entity a note (in this section referred to as a “tax adjustment note”) in respect of all or part of a specified resource, specifying an amount determined in accordance with paragraph (4)(a) (in this section referred to as the “federal component amount” of the tax adjustment note) and an amount determined in accordance with paragraph (4)(b) (in this section referred to as the “provincial component amount” of the tax adjustment note), if

  • (a) the person is deemed under paragraph 172.1(5)(b) to have collected tax, on or before the particular day, in respect of a taxable supply of the specified resource or part deemed to have been made by the person under paragraph 172.1(5)(a);

  • (b) a supply of the specified resource or part is deemed to have been received by the pension entity under subparagraph 172.1(5)(d)(i) and tax in respect of that supply is deemed to have been paid under subparagraph 172.1(5)(d)(ii) by the pension entity; and

  • (c) an amount of tax becomes payable, or is paid without having become payable, to the person (otherwise than by the operation of section 172.1) by the pension entity in respect of a taxable supply of the specified resource or part on or before the particular day.

• Marginal note:Federal and provincial component amounts

  (4) For a tax adjustment note issued under subsection (3) on a particular day in respect of a specified resource or part,

  • (a) the federal component amount shall not exceed the amount determined by the formula

    A – B

    where

    A

    is the lesser of

    • (i) the amount determined for A in the formula in paragraph 172.1(5)(c) in respect of the specified resource or part, and

    • (ii) the total of all amounts, each of which is an amount of tax under subsection 165(1) that became payable, or was paid without having become payable, to the person (otherwise than by the operation of section 172.1) by the pension entity in respect of a taxable supply of the specified resource or part on or before the particular day, and

    B

    is the total of all amounts, each of which is the federal component amount of another tax adjustment note issued under subsection (3) on or before the particular day in respect of the specified resource or part; and

  • (b) the provincial component amount shall not exceed the amount determined by the formula

    C – D

    where

    C

    is the lesser of

    • (i) the amount determined for B in the formula in paragraph 172.1(5)(c) in respect of the specified resource or part, and

    • (ii) the total of all amounts, each of which is an amount of tax under subsection 165(2) that became payable, or was paid without having become payable, to the person (otherwise than by the operation of section 172.1) by the pension entity in respect of a taxable supply of the specified resource or part on or before the particular day, and

    D

    is the total of all amounts, each of which is the provincial component amount of another tax adjustment note issued under subsection (3) on or before the particular day in respect of the specified resource or part.

• Marginal note:Effect of tax adjustment note

  (5) If a person issues a tax adjustment note to a pension entity under subsection (3) in respect of all or part of a specified resource, a supply of the specified resource or part is deemed to have been received by the pension entity under subparagraph 172.1(5)(d)(i) and tax (in this subsection referred to as “deemed tax”) in respect of that supply is deemed to have been paid on a particular day under subparagraph 172.1(5)(d)(ii) by the pension entity, the following rules apply:

  • (a) the total tax amount of the tax adjustment note may be deducted in determining the net tax of the person for its reporting period that includes the day on which the tax adjustment note is issued;

  • (b) the pension entity shall add, in determining its net tax for its reporting period that includes the day on which the tax adjustment note is issued, the amount determined by the formula

    A × (B/C)

    where

    A

    is the total of all input tax credits that the pension entity is entitled to claim in respect of the deemed tax,

    B

    is

    • (i) if the pension entity was a selected listed financial institution on the particular day, the federal component amount of the tax adjustment note, and

    • (ii) in any other case, the total tax amount of the tax adjustment note, and

    C

    is the amount of the deemed tax;

  • (c) if any part of the amount of the deemed tax is an eligible amount of the pension entity for a particular claim period of the pension entity and the pension entity was a qualifying pension entity on the last day of the particular claim period, the pension entity shall pay to the Receiver General, on or before the last day of its claim period that immediately follows its claim period that includes the day on which the tax adjustment note is issued, the amount determined by the formula

    A × B × (C/D) × [(E – F)/E]

    where

    A

    is that part of the amount of the deemed tax,

    B

    is 33%,

    C

    is

    • (i) if the pension entity was a selected listed financial institution on the particular day, the federal component amount of the tax adjustment note, and

    • (ii) in any other case, the total tax amount of the tax adjustment note,

    D

    is the amount of the deemed tax,

    E

    is the pension rebate amount of the pension entity for the particular claim period, and

    F

    is the total determined for B in the formula in subsection 261.01(2) in respect of the pension entity for the particular claim period; and

  • (d) if any part of the amount of the deemed tax is an eligible amount of the pension entity for a claim period of the pension entity for which an election under any of subsections 261.01(5), (6) or (9) was made jointly by the pension entity and all participating employers of the pension plan that were, for the calendar year that includes the last day of the claim period, qualifying employers of the pension plan, each of those participating employers shall add, in determining its net tax for its reporting period that includes the day on which the tax adjustment note is issued, the amount determined by the formula

    A × B × (C/D) × (E/F)

    where

    A

    is that part of the amount of the deemed tax,

    B

    is 33%,

    C

    is

    • (i) if the pension entity was a selected listed financial institution on the particular day, the federal component amount of the tax adjustment note, and

    • (ii) in any other case, the total tax amount of the tax adjustment note,

    D

    is the amount of the deemed tax,

    E

    is the amount of the deduction determined for the participating employer under subsection 261.01(5), paragraph 261.01(6)(b) or subsection 261.01(9), as the case may be, for the claim period, and

    F

    is

    • (i) if the pension entity was a selected listed financial institution on the particular day, the total of the pension rebate amount of the pension entity for the claim period and the provincial pension rebate amount of the pension entity for the claim period, and

    • (ii) in any other case, the pension rebate amount of the pension entity for the claim period.

• Marginal note:Prescribed form and manner

  (6) A tax adjustment note issued under subsection (3) shall be issued in prescribed form containing prescribed information and in a manner satisfactory to the Minister.

• Marginal note:Notification

  (7) If a tax adjustment note is issued under subsection (3) to a pension entity of a pension plan and, as a consequence of that issuance, paragraph (5)(d) applies to a participating employer of the pension plan, the pension entity shall, in prescribed form containing prescribed information and in a manner satisfactory to the Minister, forthwith notify the participating employer of that issuance.

• Marginal note:Joint and several liability

  (8) If a participating employer of a pension plan is required to add an amount to its net tax under paragraph (5)(d) as a consequence of the issuance of a tax adjustment note under subsection (3) to a pension entity of the pension plan, the participating employer and the pension entity are jointly and severally, or solidarily, liable to pay the amount to the Receiver General.

• Marginal note:Assessment

  (9) The Minister may assess a person for any amount for which the person is liable under subsection (8) and, if the Minister sends a notice of assessment, sections 296 to 311 apply, with such modifications as the circumstances require.

• Marginal note:Liability where participating employer ceases to exist

  (10) If a participating employer of a pension plan has ceased to exist on or before the day on which a tax adjustment note is issued under subsection (3) to a pension entity of the pension plan and the participating employer would have been required, had it not ceased to exist, to add an amount to its net tax under paragraph (5)(d) as a consequence of that issuance, the pension entity shall pay the amount to the Receiver General on or before the last day of its claim period that immediately follows its claim period that includes the day on which the tax adjustment note is issued.

• Marginal note:Requirement to maintain records

  (11) Despite section 286, every person that issues a tax adjustment note under subsection (3) shall maintain, for a period of six years from the day on which the tax adjustment note was issued, evidence satisfactory to the Minister that the person was entitled to issue the tax adjustment note for the amount for which it was issued.