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New Harmonized Value-added Tax System Regulations, No. 2 (SOR/2010-151)

Regulations are current to 2022-09-11 and last amended on 2021-06-29. Previous Versions

PART 6Recapture of Specified Provincial Input Tax Credits (continued)

DIVISION 2Prescribed Persons

Marginal note:Large business

  •  (1) For the purposes of the definition large business in subsection 236.01(1) of the Act, a person is a prescribed person for a recapture period if the person is a registrant whose recapture input tax credit threshold amount in respect of the recapture period exceeds $10,000,000.

  • Marginal note:Large business

    (2) For the purposes of the definition large business in subsection 236.01(1) of the Act, a person is a prescribed person at any time if, at that time, the person is a registrant that is

    • (a) a bank;

    • (b) a corporation licensed or otherwise authorized under the laws of Canada or of a province to carry on in Canada the business of offering to the public its services as a trustee;

    • (c) a credit union;

    • (d) an insurer or any other person whose principal business is providing insurance under insurance policies;

    • (e) a segregated fund of an insurer;

    • (f) an investment plan (as defined in subsection 149(5) of the Act);

    • (g) the Canada Deposit Insurance Corporation; or

    • (h) a person related to a person described in any of paragraphs (a) to (f).

  • Marginal note:Recapture input tax credit threshold amount

    (3) For the purposes of this section, the recapture input tax credit threshold amount of a particular person in respect of a recapture period is equal to the total of

    • (a) the amount determined by the formula

      A × (365/B)

      where

      A
      is the total of all consideration (other than consideration referred to in section 167.1 of the Act that is attributable to goodwill of a business) that became due to the particular person in the last fiscal year (in this subsection referred to as the “base year”) of the particular person ending before the first day of the recapture period, or that was paid to the particular person in the base year without having become due, for taxable supplies (other than supplies of financial services and supplies by way of sale of real property that is capital property of the particular person) made in Canada, or made outside Canada through a permanent establishment in Canada, by the particular person, and
      B
      is the number of days in the base year,
    • (b) the total of all amounts, each of which is determined, in respect of a person (in this paragraph referred to as the “associate”) that is associated with the particular person at the end of the base year, by the formula

      C × (365/D)

      where

      C
      is the total of all consideration (other than consideration referred to in section 167.1 of the Act that is attributable to goodwill of a business) that became due to the associate in the last fiscal year of the associate ending before the first day of the recapture period, or that was paid to the associate in that fiscal year without having become due, for taxable supplies (other than supplies of financial services and supplies by way of sale of real property that is capital property of the associate) made in Canada, or made outside Canada through a permanent establishment in Canada, by the associate, and
      D
      is the number of days in the last fiscal year of the associate ending before the first day of the recapture period, and
    • (c) the total of all amounts, each of which is determined, in respect of a person (in this paragraph referred to as the “vendor”) that makes a supply of a business to the particular person if, under the agreement for the supply, the particular person acquires, at any time during the 12-month period immediately preceding the recapture period, ownership, possession or use of all or substantially all of the property that can reasonably be regarded as being necessary for the particular person to be capable of carrying on the business and the vendor would, in the absence of paragraph (b), have a recapture input tax credit threshold amount exceeding $10,000,000 in respect of the particular recapture period that includes that time, by the formula

      (E/F) × (365 - G)

      where

      E
      is the total of all consideration (other than consideration referred to in section 167.1 of the Act that is attributable to goodwill of a business) for taxable supplies (other than supplies of financial services and supplies by way of sale of real property that is capital property of the particular person) made in Canada, or made outside Canada through a permanent establishment in Canada, by the particular person that became due to the particular person during the 12-month period immediately preceding the recapture period or that was paid to the particular person in that 12-month period without having become due, in relation to the business acquired by the particular person,
      F
      is the number of days in the 12-month period immediately preceding the recapture period that are after that time, and
      G
      is the number of days in the 12-month period immediately preceding the recapture period that are after that time and that are in the base year.
  • Marginal note:Consideration

    (4) For the purposes of subsection (3), consideration for a supply of property or a service includes

    • (a) any amount that would, in the absence of subsection 153(4) of the Act, be included in the consideration for the supply;

    • (b) any amount that would, in the absence of subsection 156(2) of the Act, be consideration for the supply; and

    • (c) if the supply is made between persons not dealing at arm’s length, any amount by which the consideration is less than the fair market value of the property or service at the time the supply is made.

  • Marginal note:Large business — partnership

    (5) If a member (other than an individual) of a partnership acquires property or a service, or brings it into a specified province, for consumption, use or supply in respect of the activities of the partnership but not on the account of the partnership and the partnership is a large business, for the purposes of the definition large business in subsection 236.01(1) of the Act, the member is a prescribed person at any time in respect of that acquisition or bringing in if, at that time, the member is a registrant.

  • Marginal note:Large business — joint venture

    (6) If an operator (within the meaning of subsection 273(1) of the Act) that is a participant in a joint venture with a large business under an agreement referred to in that subsection acquires property or a service, or brings it into a specified province, under the agreement on behalf of the large business in the course of the activities for which the agreement was entered into and, at the time of the acquisition or bringing in, an election under subsection 273(1) of the Act made by the operator and the large business is in effect, for the purposes of the definition large business in subsection 236.01(1) of the Act, the operator is a prescribed person at any time in respect of that acquisition or bringing in.

  • Marginal note:Large business — acquisition of control

    (7) If, at any time in a recapture period, a person that is a large business acquires control of a corporation that is not a large business, the corporation and any persons associated with the corporation are, for the period beginning at that time and ending on the last day of the recapture period that includes the last day of the fiscal year of the corporation that includes that time, prescribed persons for the purposes of the definition large business in subsection 236.01(1) of the Act.

  • Marginal note:Large business — amalgamation

    (8) If, at any time in a recapture period, two or more corporations (each of which is referred to in this subsection as a “predecessor”) are merged or amalgamated to form one corporation (in this subsection referred to as the “new corporation”) and the sum of the recapture input tax credit threshold amounts of the predecessors in respect of the recapture period exceeds $10,000,000, the new corporation is, for the period beginning at that time and ending on the last day of the recapture period that includes the last day of the first fiscal year of the new corporation, a prescribed person for the purposes of the definition large business in subsection 236.01(1) of the Act.

  • Marginal note:Large business — acquisition of a business

    (9) If a person makes, at any time in a recapture period, a supply of a business to another person that is not a large business, the person would, in the absence of paragraph (3)(b), have a recapture input tax credit threshold amount in respect of the recapture period exceeding $10,000,000, the other person is acquiring, under the agreement for the supply, ownership, possession or use of all or substantially all of the property that can reasonably be regarded as being necessary for the other person to be capable of carrying on the business and, after that time, the business is carried on by the other person, for the purposes of the definition large business in subsection 236.01(1) of the Act, the other person is a prescribed person for the period beginning on the earlier of the day that the other person begins to carry on the business and the day on which the other person acquires ownership, possession or use of all or substantially all of the property that can reasonably be regarded as being necessary for the other person to be capable of carrying on the business and ending on the last day of the recapture period.

  • Marginal note:Large business — becoming a registrant

    (10) If, at any time in a recapture period, a person becomes a registrant and the recapture input tax credit threshold amount of the person or of another person that is associated with the person at that time exceeds $10,000,000 in respect of the recapture period, for the purposes of the definition large business in subsection 236.01(1) of the Act, the person is a prescribed person for the period beginning at that time and ending on the last day of the recapture period.

  • Marginal note:Ceasing to be a large business — addition

    (11) For the purposes of the definition large business in subsection 236.01(1) of the Act, a person is a prescribed person at the time prescribed by section 30 or 32 in respect of a specified provincial input tax credit of the person in respect of a specified property or service if the person ceased to be a large business

    • (a) before that time; and

    • (b) after

      • (i) in the case of a qualifying motor vehicle in respect of which section 32 applies, the time when the person first uses the qualifying motor vehicle otherwise than exclusively for the purpose referred to in subparagraph 28(2)(g)(i), and

      • (ii) in any other case, the specified time in respect of the specified provincial input tax credit.

  • Marginal note:Ceasing to be a large business — deduction

    (12) For the purposes of the definition large business in subsection 236.01(1) of the Act, a person is a prescribed person at the time prescribed by section 33 in respect of a qualifying motor vehicle if the person ceased to be a large business

    • (a) before that time; and

    • (b) after the end of the reporting period in which the person was required to add an amount to its net tax for the reporting period as a consequence of subsection 31(2) in respect of a specified provincial input tax credit of the person in respect of the qualifying motor vehicle.

  • Marginal note:Large business — exclusion

    (13) Despite subsections (1) to (10), for the purposes of the definition large business in subsection 236.01(1) of the Act, a person is not a prescribed person at any time if, at that time, the person is

    • (a) a public service body;

    • (b) [Repealed, SOR/2013-71, s. 12]

    • (c) an entity of the government of Canada that is not listed in Schedule I of the Federal Provincial Fiscal Arrangements Act;

    • (d) a department (as defined in section 2 of the Financial Administration Act); or

    • (e) an entity of the government of a province that is eligible, pursuant to a provision of a sales tax harmonization agreement with that province, for a rebate of tax paid under Part IX of the Act.

  • SOR/2012-191, s. 28
  • SOR/2013-71, s. 12

DIVISION 3Prescribed Property or Service

Marginal note:Specified property or service

  •  (1) For the purposes of the definition specified property or service in subsection 236.01(1) of the Act, the following property and services are prescribed:

    • (a) a qualifying motor vehicle that is acquired in, or brought into, a specified province;

    • (b) motive fuel, other than diesel fuel, that is acquired in, or brought into, a specified province for consumption or use in the engine of a qualifying motor vehicle;

    • (c) property (other than property for maintenance or repair) that is acquired in, or brought into, a specified province by a person in respect of a qualifying motor vehicle acquired in, or brought into, a specified province by the person if the acquisition or bringing in of the property occurs within 365 days of the acquisition or bringing in of the qualifying motor vehicle;

    • (d) a service (other than a service for maintenance or repair) that is acquired for consumption or use in a specified province in respect of a qualifying motor vehicle acquired in, or brought into, a specified province by a person if the acquisition of the service occurs within 365 days of the acquisition or bringing in of the qualifying motor vehicle;

    • (e) specified energy that is acquired in, or brought into, a specified province other than qualifying heating oil, as defined in section 1 of the Deduction for Provincial Rebate (GST/HST) Regulations, acquired in, or brought into Prince Edward Island;

    • (f) a service described in paragraph (a) of the definition telecommunication service in subsection 123(1) of the Act if the service is acquired for consumption or use in a specified province;

    • (g) access to a telecommunications circuit, line, frequency, channel or partial channel, or to other similar means of transmitting a telecommunication (but not including a satellite channel), for use in providing a service described in paragraph (a) of the definition telecommunication service in subsection 123(1) of the Act if the access is acquired for consumption or use in a specified province; and

    • (h) food, beverages or entertainment acquired in a specified province and in respect of which subsection 67.1(1) of the Income Tax Act applies or would apply if the person were a taxpayer under that Act.

  • Marginal note:Specified property or service — exclusion

    (2) Despite subsection (1), for the purposes of the definition specified property or service in subsection 236.01(1) of the Act, property or a service referred to in any of paragraphs (1)(a) to (h) is not a prescribed property or service if the property or service is

    • (a) specified energy acquired in, or brought into, a specified province for consumption or use exclusively in the heating of asphalt to be used directly in the construction or maintenance of an eligible roadway;

    • (b) property or a service described in any of paragraphs (1)(e) to (g) acquired in, or brought into, a specified province by the organizer or sponsor of a convention for consumption or use exclusively at the convention;

    • (c) a 1-800, 1-866, 1-877 or 1-888 telephone service or a similar toll free telephone service or a service described in paragraph (1)(f) or (g) that is related to a 1-800, 1-866, 1-877 or 1-888 telephone service or a similar toll free telephone service;

    • (d) access to the Internet;

    • (e) a web-hosting service;

    • (f) a taxi the operation and custody of which is entrusted to a person by the holder of a taxi permit for the taxi; or

    • (g) property or service acquired in, or brought into, a specified province exclusively for the purpose of

      • (i) being supplied by a person,

      • (ii) becoming a component of tangible personal property that is to be supplied by a person, or

      • (iii) in the case of property or a service described in paragraph (1)(f) or (g) acquired by a person operating a telecommunication service, being used directly and solely in the making of a taxable supply of a telecommunication service by the person.

  • SOR/2013-44, s. 29

DIVISION 4Prescribed Amount, Conditions and Circumstances

Marginal note:Specified provincial input tax credit

  •  (1) For the purposes of paragraph (b) of the definition specified provincial input tax credit in subsection 236.01(1) of the Act, a prescribed amount in respect of an amount that would be an input tax credit of a person in respect of a specified property or service attributable to tax under subsection 165(2) or section 212.1 or 218.1 of the Act or Division IV.1 of Part IX of the Act is all of the amount that would be such an input tax credit if

    • (a) in the case where the specified property or service is acquired, or brought into a specified province, by the person for consumption, use or supply exclusively in the course of commercial activities and, as a result of the consumption, use or supply exclusively in the course of commercial activities, no tax under section 218.1 of the Act or Division IV.1 of Part IX of the Act is payable in respect of the acquisition or bringing in, tax under that section or that Division had been payable in respect of the acquisition or bringing in;

    • (b) in the case of a supply of the specified property or service deemed under subsection 143(1) of the Act to have been made outside Canada, the supply had not been deemed to have been made outside Canada;

    • (c) in the case of a supply of the specified property or service that is deemed under Part IX of the Act to have been made for nil consideration, the supply had not been deemed to have been made for nil consideration;

    • (d) in the case of a supply of the specified property or service that is deemed under paragraph 273(1)(c) of the Act not to be a supply, the supply had not been deemed not to be a supply;

    • (e) in the case where the specified property or service is supplied to the person in a specified province or brought into a specified province by the person and is an item included in the Schedule to the Deduction for Provincial Rebate (GST/HST) Regulations applicable to the specified province in respect of which an amount may be paid or credited under an Act of the legislature of the specified province, the specified property or service were not an item included in that Schedule;

    • (f) in the case of a supply of the specified property or service made between persons not dealing with each other at arm’s length for no consideration, the supply had been made for consideration, paid at the time the supply was made, of a value equal to the fair market value of the property or service at that time; and

    • (g) in the case of a supply of the specified property or service made between persons not dealing with each other at arm’s length for consideration less than the fair market value of the specified property or service at the time the supply is made, the value of the consideration were equal to the fair market value of the specified property or service at that time.

  • Marginal note:Specified provincial input tax credit

    (2) If, at any time, a person brings tangible personal property into a specified province from a participating province and, as a consequence of that bringing in, the tangible personal property becomes a specified property or service at that time, for the purposes of paragraph (b) of the definition specified provincial input tax credit in subsection 236.01(1) of the Act, a prescribed amount in respect of an amount that would be an input tax credit of the person in respect of the tangible personal property attributable to tax under subsection 165(2) of the Act is equal to the amount determined by the formula

    A - B

    where

    A
    is the amount that would be such an input tax credit if
    • (a) a taxable supply (other than a zero rated supply) of the tangible personal property were made in the specified province to the person at that time,

    • (b) the consideration for the supply were equal to the value, determined under the description of B in section 9, in respect of the tangible personal property at that time,

    • (c) the tangible personal property were not an item included in the Schedule to the Deduction for Provincial Rebate (GST/HST) Regulations applicable to the specified province in respect of which an amount may be paid or credited under an Act of the legislature of the specified province, and

    • (d) tax in respect of the supply calculated on that consideration were paid by the person at that time; and

    B
    is the amount, if any, that is a specified provincial input tax credit of the person attributable to tax under Division IV.1 of Part IX of the Act in respect of that bringing in.
  • SOR/2011-56, s. 31
 
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