Excise and GST/HST News - No. 111
Table of Contents
- Federal Budget 2022
- Underused housing tax
- COVID-19 rapid test kits
- Definition of vocational school
- Removal of GST/HST Policy Statement P-097R2, Expense allowances of elected municipal officers and school board members
- Revised position on new home warranties
- Trailing commissions in the mutual fund industry
- Revised Form GST111 and Form RC7291 for Financial Institutions
- Excise duty rate adjustments – April 1, 2022
- Fuel charge rate adjustments – April 1, 2022
- Prescribed rates of interest
- What’s new in publications
- Contact us
Federal Budget 2022
On April 7, 2022, the Minister of Finance tabled Budget 2022 which proposed to amend the Excise Tax Act (ETA), the Excise Act, 2001, and the Excise Act, and also confirmed the Government’s intention to proceed with certain previously announced measures relating to the GST/HST, excise duty and the Select Luxury Items Tax Act. Refer to the Department of Finance News Releases for related information.
Proposed amendments to the ETA:
GST/HST Health Care Rebate
Budget 2022 proposes to amend the GST/HST eligibility rules for the expanded hospital rebate to recognize the increasing role of nurse practitioners in delivering health care services, including in non-remote areas. It is proposed that to be eligible for the expanded hospital rebate, a charity or non-profit organization must deliver the health care service with the active involvement of, or on the recommendation of, either a physician or a nurse practitioner, irrespective of their geographical location. In other words, the expanded hospital rebate would no longer distinguish between health care services rendered by physicians and nurse practitioners.
This measure would generally apply to rebate claim periods ending after April 7, 2022 in respect of tax paid or payable after that date.
GST/HST on Assignment Sales by Individuals
For any assignment agreement entered into after May 6, 2022, Budget 2022 proposes to amend the ETA to make all assignment sales in respect of newly constructed or substantially renovated residential housing taxable for GST/HST purposes. As a result, the GST/HST would apply to the total amount paid for a new home by its first occupant and there would be greater certainty regarding the GST/HST treatment of assignment sales.
The amount of a new housing rebate under the GST/HST legislation is determined based on the total consideration payable for a taxable supply of a home, as well as the total consideration payable for any other taxable supply of an interest in the home (for example, the consideration for a taxable assignment sale). Accordingly, these changes may affect the amount of a GST/HST New Housing Rebate in respect of the GST or federal component of the HST or of a new housing rebate in respect of the provincial component of the HST that may be available in respect of a new home.
For more information please refer to GST/HST Notice 323, Proposed GST/HST Treatment of Assignment Sales.
Proposed amendments to the Excise Act, 2001:
Taxation of Vaping Products
Effective October 1, 2022, Budget 2022 proposes to implement an excise duty on vaping products. The proposed federal excise duty rate would be $1.00 per 2 millilitres (ml), or fraction thereof, for containers with 10 ml or less of vaping liquid. For containers with more than 10 ml, the applicable federal rate would be $5.00 for the first 10 ml, and $1.00 for every additional 10 ml, or fraction thereof.
Cannabis Taxation Framework and General Administration under the Excise Act, 2001
Starting from the quarter that began on April 1, 2022, Budget 2022 proposes to allow certain licensed cannabis producers to remit excise duties on a quarterly rather than monthly basis.
This option would only be available in respect of a fiscal quarter, beginning on or after April 1, 2022, of a licensee that was required to remit less than a total of $1 million in excise duties during the four fiscal quarters immediately preceding that fiscal quarter.
Budget 2022 proposes other technical amendments as the cannabis industry in Canada grows and evolves.
World Trade Organization (WTO) Settlement on the 100% Canadian Wine Exemption
To give effect to the WTO settlement, Budget 2022 proposes to repeal the 100% Canadian wine excise duty exemption.
The proposed measure would come into force on June 30, 2022. For more information refer to Excise Duty Notice EDN75, Repeal of excise duty exemption for 100% Canadian wine.
Proposed amendments to the Excise Act:
Budget 2022 proposes to eliminate excise duty for beer containing no more than 0.5% absolute ethyl alcohol by volume (non-alcoholic beer), effective as of July 1, 2022. This will bring the tax treatment of non-alcoholic beer into line with the treatment of wine and spirits with the same alcohol content.
Underused housing tax
On December 15, 2021, the Minister of Finance tabled Bill C-8 (the Economic and Fiscal Update Implementation Act, 2021) to enact the Underused Housing Tax Act. Bill C-8 received second reading in the Senate on May 10, 2022.
The Underused Housing Tax Act will impose an annual 1% underused housing tax, effective January 1, 2022, on the value of vacant or underused residential property in Canada generally owned directly or indirectly by non-resident non-Canadians.
Owners of residential property in Canada (other than “excluded owners”) will be required to file an annual return with the Canada Revenue Agency. Excluded owners are not subject to the underused housing tax and are not required to file. Owners that are not excluded owners may be subject to the tax but may be eligible to claim an exemption if certain conditions are met.
Annual returns and any tax payable for a calendar year, starting with 2022, will be due by April 30 of the following calendar year. For example, an annual return and any tax payable for the 2022 calendar year will be due by April 30, 2023.
Detailed information concerning your obligations under the underused housing tax will be available soon on Canada.ca.
COVID-19 rapid test kits
This article briefly outlines the tax status of the supply of a rapid COVID-19 test kit. They are often called rapid tests as they typically provide results in less than an hour. Some technologies require the use of a portable digital reader, while others use an optical readout and format similar to a disposable pregnancy test.
Test kits and specimen collection
COVID-19 test kits are used for the detection of the SARS CoV-2 virus (the coronavirus). The kits offer different ways for samples to be collected. Samples can be collected by a health care professional or, in some instances, by the patient themselves (self-collection), through a nose swab, throat swab, oral (fluid) swab, saliva sample, or blood draw.
Rapid COVID-19 test kits contain the necessary elements to perform the test, including the testing devices, sample collection materials (such as swabs), extraction liquids and tubes. For GST/HST purposes we consider the supply of a rapid COVID-19 test kit to be a supply of the testing device.
Supplies of elements of the test kits that do not include the testing devices are not supplies of the testing devices. For example, the supply of a collection kit where the user takes a sample that is sent to a lab for testing is not a supply of a testing device.
Part I of Schedule VI to the Excise Tax Act (ETA) contains provisions that zero-rate a broad range of drugs and substances that are regulated under federal legislation and are intended for use in human beings.
As described in GST/HST Notice 248, Application of the GST/HST to Supplies of In Vitro Diagnostic Test Kits, the supply of an in vitro diagnostic test kit is zero-rated pursuant to paragraph 2(a) of Part I of Schedule VI to the ETA if it is for use in the diagnosis of a disease in humans and it contains one or more of the following substances:
- monoclonal and polyclonal antibodies
- blood and blood derivatives
- snake venom
- micro-organisms that are not antibiotics
COVID-19 test kits generally contain monoclonal and polyclonal antibodies and are used in the diagnosis of the coronavirus in humans.
The supply of a rapid COVID-19 test kit is generally zero-rated pursuant to paragraph 2(a) of Part I of Schedule VI to the ETA.
Although supplies of rapid COVID-19 test kits are generally zero-rated, there are several exemptions for supplies by charities and other public sector bodies that could apply. Supplies of rapid COVID‑19 test kits may be exempt from GST/HST in the following circumstances:
- Supplies of rapid COVID-19 test kits by a charity, non-profit organization, hospital authority, university, public college, or school authority, if the test kit is sold for an amount that does not exceed the direct cost of the test kit;
- Supplies of rapid COVID-19 test kits by a government, municipality, charity, non-profit organization, hospital authority, university, public college, or school authority, if 90% or more of the sales of such test kits made by the supplier are free of charge; and
- Supplies of donated rapid COVID-19 test kits by a registered charity, if the supply is not zero‑rated.
For more information on the above exemptions, refer to Guide RC4082, GST/HST Information for Charities, and Guide RC4081, GST/HST Information for Non-profit Organizations.
Definition of vocational school
Section 1 of Part III of Schedule V to the Excise Tax Act (ETA) defines vocational school to mean “an organization that is established and operated primarily to provide students with correspondence courses, or instruction in courses, that develop or enhance students’ occupational skills”. With the definition of vocational school in mind, the Canada Revenue Agency has amended GST/HST Memorandum 20-4, Vocational Schools and Courses to remove paragraph 4 under the heading Definition of vocational school.
Paragraph 4 of GST/HST Memorandum 20-4 formerly read,
“4. An organization that qualifies as a vocational school generally exhibits a number of the following characteristics:
- it is normally a corporation or an unincorporated association of some type (however, in some cases, the organization could be made up of a single individual)
- it identifies or advertises itself as a school and is known publically as a school
- it offers courses or programs following a scheduled curriculum under which the courses progress in the depth of learning from semester to semester
- it has a regularly enrolled student body that forms a class or classes
- it owns/rents/leases a site from which students are provided correspondence courses or instruction in courses
- it receives tuition, which is paid by the students (or the parents/guardians), for the provision of the correspondence courses or the service of instruction”
This paragraph caused confusion as it was not based on the definition of vocational school in section 1 of Part III of Schedule V. While a vocational school may exhibit some of the characteristics listed in this paragraph, they are not legislative requirements that determine whether an organization meets the definition of “vocational school” in section 1 of Part III of Schedule V. For example, an organization is not required to own or lease a site to qualify as a vocational school.
The three criteria an organization must meet to be a vocational school are:
- The organization must be established primarily to provide students with correspondence courses, or instruction in courses, that develop or enhance students’ occupational skills.
- The organization must be operated primarily to provide correspondence courses, or instruction in courses, that develop or enhance students’ occupational skills.
- The organization must provide correspondence courses, or instruction in courses, that develop or enhance students’ occupational skills.
These criteria are explained in detail in GST/HST Memorandum 20-4, the substance of which is unchanged other than the deletion of former paragraph 4.
Supplies made by vocational schools
If an organization meets the definition of “vocational school” in section 1 of Part III of Schedule V to the ETA, some of the organization’s supplies may be exempt. These supplies may include:
- a service of instructing individuals in courses leading to, or for the purpose of maintaining or upgrading, a professional or trade accreditation or designation recognized by a regulatory body, or a certificate, or a service of administering an examination, in respect of such courses, accreditations, or designations.
- a service of instructing individuals in, or administering examinations in respect of, courses leading to certificates, diplomas, licences or similar documents, or classes or ratings in respect of licences, that attest to the competence of individuals to practise or perform a trade or vocation.
- a service of instructing individuals in, or administering examinations in respect of, language courses that form part of a program of second-language instruction in either English or French.
For more information on the requirements of the exemptions that pertain to vocational schools, please refer to GST/HST Memorandum 20-4.
Removal of GST/HST Policy Statement P-097R2, Expense allowances of elected municipal officers and school board members
The Canada Revenue Agency (CRA) has removed GST/HST Policy Statement P-097R2, Expense allowances of elected municipal officers and school board members, from the Canada.ca website. The information in
P-097R2 is no longer current as a result of subsection 81(3) of the Income Tax Act (ITA) being repealed effective January 1, 2019.
P-097R2 intended to clarify the entitlement of a municipality or a school board to public service bodies’ rebates in respect of allowances paid, or deemed to be paid, to an elected municipal officer or a school board member that fell under subsection 81(3) of the ITA.
A non-accountable allowance paid to an employee is generally considered a taxable benefit for income tax purposes. However, prior to subsection 81(3) of the ITA being repealed, an exemption was available to certain officials for a non-accountable allowance that was paid to cover expenses connected with carrying out work-related duties. This non-accountable allowance was excluded from income unless it exceeded one-half of the official’s salary and other remuneration.
After the repeal of subsection 81(3) of the ITA, non-accountable allowances paid to elected municipal officers and school board members are taxable as they are now fully included in the official’s income for income tax purposes.
This change to the ITA was summarized in a Tax Tip document titled What you need to know: Changes to the Non-accountable allowances paid to elected members of legislative assemblies, certain municipal officers, and members of public or separate school boards, published on the CRA Newsroom dated September 25, 2018. The Tax Tip stated the CRA’s intention to review P-097R2.
Impact of the removal of P-097R2
The entitlement of a municipality or a school board to public service bodies’ rebates in respect of allowances paid, or deemed to be paid, to an elected municipal officer or a school board member is unaffected by rendering policy P-097R2 obsolete. P-097R2 did not expand a municipality’s or school board’s public service bodies’ rebate entitlement beyond that provided for in the basic rules for allowances and the public service bodies’ rebate found in the Excise Tax Act.
The following information provides guidance related to situations where a public service body pays an allowance, where a public service body is deemed to have paid an allowance or where a public service body did not pay or is not deemed to have paid an allowance.
An amount constitutes an allowance where the amount meets all of the following criteria:
- the amount is predetermined;
- the amount is paid for a certain purpose;
- the amount paid is at the complete disposition of the person receiving it; and
- the person receiving the amount is not required to account for its use.
A public service body that pays an allowance to an employee may be eligible for a public service bodies’ rebate in respect of the allowance paid where the following conditions are met:
- the public service body pays an allowance to an employee of the public service body;
- the allowance is paid to the employee for:
- supplies of property or services all or substantially all (90% or more) of which are taxable supplies (other than zero-rated supplies) acquired in Canada by the employee in relation to the public service body’s activities; or
- the use of a motor vehicle in Canada in relation to the public service body’s activities;
- an amount in respect of the allowance is deductible by the public service body for income tax purposes, or would be deductible if the public service body were a taxpayer under the ITA and the activity were a business; and
- in the case of certain travel and motor vehicle allowances, the public service body must ensure that:
- the allowance is reasonable for income tax purposes; and
- at the time the allowance was paid, the person considered it to be a reasonable allowance, and it was reasonable for the person to have considered it to be a reasonable allowance for income tax purposes.
For example, if a municipality pays an allowance to an elected official that meets the above conditions, the municipality may be able to claim a public service bodies’ rebate in respect of the allowance paid.
Allowances deemed to be paid
The legislation governing municipalities (Municipal Acts) of some provinces deems that a proportion of the total amount paid to an elected officer of a municipal council (salary, fees, indemnities and honoraria; a general expense allowance, a mileage or other travelling allowance) is an allowance for expenses. Where this is so, it is the CRA’s policy that the proportion so deemed to be an expense allowance will be accepted as an expense allowance.
Therefore, if a public service body is governed by a Municipal Act of a province that deems a proportion of the total amount paid to a municipal officer in respect of their position as an elected officer to be an allowance for expenses, the public service body may be able to claim a public service bodies’ rebate in respect of the allowance deemed paid where the conditions in scenario 1 (Allowances paid) are met.
No allowance paid or deemed to be paid
Where a public service body is not governed by a Municipal Act of a province that deems a proportion of the total amount paid to an elected officer to be an allowance for expenses, and where no allowance is actually paid, the public service body is not able to claim a public service bodies’ rebate in respect of any amounts paid as salary or other remuneration.
For example, a municipality pays an honorarium to an elected official. The municipality is not governed by a Municipal Act of a province that deems a proportion of the total amount paid to an elected officer to be an allowance for expenses. The municipality is not able to claim a public service bodies’ rebate in respect of the honorarium. Since there is no allowance paid or deemed to be paid the above conditions cannot be met.
For more information on the treatment of allowances, refer to GST/HST Memorandum 9-3, Allowances.
GST/HST Memorandum 9-3, Allowances
While reviewing the removal of P-097R2, it was identified that paragraph 54 of GST/HST Memorandum 9-3 contained incorrect information. The CRA will update GST/HST Memorandum 9-3 to remove that paragraph.
New home warranty products are offered in various provinces to purchasers of new homes (homeowners). In certain provinces, the builder is required by provincial legislation to register the new home for coverage by home warranty insurance provided by an insurer. To meet these provincial requirements, the builder enters into an agreement with an insurer under which the insurer agrees to register new homes in its warranty program, and to issue new home warranty insurance policies to homeowners. Under this agreement, the builder agrees to perform the warranty obligations of these policies, which generally includes repairing and replacing construction defects in the new home. It is only if the builder does not perform these obligations that the insurer is liable to indemnify the homeowner.
In the Excise and GST/HST News No. 104 (2018/07), we indicated that our position was that there was a taxable supply from the insurer to the homeowner when the insurer issued the new home warranty insurance policy. We viewed the new home warranty insurance policy to generally not be included in the definition of insurance policy in subsection 123(1), but rather to be excluded from paragraph (a) of the definition as a warranty in respect of the quality, fitness or performance of tangible property, where the new home warranty was issued to a person who acquired the property (the new home) otherwise than for resale – for example, for personal use.
After consultation with the industry, we have changed our position.
We have concluded that the insurer and the builder have a “contract of insurance” that is included in paragraph (a) of the definition of insurance policy in subsection 123(1). Under the agreement between the insurer and the builder, the builder is required to perform all the warranty obligations of the new home warranty insurance policy. Therefore, the primary responsibility for carrying out the warranty obligations regarding the new homes rests on the builder. Essentially, it is the warranty obligations of the builder that are insured by the insurer as the insurer only provides a back-up to the builder’s warranty or, in other words, only gets involved when the builder does not properly carry out that warranty, and therefore, the insurer takes on the risk of the builder.
Consequently, the insurer is making a supply of a financial service to the builder that is included in paragraph (d) of the definition of financial service in subsection 123(1), and is not excluded by any of paragraphs (n) to (t) of that definition. This supply is exempt under section 1 of Part VII of Schedule V. This results in the insurance premium charged by the insurer to the builder being consideration for an exempt supply of a financial service and therefore, that amount will not be subject to GST/HST.
Furthermore, there is no separate taxable supply of a new home warranty insurance policy by the insurer to the homeowner. Rather, the homeowner is a beneficiary of the new home warranty insurance policy.
Trailing commissions in the mutual fund industry
This article highlights the GST/HST treatment applied to trailing commissions in the mutual fund industry.
A trailing commission (otherwise referred to as a trailer fee or a trailer commission) is, typically, an amount paid by a mutual fund manager (the manager) of a mutual fund (the fund) to an investment dealer (the dealer) with respect to a particular investor. The trailing commission is paid on a periodic basis under an agreement between the manager and dealer. The dealer agreement between the dealer and the manager usually sets out that the dealer is engaged by the manager to distribute shares or units of mutual funds to investors and the agreement also describes any other duties and obligations of both parties. Where a dealer receives a trailing commission, there is usually an obligation by the dealer to provide a degree of ongoing investment support to the investor including the provision of investment advice, account statements and newsletters. A trailing commission would be in addition to any upfront commission that may be paid to the dealer under the dealer agreement.
The fee payable under the dealer agreements for the dealer’s supply/supplies is based on the type of fund:
- No load funds – typically no front end or back end commissions are payable to the dealer upon the initial investment in a mutual fund however the dealer receives an ongoing trailing commission payable by the manager for as long as the investor holds their investment in the fund.
- Load funds – typically an upfront commission is payable to the dealer upon the initial investment in a mutual fund and the dealer may also receive an ongoing trailing commission payable by the manager for as long as the investor holds their investment in the fund. For a front end load fund, the upfront commission is usually payable by the investor under agreed terms between the dealer and the investor. For back end load funds, the upfront commission is usually payable by the manager and not the investor.
The dealer may have a separate agency agreement with a sales agent/sales representative/sales advisor (agent) to carry out its obligations under the dealer agreement. The agency agreement usually stipulates that it is for the purpose of distributing shares or units of mutual funds and describes the duties and obligations of both parties. The duties of the agent may also require the agent to provide a degree of ongoing investment support to the investor on behalf of the dealer. Typically, a portion of the upfront commission and trailing commissions are also paid by the dealer to the agent for the agent’s supply/supplies under the agency agreement.
For GST/HST purposes, whether or not certain payments represent consideration for a single supply or for separate supplies is a question of fact. Further guidance to assist in making such determinations can be found in GST/HST Policy Statement P-077R2, Single and Multiple Supplies.
In the mutual fund industry, where a dealer receives a payment or payments in accordance with an agreement for the dealer to distribute shares or units in a fund such payment(s) will ordinarily be consideration for a single supply and the essential character of that supply is arranging for the sale of shares or units in the fund. In these circumstances, the supply made by a dealer to the manager of a fund is an exempt supply of a financial service in accordance with paragraphs (l) and (d) of the financial service definition in the Excise Tax Act. GST/HST would not apply to such payment(s). This includes both payments for any upfront commission and any ongoing trailing commissions.
However, there may be some circumstances where certain payments received by the dealer are not consideration for the supply of arranging for the sale of shares or units in the fund. In these exceptional cases, the payments may be consideration for a separate supply and may therefore have a different GST/HST treatment. These exceptions are as follows:
- Where a dealer is not the same person that facilitated the initial sale of shares or units in the fund but receives a trailing commission in respect of those shares or units, the trailing commission is consideration for a separate supply from the supply of arranging for the initial sale of shares or units.
- Where a dealer is the same person that facilitated the initial sale of shares or units in the fund and receives a trailing commission in respect of those shares or units but the entitlement to the trailing commission was not created at the same time and under the same agreement(s) with respect to the facilitation of the initial sale of shares or units in the fund, the trailing commission is consideration for a separate supply from the supply of arranging for the initial sale of the shares or units.
- Where a dealer is the same person that facilitated the initial sale of shares or units in the fund and receives a trailing commission in respect of those shares or units and the entitlement to the trailing commission was created at the same time and under the same agreement(s) with respect to the facilitation of the initial sale of shares or units in the fund, the payments would ordinarily be consideration for a single supply. The exception would be if there is clear indication in the agreement(s) for the dealer’s services that the payment of the trailing commission is directly linked to a supply of specific services and those services are not so intertwined with the service of arranging for the sale of units or shares in the fund that the supply of each of those services could be effectively supplied separately. In these cases, the trailing commission is consideration for a separate supply from the supply of arranging for the initial sale of shares or units in the fund.
In the case of no load funds, where trailing commissions are the only payments received by the dealer and the agreement is for the distribution of shares or units in a mutual fund, the payments of the trailing commissions would ordinarily be consideration for the supply of arranging for the sale of shares or units in the fund unless any exceptions apply.
In the case of front end load funds, the dealer receives an ongoing trailing commission from the manager under an agreement for the distribution of units or shares of the fund. Even though there is no upfront commission payable by the manager, the ongoing trailing commissions are consideration for a supply that is arranging for the sale of shares or units in the fund.
For back end load funds, where both an upfront commission, as well as an ongoing trailing commission, is payable by a manager to a dealer while the investor holds the shares or units, those payments are ordinarily consideration for a supply whose essential character is arranging for the sale of shares or units in the fund, unless any exceptions apply.
The information concerning trailing commissions paid to dealers also applies to any trailing commissions paid to an agent. Where both an upfront commission is payable to the agent and an ongoing trailing commission is payable to the agent while the investor holds the shares or units, those payments would normally be consideration for a single supply. Where there is a single supply and the agent has been engaged by the dealer for the distribution of shares or units of mutual funds, the essential character of the supply would typically be arranging for the sale of shares or units in the fund. This is still the case even where the service includes certain ancillary services like meeting with the client, discussing the client’s needs, answering questions and providing other assistance. However, the exceptions noted above would also apply with respect to the agent’s supply to the dealer.
Revised Form GST111 and Form RC7291 for Financial Institutions
Under section 273.2 of the Excise Tax Act, a financial institution that is a reporting institution is required to file an information return with the Minister for a fiscal year in prescribed form containing prescribed information within 6 months of the reporting institution’s fiscal year end.
The 2021 versions of Form GST111, Financial Institution GST/HST Annual Information Return, and Form RC7291, GST/HST and QST Annual Information Return for Selected Listed Financial Institutions, have been redesigned and streamlined as a result of consultation with the financial industry in order to make them clearer and easier for a reporting institution to complete. In addition, the forms have been revised to reduce the compliance burden for financial institutions while continuing to meet the data needs of the Government (the Department of Finance Canada and the Canada Revenue Agency). The 2021 versions of Form GST111 and Form RC7291 are the prescribed forms to be used for fiscal years ending after December 31, 2021.
The 2018 versions of Form GST111 and Form RC7291 are the prescribed forms to be used for fiscal years ending on or before December 31, 2021. For example, a financial institution with a fiscal year end of December 31, 2021 or earlier would file the 2018 version of the form (such as Form GST111-18). A financial institution with a fiscal year end of January 1, 2022 or after would file the 2021 version of the form (such as Form GST111-21).
Please note that if a financial institution files the incorrect version of the form for a particular fiscal year, the financial institution will not have filed the prescribed form containing the required prescribed information for that specific fiscal year and will generally be required to complete the correct prescribed form.
The forms and the related Guide RC4419, Financial Institution GST/HST Annual Information Return, and Guide RC7219, GST/HST and QST Annual Information Return for Selected Listed Financial Institutions, for the 2021 and 2018 versions of Form GST111, and Form RC7291, are available on the Canada.ca website.
Excise duty rate adjustments – April 1, 2022
Under the Excise Act, 2001 and the Excise Act, inflationary adjustments are made on April 1 of each year to certain excise duty rates. The most recent adjustment occurred on April 1, 2022. The Excise duty rates web page lists current and historical rates.
Excise Act, 2001
Spirits and wine
The adjusted rates of excise duty payable on spirits and wine on or after April 1, 2022, are set out in Excise Duty Notice EDN72, Adjusted Rates of Excise Duty on Spirits and Wine Effective April 1, 2022. This annual adjustment does not apply to the rate of special duty on spirits.
The adjusted rates of excise duty payable on tobacco products on or after April 1, 2022, are provided in Excise Duty Notice EDN73, Adjusted Rates of Excise Duty on Tobacco Products Effective April 1, 2022. The rate changes do not apply to the excise duty rate on raw leaf tobacco or to the special duty rates on stamped tobacco products manufactured in Canada and exported.
Cigarette inventory tax
In addition to the April 1, 2022, rate adjustment, an inventory tax applies to the following cigarettes that were held in inventory at 12:01 a.m. on April 1, 2022:
- cigarettes on which excise duty has been paid as indicated by duty paid Canada droit acquitté on the affixed tobacco stamp; and
- imported unstamped cigarettes on which special duty was paid by a duty-free shop.
Excise Duty Notice EDN74, Cigarette Inventory Tax on April 1, 2022, provides more information on the April 1, 2022 cigarette inventory tax.
The adjusted rates of excise duty payable on beer on or after April 1, 2022, are provided in Excise Duty Notice EDBN29, Adjusted Rates of Excise Duty on Beer Effective April 1, 2022.
Beer worksheets available for excise duty purposes
All brewers must file Form K50B, Excise Duty Return – Brewer, and remit duty, and use Form N10, Excise Act – Application for Refund/Drawback, to claim a refund.
To calculate the total duty payable each month or the total amount of refund, brewers can develop their own documents or they can use, respectively, Form RC633, Monthly Beer Revenue Worksheet, and Form RC634, Monthly Beer Credit Claim Worksheet. Of note, these worksheets are designed to help brewers progress through the different production volume increments and related reduced rates of excise duty.
These worksheets are not prescribed forms. Brewers who use these worksheets must not submit them when they file Form K50B or Form N10. However, brewers must keep the worksheets in their records to support any information reported on Form K50B and Form N10.
Fuel charge rate adjustments – April 1, 2022
Under the Greenhouse Gas Pollution Pricing Act, fuel charge rates increase on April 1 of each year. The most recent adjustment occurred on April 1, 2022. The next adjustment will occur on April 1, 2023. The fuel charge rates are available on the Fuel Charge Rates web page.
Fuel charge rates – 2023 to 2030
Beginning April 1, 2023, the fuel charge rates reflect a carbon pollution price of $65 per tonne of carbon dioxide equivalent (CO2e) in 2023 (the price currently reaches $50 per tonne in 2022), which will rise by $15 per tonne annually to reach $170 per tonne in 2030.
These rates are based on global warming factors and emissions factors used by Environment and Climate Change Canada to report Canada’s emissions to the United Nations Framework Convention on Climate Change.
Prescribed rates of interest
The prescribed annual rate of interest in effect from April 1, 2022, to June 30, 2022, on overdue amounts payable to the Minister is 5%. The prescribed annual rate of interest on amounts owed by the Minister (such as, rebates or refunds) is 1% for corporate taxpayers and 3% for non-corporate taxpayers. These rates are applicable to income tax, excise tax, GST/HST, the air travellers security charge (ATSC), the fuel charge (under the Greenhouse Gas Pollution Pricing Act) and excise duty on wine, spirits, tobacco and cannabis.
The prescribed annual rate of interest respecting excise duty on beer, on overdue amounts payable for the indicated period, is set at 3%. Refund interest rates are not applicable for amounts owed by the Minister (such as, rebates or refunds) for excise duty that is in relation to beer.
|PERIOD||April 1, 2022 to
June 30, 2022
|January 1, 2022 to
March 31, 2022
|October 1, 2021 to
December 31, 2021
|July 1, 2021 to
September 30, 2021
|Arrears and Instalment Interest||5%||5%||5%||5%|
|PERIOD||April 1, 2022 to
June 30, 2022
|January 1, 2022 to
March 31, 2022
|October 1, 2021 to
December 31, 2021
|July 1, 2021 to
September 30, 2021
|Arrears Interest Excise duty – beer||3%||3%||3%||3%|
Prescribed interest rates for previous years are available on Canada.ca at Prescribed interest rates.
What’s new in publications
The following is a list of new or revised excise and GST/HST forms and publications:
- GST111, Financial Institution GST/HST Annual Information Return (revised)
- RC7291, GST/HST and QST Annual Information Return for Selected Listed Financial Institutions (revised)
- Notice 322, Recovery of the GST/HST Under the Digital Economy Measures
- Notice 323, Proposed GST/HST Treatment of Assignment Sales
GST/HST info sheets
- GI-197, Out-of-Pocket Expenses
- GI-198, Osteopathic Service Providers
- GI-199, Tax Relief for Specially Equipped Motor Vehicles
- 20-4, Vocational Schools and Courses (revised)
GST/HST policy statement
- P-256, Qualifying Health Care Supplies and the Application of the GST/HST to Supplies of Medical Examinations, Assessments, Reports and Certificates
Excise duty notices
- EDBN29, Adjusted Rates of Excise Duty on Beer Effective April 1, 2022
- EDBN30, K50B Filing and Payment Schedules for Brewers (from July 2022 to December 2024)
- EDN72, Adjusted Rates of Excise Duty on Spirits and Wine Effective April 1, 2022
- EDN73, Adjusted Rates of Excise Duty on Tobacco Products Effective April 1, 2022
- EDN74, Cigarette Inventory Tax on April 1, 2022
- EDN75, Repeal of Excise Duty Exemption for 100% Canadian Wine
- EDN76, Budget 2022 – Quarterly Filing and Remitting for Cannabis Licensees
- ETSL80, Refund of Federal Excise Tax for Goods Purchased or Imported by the Provinces of Alberta or New Brunswick
All GST/HST, excise duty, and excise taxes and other levies publications can be found on the Canada.ca website. These can be found by going to GST/HST technical information, Excise duties technical information and Excise taxes and other levies technical information.
To receive email notification as soon as a document is published on the Canada.ca website, go to Canada Revenue Agency electronic mailing lists and subscribe to the RSS feed for all new Canada Revenue Agency publications and forms, or subscribe to any number of mailing lists for different types of publications.
Forms and publications
- All GST/HST technical publications and GST/HST related forms are available on the Canada.ca website. Go to GST/HST related forms and publications.
- To access all other forms and publications on the Canada.ca website go to Forms and publications.
- To order forms and publications by telephone, call 1‑800‑959‑5525.
To make a GST/HST enquiry by telephone:
- for GST/HST general enquiries, call Business Enquiries at 1‑800‑959‑5525;
- for GST/HST technical enquiries, call GST/HST Rulings at 1‑800‑959‑8287.
If you are located in Quebec, call Revenu Québec at 1‑800‑567‑4692 or visit their website at revenuquebec.ca.
If you are a selected listed financial institution (whether or not you are located in Quebec) and require information on the GST/HST or the QST, go to GST/HST and QST - Financial institutions, including selected listed financial institutions or
- for general GST/HST or QST enquiries, call Business Enquiries at 1‑800‑959‑5525;
- for technical GST/HST or QST enquiries, call GST/HST Rulings SLFI at 1‑855‑666‑5166.
Go to the Contact Information – Excise Duties, Excise Taxes, Fuel Charge and Air Travellers Security Charge webpage for technical enquiries, publications and forms, and regional office contact information.
For general information and to make enquiries regarding your account, you can:
- view answers to common enquiries, or submit an enquiry using the online “Enquiries service” on “My Business Account”;
- view account information online at E-services for Businesses; or
- call Business Enquiries at 1‑800‑959‑5525.
For online access to your GST/HST, air travellers security charge, excise tax and duty accounts (such as viewing up-to-date account balances and transactions, transferring payments and more), go to:
- My Business Account if you are the business owner.
- Represent a Client if you are an authorized representative or employee; or
For enquiries regarding the status of specific GST/HST domestic rebate claims, call Business Enquiries at 1‑800‑959‑5525.
For technical support using our online services:
- business accounts, call 1‑800‑959‑5525
- teletypewriter users, call 1‑800‑665‑0354
- calls outside of Canada and the United States, call collect at 613‑940‑8497
Please have the screen number (bottom right) and, if applicable, the error number and message received on hand when calling.
The Excise and GST/HST News is published quarterly and highlights recent developments in the administration of the GST/HST, the QST for SLFIs, First Nations goods and services tax (FNGST) and First Nations tax (FNT), air travellers security charge (ATSC) as well as excise taxes and duties. If you would like to receive a link to each new edition of the Excise and GST/HST News as it is published, subscribe to the electronic mailing list.
This publication is provided for information purposes only and does not replace the law, either enacted or proposed. Please note that any commentary in this newsletter regarding proposed measures should not be taken as a statement by the CRA that such measures will in fact be enacted into law in their current form. Comments or suggestions about the newsletter should be sent to the Editor, Excise and GST/HST News, GST/HST Rulings Directorate, Legislative Policy and Regulatory Affairs Branch, CRA, 11th Floor, Place de Ville, 320 Queen Street, Ottawa K1A 0L5.
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