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EXTRA Vol. 144, No. 4

Registration
SOR/2010-152 June 17, 2010

EXCISE TAX ACT

Regulations Amending Various GST/HST Regulations

P.C. 2010-791 June 17 2010

Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to sections 277 (see footnote a) and 277.1 (see footnote b) of the Excise Tax Act (see footnote c), hereby makes the annexed Regulations Amending Various GST/HST Regulations.

REGULATIONS AMENDING VARIOUS GST/HST REGULATIONS

PART 1

TAXES, DUTIES AND FEES (GST/HST) REGULATIONS

“general sales tax rate” of a province means

1. The definition “general sales tax rate” in subsection 2(1) of the Taxes, Duties and Fees (GST/HST) Regulations (see footnote 1) is replaced by the following:

(a) for a participating province, the tax rate for the participating province,

(b) for Quebec, the rate of tax set out in the first paragraph of section 16 of An Act respecting the Québec sales tax, R.S.Q., c. T-0.1,

(d) for Prince Edward Island, the rate of tax set out in section 4 of the Revenue Tax Act, R.S.P.E.I. 1988, c. R-14, and

(e) for Saskatchewan, the rate of tax set out in subsection 5(1) of The Provincial Sales Tax Act, R.S.S. 1978, c. P-34.1; (taux général de la taxe de vente)

2. (1) Paragraph 3(a) of the Regulations is amended by adding the following after subparagraph (i):

(i.1) Chapter 760 of the City of Toronto Municipal Code, made under Part X of the City of Toronto Act, 2006, S.O. 2006, c. 11, Sched. A, if the tax, duty or fee would have applied to that transfer under that chapter as it read on February 1, 2008.

(2) The portion of paragraph 3(c) of the Regulations before subparagraph (i) is replaced by the following:

(3) Subparagraph 3(c)(vii) of the Regulations is repealed.

(4) Subparagraph 3(c)(ix) of the Regulations is repealed.

PART 2

PUBLIC SERVICE BODY REBATE (GST/HST) REGULATIONS

3. The long title of the Public Service Body Rebate (GST/HST) Regulations (see footnote 2) is replaced by the following:

PUBLIC SERVICE BODY REBATE (GST/HST) REGULATIONS

4. Section 1 of the Regulations and the heading before it are repealed.

“federal qualifying amount”
« montant fédéral admissible »

5. Section 2 of the Regulations is amended by adding the following in alphabetical order:

“federal qualifying amount”, in respect of property or a service for a claim period of a person, means the portion of an amount included in the total determined under paragraph (a) of the definition “non-creditable tax charged” in subsection 259(1) of the Act that is tax under subsection 165(1) or section 212 or 218 of the Act paid or payable, or deemed to have been paid or collected, by the person or that is an amount, in relation to an amount of tax under subsection 165(1) or section 212 or 218 of the Act, required to be added in determining the net tax of the person, and

(a) that is not included in determining an input tax credit of the person,

(b) for which it cannot reasonably be regarded that the person has obtained or is entitled to obtain a rebate, refund or remission of the amount under any provision of the Act other than section 259 or under any other Act of Parliament, and

(c) that is not included in an amount adjusted, refunded or credited to or in favour of the person for which a credit note referred to in subsection 232(3) of the Act has been received by the person or a debit note referred to in that subsection has been issued by the person;

“provincial qualifying amount”
« montant admissible provincial »

“provincial qualifying amount”, in respect of property or a service for a claim period of a person, means the portion of an amount included in the total determined under paragraph (a) of the definition “non-creditable tax charged” in subsection 259(1) of the Act that is tax under subsection 165(2) or section 212.1 or 218.1 of the Act or Division IV.1 of Part IX of the Act paid or payable, or deemed to have been paid or collected, by the person or that is an amount, in relation to an amount of tax under subsection 165(2) or section 212.1 or 218.1 of the Act or Division IV.1 of Part IX of the Act, required to be added in determining the net tax of the person, and

(a) that is not included in determining an input tax credit of the person,

6. Section 5 of the Regulations and the heading before it are replaced by the following:

SPECIFIED PROVINCIAL PERCENTAGES

Prescribed provinces, classes and percentages

5. For the purposes of paragraph (f) of the definition “specified provincial percentage” in subsection 259(1) of the Act,

(a) the following participating provinces are prescribed:

(i) Ontario,

(ii) Nova Scotia,

(iii) New Brunswick,

(iv) British Columbia, and

(v) Newfoundland and Labrador;

(b) the following classes of persons are prescribed:

(i) charities, or qualifying non-profit organizations, that are not selected public service bodies,

(ii) hospital authorities,

(iii) school authorities,

(iv) universities or public colleges,

(v) municipalities, and

(vi) facility operators or external suppliers; and

(i) in the case of a person referred to in subparagraph (b)(i) that is resident in

(A) Ontario, 82%,

(B) Nova Scotia, 50%,

(D) British Columbia, 57%, and

(E) Newfoundland and Labrador, 50%,

(ii) in the case of a person referred to in subparagraph (b)(ii) that is resident in

(A) Ontario, 87%,

(B) Nova Scotia, 83%, and

(iii) in the case of a person referred to in subparagraph (b)(iii) that is resident in

(A) Ontario, 93%,

(B) Nova Scotia, 68%, and

(iv) in the case of a person referred to in subparagraph (b)(iv) that is resident in

(A) Ontario, 78%,

(B) Nova Scotia, 67%, and

(v) in the case of a person referred to in subparagraph (b)(v) that is resident in

(A) Ontario, 78%,

(B) Nova Scotia, 57.14%,

(D) British Columbia, 75%, and

(vi) in the case of a person referred to in subparagraph (b)(vi) that is resident in

(A) Ontario, 87%, and

(B) British Columbia, 58%.

APPORTIONMENT OF REBATE

Extent of use, consumption or supply — relevant time

5.1 Where reference is made to a relevant time in subsection 5.2(2), 5.3(2) or 5.4(2) for the purposes of determining the extent to which a person intended to consume, use or supply property or a service in the course of certain activities in relation to a federal qualifying amount or provincial qualifying amount in respect of the property or service, the relevant time is

(a) in the case of a federal qualifying amount or provincial qualifying amount that is an amount of tax in respect of a supply made to, or an importation or bringing into a participating province of the property by, the person at any time, that time;

(b) in the case of a federal qualifying amount or provincial qualifying amount that is an amount deemed to have been paid or collected at any time by the person, that time;

(c) in the case of a federal qualifying amount or provincial qualifying amount that is an amount required to be added under subsection 129(7) of the Act in determining the person’s net tax as a result of a branch or division of the person becoming a small supplier division at any time, that time; and

(d) in the case of a federal qualifying amount or provincial qualifying amount that is an amount required to be added under paragraph 171(4)(b) of the Act in determining the person’s net tax as a result of the person ceasing, at any time, to be a registrant, that time.

Prescribed classes — subsection 259(3)

5.2 (1) For the purposes of paragraph 259(3)(b) of the Act, the following classes of persons are prescribed:

(a) charities that are not selected public service bodies and that are resident in two or more provinces;

(b) qualifying non-profit organizations that are not selected public service bodies and that are resident in two or more provinces; and

(c) selected public service bodies that are neither charities nor qualifying non-profit organizations and that are resident in two or more provinces.

Prescribed manner — subsection 259(3)

(2) For the purpose of determining an amount of a rebate under subsection 259(3) of the Act in respect of a claim period of a person referred to in subsection (1), the amount under paragraph 259(3)(b) of the Act is equal to the total of all amounts, each of which is determined — in relation to a provincial qualifying amount in respect of property or a service (other than property or a service prescribed by section 4) for the claim period for each participating province in which the person is resident — by the formula

A × B × C

where

A is the specified provincial percentage applicable to the person in relation to the participating province;

B is the provincial qualifying amount; and

Selected public service bodies

(3) If a person brings tangible personal property into a participating province on or after a day that is the later of July 1, 2010 and the day on which this section is first published in the Canada Gazette, subsection 259(7) of the Act is adapted as follows:

(7) If a selected public service body acquires, imports or brings into a participating province property or a service primarily for consumption, use or supply in the course of activities engaged in by another selected public service body, for the purpose of determining the amount of a rebate under this section to the body in respect of the non-creditable tax charged in respect of the property or service for any claim period of the body, the body is deemed to be engaged in those activities.

Selected public service bodies

(4) If a person brings tangible personal property into a participating province on or after a day that is the later of July 1, 2010 and the day on which this section is first published in the Canada Gazette, subsection 259(8) of the Act is adapted as follows:

(8) If a person acquires, imports or brings into a participating province property or a service primarily for consumption, use or supply in the course of activities engaged in by the person acting in the capacity of a selected public service body described in any of paragraphs (a) to (g) of the definition “selected public service body” in subsection (1), the amount of any rebate under this section to the person in respect of the non-creditable tax charged in respect of the property or service for a claim period shall be determined as if the person were not a selected public service body described in any other of those paragraphs.

Selected public service bodies

(5) If a person that is a selected public service body acquires, imports or brings into a participating province property or a service primarily for consumption, use or supply in the course of activities engaged in by another selected public service body, for the purposes of applying subsection (2) to the person in relation to a provincial qualifying amount in respect of the property or service for a claim period of the person, the person is deemed to be engaged in those activities.

Selected public service bodies

(6) If a person acquires, imports or brings into a participating province property or a service primarily for consumption, use or supply in the course of activities engaged in by the person acting in the capacity of a selected public service body described in any of paragraphs (a) to (g) of the definition “selected public service body” in subsection 259(1) of the Act, the amount determined under subsection (2) in relation to a provincial qualifying amount in respect of the property or service for a claim period shall be determined as if the person were not a selected public service body described in any other of those paragraphs.

Prescribed classes — subsection 259(4)

5.3 (1) For the purposes of paragraph 259(4)(b) of the Act, persons that are resident in two or more provinces are persons of a prescribed class.

Prescribed manner — subsection 259(4)

(2) For the purpose of determining an amount of a rebate under subsection 259(4) of the Act in respect of a claim period of a person referred to in subsection (1), the amount determined under paragraph 259(4)(b) of the Act is equal to the total of all amounts, each of which is determined — in relation to a provincial qualifying amount in respect of property or a service for the claim period for each participating province in which the person is resident — by the formula

A × B × C

where

A is the specified provincial percentage applicable to a municipality resident in the participating province;

B is the provincial qualifying amount; and

C is the extent (expressed as a percentage) to which the person intended, at the relevant time, to consume, use or supply the property or service in the course of the designated activities in the participating province.

Prescribed classes — subsection 259(4.1)

5.4 (1) For the purposes of subsection 259(4.1) of the Act, the following classes of persons are prescribed:

(a) charities that are selected public service bodies;

(b) public institutions that are selected public service bodies; and

Prescribed manner — subsection 259(4.1)

(2) For the purpose of subsection 259(4.1) of the Act, the rebate in respect of property or a service (other than property or a service prescribed by section 4) for a claim period of a person referred to in subsection (1) is equal to the total of

(a) 50% of the total of all federal qualifying amounts in respect of the property or service for the claim period,

(b) all amounts, each of which is determined — in relation to a provincial qualifying amount in respect of the property or service for the claim period for each participating province in which the person is resident — by the formula

A × B × C

where

A is

(i) 0%, if the person is

(A) a selected public service body described in any of paragraphs (a) to (e) of the definition “selected public service body” in subsection 259(1) of the Act that is resident in the participating province and the specified provincial percentage applicable to that selected public service body is 0%, or

(B) a selected public service body described in paragraph (f) or (g) of the definition “selected public service body” in subsection 259(1) of the Act and the participating province is Newfoundland and Labrador, and

(ii) 50%, in any other case,

B is the provincial qualifying amount, and

(c) in the case of a person designated for the purposes of section 259 of the Act to be a municipality in respect of activities (in this paragraph referred to as the “designated activities”) specified in the designation that consumes, uses or supplies the property or service in the course of the designated activities, the total of

(i) all amounts, each of which is determined — in relation to a federal qualifying amount in respect of the property or service for the claim period — by the formula

A × B × C

where

A is the specified percentage applicable to a municipality minus 50%,

B is the federal qualifying amount, and

C is the extent (expressed as a percentage) to which the person intended, at the relevant time, to consume, use or supply the property or service in the course of the designated activities, and

(ii) all amounts, each of which is determined — in relation to a provincial qualifying amount in respect of the property or service for the claim period for each participating province in which the person is resident — by the formula

D × E × F

where

D is the greater of

(A) the specified provincial percentage applicable to a municipality resident in the participating province minus 50%, and

(B) 0%,

E is the provincial qualifying amount, and

F is the extent (expressed as a percentage) to which the person intended, at the relevant time, to consume, use or supply the property or service in the course of the designated activities in the participating province,

(d) in the case of a person determined to be a municipality under paragraph (b) of the definition “municipality” in subsection 123(1) of the Act that consumes, uses or supplies the property or service in the course of fulfilling the person’s responsibilities as a local authority, the total of

(i) all amounts, each of which is determined — in relation to a federal qualifying amount in respect of the property or service for the claim period — by the formula

A × B × C

where

A is the specified percentage applicable to a municipality minus 50%,

B is the federal qualifying amount, and

D × E × F

where

D is the greater of

(A) the specified provincial percentage applicable to a municipality resident in the participating province minus 50%, and

(B) 0%,

E is the provincial qualifying amount, and

(e) in the case of a person that, acting in the person’s capacity as a hospital authority, consumes, uses or supplies the property or service in the course of activities engaged in by the person in the course of operating a public hospital, of operating a qualifying facility for use in making facility supplies or of making facility supplies, ancillary supplies or home medical supplies, the total of

(i) all amounts, each of which is determined — in relation to a federal qualifying amount in respect of the property or service for the claim period — by the formula

A × B × C

where

A is the specified percentage applicable to a hospital authority minus 50%,

B is the federal qualifying amount, and

C is the extent (expressed as a percentage) to which the person intended, at the relevant time, to consume, use or supply the property or service in the course of activities engaged in by the person in the course of operating a public hospital, of operating a qualifying facility for use in making facility supplies or of making facility supplies, ancillary supplies or home medical supplies, and

D × E × F

where

D is the greater of

(A) the specified provincial percentage applicable to a hospital authority resident in the participating province minus 50%, and

(B) 0%,

E is the provincial qualifying amount, and

F is

(A) if the participating province is Ontario or British Columbia, the extent (expressed as a percentage) to which the person intended, at the relevant time, to consume, use or supply the property or service in the course of activities engaged in by the person

(I) in the course of operating a public hospital in the participating province or of operating a qualifying facility in the participating province for use in making facility supplies, or

(II) in the participating province in the course of making facility supplies, ancillary supplies or home medical supplies, and

(B) in any other case, the extent (expressed as a percentage) to which the person intended, at the relevant time, to consume, use or supply the property or service in the course of activities engaged in by the person in the course of operating a public hospital in the participating province,

(f) in the case of a person that, acting in the person’s capacity as a facility operator or external supplier, consumes, uses or supplies the property or service in the course of activities engaged in by the person in the course of operating a qualifying facility for use in making facility supplies or of making facility supplies, ancillary supplies or home medical supplies, the total of

(i) all amounts, each of which is determined — in relation to a federal qualifying amount in respect of the property or service for the claim period — by the formula

A × B × C

where

A is the specified percentage applicable to a facility operator or external supplier minus 50%,

B is the federal qualifying amount, and

C is the extent (expressed as a percentage) to which the person intended, at the relevant time, to consume, use or supply the property or service in the course of activities engaged in by the person in the course of operating a qualifying facility for use in making facility supplies or of making facility supplies, ancillary supplies or home medical supplies, and

(ii) all amounts, each of which is an amount determined — in relation to a provincial qualifying amount in respect of the property or service for the claim period for each participating province in which the person is resident — by the formula

D × E × F

where

D is the greater of

(A) the specified provincial percentage applicable to a facility operator or external supplier resident in the participating province minus 50%, and

(B) 0%,

E is the provincial qualifying amount, and

F is the extent (expressed as a percentage) to which the person intended, at the relevant time, to consume, use or supply the property or service in the course of activities engaged in by the person

(A) in the course of operating a qualifying facility in the participating province for use in making facility supplies, or

(B) in the participating province in the course of making facility supplies, ancillary supplies or home medical supplies,

(g) in the case of a person that, acting in the person’s capacity as a school authority, consumes, uses or supplies the property or service in activities engaged in by the person in the course of operating an elementary or secondary school, the total of

(i) all amounts, each of which is determined — in relation to a federal qualifying amount in respect of the property or service for the claim period — by the formula

A × B × C

where

A is the specified percentage applicable to a school authority minus 50%,

B is the federal qualifying amount, and

D × E × F

where

D is the greater of

(A) the specified provincial percentage applicable to a school authority resident in the participating province minus 50%, and

(B) 0%,

E is the provincial qualifying amount, and

(h) in the case of a person that, acting in the person’s capacity as a university or public college, consumes, uses or supplies the property or service in activities engaged in by the person in the course of operating a recognized degree-granting institution, a college affiliated with, or research body of, such an institution or of operating a post-secondary college or post-secondary technical institute, the total of

(i) all amounts, each of which is determined — in relation to a federal qualifying amount in respect of the property or service for the claim period — by the formula

A × B × C

where

A is the specified percentage applicable to a university or public college minus 50%,

B is the federal qualifying amount, and

C is the extent (expressed as a percentage) to which the person intended, at the relevant time, to consume, use or supply the property or service in the course of activities engaged in by the person in the course of operating a recognized degree-granting institution, a college affiliated with, or research body of, such an institution or of operating a post-secondary college or post-secondary technical institute, and

D × E × F

where

D is the greater of

(A) the specified provincial percentage applicable to a university or public college resident in the participating province minus 50%, and

(B) 0%,

E is the provincial qualifying amount, and

F is the extent (expressed as a percentage) to which the person intended, at the relevant time, to consume, use or supply the property or service in the course of activities engaged in by the person in the course of operating a recognized degree-granting institution, a college affiliated with, or research body of, such an institution or of operating a post-secondary college or post-secondary technical institute in the participating province,

(i) in the case of a person resident in Ontario, the total of all amounts, each of which is determined — in relation to a provincial qualifying amount in respect of the property or service for the claim period — by the formula

A × B × C

where

A is 32%,

B is the provincial qualifying amount, and

C is the extent (expressed as a percentage) to which the person intended, at the relevant time, to consume, use or supply the property or service, in the course of activities, other than activities in respect of which any of paragraphs (c) to (h) applies, engaged in by the person in Ontario, and

(j) in the case of a person resident in British Columbia, the total of all amounts, each of which is determined — in relation to a provincial qualifying amount in respect of the property or service for the claim period — by the formula

A × B × C

where

A is 7%,

B is the provincial qualifying amount, and

Federal qualifying amount — specified supplies

(3) Despite paragraphs (2)(e) and (f), if a person that is a hospital authority, a facility operator or an external supplier is the recipient of a specified supply of property in respect of which an amount of tax, at any time, becomes payable or is paid without having become payable and that amount of tax is a federal qualifying amount in respect of the property, for the purposes of determining a particular amount under either of those paragraphs in respect of the property for the claim period that includes that time, the federal qualifying amount referred to in the description of B in either of those paragraphs to be used in determining the particular amount in respect of consumption, use or supply of the property in the course of activities in respect of which either of those paragraphs applies, other than activities engaged in by the person in the course of operating a public hospital, is determined by the formula

A × B

where

A is the amount that would, in the absence of this subsection, be determined to be the federal qualifying amount in relation to that tax; and

B is the amount determined by the formula

(C - D) / C

where

C is the fair market value of the property at the time the specified supply is made, and

D is the fair market value of the property on January 1, 2005.

7. (1) Paragraph (a) of the description of A in subsection 8(1) of the Regulations is replaced by the following:

(a) if neither tax under subsection 165(2) of the Act nor tax under section 212.1 of the Act was payable in respect of the acquisition or importation, 6/106 in the case of tax payable under subsection 165(1) or section 212 of the Act, and

(2) Paragraph (a) of the description of A in subsection 8(1) of the Regulations, as enacted by subsection (1), is replaced by the following:

(a) if neither tax under subsection 165(2) of the Act nor tax under section 212.1 of the Act was payable in respect of the acquisition or importation, in the case of tax payable under subsection 165(1) or section 212 of the Act, the amount determined by the formula

C/D

where

C is the rate set out in subsection 165(1) of the Act, and

D is the total of 100% and the percentage determined for C, and

(3) Subparagraphs (b)(i) and (ii) of the description of A in subsection 8(1) of the Regulations are replaced by the following:

(i) 6/114, in the case of tax payable under subsection 165(1) or section 212 of the Act, and

(ii) 8/114, in the case of tax payable under subsection 165(2) or section 212.1 of the Act, and

(4) Subparagraphs (b)(i) and (ii) of the description of A in subsection 8(1) of the Regulations, as enacted by subsection (3), are replaced by the following:

(i) in the case of tax payable under subsection 165(1) or section 212 of the Act, the amount determined by the formula

E/F

where

E is the rate set out in subsection 165(1) of the Act, and

F is the total of 100%, the percentage determined for E and the tax rate for the participating province in which the supply was made or, in the case of an importation, in which the particular person is resident, and

(ii) in the case of tax payable under subsection 165(2) or section 212.1 of the Act, the amount determined by the formula

G/H

where

G is the tax rate for the participating province in which the supply was made or, in the case of an importation, in which the particular person is resident, and

H is the total of 100%, the percentage determined for G and the rate set out in subsection 165(1) of the Act, and

PART 3

AUTOMOBILE OPERATING EXPENSE BENEFIT (GST/HST) REGULATIONS

8. Paragraphs 2(a) and (b) of the Automobile Operating Expense Benefit (GST/HST) Regulations (see footnote 3) are replaced by the following:

(a) 9% if

(i) the individual is an employee of the registrant and is required under subsection 6(1) of the Income Tax Act to so include the amount and the last establishment of the registrant at which the individual ordinarily worked, or to which the individual ordinarily reported, in the year in relation to that office or employment is located in Ontario, New Brunswick or Newfoundland and Labrador, or

(ii) the individual is a shareholder of the registrant, is required under subsection 15(1) of the Income Tax Act to so include the amount and the individual is resident in Ontario, New Brunswick or Newfoundland and Labrador at the end of the year;

(b) 11% if

(ii) the individual is a shareholder of the registrant, is required under subsection 15(1) of the Income Tax Act to so include the amount and the individual is resident in Nova Scotia at the end of the year;

(ii) the individual is a shareholder of the registrant, is required under subsection 15(1) of the Income Tax Act to so include the amount and the individual is resident in British Columbia at the end of the year; and

(d) 3%, in any other case.

PART 4

DEDUCTION FOR PROVINCIAL REBATE (GST/HST) REGULATIONS

9. Section 1 of the Deduction for Provincial Rebate (GST/HST) Regulations (see footnote 4) is amended by adding the following in alphabetical order:

“aircraft fuel” means a fuel that is suitable for use in aircraft engines and that is marketed or sold as a fuel for use in those engines. (carburant d’aéronef)

“children’s car seat” means a restraint system or booster seat that conforms to the Canada Motor Vehicle Safety Standard 213, 213.1, 213.2 or 213.5 under the Motor Vehicle Restraint Systems and Booster Seats Safety Regulations. (siège d’auto)

“children’s clothing” means garments (other than garments of a class that is used exclusively in sports or recreational activities, costumes, children’s diapers or children’s footwear) that are

(a) designed for babies, including baby bibs, bunting blankets and receiving blankets;

(b) children’s garments

(i) designed for girls and of a size not greater than the size that is girls’ size 16 according to the national standard applicable to the garments,

(ii) designed for boys and of a size not greater than the size that is boys’ size 20 according to the national standard applicable to the garments, or

(iii) if no national standard applies to the garments, designed for girls or boys and having a size designation of extra small, small, medium or large; or

(c) hosiery or stretchy socks, hats, ties, scarves, belts, suspenders, mittens and gloves in sizes and styles designed for children or babies. (vêtements pour enfants)

“children’s diaper” means a product that is designed for babies or children and that is

(a) a diaper;

(b) a diaper insert or liner;

(d) a rubber pant designed for use in conjunction with any of the items referred to in paragraphs (a) to (c). (couche pour enfants)

“children’s footwear” means footwear (other than stockings, socks or similar footwear or footwear of a class that is used exclusively in sports or recreational activities) that

(a) is designed for babies; or

(b) is designed for girls or boys and has an insole length of 24.25 centimetres or less. (chaussures pour enfants)

“diesel fuel” means a fuel (other than aircraft fuel, heavy fuel oil or fuel marketed or sold as a fuel for use as heating oil) that is suitable for use in internal combustion engines of the compression-ignition type and that is marketed or sold as a fuel for use in those engines. (carburant diesel)

“feminine hygiene product” means a product that is marketed exclusively for feminine hygiene purposes and is a sanitary napkin, tampon, sanitary belt, menstrual cup or other similar product. (produit d’hygiène féminine)

“gasoline” means a gasoline type fuel (other than aircraft fuel) that is suitable for use in internal combustion engines and that is marketed or sold as a fuel for use in those engines. (essence)

“motor fuel” means

(a) gasoline;

(b) diesel fuel; or

“national standard” means a standard of the National Standards of Canada, as they read on January 1, 2010, in the subject area CAN/CGSB-49, Garment Sizes, published by the Canadian General Standards Board. (norme nationale)

“provincial schedule” in respect of a participating province means

(a) in the case of Ontario, Schedule 1;

(b) in the case of Nova Scotia, Schedule 2;

(d) in the case of British Columbia, Schedule 4; and

(e) in the case of Newfoundland and Labrador, Schedule 5. (annexe provinciale)

“qualifying food and beverages” means food or beverages (other than wine, spirits, beer, malt liquor or other alcoholic beverages) for human consumption that are, having regard to the nature of the product, the quantity sold or its packaging, sold in a form suitable for immediate consumption and that are

(a) food or beverages heated for consumption;

(b) salads not canned or vacuum sealed;

(d) platters of cheese, cold cuts, fruit or vegetables and other arrangements of prepared food;

(e) cakes, muffins, pies, pastries, tarts, cookies, doughnuts, brownies, croissants with sweetened filling or coating, or similar products if they are not prepackaged for sale to consumers and are sold as single servings in quantities of less than six;

(f) ice cream, ice milk, sherbet, frozen yoghurt, frozen pudding or non-dairy substitutes for any of the foregoing, or any product that contains any of the foregoing, sold in single servings and not prepackaged;

(g) food, the supply of which is a taxable supply (other than a zero-rated supply) that would be a zero-rated supply included in section 1 of Part III of Schedule VI to the Act if that section were read without reference to paragraph (q);

(h) non-carbonated beverages dispensed at the place where they are sold;

(i) any of the following beverages, the supply of which is not a zero-rated supply:

(i) milk (flavoured or unflavoured),

(ii) soy, rice or almond-based beverages or other similar non-dairy substitutes for milk, or

(iii) non-carbonated fruit juice beverages or fruit flavoured beverages, other than milk-based beverages, that contain 25% or more by volume of a natural fruit juice or combination of natural fruit juices or of a natural fruit juice or combination of natural fruit juices that have been reconstituted into the original state;

(j) any of the following beverages sold to a person at the same time as food or beverages that are described in any of paragraphs (a) to (i) and the supply of which is not a zero-rated supply:

(i) carbonated beverages dispensed at the place where they are sold, or

(ii) beverages (other than those described in any of paragraphs (a), (h) and (i)), provided that all of the following circumstances are satisfied:

(A) the cans, bottles or other primary containers in which they are sold contain a quantity not exceeding a single serving, and

(B) the beverages are not sold in multiples, prepackaged by the manufacturer or producer, of single servings; or

(k) any of the following food, sold to a person together with food or beverages that are described in any of paragraphs (a) to (i) for a single consideration:

(i) cakes, muffins, pies, pastries, tarts, cookies, doughnuts, brownies, croissants with sweetened filling or coating, or similar products if they are prepackaged for sale to consumers in quantities of less than six items each of which is a single serving,

(ii) ice cream, ice milk, sherbet, frozen yoghurt or frozen pudding, non-dairy substitutes for any of the foregoing, or any product that contains any of the foregoing, prepackaged and sold in single servings, or

(iii) food described in any of paragraphs 1(e) to (j) and (l) of Part III of Schedule VI to the Act. (aliments et boissons admissibles)

“qualifying newspaper” means a print newspaper (other than a flyer, insert, magazine, periodical or shopper) that contains news, editorials, feature stories or other information of interest to the general public and that is published at regular intervals. (journal admissible)

10. Section 2 of the Regulations is replaced by the following:

2. For the purposes of subsection 234(3) of the Act, the prescribed amount for an item included in the provincial schedule in respect of a participating province is the amount that may be paid or credited under an Act of the legislature of the participating province and that is equal to an amount of tax payable under Part IX of the Act in respect of that item.

RESTRICTIONS RELATED TO POINT-OF-SALE REBATES

Coupons

2.1 For the purposes of the new harmonized value-added tax system, section 181 of the Act is adapted according to the following rules:

(a) the reference to “a supply made in a participating province” in paragraph (a) of the definition “tax fraction” in subsection 181(1) of the Act is to be read as “a supply made in a participating province (other than a supply in respect of which the supplier pays to, or credits in favour of, the recipient of the supply an amount prescribed for the purposes of subsection 234(3))”; and

(b) for the purposes of paragraphs 181(2)(b) and (c) of the Act, if the tax fraction referred to in those paragraphs is determined under paragraph (b) of the definition “tax fraction” in subsection 181(1) of the Act, the references in paragraphs 181(2)(b) and (c) of the Act to “tax collectible” is to be read as “tax collectible under subsection 165(1)” and the reference in paragraph 181(2)(c) of the Act to “tax payable” is to be read as “tax payable under subsection 165(1)”.

Restriction

2.2 Section 234 of the Act is modified to adapt that section to the new harmonized value-added tax system by adding the following subsection after subsection (4) of that section:

Additional restriction

(4.1) No amount of an input tax credit, rebate, refund or remission under this or any other Act of Parliament, and no amount of a tax benefit (as defined in subsection 274(1)), shall be credited, paid, granted or allowed to the extent that it can reasonably be regarded that the amount is determined, directly or indirectly, in relation to an amount that is prescribed for the purposes of subsection (3).

11. The schedule to the Regulations is replaced by the Schedules 1 to 5 set out in the schedule to these Regulations.

PART 5

NOVA SCOTIA HST REGULATIONS, 2010

12. Paragraph 14(a) of the Nova Scotia HST Regulations, 2010 (see footnote 5) is replaced by the following:

(a) a benefit amount is required to be included under paragraph 6(1)(a) or (e) of the Income Tax Act in computing an individual’s income from an office or employment and the last establishment of the employer at which the individual ordinarily worked or to which the individual ordinarily reported in the year in relation to that office or employment is located in Nova Scotia or in the Nova Scotia offshore area, or

PART 6

TRANSITIONAL PROVISION AND APPLICATION

TRANSITIONAL PROVISION

13. Until December 31, 2010, the children’s car seats referred to in the Deduction for Provincial Rebate (GST/HST) Regulations, as amended by sections 9 to 11, may, instead of conforming to the requirements of the Motor Vehicle Restraint Systems and Booster Seats Safety Regulations, conform to the requirements of the Motor Vehicle Restraint Systems and Booster Cushions Safety Regulations as they read on May 11, 2010 and as they were modified in their application by the Order Modifying the Operation of the Motor Vehicle Restraint Systems and Booster Cushions Safety Regulations and the Motor Vehicle Safety Regulations, which came into effect on May 1, 2009 and was published in the Canada Gazette, Part I, on May 9, 2009.

APPLICATION

14. Section 1, subsection 2(4) and sections 9 to 13 come into force, or are deemed to have come into force, on July 1, 2010.

15. Subsection 2(1) is deemed to have come into force on February 1, 2008.

16. Sections 5 and 6 apply for the purposes of determining an amount of a rebate under section 259 of the Act in respect of a claim period of a person that ends after June 2010.

17. Subsections 7(1) and (3) apply for the purposes of determining an amount of a rebate under section 259 of the Act in respect of a claim period that ends after June 2006, except that if a claim period of a person includes June 30, 2006, the portion of subsection 8(1) of the Regulations after paragraph (a) is to be read as follows:

(b) the particular person is entitled to claim a rebate under section 259 of the Act in respect of the property or service for the claim period of the particular person that includes June 30, 2006,

for the purpose of determining in accordance with these Regulations the amount of a rebate under that section in respect of the property or service for the claim period of the particular person, the amount of tax under subsection 165(1) or (2) or section 212 or 212.1 of the Act, as the case may be, that became payable, or was paid without having become payable, by the particular person during the claim period in respect of the supply or importation of the property or service is deemed to be equal to the amount determined by the formula

(A × B) + (C × D)

where

A is

(a) if neither tax under subsection 165(2) of the Act nor tax under section 212.1 of the Act was payable in respect of the acquisition or importation, 7/107 in the case of tax under subsection 165(1) or section 212 of the Act that became payable, or was paid without having become payable, before July 1, 2006, and

(b) if tax under subsection 165(2) or section 212.1 of the Act was payable in respect of the acquisition or importation,

(i) 7/115, in the case of tax under subsection 165(1) or section 212 of the Act that became payable, or was paid without having become payable, before July 1, 2006, and

(ii) 8/115, in the case of tax under subsection 165(2) or section 212.1 of the Act that became payable, or was paid without having become payable, before July 1, 2006,

B is the total of all amounts each of which is

(a) the consideration that became due, or was paid without having become due, by the particular person during the period but before July 1, 2006, in respect of the supply of the property or service to the particular person,

(b) the tax under Division II or III of Part IX of the Act that became payable, or was paid without having become payable, by the particular person during the period but before July 1, 2006, in respect of the supply or importation of the property or service,

(c) in the case of tangible personal property that was imported by the particular person, the amount of a tax or duty imposed in respect of the property under the Act (other than Part IX), the Customs Act, the Special Import Measures Act or any other law relating to customs that became due, or was paid without having become due, by the particular person during the period but before July 1, 2006,

(d) the amount of a tax, duty or fee prescribed by paragraph 3(b) or (c) of the Taxes, Duties and Fees (GST/HST) Regulations that became due, or was paid without having become due, by the particular person during the period but before July 1, 2006, in respect of the property or service, other than tax imposed under an Act of the legislature of a province to the extent that the tax is recoverable by the particular person under that Act,

(e) a reasonable gratuity paid by the particular person during the period but before July 1, 2006, in connection with the supply, or

(f) interest, a penalty or other amount paid by the particular person during the period but before July 1, 2006, if the amount was charged to the particular person by the supplier of the property or service because an amount of consideration, or an amount of a tax, duty or fee referred to in paragraph (c) or (d), that was payable in respect of the supply or importation was overdue,

C is

(a) if neither tax under subsection 165(2) of the Act nor tax under section 212.1 of the Act was payable in respect of the acquisition or importation, 6/106 in the case of tax under subsection 165(1) or section 212 of the Act that became payable, or was paid without having become payable, on or after July 1, 2006, and

(b) if tax under subsection 165(2) or section 212.1 of the Act was payable in respect of the acquisition or importation,

(i) 6/114, in the case of tax under subsection 165(1) or section 212 of the Act that became payable, or was paid without having become payable, on or after July 1, 2006, and

(ii) 8/114, in the case of tax under subsection 165(2) or section 212.1 of the Act that became payable, or was paid without having become payable, on or after July 1, 2006, and

D is the total of all amounts each of which is

(a) the consideration that became due, or was paid without having become due, by the particular person during the period but on or after July 1, 2006, in respect of the supply of the property or service to the particular person,

(b) the tax under Division II or III of Part IX of the Act that became payable, or was paid without having become payable, by the particular person during the period but on or after July 1, 2006, in respect of the supply or importation of the property or service,

(d) the amount of a tax, duty or fee prescribed by paragraph 3(b) or (c) of the Taxes, Duties and Fees (GST/HST) Regulations that became due, or was paid without having become due, by the particular person during the period but on or after July 1, 2006, in respect of the property or service, other than tax imposed under an Act of the legislature of a province to the extent that the tax is recoverable by the particular person under that Act,

(e) a reasonable gratuity paid by the particular person during the period but on or after July 1, 2006, in connection with the supply, or

(f) interest, a penalty or other amount paid by the particular person during the period but on or after July 1, 2006, if the amount was charged to the particular person by the supplier of the property or service because an amount of consideration, or an amount of a tax, duty or fee referred to in paragraph (c) or (d), that was payable in respect of the supply or importation was overdue.

18. Subsections 7(2) and (4) apply for the purposes of determining an amount of a rebate under section 259 of the Act in respect of a claim period that ends after December 2007, except that if a claim period of a person includes December 31, 2007, the portion of subsection 8(1) of the Regulations after paragraph (a) is to be read as follows:

(b) the particular person is entitled to claim a rebate under section 259 of the Act in respect of the property or service for the claim period of the particular person that includes December 31, 2007,

(A × B) + (C × D)

where

A is

(b) if tax under subsection 165(2) or section 212.1 of the Act was payable in respect of the acquisition or importation,

(i) 6/114, in the case of tax under subsection 165(1) or section 212 of the Act that became payable, or was paid without having become payable, before January 1, 2008, and

(ii) 8/114, in the case of tax under subsection 165(2) or section 212.1 of the Act that became payable, or was paid without having become payable, before January 1, 2008,

B is the total of all amounts each of which is

(a) the consideration that became due, or was paid without having become due, by the particular person during the period but before January 1, 2008, in respect of the supply of the property or service to the particular person,

(b) the tax under Division II or III of Part IX of the Act that became payable, or was paid without having become payable, by the particular person during the period but before January 1, 2008, in respect of the supply or importation of the property or service,

(d) the amount of a tax, duty or fee prescribed by paragraph 3(b) or (c) of the Taxes, Duties and Fees (GST/HST) Regulations that became due, or was paid without having become due, by the particular person during the period but before January 1, 2008, in respect of the property or service, other than tax imposed under an Act of the legislature of a province to the extent that the tax is recoverable by the particular person under that Act,

(e) a reasonable gratuity paid by the particular person during the period but before January 1, 2008, in connection with the supply, or

(f) interest, a penalty or other amount paid by the particular person during the period but before January 1, 2008, if the amount was charged to the particular person by the supplier of the property or service because an amount of consideration, or an amount of a tax, duty or fee referred to in paragraph (c) or (d), that was payable in respect of the supply or importation was overdue,

C is

(a) if neither tax under subsection 165(2) of the Act nor tax under section 212.1 of the Act was payable in respect of the acquisition or importation, 5/105 in the case of tax under subsection 165(1) or section 212 of the Act that became payable, or was paid without having become payable, on or after January 1, 2008, and

(b) if tax under subsection 165(2) or section 212.1 of the Act was payable in respect of the acquisition or importation,

(i) 5/113, in the case of tax under subsection 165(1) or section 212 of the Act that became payable, or was paid without having become payable, on or after January 1, 2008, and

(ii) 8/113, in the case of tax under subsection 165(2) or section 212.1 of the Act that became payable, or was paid without having become payable, on or after January 1, 2008, and

D is the total of all amounts each of which is

(a) the consideration that became due, or was paid without having become due, by the particular person during the period but on or after January 1, 2008, in respect of the supply of the property or service to the particular person,

(b) the tax under Division II or III of Part IX of the Act that became payable, or was paid without having become payable, by the particular person during the period but on or after January 1, 2008, in respect of the supply or importation of the property or service,

(d) the amount of a tax, duty or fee prescribed by paragraph 3(b) or (c) of the Taxes, Duties and Fees (GST/HST) Regulations that became due, or was paid without having become due, by the particular person during the period but on or after January 1, 2008, in respect of the property or service, other than tax imposed under an Act of the legislature of a province to the extent that the tax is recoverable by the particular person under that Act,

(e) a reasonable gratuity paid by the particular person during the period but on or after January 1, 2008, in connection with the supply, or

(f) interest, a penalty or other amount paid by the particular person during the period but on or after January 1, 2008, if the amount was charged to the particular person by the supplier of the property or service because an amount of consideration, or an amount of a tax, duty or fee referred to in paragraph (c) or (d), that was payable in respect of the supply or importation was overdue.

19. Section 8 applies to amounts that are required to be included in computing an individual’s income for the purposes of the Income Tax Act for the 2010 and subsequent taxation years except that,

(a) in respect of the 2010 taxation year,

(i) the reference in paragraph 2(a) of the Automobile Operating Expense Benefit (GST/HST) Regulations, as enacted by section 8, to “9%” is to be read as a reference to “6%” if the registrant is not a large business (as defined in subsection 236.01(1) of the Act) on December 31, 2010 and

(A) in the case where the individual is an employee of the registrant, the last establishment of the registrant at which the individual ordinarily worked, or to which the individual ordinarily reported, in the year in relation to that office or employment is located in Ontario, or

(B) in the case where the individual is a shareholder of the registrant, the individual is resident in Ontario at the end of the year,

(ii) the reference in paragraph 2(a) of the Automobile Operating Expense Benefit (GST/HST) Regulations , as enacted by section 8, to “9%” is to be read as a reference to “4.5%” if the registrant is a large business (as defined in subsection 236.01(1) of the Act) on December 31, 2010, if

(B) in the case where the individual is a shareholder of the registrant, the individual is resident in Ontario at the end of the year,

(iii) the reference in paragraph 2(b) of the Automobile Operating Expense Benefit (GST/HST) Regulations, as enacted by section 8, to “11%” is to be read as a reference to “10%”, and

(iv) the reference in paragraph 2(c) of the Automobile Operating Expense Benefit (GST/HST) Regulations, as enacted by section 8, to “5%” is to be read as a reference to “4%”;

(b) in respect of the 2011 to 2014 taxation years, the reference in paragraph 2(a) of the Automobile Operating Expense Benefit (GST/ HST) Regulations, as enacted by section 8, to “9%” is to be read as a reference to “6%” if the registrant is a large business (as defined in subsection 236.01(1) of the Act) on December 31 of the taxation year and

(i) in the case where the individual is an employee of the registrant, the last establishment of the registrant at which the individual ordinarily worked, or to which the individual ordinarily reported, in the year in relation to that office or employment is located in Ontario; or

(ii) in the case where the individual is a shareholder of the registrant, the individual is resident in Ontario at the end of the year;

(c) in respect of the 2015 taxation year, the reference in paragraph 2(a) of the Automobile Operating Expense Benefit (GST/HST) Regulations, as enacted by section 8, to “9%” is to be read as a reference to “6.6%” if the registrant is a large business (as defined in subsection 236.01(1) of the Act) on December 31, 2015 and

(ii) in the case where the individual is a shareholder of the registrant, the individual is resident in Ontario at the end of the year;

(d) in respect of the 2016 taxation year, the reference in paragraph 2(a) of the Automobile Operating Expense Benefit (GST/HST) Regulations, as enacted by section 8, to “9%” is to be read as a reference to “7.2%” if the registrant is a large business (as defined in subsection 236.01(1) of the Act) on December 31, 2016 and

(ii) in the case where the individual is a shareholder of the registrant, the individual is resident in Ontario at the end of the year;

(e) in respect of the 2017 taxation year, the reference in paragraph 2(a) of the Automobile Operating Expense Benefit (GST/HST) Regulations, as enacted by section 8, to “9%” is to be read as a reference to “7.8%” if the registrant is a large business (as defined in subsection 236.01(1) of the Act) on December 31, 2017 and

(ii) in the case where the individual is a shareholder of the registrant, the individual is resident in Ontario at the end of the year; and

(f) in respect of the 2018 taxation year, the reference in paragraph 2(a) of the Automobile Operating Expense Benefit (GST/HST) Regulations, as enacted by section 8, to “9%” is to be read as a reference to “8.4%”if the registrant is a large business (as defined in subsection 236.01(1) of the Act) on December 31, 2018 and

(ii) in the case where the individual is a shareholder of the registrant, the individual is resident in Ontario at the end of the year.

SCHEDULE
(Section 11)

SCHEDULE 1
(Section 1)

ONTARIO ITEMS

1. A printed book or an update of a printed book

2. An audio recording all or substantially all of which is a spoken reading of a printed book

3. A bound or unbound printed version of scripture of any religion

4. A composite property

5. Children’s clothing

6. Children’s footwear

7. A children’s diaper

8. A feminine hygiene product

9. A children’s car seat

10. A qualifying newspaper

11. Qualifying food and beverages sold to a person at a particular time, if the total of all consideration for all qualifying food and beverages sold to the person at the particular time is four dollars or less

SCHEDULE 2
(Section 1)

NOVA SCOTIA ITEMS

1. A printed book or an update of a printed book

2. An audio recording all or substantially all of which is a spoken reading of a printed book

3. A bound or unbound printed version of scripture of any religion

4. A composite property

5. Children’s clothing

6. Children’s footwear

7. A children’s diaper

8. A feminine hygiene product

SCHEDULE 3
(Section 1)

NEW BRUNSWICK ITEMS

1. A printed book or an update of a printed book

2. An audio recording all or substantially all of which is a spoken reading of a printed book

3. A bound or unbound printed version of scripture of any religion

4. A composite property

SCHEDULE 4
(Section 1)

BRITISH COLUMBIA ITEMS

1. A printed book or an update of a printed book

2. An audio recording all or substantially all of which is a spoken reading of a printed book

3. A bound or unbound printed version of scripture of any religion

4. A composite property

5. Children’s clothing

6. Children’s footwear

7. A children’s diaper

8. A feminine hygiene product

9. A children’s car seat

10. A motor fuel

SCHEDULE 5
(Section 1)

NEWFOUNDLAND AND LABRADOR ITEMS

1. A printed book or an update of a printed book

2. An audio recording all or substantially all of which is a spoken reading of a printed book

3. A bound or unbound printed version of scripture of any religion

4. A composite property

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issue and objectives

The Government of Ontario and the Government of British Columbia announced their intention to adopt the Harmonized Sales Tax (HST) on March 26, 2009 and July 23, 2009, respectively, with an effective date of July 1, 2010. On April 6, 2010, the Government of Nova Scotia announced its intention to provide, effective July 1, 2010, additional point-of-sale rebates for children’s clothing, children’s footwear, feminine hygiene products and children’s diapers.

Under the Comprehensive Integrated Tax Co-ordination Agreements (CITCAs) between Canada and Ontario, Canada and Nova Scotia and Canada and British Columbia, each of these provinces is entitled to certain elements of provincial tax policy flexibility, such as establishing the rate of the provincial component of the HST, the limited point-of-sale rebates for the provincial component of the HST and the rate of some targeted rebates. The CITCAs are the federal-provincial agreements that detail the parameters agreed upon between Canada and each of these provinces to govern the application of the HST under federal legislation and administration, on the same tax base as the federal Goods and Services Tax (GST). The new harmonized value-added tax system under the Excise Tax Act (ETA) applies the provincial component of the HST on transactions related to provinces that participate in that system. Amendments to existing regulations are required to implement, in accordance with the CITCAs and the new harmonized value-added tax system under the ETA, the elements of provincial tax policy flexibility previously announced by each of these provinces.

In order to facilitate the transition to the HST, various announcements of rules have been made. For instance, each of Ontario and British Columbia announced which public service bodies (PSBs) in those provinces, including municipalities, universities, public colleges, school authorities, hospitals, charities and qualifying government-funded non-profit organizations, would be designated to qualify for a rebate of the provincial component of the HST and which rebate rates would apply to each of those PSBs. As well, Ontario and British Columbia announced, on March 26, 2009 and July 23, 2009, their intention to introduce point-of-sale rebates for the provincial component of the HST related to supplies in Ontario and British Columbia of books, children’s clothing, children’s footwear, feminine hygiene products, children’s diapers, children’s car seats and children’s car booster seats. In the case of British Columbia, a point-of-sale rebate for the provincial component of the HST related to supplies of motor fuel made in that province was announced as well. On November 12, 2009, Ontario also announced a point-of-sale rebate for the provincial component of the HST related to supplies in Ontario of print newspapers as well as prepared food and beverages sold for a total price not exceeding four dollars.

The Regulations Amending Various GST/HST Regulations (the Regulations) formalize and give legal force to the measures of provincial tax policy flexibility previously announced by Ontario, Nova Scotia and British Columbia as well as introduce other rules required to accommodate the elements of provincial tax policy flexibility permitted under the new harmonized value-added tax system. The provisions contained in the Regulations are amendments to existing GST/HST regulations. These amendments are necessary to address flexibilities related to provincial tax policy that are allowed for under this new system.

Description and rationale

With the passage of the Provincial Choice Tax Framework Act on December 15, 2009, Parliament has approved the implementation on July 1, 2010, of the HST in Ontario with a provincial component of 8% and in British Columbia with a provincial component of 7% as well as the mechanisms to facilitate the application of certain HST rules by way of regulations.

The Regulations contain rules with respect to the new harmonized value-added tax system under the ETA. These Regulations cover amendments to:

Deduction for Provincial Rebate (GST/HST) Regulations;
Public Service Body Rebate (GST/HST) Regulations;
Automobile Operating Expense Benefit (GST/HST) Regulations; and
Taxes, Duties and Fees (GST/HST) Regulations.

The Regulations also make a purely housekeeping amendment in the Nova Scotia HST Regulations, 2010 to remove superfluous wording that has no legal effect but that might create confusion if left unchanged.

Deduction for Provincial Rebate (GST/HST) Regulations

The CITCAs between Canada and Ontario and Canada and British Columbia provide these provinces with the flexibility of designating a limited number of point-of-sale rebates of the provincial component of the HST. As well, the new CITCA between Canada and Nova Scotia allows that province to add additional items that are eligible for a point-of-sale rebate. Currently, Nova Scotia provides a rebate of the provincial component of the HST on qualifying books. The Regulations are required to facilitate exercise of these rebates at the point of sale (e.g., to allow the vendor to refund the provincial component of the HST to the purchaser directly at the point of sale). The regulations add new items that are eligible for a point-of-sale rebate of the provincial component of the HST in Ontario, British Columbia and Nova Scotia. These new rebates in Ontario, British Columbia and Nova Scotia have been announced publicly by the respective province and encompass children’s clothing and footwear, children’s diapers, feminine hygiene products and certain other prescribed items (e.g. print newspapers in Ontario and motor fuel in British Columbia).

Public Service Body Rebate (GST/HST) Regulations

The Regulations put into effect PSB rebates of the provincial component of HST set out in the CITCAs, and that were publicly announced by Ontario on March 26, 2009 and by British Columbia on September 1, 2009. They also put into effect the additional PSB rebates, announced by British Columbia on January 14, 2010, for school authorities, public universities and public colleges, public hospitals and certain hospital-like service providers. British Columbia and Ontario determined the PSB sectors to which rebates are to be provided and the respective rebates rates, which are different from one province to the other based on different circumstances. Consequential to the different PSB rebate rates, these Regulations also provide rules for determining the appropriate PSB rebates of the provincial component of HST for a PSB that carries on more than one PSB activity or that is resident in, and carries on activities in, more than one province.

For completeness, outstanding technical amendments are also made to the Regulations purely consequential to the previous GST rate reductions.

Automobile Operating Expense Benefit (GST/HST) Regulations

These Regulations prescribe the rates of GST and HST applicable to the value of an automobile operating expense benefit, which is the personal portion of automobile operating expenses paid by employers or corporations and reported as income for income tax purposes by an employee or shareholder. The GST or HST is applicable to the benefit and the employer or corporation must account for and remit the GST/HST at a prescribed rate. In general, technical amendments to these Regulations are necessary as a consequence of the rate flexibility for the provincial component of the HST afforded to participating provinces under the new harmonized value-added tax system. These Regulations are amended to account for the different HST rates applicable in the participating provinces and to reflect the fact that some expenses (e.g., fuel) may be subject to a point-of-sale rebate or to input tax credit recapture. In addition, the prescribed rates are lower than the GST and HST rates to reflect the fact that a portion of the total automobile operating expense benefit reported for income tax purposes relates to GST/HST-exempt expenses such as insurance and, in the case of British Columbia, the provision of a point-of-sale rebate of the provincial component of the HST for motor fuels. Special prescribed rates also apply to the automobile operating expense benefit of an employee or shareholder in Ontario where the employer or corporation, as a large business, is required to recapture input tax credits in respect of fuel expenses.

Taxes, Duties and Fees (GST/HST) Regulations

These Regulations exclude certain provincial taxes from the GST/HST base. The main exclusions are provincial land transfer taxes, general provincial sales taxes and any specific ad valorem provincial tax that is imposed on a property or service in lieu of a general provincial sales tax. These Regulations are amended to remove the tax on hotel accommodations imposed under British Columbia’s Hotel Room Tax Act from the list of taxes that are excluded from the GST/HST base because, with the implementation of the HST (that applies to room accommodation) in British Columbia, effective on July 1, 2010, the hotel tax is no longer imposed in lieu of a general sales tax in the province.

For completeness, outstanding amendments are also made to these Regulations. The new land transfer tax imposed by the City of Toronto is added to the list of prescribed taxes that are excluded from the GST/HST base. Removing it from the base ensures consistency with the original policy rationale for relieving land transfer taxes from the GST and is consistent with the approach taken for other provinces where land transfer taxes may be imposed. Also, certain references to other prescribed taxes in these regulations are being updated.

Consultation

The Regulations were developed in consultation with the governments of Ontario, British Columbia and the existing harmonized provinces of Nova Scotia, New Brunswick and Newfoundland and Labrador. The Canada Revenue Agency was also consulted on the Regulations. The Regulations are designed to reflect previous HST announcements of rules made on various dates by Ontario, Nova Scotia and British Columbia and by the Government of Canada on February 25, 2010.

Contacts

Ron Brazeau
Sales Tax Division
Department of Finance
L’Esplanade Laurier
140 O’Connor Street
Ottawa, Ontario
K1A 0G5
Telephone: 613-947-9842

Costa Dimitrakopoulos
Excise and GST/HST Rulings Directorate
Canada Revenue Agency
Place de Ville, Tower A, 15th Floor
Ottawa, Ontario
K1A 0L5
Telephone: 613-952-9205

Footnote a
S.C. 1993, c. 27, s. 125(1)

Footnote b
S.C. 2009, c. 32, s. 37(1)

Footnote c
R.S., c. E-15

Footnote 1
SOR/91-34; SOR/2006-280

Footnote 2
SOR/91-37; SOR/99-367

Footnote 3
SOR/99-176

Footnote 4
SOR/2001-65

Footnote 5
SOR/2010-99

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EXTRA Vol. 144, No. 4

Regulations Amending Various GST/HST Regulations