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Excise Tax Act (R.S.C., 1985, c. E-15)

Full Document:  

Act current to 2024-05-28 and last amended on 2024-01-01. Previous Versions

PART IXGoods and Services Tax (continued)

DIVISION IInterpretation (continued)

Consideration (continued)

Marginal note:Meaning of selected qualifying employer

  •  (1) For the purposes of this section, selected qualifying employer has the meaning assigned by subsection 172.1(9).

  • Marginal note:Election for nil consideration

    (2) For the purposes of this Part, if a participating employer of a pension plan elects jointly with a pension entity of the pension plan, every taxable supply made by the participating employer to the pension entity at a time when the election is in effect is deemed to have been made for no consideration.

  • Marginal note:Election for nil consideration — master pension entity

    (2.1) A person that is a participating employer of a pension plan and a master pension entity of the pension plan may jointly make an election in respect of taxable supplies made by the person to the master pension entity if

    A ≥ 90%

    where

    A
    is the total of all percentages, each of which is a master pension factor in respect of a pension plan of which the person is a participating employer for the fiscal year of the master pension entity that includes the day on which the election becomes effective.
  • Marginal note:Effect of subsection (2.1) election

    (2.2) For the purposes of this Part, every taxable supply made by a participating employer to a master pension entity at a time when a joint election made under subsection (2.1) by the participating employer and the master pension entity is in effect is deemed to have been made for no consideration.

  • Marginal note:Non-application

    (3) Subsection (2) does not apply to

    • (a) a supply deemed under section 172.1 to have been made;

    • (b) a supply of property or a service that is not acquired by a pension entity of a pension plan for consumption, use or supply by the pension entity in the course of pension activities (as defined in subsection 172.1(1)) in respect of the pension plan;

    • (c) a supply made by a participating employer of a pension plan to a pension entity of the pension plan of all or part of property or a service if, at the time the participating employer acquires the property or service, the participating employer is a selected qualifying employer of the pension plan;

    • (d) a supply made by a participating employer of a pension plan to a pension entity of the pension plan of property or a service if, at the time the participating employer consumes or uses an employer resource (as defined in subsection 172.1(1)) of the participating employer for the purpose of making the supply, the participating employer is a selected qualifying employer of the pension plan; or

    • (e) a supply made in prescribed circumstances or made by a prescribed person.

  • Marginal note:Non-application of subsection (2.2)

    (3.1) Subsection (2.2) does not apply to

    • (a) a supply deemed under section 172.1 to have been made;

    • (b) a supply of property or a service that is not acquired by a master pension entity of a pension plan for consumption, use or supply by the master pension entity in the course of pension activities (as defined in subsection 172.1(1)) in respect of the pension plan;

    • (c) a supply made by a participating employer of a pension plan to a master pension entity of the pension plan of all or part of property or a service if, at the time the participating employer acquires the property or service, the master pension entity is a master pension entity of one or more pension plans of which the participating employer is a selected qualifying employer;

    • (d) a supply made by a participating employer of a pension plan to a master pension entity of the pension plan of property or a service if, at the time the participating employer consumes or uses an employer resource (as defined in subsection 172.1(1)) of the participating employer for the purpose of making the supply, the master pension entity is a master pension entity of one or more pension plans of which the participating employer is a selected qualifying employer; or

    • (e) a supply made in prescribed circumstances or made by a prescribed person.

  • Marginal note:Joint revocation

    (4) The persons that have jointly made an election under subsection (2) or (2.1) may jointly revoke the election.

  • Marginal note:Form of election and revocation

    (5) An election under subsection (2) or (2.1) and a revocation of an election under subsection (4) must

    • (a) be made in prescribed form containing prescribed information;

    • (b) specify the day on which the election or the revocation is to become effective, which must be the first day of a fiscal year of the participating employer; and

    • (c) be filed by the participating employer with the Minister in prescribed manner on or before the day that is the day on which the election or the revocation is to become effective or any later day that the Minister may allow.

  • Marginal note:Cessation

    (6) An election made jointly under subsection (2) or (2.1) by a person that is a participating employer of a pension plan and by another person that is a pension entity of the pension plan or a master pension entity of the pension plan ceases to have effect on the earliest of

    • (a) the day on which the person ceases to be a participating employer of the pension plan,

    • (b) the day on which the other person ceases to be a pension entity of the pension plan or a master pension entity of the pension plan, as the case may be,

    • (c) the day on which a joint revocation of the election under subsection (4) becomes effective,

    • (d) the day specified in a notice of revocation of the election sent to the person under subsection (9), and

    • (e) in the case of an election under subsection (2.1), the first day of a fiscal year of the other person for which

      A < 90%

      where

      A
      is the total of all percentages, each of which is a master pension factor in respect of a pension plan of which the person is a participating employer for the fiscal year.
  • Marginal note:Notice of intent

    (7) If an election made jointly under subsection (2) or (2.1) by a participating employer of a pension plan and by a pension entity of the pension plan or a master pension entity of the pension plan is in effect at any time in a fiscal year of the participating employer and if the participating employer fails to account for, as and when required under this Part, any tax deemed to have been collected by the participating employer on the last day of the fiscal year under any of subsections 172.1(5) to (6.1) in respect of the pension plan, the Minister may send a notice in writing (in this section referred to as a “notice of intent”) to the participating employer and to the pension entity or the master pension entity, as the case may be, that the Minister proposes to revoke the election as of the first day of the fiscal year.

  • Marginal note:Representations to Minister

    (8) Upon receipt of a notice of intent, a participating employer must establish to the satisfaction of the Minister that the participating employer did not fail to account for, as and when required under this Part, tax deemed to have been collected by the participating employer under any of subsections 172.1(5) to (6.1) in respect of the pension plan.

  • Marginal note:Notice of revocation

    (9) If, after 60 days after the day on which the notice of intent was sent by the Minister to the participating employer, the Minister is not satisfied that the participating employer did not fail to account for, as and when required under this Part, tax deemed to have been collected by the participating employer on the last day of a particular fiscal year under any of subsections 172.1(5) to (6.1) in respect of the pension plan, the Minister may send a notice in writing (in this section referred to as a “notice of revocation”) to the participating employer and to the pension entity or master pension entity with which the participating employer made the election that the election is revoked as of the day specified in the notice of revocation, and that day is not to be earlier than the day specified in the notice of intent and must be the first day of any particular fiscal year.

  • Marginal note:Revocation — effect

    (10) For the purposes of this Part, an election under subsection (2) or (2.1) that has been revoked by the Minister under subsection (9) is deemed never to have been in effect on any day on or after the day specified in the notice of revocation.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1990, c. 45, s. 12
  • 1993, c. 27, s. 28
  • 2013, c. 33, s. 43
  • 2017, c. 33, s. 111

Marginal note:Tax refund discounts

 For the purposes of this Part, where a discounter (within the meaning of the Tax Rebate Discounting Act) pays an amount to a person to acquire from the person a right to a refund of tax (within the meaning of that Act), notwithstanding section 139, the discounter shall be deemed to have made

  • (a) a taxable supply of a service for consideration equal to the lesser of

    • (i) 2/3 of the amount, if any, by which the amount of the refund exceeds the amount paid by the discounter to the person to acquire the right, and

    • (ii) $30; and

  • (b) a separate supply of a financial service for consideration equal to the amount by which the amount of the refund exceeds the total of the amount paid by the discounter to the person to acquire the right and the amount determined under paragraph (a).

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1990, c. 45, s. 12

Marginal note:Value in Canadian currency

 Where the consideration for a supply is expressed in a foreign currency, the value of the consideration shall, for the purposes of this Part, be computed on the basis of the value of that foreign currency in Canadian currency on the day the tax is payable, or on such other day as is acceptable to the Minister.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1990, c. 45, s. 12

Marginal note:Coin-operated devices

 Where a supply is made, and the consideration therefor is paid, by means of a coin-operated device, the following rules apply for the purposes of this Part:

  • (a) the recipient shall be deemed to have

    • (i) received the supply,

    • (ii) paid the consideration for the supply, and

    • (iii) paid any tax payable in respect of the supply,

    on the day the consideration for the supply is inserted into the device; and

  • (b) the supplier shall be deemed to have

    • (i) made the supply,

    • (ii) received the consideration for the supply, and

    • (iii) collected any tax payable in respect of the supply,

    on the day the consideration for the supply is removed from the device.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1990, c. 45, s. 12

Marginal note:Early or late payments

 For the purposes of this Part, where tangible personal property or services are supplied and the amount of consideration for the supply shown in the invoice in respect of the supply may be reduced if the amount thereof is paid within a time specified in the invoice or an additional amount is charged to the recipient by the supplier if the amount of the consideration is not paid within a reasonable period specified in the invoice, the consideration due shall be deemed to be the amount of consideration shown in the invoice.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1990, c. 45, s. 12

Marginal note:Definitions

  •  (1) The definitions in this subsection apply in this section.

    estimated reserves

    estimated reserves of minerals means the estimated quantities of minerals that geological and engineering data demonstrate, with reasonable certainty, to be recoverable under existing economic and operating conditions. (réserves estimées)

    farm-out agreement

    farm-out agreement means an agreement referred to in subsection (4). (accord d’amodiation)

    natural resource right

    natural resource right means

    • (a) a right to explore for or exploit a mineral deposit;

    • (b) a right of entry or user relating to a right referred to in paragraph (a); or

    • (c) a right to an amount computed by reference to the production (including profit) from, or to the value of production from, a mineral deposit. (droit relatif à des ressources)

    specified mining or well-site equipment

    specified mining or well-site equipment, in relation to the exploration or development of unproven property under a farm-out agreement, means

    • (a) equipment, installations and structures for use at a mine site in the production of minerals from the mine and not in the milling, smelting, refining or other processing of the minerals after production; and

    • (b) equipment, installations and structures for use at a well site in the production of minerals from the well, including a heater, dehydrator or other well-site facility for the initial treatment of substances produced from the well to prepare such production for transportation but excluding

      • (i) any equipment, installation, structure or facility that serves or is intended to serve a well that has not been drilled in the course of the exploration or development under that agreement, and

      • (ii) any equipment, installation, structure or facility for use in the refining of oil or the processing of natural gas including the separation therefrom of liquid hydrocarbons, sulphur or other joint products or by-products. (matériel déterminé)

    unproven property

    unproven property means real property for which estimated reserves of minerals have not been attributed. (bien non prouvé)

  • Marginal note:Natural resources

    (2) For the purposes of this Part, the supply of

    • (a) a right to explore for or exploit a mineral deposit, a peat bog or deposit of peat or a forestry, water or fishery resource,

    • (b) a right of entry or user relating to a right referred to in paragraph (a),

    • (c) a right to an amount computed by reference to the production (including profit) from, or to the value of production from, any such deposit, bog or resource, or

    • (d) a right to enter or use land to generate, or evaluate the feasibility of generating, electricity from the sun or wind,

    shall be deemed not to be a supply and any consideration paid or due, or any fee or royalty charged or reserved, in respect of the right shall be deemed not to be consideration for the right.

  • Marginal note:Exception

    (3) Subsection (2) does not apply to a supply of a right to take or remove forestry products, products that grow in water, fishery products, minerals or peat, a right of entry or user relating thereto or a right referred to in paragraph (2)(d), if the supply is made to

    • (a) a consumer; or

    • (b) a person who is not a registrant and who acquires the right in the course of a business of the person of making supplies of the products, minerals, peat or electricity to consumers.

  • Marginal note:Exploration and development of mineral deposits

    (4) For the purposes of this Part, if, under an agreement in writing between a person (in this subsection referred to as the “farmor”) and another person (in this subsection referred to as the “farmee”), the farmor transfers to the farmee particular natural resource rights, or portions of them, relating to unproven property in consideration or part consideration for the farmee undertaking the exploration of the property for mineral deposits, providing information (or the right to it) gathered from the exploration and, subject to any conditions that may be provided in the agreement, developing the property for the production of minerals,

    • (a) the value, as consideration, of any property or service given by the farmor to the farmee under the agreement is deemed to be nil to the extent that the property or service is given as consideration for any of the following (each of which is referred to in this subsection as the “farmee’s contribution”):

      • (i) the undertaking of that exploration or development,

      • (ii) the provision of that information (or the right to it), and

      • (iii) any transfer under the agreement by the farmee to the farmor of any interest in specified mining or well-site equipment that is used by the farmee exclusively in that exploration or development;

    • (b) the value of the farmee’s contribution as consideration for any property or service given by the farmor to the farmee under the agreement is deemed to be nil; and

    • (c) if part of the consideration given by the farmor for the farmee’s contribution is a service or property (each of which is referred to in this paragraph as the “farmor’s additional contribution”) that is not a natural resource right relating to unproven property,

      • (i) the farmee is deemed to have made, at the place at which the unproven property is situated, a taxable supply of a service to the farmor separate from any supply by the farmee under the agreement and that service is deemed to be consideration for the farmor’s additional contribution,

      • (ii) the value of that service and the value of the farmor’s additional contribution as consideration for the supply of that service are each deemed to be equal to the fair market value of the farmor’s additional contribution determined at the time (in this paragraph referred to as the “time of transfer”) that

        • (A) if the farmor’s additional contribution is a service, performance of the service commences, and

        • (B) in any other case, ownership of the farmor’s additional contribution is transferred to the farmee,

      • (iii) all of the consideration for the farmor’s additional contribution and the consideration for the service deemed to have been supplied by the farmee are deemed to become due at the time of transfer, and

      • (iv) if, in addition to the farmee’s contribution, the farmee supplies to the farmor other property or services (other than the service deemed under subparagraph (i) to have been supplied) for which part of the consideration is the farmor’s additional contribution, the value of the consideration for the supply of the other property or services is deemed to be equal to the amount, if any, by which the value of that consideration, determined without reference to this subparagraph, exceeds the fair market value of the farmor’s additional contribution.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1990, c. 45, s. 12
  • 1993, c. 27, s. 29
  • 2000, c. 30, s. 26
  • 2008, c. 28, s. 72
 

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