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: 182285
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
The impact of the Ontario's 8% electricity rebate on ITCs/RITCs
Thank you for your fax of February 7, 2017, concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to supplies of electricity in Ontario. You would like to know how Ontario’s 8% electricity rebate program impacts on the claiming of input tax credits (ITCs), and the recapture of ITCs (RITCs).
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 their electricity costs.
3. Recipients receive the financial assistance by means of an 8% reduction in the amount payable for the supply of electricity.
4. The 8% rebate amount is shown as a separate line item on electricity invoices and reduces the total amount charged, including HST at 13% for the supply of electricity.
RULING REQUESTED
You would like to know if the Ontario electricity rebate impacts on claiming ITCs and recapturing ITCs.
RULING GIVEN
Based on the facts set out above, we rule that the Ontario’s 8% electricity rebate has no impact on claiming ITCs or recapturing ITCs.
EXPLANATION
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.
With the introduction of the HST in Ontario, large businesses, as defined in section 27 of the New Harmonized Value-Added Tax System Regulations No.2, are required under section 236.01 of the ETA to recapture the portion of any available ITC that is attributable to the provincial part of the HST that becomes payable, or is paid without having become payable, in respect of a specified property or service.
The rebate amount is not a reduction in the consideration charged by the supplier for the supply of electricity. The supplier retains the full amount of the consideration charged in respect of the supply. The 13% HST is still payable on the invoice amount, and as such is required to be remitted by the supplier.
Therefore, where a person is eligible to claim an ITC in respect of the HST paid or payable, to the extent that the electricity is acquired in the course of the person’s commercial activities, the person may claim the full amount of tax charged. Furthermore, where a person is required to recapture ITCs, the amount subject to recapture is the provincial portion of the tax charged.
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 Credit Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
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