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

Marginal note:Definitions

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

  government funding

  government funding, in respect of a residential complex, means an amount of money (including a forgivable loan but not including any other loan or a refund or rebate of, or credit in respect of, taxes, duties or fees imposed under any statute) paid or payable by

  • (a) a grantor, or

  • (b) an organization that received the amount from a grantor or another organization that received the amount from a grantor,

  to a builder of the complex or of an addition thereto for the purpose of making residential units in the complex available to individuals referred to in paragraph (2)(b). (subvention)

  grantor

  grantor means

  • (a) a government or municipality, other than a corporation all or substantially all of whose activities are commercial activities or the supply of financial services or any combination thereof;

  • (b) a band (within the meaning assigned by section 2 of the Indian Act);

  • (c) a corporation that is controlled by a government, a municipality or a band referred to in paragraph (b) and one of the main purposes of which is to fund charitable or non-profit endeavours; and

  • (d) a trust, board, commission or other body that is established by a government, municipality, band referred to in paragraph (b) or corporation described in paragraph (c) and one of the main purposes of which is to fund charitable or non-profit endeavours. (subventionneur)

• Marginal note:Subsidized residential complexes

  (2) For the purposes of subsections 191(1) to (4), where

  • (a) a builder of a residential complex or an addition thereto is deemed under any of subsections 191(1) to (4) to have, at any time, made and received a supply of the complex or addition,

  • (b) possession or use of at least 10% of the residential units in the complex is intended to be given for the purpose of their occupancy as a place of residence or lodging by

    • (i) seniors,

    • (ii) youths,

    • (iii) students,

    • (iv) individuals with a disability,

    • (v) individuals in distress or individuals in need of assistance,

    • (vi) individuals whose eligibility for occupancy of the units as a place of residence or lodging, or for reduced payments in respect of their occupancy as a place of residence or lodging, is dependent on a means or income test,

    • (vii) individuals for whose benefit no other persons (other than public sector bodies) pay consideration for supplies that include giving possession or use of the units for occupancy by the individuals as a place of residence or lodging and who either pay no consideration for the supplies or pay consideration that is significantly less than the consideration that could reasonably be expected to be paid for comparable supplies made by a person in the business of making such supplies for the purpose of earning a profit, or

    • (viii) any combination of individuals described in any of subparagraphs (i) to (vii), and

  • (c) except where the builder is a government or a municipality, the builder, at or before that time, has received or can reasonably expect to receive government funding in respect of the complex,

  the amount of tax in respect of the supply calculated on the fair market value of the complex or addition, as the case may be, is deemed to be equal to the greater of

  • (d) the amount that would, but for this subsection, be the tax calculated on that fair market value, and

  • (e) the amount determined by the formula

    A + B + C + D

    where

    A

    is the total of all amounts each of which is an amount determined by the formula

    E × (F/G)

    where

    E

    is an amount of tax, calculated at a particular rate, that was payable under subsection 165(1) or section 212, 218 or 218.01 by the builder in respect of an acquisition of real property that forms part of the complex or addition or in respect of an acquisition or importation of an improvement to real property that forms part of the complex or addition,

    F

    is the rate set out in subsection 165(1) at the time referred to in paragraph (a), and

    G

    is the particular rate,

    B

    is the total of all amounts each of which is an amount determined by the formula

    H × (I/J)

    where

    H

    is an amount (other than an amount referred to in the description of E) that would have been payable as tax, calculated at a particular rate, under subsection 165(1) or section 212, 218 or 218.01 by the builder in respect of an acquisition or importation of an improvement to real property that forms part of the complex or addition but for the fact that the improvement was acquired or imported for consumption, use or supply exclusively in the course of commercial activities of the builder,

    I

    is the rate set out in subsection 165(1) at the time referred to in paragraph (a), and

    J

    is the particular rate,

    C

    is

    • (i) if the complex or addition is situated in a participating province, the total of all amounts each of which is an amount determined by the formula

      K × (L/M)

      where

      K

      is an amount of tax, calculated at a particular rate, that was payable under subsection 165(2), 212.1(2) or 218.1(1) or Division IV.1 by the builder in respect of an acquisition of real property that forms part of the complex or addition or in respect of an acquisition, importation or bringing into the participating province of an improvement to real property that forms part of the complex or addition,

      L

      is the tax rate for the participating province at the time referred to in paragraph (a), and

      M

      is the particular rate, and

    • (ii) in any other case, zero, and

    D

    is

    • (i) if the complex or addition is situated in a participating province, the total of all amounts each of which is an amount determined by the formula

      N × (O/P)

      where

      N

      is an amount (other than an amount referred to in the description of K) that would have been payable as tax, calculated at a particular rate, under subsection 165(2), 212.1(2) or 218.1(1) or Division IV.1 by the builder in respect of an acquisition, importation or bringing into the participating province of an improvement to real property that forms part of the complex or addition but for the fact that the improvement was acquired, imported or brought into the participating province for consumption, use or supply exclusively in the course of commercial activities of the builder,

      O

      is the tax rate for the participating province at the time referred to in paragraph (a), and

      P

      is the particular rate, and

    • (ii) in any other case, zero.

Marginal note:Non-substantial renovation

192 For the purposes of this Part, where in the course of a business of making supplies of real property a person renovates or alters a residential complex of the person and the renovation or alteration is not a substantial renovation, the person shall be deemed

• (a) to have made and received a taxable supply, in the province in which the complex is situated and at the earlier of the time the renovation is substantially completed and the time ownership of the complex is transferred, for consideration equal to the total of all amounts each of which is an amount in respect of the renovation or alteration (other than an amount of consideration paid or payable by the person for a financial service or for any property or service in respect of which the person is required to pay tax) that would be included in determining the adjusted cost base to the person of the complex for the purposes of the Income Tax Act if the complex were capital property of the person and the person were a taxpayer under that Act; and

• (b) to have paid as a recipient and to have collected as a supplier, at that time, tax in respect of the supply, calculated on the total determined under paragraph (a).

Marginal note:New housing — assignment of agreement

192.1 If a taxable supply by way of sale of a single unit residential complex (as defined in subsection 254(1)) or of a residential condominium unit is made in Canada under an agreement of purchase and sale (in this section referred to as the “purchase agreement”) entered into with a builder of the single unit residential complex or of the residential condominium unit and if another supply by way of assignment of the purchase agreement is made by a person (other than the builder) under another agreement, then the following rules apply for the purposes of this Part:

• (a) the other supply is deemed to be a taxable supply, by way of sale, of real property that is an interest in the single unit residential complex or residential condominium unit; and

• (b) the consideration for the other supply is deemed to be equal to the amount determined by the formula

  A − B

  where

  A

  is the consideration for the other supply as otherwise determined for the purposes of this Part, and

  B

  is

  • (i) if the other agreement indicates in writing that a part of the consideration for the other supply is attributable to the reimbursement of a deposit paid under the purchase agreement, the part of the consideration for the other supply, as otherwise determined for the purposes of this Part, that is solely attributable to the reimbursement of the deposit paid under the purchase agreement, and

  • (ii) in any other case, zero.

Real Property Credits

Marginal note:Sale of real property

• 193 (1) Subject to subsection (2.1), if at a particular time a registrant makes a particular taxable supply of real property by way of sale, other than

  • (a) a supply deemed under subsection 206(5) or 207(2) to have been made, or

  • (b) a supply made by a public sector body (other than a financial institution) of property in respect of which an election by the body under section 211 is not in effect at the particular time,

  the registrant may, notwithstanding section 170 and Subdivision D, claim an input tax credit for the reporting period in which tax in respect of the particular taxable supply becomes payable or is deemed to have been collected, as the case may be, equal to the amount determined by the formula

  A × B

  where

  A

  is the lesser of

  • (a) the basic tax content of the property at the particular time; and

  • (b) the tax that is or would, in the absence of section 167 or 167.11, be payable in respect of the particular taxable supply, and

  B

  is the percentage that, immediately before the particular time, the use of the property otherwise than in commercial activities of the registrant was of the total use of the property.

• Marginal note:Sale by public sector bodies

  (2) Subject to subsection (2.1), if at a particular time a registrant that is a public sector body (other than a financial institution) makes a particular taxable supply of real property by way of sale (other than a supply that is deemed under subsection 200(2) or 206(5) to have been made) and, immediately before the time tax becomes payable in respect of the particular taxable supply, the property was not used by the registrant primarily in commercial activities of the registrant, except where subsection (1) applies, the registrant may, despite section 170 and Subdivision D, claim an input tax credit for the reporting period in which tax in respect of the particular taxable supply became payable or is deemed to have been collected, as the case may be, equal to the lesser of

  • (a) the basic tax content of the property at the particular time; and

  • (b) the tax that is or would, but for section 167, be payable in respect of the particular taxable supply.

• Marginal note:Limitation

  (2.1) If the particular taxable supply of property referred to in subsection (1) or (2) is made at a particular time by a public sector body to another person with whom the public sector body is not dealing at arm’s length, the value of A in subsection (1) and the input tax credit under subsection (2) shall not exceed the lesser of

  • (a) the basic tax content of the property at the particular time, and

  • (b) the amount determined by the formula

    (A/B) × C

    where

    A

    is the basic tax content of the property at the particular time,

    B

    is the amount that would be the basic tax content of the property at that time if that amount were determined without reference to the description of B in paragraph (a) and the description of K in paragraph (b) of the definition basic tax content in subsection 123(1), and

    C

    is the tax that is or would, in the absence of section 167, be payable in respect of the particular taxable supply.

• Marginal note:Redemption of real property

  (3) Where

  • (a) for the purposes of satisfying in whole or in part a debt or obligation owing by a person (in this subsection referred to as the “debtor”), a creditor exercises a right under an Act of Parliament or the legislature of a province or an agreement relating to a debt security to cause the supply of real property, and

  • (b) under the Act or the agreement, the debtor has a right to redeem the property,

  the following rules apply:

  • (c) the debtor is not entitled to claim an input tax credit under this section in respect of the property unless the time limit for redeeming the property has expired and the debtor has not redeemed the property, and

  • (d) where the debtor is entitled to claim the input tax credit, that input tax credit is for the reporting period in which the time limit for redeeming the property expires.

Statement as to Use of Real Property

Marginal note:Incorrect statement

194 For the purposes of this Part, where a supplier makes a taxable supply by way of sale of real property and incorrectly states or certifies in writing to the recipient of the supply that the supply is an exempt supply described in any of sections 2 to 5.3, 8 and 9 of Part I of Schedule V, except where the recipient knows or ought to know that the supply is not an exempt supply,

• (a) the tax payable in respect of the supply is deemed to be equal to the amount determined by the formula

  (A/B) × C

  where

  A

  is

  • (i) if tax under subsection 165(2) was payable in respect of the supply, the total of the rate set out in subsection 165(1) and the tax rate for the participating province in which the supply was made, and

  • (ii) in any other case, the rate set out in subsection 165(1),

  B

  is the total of 100% and the percentage determined for A, and

  C

  is the consideration for the supply; and

• (b) the supplier shall be deemed to have collected, and the recipient shall be deemed to have paid, that tax on the earlier of the day ownership of the property was transferred to the recipient and the day possession of the property was transferred to the recipient under the agreement for the supply.