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

Total tax amount

• 232.02 (1) In this section, total tax amount of a tax adjustment note issued under subsection (2) 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(6) and (6.1)

  (2) 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 employer resources consumed or used for the purpose of making a supply (in this section referred to as the “actual pension supply”) of property or a service to the pension entity or to a master pension entity of the pension plan, specifying an amount determined in accordance with paragraph (3)(a) (in this section referred to as the “federal component amount” of the tax adjustment note) and an amount determined in accordance with paragraph (3)(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(6)(b) or (6.1)(b) to have collected tax, on or before the particular day, in respect of one or more taxable supplies, deemed to have been made by the person under paragraph 172.1(6)(a) or (6.1)(a), of the employer resources;

  • (b) a supply of each of those employer resources is deemed to have been received by the pension entity under subparagraph 172.1(6)(d)(i) or (6.1)(d)(i) and tax in respect of each of those supplies is deemed to have been paid under subparagraph 172.1(6)(d)(ii) or (6.1)(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 the actual pension supply

    • (i) by the pension entity, if the taxable supplies referred to in paragraph (a) are deemed to have been made under paragraph 172.1(6)(a), or,

    • (ii) by the master pension entity, if the taxable supplies referred to in paragraph (a) are deemed to have been made under paragraph 172.1(6.1)(a).

• Marginal note:Federal and provincial component amounts

  (3) For a tax adjustment note issued under subsection (2) on a particular day in respect of employer resources consumed or used for the purpose of making an actual pension supply,

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

    A – B

    where

    A

    is

    • (i) if the taxable supplies referred to in paragraph (2)(a) are deemed to have been made under paragraph 172.1(6)(a), the lesser of

      • (A) the total of all amounts, each of which is an amount determined for A in paragraph 172.1(6)(c) in determining an amount of tax that is in respect of one of those employer resources and that is deemed under paragraph 172.1(6)(b) to have become payable and to have been collected on or before the particular day, 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 the actual pension supply on or before the particular day, and

    • (ii) if the taxable supplies referred to in paragraph (2)(a) are deemed to have been made under paragraph 172.1(6.1)(a), the lesser of

      • (A) the total of all amounts, each of which is an amount determined for the pension plan under the description of A in paragraph 172.1(6.1)(c) in determining an amount of tax that is in respect of one of those employer resources and that is deemed under paragraph 172.1(6.1)(b) to have become payable and to have been collected on or before the particular day, 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 subsection (2) in respect of the actual pension supply 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 (2) on or before the particular day in respect of employer resources consumed or used for the purpose of making the actual pension supply; and

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

    C – D

    where

    C

    is

    • (i) if the taxable supplies referred to in paragraph (2)(a) are deemed to have been made under paragraph 172.1(6)(a), the lesser of

      • (A) the total of all amounts, each of which is an amount determined for B in paragraph 172.1(6)(c) in determining an amount of tax that is in respect of one of those employer resources and that is deemed under paragraph 172.1(6)(b) to have become payable and to have been collected on or before the particular day, 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 the actual pension supply on or before the particular day, and

    • (ii) if the taxable supplies referred to in paragraph (2)(a) are deemed to have been made under paragraph 172.1(6.1)(a), the lesser of

      • (A) the total of all amounts, each of which is an amount determined for the pension plan under the description of B in paragraph 172.1(6.1)(c) in determining an amount of tax that is in respect of one of those employer resources and that is deemed under paragraph 172.1(6.1)(b) to have become payable and to have been collected on or before the particular day, and

      • (B) the amount determined by the formula

        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 subsection (2) in respect of the actual pension supply 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 (2) on or before the particular day in respect of employer resources consumed or used for the purpose of making the actual pension supply.

• Marginal note:Effect of tax adjustment note

  (4) If a person issues a tax adjustment note to a pension entity under subsection (2) in respect of particular employer resources consumed or used for the purpose of making an actual pension supply, a supply of each of those particular employer resources (each of which in this subsection is referred to as a “particular supply”) is deemed to have been received by the pension entity under subparagraph 172.1(6)(d)(i) or (6.1)(d)(i) and tax (in this subsection referred to as “deemed tax”) in respect of each of the particular supplies is deemed to have been paid under subparagraph 172.1(6)(d)(ii) or (6.1)(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 amounts, each of which is the total of all input tax credits that the pension entity is entitled to claim in respect of deemed tax in respect of a particular supply,

    B

    is

    • (i) if the pension entity was a selected listed financial institution on the particular day that is the first day on which an amount of deemed tax is deemed to have been paid, 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 total of all amounts, each of which is an amount of deemed tax in respect of a particular supply;

  • (c) for each particular claim period of the pension entity for which any part of an amount of deemed tax in respect of a particular supply is included in the determination of the pension rebate amount 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 the total of all amounts, each of which is the part of an amount of deemed tax in respect of a particular supply that is an eligible amount of the pension entity for the particular claim period,

    B

    is 33%,

    C

    is

    • (i) if the pension entity was a selected listed financial institution on the particular day referred to in paragraph (b), 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 total of all amounts, each of which is an amount of deemed tax in respect of a particular supply,

    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) for each claim period of the pension entity for which any part of an amount of deemed tax in respect of a particular supply is included in the determination of the pension rebate amount of the pension entity and for which an election under any of subsections 261.01(5), (6) or (9) is made jointly by the pension entity and 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 the total of all amounts, each of which is the part of an amount of deemed tax in respect of a particular supply that is an eligible amount of the pension entity for the claim period,

    B

    is 33%,

    C

    is

    • (i) if the pension entity was a selected listed financial institution on the particular day referred to in paragraph (b), 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 total of all amounts, each of which is an amount of deemed tax in respect of a particular supply,

    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

  (5) A tax adjustment note issued under subsection (2) shall be issued in prescribed form containing prescribed information and in a manner satisfactory to the Minister.

• Marginal note:Notification

  (6) If a tax adjustment note is issued under subsection (2) to a pension entity of a pension plan and, as a consequence of that issuance, paragraph (4)(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

  (7) If a participating employer of a pension plan is required to add an amount to its net tax under paragraph (4)(d) as a consequence of the issuance of a tax adjustment note under subsection (2) 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

  (8) The Minister may assess a person for any amount for which the person is liable under subsection (7) 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

  (9) 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 (2) 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 (4)(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

  (10) Despite section 286, every person that issues a tax adjustment note under subsection (2) 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.

Marginal note:Promotional allowances

232.1 For the purposes of this Part, if

• (a) a particular registrant acquires particular tangible personal property exclusively for supply by way of sale for a price in money in the course of commercial activities of the particular registrant, and

• (b) another registrant, who has made taxable supplies of the particular property by way of sale, whether to the particular registrant or another person,

  • (i) pays to or credits in favour of the particular registrant, or

  • (ii) allows as a discount on or credit against the price of any property or service (in this section referred to as the “discounted property or service”) supplied by the other registrant to the particular registrant,

  an amount in return for the promotion of the particular property by the particular registrant,

the following rules apply:

• (c) the amount is deemed not to be consideration for a supply by the particular registrant to the other registrant,

• (d) where the amount is allowed as a discount on or credit against the price of the discounted property or service,

  • (i) if the other registrant has previously charged to or collected from the particular registrant tax under Division II calculated on the consideration or part of it for the supply of the discounted property or service, the amount of the discount or credit is deemed to be a reduction in the consideration for that supply for the purposes of subsection 232(2), and

  • (ii) in any other case, the value of the consideration for the supply of the discounted property or service is deemed to be the amount, if any, by which the value of the consideration as otherwise determined for the purposes of this Part exceeds the amount of the discount or credit, and

• (e) if the amount is not allowed as a discount on or credit against the price of any discounted property or service supplied to the particular registrant, the amount is deemed to be a rebate in respect of the particular property for the purposes of section 181.1.

Meaning of specified amount

• 233 (1) In this section, specified amount, in respect of a patronage dividend paid by a person in a fiscal year of the person, means the amount determined by the formula

  A × [(B + D)/(C + D)]

  where

  A

  is the amount of the patronage dividend;

  B

  is the total value of all consideration that became due, or was paid without having become due, in the immediately preceding fiscal year of the person while the person was a registrant for taxable supplies (other than supplies by way of sale of capital property of the person and zero-rated supplies) made in Canada by the person;

  C

  is the total value of all consideration that became due, or was paid without having become due, in the immediately preceding fiscal year of the person for taxable supplies (other than supplies by way of sale of capital property of the person) made in Canada by the person; and

  D

  is the total of all tax that became payable, or was paid without having become payable, in the immediately preceding fiscal year of the person in respect of taxable supplies (other than supplies by way of sale of capital property of the person) made by the person.

• Marginal note:Patronage dividends

  (2) For the purposes of this Part, if, at any time in a fiscal year of a particular person, the particular person pays to another person a patronage dividend all or part of which is in respect of supplies (in this subsection referred to as “specified supplies”) that are taxable supplies (other than zero-rated supplies) made by the particular person to the other person, the particular person is deemed

  • (a) to have reduced, at that time,

    • (i) the total consideration for all supplies (in this subparagraph referred to as the “participating province’s supplies”) that are specified supplies made in a participating province and to which subsection 165(2) applied by the amount determined by the formula

      (100%/A) × B

      where

      A

      is the total of 100%, the rate set out in subsection 165(1) and the tax rate for that province, and

      B

      is

      • (A) if the particular person has made an election under this subsection that is in effect for that fiscal year, the part of the dividend that is in respect of the participating province’s supplies, and

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

        (C/D) × E

        where

        C

        is the portion of the total of the values determined, in computing the specified amount in respect of the dividend, for B and D in subsection (1) that is attributable to supplies made in that province,

        D

        is the total referred to in the description of C, and

        E

        is the specified amount in respect of the dividend, and

    • (ii) the total consideration for all supplies (in this subparagraph referred to as the “non-participating provinces’ supplies”) that are specified supplies to which subsection 165(2) did not apply by the amount determined by the formula

      (100%/A) × B

      where

      A

      is the total of 100% and the rate set out in subsection 165(1),

      B

      is

      • (A) if the particular person has made an election under this subsection that is in effect for that fiscal year, the part of the dividend that is in respect of the non-participating province’s supplies, and

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

        (C/D) × E

        where

        C

        is the portion of the total of the values determined, in computing the specified amount in respect of the dividend, for B and D in subsection (1) that is attributable to supplies made in non-participating provinces,

        D

        is the total referred to in the description of C, and

        E

        is the specified amount in respect of the dividend; and

  • (b) to have made, at that time, the appropriate adjustment, refund or credit in favour of, or to, the other person under subsection 232(2).

• Marginal note:Exception

  (3) Subsection (2) does not apply to a patronage dividend paid by a person in a fiscal year of the person for which an election made by the person under this subsection is in effect, in which event the dividend shall be deemed not to be a reduction of the consideration for any supplies.

• Marginal note:Time for election

  (4) An election made under subsection (2) or (3) by a person shall be made before any patronage dividend is paid by the person in the fiscal year of the person in which the election is to take effect.

• Marginal note:Revocation of election

  (5) An election made under subsection (2) or (3) by a person may be revoked by the person in a fiscal year of the person if the revocation is to take effect before any patronage dividend is paid by the person in that year.

• Marginal note:Date of payment of dividend

  (6) For the purposes of this section, a dividend shall be deemed to be paid on the day that it is declared.