Date: 20130530
Docket: A-48-12
Citation: 2013 FCA 140
CORAM: GAUTHIER
J.A.
MAINVILLE
J.A.
WEBB J.A.
BETWEEN:
BOARDWALK EQUITIES INC.
Appellant
and
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT
WEBB J.A.
[1]
This
appeal is from the decision of Jorré J. (the Judge) of the Tax Court of Canada
(2012 TCC 7). This appeal was heard at the same time as the appeal of the Calgary Board of Education v. Her Majesty the Queen (A-49-12).
[2]
In
2001, energy costs had risen significantly. The Province of Alberta (Province) introduced a program to provide assistance to consumers with their high energy
costs. The suppliers of electricity and natural gas received certain amounts
from the Province in relation to bills that had been rendered to consumers. The
appellant had been charged (and had paid) GST based on the total amount that
the suppliers had billed for the cost of natural gas and electricity that it
had consumed, before taking into account the amount that the suppliers would be
receiving from the Province. The appellant claims that it should not have paid
GST on the amounts that the suppliers had received from the Province. The
appellant claims, therefore, that this GST had been paid in error and is
seeking a rebate of such GST under subsection 261(1) of the Excise Tax Act, R.S.C. 1985, c. E-15
(the Act). The Judge dismissed the appellant’s claim that it
had paid GST in error. For the reasons that follow, I would dismiss this
appeal.
[3]
The
program which was implemented by the Province provided assistance in relation
to electricity, natural gas, propane or other heating fuel costs. The amount
was fixed for residential customers. For non-residential customers, the amount
of the assistance was based on the amount of energy consumed. This appeal only
relates to the amount of assistance that was based on the electricity and
natural gas consumed by the appellant as a non-residential customer.
[4]
For
the assistance related to natural gas costs, the ministerial orders (MO No.
6/01 and 17/01) provided that “[t]he natural gas rebate will be paid to Alberta
users of natural gas”. While these ministerial orders used the term “rebate”,
the Transportation and Utilities Grants Regulation, Alta. Reg. 355/1986,
under which the ministerial orders were issued, authorized the Minister to make
grants. The invoices issued by the suppliers also described the amounts as
“rebates”. Whether the amounts should be properly characterized as grants or
rebates does not, in my opinion, affect the result in this case. The amounts that
the suppliers received from the Province were simply assistance payments made by
the Province, that when received by the suppliers, reduced the liability of the
customers.
[5]
In
the agreed statement of facts submitted at the Tax Court hearing, the parties
agreed that for administrative convenience, the suppliers of natural gas received
the amounts directly from the Province after the suppliers notified the
government of the amount of natural gas consumed by its customers in Alberta. The invoices that were issued by the suppliers reflected the amount that would be
paid by the Province under this assistance program, which was generally paid either
the day before or on the day that the payment by the customer was due.
[6]
The
amounts for electricity were paid from the balancing pool. The rules related to
the distribution of balancing pool credits were made by the Power Pool Council
(subsection 8(1) of the Balancing Pool Allocation Regulation, Alta. Reg.
330/2000). The definition of “monthly eligible consumption allocation” in the Balancing
Pool Rules, revised October 1, 2001, provided that the amounts would be
paid to the non-residential customer. The supplier of electricity issued a
credit (which was identified as a rebate) for the amount that would be paid from
the balancing pool. The invoice issued by the supplier to the customer
reflected this credit. The Province paid the amounts for electricity from the
balancing pool to the suppliers based on the credits identified by the
suppliers on their invoices. As acknowledged by the parties, the amounts were
paid directly to the suppliers because this was administratively easier and
more efficient than making payments directly to each consumer of electricity in
Alberta.
[7]
Liability
for GST is imposed by subsection 165(1) of the Act. This subsection, in
2001, provided that:
|
165. (1) Subject to this Part,
every recipient of a taxable supply made in Canada shall pay to Her Majesty
in right of Canada tax in respect of the supply calculated at the rate of 7%
on the value of the consideration for the supply.
|
165.
(1) Sous réserve des autres dispositions de la présente partie, l’acquéreur
d’une fourniture taxable effectuée au Canada est tenu de payer à Sa Majesté
du chef du Canada une taxe calculée au taux de 7% sur la valeur de la
contrepartie de la fourniture.
|
[8]
The
recipient of the supply is the person who is liable to pay GST based on the
value of the consideration for the supply. “Consideration” and “recipient” are
defined in subsection 123(1) of the Act as follows:
|
“consideration” includes any
amount that is payable for a supply by operation of law;
…
“recipient” of a supply of
property or a service means
(a) where consideration for the
supply is payable under an agreement for the supply, the person who is liable
under the agreement to pay that consideration,
(b) where paragraph (a) does
not apply and consideration is payable for the supply, the person who is
liable to pay that consideration, and …
|
«
contrepartie » Est assimilé à une contrepartie tout montant qui, par effet de
la loi, est payable pour une fourniture.
[…]
« acquéreur »
a) Personne qui est tenue, aux
termes
d’une convention portant sur
une fourniture, de payer la contrepartie de la fourniture;
b) personne qui est tenue,
autrement qu’aux termes d’une convention portant sur une fourniture, de payer
la contrepartie de la fourniture;…
|
[9]
The
amount of GST that is payable by any particular person for any property or
service acquired under an agreement, is the applicable rate (7% in 2001)
multiplied by the amount of the consideration payable by that person under that
agreement. GST is based on the amount payable by that person, not on the amount
actually paid by that person.
[10]
As
noted above, the appellant was charged GST based on the total amount payable
for the consumption of natural gas and electricity, before any credit was
applied for the amount that the suppliers would eventually receive from the Province.
The issue in this appeal is whether the amount payable by the appellant under
its agreements for the supply of natural gas and electricity was, as of the
time that the liability for the GST arose, the full amount invoiced for such
supply (before taking into account the credit shown on the invoice for the
amount that the supplier would subsequently receive from the Province) or only
the net amount after taking into account such credit.
[11]
Subsection
168(1) of the Act provides that GST is payable by a recipient on the
earlier of two days – the day the consideration for the supply is paid and the
day that the consideration for the supply becomes due. Subsection 152(1) of the
Act deems the consideration for a taxable supply to become due on the
earliest of the days as set out in paragraphs (a) to (c) (one of which is the
day that the invoice for the supply is issued). As a result of these
provisions, in this case, GST was payable by the appellant on the date that the
invoices for the supplies of natural gas and electricity were issued. While the
credit for the amount that would be paid by the Province was shown on the
invoice, the amount was not paid by the Province until sometime after the date
of the invoice.
[12]
The
authorizing orders or rules provided that the Province would be paying the
amount to the consumers (including the appellant). These amounts were indirectly
paid to the appellant by the Province paying to the suppliers of natural gas
and electricity a portion of the amounts payable by the appellant for such
supplies. The liability of the appellant for the amount payable for natural gas
and electricity was not reduced, as of the date of the invoice, by the amount
of the credit shown on the invoice. There was nothing to suggest that if, for
any reason, the Province did not pay the amount indicated as the credit, that
the suppliers would be unable to recover this amount from the consumers
(including the appellant). It seems to me that the Province had not partially
assumed the liability of the appellant to pay its suppliers for natural gas and
electricity. The Province had simply implemented an assistance program to
provide funds to customers of natural gas and electricity in Alberta. The funds
were provided to such customers by the Province paying such amounts to their
suppliers of natural gas and electricity.
[13]
When
the suppliers received the funds from the Province, the liability of the
appellant was then reduced since such amount was accepted by the suppliers as
partial payment of the amount that the appellant otherwise had to pay under its
agreements with the suppliers. However, this was after the date of the invoices
and after the liability arose to pay the GST. Therefore, the liability of the appellant
for GST under the Act was correctly calculated as 7% of the amount
payable for the supply of natural gas and electricity before the credit for the
amount that the suppliers would subsequently receive from the Province is taken
into account.
[14]
I
would, therefore, dismiss this appeal with one set of costs for both this
appeal and for the appeal of the Calgary Board of Education, with each
appellant to pay one-half of such costs.
"Wyman
W. Webb"
“I
agree,
Johanne
Gauthier J.A.”
“I
agree,
Robert M. Mainville
J.A.”
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