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: 182286
Dear [Client]:
Subject: GST/HST RULING
The impact of the Ontario's 8% electricity rebate on ITCs and PSB rebates
Thank you for your letter of February 6, 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 Ontario’s 8% electricity rebate program impacts on the claiming of input tax credits (ITCs), and public service bodies’ (PSB) rebates.
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 Ontario electricity rebate impacts on claiming ITCs, and PSB rebates.
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 the PSB rebates of the provincial part of the HST.
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.
Certain PSBs are eligible to claim a PSB rebate of a percentage of the GST and the federal part of the HST paid or payable on eligible purchases and expenses. A PSB resident in Ontario may also be eligible to claim a rebate of the provincial part of the HST. A PSB is eligible for a PSB rebate if it is a charity, a qualifying non-profit organization or a selected public service body on the last day of a claim period or on the last day of the fiscal year that includes that claim period.
The PSB rebate calculation is based on the PSB's “non-creditable tax charged” for the claim period. Non-creditable tax charged for a claim period is generally equal to the total GST/HST that became payable during the claim period or that was paid during the claim period without having become payable, minus the following amounts:
- any input tax credits the PSB claimed or is entitled to claim for any of that GST/HST;
- any rebate, refund, or remission of any of that GST/HST that it is reasonable to expect the PSB received or is entitled to receive under any other section of the ETA or under any other Act of Parliament;
- any amount of that GST/HST that is refunded, credited, or adjusted in the PSB's favour and for which it has either received a credit note from the supplier or has issued a debit note to the supplier.
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 claimable by a registrant who uses the electricity consumed in its commercial activities.
Furthermore, the Ontario rebate does not impact on the calculation of the non-creditable HST charged in respect of the electricity for the claim period, and therefore does not affect the amount of the PSB rebate.
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 905-721-5084. 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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