Rebate for Specially-equipped Vehicles for Persons With Disabilities
GST/HST Technical Information Bulletin B-086
September 17, 1999
This bulletin does not replace the law found in the Excise Tax Act and its Regulations. It is provided for your reference. As it may not completely address your particular operation, you may wish to refer to the Act or appropriate Regulation or contact any Revenue Canada tax services office for additional information. If you are located in the Province of Quebec, please contact the Ministère du Revenu du Québec (MRQ) for additional information.
This bulletin reflects amendments proposed to the Excise Tax Act contained in the Notice of Ways and Means Motion tabled on June 4, 1999. At the time of publication, Parliament has not enacted these proposed amendments. Any commentary should not be taken as a statement by the Department that such amendments will in fact be enacted into law in their current form.
Reference in this publication is made to supplies taxable at 7% or 15% (the rate of the HST). The 15% HST applies to supplies made in Nova Scotia, New Brunswick and Newfoundland (the "participating provinces"). If a person is uncertain as to whether the supply is made in a participating province, the person may refer to Technical Information Bulletin B-078, Place of Supply Rules under the HST, available from any Revenue Canada tax services office or on Internet at the Revenue Canada site http://www.rc.gc.ca/ under the heading "Technical Information" in "General Information".
This bulletin explains the rebate of the 7% GST, the 8% provincial component of the HST or the 15% HST that may be claimed on specially-equipped motor vehicles (referred to below as qualifying motor vehicles) that are used by, or to transport, individuals using wheelchairs, and vehicles equipped with auxiliary driving controls for individuals with disabilities. The rebate applies to new vehicles and used vehicles that have not been used since being specially equipped, and to first leases of qualifying motor vehicles, including the purchase of the vehicle by the first lessee upon the exercise of an option under that lease.
The rebate applies to:
- sales in Canada of qualifying motor vehicles for which any consideration becomes due on or after April 4, 1998, or is paid on or after April 4, 1998, without having become due;
- importations into Canada of qualifying motor vehicles on or after April 4, 1998;
- qualifying motor vehicles brought into a participating province on or after April 4, 1998;
- modification services performed outside Canada or outside a participating province to specially equip or adapt a vehicle for use by, or to transport, an individual using a wheelchair, or to install an auxiliary driving control for an individual with a disability where the importation or bringing into a participating province of the vehicle occurs on or after April 4, 1998; and
- first leases (including options to purchase contained in the lease) where the lease is entered into on or after April 4, 1998.
QUALIFYING MOTOR VEHICLES
A qualifying motor vehicle means a motor vehicle that is equipped with either:
- a device designed exclusively to assist in placing a wheelchair in the vehicle without having to collapse the wheelchair; or
- an auxiliary driving control to facilitate the operation of the vehicle by an individual with a disability.
Qualifying motor vehicles do not include most ambulances, but include vehicles such as para transit buses and vans.
Whether new or used, to be a qualifying motor vehicle, the vehicle must be equipped with one or both of the above-mentioned devices, and since being so equipped must not have been used as capital property or held otherwise than for supply in the ordinary course of business.
Qualifying Motor Vehicles Purchased in Canada
The rebate for purchases of qualifying motor vehicles in Canada is equal to the 7% GST or 15% HST calculated on the portion of the purchase price (excluding provincial retail sales taxes) that is identified in writing by the supplier to the recipient and that can be reasonably attributed to the vehicle's special features or adaptations incorporated:
- for the purpose of its use by or in transporting an individual using a wheelchair, or
- to equip the vehicle with an auxiliary driving control.
The recipient may file a rebate application within four years after the day any tax in respect of the purchase becomes payable.
Qualifying Motor Vehicles Imported or Brought into a Participating Province
Where a qualifying motor vehicle is purchased outside Canada or outside a participating province, and is subsequently imported into Canada or brought into a participating province, the rebate is based on the portion of the purchase price (including any import duties thereon, but excluding any provincial retail sales taxes) that is reasonably attributable to the vehicle's special features or adaptations incorporated for its use by or in transporting an individual using a wheelchair or to equip the vehicle with an auxiliary driving control. This portion of the purchase price must be identified in writing by the supplier and included in the value of the vehicle for the purposes of calculating the tax (including duties) on imported goods or the 8% provincial component of the HST that applies to property and services brought into a participating province, as the case may be. After the recipient acquires the vehicle and before it is imported or brought into a participating province, the vehicle cannot have been used by any person except to the extent reasonably necessary to deliver the vehicle to the supplier of a service to be performed, or to import it or bring it into the participating province, as the case may be. The recipient may apply for the rebate within four years after the recipient imports the vehicle or brings it into the participating province.
Modification Services Performed Outside Canada or Outside a Participating Province
Where a motor vehicle is imported or brought into a participating province after a modification service has been performed on the vehicle outside Canada or outside a participating province, the rebate is based on the portion of the value of the vehicle for the purposes of calculating the GST/HST on imported goods or the 8% provincial component of the HST that applies to property and services brought into a participating province, as the case may be, that is attributable to the modification service and any parts supplied in conjunction with the service. The vehicle cannot have been used by any person after the modification service is performed except to the extent reasonably necessary to deliver the vehicle to the supplier of a service performed on it, or to import it or bring it into a participating province, as the case may be. The person who acquires the modification service and imports or brings the vehicle into a participating province may apply for the rebate within four years after the person imports the vehicle or brings it into a participating province.
Leased Qualifying Motor Vehicles
Tax relief (i.e., no tax on that portion of the lease payments attributable to the special features or adaptations) is provided for qualifying motor vehicles supplied under written lease agreements that are entered into on or after April 4, 1998. Only the first lessee of the vehicle qualifies for the tax relief since the vehicle is no longer a qualifying motor vehicle once it has been used as capital property. The first lessee, however, qualifies for tax relief not only on the lease payments made under the original lease entered into on or after April 4, 1998, but also on any lease payments made under any subsequent agreement for the renewal or variation of that lease of the same vehicle by that lessee.
The 7% GST or 15% HST (as applicable) for the lease payment is calculated on the lease payment less the amount of the payment that can reasonably be attributed to the vehicle's special features or adaptations and that is identified in writing by the supplier (i.e., the lessor).
Where the lessee who qualifies for this tax relief on a lease of a qualifying motor vehicle exercises an option under that lease agreement (or under an agreement to renew or vary the original lease) to purchase the vehicle, the lessee will be entitled to claim a rebate in respect of that purchase for the tax payable on the portion of the purchase price reasonably attributed to the vehicle's special features or adaptations and that is identified in writing by the supplier (i.e., the lessor). The vehicle is also considered to be a qualifying motor vehicle for purposes of obtaining a rebate if the vehicle is purchased outside Canada or a participating province and the vehicle is subsequently imported or brought into a participating province. The recipient would then be required to fulfil all the requirements for the rebate in order to be eligible for the rebate.
How to Apply for the Rebate
Recipients who purchase a qualifying motor vehicle can give the completed application to the supplier for a point-of-sale rebate. The supplier will then pay or credit the amount of the rebate to the recipient. The recipient is not entitled to claim an input tax credit in respect of the tax to which the amount of the rebate that was paid or credited relates.
Recipients who purchase their vehicles may, instead (and all other recipients filing rebate claims must), mail the application to:
Summerside Tax Centre
275 Pope Rd., Suite 103
Summerside PE C1N 6A2
The rebate is claimed using reason code 17 or 18 on form GST518, Application for Rebate of Goods and Services Tax (GST)/Harmonized Sales Tax (HST) for Specially-Equipped Motor Vehicles. Recipients must have paid the tax payable in respect of the vehicle, importation or bringing into a participating province, as the case may be. The rebate is not payable if the recipient is eligible for an input tax credit or for a different rebate, refund or remission.
Suppliers' Entitlements and Obligations
Suppliers providing a point-of-sale rebate can deduct an amount equal to the rebate in determining their net tax for the reporting period in which they paid or credited the rebate. To qualify for the net tax deduction, suppliers providing a point-of-sale rebate must send the recipient's rebate application attached to their GST/HST return for the reporting period in which the amount on account of the rebate is paid or credited to the recipient.
Suppliers who provide a point-of-sale rebate in excess of the amount to which a recipient was entitled are jointly and severally liable with the recipient to pay that amount to the Receiver General for Canada. This liability applies if the supplier knew or ought to have known that a recipient was not entitled to a rebate or that the amount paid or credited was greater than the amount to which the recipient was entitled.
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