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

Full Document:  

Act current to 2022-07-25 and last amended on 2022-06-23. Previous Versions

PART IXGoods and Services Tax (continued)

DIVISION IIGoods and Services Tax (continued)

SUBDIVISION DCapital Property (continued)

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
Capital Real Property

Marginal note:Application

  •  (1) Subject to subsection 211(1), this section does not apply in respect of property acquired by a registrant who is

    • (a) an individual;

    • (b) a public sector body that is not a financial institution; or

    • (c) a prescribed registrant.

  • Marginal note:Beginning use in commercial activities

    (2) For the purposes of this Part, where a registrant last acquired real property for use as capital property of the registrant but not for use in commercial activities of the registrant and the registrant begins, at a particular time, to use the property as capital property 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:Increasing use in commercial activities

    (3) Where a registrant last acquired real property for use as capital property in commercial activities of the registrant and the registrant increases, at a particular time, the extent to which the property is used in commercial activities of the registrant, for the purposes of determining an input tax credit of the registrant, the registrant shall be deemed

    • (a) to have received, immediately before the particular time, a supply of a portion of the property for use as capital property exclusively in commercial activities of the registrant; 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 amount determined by the formula

      A × B

      where

      A
      is the basic tax content of the property at the particular time, and
      B
      is the extent (expressed as a percentage of the total use of the property by the registrant at the particular time) to which the registrant increased the use of the property in commercial activities of the registrant at the particular time.
  • Marginal note:Ceasing use in commercial activities

    (4) For the purposes of this Part, where a registrant last acquired real property for use as capital property in commercial activities of the registrant and the registrant begins, at a particular time, to use the property exclusively 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, except where the supply is an exempt supply, 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, except where the supply is an exempt supply, to have paid, at the particular time, tax in respect of the supply equal to the amount determined under paragraph (a).

  • Marginal note:Reducing use in commercial activities

    (5) Except where subsection (4) applies, where a registrant last acquired real property for use as capital property in commercial activities of the registrant and the registrant reduces, at a particular time, the extent to which the property is used in commercial activities of the registrant, for the purposes of determining the net tax of the registrant for the reporting period of the registrant that includes the particular time, the registrant shall be deemed

    • (a) to have made, immediately before the particular time, a supply of a portion of the property; and

    • (b) except where the supply is an exempt supply, to have collected, at the particular time, tax in respect of the supply equal to the amount determined by the formula

      A × B

      where

      A
      is the basic tax content of the property at the particular time, and
      B
      is the extent (expressed as a percentage of the total use of the property by the registrant at the particular time) to which the registrant reduced the use of the property in commercial activities of the registrant 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. 72
  • 1997, c. 10, s. 194

Marginal note:Individual ceasing use in commercial activities

  •  (1) For the purposes of this Part, where an individual who is a registrant last acquired real property for use as capital property in commercial activities of the individual, and not primarily for the personal use and enjoyment of the individual or a related individual, and the individual begins, at a particular time, to use the property exclusively for other purposes, or primarily for the personal use and enjoyment of the individual or a related individual, the individual shall be deemed

    • (a) to have made, immediately before the particular time, a supply of the property by way of sale and, except where the supply is an exempt supply, to have collected, at the particular time, tax in respect of the supply equal to the amount determined by the formula

      A - B

      where

      A
      is the basic tax content of the property at the particular time, and
      B
      is the tax, if any, that the individual is deemed under section 190 to have collected at the particular time in respect of the property; and
    • (b) to have received, at the particular time, a supply of the property by way of sale and, except where the supply is an exempt supply, to have paid, at the particular time, tax in respect of the supply equal to the amount determined under paragraph (a).

  • Marginal note:Individual reducing use in commercial activities

    (2) Except where subsection (1) applies, where an individual who is a registrant last acquired real property for use as capital property in commercial activities of the individual, and not primarily for the personal use and enjoyment of the individual or a related individual, and the individual reduces, at a particular time, the extent to which the property is used in commercial activities of the individual without beginning to use the property primarily for the personal use and enjoyment of the individual or a related individual, for the purposes of determining the net tax of the individual, the individual shall be deemed

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

    • (b) except where the supply is an exempt supply, to have collected, at the particular time, tax in respect of the supply equal to the amount determined by the formula

      (A × B) - C

      where

      A
      is the basic tax content of the property at the particular time,
      B
      is the extent (expressed as a percentage of the total use of the property by the individual at the particular time) to which the individual reduced the use of the property in commercial activities of the individual at the particular time, and
      C
      is the tax, if any, that the individual is deemed under section 190 to have collected at the particular time in respect of the 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. 73
  • 1997, c. 10, s. 195

Marginal note:Acquisition of capital real property by individual

  •  (1) Subject to this section, where an individual who is a registrant acquires real property for use as capital property of the individual but primarily for the personal use and enjoyment of the individual or a related individual, the tax payable by the individual in respect of the acquisition of the property shall not be included in determining an input tax credit of the individual.

  • Marginal note:Individual beginning use in commercial activities

    (2) For the purposes of this Part, where an individual who is a registrant last acquired real property for use as capital property of the individual and

    • (a) primarily for the personal use and enjoyment of the individual or a related individual, or

    • (b) not for use in commercial activities of the individual,

    and the individual begins, at a particular time, to use the property as capital property in commercial activities of the individual and not primarily for the personal use and enjoyment of the individual or a related individual, the individual is deemed

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

    • (d) 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:Individual increasing use in commercial activities

    (3) Where an individual who is a registrant last acquired real property for use as capital property in commercial activities of the individual and not primarily for the personal use and enjoyment of the individual or a related individual, and the individual increases, at a particular time, the extent to which the property is used in commercial activities of the individual without beginning to use the property primarily for the personal use and enjoyment of the individual or a related individual, for the purposes of determining an input tax credit of the individual, the individual shall be deemed

    • (a) to have received, at the particular time, a supply by way of sale of a portion of the property for use as capital property exclusively in commercial activities of the individual; 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 amount determined by the formula

      A × B

      where

      A
      is the basic tax content of the property at the particular time, and
      B
      is the extent (expressed as a percentage of the total use of the property by the individual at the particular time) to which the individual increased the use of the property in commercial activities of the individual at the particular time.
  • Marginal note:Improvement to capital real property by individual

    (4) Where an individual who is a registrant acquires, imports or brings into a participating province an improvement to real property that is capital property of the individual, the tax payable by the individual in respect of the improvement shall not be included in determining an input tax credit of the individual if, at the time that tax becomes payable or is paid without having become payable, the property is primarily for the personal use and enjoyment of the individual or a related individual.

  • [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. 74
  • 1997, c. 10, ss. 40.1, 196
 
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