Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.
XXXXX
XXXXX
XXXXX
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
Case Number: 122500
June 9, 2010
Dear XXXXX:
Subject:
GST/HST INTERPRETATION
Rebate claims for provincial portion of HST
Thank you for your XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to rebate claims for the provincial portion of the HST.
HST currently applies at the rate of 13% in Nova Scotia, New Brunswick, and Newfoundland and Labrador. Effective July 1, 2010, HST will apply at the rate of 15% in Nova Scotia, 13% in New Brunswick, Newfoundland and Labrador, and Ontario, and 12% in British Columbia. GST will continue to apply at the rate of 5% in the remaining provinces and territories.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
We understand it is your view that subsection 296(2.1) would require the Canada Revenue Agency ("CRA") to take into account, when assessing the net tax of a person, any amount that the person could have claimed as a point-of-sale rebate ("POS rebate") but did not where the supplier did not credit the person with a POS rebate at the time the person purchased a qualifying good.
Interpretation Requested
You would like to know whether subsection 296(2.1) would apply where a person did not receive nor claim a POS rebate.
Interpretation Given
Based on the information provided, it is our view that subsection 296(2.1) would not apply where a person did not receive nor claim a POS rebate.
Subsection 296(2.1) reads as follows:
(2.1) Allowance of unclaimed rebate - Where, in assessing the net tax of a person for a reporting period of the person or an amount (in this subsection referred to as the "overdue amount") that became payable by a person under this Part, the Minister determines that
(a) an amount (in this subsection referred to as the "allowable rebate") would have been payable to the person as a rebate if it had been claimed in an application under this Part filed on the particular day that is
(i) if the assessment is in respect of net tax for the reporting period, the day on or before which the return under Division V for the period was required to be filed, or
(ii) if the assessment is in respect of an overdue amount, the day on which the overdue amount became payable by the person,
and, where the rebate is in respect of an amount that is being assessed, if the person had paid or remitted that amount,
(b) the allowable rebate was not claimed by the person in an application filed before the day notice of the assessment is sent to the person, and
(c) the allowable rebate would be payable to the person if it were claimed in an application under this Part filed on the day notice of the assessment is sent to the person or would be disallowed if it were claimed in that application only because the period for claiming the allowable rebate expired before that day,
the Minister shall apply all or part of the allowable rebate against that net tax or overdue amount as if the person had, on the particular day, paid or remitted the amount so applied on account of that net tax or overdue amount.
This provision authorizes the CRA to apply unclaimed rebates against any outstanding liabilities under Part IX of the ETA. An unclaimed rebate shall, unless the person being assessed requests otherwise, be applied under this subsection provided the limitation period for claiming it has not expired before the outstanding liability arose and the ETA would not disallow a claim for that rebate if it were claimed at the time notice of the assessment were sent, apart from the limitation period restrictions. Unapplied rebates shall, unless the person being assessed requests otherwise, be applied against other liabilities or refunded in accordance with subsection 296(3.1).
At first glance, it would appear that you are correct. A person who did not receive the POS rebate at the time a qualifying good was purchased, and who did not subsequently file an application with the CRA to claim the POS rebate, would seem to have an "allowable rebate" in their favour that should be taken into account upon an assessment.
However, it is important to understand the nature of the POS rebate. Paragraph 296(2.1)(a) refers to "an amount (in this subsection referred to as the "allowable rebate") [that] would have been payable to the person as a rebate if it had been claimed in an application under this Part...." The allowable rebate must be an amount that would have been payable as a rebate "in an application under this Part" (i.e., Part IX of the ETA). However, the POS rebate is not a rebate that is payable in an application under Part IX.
The current POS rebate for printed books in the current participating provinces is described in Memorandum Series Chapter 13.4, paragraphs 21 and 22. They state:
21. The governments of Nova Scotia, New Brunswick, and Newfoundland and Labrador (the participating provinces) provide to all persons a point-of-sale rebate of 100% of the provincial component of the HST on all supplies of the items listed in paragraph 1.
22. These are the same goods that qualify for the federal book rebate under section 259.1 of the Act. The Canada Customs and Revenue Agency (CCRA) administers this rebate of the 8% provincial component of the HST on behalf of the participating provinces.
The provincial legislation that provides for the point-of-sale rebate in each current participating province is found in the following provisions:
• in Nova Scotia: Sales Tax Act Regulations, section 8;
• in New Brunswick: General Regulation - Harmonized Sales Tax Act, section 12; and
• in Newfoundland and Labrador: Tax Agreement Regulations, section 9.In other words, the existing POS rebate is a rebate that is payable not under Part IX of the ETA, but rather under provincial legislation. This is unlike the rebate for the GST or the federal portion of the HST on printed books which is available only to a limited class of purchasers and which is provided for in section 259.1.
There is one more factor to consider. Paragraph 296(2.1)(a) does not say the rebate must be payable under Part IX of the ETA, but rather it must be an amount that was payable as a rebate "if it had been claimed in an application" under Part IX. A person claiming the printed book POS rebate in an application does so by completing form GST 189, General Application for Rebate of GST/HST and submitting it to the CRA.
This does not mean however, that the application is made under the ETA. The ETA contains no provision respecting applications for the POS rebate for printed books. Although the application is made using a CRA form and is submitted to and processed by the CRA, it is not done under the ETA. The authority to pay the rebate is found in the acts and regulations of the participating provinces. For example, subsection 8(4) of the Sales Tax Act Regulations for Nova Scotia states:
(4) In the event that a purchaser to whom an amount may be paid or credited under subsection (2) in respect of a supply of a qualifying property is not paid or credited with that amount by the supplier, the purchaser may, not more than 4 years after the day tax under subsection 165(2) of the Excise Tax Act (Canada) became payable in respect of the supply, apply to the federal minister, in the form and manner required by the federal minister, for payment of that amount and the federal minister may, on behalf of the government of the Province, pay or credit the amount to the purchaser.
The mechanism for administering the rebates in Ontario and British Columbia will operate in the same manner as for the existing POS rebate for printed books. As stated in the Info Sheets describing the various POS rebates (e.g., GI-063), "The CRA and the Canada Border Services Agency (CBSA) would administer these rebates on behalf of the governments of Ontario and British Columbia." For example, in Ontario, subsection 51(4) of the Retail Sales Tax Act states:
(4) An eligible purchaser to whom an amount may be paid or credited under subsection (2) may apply to the Federal Minister for payment of the amount if the amount is not paid or credited by the supplier.
Subsection 51(6) states that:
(6) The Federal Minister shall, on behalf of the Crown in right of Ontario, pay an amount to which an eligible purchaser is entitled under subsection (4) or (5) if the eligible purchaser makes an application for the amount not more than four years after the day the tax under Part IX of the Federal Act became payable.
Therefore, subsection 296(2.1) does not apply in respect of POS rebates, since applications for these rebates are not made under the ETA as required in paragraph 296(2.1)(a), but rather under provincial regulations and administered by CRA on behalf of the participating provinces.
The foregoing comments represent our general views with respect to the subject matter of your request. These comments are not rulings and, in accordance with the guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, do not bind the Canada Revenue Agency with respect to a particular situation. Future changes to the ETA, regulations, or our interpretative policy could affect this interpretation.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-4397. 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,
Gunar Ozols
A/Manager
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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