Legislative and Regulatory Proposals Relating to the Excise Tax Act, the Excise Act, 2001 and the Air Travellers Security Charge Act
PART 1
Draft Amendments to the Excise Tax Act
1 (1) Paragraph 68.01(1)(a) of the Excise Tax Act is amended by adding the following after subparagraph (i):
(i.1) to the vendor, if the quantity of the diesel fuel is at least 1,000 litres, the vendor applies for the payment and the purchaser certifies that, and the vendor reasonably believes that, the purchaser will use the diesel fuel exclusively to generate electricity other than in or by a vehicle, including a conveyance attached to the vehicle, of any mode of transportation, or
(2) Paragraph 68.01(1)(b) of the Act is replaced by the following:
(b) to a purchaser that applies for the payment and that uses the diesel fuel to generate electricity (other than in or by a vehicle, including a conveyance attached to the vehicle, of any mode of transportation), if no application in respect of the diesel fuel can be made by the vendor under subparagraph (a)(i.1).
(3) Paragraph 68.01(3)(a) of the Act is replaced by the following:
(a) the vendor described in subparagraph (1)(a)(i) or (i.1) applies for it within two years after the vendor sells the diesel fuel to the purchaser described in subparagraph (1)(a)(i) or (i.1); or
2 (1) Paragraph 186(1)(b) of the Act is replaced by the following:
(b) at the time that tax in respect of the acquisition, importation or bringing in becomes payable, or is paid without having become payable, by the parent, all or substantially all of the property of the other corporation is property that was last manufactured, produced, acquired or imported by the other corporation for consumption, use or supply by the other corporation exclusively in the course of its commercial activities,
(2) Subsection 186(1) of the Act, as amended by subsection (1), is replaced by the following:
Operating corporation
186 (0.1) For the purposes of this section, a particular corporation is at a particular time an operating corporation of another corporation if at the particular time the particular corporation is related to the other corporation and all or substantially all of the property of the particular corporation is property that was last manufactured, produced, acquired or imported by the particular corporation for consumption, use or supply by the particular corporation exclusively in the course of its commercial activities.
Input tax credit
(1) Unless subsection (2) applies, if at a particular time a registrant (in this subsection referred to as the "parent") that is a corporation resident in Canada acquires, imports or brings into a participating province a particular property or service and if at the particular time a particular corporation is an operating corporation of the parent, the parent is deemed, for the purpose of determining an input tax credit of the parent, to have acquired or imported the particular property or service or brought it into the participating province, as the case may be, for use in the course of commercial activities of the parent to the extent that
(a) the parent acquires or imports the particular property or service or brings it into the participating province for the purpose of
(i) selling or otherwise disposing of, purchasing or otherwise obtaining, or holding shares of the capital stock, or indebtedness, of the particular corporation by the parent, or
(ii) redeeming, issuing or converting or otherwise modifying shares of the capital stock, or indebtedness, of the particular corporation by the particular corporation;
(b) the following conditions are met:
(i) the parent acquires or imports the particular property or service or brings it into the participating province for the purpose of issuing or selling shares of the capital stock, or indebtedness, of the parent,
(ii) the parent transfers to the particular corporation the proceeds from the issuance or sale by lending money to the particular corporation or by purchasing or otherwise obtaining from the particular corporation shares of the capital stock, or indebtedness, of the particular corporation, and
(iii) those proceeds are for use by the particular corporation exclusively in the course of its commercial activities; or
(c) if at the particular time all or substantially all of the property of the parent is shares of the capital stock, or indebtedness, of operating corporations of the parent, the parent acquires or imports the particular property or service or brings it into the participating province for the purpose of carrying on, engaging in or conducting an activity of the parent other than
(i) an activity that is primarily in respect of shares of the capital stock, or indebtedness, of a person that is neither the parent nor an operating corporation of the parent; or
(ii) an activity that is carried on, engaged in or conducted in the course of making an exempt supply by the parent unless the activity is a financial service that is
(A) the lending or borrowing of shares of the capital stock, or indebtedness, of an operating corporation of the parent,
(B) the issue, granting, allotment, acceptance, endorsement, renewal, processing, variation, transfer of ownership or repayment of shares of the capital stock, or indebtedness, of the parent or an operating corporation of the parent,
(C) the provision, variation, release or receipt of a guarantee, acceptance or indemnity in respect of shares of the capital stock, or indebtedness, of the parent or an operating corporation of the parent,
(D) the payment or receipt of money as dividends (other than patronage dividends), interest, principal, benefits, or similar receipt or payment of money in respect of shares of the capital stock, or indebtedness, of the parent or an operating corporation of the parent, or
(E) the underwriting of shares of the capital stock, or indebtedness, of an operating corporation of the parent.
(3) Paragraph 186(2)(b) of the Act is replaced by the following:
(b) throughout the period beginning when the performance of the particular service began or when the purchaser acquired, imported or brought into the participating province, as the case may be, the particular property and ending at the later of the times referred to in paragraph (c), all or substantially all of the property of the other corporation was property that was last manufactured, produced, acquired or imported for consumption, use or supply exclusively in the course of commercial activities,
(4) Subsection 186(3) of the Act is replaced by the following:
Shares, etc., held by corporation
(3) If at any time all or substantially all of the property of a particular corporation is property that was last manufactured, produced, acquired or imported by it for consumption, use or supply exclusively in the course of its commercial activities, all shares of the capital stock of the particular corporation owned by, and all indebtedness of the particular corporation owed to, any other corporation that is related to the particular corporation is, for the purposes of this section, deemed to be, at that time, property that was acquired by the other corporation for use exclusively in the course of its commercial activities.
(5) Subsection 186(3) of the Act, as enacted by subsection (4), is replaced by the following:
Shares, etc., held by corporation
(3) If at a particular time a particular corporation is an operating corporation of another corporation, all shares of the capital stock of the particular corporation owned by, and all indebtedness of the particular corporation owed to, the other corporation is, for the purposes of this section, deemed to be, at the particular time, property that was acquired by the other corporation for use exclusively in the course of its commercial activities.
(6) Subsections (1) and (4) apply to any acquisition, importation or bringing into a participating province of property or a service on or before Announcement Date in respect of which tax is payable or is paid without having become payable.
(7) Subsections (2) and (5) apply to any acquisition, importation or bringing into a participating province of property or a service after Announcement Date.
(8) Subsection (3) applies to any acquisition, importation or bringing into a participating province of property or a service in respect of which tax is payable or is paid without having become payable.
3 (1) The portion of paragraph 240(3)(d) of the Act after subparagraph (ii) is replaced by the following:
where all or substantially all of the property of the other corporation is, for the purposes of section 186, property that was last manufactured, produced, acquired or imported by the other corporation for consumption, use or supply exclusively in the course of its commercial activities;
(2) Subsection (1) applies in respect of any application for registration for the purposes of Part IX of the Act.
4 (1) Paragraphs 259.1(2)(a) and (b) of the Act are replaced by the following:
(a) in the case of a specified person described in paragraph (f) of the definition specified person in subsection (1), the person does not acquire or import the specified property for any of the following purposes:
(i) the purpose of making a supply by way of sale of the specified property for consideration, and
(ii) the purpose of transferring ownership of the specified property to another person in the course of supplying another property or a service for consideration; and
(b) in any other case, the person does not acquire or import the specified property for any of the following purposes:
(i) the purpose of making a supply by way of sale of the specified property, and
(ii) the purpose of transferring ownership of the specified property to another person in the course of supplying another property or a service.
(2) Subsection (1) applies to any acquisition or importation of property in respect of which tax
(a) becomes payable after Announcement Date without having been paid on or before that day; or
(b) is paid after Announcement Date without having become payable on or before that day.
5 The Act is amended by adding the following after section 289.1:
Time period not to count
289.2 The following periods of time shall not be counted in the computation of the period of time within which an assessment of a person may be made under section 296 or 297:
(a) if the person is served a notice of a requirement under subsection 289(1), the period of time between the day on which an application for judicial review in respect of the requirement is made and the day on which the application is finally disposed of; and
(b) if an application is commenced by the Minister under subsection 289.1(1) to order the person to provide any access, assistance, information or document, the period of time between the day on which the person files a notice of appearance, or otherwise opposes the application, and the day on which the application is finally disposed of.
6 The portion of subsection 292(7) of the Act before paragraph (a) is replaced by the following:
Time period not to count
(7) The period of time between the day on which an application for the review of a requirement is made under subsection (4) and the day on which the application is finally disposed of shall not be counted in the computation of
7 (1) Paragraph 295(5)(d.1) of the Act is replaced by the following:
(d.1) provide confidential information, or allow the inspection of or access to confidential information, as the case may be, under, and solely for the purpose of,
(i) paragraph 33.1(a) of the Old Age Security Act,
(ii) an order made under subsection 462.48(3) of the Criminal Code, or
(iii) an order made under the Mutual Legal Assistance in Criminal Matters Act to gather or send information, for the purposes of an investigation or prosecution relating to an act or omission that, if it had occurred in Canada, would constitute an offence for which an order could be obtained under subsection 462.48(3) of the Criminal Code, in response to a request made pursuant to
(A) an administrative arrangement entered into under section 6 of the Mutual Legal Assistance in Criminal Matters Act, or
(B) a bilateral agreement for mutual legal assistance in criminal matters to which Canada is a party;
(2) Paragraph 295(5)(n) of the Act is replaced by the following:
(n) provide confidential information, or allow the inspection of or access to confidential information, as the case may be, solely for the purposes of a provision contained in a tax treaty (as defined in subsection 248(1) of the Income Tax Act) or in a listed international agreement; or
PART 2
Draft Amendments to the Excise Act, 2001
8 The Excise Act, 2001 is amended by adding the following after section 209:
Time period not to count
209.1 The following periods of time shall not be counted in the computation of the period of time within which an assessment of a person may be made under section 188 or 189:
(a) if the person is served a notice of a requirement under subsection 208(1), the period of time between the day on which an application for judicial review in respect of the requirement is made and the day on which the application is finally disposed of; and
(b) if an application is commenced by the Minister under subsection 209(1) to order the person to provide any access, assistance, information or record, the period of time between the day on which the person files a notice of appearance, or otherwise opposes the application, and the day on which the application is finally disposed of.
9 The portion of subsection 210(7) of the Act before paragraph (a) is replaced by the following:
Time period not to count
(7) The period between the day on which an application for the review of a requirement is made and the day on which the application is finally disposed of shall not be counted in the computation of
10 (1) Paragraph 211(6)(d.1) of the Act is replaced by the following:
(d.1) provide confidential information, or allow the inspection of or access to confidential information, as the case may be, under, and solely for the purpose of,
(i) paragraph 33.1(a) of the Old Age Security Act,
(ii) an order made under subsection 462.48(3) of the Criminal Code, or
(iii) an order made under the Mutual Legal Assistance in Criminal Matters Act to gather or send information, for the purposes of an investigation or prosecution relating to an act or omission that, if it had occurred in Canada, would constitute an offence for which an order could be obtained under subsection 462.48(3) of the Criminal Code, in response to a request made pursuant to
(A) an administrative arrangement entered into under section 6 of the Mutual Legal Assistance in Criminal Matters Act, or
(B) a bilateral agreement for mutual legal assistance in criminal matters to which Canada is a party;
(2) Paragraph 211(6)(l) of the Act is replaced by the following:
(l) provide confidential information, or allow the inspection of or access to confidential information, as the case may be, solely for the purposes of a provision contained in a tax treaty (as defined in subsection 248(1) of the Income Tax Act) or in a listed international agreement;
PART 3
Draft Amendments to the Air Travellers Security Charge Act
11 The portion of subsection 38(6) of the Air Travellers Security Charge Act before paragraph (a) is replaced by the following:
Time period not to count
(6) The period between the day on which an application for the review of a requirement is made and the day on which the application is finally disposed of shall not be counted in the computation of
PART 4
Draft Amendments to the New Harmonized Value-Added Tax System Regulations, No. 2
12 Paragraphs 259.1(2)(a) and (b) of the Excise Tax Act, as adapted by section 47.1 of the New Harmonized Value-added Tax System Regulations, No. 2, are replaced by the following:
(a) in the case of a specified person described in paragraph (f) of the definition specified person in subsection (1), the person does not acquire, import or bring in the specified property for any of the following purposes:
(i) the purpose of making a supply by way of sale of the specified property for consideration, and
(ii) the purpose of transferring ownership of the specified property to another person in the course of supplying another property or a service for consideration; and
(b) in any other case, the person does not acquire, import or bring in the specified property for any of the following purposes:
(i) the purpose of making a supply by way of sale of the specified property, and
(ii) the purpose of transferring ownership of the specified property to another person in the course of supplying another property or a service.
13 Section 12 applies to any acquisition, importation or bringing into a participating province of property in respect of which tax
(a) becomes payable after Announcement Date without having been paid on or before that day; or
(b) is paid after Announcement Date without having become payable on or before that day.
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