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Budget 2000 - Budget Plan, Annex 7- 8: Notice of Ways and Means Motion - 2
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That it is expedient to amend the Excise Tax Act to provide among other things:
(1) That the following definitions be added to Part IX of the Act for the purposes of any enactment founded on this paragraph or any of paragraphs (2) to (17):
"added property" of a person means tangible personal property (other than property that serves as evidence of the payment of postage) or software that the person incorporates into, attaches to, combines or assembles with, or uses to pack, other property that is not property of the person held otherwise than for sale by the person.
"base value" of property that a particular person imports or obtains physical possession of in Canada from another person means
(a) if the particular person imports the property, the value that is or would be, but for subsection 215(2) of the Act, deemed under subsection 215(1) of the Act to be the value of the property for the purposes of Division III of Part IX of the Act; and
(b) in any other case, the fair market value of the property at the time the particular person obtains physical possession of it in Canada.
"basic service" means any of the following services performed in respect of goods, to the extent that, if the goods were held in a bonded warehouse at the time the service is performed, it would be feasible, given the stage of processing of the goods at that time, to perform that service in the warehouse and it would be permissible to do so according to the Customs Bonded Warehouses Regulations:
(a) disassembling or reassembling, if the goods have been assembled or disassembled for packing, handling or transportation purposes;
(b) displaying;
(c) inspecting;
(d) labelling;
(e) packing;
(f) removing, for the sole purpose of soliciting orders for goods or services, a small quantity of material, or a portion, a piece or an individual object, that represents the goods;
(g) storing;
(h) testing; or
(i) any of the following that do not materially alter the characteristics of the goods:
(i) cleaning,
(ii) complying with any applicable law of Canada or of a province,
(iii) diluting,
(iv) normal maintenance and servicing,
(v) preserving,
(vi) separating defective goods from prime quality goods,
(vii) sorting or grading, and
(viii) trimming, filing, slitting or cutting.
"bonded warehouse" has the meaning assigned by subsection 2(1) of the Customs Act.
"customer’s good", in respect of a particular person, means tangible personal property of another person that the particular person imports or obtains physical possession of in Canada for the purpose of supplying a service, or supplying added property, in respect of the tangible personal property.
"domestic inventory" of a person means tangible personal property that the person acquires in Canada, or acquires outside Canada and imports, for the purpose of selling the property separately for consideration in the ordinary course of a business carried on by the person.
"export revenue" of a particular person for a fiscal year means the total of all amounts each of which is consideration, included in determining the income from a business of the person for the year, for
(a) a supply by way of sale of an item of domestic inventory of the person that is made outside Canada or is included in Part V of Schedule VI to the Act (other than sections 2.1, 3, 11, 14 and 15.1 of that Part);
(b) a supply by way of sale of added property acquired by the person for the purpose of processing in Canada particular property where the particular property, or all the products resulting from that processing, as the case may be, are exported after that processing is complete without being consumed, used, transformed or further processed, manufactured or produced in Canada by another person, except to the extent reasonably necessary or incidental to the transportation of the particular property or those products; or
(c) a supply of a service of processing, storing or distributing tangible personal property of another person if the property, or all the products resulting from that processing, as the case may be, are exported, after the processing in Canada, if any, by the particular person is complete, without being consumed, used, transformed or further processed, manufactured or produced in Canada by any person other than the particular person, except to the extent reasonably necessary or incidental to the transportation of that other property or those products.
"export revenue percentage" of a person for a fiscal year means the percentage that the person’s export revenue for the year is of the person’s specified total revenue for the year.
"labelling" includes marking, tagging and ticketing.
"packing" includes unpacking, repacking, packaging and repackaging.
"processing" includes adjusting, altering, assembling, labelling, modifying, packing and any basic service.
"specified total revenue" of a person for a fiscal year of the person means the total of all amounts each of which is consideration, included in determining the income from a business of the person for the year, for a supply that is made by the person (or that would be made by the person but for any provision of Part IX of the Act that deems the supply to be made by another person) other than
(a) a supply of a service in respect of property that the person neither imports, nor obtains physical possession of in Canada, for the purpose of providing the service;
(b) a supply by way of sale of property that the person acquires for the purpose of selling the property for consideration but that is neither acquired in Canada nor imported by the person;
(c) a supply by way of sale of an added property that the person acquires for the purpose of processing other tangible personal property that the person neither imports nor obtains physical possession of in Canada; and
(d) a supply by way of sale of capital property of the person.
"substantial alteration of property" by a person means
(a) manufacturing or producing, or engaging another person to manufacture or produce, property (other than capital property of the person) in the course of a business carried on by the person; or
(b) any processing of property of the person (other than capital property) that is intended for sale by the person, or for use as added property, in the course of a business carried on by the person, if the prescribed percentage is less than the amount (expressed as a percentage) determined by the formula
A/B
where
A is the portion of the total cost to the person of the property, or of the products resulting from the processing of the property, as the case may be, after all processing of the property by or for the person is complete, that is reasonably attributable to
(i) salary, wages or other remuneration paid or payable to employees of the person, excluding any amounts that are reasonably attributable to the performance of basic services, or
(ii) consideration paid or payable by the person to engage other persons to process the property for the person, excluding any portion of such consideration that is reasonably attributable to the performance of basic services or that is reasonably attributed by the other persons to other tangible personal property supplied in connection with the processing of the property, and
B is the total cost to the person of the property, or of the products resulting from the processing of the property, as the case may be, after all processing of the property by or for the person is complete.
(2) That a person’s percentage value added in respect of customers’ goods for a fiscal year of the person be defined as the amount (expressed as a percentage) determined by the formula
A / (A + B)
where
A is the total of all consideration, included in determining the income from a business of the person for the year, for supplies of services, or of added property, in respect of customers’ goods, other than the portion of such consideration that is reasonably attributable to the performance of basic services or to the provision of added property used in the performance of basic services, and
B is the total of the base values of the customers’ goods.
(3) That the Minister of National Revenue may, on the application of a person who is registered under Subdivision d of Division V of Part IX of the Act and who is engaged exclusively in commercial activities, authorize the person to use, beginning on a particular day in a fiscal year of the person, an export distribution centre certificate for the purposes of any enactments founded on paragraphs (15) and (17), if it can reasonably be expected that
(a) none of the activities engaged in by the person during the year will constitute the substantial alteration of property;
(b) the person’s percentage value added in respect of customers’ goods for the year will not exceed the prescribed percentage; and
(c) the person’s export revenue percentage for the year will equal or exceed 90 per cent.
(4) That an authorization to use an export distribution centre certificate be subject to such terms and conditions as the Minister of National Revenue may from time to time specify.
(5) That, for the purpose of determining the export revenue of a person or a person’s percentage value added in respect of customers’ goods, any supply between the person and another person with whom the person is not dealing at arm’s length that is made for no consideration or for less than fair market value be deemed to be made for consideration equal to fair market value.
(6) That an application for authority to use an export distribution centre certificate be required to be made in prescribed form containing prescribed information and be filed with the Minister of National Revenue in prescribed manner.
(7) That, where the Minister of National Revenue authorizes a person to use an export distribution centre certificate, the Minister be required to notify the person in writing of the authorization, its effective date and its expiry date, and the number assigned by the Minister that identifies the person or the authorization and that must be disclosed by the person when providing the certificate.
(8) That the Minister of National Revenue may, subject to giving reasonable written notice, revoke the authorization of a person to use an export distribution centre certificate, effective on a day in a particular fiscal year of the person, where
(a) the person fails to comply with any condition attached to the authorization or with any provision of Part IX of the Act;
(b) it can reasonably be expected that the conditions described in paragraph (3) would not be met if the fiscal year referred to therein were the particular fiscal year; or
(c) the person has requested in writing that the authorization be revoked as of that day.
(9) That, subject to any enactment founded on paragraph (8), an authorization of a person to use an export distribution centre certificate be deemed to have been revoked, effective immediately after a fiscal year of the person, where
(a) the person had engaged in the substantial alteration of property during that year;
(b) the person’s percentage value added in respect of customers’ goods for that year exceeds the percentage prescribed for the purpose of an enactment founded on paragraph (3); or
(c) the person’s export revenue percentage for that year is less than 80 per cent.
(10) That an authorization referred to in paragraph (3) cease to have effect immediately before the earlier of
(a) the day on which a revocation of the authorization becomes effective; and
(b) the day that is three years after the day on which the authorization became effective.
(11) That, where an authorization of a person to use an export distribution centre certificate is revoked, effective on a particular day, the person not be entitled to obtain another such authorization before
(a) the day that is two years after the particular day, if the authorization was revoked because the person failed to comply with a condition of the authorization or any provision of Part IX of the Act; and
(b) the first day of the second fiscal year of the person beginning after the particular day, in any other case.
(12) That, where a supply of property that is a zero-rated supply under an enactment founded on paragraph (15) is made to a person who had been granted an authorization to use an export distribution centre certificate and, at the time the supply is made, the authorization is no longer in effect or the property is not being acquired by the person for use or supply in the course of commercial activities of the person as domestic inventory or added property, the person be required, in determining the net tax of the person for the reporting period that includes the earliest day on which tax would, but for that enactment, have become payable in respect of the supply, to add an amount equal to interest, at the rate prescribed for the purposes of paragraph 280(1)(b) of the Act plus 4 per cent per year compounded daily, on the total amount of tax that would have been payable in respect of the supply if it had not been a zero-rated supply, computed for the period beginning on that earliest day and ending on the day on or before which the return under section 238 of the Act for that reporting period is required to be filed.
(13) That, where an authorization of a person to use an export distribution centre certificate is in effect at any time in a fiscal year of the person and the export revenue percentage of the person for the year is less than 90 per cent or the authorization ceases in the year to apply because of a revocation in the circumstances described in paragraph (9), the person be required to add an amount, in determining the person’s net tax for the first reporting period of the person following that fiscal year, equal to the amount determined by the formula
A x B/12
where
A is the total of
(a) the product obtained when the rate set out in subsection 165(1) of the Act is multiplied by the total of all amounts each of which is consideration paid or payable by the person for a supply of property acquired by the person in the year in a non-participating province that was a zero-rated supply only because of an enactment founded on paragraph (15), other than a supply in respect of which the person is required to add an amount in determining net tax pursuant to an enactment founded on paragraph (12),
(b) the product obtained when the total of the rates set out in subsections 165(1) and (2) of the Act is multiplied by the total of all amounts each of which is consideration paid or payable by the person for a supply of property acquired by the person in the year in a participating province that was a zero-rated supply only because of an enactment founded on paragraph (15), other than a supply in respect of which the person is required to add an amount in determining net tax pursuant to an enactment founded on paragraph (12), and
(c) the product obtained when the rate set out in subsection 165(1) of the Act is multiplied by the total of all amounts each of which is the value that is or would be, but for subsection 215(2) of the Act, deemed under subsection 215(1) of the Act to be the value, for the purposes of Division III of Part IX of the Act, of a good that was imported by the person in the year and in respect of which, by reason only of an enactment founded on paragraph (17), tax under that Division did not apply, and
B is the total of the rate of interest prescribed for the purpose of paragraph 280(1)(b) of the Act and 4 per cent.
(14) That a person who receives a zero-rated supply of property, under an enactment founded on paragraph (15), at a time at which the person’s authorization to use an export distribution centre certificate is no longer in effect, or who is not acquiring the property for use or supply as domestic inventory or as added property, be liable for tax, under section 218 and, where applicable, section 218.1, of the Act, calculated on the value of the consideration for that supply, unless the property is acquired by the person for consumption, use or supply exclusively in the course of commercial activities of the person.
(15) That Part V of Schedule VI to the Act be amended to include, as a zero-rated supply, a sale of property (other than an excisable good and property that is a continuous transmission commodity that the recipient intends to export by means of a wire, pipeline or other conduit) made to a recipient who is registered under Subdivision d of Division V of Part IX of the Act, where
(a) the recipient provides the supplier with an export distribution centre certificate certifying that an authorization to use the certificate is in effect at the time the supply is made and that the property is being acquired for use or supply as domestic inventory or added property of the person and disclosing the number referred to in paragraph (7) as well as the expiry date of the authorization;
(b) the total amount, included in a single invoice or agreement, of the consideration for that supply and for all other supplies, if any, that are made to the recipient and are otherwise included in this paragraph, is at least $1,000; and
(c) if an authorization to use the certificate is not in effect at the time the supply is made or the recipient is not acquiring the property for use or supply as domestic inventory or as added property in the course of commercial activities of the recipient, it is the case that, at the latest time at which tax in respect of the supply would have become payable if the supply were not a zero-rated supply, the supplier did not know, and could not reasonably be expected to have known, that the authorization was not in effect at the time the supply was made or that the recipient was not acquiring the property for that purpose.
(16) That an enactment founded on any of paragraphs (1) to (15) be deemed to come into force on January 1, 2001 and apply in respect of supplies made after December 31, 2000.
(17) That Schedule VII to the Act be amended to exempt from tax under Division III of Part IX of the Act a good imported after December 31, 2000 that is an item of domestic inventory or added property of the importer or a customer’s good, where the importer is registered under Subdivision d of Division V of that Part and has been granted an authorization that is in effect at that time to use an export distribution centre certificate, provided that,
(a) when the good is accounted for under section 32 of the Customs Act, the importer certifies that the authorization is in effect at that time and that the good is an item of domestic inventory or added property of the importer or a customer’s good and the importer discloses the number referred to in paragraph (7) and the expiry date of the authorization; and
(b) the importer has posted any security required under section 213.1 of the Act in respect of the importation of the good.
(18) That the drop-shipment rules under section 179 of the Act be amended to provide that
(a) the specific exclusion from tax-free treatment for certain services be removed in the case of supplies of storage services in respect of which tax would, but for an enactment founded on this paragraph, become payable after February 28, 2000; and
(b) with respect to any supply by way of sale in Canada of railway rolling stock that is made to a non-resident person who is not registered under Subdivision d of Division V of Part IX of the Act and in respect of which tax would, but for an enactment founded on this paragraph, become payable after February 28, 2000, where the first use of the rolling stock after the supplier transfers possession of it is to transport goods in the course of exporting the rolling stock, that use be deemed to be entirely outside Canada for the purpose of treating the sale as having been made outside Canada, provided that the rolling stock is exported within 60 days after its delivery to the non-resident person.
(19) That the export certificate rules under subsection 221(3.1), section 221.1 and Schedule VI, of the Act be amended to provide that:
(a) a registrant who has been authorized to use an export certificate be entitled to request in writing that the Minister of National Revenue revoke the authorization;
(b) if the Minister of National Revenue authorizes a registrant to use an export certificate, the Minister be required to notify the registrant in writing of the authorization, its effective date and expiry date and the number assigned by the Minister that identifies the registrant or the authorization and that must be disclosed by the registrant when providing the certificate to a supplier;
(c) when providing an export certificate to a supplier, a registrant be required to disclose the number assigned by the Minister of National Revenue that identifies the registrant or the authorization and to certify that an authorization to use the certificate is in effect at that time;
(d) the mechanism for relieving a supplier of the obligation to collect tax on a supply for which the recipient provides an export certificate be the inclusion of the supply in Part V of Schedule VI to the Act as a zero-rated supply;
(e) in order for a supply to be a zero-rated supply under an enactment founded on this paragraph, it must be the case that the supplier did not know, and could not reasonably be expected to have known, at the latest time at which tax in respect of the supply would have become payable if the supply were not a zero-rated supply, that the authorization of the recipient to use the certificate was not in effect at the time the supply was made or that the recipient would not export the property in the circumstances set out in section 1 of Part V of Schedule VI to the Act;
(f) the mechanism for requiring the payment of tax by a registrant who has used an export certificate to acquire property but who was not authorized to do so at the time the supply was made, or who failed to subsequently export the property in the circumstances set out in section 1 of Part V of Schedule VI to the Act, be the inclusion of the supply in Division IV of Part IX of the Act, but no such inclusion be required if the registrant acquired the property for consumption, use or supply exclusively in the course of commercial activities of the registrant;
(g) if a registrant has used an export certificate to acquire property but was not authorized to do so at the time the supply was made, or the registrant failed to subsequently export the property in the circumstances set out in section 1 of Part V of Schedule VI to the Act, the registrant be required, in determining the net tax of the registrant for the reporting period that includes the earliest day on which tax would have become payable in respect of the supply if it had not been a zero-rated supply, to add an amount equal to interest, at the rate prescribed for the purpose of paragraph 280(1)(b) of the Act plus 4 per cent per year compounded daily, on the total amount of tax that would have been payable in respect of the supply, computed for the period beginning on that earliest day and ending on the day on or before which the registrant’s return under section 238 of the Act for that reporting period is required to be filed; and
(h) if a registrant’s authorization to use an export certificate is revoked after the last day of a fiscal year of the registrant because the registrant failed to meet the test set out in subsection 221.1(6) of the Act in respect of that year, the registrant be required to add an amount in determining the registrant’s net tax for the first reporting period of the registrant following that year equal to the amount determined by the formula
A x B/12
where
A is the total of
(i) the product obtained when the rate set out in subsection 165(1) of the Act is multiplied by the total of all amounts each of which is consideration paid or payable by the registrant for a supply in a non-participating province of an item of inventory acquired by the registrant in the year that is a zero-rated supply as a result of the registrant having provided an export certificate to the supplier, other than a supply in respect of which the registrant is otherwise required, under an enactment founded on this paragraph, to add an amount in determining net tax, and
(ii) the product obtained when the total of the rates set out in subsections 165(1) and (2) of the Act is multiplied by the total of all amounts each of which is consideration paid or payable by the registrant for a supply in a participating province of an item of inventory acquired by the registrant in the year that is a zero-rated supply as a result of the registrant having provided an export certificate to the supplier, other than a supply in respect of which the registrant is otherwise required, under an enactment founded on this paragraph, to add an amount in determining net tax, and
B is the total of the rate of interest prescribed for the purpose of paragraph 280(1)(b) of the Act and 4 per cent.
(20) That any enactment founded on paragraph (19) be deemed to come into force on January 1, 2001 and apply in respect of supplies made after December 31, 2000.
(21) That the following definitions be added to Part IX of the Act for the purposes of any enactment founded on this paragraph or any of paragraphs (22) to (32):
"first use", in respect of a residential unit, means the first use of the unit after the construction or last substantial renovation of the unit.
"percentage of total floor space", in respect of a residential unit forming part of a residential complex or part of an addition to a multiple unit residential complex, means the percentage that the total square metres of floor space occupied by the unit is of the total square metres of floor space occupied by all of the residential units in the residential complex or addition, as the case may be.
"qualifying residential unit" of a person, at a particular time, means
(a) a residential unit in which the person has, at or immediately before the particular time, an ownership interest or an interest that arises as a result of being a lessee or sublessee of the unit or of the complex in which the unit is situated, where
(i) at the particular time, the unit is a self-contained residence,
(ii) that interest is held by the person for the purpose of making exempt supplies included in section 5.1, 6, 6.1 or 7 of Part I of Schedule V to the Act,
(iii) it is the case, or can reasonably be expected by the person at the particular time to be the case, that the first use of the unit is or will be
(A) as the primary place of residence of the person or a relation of the person, or of another lessor of the complex or a relation of that lessor, for a period of at least one year or for a shorter period where the next use of the unit after that shorter period is as described in clause (iii)(B), or
(B) as a place of residence of individuals, each of whom is given continuous occupancy of the unit, under one or more leases, for a period, throughout which the unit is used as the primary place of residence of that individual, of at least one year or ending when the unit is sold to a recipient who acquires the unit for use as the primary place of residence of the recipient or of a relation of the recipient, and
(iv) if, at the particular time, the person intends that, after the unit is used as described in clause (iii), the person will occupy it for the person’s own use or the person will supply it by way of lease as a place of residence or lodging for an individual who is a relation, shareholder, member or partner of, or not dealing at arm’s length with, the person, the person can reasonably expect that the unit will be the primary place of residence of the person or of that individual; or
(b) a prescribed residential unit of the person.
"qualifying portion of basic tax content", at a particular time, of property of a person means the amount that would be the basic tax content of the property at that time if that amount were determined without reference to subparagraph (v) of the description of A in the definition "basic tax content" in subsection 123(1) of the Act and if no amount of tax under any of subsections 165(2), 212.1(2) and 218.1(1) and Division IV.1 of Part IX of the Act that was, or would have been, payable by the person were included in determining that basic tax content.
"relation" has the meaning assigned by subsection 256(1) of the Act.
"self-contained residence" means a residential unit
(a) that is a suite or room in a hotel, a motel, an inn, a boarding house or a lodging house or in a residence for students, seniors, individuals with a disability or other individuals; or
(b) that contains private kitchen facilities and a private bath and living area.
(22) That a reference, in an enactment founded on any of paragraphs (21) and (23) to (32), to a "lease" be read as a reference to a "lease, licence or similar arrangement".
(23) That, where
(a) a particular person, other than a cooperative housing corporation,
(i) is the recipient of a taxable supply by way of sale (referred to as the "purchase from the supplier") from another person of a residential complex or of an interest in a residential complex and is not a builder of the complex, or
(ii) is a builder of a residential complex, or of an addition to a multiple unit residential complex, who makes an exempt supply by way of lease included in section 6 or 6.1 of Part I of Schedule V to the Act that results in the person being deemed under section 191 of the Act to have made and received a taxable supply by way of sale (referred to as the "deemed purchase") of the complex or addition,
(b) at a particular time, tax first becomes payable in respect of the purchase from the supplier or tax in respect of the deemed purchase is deemed to have been paid by the person,
(c) at the particular time, the residential complex or addition, as the case may be, is a qualifying residential unit of the person or includes one or more qualifying residential units of the person, and
(d) the person is not entitled to include the tax in respect of the purchase from the supplier, or the tax in respect of the deemed purchase, in determining an input tax credit of the person,
the Minister of National Revenue shall, subject to paragraphs (27) and (29), pay a rebate to the person equal to the total of all amounts each of which is an amount, in respect of a residential unit that forms part of the residential complex or addition, as the case may be, and is a qualifying residential unit of the person at the particular time, determined by the formula
A x ($450,000 - B)/$100,000
where
A is the lesser of $8,750 and the amount determined by the formula
A1 x A2
where
A1 is 36 per cent of the total tax under subsection 165(1) of the Act that is payable in respect of the purchase from the supplier or is deemed to have been paid in respect of the deemed purchase, and
A2 is
(i) if the unit is a single unit residential complex or a residential condominium unit, 1, and
(ii) in any other case, the unit’s percentage of total floor space, and
B is the greater of $350,000 and
(i) if the unit is a single unit residential complex or a residential condominium unit, the fair market value of the unit at the particular time, and
(ii) in any other case, the amount determined by the formula
B1 x B2
where
B1 is the unit’s percentage of total floor space, and
B2 is the fair market value at the particular time of the residential complex or addition, as the case may be.
(24) That, where
(a) a person, other than a cooperative housing corporation, is a builder of a residential complex or of an addition to a multiple unit residential complex and the person makes
(i) an exempt supply by way of sale, included in section 5.1 of Part I of Schedule V to the Act, of a building or part of a building, and
(ii) an exempt supply, included in section 7 of that Part, of land by way of lease or an exempt supply, included in that section, by way of assignment of a lease in respect of land,
(b) the lease provides for continuous possession or use of the land for a period of at least twenty years or it contains an option to purchase the land,
(c) those supplies result in the person being deemed under section 191 of the Act to have made and received a taxable supply by way of sale of the complex or addition and to have paid tax at a particular time in respect of that supply,
(d) in the case of a multiple unit residential complex or an addition to such a complex, the complex or addition, as the case may be, includes, at the particular time, one or more qualifying residential units of the person,
(e) the person is not entitled to include the tax deemed to have been paid by the person in determining an input tax credit of the person, and
(f) in the case of an exempt supply by way of sale of a single unit residential complex or a residential condominium unit, the recipient of that supply is entitled to claim a rebate under subsection 254.1(2) of the Act in respect of the complex or unit,
the Minister of National Revenue shall, subject to paragraphs (27) and (29), pay a rebate to the person equal to the total of all amounts each of which is an amount, in respect of a residential unit that forms part of the residential complex or addition, as the case may be, and is, in the case of a multiple unit residential complex or an addition to such a complex, a qualifying residential unit of the person at the particular time, determined by the formula
[A x ($450,000 - B)/$100,000] - C
where
A is the lesser of $8,750 and the amount determined by the formula
A1 x A2
where
A1 is 36 per cent of the tax under subsection 165(1) of the Act that is deemed to have been paid by the person at the particular time, and
A2 is
(i) if the unit is a single unit residential complex or a residential condominium unit, 1, and
(ii) in any other case, the unit’s percentage of total floor space,
B is the greater of $350,000 and
(i) if the unit is a single unit residential complex or a residential condominium unit, the fair market value of the unit at the particular time, and
(ii) in any other case, the amount determined by the formula
B1 x B2
where
B1 is the unit’s percentage of total floor space, and
B2 is the fair market value at the particular time of the residential complex or addition, as the case may be, and
C is the amount of the rebate, if any, under subsection 254.1(2) of the Act that the recipient of the exempt supply by way of sale is entitled to claim in respect of the complex or unit.
(25) That, where
(a) a cooperative housing corporation (referred to as the "cooperative")
(i) is the recipient of a taxable supply by way of sale (referred to as the "purchase from the supplier") from another person of a residential complex or of an interest in a residential complex and is not a builder of the complex, or
(ii) is a builder of a residential complex, or of an addition to a multiple unit residential complex, who makes an exempt supply by way of lease included in section 6 of Part I of Schedule V to the Act that results in the cooperative being deemed under section 191 of the Act to have made and received a taxable supply by way of sale (referred to as the "deemed purchase") of the complex or addition and to have paid tax in respect of that supply,
(b) the cooperative is not entitled to include the tax in respect of the purchase from the supplier, or the tax in respect of the deemed purchase, in determining an input tax credit of the cooperative, and
(c) at any time at which a residential unit included in the complex is a qualifying residential unit of the cooperative, the cooperative first gives occupancy of the unit after its construction or last substantial renovation under an agreement for a supply of that unit that is an exempt supply included in section 6 of that Part,
the Minister of National Revenue shall, subject to paragraphs (27) and (29), pay a rebate to the cooperative in respect of that unit equal to the amount determined by the formula
[A x ($450,000 - B)/$100,000] - C
where
A is the lesser of $8,750 and the amount determined by the formula
A1 x A2
where
A1 is 36 per cent of the total tax under subsection 165(1) of the Act that is payable in respect of the purchase from the supplier or is deemed to have been paid in respect of the deemed purchase, and
A2 is
(i) if the unit is a single unit residential complex, 1, and
(ii) in any other case, the unit’s percentage of total floor space,
B is the greater of $350,000 and
(i) if the unit is a single unit residential complex, the fair market value of the unit at the particular time at which tax first becomes payable in respect of the purchase from the supplier or tax in respect of the deemed purchase is deemed to have been paid by the cooperative, and
(ii) in any other case, the amount determined by the formula
B1 x B2
where
B1 is the unit’s percentage of total floor space, and
B2 is the fair market value of the unit at the particular time, and
C is
(i) if the recipient of the exempt supply of the unit was entitled to claim a rebate under subsection 255(2) of the Act in respect of the unit, the amount of that rebate, and
(ii) in any other case, nil.
(26) That, where
(a) a person makes a supply of land or of an interest in land
(i) that is an exempt supply, included in paragraph 7(a) of Part I of Schedule V to the Act, to a person described in subparagraph (i) of that paragraph, or that is an exempt supply, included in paragraph 7(b) of that Part, of a site in a residential trailer park, and
(ii) that results in the person being deemed under any of subsections 190(3) to (5), 200(2), 206(4) and 207(1) of the Act to have made and received a taxable supply by way of sale of the land and to have paid tax, at a particular time, in respect of that supply,
(b) in the case of an exempt supply of land described in paragraph 7(a) of that Part, the residential unit that is or is to be affixed to the land is or will be so affixed for the purpose of its use and enjoyment as a primary place of residence for individuals, and
(c) the person is not entitled to include the tax deemed to have been paid by the person in determining an input tax credit of the person,
the Minister of National Revenue shall, subject to paragraphs (27) and (29), pay a rebate to the person equal to the amount determined by the formula
A x ($112,500 - B) / $25,000
where
A is
(i) in the case of a taxable supply in respect of which the person is deemed to have paid tax calculated on the fair market value of the land, 36 per cent of the tax under subsection 165(1) of the Act that is deemed to have been paid in respect of that supply, and
(ii) in the case of a taxable supply in respect of which the person is deemed to have paid tax equal to the basic tax content of the land, 36 per cent of the qualifying portion of the basic tax content of the land at the particular time, and
B is the greater of $87,500 and
(i) in the case of an exempt supply of land included in paragraph 7(a) of that Part, the fair market value of the land at the particular time, and
(ii) in the case of an exempt supply of a site in a residential trailer park or in an addition to a residential trailer park, the fair market value, at the particular time, of the park or addition, as the case may be, divided by the total number of sites in the park or addition, as the case may be, at the particular time.
(27) That, in order for a person to be entitled to a rebate in respect of a residential unit under an enactment founded on any of paragraphs (23) to (26),
(a) the person be required to file an application for the rebate within two years after
(i) in the case of a rebate under an enactment founded on paragraph (25), the month in which the person makes the exempt supply of the unit referred to in that paragraph, and
(ii) in any other case, the month in which tax first becomes payable by the person, or is deemed to have been paid by the person, in respect of the unit or the residential complex or addition in which the unit is situated; and
(b) where the person received a taxable supply of the unit, or of the complex or addition in which the unit is situated, from another person, the person be required to have paid all of the tax payable in respect of that supply.
(28) That, where the application of a person for a rebate under an enactment founded on any of paragraphs (23) to (26) is required to be filed within two years after a month that ends before the day on which Royal Assent is given to the enactment, the person have until the day that is two years after the day of the assent to file the application.
(29) That no rebate be paid to a person under an enactment founded on any of paragraphs (23) to (26) if all or part of the tax included in determining the rebate would otherwise be included in determining a rebate of the person under any of sections 254, 256, 256.1 and 259 of the Act.
(30) That, where a trust governed by a multi-employer pension plan is entitled to include tax under subsection 165(1) of the Act that was payable or deemed to have been paid by the trust in determining a rebate under an enactment founded on any of paragraphs (23) to (26), the trust not be entitled to include any portion of that tax in determining any multi-employer pension plan rebate to which it may be entitled.
(31) That, for the purposes of an enactment founded on any of paragraphs (21) to (26),
(a) where, at any time, substantially all of the residential units in a multiple unit residential complex containing ten or more residential units are units in respect of which the condition set out in the definition of "qualifying residential unit" pertaining to the first use of the unit is satisfied, all of the residential units in the complex be deemed to be units that satisfy that condition at that time;
(b) except in the case of residential units referred to in paragraph (a) of the definition "self-contained residence",
(i) the two residential units that are located in a multiple unit residential complex containing only those two residential units be deemed to form a single residential unit, and
(ii) where an area of a building is, or is deemed pursuant to this paragraph to be, all or part of a particular residential unit and occupants of that area have, or will have, direct internal access, with or without restriction, to another area of the building that is all or part of a residential unit, that other area be deemed to be part of the particular residential unit and not to be all or part of any other residential unit; and
(c) in determining the rebate of a person under that enactment, there not be included any amount of tax that the person is exempt from paying under an Act of Parliament (other than the Excise Tax Act) or any other law.
(32) That, where a person was entitled to claim a rebate under an enactment founded on paragraph (23) in respect of a qualifying residential unit and, within 1 year after the unit is first occupied as a place of residence after its construction or last substantial renovation, the person sells the unit to a purchaser who is not acquiring the unit for use as the primary place of residence of the purchaser or of a relation of the purchaser, the person be required to pay to the Receiver General an amount equal to the rebate, plus interest at the rate prescribed for the purpose of paragraph 280(1)(b) of the Act calculated on that amount for the period beginning on the day the rebate was paid or applied to a liability of the person and ending on the day the amount of the rebate is paid by the person to the Receiver General.
(33) That any enactment founded on any of paragraphs (21), (22) and (27) to (32) be deemed to come into force on February 28, 2000.
(34) That any enactment founded on any of paragraphs (23) to (25) apply in respect of residential complexes and additions to residential complexes the construction or substantial renovation of which begins after February 27, 2000 or, in the case of a deemed substantial renovation of a building converted into the residential complex, where the construction or alterations necessary to effect the conversion begins after February 27, 2000.
(35) That any enactment founded on paragraph (26) apply in respect of exempt supplies of land by way of lease made after February 27, 2000.
(36) That the following definitions be added to Part IX of the Act for the purposes of any enactment founded on this paragraph or any of paragraphs (37) to (49):
"accrued net tax", in respect of a reporting period of a person, on a particular day, means the amount that would be the net tax for the period if,
(a) on that day, the person were to claim in a return under Division V of Part IX of the Act filed for the period all amounts, each of which is an amount that the person would be entitled on that day to claim as an input tax credit for the period or as an amount that may be deducted by the person in determining the net tax for the period; and
(b) where the period includes the particular day, that day were the last day of the period.
"assessed period", in respect of an authorization referred to in paragraph (37) relating to a particular reporting period of a person, means
(a) if the hearing date is before the end of the particular reporting period, the period beginning on the first day of the particular reporting period and ending on the assessment date; and
(b) in any other case, the particular reporting period.
"assessment date", in respect of an authorization referred to in paragraph (37), means the day immediately before the hearing date.
"hearing date", in respect of an authorization referred to in paragraph (37), means the day on which a judge hears the application for the authorization.
"judge" means a judge of a superior court of a province or a judge of the Federal Court.
(37) That, where, on ex parte application by the Minister of National Revenue relating to a particular reporting period of a person, a judge is satisfied that there are reasonable grounds to believe that the net tax for the period, determined without reference to any enactment founded on paragraph (38), will be a positive amount and that the collection of all or any part of that net tax would be jeopardized by a delay in its collection, the judge shall, on such terms as the judge considers reasonable in the circumstances, authorize the Minister to, without delay,
(a) assess the net tax, determined in accordance with an enactment founded on paragraph (38), for the assessed period; and
(b) take any of the actions described in sections 316 to 321 of the Act for the recovery of that amount.
(38) That, for the purposes of Part IX of the Act, where an authorization referred to in paragraph (37) is granted in respect of an application relating to a particular reporting period of a person,
(a) if the hearing date is before the end of the particular reporting period,
(i) each of the following periods be deemed to be a separate reporting period of the person:
(A) the period beginning on the first day of the particular reporting period and ending on the assessment date, and
(B) the period beginning on the hearing date and ending on
(I) if the particular reporting period is a fiscal year, the last day of the fiscal quarter that includes the hearing date, and
(II) in any other case, the last day of the particular reporting period, and
(ii) the reporting period of the person beginning after the hearing date be determined to be the fiscal quarter of the person unless the person had elected to have reporting periods that are fiscal months;
(b) the due date for the person’s return under Division V of Part IX of the Act for the assessed period be deemed to be the hearing date;
(c) the net tax for the assessed period be deemed to be equal to the accrued net tax in respect of the particular reporting period on the assessment date and that amount be deemed to have become due to the Receiver General on the hearing date;
(d) if, in determining that accrued net tax, the Minister of National Revenue takes into account an amount as an input tax credit or a deduction from net tax, the person be deemed to have claimed the amount in a return under Division V of Part IX of the Act filed for the assessed period; and
(e) any penalty and interest under section 280 of the Act, and any penalty under section 284 of the Act, be determined as if the net tax for the assessed period were not required to be remitted, and the return for the assessed period were not required to be filed, until the last day of the period described in paragraph (44).
(39) That statements contained in an affidavit filed in the context of an application under an enactment founded on any of paragraphs (37), (42), (43) and (45) be allowed to be based on belief with the grounds for that belief.
(40) That an authorization referred to in paragraph (37) in respect of a person be required to be served by the Minister of National Revenue on the person within 72 hours after it is granted, except where the judge orders the authorization to be served at some other time specified in the authorization, and a notice of assessment for the assessed period be required to be served on the person together with the authorization.
(41) That, for the purposes of an enactment founded on paragraph (40), service on a person be required to be effected by
(a) personal service on the person; or
(b) service in accordance with directions, if any, of a judge.
(42) That, where service cannot reasonably be otherwise effected as and when required under an enactment founded on paragraph (41), the Minister of National Revenue be allowed to, as soon as practicable, apply to a judge for further direction.
(43) That, where a judge of a court has granted an authorization under any enactment founded on paragraph (37) in respect of a person, the person be allowed to apply, on 6 clear days’ notice to the Deputy Attorney General of Canada, to a judge of the court to review the authorization.
(44) An application by a person under an enactment founded on paragraph (43) to review an authorization be required to be made
(a) within 30 days from the day on which the authorization was served on the person; or
(b) within such further time as a judge may allow, on being satisfied that the application was made as soon as practicable.
(45) That an application by a person under an enactment founded on paragraph (43) be allowed to be heard in camera, if the person applies therefore and establishes to the satisfaction of the judge that the circumstances of the case justify in camera proceedings.
(46) That, on an application under an enactment founded on paragraph (43), the judge shall determine the question summarily and may confirm, vary or set aside the authorization and make such other order as the judge considers appropriate.
(47) That, where an authorization is set aside under an enactment founded on paragraph (46), any enactment founded on paragraph (38) not apply in respect of the authorization and any assessment made pursuant to the authorization be deemed to be void.
(48) That, where any question arises as to the course to be followed in connection with anything done or being done under an enactment founded on any of paragraphs (37) to (47) and there is no relevant direction in the enactment, a judge may give such direction with regard to the course to be followed as, in the opinion of the judge, is appropriate.
(49) That no appeal lie from an order of a judge referred to in paragraph (46).
(50) That any enactment founded on any of paragraphs (36) to (49) come into force on Royal Assent.
(51) That section 295 of the Act be amended to permit an official to provide confidential information to a police officer, as defined by subsection 462.48(17) of the Criminal Code, where
(a) an official has performed or is performing an act that Part IX of the Act obliges or authorizes the official to perform;
(b) the information can reasonably be regarded as necessary to ascertain the identity of a person and the circumstances in which an offence, which may reasonably be considered to be related to that act, may have been committed under the Criminal Code by the person in respect of an official of the Canada Customs and Revenue Agency, or a provincial official authorized to exercise duties and powers under Part IX of the Act pursuant to an administration agreement between the government of the province and the government of Canada, or in respect of any person related to the official; and
(c) the information is provided solely for the purpose of the investigation or prosecution of the offence.
(52) That the prohibitions and obligations under subsection 231.5(2) of the Income Tax Act imposed on a person in relation to administrative and enforcement acts authorized under that Act be paralleled with respect to the comparable administrative and enforcement acts authorized under the Excise Tax Act, and the penalty under section 238 of the Income Tax Act for failure to comply with those prohibitions and obligations likewise be paralleled in the Excise Tax Act.
(53) That the annual exemption from the excise tax on exports of tobacco products by a manufacturer be reduced for each category of tobacco product from 2.5 per cent to 1.5 per cent of the manufacturer’s total production of that category of tobacco product in the previous calendar year, effective for tobacco products exported after March 2000, and pro-rated for the 2000 transitional year.
That it is expedient to amend the Customs Act to provide among other things:
(1) That the prohibitions and obligations under subsection 231.5(2) of the Income Tax Act imposed on a person in relation to administrative and enforcement acts authorized under that Act be paralleled with respect to the comparable administrative and enforcement acts authorized under the Customs Act, and the penalty under section 238 of the Income Tax Act for failure to comply with those prohibitions and obligations likewise be paralleled in the Customs Act.
That it is expedient to amend the Special Import Measures Act to repeal, or suspend the operation of, certain provisions in that Act for the purpose of bringing it into conformity with recent changes to the World Trade Organization Agreement on Subsidies and Countervailing Measures, including any necessary related amendments.
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