Sales Tax Amendments Act, 2006 (S.C. 2007, c. 18)

• 29. (1) The Act is amended by adding the following after section 226:

  Marginal note:Non-application of exemption

  226.01 Section 5.1 of Part V.1 of Schedule V and section 6 of Part VI of that Schedule do not apply to a supply of a used and empty returnable container (as defined in section 226) or to a supply of the material resulting from its compaction.

• (2) Section 226.01 of the Act, as enacted by subsection (1), is repealed.

• (3) Subsection (1) applies to supplies for which consideration becomes due after 1996 or is paid after 1996 without having become due.

• (4) Subsection (2) applies to supplies for which consideration becomes due after July 15, 2002 or is paid after that day without having become due.

Marginal note:2000, c. 30, s. 55(1)

• 30. (1) The portion of subsection 226.1(1) of the French version of the Act before paragraph (a) is replaced by the following:

  Marginal note:Déduction pour organisme de bienfaisance

  • 226.1 (1) Un organisme de bienfaisance peut déduire un montant dans le calcul de sa taxe nette pour sa période de déclaration au cours de laquelle la fourniture donnée visée à l’alinéa a) est effectuée ou pour une période de déclaration postérieure si les conditions suivantes sont réunies :

• Marginal note:2000, c. 30, s. 55(1)

  (2) The portion of subsection 226.1(1) of the English version of the Act after paragraph (e) and before the formula is replaced by the following:

  the charity may, in determining the net tax for its reporting period in which the particular supply is made or for a subsequent reporting period, deduct the amount determined by the formula

• Marginal note:2000, c. 30, s. 55(1)

  (3) Section 226.1 of the Act, as amended by subsections (1) and (2), is repealed.

• (4) Subsections (1) and (2) apply to any supply of a container made to a charity after March 1998.

• (5) Subsection (3) applies to supplies for which consideration becomes due after July 15, 2002 or is paid after that day without having become due.

Marginal note:1997, c. 10, s. 50(1)

• 31. (1) Subsection 231(1) of the Act is replaced by the following:

  Marginal note:Bad debt — deduction from net tax

  • 231. (1) If a supplier has made a taxable supply (other than a zero-rated supply) for consideration to a recipient with whom the supplier was dealing at arm’s length, it is established that all or a part of the total of the consideration and tax payable in respect of the supply has become a bad debt and the supplier at any time writes off the bad debt in the supplier’s books of account, the reporting entity for the supply may, in determining the reporting entity’s net tax for the reporting period that includes that time or for a subsequent reporting period, deduct the amount determined by the formula

    A × B/C

    where

    A 

    is the tax in respect of the supply;

    B 

    is the total of the consideration, tax and applicable provincial tax remaining unpaid in respect of the supply that was written off at that time as a bad debt; and

    C 

    is the total of the consideration, tax and applicable provincial tax in respect of the supply.

  • Marginal note:Reporting and remittance conditions

    (1.1) A reporting entity is not entitled to deduct an amount under subsection (1) in respect of a supply unless

    • (a) the tax collectible in respect of the supply is included in determining the amount of net tax reported in the reporting entity’s return under this Division for the reporting period in which the tax became collectible; and

    • (b) all net tax remittable, if any, as reported in that return is remitted.

• Marginal note:1997, c. 10, s. 50(1); 2000, c. 30, ss. 58(2) and (3)

  (2) Subsections 231(3) and (4) of the Act are replaced by the following:

  • Marginal note:Recovery of bad debt

    (3) If all or part of a bad debt in respect of which a person has made a deduction under this section is recovered at any time, the person shall, in determining the person’s net tax for the reporting period that includes that time, add the amount determined by the formula

    A × B/C

    where

    A 

    is the amount of the bad debt recovered at that time;

    B 

    is the tax in respect of the supply to which the bad debt relates; and

    C 

    is the total of the consideration, tax and applicable provincial tax in respect of the supply.

  • Marginal note:Limitation period

    (4) A person may not claim a deduction under this section in respect of a bad debt relating to a supply unless the deduction is claimed in a return under this Division filed within four years after the day on or before which a return of the person was required to be filed for the reporting period in which the supplier has written off the bad debt in its books of account.

  • Marginal note:Definitions

    (5) The following definitions apply in this section.

    “applicable provincial tax”

    « taxe provinciale applicable »

    “applicable provincial tax”, in respect of a supply, means any amount that can reasonably be attributed to a tax, duty or fee imposed under an Act of the legislature of a province in respect of the supply that is a prescribed tax, duty or fee for the purposes of section 154.

    “reporting entity”

    « déclarant »

    “reporting entity” for a supply means

    • (a) if an election has been made under subsection 177(1.1) in respect of the supply, the person who is required, under that subsection, to include the tax collectible in respect of the supply in determining the person’s net tax; and

    • (b) in any other case, the supplier.

• (3) Subsection (1) applies to supplies made after April 23, 1996.

• (4) Subsections 231(3) and (4) of the Act, as enacted by subsection (2), apply to bad debts relating to supplies made after April 23, 1996 except that the reference to “supplier” in subsection 231(4) of the Act, as enacted by subsection (2), shall be read as a reference to “person” in its application to a deduction claimed by a person under subsection 231(2) of the Act as that subsection read in relation to an account receivable transferred to the person before 2000.

• (5) Subsection 231(5) of the Act, as enacted by subsection (2), is deemed to have come into force on April 24, 1996.

• (6) Despite subsection 231(4) of the Act, as enacted by subsection (2), if a supplier and a registrant acting as an agent of the supplier have jointly made an election under subsection 177(1.1) of the Act in respect of a supply made before December 20, 2002 and the supplier wrote off a bad debt relating to the supply in the supplier’s books of account at any time before December 21, 2002, the registrant may claim a deduction under subsection 231(1) of the Act, as enacted by subsection (1), in respect of the bad debt written off at that time in a return of the registrant under Division V of Part IX of the Act that is filed with the Minister of National Revenue on or before the later of the day that is one year after December 20, 2002 and the day that is four years after the day on or before which the registrant’s return under that Division for the registrant’s reporting period in which the bad debt was written off is required to be filed.

Marginal note:2000, c. 30, s. 63(2)

• 32. (1) The portion of subsection 235(1) of the Act before the formula is replaced by the following:

  Marginal note:Net tax where passenger vehicle leased

  • 235. (1) If, in a taxation year of a registrant, tax becomes payable, or is paid without having become payable, by the registrant in respect of supplies of a passenger vehicle made under a lease and

    • (a) the total of the consideration for the supplies that would be deductible in computing the registrant’s income for the year for the purposes of the Income Tax Act, if the registrant were a taxpayer under that Act and that Act were read without reference to section 67.3,

    exceeds

    • (b) the amount in respect of that consideration that would be deductible in computing the registrant’s income for the year for the purposes of the Income Tax Act, if the registrant were a taxpayer under that Act and the formulae in paragraphs 7307(1)(b) and (3)(b) of the Income Tax Regulations were read without reference to the description of B,

    there shall be added in determining the net tax for the appropriate reporting period of the registrant an amount determined by the formula

• (2) Subsection (1) applies in respect of reporting periods that end after November 27, 2006 and in respect of any reporting period that ends on or before that day unless

  • (a) an amount was added pursuant to section 235 of the Act in determining the net tax for the reporting period;

  • (b) the amount was determined on the basis that the capital cost of the passenger vehicle for the purposes of the Income Tax Act included federal and provincial sales taxes; and

  • (c) the return for the reporting period was filed under Division V of Part IX of the Act on or before that day.

• 33. (1) Subsection 240(3) of the Act is amended by striking out the word “or” at the end of paragraph (c), by adding the word “or” at the end of paragraph (d) and by adding the following after paragraph (d):

  • (e) is the recipient of a qualifying supply (as defined in subsection 167.11(1)), or of a supply that would be a qualifying supply if the recipient were a registrant, and the recipient files an election referred to in subsection 167.11(2) with the Minister in respect of the qualifying supply before the particular day that is referred to in paragraph 167.11(7)(a).

• (2) Subsection 240(3) of the Act is amended by striking out the word “or” at the end of paragraph (d), by adding the word “or” at the end of paragraph (e), as enacted by subsection (1), and by adding the following after paragraph (e):

  • (f) a corporation that would be a temporary member, as defined in subsection 156(1), in the absence of paragraph (a) of that definition.

• (3) Subsection (1) is deemed to have come into force on June 28, 1999.

• (4) Subsection (2) is deemed to have come into force on November 17, 2005.