Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 11th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 165888
[Dear Client]
Subject: GST/HST INTERPRETATION
Rebate claimed by a selected listed financial institution for amounts paid in error as or on account of tax
In response to [correspondence] received on [mm/dd/yyyy], from […][the Client], we provided general information on the CRA’s interpretative position with respect to amounts paid in error as or on account of tax by a person that is a selected listed financial institution (SLFI) […] on [mm/dd/yyyy]. Subsequent to receiving our response, [the Client] asked that we provide an […][interpretation] regarding […] in the [mm/dd] enquiry. We apologize for the delay in this response.
All references are to the Excise Tax Act (ETA) unless otherwise specified.
[…][Statement of Facts]
Based on the information provided, we understand the following:
1. […]([…][ACo]) filed a rebate application with the CRA for amounts paid in error as or on account of tax related to […] that [ACo] paid to […] during the period from [mm/dd/yyyy], to [mm/dd/yyyy]. The rebate claim amount was $[…] which included the GST, the federal part of the harmonized sales tax (HST) and the provincial part of the HST.
2. During [ACo]’s [yyyy] fiscal year, the CRA allowed a rebate claim in the amount of $[…], refunding only the GST and the federal part of the HST based on the understanding that the restriction with respect to the provincial part of the HST in section 263.01 applied.
3. [ACo] was a SLFI that was registered for GST/HST purposes with […][a reporting period] during the applicable [yyyy, yyyy and yyyy] fiscal years when it paid the amounts in error as or on account of tax and during the [yyyy] fiscal year when it received the rebate.
[…][INTERPRETATION REQUESTED]
Should the entire rebate amount be included in subparagraph (iii) of G2 of paragraph 46(a) of the Selected Listed Financial Institution Attribution Method (GST/HST) Regulations (SLFI Regulations) in determining Element G of [ACo]’s special attribution method (SAM) formula calculation under subsection 225.2(2) for its [yyyy] fiscal year?
[…][INTERPRETATION GIVEN]
Subparagraph (iii) of G2
Under subsection 123(1) “tax” is defined to mean tax payable under Part IX. This definition is interpreted by the CRA to include only amounts of tax that are actually payable under Part IX, such as tax under subsections 165(1) and (2). As such, an amount paid in error as or on account of tax is not tax for GST/HST purposes.
Subparagraph (iii) of G2 of paragraph 46(a) of the SLFI Regulations is the total of all amounts each of which is an amount (other than an amount included under subparagraph (i) of G2 ) that, during the particular reporting period, was rebated, refunded or remitted to the SLFI under any Act of Parliament, to the extent that the amount is in respect of tax under any of subsection 165(1) and sections 212, 218 and 218.01 and was included in Element A of the SAM formula (or in subparagraph (iv) of the description of G7 of paragraph 46(b) of the SLFI Regulations) for any reporting period, including the particular reporting period, of the SLFI.
Given the use of the phrase “amount is in respect of tax” in subparagraph (iii) of G2 of paragraph 46(a) of the SLFI Regulations, the amount rebated to [ACo] in [yyyy] for amounts paid in error as or on account of tax was not an amount in respect of tax under subsection 165(1) or sections 212, 218 or 218.01 and therefore the amount of the rebate cannot be included in subparagraph (iii) of G2 of paragraph 46(a) of the SLFI Regulations in determining Element G of [ACo]’s SAM formula calculation for its [yyyy] fiscal year, or any other fiscal year.
Additional information
Subsection 263.01
Under subsection 263.01(1), a rebate of an amount under any provision of the ETA (other than sections 252.4 and 252.41) or a refund or abatement of an amount that, because of subsection 215.1(3) or 216(7), may be granted under section 69, 73, 74 or 76 of the Customs Act shall not be paid or granted to a person to the extent that it can reasonably be regarded that the amount is in respect of tax under subsection 165(2) or section 212.1 that became payable by a person at a time when the person was an SLFI, or that was paid by the person at that time without having become payable, in respect of property or a service acquired or imported by the person for consumption, use or supply in the course of a business of the person or an adventure or concern in the nature of trade of the person.
Given the definition of the word tax in subsection 123(1) and the use of the phrase “an amount is in respect of tax” in subsection 263.01(1), the restriction in that subsection would not apply to the rebate of an amount paid in error as or on account of tax by a person that was an SLFI at the time the amount was paid. If the supplier did not refund the amount, the SLFI could apply for a rebate under section 261 for the total amount paid in error as or on account of tax (an amount paid in error as or on account of GST or the federal or provincial part of the HST) provided none of the restrictions in subsection 261(2) applied, the rebate application is filed in prescribed form and manner containing prescribed information within two years after the day the amount was paid or remitted by the SLFI and the other conditions with respect to the rebate application have been met.
Elements A and F of the SAM formula
As an amount paid in error as or on account of tax is not tax, the amount should not be included in Element A of the SAM formula which includes all tax (other than a prescribed amount of tax) that became payable under any of subsection 165(1) and sections 212, 218 and 218.01 by the financial institution during the particular reporting period or that was paid by the financial institution during the particular reporting period without having become payable.
Similarly, an amount paid in error as or on account of tax should not be included in Element F of the SAM formula, which includes all amounts of tax (other than a prescribed amount of tax) under subsection 165(2) in respect of supplies made in the participating province to the financial institution, or under section 212.1 calculated at the tax rate for the participating province, that became payable, or were paid without becoming payable, in the particular reporting period, or a reporting period that ends within two years before the end of the fiscal year that includes the particular reporting period under specific circumstances, by the financial institution.
Consequently, if an SLFI has included an amount in Element A and Element F of the SAM formula in a particular reporting period and subsequently it is determined that the amount was paid in error by the SLFI as or on account of tax, as the amount is not tax payable under subsections 165(1), 165(2) or sections 212, 212.1, 218 or 218.01, the SLFI’s SAM formula calculation should be corrected to remove the amount from Element A and Element F for the reporting period in which that amount was included.
[In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the interpretation(s) given in this letter, including any additional information, is not a ruling and does not bind the Canada Revenue Agency (CRA) with respect to a particular situation. Future changes to the ETA, regulations, or the CRA’s interpretative policy could affect the interpretation(s) or the additional information provided herein.]
If you require clarification with respect to any of the issues discussed […], please contact me directly at 613-670-1347, or Dawn Weisberg the manager of the Listed Financial Institutions Unit at 613-670-1344.
Yours truly,
Katherine Lairson
Listed Financial Institutions Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate
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