Excise Tax Act

Marginal note:Food, beverages and entertainment

• 236 (1) If

  • (a) an amount (in this subsection referred to as the “composite amount”)

    • (i) becomes due from a person, or is a payment made by a person without having become due, in respect of a supply of property or a service made to the person, or

    • (ii) is paid by a person as an allowance or reimbursement in respect of which the person is deemed under section 174 or 175 to have received a supply of property or a service,

  • (b) one or both of the following situations apply:

    • (i) subsection 67.1(1) of the Income Tax Act applies, or would apply, if the person were a taxpayer under that Act, to all of the composite amount or that part of it that is, for the purposes of that Act, an amount (other than an amount to which subsection 67.1(1.1) of that Act applies) paid or payable in respect of the human consumption of food or beverages or the enjoyment of entertainment and section 67.1 of that Act deems the composite amount or that part to be 50% of a particular amount,

    • (ii) subsection 67.1(1.1) of that Act applies, or would apply, if the person were a taxpayer under that Act, to all of the composite amount or that part of it that is, for the purposes of that Act, an amount paid or payable in respect of the consumption of food or beverages by a long-haul truck driver during the driver’s eligible travel period (as those terms are defined in section 67.1 of that Act), and section 67.1 of that Act deems the composite amount or that part to be a percentage of a specified particular amount, and

  • (c) tax included in the composite amount or deemed under section 174 or 175 to have been paid by the person is included in determining an input tax credit in respect of the property or service that is claimed by the person in a return for a reporting period in a fiscal year of the person,

  the person shall, in determining the net tax for the appropriate reporting period of the person, add the amount determined by the formula

  [50% × (A/B) × C] + [20% × (D/B) × C]

  where

  A

  is

  • (i) in the case where subparagraph (b)(i) applies, the particular amount, and

  • (ii) in any other case, zero,

  B

  is the composite amount,

  C

  is the input tax credit, and

  D

  is

  • (i) in the case where subparagraph (b)(ii) applies, the specified particular amount, and

  • (ii) in any other case, zero.

• Marginal note:Appropriate reporting period

  (1.1) Where a person is required under subsection (1) to add, in determining the person’s net tax, an amount determined by reference to an input tax credit claimed by the person in a return for a reporting period in a fiscal year of the person, for the purposes of that subsection, the appropriate reporting period of the person is

  • (a) if the person ceases to be registered under Subdivision D in a reporting period ending in that fiscal year, that reporting period;

  • (b) if that fiscal year is the person’s reporting period, that reporting period; and

  • (c) in any other case, the person’s reporting period that begins immediately after that fiscal year.

• Marginal note:Unreasonable amounts

  (1.2) If tax calculated on an amount (in this subsection referred to as the “unreasonable consideration”) that is all or part of the total amount that becomes due from a person, or is paid by a person without having become due, in respect of a supply of property or a service made to the person is, because of subsection 170(2), not to be included in determining an input tax credit, for the purposes of subsection (1), that total amount is deemed to be the amount, if any, by which it exceeds the total of the unreasonable consideration and all gratuities, and taxes, duties or fees under this Part or under an Act of the legislature of a province, that are paid or payable in respect of the unreasonable consideration.

• Marginal note:Exception

  (2) Subsection (1) does not apply to a charity or a public institution.