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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 IIGoods and Services Tax (continued)

SUBDIVISION DCapital Property (continued)

Marginal note:Improvement to passenger vehicle

  •  (1) If the consideration paid or payable by a registrant for an improvement to a passenger vehicle of the registrant increases the cost to the registrant of the vehicle to an amount that exceeds the amount that would, under whichever of paragraphs 13(7)(g) to (i) of the Income Tax Act is applicable in respect of the vehicle, be deemed to be, for the purposes of section 13 of that Act, the capital cost to a taxpayer of a passenger vehicle in respect of which that paragraph applies if the formulae in paragraph 7307(1)(b) and subsection 7307(1.1) of the Income Tax Regulations were read without reference to the description of B, the tax calculated on that excess shall not be included in determining an input tax credit of the registrant for any reporting period of the registrant.

  • Marginal note:Input tax credit on passenger vehicle or aircraft

    (2) Where a registrant who is an individual or a partnership acquires or imports a passenger vehicle or aircraft or brings it into a participating province for use as capital property of the registrant, the tax payable (other than tax deemed to be payable under subsection (4)) by the registrant in respect of that acquisition, importation or bringing in, as the case may be, shall not be included in determining an input tax credit of the registrant unless the vehicle or aircraft was acquired or imported, or brought in, as the case may be, by the registrant for use exclusively in commercial activities of the registrant.

  • Marginal note:Improvement to passenger vehicle or aircraft

    (3) Where a registrant who is an individual or a partnership acquires, imports or brings into a participating province an improvement to a passenger vehicle or aircraft that is capital property of the registrant, the tax payable by the registrant in respect of the improvement shall not be included in determining an input tax credit of the registrant unless, throughout the period

    • (a) beginning on the later of the day the vehicle or aircraft, as the case may be, was originally acquired or imported by the registrant and the day the individual or partnership becomes a registrant, and

    • (b) ending on the day tax in respect of the improvement becomes payable or is paid without having become payable,

    the vehicle or aircraft was used exclusively in commercial activities of the registrant.

  • Marginal note:Non-exclusive use of passenger vehicle or aircraft

    (4) Notwithstanding subsections (2) and (3), where a registrant who is an individual or a partnership at any time acquires or imports a passenger vehicle or aircraft, or brings it into a participating province, for use as capital property of the registrant but not for use exclusively in commercial activities of the registrant and tax is payable by the registrant in respect of the acquisition, importation or bringing in, as the case may require, for the purpose of determining an input tax credit of the registrant, the registrant is deemed

    • (a) to have acquired the vehicle or aircraft on the last day of each taxation year of the registrant ending after that time; and

    • (b) to have paid, on that day, tax in respect of the acquisition of the vehicle or aircraft equal to the amount determined by the formula

      A × B

      where

      A
      is
      • (i) in the case of an acquisition or importation in respect of which tax is payable only under subsection 165(1) or section 212 or 218, as the case may require, and in the case of an acquisition deemed to have been made under subsection (5) of a vehicle or aircraft in respect of which no tax under subsection 165(2) was payable by the registrant, the amount determined by the formula

        C/D

        where

        C
        is the rate set out in subsection 165(1), and
        D
        is the total of 100% and the percentage determined for C,
      • (ii) in the case of the bringing into a participating province of the vehicle or aircraft from a non-participating prov­ince and in the case of an acquisition in respect of which tax under section 220.06 is payable, the amount determined by the formula

        E/F

        where

        E
        is the tax rate for the participating province, and
        F
        is the total of 100% and the percentage determined for E,
      • (iii) in the case of an acquisition or importation in respect of which tax is payable under subsection 165(2), section 212.1 or subsection 218.1(1) calculated at the tax rate for a participating province, the amount determined by the formula

        G/H

        where

        G
        is the total of the rate set out in subsection 165(1) and the tax rate for the participating province, and
        H
        is the total of 100% and the percentage determined for G, and
      • (iv) in any other case, the amount determined by the formula

        I/J

        where

        I
        is the rate determined in prescribed manner, and
        J
        is the total of 100% and the percentage determined for I, and
      B
      is
      • (i) where an amount in respect of the vehicle or aircraft is required by paragraph 6(1)(e) or subsection 15(1) of the Income Tax Act to be included in computing the income of an individual for a taxation year of the individual ending in that taxation year of the registrant, nil, and

      • (ii) in any other case, the capital cost allowance in respect of the vehicle or aircraft that was deducted under the Income Tax Act in computing the income of the registrant from those commercial activities for that taxation year of the registrant.

  • Marginal note:Deemed acquisition

    (5) For the purpose of subsection (4), where at any time a registrant is deemed under section 203 to have made a taxable supply of a passenger vehicle or aircraft,

    • (a) the registrant shall be deemed to have acquired the vehicle or aircraft at that time; and

    • (b) tax shall be deemed to be payable at that time by the registrant in respect of the vehicle or aircraft.

  • [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. 69
  • 1997, c. 10, s. 192
  • 2006, c. 4, s. 17
  • 2007, c. 18, s. 16
  • 2009, c. 32, s. 13
  • 2019, c. 29, s. 72

Marginal note:Sale of passenger vehicle

  •  (1) If a registrant (other than a municipality), at a particular time in a reporting period of the registrant, makes a taxable supply by way of sale of a passenger vehicle (other than a vehicle that is designated municipal property of a person designated at the particular time to be a municipality for the purposes of section 259) that, immediately before the particular time, was used as capital property in commercial activities of the registrant, the registrant may, despite section 170, paragraph 199(2)(a) and subsections 199(4) and 202(1), claim an input tax credit for that period equal to the amount determined by the formula

    A × (B - C)/B

    where

    A
    is the basic tax content of the vehicle at the particular time;
    B
    is the total of
    • (a) the tax that was payable by the registrant in respect of the last acquisition or importation of the vehicle by the registrant,

    • (b) where the registrant brought the vehicle into a participating province after it was last acquired or imported by the registrant, the tax that was payable by the registrant in respect of bringing it into that province, and

    • (c) the tax that was payable by the registrant in respect of improvements to the vehicle acquired, imported or brought into a participating province by the registrant after the property was last acquired or imported; and

    C
    is the total of all input tax credits that the registrant was entitled to claim in respect of any tax included in the total for B.
  • Marginal note:Ceasing to use passenger vehicle, etc.

    (2) For the purposes of this Part, where a registrant who is an individual or a partnership acquired or imported a passenger vehicle or an aircraft for use as capital property exclusively in commercial activities of the registrant and the registrant begins, at any time, to use the vehicle or aircraft otherwise than exclusively in commercial activities of the registrant, the registrant shall be deemed to have

    • (a) made, immediately before that time, a taxable supply by way of sale of the vehicle or aircraft; and

    • (b) collected, at that time, tax in respect of the supply equal to the basic tax content of the vehicle or aircraft immediately before that time.

  • Marginal note:Sale of passenger vehicle, etc.

    (3) Despite paragraph 141.1(1)(a), for the purposes of this Part, a supply shall be deemed not to be a taxable supply if

    • (a) an individual or a partnership (other than a municipality) who is a registrant makes, at a particular time, the supply by way of sale of a passenger vehicle or an aircraft (other than a vehicle or an aircraft that is designated municipal property of a person designated at the particular time to be a municipality for the purposes of section 259) that is capital property of the registrant; and

    • (b) at any time after the individual or partnership became a registrant and before the particular time, the registrant did not use the vehicle or aircraft exclusively in commercial activities of the registrant.

  • Marginal note:Sale of passenger vehicle by a municipality

    (4) If a registrant (other than an individual or a partnership) that is a municipality or a person designated to be a municipality for the purposes of section 259, at a particular time in a reporting period of the registrant, makes a taxable supply by way of sale of a passenger vehicle (other than a vehicle of a person designated to be a municipality for the purposes of section 259 that is not designated municipal property of the person) that, immediately before the particular time, was capital property of the registrant, the registrant may, despite section 170, paragraph 199(2)(a) and subsections 199(4) and 202(1), claim an input tax credit for that period equal to the lesser of

    • (a) the amount determined by the formula

      A × (B – C)/B

      where

      A
      is the basic tax content of the vehicle at the particular time,
      B
      is the total of
      • (i) the tax that was payable by the registrant in respect of the last acquisition or importation of the vehicle by the registrant,

      • (ii) if the registrant brought the vehicle into a participating province after it was last acquired or imported by the registrant, the tax that was payable by the registrant in respect of bringing it into that province, and

      • (iii) the tax that was payable by the registrant in respect of improvements to the vehicle acquired, imported or brought into a participating province by the registrant after the property was last acquired or imported, and

      C
      is the total of all input tax credits that the registrant was entitled to claim in respect of any tax included in the total for B, and
    • (b) the tax that is or would, in the absence of section 167, be payable in respect of the taxable supply.

  • [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. 70
  • 1997, c. 10, s. 193
  • 2004, c. 22, s. 36

Marginal note:Application

  •  (1) This section does not apply to personal property of a financial institution having a cost to the institution of $50,000 or less.

  • Marginal note:Personal property of a financial institution

    (2) Where a financial institution is a registrant, subsections 206(2) to (5) apply, with such modifications as the circumstances require, to personal property acquired or imported by the institution for use as capital property of the institution, and to improvements to personal property that is capital property of the institution, as if the personal property were real property.

  • Marginal note:Credit on sale

    (3) Where a financial institution is a registrant, subsection 193(1) applies, with such modifications as the circumstances require, to personal property (other than a passenger vehicle) acquired or imported by the institution for use as capital property of the institution, as if the personal property were real property.

  • [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. 71

Marginal note:Financial institution making election for exempt supplies

  •  (1) Where an election made by a registrant under subsection 150(1) becomes effective at a particular time, the registrant was a financial institution immediately before the particular time and, as a result of the election becoming effective, the registrant reduces at the particular time the extent to which personal property of the registrant is used as capital property in commercial activities of the registrant, subsections 193(1) and 206(4) and (5) apply, with such modifications as the circumstances require, to the reduction in use, as if the property were real property.

  • Marginal note:Registrant becoming financial institution

    (2) Where a registrant at any time becomes a financial institution and, immediately before that time, the registrant was using personal property of the registrant as capital property of the registrant, the following rules apply:

    • (a) where, immediately before that time, the registrant was not using the property primarily in commercial activities of the registrant and, immediately after that time, the property is for use in commercial activities of the registrant, the registrant shall be deemed, for the purposes of this Part, to have changed at that time the extent to which the property is used in commercial activities of the registrant, and subsection 206(2) applies, with such modifications as the circumstances require, to the change in use as if the property were real property that was not used immediately before that time in commercial activities of the registrant; and

    • (b) where, immediately before that time, the registrant was using the property primarily in commercial activities of the registrant and, immediately after that time, the property is not for use exclusively in commercial activities of the registrant, the registrant shall be deemed, for the purposes of this Part, to have changed at that time the extent to which the property is used in commercial activities of the registrant, and subsections 193(1) and 206(4) and (5) apply, with such modifications as the circumstances require, to the change in use as if the property were real property used immediately before that time exclusively in commercial activities of the registrant.

  • Marginal note:Registrant ceasing to be financial institution

    (3) Where a registrant at any time ceases to be a financial institution and, immediately before that time, the registrant was using personal property of the registrant as capital property of the registrant, the following rules apply:

    • (a) where, immediately before that time, the registrant was using the property as capital property but not exclusively in commercial activities of the registrant and, immediately after that time, the property is for use primarily in commercial activities of the registrant, the registrant shall be deemed, for the purposes of this Part, to have begun at that time to use the property exclusively in commercial activities of the registrant, and subsections 206(2) and (3) apply, with such modifications as the circumstances require, to the change in use as if the property were real property; and

    • (b) where, immediately before that time, the registrant was using the property as capital property in commercial activities of the registrant and, immediately after that time, the property is not for use primarily in commercial activities of the registrant, the registrant shall be deemed, for the purposes of this Part, to have ceased at that time to use the property in commercial activities of the registrant, and subsections 193(1) and 206(4) apply, with such modifications as the circumstances require, to the change in use as if the property were real property.

  • Marginal note:Acquisition of a business

    (4) Notwithstanding section 197, where

    • (a) in acquiring a business or part of a business from a registrant, a financial institution that is a registrant is deemed under subsection 167(1) to have acquired property for use exclusively in commercial activities of the institution, and

    • (b) immediately after the time possession of the property is transferred to the institution under the agreement for the supply of the business or part, the property is for use by the institution as capital property of the institution but not exclusively in commercial activities of the institution,

    subsections 193(1) and 206(4) and (5) apply, with such modifications as the circumstances require, to the change in use of the property as if the property were real property.

  • Marginal note:Acquisition of asset

    (4.1) Despite section 197, subsection 193(1) applies to the supplier of a supply of capital personal property that is made under an agreement for a qualifying supply (as defined in subsection 167.11(1)), and subsections 206(4) and (5) apply to the recipient of the supply of capital personal property, with any modifications that the circumstances require, as if the property were real property if

    • (a) the supplier and the recipient are both registrants at the time the qualifying supply is made and they make a joint election referred to in subsection 167.11(2) in respect of the qualifying supply;

    • (b) in acquiring the property, the recipient is deemed under subsection 167.11(3) to have acquired the property for use exclusively in commercial activities of the recipient; and

    • (c) immediately after the earlier of the time the ownership of the property and the time the possession of the property is transferred to the recipient under the agreement for the qualifying supply, the property is for use by the recipient as capital property of the recipient but not exclusively in commercial activities of the recipient.

  • Marginal note:Idem

    (5) Notwithstanding section 197, where

    • (a) in acquiring a business or part of a business from a registrant, a financial institution that is a registrant is deemed under subsection 167(1) to have acquired property but not for use in commercial activities of the institution,

    • (b) possession of the property is transferred to the institution under the agreement for the supply of the business or part after 1993, and

    • (c) immediately after the transfer, the property is for use by the institution as capital property of the institution in commercial activities of the institution,

    subsection 206(2) applies, with such modifications as the circumstances require, to the change in use of the property as if the property were real property.

  • Marginal note:Acquisition of asset

    (5.1) Despite section 197, subsection 206(2) applies to the recipient of a supply of capital personal property that is made under an agreement for a qualifying supply (as defined in subsection 167.11(1)), with any modifications that the circumstances require, as if the property were real property if

    • (a) the supplier and the recipient of the capital personal property are both registrants at the time the qualifying supply is made and they make a joint election referred to in subsection 167.11(2) in respect of the qualifying supply;

    • (b) in acquiring the property, the recipient is deemed under subsection 167.11(3) to have acquired the property for use exclusively in activities of the recipient that are not commercial activities; and

    • (c) immediately after the earlier of the time the ownership of the property and the time the possession of the property is transferred to the recipient under the agreement for the qualifying supply, the property is for use by the recipient as capital property of the recipient in commercial activities of the recipient.

  • Marginal note:Amalgamation

    (6) Where

    • (a) a particular corporation that is not a financial institution is merged or amalgamated with one or more other corporations to form a corporation (in this subsection referred to as the “new corporation”) that is a financial institution in circumstances to which section 271 applies,

    • (b) the new corporation is a registrant, and

    • (c) personal property that was capital property of the particular corporation becomes at any time the property of the new corporation as a consequence of the merger or amalgamation,

    subsection (2) applies to the property as if the new corporation became a financial institution at that time.

  • Marginal note:Winding-up

    (7) Where

    • (a) a particular corporation that is not a financial institution is wound up at a particular time in circumstances to which section 272 applies,

    • (b) not less than 90% of the issued shares of each class of the capital stock of the corporation were, immediately before the particular time, owned by another corporation (in this subsection referred to as the “new corporation”) that is a financial institution,

    • (c) the new corporation is a registrant, and

    • (d) personal property that was capital property of the particular corporation becomes at any time the property of the new corporation as a consequence of the winding-up,

    subsection (2) applies to the property as if the new corporation became a financial institution at the particular time.

  • [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. 71
  • 2007, c. 18, s. 17
 

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