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Backgrounder
Notice of Ways and Means Motion to introduce an Act to amend the
Excise Tax Act, the Excise Act, 2001 and the Air Travellers Security
Charge Act and to make related amendments to other Acts
Amendments to the Excise Tax Act, the Excise Act, 2001 and Related Acts
and the Air Travellers Security Charge Act
The Honourable Jim Flaherty, Minister of Finance, today
tabled a Notice of Ways and Means Motion in the House of Commons to
implement measures aimed at increasing the fairness, efficiency and ease of
compliance and administration of the sales tax system.
"Canada's New Government is committed to reducing
taxes and eliminating red tape. We believe this will make our economy
stronger and that it will give a competitive advantage for Canada,"
said Minister Flaherty. "The Motion we tabled today will increase the
fairness of the sales tax system for many individuals with special needs and
ease compliance for a wide range of businesses and other
organizations."
The proposals, which pertain to the goods and services tax
and the harmonized sales tax, the application of the taxation of wine,
spirits and tobacco and the application of the Air Travellers Security
Charge, will also ensure that existing legislation continues to accord with
the policy intent.
Most of these proposals were previously released in the form
of draft legislation to provide affected stakeholders with the opportunity
to comment on the measures prior to enactment. These proposals also include
a few technical amendments that were not previously announced, but which are
required to address recently identified matters.
The attached schedule provides a summary of the principal
proposals and the attached explanatory notes provide details on all of the
proposed measures. References to "Announcement Date" in the
explanatory notes should be read as referring to today's date.
The legislative proposals and explanatory notes are
available on the Department of Finance website. Printed copies of the
legislative proposals and explanatory notes are available for $10 and $15
respectively from the Department of Finance Distribution Centre at
613-995-2855.
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Office of the Minister of Finance
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Schedule
Part 1 of this motion mainly implements proposed measures
relating to the Goods and Services Tax and Harmonized Sales Tax (GST/HST).
Part 2 contains measures relating to the Excise Act, 2001 and other Acts,
with respect to the taxation of tobacco, spirits and wine. Finally, Part 3
contains measures relating to the Air Travellers Security Charge.
GST/HST Measures
The GST/HST measures, contained in Part 1 of this motion,
are principally aimed at improving the operation and fairness of the GST/HST
in the affected areas and ensuring that the legislation accords with the
policy intent. In some cases, adjustments have been made to the legislation
as originally proposed in response to representations from the tax and
business communities.
The principal GST/HST measures are as follows:
Health
confirms the GST/HST exemption for speech-language pathology services;
exempts health-related services rendered in the practise of the
profession of social work;
zero-rates sales and importations of a blood substitute known as
plasma expander;
restores the zero-rated status of a group of drugs, collectively known
as Benzodiazepines;
broadens the specially equipped vehicle GST/HST rebate so that this
rebate applies to motor vehicles that have been used subsequent to being
specially equipped for use by individuals with disabilities;
Charities
ensures that the exemption of supplies by charities of real property
under short-term leases and licences extends to any goods supplied
together with such real property;
Business Arrangements
provides transitional GST/HST relief on the initial asset transfer by
a foreign bank that restructures its Canadian subsidiary into a Canadian
branch;
removes technical impediments that hinder the use of existing group
relief provisions under the GST/HST;
simplifies compliance by excluding beverage container deposits that
are refundable to the consumer from the GST/HST base;
permits an agent to claim a GST/HST deduction for bad debts, and to
claim adjustments or refunds of tax, in respect of sales made on behalf
of a principal where the agent collects and reports tax;
extends the existing agent rules under the GST/HST legislation to
persons acting only as billing agents for vendors;
better accommodates special import arrangements between businesses in
certain situations where goods are supplied outside Canada to a Canadian
customer;
ensures that GST/HST group relief rules cannot be used to exempt from
GST/HST otherwise taxable clearing services that are provided by a group
member to a closely related financial institution who will then
re-supply those services on an exempt basis to a third-party purchaser
outside the group;
clarifies the treatment of the right to use certain types of amusement
or entertainment devices, such as the playing of a game, when it is
provided through the operation of a mechanical coin-operated device that
can accept only a single coin of twenty-five cents or less as the total
consideration for the supply;
confirms the policy intent and Canada Revenue Agency's existing
practise that no GST/HST or provincial sales taxes on a passenger
vehicle are included in calculating the maximum allowable value for
input tax credit purposes;
Governments
ensures that a small supplier division of a municipality is treated in
the same manner as a municipality that is a small supplier;
exempts a supply of a right to file or retrieve a document or
information stored in an electronic official registry;
HST-related Rules
as announced by the Government of Nova Scotia, limits the availability
of the current Nova Scotia HST New Housing Rebate to first-time
homebuyers and reduces the maximum rebate available to $1,500;
includes in the Act the draft Specified Motor Vehicle (GST/HST)
Regulations, which prescribe the value of a specified motor vehicle for
the purposes of calculating the 8 per cent provincial component of the
HST in circumstances where the vehicle is brought into a participating
province and prescribe the manner in which that tax is required to be
paid;
Administration
adds a discretionary power for the Minister of National Revenue to
accept late-filed applications for the GST New Housing Rebate and the
Nova Scotia HST New Housing Rebate for owner-built homes, where
exceptional circumstances have prevented an applicant from meeting the
normal filing deadline;
adds a discretionary power for the Minister of National Revenue to
accept late-filed elections between closely related financial
institutions for adjustments that they are required to make for the
provincial component of the HST;
permits the Minister of National Revenue to exchange GST/HST
information with foreign governments that are signatories to the
Convention on Mutual Administrative Assistance in Tax Matters; and
adds a discretionary power under the Act for the Chief Statistician of
Canada to provide statistical information concerning business activities
to the provinces similar to an existing provision in the Income Tax Act.
Excise Measures
The measures contained in Part 2 of this motion amend the
Excise Act, 2001 to implement minor refinements that will improve the
operation of the Act and more accurately reflect current industry and
administrative practices. They also implement related and consequential
amendments to the Access to Information Act, the Customs Act, the Customs
Tariff and the Excise Tax Act.
The principal measures related to the Excise Act, 2001
included in this motion are as follows:
Tobacco
extends the requirement to identify the origin of tobacco products to
all products, including those for sale at duty-free shops or for export,
consistent with the Framework Convention on Tobacco Control, an
international treaty on tobacco control;
clarifies that cigarettes, tobacco sticks, fine-cut tobacco or cigars,
but not packaged raw leaf tobacco, may be supplied to the export market
or the domestic duty-free market;
Alcohol
authorizes private laboratories, provincial liquor boards and vintners
to possess a still or similar equipment and produce spirits for the
purpose of analysing substances containing ethyl alcohol without holding
a spirits licence;
defers the payment of duty by small vintners selling wine on
consignment in retail stores operated by an association of vintners
until the wine is sold;
Administration
permits the Minister of National Revenue to exchange excise duty
information with foreign governments that are signatories to the
Convention on Mutual Administrative Assistance in Tax Matters; and
adds a discretionary power under the Act for the Chief Statistician of
Canada to provide statistical information concerning business activities
to the provinces similar to an existing provision in the Income Tax Act.
Air Travellers Security Charge Measures
The measures pertaining to the Air Travellers Security
Charge (ATSC), contained in Part 3 of this motion, include previously
announced relief provisions, as well as technical changes to the Air
Travellers Security Charge Act.
The principal measures related to the ATSC included in this
motion are as follows:
Relief
relieves, in particular circumstances, the ATSC in respect of air
travel sold by resellers or donated by air carriers; and
Administration
provides authority for the Governor in Council to add, delete or vary
by regulation the schedule of listed airports.
