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Legislative and Regulatory Proposals Relating to the Excise Tax Act, the Excise Act, 2001 and the Select Luxury Items Tax Act

PART 1Draft Amendments to the Excise Tax Act

PART 2Draft Amendments to the Excise Act, 2001

 The Act is amended by adding the following after section 233.2:

Marginal note:Contravention of section 158.47

233.3 Every person that is liable to pay a duty imposed under paragraph 158.57(b) on a vaping product is liable to a penalty equal to the amount determined by the following formula if the vaping product is released under the Customs Act for entry into the duty paid market in contravention of section 158.47:

(A + B) × 200%

where

A
is the amount determined under Schedule 8 in respect of the vaping product, using the rates of duty applicable at the time the contravention occurred; and
B
is
  • (a) if the contravention occurred in a specified vaping province, the amount determined for A, and

  • (b) in any other case, 0.

 The portion of section 234.2 of the Act before the formula is replaced by the following:

Marginal note:Contravention — sections 158.35 and 158.43 to 158.45

234.2 Every person that contravenes section 158.35, 158.43, 158.44 or 158.45 is liable to a penalty equal to the amount determined by the formula

 The Act is amended by adding the following after section 249:

Marginal note:Contravention of section 158.511

249.1 Every person that contravenes section 158.511 is liable to a penalty equal to the amount determined by the formula

(A + B) × 50%

where

A
is the amount determined under Schedule 8 in respect of the vaping products to which the contravention relates, using the rates of duty applicable at the time the contravention occurred; and
B
is
  • (a) if the contravention occurred in a specified vaping province, the amount determined for A, and

  • (b) in any other case, 0.

 Sections 14 to 16 come into force on the day on which the Act enacting those sections receives royal assent.

PART 3Draft Amendments to Various Regulations

DIVISION 1Financial Services and Financial Institutions (GST/HST) Regulations

 The Financial Services and Financial Institutions (GST/HST) Regulations are amended by adding the following after section 3.1:

  • 3.2 (1) For the purposes of this section,

    • (a) acquirer, issuer, payment card, payment card network and payment card network operator have the same meanings as in section 3 of the Payment Card Networks Act; and

    • (b) payment service provider has the same meaning as in section 2 of the Retail Payment Activities Act.

  • (2) The following services are prescribed for the purposes of paragraph (r.6) of the definition financial service in subsection 123(1) of the Act:

    • (a) a service that is supplied by a payment card network operator and that enables a merchant to accept payments by payment card by providing the merchant, or a payment service provider engaged by the merchant, with access to a payment card network for the transmission or processing of the payments;

    • (b) a service that is rendered to a holder of a payment card and that is supplied by a payment card network operator in its capacity as the issuer of the payment card; and

    • (c) a service, in respect of the settlement of a transaction made by payment card, that is supplied

      • (i) by a payment card network operator, in its capacity as the acquirer for the transaction, to the issuer of the payment card,

      • (ii) by a payment card network operator, in its capacity as the issuer of the payment card, to the acquirer for the transaction, or

      • (iii) by a payment card network operator to the acquirer for the transaction if the amount of consideration for the supply of the service is equal to the amount of the fee that is payable, by the payment card network operator to the issuer of the payment card, in respect of the settlement of the transaction.

 Section 18 applies to a supply of a service for which

DIVISION 2Amalgamations and Windings-Up Continuation (GST/HST) Regulations

 The schedule to the Amalgamations and Windings-Up Continuation (GST/HST) Regulations is amended by adding the following in numerical order:

  • Subsections 177(1.1) and (1.11)

 Section 20 is deemed to have come into force on Announcement Date.

DIVISION 3Returning Persons Exemption Regulations

 Paragraph 3(2)(b) of the Returning Persons Exemption Regulations is replaced by the following:

  • (b) tobacco or vaping products (other than a vaping product drug as defined in section 2 of the Excise Act, 2001) imported by a person who has not attained 18 years of age.

 Section 22 comes into force on the day on which the Act enacting that section receives royal assent.

DIVISION 4Selected Listed Financial Institutions Attribution Method (GST/HST) Regulations

 The definition plan merger in subsection 16(1) of the Selected Listed Financial Institutions Attribution Method (GST/HST) Regulations is amended by adding “and” at the end of paragraph (a), by striking out “and” at the end of paragaph (b) and by repealing paragraph (c).

 The description of B in subsection 24(2) of the Regulations is replaced by the following:

B
is the total of its net premiums for the particular period in respect of the insurance of risk in respect of property and of its net premiums for the particular period in respect of the insurance of risk in respect of persons, that are included in computing its income for the purposes of Part I of the Income Tax Act or that would be included in computing its income for the purposes of Part I of that Act if the financial institution were an insurance corporation.

 The portion of paragraph 28(d) of the Regulations before subparagraph (i) is replaced by the following:

  • (d) if the particular person is not a selected listed financial institution and is either a qualifying small investment plan or a qualifying private investment plan for the purposes of Part 1, or if the particular person is not a selected listed financial institution by operation of section 11 or 12, the amount that would, if the particular person were a selected listed financial institution, be the particular person’s percentage for the participating province and for the taxation year of the particular person in which the fiscal year that includes the following reporting period of the particular person ends:

 Sections 24 to 26 apply in respect of any reporting period of a person that ends after Announcement Date.

DIVISION 5Regulations Respecting Excise Licences and Registrations

 Section 28 is deemed to have come into force on April 1, 2023.

DIVISION 6Stamping and Marking of Tobacco, Cannabis and Vaping Products Regulations

 The portion of section 3.6 of the Stamping and Marking of Tobacco, Cannabis and Vaping Products Regulations before paragraph (a) is replaced by the following:

3.6 For the purposes of paragraphs 158.46(1)(b) and (2)(a) of the Act, the prescribed information is

 Sections 3.6 and 3.7 of the Regulations are replaced by the following:

3.6 For the purposes of paragraphs 158.46(1)(b) and (2)(a) of the Act, the prescribed information is

  • (a) one of the following:

    • (i) the vaping product licensee’s name and address,

    • (ii) the vaping product licensee’s licence number, or

    • (iii) if the vaping product is packaged by the vaping product licensee for another person, the person’s name and the address of their principal place of business; and

  • (b) the volume in millilitres of the vaping substance in liquid form, and the weight in grams of the vaping substance in solid form, contained in each vaping device or immediate container in the package and the number of vaping devices and immediate containers in the package.

3.7 For the purposes of paragraph 158.47(1)(a) of the Act, the prescribed information is

  • (a) if the vaping product was imported by a vaping product licensee, the licensee’s name and address or vaping product licence number;

  • (b) if the vaping product was imported by a person other than a vaping product licensee, the person’s name and address; and

  • (c) the volume in millilitres of the vaping substance in liquid form, and the weight in grams of the vaping substance in solid form, contained in each vaping device or immediate container in the package and the number of vaping devices and immediate containers in the package.

 The portion of section 3.8 of the Regulations before paragraph (a) is replaced by the following:

3.8 For the purposes of paragraphs 158.46(1)(b) and (2)(a) and 158.47(1)(a) of the Act, the following information is prescribed for cases of vaping products:

 Paragraph 4(4)(b) of the Regulations is replaced by the following:

  • (b) a person that has in their possession vaping excise stamps only for the purpose of applying adhesive to the stamps on behalf of the person to which the stamps are issued.

 Sections 30 and 32 come into force or are deemed to have come into force on January 1, 2024.

 Section 31 comes into force on the day that is six months after the first day of the month following the month in which the Act enacting that section receives royal assent.

 Section 33 is deemed to have come into force on June 23, 2022.

DIVISION 7Select Luxury Items Tax Regulations

 The Select Luxury Items Tax Regulations are made as follows:

Select Luxury Items Tax Regulations

Interpretation

Marginal note:Definition of Act

1 In these Regulations, Act means the Select Luxury Items Tax Act.

PART 1Prescribed Aircraft and Vessels

Marginal note:Exclusion from subject aircraft — agreements before 2022

2 For the purposes of paragraph (g) of the definition subject aircraft in subsection 2(1) of the Act, an aircraft is a prescribed aircraft if ownership of the aircraft is transferred to a purchaser from a vendor by way of sale under an agreement in writing (in this section referred to as the “sale agreement”) and

  • (a) it is the case that

    • (i) the purchaser entered into the sale agreement before 2022, or

    • (ii) the purchaser

      • (A) entered into the sale agreement after 2021, and

      • (B) entered into another agreement in writing before 2022 with the vendor in respect of the aircraft, under which the purchaser

        • (I) paid a deposit in respect of the aircraft to the vendor before 2022,

        • (II) agrees to enter into the sale agreement, and

        • (III) agrees to forfeit the deposit if the purchaser fails to enter into the sale agreement;

  • (b) the sale agreement was entered into between the purchaser and the vendor in the course of the vendor’s business of offering aircraft for sale;

  • (c) the aircraft is delivered or made available in Canada in relation to the sale agreement;

  • (d) possession of the aircraft is transferred to the purchaser under the sale agreement at a particular time;

  • (e) the vendor is a registered vendor in respect of subject aircraft at the particular time; and

  • (f) the purchaser is neither registered, nor required to be registered, as a vendor in respect of subject aircraft under Division 5 of the Act at, or at any time before, the particular time.

Marginal note:Exclusion from subject vessel — agreements before 2022

3 For the purposes of paragraph (h) of the definition subject vessel in subsection 2(1) of the Act, a vessel is a prescribed vessel if ownership of the vessel is transferred to a purchaser from a vendor by way of sale under an agreement in writing (in this section referred to as the “sale agreement”) and

  • (a) it is the case that

    • (i) the purchaser entered into the sale agreement before 2022, or

    • (ii) the purchaser

      • (A) entered into the sale agreement after 2021, and

      • (B) entered into another agreement in writing before 2022 with the vendor in respect of the vessel, under which the purchaser

        • (I) paid a deposit in respect of the vessel to the vendor before 2022,

        • (II) agrees to enter into the sale agreement, and

        • (III) agrees to forfeit the deposit if the purchaser fails to enter into the sale agreement;

  • (b) the sale agreement was entered into between the purchaser and the vendor in the course of the vendor’s business of offering vessels for sale;

  • (c) the vessel is delivered or made available in Canada in relation to the sale agreement;

  • (d) possession of the vessel is transferred to the purchaser under the sale agreement at a particular time;

  • (e) the vendor is a registered vendor in respect of subject vessels at the particular time; and

  • (f) the purchaser is neither registered, nor required to be registered, as a vendor in respect of subject vessels under Division 5 of the Act at, or at any time before, the particular time.

Marginal note:Partial ownership

4 For the purposes of sections 2 and 3, a particular person transfers ownership of an aircraft or vessel to another person even if, at the time ownership is transferred to the other person, the particular person retains partial ownership or transfers partial ownership to any third person.

PART 2Sale of Partial Ownership

Marginal note:Prescribed circumstances — taxable amount

  • 5 (1) For the purposes of subsection 18(7) of the Act, the circumstances set out in this section are prescribed circumstances.

  • Marginal note:Taxable amount — sale of partial ownership

    (2) Subject to subsection (3), for the purposes of section 18 of the Act and for the purposes of determining under section 34 of the Act the amount of tax payable under section 18 of the Act, if a vendor sells only partial ownership of a subject item to a purchaser, the taxable amount of the subject item is the amount determined by the formula

    A + B

    where

    A
    is the greater of the value of the consideration for the sale of the subject item and the retail value of the subject item at the time at which the sale is completed; and
    B
    is the total of all amounts, each of which is the greater of the value of the consideration for, and the fair market value of, an improvement in respect of the subject item that is provided by the vendor, or a person that does not deal at arm’s length with the vendor, in connection with the sale of the subject item, but only to the extent that the amount is not included in the determination of A.
  • Marginal note:Multiple sales of partial ownership

    (3) For the purposes of section 18 of the Act and for the purposes of determining under section 34 of the Act the amount of tax payable under section 18 of the Act, if a particular sale of only partial ownership of a subject item between a vendor and a purchaser is completed at a particular time and if another sale of only partial ownership of the subject item between the vendor and a purchaser is completed at or after the particular time, the taxable amount of the subject item in respect of the other sale is equal to zero if

    • (a) the taxable amount of the subject item in respect of the particular sale is determined under subsection (2); and

    • (b) before the particular time, the vendor entered into an agreement in writing for the particular sale and an agreement in writing for the other sale.

PART 3Exportation

Marginal note:Prescribed circumstances — aircraft

  • 6 (1) For the purposes of subsection 36(3) of the Act, the circumstances set out in this section are prescribed circumstances.

  • Marginal note:Exemption certificate — aircraft

    (2) Subject to subsection (3), an exemption certificate applies in respect of a sale of a subject aircraft by a vendor to a purchaser if

    • (a) the vendor is a registered vendor in respect of subject aircraft at the particular time at which the sale is completed;

    • (b) the certificate is made in prescribed form containing prescribed information;

    • (c) the certificate includes

      • (i) the identification number of the subject aircraft,

      • (ii) a declaration by the purchaser that

        • (A) the subject aircraft is to be exported as soon after the particular time as is reasonable having regard to the circumstances surrounding the exportation, the sale and, if applicable, the normal business practice of the purchaser and vendor,

        • (B) the subject aircraft is not to be used in Canada at any time before the exportation except to the extent reasonably necessary or incidental to its manufacture, offering for sale, transportation or exportation,

        • (C) the subject aircraft is not to be registered with the Government of Canada or a province before the exportation except if the registration is done solely for a purpose incidental to its manufacture, offering for sale, transportation or exportation, and

        • (D) the purchaser is neither registered, nor required to be registered, as a vendor in respect of subject aircraft under Division 5 of the Act at the particular time, and

      • (iii) an acknowledgement by the purchaser that the purchaser is assuming liability to pay any amount of tax in respect of the subject aircraft that is or may become payable by the purchaser under this Act;

    • (d) the purchaser provides, in a manner satisfactory to the Minister, the certificate in respect of the sale to the vendor; and

    • (e) the vendor retains the certificate.

  • Marginal note:Exemption certificate — multiple purchasers

    (3) If a subject aircraft is sold by a vendor to more than one purchaser, an exemption certificate applies in respect of the sale of the subject aircraft only if, in the absence of this subsection, an exemption certificate would apply in respect of each purchaser in accordance with subsection (2).

Marginal note:Prescribed circumstances — aircraft

  • 7 (1) For the purposes of section 33 of the Act, the circumstances set out in this section are prescribed circumstances.

  • Marginal note:Tax not payable — aircraft

    (2) The tax under section 18 of the Act in respect of a sale of a subject aircraft by a vendor to a purchaser is not payable if

    • (a) the vendor is a registered vendor in respect of subject aircraft at the particular time at which the sale is completed;

    • (b) the purchaser is neither registered, nor required to be registered, as a vendor in respect of subject aircraft under Division 5 of the Act at the particular time;

    • (c) an exemption certificate does not apply in respect of the sale in accordance with section 36 of the Act;

    • (d) the subject aircraft

      • (i) is to be exported as soon after the particular time as is reasonable having regard to the circumstances surrounding the exportation, the sale and, if applicable, the normal business practice of the purchaser and vendor,

      • (ii) is not to be used in Canada at any time before the exportation except to the extent reasonably necessary or incidental to its manufacture, offering for sale, transportation or exportation, and

      • (iii) is not to be registered with the Government of Canada or a province before the exportation except if the registration is done solely for a purpose incidental to its manufacture, offering for sale, transportation or exportation; and

    • (e) the vendor maintains evidence satisfactory to the Minister of the exportation of the subject aircraft.

PART 4Miscellaneous

Marginal note:Information return — prescribed person

8 For the purposes of subsection 59(1) of the Act, a person is a prescribed person for a reporting period of the person if the person

  • (a) is a registered vendor in respect of subject vehicles throughout the reporting period; and

  • (b) is not otherwise registered, or required to be registered, under Division 5 of the Act at any time during the reporting period.

Marginal note:General penalty — prescribed provision

9 For the purposes of paragraph 119(a) of the Act, subsection 71(2) of the Act is a prescribed provision.

PART 5Transitional Relief — Agreements Before 2022

Marginal note:Prescribed circumstances

  • 10 (1) For the purposes of section 33 of the Act, the circumstances set out in this section are prescribed circumstances.

  • Marginal note:Tax not payable on sale

    (2) Neither the tax under section 18 of the Act nor the tax under section 29 of the Act in respect of a subject item that is sold by a vendor to a purchaser is payable if the purchaser entered into an agreement in writing before 2022 with the vendor for the sale of the subject item in the course of the vendor’s business of offering for sale that type of subject item.

  • Marginal note:Tax not payable on import

    (3) The tax under section 20 of the Act in respect of a subject item that is imported is not payable if

    • (a) the importer entered into an agreement in writing before 2022 with a vendor for the transfer of ownership of the subject item to the importer by way of sale; and

    • (b) the agreement was entered into in the course of the vendor’s business of offering for sale that type of subject item.

  • Marginal note:Tax not payable on use

    (4) The tax under section 26 of the Act in respect of a subject item that is used in Canada at a particular time is not payable if

    • (a) a person entered into an agreement in writing before 2022 with a vendor for the transfer of ownership of the subject item to the person by way of sale;

    • (b) the agreement was entered into in the course of the vendor’s business of offering for sale that type of subject item; and

    • (c) the person is an owner of the subject item at the particular time.

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