New Harmonized Value-added Tax System Regulations, No. 2

Marginal note:Large business

• 27 (1) For the purposes of the definition large business in subsection 236.01(1) of the Act, a person is a prescribed person for a recapture period if the person is a registrant whose recapture input tax credit threshold amount in respect of the recapture period exceeds $10,000,000.

• Marginal note:Large business

  (2) For the purposes of the definition large business in subsection 236.01(1) of the Act, a person is a prescribed person at any time if, at that time, the person is a registrant that is

  • (a) a bank;

  • (b) a corporation licensed or otherwise authorized under the laws of Canada or of a province to carry on in Canada the business of offering to the public its services as a trustee;

  • (c) a credit union;

  • (d) an insurer or any other person whose principal business is providing insurance under insurance policies;

  • (e) a segregated fund of an insurer;

  • (f) an investment plan (as defined in subsection 149(5) of the Act);

  • (g) the Canada Deposit Insurance Corporation; or

  • (h) a person related to a person described in any of paragraphs (a) to (f).

• Marginal note:Recapture input tax credit threshold amount

  (3) For the purposes of this section, the recapture input tax credit threshold amount of a particular person in respect of a recapture period is equal to the total of

  • (a) the amount determined by the formula

    A × (365/B)

    where

    A

    is the total of all consideration (other than consideration referred to in section 167.1 of the Act that is attributable to goodwill of a business) that became due to the particular person in the last fiscal year (in this subsection referred to as the “base year”) of the particular person ending before the first day of the recapture period, or that was paid to the particular person in the base year without having become due, for taxable supplies (other than supplies of financial services and supplies by way of sale of real property that is capital property of the particular person) made in Canada, or made outside Canada through a permanent establishment in Canada, by the particular person, and

    B

    is the number of days in the base year,

  • (b) the total of all amounts, each of which is determined, in respect of a person (in this paragraph referred to as the “associate”) that is associated with the particular person at the end of the base year, by the formula

    C × (365/D)

    where

    C

    is the total of all consideration (other than consideration referred to in section 167.1 of the Act that is attributable to goodwill of a business) that became due to the associate in the last fiscal year of the associate ending before the first day of the recapture period, or that was paid to the associate in that fiscal year without having become due, for taxable supplies (other than supplies of financial services and supplies by way of sale of real property that is capital property of the associate) made in Canada, or made outside Canada through a permanent establishment in Canada, by the associate, and

    D

    is the number of days in the last fiscal year of the associate ending before the first day of the recapture period, and

  • (c) the total of all amounts, each of which is determined, in respect of a person (in this paragraph referred to as the “vendor”) that makes a supply of a business to the particular person if, under the agreement for the supply, the particular person acquires, at any time during the 12-month period immediately preceding the recapture period, ownership, possession or use of all or substantially all of the property that can reasonably be regarded as being necessary for the particular person to be capable of carrying on the business and the vendor would, in the absence of paragraph (b), have a recapture input tax credit threshold amount exceeding $10,000,000 in respect of the particular recapture period that includes that time, by the formula

    (E/F) × (365 - G)

    where

    E

    is the total of all consideration (other than consideration referred to in section 167.1 of the Act that is attributable to goodwill of a business) for taxable supplies (other than supplies of financial services and supplies by way of sale of real property that is capital property of the particular person) made in Canada, or made outside Canada through a permanent establishment in Canada, by the particular person that became due to the particular person during the 12-month period immediately preceding the recapture period or that was paid to the particular person in that 12-month period without having become due, in relation to the business acquired by the particular person,

    F

    is the number of days in the 12-month period immediately preceding the recapture period that are after that time, and

    G

    is the number of days in the 12-month period immediately preceding the recapture period that are after that time and that are in the base year.

• Marginal note:Consideration

  (4) For the purposes of subsection (3), consideration for a supply of property or a service includes

  • (a) any amount that would, in the absence of subsection 153(4) of the Act, be included in the consideration for the supply;

  • (b) any amount that would, in the absence of subsection 156(2) of the Act, be consideration for the supply; and

  • (c) if the supply is made between persons not dealing at arm’s length, any amount by which the consideration is less than the fair market value of the property or service at the time the supply is made.

• Marginal note:Large business — partnership

  (5) If a member (other than an individual) of a partnership acquires property or a service, or brings it into a specified province, for consumption, use or supply in respect of the activities of the partnership but not on the account of the partnership and the partnership is a large business, for the purposes of the definition large business in subsection 236.01(1) of the Act, the member is a prescribed person at any time in respect of that acquisition or bringing in if, at that time, the member is a registrant.

• Marginal note:Large business — joint venture

  (6) If an operator (within the meaning of subsection 273(1) of the Act) that is a participant in a joint venture with a large business under an agreement referred to in that subsection acquires property or a service, or brings it into a specified province, under the agreement on behalf of the large business in the course of the activities for which the agreement was entered into and, at the time of the acquisition or bringing in, an election under subsection 273(1) of the Act made by the operator and the large business is in effect, for the purposes of the definition large business in subsection 236.01(1) of the Act, the operator is a prescribed person at any time in respect of that acquisition or bringing in.

• Marginal note:Large business — acquisition of control

  (7) If, at any time in a recapture period, a person that is a large business acquires control of a corporation that is not a large business, the corporation and any persons associated with the corporation are, for the period beginning at that time and ending on the last day of the recapture period that includes the last day of the fiscal year of the corporation that includes that time, prescribed persons for the purposes of the definition large business in subsection 236.01(1) of the Act.

• Marginal note:Large business — amalgamation

  (8) If, at any time in a recapture period, two or more corporations (each of which is referred to in this subsection as a “predecessor”) are merged or amalgamated to form one corporation (in this subsection referred to as the “new corporation”) and the sum of the recapture input tax credit threshold amounts of the predecessors in respect of the recapture period exceeds $10,000,000, the new corporation is, for the period beginning at that time and ending on the last day of the recapture period that includes the last day of the first fiscal year of the new corporation, a prescribed person for the purposes of the definition large business in subsection 236.01(1) of the Act.

• Marginal note:Large business — acquisition of a business

  (9) If a person makes, at any time in a recapture period, a supply of a business to another person that is not a large business, the person would, in the absence of paragraph (3)(b), have a recapture input tax credit threshold amount in respect of the recapture period exceeding $10,000,000, the other person is acquiring, under the agreement for the supply, ownership, possession or use of all or substantially all of the property that can reasonably be regarded as being necessary for the other person to be capable of carrying on the business and, after that time, the business is carried on by the other person, for the purposes of the definition large business in subsection 236.01(1) of the Act, the other person is a prescribed person for the period beginning on the earlier of the day that the other person begins to carry on the business and the day on which the other person acquires ownership, possession or use of all or substantially all of the property that can reasonably be regarded as being necessary for the other person to be capable of carrying on the business and ending on the last day of the recapture period.

• Marginal note:Large business — becoming a registrant

  (10) If, at any time in a recapture period, a person becomes a registrant and the recapture input tax credit threshold amount of the person or of another person that is associated with the person at that time exceeds $10,000,000 in respect of the recapture period, for the purposes of the definition large business in subsection 236.01(1) of the Act, the person is a prescribed person for the period beginning at that time and ending on the last day of the recapture period.

• Marginal note:Ceasing to be a large business — addition

  (11) For the purposes of the definition large business in subsection 236.01(1) of the Act, a person is a prescribed person at the time prescribed by section 30 or 32 in respect of a specified provincial input tax credit of the person in respect of a specified property or service if the person ceased to be a large business

  • (a) before that time; and

  • (b) after

    • (i) in the case of a qualifying motor vehicle in respect of which section 32 applies, the time when the person first uses the qualifying motor vehicle otherwise than exclusively for the purpose referred to in subparagraph 28(2)(g)(i), and

    • (ii) in any other case, the specified time in respect of the specified provincial input tax credit.

• Marginal note:Ceasing to be a large business — deduction

  (12) For the purposes of the definition large business in subsection 236.01(1) of the Act, a person is a prescribed person at the time prescribed by section 33 in respect of a qualifying motor vehicle if the person ceased to be a large business

  • (a) before that time; and

  • (b) after the end of the reporting period in which the person was required to add an amount to its net tax for the reporting period as a consequence of subsection 31(2) in respect of a specified provincial input tax credit of the person in respect of the qualifying motor vehicle.

• Marginal note:Large business — exclusion

  (13) Despite subsections (1) to (10), for the purposes of the definition large business in subsection 236.01(1) of the Act, a person is not a prescribed person at any time if, at that time, the person is

  • (a) a public service body;

  • (b) a selected listed financial institution;

  • (c) an entity of the government of Canada that is not listed in Schedule I of the Federal Provincial Fiscal Arrangements Act;

  • (d) a department (as defined in section 2 of the Financial Administration Act); or

  • (e) an entity of the government of a province that is eligible, pursuant to a provision of a sales tax harmonization agreement with that province, for a rebate of tax paid under Part IX of the Act.