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

Special Case

Marginal note:Qualifying motor vehicles

32 If a qualifying motor vehicle acquired in, or brought into, a specified province by a person is, only by virtue of subparagraph 28(2)(g)(i), not a specified property or service, the person is engaged in the business of supplying motor vehicles by way of sale and the person uses, at any time during the fiscal year when the person is a large business, the qualifying motor vehicle otherwise than exclusively for the purpose referred to in subparagraph 28(2)(g)(i), the following rules apply:

• (a) for the purposes of the definition specified property or service in subsection 236.01(1) of the Act, the qualifying motor vehicle is a prescribed property; and

• (b) for the purposes of subsection 236.01(2) of the Act

  • (i) despite section 30, the prescribed time in respect of a specified provincial input tax credit of the person in respect of the qualifying motor vehicle is the last day of each fiscal year of the person during which the person uses the qualifying motor vehicle otherwise than exclusively for the purpose referred to in subparagraph 28(2)(g)(i), and

  • (ii) despite subsection 31(2), the amount to be added to the net tax of the person for a reporting period of the person that includes the last day of a fiscal year referred to in subparagraph (i) of the person is determined by the formula

    A × B

    where

    A

    is an amount determined by the formula

    C × D × 2%

    where

    C

    is the specified provincial input tax credit, and

    D

    is the number of fiscal months in the fiscal year during which the qualifying motor vehicle is used otherwise than exclusively for the purpose referred to in subparagraph 28(2)(g)(i) and during which the person is a large business, and

    B

    is the recapture rate applicable on the last day of the fiscal year in respect of the specified provincial input tax credit.

DIVISION 7Deduction from Net Tax

Marginal note:Prescribed time

33 If a person, at any time, supplies a qualifying motor vehicle by way of sale or removes it from a specified province and registers it in another province and, as a consequence of subsection 31(2), the person added an amount to its net tax for a reporting period of the person in respect of a specified provincial input tax credit of the person in respect of the qualifying motor vehicle, for the purposes of subsection 236.01(3) of the Act, that time is the prescribed time in respect of the qualifying motor vehicle.

Marginal note:Prescribed manner

34 For the purposes of subsection 236.01(3) of the Act, if a qualifying motor vehicle in respect of which a person added an amount under subsection 236.01(2) of the Act in determining its net tax and in respect of which paragraph 28(1)(a) applies is supplied by way of sale by the person to another person that is not related to the person, or is removed from a specified province and registered outside the specified province by the person, the person may deduct from its net tax for the reporting period of the person that includes the time prescribed in section 33 the amount determined by the formula

Marginal note:Restriction

34.1 Section 34 does not apply in respect of a supply of a qualifying motor vehicle by a person made after March 31, 2013 or a removal of a qualifying motor vehicle by a person from British Columbia after that day, if the person added an amount under subsection 236.01(2) of the Act in respect of the last acquisition or bringing in of the qualifying motor vehicle by the person and that amount was in respect of a British Columbia recapture amount.

DIVISION 8Methods, Reporting and Accounting, and Compliance

Marginal note:Election to use the instalment method

• 35 (1) A person may elect to have section 36 apply to the person at all times when the election is in effect.

• Marginal note:Condition — election

  (2) A person may not elect to have section 36 apply to the person beginning on a day in a particular fiscal year of the person if the particular fiscal year is the first fiscal year of the person.

• Marginal note:Form and manner of filing

  (3) An election made under subsection (1) by a person shall

  • (a) be made in prescribed form containing prescribed information;

  • (b) set out the day on which the election is to become effective, which shall be

    • (i) the first day of the fourth fiscal month of a fiscal year of the person, or

    • (ii) if the person becomes a large business in a fiscal year of the person, the day on which the person becomes a large business;

  • (c) be filed with the Minister on or before the day on or before which the person must file a return under Division V of Part IX of the Act for the reporting period of the person that includes the day on which the election is to become effective; and

  • (d) remain in effect until a revocation of the election becomes effective.

• Marginal note:Revocation

  (4) A person that has made an election under subsection (1) may revoke the election, effective on the first day of an instalment period that begins after the election became effective, by filing in prescribed manner with the Minister a notice of revocation in prescribed form containing prescribed information on or before the day on or before which the person must file a return under Division V of Part IX of the Act for the reporting period of the person that includes the day on which the revocation is to become effective.

Marginal note:Effect of election

• 36 (1) For the purposes of paragraph 236.01(4)(a) of the Act and despite sections 31 and 32, if an election made under subsection 35(1) by a person is in effect during an instalment period, the amount to be added to the net tax of the person for each particular reporting period of the person during which the person is a large business that ends at a time in the instalment period when the election is in effect is the total of all amounts each of which is determined, for a specified provincial input tax credit, by the formula

  (A/B) × C × D

  where

  A

  is all or part of the specified provincial input tax credit that would have been required to be added under subsection 236.01(2) of the Act for each reporting period of the person ending in the last fiscal year of the person that ends before the first day of the instalment period if

  • (a) where the first day of that fiscal year is before July 1, 2010 and the specified provincial input tax credit is not a Prince Edward Island recapture amount, the new harmonized value-added tax system had been in effect, with all modifications as the circumstances may require, throughout that fiscal year in respect of each specified province (other than Prince Edward Island) and the harmonization date for the specified province had been the first day of that fiscal year,

  • (a.1) where the first day of that fiscal year is before April 1, 2013 and the specified provincial input tax credit is a Prince Edward Island recapture amount, the new harmonized value-added tax system had been in effect, with all modifications as the circumstances may require, throughout that fiscal year in respect of Prince Edward Island and the harmonization date for Prince Edward Island had been the first day of that fiscal year,

  • (b) no election under subsection 35(1) had been in effect, and

  • (c) the recapture rate applicable at all times throughout that fiscal year had been 100%;

  B

  is the number of fiscal months in the last fiscal year of the person that ends before the first day of the instalment period;

  C

  is

  • (a) if the particular reporting period is a fiscal year, 12,

  • (b) if the particular reporting period is a fiscal month, 1, or

  • (c) if the particular reporting period is a fiscal quarter, 3; and

  D

  is the recapture rate applicable on the last day of the particular reporting period in respect of the specified provincial input tax credit.

• Marginal note:Reconciliation

  (2) For the purposes of paragraph 236.01(4)(a) of the Act, if an election made under subsection 35(1) by a person is in effect during a fiscal year of the person, the person shall, in determining the net tax of the person for a reporting period of the person that includes the last day of that fiscal year or for a reporting period of the person that begins after that fiscal year and ends on or before the last day of the third fiscal month following the last day of that fiscal year, add the positive amount or deduct the negative amount determined by the formula

  A - B

  where

  A

  is the total of all amounts that, in the absence of subsection (1), would have been required under subsection 236.01(2) of the Act to be added to the net tax of the person as a consequence of section 31 or 32 for each reporting period of the person ending in the fiscal year; and

  B

  is the total of all amounts each of which is added to the net tax of the person as a consequence of subsection (1) or section 31 or 32 for each reporting period of the person ending in the fiscal year.

• Marginal note:Reconciliation on cessation

  (3) Despite subsection (2), for the purposes of paragraph 236.01(4)(a) of the Act, if an election made under subsection 35(1) by a person is in effect during a particular fiscal year of the person and the person ceases to be a registrant at any time in the particular fiscal year, the person shall, in determining the net tax of the person for the particular reporting period in which the person ceases to be a registrant, add the positive amount or deduct the negative amount determined by the formula

  (A - B) + (C - D)

  where

  A

  is the total of all amounts that, in the absence of subsection (1), would have been required under subsection 236.01(2) of the Act to be added to the net tax of the person as a consequence of section 31 or 32 for each reporting period of the person ending in the particular fiscal year;

  B

  is the total of all amounts each of which was added to the net tax of the person as a consequence of subsection (1) or section 31 or 32 for each reporting period of the person ending in the particular fiscal year;

  C

  is

  • (a) if an election made under subsection 35(1) was in effect during the fiscal year (in this subsection referred to as the “prior fiscal year”) immediately preceding the particular fiscal year and the person has not added or deducted an amount under subsection (2) in respect of that prior fiscal year in a reporting period ending before the particular reporting period, the total of all amounts that, in the absence of subsection (1), would have been required under subsection 236.01(2) of the Act to be added to the net tax of the person as a consequence of section 31 or 32 for each reporting period of the person ending in the prior fiscal year, and

  • (b) in any other case, zero; and

  D

  is

  • (a) if an election made under subsection 35(1) was in effect during the prior fiscal year and the person has not added or deducted an amount under subsection (2) in respect of that prior fiscal year in a reporting period ending before the particular reporting period, the total of all amounts each of which was added to the net tax of the person as a consequence of subsection (1) or section 31 or 32 for each reporting period of the person ending in the prior fiscal year, and

  • (b) in any other case, zero.

• Marginal note:Prescribed person

  (4) If a person is required under subsection (2) or (3) to add a positive amount, or deduct a negative amount, in determining its net tax for a reporting period of the person, for the purposes of the definition large business in subsection 236.01(1) of the Act, the person is a prescribed person in respect of that addition or deduction.

DIVISION 9Certain Benefits and Rebates

Marginal note:Qualifying motor vehicles

37 If a registrant makes a supply of a qualifying motor vehicle to an individual or a person related to the individual at any time during a taxation year of the individual to which subsection 173(1) of the Act applies and, as a consequence of subsection 31(2), the registrant added an amount to its net tax for a reporting period of the registrant ending on or before that time in respect of a specified provincial input tax credit of the registrant in respect of the qualifying motor vehicle, for the purpose of determining an amount of tax under subparagraph 173(1)(d)(vi) of the Act in respect of an amount that is deemed to be the total consideration payable in respect of the provision of the qualifying motor vehicle during the taxation year, the reference in the portion of subclause (I) of the description of A in clause 173(1)(d)(vi)(B) of the Act after sub-subclause 2 to “the tax rate for the participating province” is to be read as a reference to “the percentage determined by the formula

Marginal note:Restriction on rebate to partner

38 For the purposes of the new harmonized value-added tax system, subsection 253(2) of the Act is adapted so that the reference to “the amount that would be an input tax credit of the partnership in respect of the property or service for the last reporting period of the partnership in its last fiscal year ending in that calendar year if” in that subsection before paragraph (a) is to be read as “the amount that would be an input tax credit of the partnership in respect of the property or service for the last reporting period of the partnership in its last fiscal year ending in that calendar year, other than the part of that amount that would have been required to be added to the net tax of the partnership in accordance with subsection 236.01(2), if”.

PART 7Rebate for Employees and Partners

Marginal note:Percentage — subsection 253(1)

• 39 (1) For the purpose of the description of F in paragraph (b) of the description of A in subsection 253(1) of the Act, the percentage is the rate at which the tax referred to in paragraph 253(1)(b) of the Act was payable.

• Marginal note:Percentage — subsection 253(1)

  (2) For the purpose of the description of H in paragraph (c) of the description of A in subsection 253(1) of the Act, the percentage is the rate at which the 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 referred to in paragraph 253(1)(b) of the Act was payable.

• Marginal note:Percentage — subsection 253(2)

  (3) For the purpose of the description of E in clause (B) of the description of A in subparagraph 253(2)(a)(ii) of the Act, the percentage is the rate at which the tax referred to in paragraph 253(1)(b) of the Act was payable by the individual in respect of the acquisition or importation of the instrument, or the bringing into a participating province of the instrument, as the case may be.

• Marginal note:Percentage — subsection 253(2)

  (4) For the purpose of the description of G in clause (C) of the description of A in subparagraph 253(2)(a)(ii) of the Act, the percentage is the rate at which the 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 referred to in paragraph 253(1)(b) of the Act was payable by the individual in respect of the acquisition or importation of the instrument, or the bringing into a participating province of the instrument, as the case may be.

• Marginal note:Percentage — subsection 253(2)

  (5) For the purpose of the description of E in clause (B) of the description of A in subparagraph 253(2)(c)(ii) of the Act, the percentage is the rate at which the tax referred to in paragraph 253(1)(b) of the Act was payable by the individual in respect of the acquisition or importation of the property or service, or the bringing into a participating province of the property, as the case may be.

• Marginal note:Percentage — subsection 253(2)

  (6) For the purpose of the description of G in clause (C) of the description of A in subparagraph 253(2)(c)(ii) of the Act, the percentage is the rate at which the 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 referred to in paragraph 253(1)(b) of the Act was payable by the individual in respect of the acquisition or importation of the property or service, or the bringing into a participating province of the property, as the case may be.