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, 20th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 146294
April 17, 2013
Subject: EXCISE INTERPRETATION
Federal Excise Tax on Air Conditioners designed for use in automobiles, station wagons, vans or trucks
Dear [Client]:
Thank you for your letter of [mm/dd/yyyy] with your concerns of the invoicing procedures and excise tax charges on your vehicle purchase. Please accept our apologies for the delay in responding to your enquiry.
You have written regarding the Federal Excise Tax on Air Conditioners designed for use in automobiles, station wagons, vans and trucks, as it appears on invoices and documents involved with your purchase of a vehicle. You have concerns the tax may have been charged twice and if so you would like a refund.
Background
All legislative references are to the Excise Tax Act (ETA), unless otherwise specified.
Excise taxes apply to certain products and the manufacturer, not the consumer, pays these taxes which are often referred to as an indirect manufacturer's tax. These excise taxes, legislated in Part III, Section 23 and listed in Schedule I to the ETA, are payable by the manufacturer or deemed manufacturer of the goods at the time of delivery to a purchaser. The excise tax on air conditioners in vehicles is one of these taxes, however, the payment of this tax is deferred to the time of delivery of vehicles to dealers.
Importers and wholesalers of new motor vehicles are included in the definition of a manufacturer or producer. Importers of new motor vehicles are deemed to be the manufacturers of the goods and the goods are deemed to be manufactured in Canada.
Explanation
We are unable to comment regarding the pricing or negotiations of your vehicle purchase which you have provided, however in the automotive industry it is common practice for manufacturers when invoicing a dealer for the purchase of a vehicle to show an amount of $100 excise tax for vehicles containing an air conditioner unit. This is a cost recovery for the manufacturer who as mentioned earlier, is the person responsible for remitting the tax payment upon delivery to the dealer. There are no legislative references or Regulations under the ETA with respect to the necessary contents of an invoice where excise tax is charged.
The CRA licenses and monitors compliance of the manufacturers of these products who must account for and remit the excise tax. Refunds of the excise tax paid can only be made to the deemed manufacturer responsible for the initial remittance of the excise tax.
Should you have any further questions or if you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613 952 0048.
Yours truly,
Michael Ryder
Excise Taxes and Other Levies
Excise Duties and Taxes Division
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