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, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 182121
Business number: […]
Dear [Client]:
Subject: GST/HST RULING
The impact of the Ontario's 8% electricity rebate on ITCs
Thank you for your fax of January 30, 2017, concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to supplies of electricity in Ontario. Specifically, you would like to know how the Ontario 8% electricity rebate program impacts on input tax credit (ITC) eligibility.
The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
STATEMENT OF FACTS
We understand the following:
1. The Ontario government passed legislation, the Ontario Rebate for Electricity Consumers Act, 2016 (Ontario Rebate Act), on November 2, 2016.
2. The Ontario Rebate Act provides for the financial assistance to certain Ontario electricity recipients in respect of charges for electricity.
3. Recipients receive the financial assistance by means of an 8% reduction in the amount payable for electricity.
4. The 8% rebate amount is shown as a separate line item that reduces the total amount payable for electricity after the HST has been calculated and applied.
RULING REQUESTED
You would like to know if the rebate impacts the claiming of ITCs.
RULING GIVEN
Based on the facts set out above, we rule that the value of ITCs that may be claimed are not reduced or affected by the receipt of the Ontario rebate in respect of electricity charges.
EXPLANATION
Pursuant to subsection 165(1), every recipient of a taxable supply made in Canada shall pay tax in respect of the supply calculated at the rate of 5% on the value of the consideration for the supply. Pursuant to subsection 165(2), every recipient of a taxable supply made in a participating province shall pay in addition to the tax imposed by subsection 165(1), tax in respect of the supply calculated at the rate of tax for that province (Ontario 8%) on the value of the consideration for the supply.
Generally, under section 169 of the ETA, where a person acquires or imports a property or service or brings it into a participating province during a reporting period of the person during which the person is a registrant and the GST/HST in respect of the property or service becomes payable by the person or is paid by the person without having become payable, the person will be eligible to claim an ITC in respect of the tax to the extent that the property or service is acquired, imported or brought in for consumption, use or supply in the course of the person's commercial activities.
The Ontario rebate is financial assistance provided by the province to eligible recipients of electricity and serves to reduce the total amount payable by the recipients. The rebate is not a reduction in consideration for the supply of electricity, nor is it a reduction to the HST payable in respect of the supply of electricity. The Ontario rebate does not alter the value of the ITC that is otherwise claimable by a registrant.
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the ruling(s) given in this letter provided that: none of the issues discussed in the ruling(s) are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 905-721-5081. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
Peter Pushkarna
Basic Groceries and Recaptured Input Tax Credits Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
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