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

Marginal note:Overpayment of refund or interest

230.1 Where an amount is paid to, or applied to a liability of, a person as a refund, or as interest, under this Division and the person is not entitled to the refund or interest, as the case may be, or the amount paid or applied exceeds the refund or interest, as the case may be, to which the person is entitled, the person shall pay to the Receiver General an amount equal to the refund, interest or excess, as the case may be, on the day the refund, interest or excess, as the case may be, is paid to, or applied to a liability of, the person.

Marginal note:Definitions

• 230.2 (1) In this section,

  certified institution

  certified institution has the meaning assigned by section 2 of Part XIV of Schedule III; (institution agréée)

  specified property

  specified property means goods described in section 1 of Part XIV of Schedule III. (biens déterminés)

• Marginal note:Deduction from net tax

  (2) Where a registrant is a certified institution in a particular reporting period of the registrant, the registrant may, in determining the net tax for the particular reporting period or for a reporting period that ends within four years after the end of the particular period, deduct

  • (a) the total of all amounts that became collectible, or were collected without having become collectible, by the registrant in the particular period and in 1991 as or on account of tax under Division II in respect of specified property;

  • (b) 75% of the total of all amounts that became collectible, or were collected without having become collectible, by the registrant in the particular period and in 1992 as or on account of tax under Division II in respect of specified property;

  • (c) 50% of the total of all amounts that became collectible, or were collected without having become collectible, by the registrant in the particular period and in 1993 as or on account of tax under Division II in respect of specified property; and

  • (d) 25% of the total of all amounts that became collectible, or were collected without having become collectible, by the registrant in the particular period and in 1994 or 1995 as or on account of tax under Division II in respect of specified property.

Marginal note:Bad debt — deduction from net tax

• 231 (1) If a supplier has made a taxable supply (other than a zero-rated supply) for consideration to a recipient with whom the supplier was dealing at arm’s length, it is established that all or a part of the total of the consideration and tax payable in respect of the supply has become a bad debt and the supplier at any time writes off the bad debt in the supplier’s books of account, the reporting entity for the supply may, in determining the reporting entity’s net tax for the reporting period that includes that time or for a subsequent reporting period, deduct the amount determined by the formula

  A × B/C

  where

  A

  is the tax in respect of the supply;

  B

  is the total of the consideration, tax and applicable provincial tax remaining unpaid in respect of the supply that was written off at that time as a bad debt; and

  C

  is the total of the consideration, tax and applicable provincial tax in respect of the supply.

• Marginal note:Reporting and remittance conditions

  (1.1) A reporting entity is not entitled to deduct an amount under subsection (1) in respect of a supply unless

  • (a) the tax collectible in respect of the supply is included in determining the amount of net tax reported in the reporting entity’s return under this Division for the reporting period in which the tax became collectible; and

  • (b) all net tax remittable, if any, as reported in that return is remitted.

• (2) [Repealed, 2000, c. 30, s. 58]

• Marginal note:Recovery of bad debt

  (3) If all or part of a bad debt in respect of which a person has made a deduction under this section is recovered at any time, the person shall, in determining the person’s net tax for the reporting period that includes that time, add the amount determined by the formula

  A × B/C

  where

  A

  is the amount of the bad debt recovered at that time;

  B

  is the tax in respect of the supply to which the bad debt relates; and

  C

  is the total of the consideration, tax and applicable provincial tax in respect of the supply.

• Marginal note:Limitation period

  (4) A person may not claim a deduction under this section in respect of a bad debt relating to a supply unless the deduction is claimed in a return under this Division filed within four years after the day on or before which a return of the person was required to be filed for the reporting period in which the supplier has written off the bad debt in its books of account.

• Marginal note:Definitions

  (5) The following definitions apply in this section.

  applicable provincial tax

  applicable provincial tax, in respect of a supply, means any amount that can reasonably be attributed to a tax, duty or fee imposed under an Act of the legislature of a province in respect of the supply that is a prescribed tax, duty or fee for the purposes of section 154. (taxe provinciale applicable)

  reporting entity

  reporting entity for a supply means

  • (a) if an election has been made under subsection 177(1.1) in respect of the supply, the person who is required, under that subsection, to include the tax collectible in respect of the supply in determining the person’s net tax; and

  • (b) in any other case, the supplier. (déclarant)

Marginal note:No adjustment of provincial component of tax

231.1 The amount of tax under subsection 165(2) in respect of a supply that is equal to the amount in respect of the supply that may be deducted under subsection 234(3) by a person shall not be included in determining the amount that may be deducted or that is required to be added, as the case may be, under section 231 or 232 in determining the net tax of the person for any reporting period of the person.

Marginal note:Refund or adjustment of tax

• 232 (1) Where a particular person has charged to, or collected from, another person an amount as or on account of tax under Division II in excess of the tax under that Division that was collectible by the particular person from the other person, the particular person may, within two years after the day the amount was so charged or collected,

  • (a) where the excess amount was charged but not collected, adjust the amount of tax charged; and

  • (b) where the excess amount was collected, refund or credit the excess amount to that other person.

• Marginal note:Adjustment

  (2) Where a particular person has charged to, or collected from, another person tax under Division II calculated on the consideration or a part thereof for a supply and, for any reason, the consideration or part is subsequently reduced, the particular person may, in or within four years after the end of the reporting period of the particular person in which the consideration was so reduced,

  • (a) where tax calculated on the consideration or part was charged but not collected, adjust the amount of tax charged by subtracting the portion of the tax that was calculated on the amount by which the consideration or part was so reduced; and

  • (b) where the tax calculated on the consideration or part was collected, refund or credit to that other person the portion of the tax that was calculated on the amount by which the consideration or part was so reduced.

• Marginal note:Credit or debit notes

  (3) Where a particular person adjusts, refunds or credits an amount in favour of, or to, another person in accordance with subsection (1) or (2), the following rules apply:

  • (a) the particular person shall, within a reasonable time, issue to the other person a credit note, containing prescribed information, for the amount of the adjustment, refund or credit, unless the other person issues a debit note, containing prescribed information, for the amount;

  • (b) the amount may be deducted in determining the net tax of the particular person for the reporting period of the particular person in which the credit note is issued to the other person or the debit note is received by the particular person, to the extent that the amount has been included in determining the net tax for the reporting period or a preceding reporting period of the particular person;

  • (c) the amount shall be added in determining the net tax of the other person for the reporting period of the other person in which the debit note is issued to the particular person or the credit note is received by the other person, to the extent that the amount has been included in determining an input tax credit claimed by the other person in a return filed for a preceding reporting period of the other person; and

  • (d) if all or part of the amount has been included in determining a rebate under Division VI paid to, or applied to a liability of, the other person before the particular day on which the credit note is received, or the debit note is issued, by the other person and the rebate so paid or applied exceeds the rebate to which the other person would have been entitled if the amount adjusted, refunded or credited by the particular person had never been charged to or collected from the other person, the other person shall pay to the Receiver General under section 264 the excess as if it were an excess amount of that rebate paid to the other person

    • (i) if the other person is a registrant, on the day on or before which the other person’s return for the reporting period that includes the particular day is required to be filed, and

    • (ii) in any other case, on the last day of the calendar month immediately following the calendar month that includes the particular day.

• Marginal note:Application

  (4) This section does not apply in circumstances in which section 161 or 176 applies.

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.

• Marginal note: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 — subsections 172.1(5) and (5.1)

  (3) A person may, on a particular day, issue to a pension entity of a pension plan 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) or (5.1)(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) or (5.1)(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) or (5.1)(d)(i) and tax in respect of that supply is deemed to have been paid under subparagraph 172.1(5)(d)(ii) or (5.1)(d)(ii) by the pension entity; and

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

    • (i) by the pension entity, if the taxable supply referred to in paragraph (a) is deemed to have been made under paragraph 172.1(5)(a), or

    • (ii) by a master pension entity of the pension plan, if the taxable supply referred to in paragraph (a) is deemed to have been made under paragraph 172.1(5.1)(a).

• 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

    • (i) if the taxable supply referred to in paragraph (3)(a) is deemed to have been made under paragraph 172.1(5)(a), the lesser of

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

      • (B) 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

    • (ii) if the taxable supply referred to in paragraph (3)(a) is deemed to have been made under paragraph 172.1(5.1)(a), the lesser of

      • (A) the amount determined for the pension plan under the description of A in paragraph 172.1(5.1)(c) in respect of the specified resource or part, and

      • (B) the amount determined by the formula

        A₁ × A₂

        where

        A₁

        is 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 master pension entity referred to in subparagraph (3)(c)(ii) in respect of a taxable supply of the specified resource or part on or before the particular day, and

        A₂

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

    • (i) if the taxable supply referred to in paragraph (3)(a) is deemed to have been made under paragraph 172.1(5)(a), the lesser of

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

      • (B) 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

    • (ii) if the taxable supply referred to in paragraph (3)(a) is deemed to have been made under paragraph 172.1(5.1)(a), the lesser of

      • (A) the amount determined for the pension plan under the description of B in paragraph 172.1(5.1)(c) in respect of the specified resource or part, and

      • (B) the amount determined by the formula and

        C₁ × C₂

        where

        C₁

        is 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 master pension entity referred to in subparagraph (3)(c)(ii) in respect of a taxable supply of the specified resource or part on or before the particular day, and

        C₂

        is the master pension factor in respect of the pension plan for the fiscal year of the master pension entity that includes 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) or (5.1)(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) or (5.1)(d)(ii) or paragraph 172.1(8.01)(b) 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 included in the determination of the pension rebate amount of the pension entity for a particular claim period of the pension entity, the pension entity shall pay to the Receiver General — on or before the day that is the later of the day on which the application for the rebate is filed and the day that is 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)

    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 rebate determined for the pension entity under subsection 261.01(2) for the particular claim period, and

    F

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

  • (d) if any part of the amount of the deemed tax is included in the determination of the pension rebate amount of the pension entity for a claim period of the pension entity and if the pension entity makes an election for the claim period under any of subsections 261.01(5), (6) or (9) jointly with all participating employers of the pension plan that are, 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 that is the later of the day on which the tax adjustment note is issued and the day on which the election is filed with the Minister, 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 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.