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

Marginal note:Excluded amount

• 172.2 (1) For the purposes of this section, an excluded amount of a master pension entity is an amount of tax that

  • (a) is deemed to have been paid by the master pension entity under this Part (other than section 191);

  • (b) became payable, or was paid without having become payable, by the master pension entity at a time when it was entitled to claim a rebate under section 259; or

  • (c) is payable under subsection 165(1), or is deemed under section 191 to have been paid, by the master pension entity in respect of a taxable supply to the master pension entity of a residential complex, an addition to a residential complex or land if, in respect of that supply, the master pension entity is entitled to claim a rebate under section 256.2 or would be so entitled after paying the tax payable in respect of that supply.

• Marginal note:Designated pension entity

  (2) For the purposes of this section,

  • (a) if a person is a master pension entity of a pension plan having, at any time, only one pension entity, that pension entity is, at that time, the designated pension entity of the pension plan in respect of the person; and

  • (b) if a person is a master pension entity of a pension plan having, at any time, two or more pension entities and if an election made jointly under subsection (4) by the person and one of those pension entities is in effect at that time, that pension entity is, at that time, the designated pension entity of the pension plan in respect of the person.

• Marginal note:Tax deemed paid by designated pension entity — section 261.01

  (3) For the purposes of section 261.01, if a particular amount of tax becomes payable, or is paid without having become payable, by a master pension entity of one or more pension plans at any time in a fiscal year of the master pension entity and if the particular amount of tax is not an excluded amount of the master pension entity, then, for each of those pension plans, the designated pension entity of the pension plan at that time in respect of the master pension entity is deemed to have paid at that time an amount of tax equal to the amount determined by the formula

  A × B

  where

  A

  is

  • (a) if the designated pension entity is a selected listed financial institution and the particular amount of tax is payable under any of subsection 165(2), sections 212.1 and 218.1 and Division IV.1, zero, and

  • (b) in any other case, the amount determined by the formula

    A₁ − A₂

    where

    A₁

    is the particular amount of tax, and

    A₂

    is the total of all amounts, each of which is included in the particular amount of tax and is

    • (i) an input tax credit that the master pension entity is entitled to claim in respect of the particular amount of tax,

    • (ii) an amount for which it can reasonably be regarded that the master pension entity has obtained or is entitled to obtain a rebate, refund or remission under any other section of this Act or under any other Act of Parliament, or

    • (iii) an amount that can reasonably be regarded as being included in an amount adjusted, refunded or credited to or in favour of the master pension entity for which a credit note referred to in subsection 232(3) has been received by the master pension entity or a debit note referred to in that subsection has been issued by the master pension entity; and

  B

  is the master pension factor in respect of the pension plan for the fiscal year of the master pension entity that includes that time.

• Marginal note:Designated pension entity election

  (4) A master pension entity of a pension plan having two or more pension entities may jointly elect with one of those pension entities, in prescribed form containing prescribed information, to have that pension entity be, while the election is in effect, the designated pension entity of the pension plan in respect of the master pension entity for the purposes of this section.

• Marginal note:Effective period of election

  (5) An election made under subsection (4) by a particular person that is a master pension entity of a pension plan and by another person that is a pension entity of the pension plan becomes effective on the day set out in the election and ceases to have effect on the earliest of

  • (a) the day on which the particular person ceases to be a master pension entity of the pension plan,

  • (b) the day on which the other person ceases to be a pension entity of the pension plan,

  • (c) the day on which an election made under subsection (4) by the particular person and by a third person that is a pension entity of the pension plan becomes effective, and

  • (d) the day specified in a revocation of the election made under subsection (6).

• Marginal note:Revocation

  (6) A master pension entity and a pension entity that have jointly made an election under subsection (4) may jointly revoke the election, in prescribed form containing prescribed information, effective on the day specified in the revocation.

Taxable Benefits

Marginal note:Employee and shareholder benefits

• 173 (1) Where a registrant makes a supply (other than an exempt or zero-rated supply) of property or a service to an individual or a person related to the individual and

  • (a) an amount (in this subsection referred to as the “benefit amount”) in respect of the supply is required under paragraph 6(1)(a), (e), (k) or (l) or subsection 15(1) of the Income Tax Act to be included in computing the individual’s income for a taxation year of the individual, or

  • (b) the supply relates to the use or operation of an automobile and an amount (in this subsection referred to as a “reimbursement”) is paid by the individual or a person related to the individual that reduces the amount in respect of the supply that would otherwise be required under paragraph 6(1)(e), (k) or (l) or subsection 15(1) of that Act to be so included,

  the following rules apply:

  • (c) in the case of a supply of property otherwise than by way of sale, the use made by the registrant in so providing the property to the individual or person related to the individual is deemed, for the purposes of this Part, to be use in commercial activities of the registrant and, to the extent that the registrant acquired or imported the property or brought it into a participating province for the purpose of making that supply, the registrant is deemed, for the purposes of this Part, to have so acquired or imported the property or brought it into the province, as the case may be, for use in commercial activities of the registrant, and

  • (d) in any case, except where

    • (i) the registrant was, because of section 170, not entitled to claim an input tax credit in respect of the last acquisition, importation or bringing into a participating province of the property or service by the registrant,

    • (ii) an election under subsection (2) by the registrant in respect of the property is in effect at the beginning of the taxation year,

    • (iii) the registrant is an individual or a partnership and the property is a passenger vehicle or aircraft of the registrant that is not used by the registrant exclusively in commercial activities of the registrant, or

    • (iv) the registrant is not an individual, a partnership or a financial institution and the property is a passenger vehicle or aircraft of the registrant that is not used by the registrant primarily in commercial activities of the registrant,

    for the purpose of determining the net tax of the registrant,

    • (v) the total of the benefit amount and all reimbursements is deemed to be the total consideration payable in respect of the provision during the year of the property or service to the individual or person related to the individual,

    • (vi) the tax calculated on the total consideration is deemed to be equal to

      • (A) where the benefit amount is an amount that is or would, if the individual were an employee of the registrant and no reimbursements were paid, be required under paragraph 6(1)(k) or (l) of the Income Tax Act to be included in computing the individual’s income, the prescribed percentage of the total consideration, and

      • (B) in any other case, the amount determined by the formula

        (A/B) × C

        where

        A

        is

        • (I) where

          • 1. the benefit amount is required to be included under paragraph 6(1)(a) or (e) of the Income Tax Act in computing the individual’s income from an office or employment and the last establishment of the employer at which the individual ordinarily worked or to which the individual ordinarily reported in the year in relation to that office or employment is located in a participating province, or

          • 2. the benefit amount is required under subsection 15(1) of that Act to be included in computing the individual’s income and the individual is resident in a participating province at the end of the year,

          the total of 4% and the percentage determined in prescribed manner in respect of the participating province or, in the absence of a percentage determined in prescribed manner in respect of the participating province, the total of 4% and the tax rate for the participating province, and

        • (II) in any other case, 4%,

        B

        is the total of 100% and the percentage determined for A, and

        C

        is the total consideration.

    • (vii) that tax is deemed to have become collectible, and to have been collected, by the registrant

      • (A) except where clause (B) applies, on the last day of February of the year following the taxation year, and

      • (B) where the benefit amount is or would, if no reimbursements were paid, be required under subsection 15(1) of that Act to be included in computing the individual’s income and relates to the provision of the property or service in a taxation year of the registrant, on the last day of that taxation year.

• Marginal note:Election in respect of passenger vehicle or aircraft

  (2) Where

  • (a) in a reporting period of a registrant other than a financial institution, the registrant acquires a passenger vehicle or aircraft by way of lease for use otherwise than primarily in commercial activities of the registrant or the registrant uses, otherwise than primarily in commercial activities of the registrant, a passenger vehicle or aircraft that was last acquired by the registrant by way of lease, or

  • (b) in a reporting period of a registrant that is a financial institution, the registrant acquires a passenger vehicle or aircraft by way of purchase or lease or uses a passenger vehicle or aircraft that was last so acquired by the registrant,

  the registrant may make an election under this subsection in respect of the vehicle or aircraft to take effect on the first day of that reporting period of the registrant.

• Marginal note:Effect of election

  (3) For the purposes of this Part, where an election made by a registrant under subsection (2) in respect of property becomes effective on a day in a particular reporting period of the registrant,

  • (a) notwithstanding paragraph (1)(c), the registrant is deemed to have begun, on that day, to use the property exclusively in activities of the registrant that are not commercial activities and, at all times thereafter until the registrant next disposes of or ceases to lease the property, the registrant is deemed to use the property exclusively in activities of the registrant that are not commercial activities;

  • (b) where the property was last supplied to the registrant by way of lease,

    • (i) there shall not be included, in determining an input tax credit claimed by the registrant in the return under section 238 for the particular or any subsequent reporting period, tax calculated on consideration, or a part thereof, for that supply that is reasonably attributable to a period after that day, and

    • (ii) where an amount in respect of any tax referred to in subparagraph (i) was included in determining an input tax credit claimed by the registrant in a return under section 238 for a reporting period ending before the particular reporting period, that amount shall be added in determining the net tax of the registrant for the particular reporting period;

  • (c) where the property was last supplied to the registrant by way of sale, the registrant is a financial institution and the cost of the property to the registrant did not exceed $50,000,

    • (i) there shall not be included, in determining an input tax credit claimed by the registrant in the return under section 238 for the particular or any subsequent reporting period, tax that is calculated on consideration or part thereof, for that supply or that is in respect of an improvement to the property acquired, imported or brought into a participating province by the registrant after the property was last so acquired, imported or brought in, as the case may be, and

    • (ii) where an amount in respect of any tax referred to in subparagraph (i) was included in determining an input tax credit claimed by the registrant in a return under section 238 for a reporting period of the registrant ending before the particular reporting period, that amount shall be added in determining the net tax of the registrant for the particular reporting period; and

  • (d) there shall not be included, in determining an input tax credit claimed by the registrant in the return under section 238 for the particular or any subsequent reporting period, tax calculated on an amount of consideration, or a value determined under section 215 or subsection 220.05(1), 220.06(1) or 220.07(1), that can reasonably be attributed to

    • (i) any property that is acquired, imported or brought into a participating province for consumption or use in operating the vehicle or aircraft in respect of which the election is made and that is, or is to be used, or consumed after that day, or

    • (ii) that portion of any service relating to the operation of that vehicle or aircraft that is, or is to be, rendered after that day; and

  • (e) where an amount in respect of any tax referred to in paragraph (d) was included in determining an input tax credit claimed by the registrant in a return under section 238 for a reporting period ending before the particular reporting period, that amount shall be added in determining the net tax of the registrant for the particular reporting period.

• Marginal note:Form of election

  (4) An election made under subsection (2) shall be made in prescribed form containing prescribed information.

Allowances and Reimbursements

Marginal note:Travel and other allowances

174 For the purposes of this Part, where

• (a) a person pays an allowance

  • (i) to an employee of the person,

  • (ii) where the person is a partnership, to a member of the partnership, or

  • (iii) where the person is a charity or a public institution, to a volunteer who gives services to the charity or institution

  for

  • (iv) supplies all or substantially all of which are taxable supplies (other than zero-rated supplies) of property or services acquired in Canada by the employee, member or volunteer in relation to activities engaged in by the person, or

  • (v) the use in Canada, in relation to activities engaged in by the person, of a motor vehicle,

• (b) an amount in respect of the allowance is deductible in computing the income of the person for a taxation year of the person for the purposes of the Income Tax Act, or would have been so deductible if the person were a taxpayer under that Act and the activity were a business, and

• (c) in the case of an allowance to which subparagraph 6(1)(b)(v), (vi), (vii) or (vii.1) of that Act would apply

  • (i) if the allowance were a reasonable allowance for the purposes of that subparagraph, and

  • (ii) where the person is a partnership and the allowance is paid to a member of the partnership, if the member were an employee of the partnership, or, where the person is a charity or a public institution and the allowance is paid to a volunteer, if the volunteer were an employee of the charity or institution,

  the person considered, at the time the allowance was paid, that the allowance would be a reasonable allowance for those purposes and it is reasonable for the person to have considered, at that time, that the allowance would be a reasonable allowance for those purposes,

the following rules apply:

• (d) the person is deemed to have received a supply of the property or service,

• (e) any consumption or use of the property or service by the employee, member or volunteer is deemed to be consumption or use by the person and not by the employee, member or volunteer, and

• (f) the person is deemed to have paid, at the time the allowance is paid, tax in respect of the supply equal to the amount determined by the formula

  A × (B/C)

  where

  A

  is the amount of the allowance,

  B

  is

  • (i) in prescribed circumstances relating to a participating province, the percentage determined in prescribed manner, and

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

  C

  is the total of 100% and the percentage determined for B.