Excise and GST/HST News - No. 112

November 2022

Table of Contents

Please note that this edition of the Excise and GST/HST News also highlights recent developments relevant to the administration of the new federal programs for the underused housing tax and the luxury tax.

Input tax credit entitlement of a GST/HST registrant that supplies property and services to Indians, Indian bands, or band-empowered entities

A taxable supply to an IndianFootnote 1, Indian band, or band-empowered entity may be relieved of GST/HST as described in the Technical Information Bulletin B-039, GST/HST Administrative Policy – Application of the GST/HST to Indians

Generally, a GST/HST registrant can claim an input tax credit (ITC) to recover the GST/HST paid or payable in respect of the supply of property or a service acquired for consumption, use or supply in the course of their commercial activities.

For GST/HST purposes, commercial activities includes making a taxable supply to an Indian, Indian band, or band-empowered entity. Therefore, even though the supply may be relieved of GST/HST as described in B-039, it is considered a taxable supply when determining eligibility for ITCs.

Example

A vendor that is registered for GST/HST purposes purchases materials on which the vendor pays the GST. The vendor makes a taxable supply of office furniture to an Indian where all the conditions for tax relief under B-039 are met and does not collect any GST. Although no tax was collected, the supply of the office furniture to the Indian is a taxable supply made in the course of the vendor’s commercial activities.

Therefore, where all other conditions for claiming an ITC are met, the vendor can claim an ITC for the GST paid or payable on the inputs used to make the supply of the office furniture to the Indian.

For more information about ITCs, refer to Guide RC4022, General Information for GST/HST Registrants and GST/HST Memorandum 8.1, General Eligibility Rules.

Underused housing tax program

The Underused Housing Tax Act (UHTA) was enacted under Bill C-8 (the Economic and Fiscal Update Implementation Act, 2021), which received royal assent on June 9, 2022. The UHTA imposes 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.

On August 9, 2022, the Department of Finance issued a news release, which included a number of proposed draft legislative amendments to the UHTA and proposed draft regulations under the UHTA. The following is a brief list of the proposed draft UHTA amendments and draft regulations announced on August 9, 2022:

The news release also included a related amendment to section 116 of the Income Tax Act (ITA). Section 116 of the ITA provides for the issuance of a certificate of compliance by the Minister to a non-resident of Canada in connection with the disposition of property by the non-resident that is taxable Canadian property under the ITA. The amendment provides conditions under which the Minister may decline to issue a certificate under that section if they are not compliant with their UHTA obligations.

Detailed information concerning obligations under the UHTA, including these amendments, will soon be available on Canada.ca.

Proposed GST/HST amendments

On August 9, 2022, the Department of Finance issued a news release which included a number of proposed draft legislative and regulatory amendments for public comment. The proposed draft legislation, included with the announcement, provides details on these proposed amendments and when they are proposed to come into force.

The following is a brief summary of some of the proposed amendments to the Excise Tax Act (ETA) announced on August 9, 2022:

The following is a brief summary of some of the proposed draft amendments to the Selected Listed Financial Institutions Attribution Method (GST/HST) Regulations announced on August 9, 2022:

The proposed amendments to the Joint Venture (GST/HST) Regulations announced on August 9, 2022, will include the operation of a pipeline, rail terminal or truck terminal used for the transportation of oil, natural gas or related or ancillary products in subsection 3(1).

Please note that this is not an exhaustive list of the proposed amendments to the ETA and its related regulations. For further details on the proposed amendments to other Acts such as the Underused Housing Act, refer to the Legislative and Regulatory Proposals Relating to the Excise Tax Act, the Air Travellers Security Charge Act, the Excise Act, 2001, the Greenhouse Gas Pollution Pricing Act, the Underused Housing Tax Act and Related Legislation.

Recent change to the excise duty exemption on 100% Canadian wine

Budget Implementation Act, 2022, No. 1 amended the Excise Act, 2001. Effective June 30, 2022, the excise duty exemption on 100% Canadian wine applies exclusively to honey wine, mead and cider.

More information is available in Excise Duty Notice EDN75, Repeal of Excise Duty Exemption for 100% Canadian Wine and Excise Duty Notice EDN77, Excise Duty Exemption on 100% Canadian Wine Made from Honey or Apples.

Luxury tax program

The Government of Canada has introduced a luxury tax on the sale or importation of certain vehicles and aircraft priced above $100,000 (subject vehicles and subject aircraft) and certain vessels priced above $250,000 (subject vessels).

The Select Luxury Items Tax Act was included in Bill C-19, Budget Implementation Act, 2022, No. 1, which received royal assent on June 23, 2022 and came into effect on September 1, 2022.

The luxury tax is generally calculated as the lesser of:

Certain persons are required to register with the CRA as registered vendors under the Select Luxury Items Tax Act. For more information about the luxury tax and applying for registration, go to Luxury tax.

GST/HST and the new luxury tax

Section 154 of the ETA provides, in part, that taxes, duties, and fees imposed by a federal, provincial, or territorial government and payable or collectible by a supplier of the property or services are generally included in the value of the consideration for a supply, with certain exceptions. None of the exceptions in section 154 apply with respect to the imposition of the luxury tax. Therefore, effective September 1, 2022, the GST/HST applies to the value of the consideration paid for subject items, inclusive of the luxury tax.

Example

On September 23, 2022, a Manitoba resident purchases a passenger automobile from a dealership for the purchase price of $135,000. As the price of the passenger automobile exceeds the threshold amount of $100,000, the luxury tax is payable by the dealership (that is, a registered vendor) of the passenger automobile. Other provincial sales taxes normally charged on the purchase of passenger automobiles are ignored for the purposes of this example. The luxury tax is calculated as follows:

The luxury tax equals the lesser of 10% of the total price of the subject vehicle (A) or 20% of the amount above the relevant price threshold of the subject vehicle (B):

(A) $13,500 ($135,000 × 10%)
(B) $7,000 [($135,000 – $100,000) × 20%]

Therefore, the luxury tax on the passenger automobile is $7,000.

Under section 154, the GST is calculated on the consideration payable for the passenger automobile, inclusive of the luxury tax, as follows:

  1. Cost of the passenger automobile:
    Luxury tax as calculated above:
    Total consideration for the passenger automobile:
    GST ($142,000 × 5%)

  2. $135,000
    $7,000
    $142,000
    $7,100

For more information regarding the application of GST/HST to federal, provincial and territorial taxes, duties and fees, refer to GST/HST Memorandum 3-5, Application of GST/HST to Other Taxes, Duties, and Fees.

Excise duty on vaping products

The Budget Implementation Act, 2022, No. 1, received royal assent on June 23, 2022. This Act implemented amendments to the Excise Act, 2001 that provide for a new federal excise duty framework on vaping products.

As of October 1, 2022 the following provisions came into effect:

In order to be compliant with the Excise Act, 2001, manufacturers and importers of vaping products must have applied for and obtained either a vaping product licence or vaping prescribed person registration before October 1, 2022.

Rates of vaping duty

The rates of vaping duty imposed on vaping liquids are:

The same rates of vaping duty are imposed on vaping solids on a per-gram basis.

Transitional rules

To facilitate the implementation of the excise duty framework for vaping products, the following transitional provisions apply:

For a vaping product that was manufactured in Canada and packaged before October 1, 2022:

For packaged and stamped vaping products imported into Canada before October 1, 2022, duty is payable at the time of importation.

Possession and sale of unstamped vaping products that were manufactured in Canada and packaged before October 1, 2022, is permitted up to and including December 31, 2022.

Possession and sale of unstamped packaged vaping products that were imported into Canada before October 1, 2022, is permitted up to and including December 31, 2022.

As of January 1, 2023, no person is permitted to possess or sell unstamped packaged vaping products unless explicitly permitted under the Excise Act, 2001.

Reporting requirements

Vaping product licensees must file a return by completing Form B600, Vaping Duty and Information Return for each calendar month. The monthly return and any applicable vaping duty payable are due no later than the last day of the month following the reporting period.

Vaping prescribed persons must file a return by completing Form B601, Vaping Information Return – Prescribed Person for each calendar month. The monthly return is due no later than the last day of the month following the reporting period.

If there are no activities to report for a specific reporting period, both vaping product licensees and vaping prescribed persons must send a completed NIL return by the deadline.

More information

For more information on the new federal excise duty framework for vaping products refer to the following webpages:

To make a general enquiry on the application of the excise duty framework on vaping products call 1-866-330-3304 or send an email to LPVAPINGG@cra-arc.gc.ca. Please do not include any confidential information in your email.

Prescribed rates of interest

The prescribed annual rate of interest in effect from July 1, 2022, to September 30, 2022, on overdue amounts payable to the Minister is 6%. The prescribed annual rate of interest on amounts owed by the Minister (such as, rebates or refunds) is 2% for corporate taxpayers and 4% 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 4%. 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.

Prescribed annual rates of interest for GST/HST, excise tax, fuel charge, ATSC, excise duty (wine, spirits, tobacco, cannabis), and income tax
PERIOD July 1, 2022 to
September 30, 2022
April 1, 2022 to
June 30, 2022
January 1, 2022 to
March 31, 2022
October 1, 2021 to
December 31, 2021
Refund Interest
Corporate Taxpayers

2% 1% 1% 1%
Refund Interest
Non-Corporate Taxpayers

4% 3% 3% 3%
Arrears and Instalment Interest 6% 5% 5% 5%
Prescribed annual rates of interest for excise duty on beer
PERIOD July 1, 2022 to
September 30, 2022
April 1, 2022 to
June 30, 2022
January 1, 2022 to
March 31, 2022
October 1, 2021 to
December 31, 2021
Arrears Interest Excise duty – beer  4% 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, luxury tax and GST/HST forms and publications:

GST/HST memoranda

Excise forms

Excise duty notices

Excise memorandums

Excise duty circular

Luxury tax forms

Luxury tax notices

All GST/HST, luxury tax, excise duty, and excise taxes and other levies publications can be found on the Canada.ca website. Go to the GST/HST technical information, Luxury tax 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 CRA website, go to Canada Revenue Agency electronic mailing lists and subscribe to the RSS feed for all new CRA publications and forms, or subscribe to any number of mailing lists for different types of publications.

Contact us

More information

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 and Specialty Tax Directorate webpage for technical enquiries, publications and forms, and regional office contact information.

Account enquiries

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, luxury tax, excise tax and duty accounts (such as viewing up-to-date account balances and transactions, transferring payments and more), go to:

For enquiries regarding the status of specific GST/HST domestic rebate claims, call Business Enquiries at 1‑800‑959‑5525.

Help

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), the Underused Housing Tax, the Select Luxury Items Tax 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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