Excise Tax Act

Marginal note:Supply to insurer on settlement of claim

• 184 (1) For the purposes of this Part, where at any time after 1990 property of a person is transferred to an insurer in the course of settling an insurance claim, the following rules apply:

  • (a) for the purposes of this Part, the person shall be deemed to have made, and the insurer shall be deemed to have received, at that time, a supply by way of sale of the property;

  • (b) for the purposes of this Part (other than sections 193 and 257), that supply shall be deemed to have been made for no consideration;

  • (c) in the case of a taxable supply of real property, for the purposes of sections 193 and 257, the tax payable in respect of the supply shall be deemed to be equal to tax calculated on the fair market value of the property at that time; and

  • (d) in the case of a supply of real property included in section 9 of Part I of Schedule V, in section 1 of Part V.1 of that Schedule or in section 25 of Part VI of that Schedule, for the purposes of sections 193 and 257, the supply is deemed to be a taxable supply and the tax payable in respect of the supply is deemed to be equal to tax calculated on the fair market value of the property at that time.

• Marginal note:Supply in commercial activity

  (2) Where at any time an insurer makes a particular supply (other than an exempt supply) of property transferred to the insurer in circumstances in which subsection (1) applies, except where any of subsections (3) to (5) applied at an earlier time in respect of the use of the property by the insurer, the insurer shall be deemed, for the purposes of this Part, to have made the particular supply in the course of a commercial activity of the insurer and anything done by the insurer in the course of, or in connection with, the making of the supply and not in connection with the transfer of the property shall be deemed to have been done in the course of the commercial activity.

• Marginal note:Use of real property

  (3) For the purposes of this Part, where at any time an insurer to whom real property has been transferred, in circumstances in which subsection (1) applies, begins to use the property otherwise than in the making of a supply of the property, the insurer shall be deemed to have made a supply of the property at that time and, except where the supply is an exempt supply,

  • (a) to have collected, at that time, tax in respect of the supply equal to the amount determined by the formula

    (A/B) × C

    where

    A

    is

    • (i) if the supply is made in a participating province, the total of the rate set out in subsection 165(1) and the tax rate for that province, and

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

    B

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

    C

    is the fair market value of the property at that time; and

  • (b) to have acquired the property and paid that tax at that time.

• Marginal note:Use of personal property transferred before 1994

  (4) For the purposes of this Part, where an insurer to whom personal property has been transferred from a person before 1994, in circumstances in which subsection (1) applies, begins at a particular time to use the property otherwise than in the making of a supply of the property, the following rules apply:

  • (a) the insurer is deemed to have received, immediately after the particular time, a particular supply by way of sale of the property; and

  • (b) where tax would have been payable had the property been purchased in Canada from the person for consideration at the time it was transferred, the insurer shall be deemed

    • (i) to have made, at the particular time, a taxable supply of the property and to have collected, at the particular time, tax in respect of that supply equal to the amount determined by the formula

      (A/B) × C

      where

      A

      is

      • (A) if the property is situated in a participating province at the particular time, the total of the rate set out in subsection 165(1) and the tax rate for that province, and

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

      B

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

      C

      is the fair market value of the property at the time it was transferred, and

    • (ii) to have paid, immediately after the particular time, tax in respect of the particular supply equal to the amount determined under subparagraph (i).

• Marginal note:Use of personal property transferred after 1993

  (5) For the purposes of this Part, where an insurer to whom personal property has been transferred from a person after 1993, in circumstances in which subsection (1) applies, begins at a particular time to use the property otherwise than in the making of a supply of the property,

  • (a) the insurer is deemed

    • (i) to have received, immediately after the particular time, a supply by way of sale of the property, and

    • (ii) except where

      • (A) that supply is a zero-rated supply, or

      • (B) in the case of property that was, at the time it was transferred, specified tangible personal property having a fair market value in excess of the prescribed amount in respect of the property, tax would not have been payable had the property been purchased in Canada from the person at that time,

      to have paid, immediately after the particular time, all tax payable in respect of that supply, which is deemed to be equal to the amount determined by the formula

      (A/B) × C

      where

      A

      is

      • (A) the rate set out in subsection 165(1) if

        • (I) the property is situated in a participating province at the partic­ular time, it was transferred before the day that is three years after the implementation date for that province (as defined in section 348) and tax would not have been payable had the property been purchased in Canada from the person at the time it was transferred, or

        • (II) the property is situated in a non-participating province at the particular time, and

      • (B) in any other case, the total of the rate set out in subsection 165(1) and the tax rate for the participating province in which the property is situated at the particular time,

      B

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

      C

      is the fair market value of the property at the time it was transferred; and

  • (b) where tax would have been payable had the property been purchased in Canada from the person at the time it was transferred, the insurer is deemed to have made, at the particular time, a taxable supply of the property and to have collected, at the particular time, all tax payable in respect of that supply, which is deemed to be equal to the amount determined by the formula

    (A/B) × C

    where

    A

    is

    • (i) if the property is situated in a participating province at the particular time, the total of the rate set out in subsection 165(1) and the tax rate for that province, and

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

    B

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

    C

    is the fair market value of the property at the time it was transferred.

• Marginal note:Sale of personal property

  (6) For the purposes of this Part, where an insurer to whom personal property has been transferred from a person in circumstances in which subsection (1) applies makes at any time a particular taxable supply of the property by way of sale (other than a supply deemed under this Part to have been made), the insurer was not deemed under subsection (4), (5) or (7) to have received a supply of the property at an earlier time and no tax would have been payable by the insurer had the insurer purchased the property from the person in Canada at the time it was transferred, except where

  • (a) the particular supply is made outside Canada or is a zero-rated supply, and

  • (b) the property was transferred to the insurer before 1994 or was, at the time of the transfer, specified tangible personal property having a fair market value in excess of the prescribed amount in respect of the property,

  the insurer shall be deemed

  • (c) to have received a supply by way of sale of the property immediately before that time for consideration equal to the consideration for the particular supply, and

  • (d) except if the supply deemed under paragraph (c) to have been received is a zero-rated supply, to have paid, immediately before that time, all tax payable in respect of the supply deemed to have been received, which is deemed to be equal to the amount determined by the formula

    A - B

    where

    A

    is

    • (i) if

      • (A) the property was last held by the person in a participating province before being transferred to the insurer, the property was so transferred before the day that is three years after the implementation date for that province (as defined in section 348) and the particular supply is either made outside Canada or is a zero-rated supply, or

      • (B) either the property was last held by the person in a non-participating province before being transferred or the particular supply is a supply (other than a zero-rated supply) made in a non-participating province,

      tax under subsection 165(1) calculated on that consideration, and

    • (ii) in any other case, the total of

      • (A) tax under subsection 165(1) calculated on that consideration, and

      • (B) tax under subsection 165(2) calculated on that consideration at the lesser of the tax rate for the participating province in which the particular supply is made and the tax rate for the participating province in which the property was last held by the person before being transferred, and

    B

    is the total of all amounts each of which is an input tax credit or a rebate under this Part that the insurer was entitled to claim in respect of the property or an improvement thereto.

• Marginal note:Lease of personal property

  (7) For the purposes of this Part, if, at a particular time, an insurer to whom personal property has been transferred from a person in circumstances in which subsection (1) applies makes a particular taxable supply of the property by way of lease, licence or similar arrangement for the first lease interval (within the meaning of subsection 136.1(1)) in respect of the arrangement, the insurer was not deemed under subsection (4) or (5) to have received a supply of the property at an earlier time and no tax would have been payable had the property been purchased in Canada from the person at the time the property was transferred, except if

  • (a) the particular supply is made outside Canada or is a zero-rated supply, and

  • (b) the property was transferred to the insurer before 1994 or was, at the time it was transferred, specified tangible personal property having a fair market value in excess of the prescribed amount in respect of the property,

  the insurer shall be deemed

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

  • (d) except if that supply is a zero-rated supply, to have paid, immediately before the particular time, all tax payable in respect of that supply, which is deemed to be equal to

    • (i) if

      • (A) the property was last held by the person in a participating province before being transferred to the insurer, the property was so transferred before the day that is three years after the implementation date for that province (as defined in section 348) and the particular supply is either made outside Canada or is a zero-rated supply, or

      • (B) either the property was last held by the person in a non-participating province before being transferred or the particular supply is a supply (other than a zero-rated supply) made in a non-participating province,

      tax under subsection 165(1) calculated on the fair market value of the property at the time it was transferred, and

    • (ii) in any other case, the total of

      • (A) tax under subsection 165(1) calculated on that fair market value, and

      • (B) tax under subsection 165(2) calculated on that fair market value at the lesser of the tax rate for the participating province in which the particular supply is made and the tax rate for the participating province in which the property was last held by the person before being transferred.