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.
DATE June 22, 2017
TO
[Addressee]
FROM
Nadine Kennedy
Industry Sector Specialist
General Operations Unit
Excise and GST/HST Rulings Directorate
Case Number: 180966
Subject: GST/HST INTERPRETATION
Old “matter” versus new “matter” with respect to rebates
[…]
In your [correspondence] of [mm/dd/yyyy], you asked numerous questions. We are providing responses to the following selected questions which should also provide direction on your other questions. We apologize for the delay in responding to your enquiries. All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
[…][INTERPRETATION REQUESTED]
Does “matter” refer to a claim period or the substance of what is being claimed?
[INTERPRETATION GIVEN]
“Matter” is not defined in the ETA. Under subsection 262(2), only one application may be made under Division VI for a rebate with respect to any matter. The French version states: « L’objet d’un remboursement ne peut être visé par plus d'une demande selon la présente section. » This translates to: “The object of a reimbursement (or rebate) cannot be made on more than one application.”
In interpreting subsection 262(2), we consider what would give rise to the particular rebate being applied for; in other words, what is the object or matter of the rebate. To know this, we have to refer to the provision that covers the particular rebate. In general, any eligible rebate under Division VI will be for all or part of the tax paid or payable in respect of a particular transaction or deemed supply (hereafter we simply refer to transaction).
There is not a lot of jurisprudence on subsection 262(2). The following court cases were reviewed.
In Fanshawe College of Applied Arts and Technology v. The Queen, (2006 TCC 652), Justice Woods held that the word “matter” means “a transaction giving rise to the incidence of GST”. At paragraph 58, she stated:
“… The word "matter" in section 262 in my view relates to a transaction -- in this case the purchase of a book. If, for example, the College is entitled to a $10 rebate in relation to the purchase of a book but it claims only $8 in error, section 262 precludes the College from including the remaining $2 in another rebate application. The manner in which the College could correct its claim for the GST in relation to the book is to object to the assessment which determined the rebate. This must be done within the time limits for filing objections.”
In The Ottawa Hospital Corporation v The Queen, (2010 TCC 53), Justice Campbell stated that contrary to Justice Miller’s comments in Toronto District School Board v The Queen (see below), she would follow Justice Woods’ reasoning and disallow the 17% rebate applications. Justice Campbell further stated that:
“The "any matter" restriction in subsection 262(2) means that once a particular transaction has been the subject of a rebate claim of any kind, it cannot be the subject of a second rebate application of any kind. Subsection 262(2) interpreted in a contextual and purposive manner requires that it be read as a residual clause within Division VI of the ETA.”
In addition, Justice Campbell considered the French version of subsection 262(2) as being clearer in wording than the English version and that it supported Justice Woods’ interpretation of this subsection.
In Mesfin G. Hagos v Her Majesty the Queen, (2014 TCC 65), the appellant had applied for two new housing rebates with respect to the same property; one a new housing rebate for a home purchased from a builder and the other a New Residential Rental Property (NRRP) rebate. Justice Rip quoted subsection 262(2), in English and French, and dismissed the appeal stating that the appellant had already received a rebate when he applied for the NRRP rebate.
In George Horvath v Her Majesty the Queen, (2009 TCC 634), the appellant had claimed a new housing rebate in respect of amounts paid to Aspen Homes and a second rebate in respect of amounts paid personally by him to third party suppliers. Justice D’Arcy dismissed the appeal stating that subsection 262(2) prevented the appellant from claiming a second rebate.
A differing opinion can be found in the Toronto District School Board v Her Majesty the Queen, (2009 TCC 39), wherein Justice Miller stated:
“Finally, with respect to the application of section 262 of the Excise Tax Act, I would have had no difficulty, notwithstanding the interpretation given to that section in completely different circumstances in the case of Fanshawe College of Applied Arts & Technology v. R., finding that an application for a rebate of 32% based on an error is certainly a different matter than an application for a rebate of 68% pursuant to subsection 259(3) of the Excise Tax Act.”
The appeal in the above case was dismissed by the Tax Court of Canada (TCC) on the basis that the school board did not pay GST by mistake. As such, the above statement by Justice Miller did not have subsequent application. The Federal Court of Appeal (FCA) also dismissed the appeal of the TCC decision by the appellant. As noted above, Justices Campbell and Woods did not take the same interpretation. We would also counter Justice Miller’s comment by stating that, if a particular amount was charged as GST in error, then it is that particular amount - and not a percentage of that amount - that the person may be entitled to as a rebate under section 261. […].
[…][INTERPRETATION REQUESTED]
Can a particular transaction give rise to more than one rebate claim/application?
[INTERPRETATION GIVEN]
There are instances where a particular transaction can give rise to more than one rebate. As such, there may be two objects (or matters) of reimbursement in respect of a single transaction but there may only be one rebate application for each object or matter. For example, a person may be eligible to claim a new housing rebate for the federal part of the HST payable in respect of new housing as well as a new housing rebate for the provincial part of the HST payable where certain conditions are met. In such a case, there will be a Comprehensive Integrated Tax Coordination Agreement (CITCA) between the federal and provincial governments where we have agreed to administer the province’s housing rebate program under our legislation.
A particular transaction may also give rise to more than one rebate of the provincial part of the HST. For example, in a particular claim period, a non-registrant charity that is resident only in Ontario purchased goods in Nova Scotia for consideration of $10,000 plus HST of $1,500 (15% HST). The charity then removed the goods from Nova Scotia to Ontario within 30 days where they will be used exclusively in the charity’s operations in Ontario (where the HST rate is 13%). The charity would be entitled to the following rebates where all the conditions for claiming them have been met:
• under section 261.1, a rebate of $200 [$1,500 x 2/15] in respect of the difference in the rates for the provincial part of the HST between Nova Scotia and Ontario; and
• under section 259, a PSB rebate for non-creditable tax charged equal to the total of:
- $250 [50% of the federal part of the HST of $500]; and
- $656 [82% of the provincial part of the HST of $800 ($1,000 - $200 section 261.1 rebate)].
However, there cannot be two applications for the same object or matter of reimbursement/rebate. Finance’s explanatory notes cites the example of a husband and wife who are precluded under subsection 262(2) from filing separate claims for a new housing rebate in respect of the same residence (i.e., no “doubling-up”).
[…][INTERPRETATION REQUESTED]
Which rebate types/ programs does section 262 apply to?
[INTERPRETATION GIVEN]
As noted above, subsection 262(2) applies to rebates under Division VI; thus, it does not apply to rebates under section 215.1 of Division III. However, subsection 262(2) does not apply in isolation. For instance, subsection 262(1) provides that an application for a rebate under Division VI (other than section 253 - employer/partner rebate) shall be made in prescribed form containing prescribed information and shall be filed with the Minister in prescribed manner. Thus, the “one matter” is only one criterion to claiming a rebate in respect of a particular transaction.
[…][INTERPRETATION REQUESTED]
When a PSB rebate amount is claimed in an incorrect claim period […][CRA may] reassess and reduce the claim period it was incorrectly claimed in and process a reassessment to add the amount into the correct period. Would this incorrectly claimed amount be considered the same matter even though it wasn’t claimed in the correct claim period? Or would it be considered a new matter because it wasn’t claimed in the correct claim period?
[INTERPRETATION GIVEN]
Under subsection 259(6), a person cannot make more than one application for rebates under section 259 for any claim period of the person, except where subsection 259(10) or (11) applies (branch or division filing). As such, where neither of these two subsections apply (also assume this in the responses that follow), if the person is eligible to claim a PSB rebate under section 259, then the person is generally restricted to claiming an eligible PSB rebate for non-creditable tax charged in respect of a particular claim period in one application for that claim period. Also, unlike claiming input tax credits (ITCs) under subsection 225(4), section 259 does not generally permit a person who missed claiming an eligible PSB rebate for non-creditable tax charged in the claim period in which it arose, to claim it in a subsequent claim period.
Therefore, if a person includes in its PSB rebate application for a particular claim period an amount for non-creditable tax charged that arose in a prior claim period, then it is not necessary to consider whether that amount claimed is a new or old matter - that amount can be disallowed when assessing the rebate claim for the claim period because generally it is not eligible to be claimed in that period. The legislation, as it currently reads, does not allow a person to file a second PSB rebate application under section 259 for the same claim period to claim missed amounts or to claim differences due to misstated amounts in the initial application. However, [CRA] could exercise its discretion and reassess the prior rebate claim to add the amount to the PSB rebate claim for the correct claim period.
Alternatively, an applicant can file an objection to the assessment of its initial rebate application requesting that a missed amount be allowed and/or an adjustment be made for a misstated amount. If the time limit for objecting has passed, the person can write in and ask for a reassessment of the rebate claim for the particular claim period.
[…][INTERPRETATION REQUESTED]
For the general rebate program, paragraphs 261.4(1)(b) and (c) limit the number of rebate applications to one per quarter or month for rebates under any of sections 261.1 to 261.31 depending on whether the applicant is an individual or other type of person. […]. […][Could CRA] process a second rebate for a new matter if the request was not received in the same month or quarter? […]
[INTERPRETATION GIVEN]
As you noted above, paragraph 261.4(1)(b) limits a person who is an individual to making one application in a calendar quarter for a rebate under any of sections 261.1 to 261.31 except where the application is a prescribed application. Paragraph 261.4(1)(c) limits a person who is not an individual to making one application in a calendar month for a rebate under any of those sections. While paragraph 261.4(1)(a) sets out a time limitation of one year to claim the rebate, there is no reference in section 261.4 or in any of sections 261.1 to 261.31 to a “claim period” for a rebate. […]
As an example, in July 2016, an individual applicant files an application for a section 261.3 rebate under code 13 on form GST189 and, under Part A of the form, indicates the period covering the rebate claim is from January 1 to June 30, 2016. In October 2016, the same applicant submits a second GST189 indicating the same period as specified on the previous GST189 and claims another section 261.3 rebate under code 13 but in respect of a transaction in that period that was missed when the applicant filed the previous GST189. Can [CRA] process that second GST189 as it was not filed in the same calendar quarter as the first one? Yes, [CRA] can accept and process that second GST189 as it was filed in a subsequent calendar quarter and the rebate claimed is in respect of a new matter.
[…][INTERPRETATION REQUESTED]
Does section 262 allow […] a second rebate in a claim period [to be processed] if it pertains to a new matter?
[INTERPRETATION GIVEN]
We are not sure in what context you are asking this question. Other provisions in Division VI define “claim period” as having the same meaning as under subsection 259(1). For example, the rebate for poppies and wreaths under subsection 259.2(1) defines “claim period” as having the same meaning under subsection 259(1). However, that rebate and the PSB rebate are set out in two different provisions, are claimed on two different application forms (form GST189 for the poppies and wreaths rebate and form GST66 or GST284 for the PSB rebate), and the objects of the rebates are different. So, you could have a person filing two rebate applications for one claim period of the person but for two different matters. Both rebate applications can be processed for that claim period.
However, if you are asking if a second PSB rebate application for non-creditable tax charged may be processed for a particular claim period because the PSB missed claiming an amount of non-creditable tax for that claim period in the first rebate application then, as noted […], [CRA] should not be processing the second PSB rebate application since subsection 259(6) prohibits a PSB from making more than one rebate application under section 259 for any claim period. [CRA] has the option to reassess the first rebate application to make an adjustment to the claim to allow a missed amount but there is no requirement to do so.
As another example, a selected PSB filed a rebate application claiming a PSB rebate of 50% of the non-creditable tax charged in respect of a particular transaction for a particular claim period. It then considers that it could have claimed a rebate of 83% of that non-creditable tax charged and files a second rebate application to claim the 33% difference for that claim period. Under subsection 262(2), the selected PSB is prohibited from filing a second PSB rebate claim for the difference of 33% in respect of that same matter and is also prohibited from filing a second rebate application for the same claim period under subsection 259(6). As noted above, the person can object to the assessment of the initial rebate or ask for a reassessment of that rebate to recover the 33% (if eligible).
It should be noted that a particular transaction can give rise to two different rebates claimable by a PSB that straddles claim periods. For example, a charity may claim an eligible PSB rebate under section 259 for 50% of the non-creditable tax charged on the acquisition of personal property in one claim period. In the next claim period, the charity exports that property out of the country. The charity may now be eligible for a rebate of the tax paid on that property under section 260 in this subsequent claim period. In this example, the tax paid on the same property has been the object of two different rebates. Thus, there are two different matters involved. However, the ETA is structured in such a way as to prevent a person from recovering more tax than what was paid or payable. In this case, section 263 will restrict the payment of a rebate to the extent that it can reasonably be regarded that the amount has previously been rebated, refunded or remitted to that person under the ETA or any other Act of Parliament. As a result, the eligible rebate amount when the property is exported will be restricted to 50% of the tax paid on the property because the charity already received a PSB rebate for the other 50%.
In the above example, it is assumed all the conditions for claiming both rebates were met. This will not be the case where a PSB claims both a rebate under section 259 and a rebate under section 261. A rebate claim under section 259 is for non-creditable tax charged which, as defined, includes the total of all amounts each of which is an amount of tax in respect of a supply that became payable, or that was paid without having become payable, by the person minus amounts eligible to be claimed by the person as ITCs or eligible to be obtained as a rebate, refund or remission under any other section of the ETA or Act of Parliament or that are included in amounts refunded, credited or adjusted where a credit note or debit note has been issued under subsection 232(3). Thus, non-creditable tax charged does not include an amount paid as or on account of, or taken in account as, tax in error where the person is entitled to obtain a rebate under section 261 for that amount. For example, if a charity paid an amount as tax in error, the charity cannot claim both a PSB rebate of 50% of the amount under section 259 and a rebate of 50% of that same amount under section 261. In such a case, the charity would only be eligible to claim the rebate under section 261 for 100% of the amount paid as tax in error (where all conditions for claiming the rebate have been met).
The eligibility for any rebate will always be determined on a case-by-case basis.
[…][INTERPRETATION REQUESTED]
Is there a section of the ETA that permits [CRA] to allow missed rebate amounts […]?
[INTERPRETATION GIVEN]
Where the conditions are met under subsection 296(2.1), an allowable unclaimed rebate amount must be applied against an assessment of net tax of a person for a reporting period or an amount that became payable by the person under Part IX of the ETA. If this is missed by the auditor when assessing the person, then [CRA] can apply the eligible unclaimed rebate amount where an objection has been filed by the person.
[…] [Rebates are assessed or reassessed] under section 297 and not section 296. However, it is our understanding that if an auditor is assessing under section 296 and the person has an allowable unclaimed rebate under subsection 296(2.1), then administratively the auditor is supposed to submit internal paperwork […] for processing […]. It is up to the auditor to ensure that the rebate amount has met all the conditions.
Under subsection 297(2), the Minister may reassess or make an additional assessment of the amount of a rebate, notwithstanding any previous assessment of the amount of the rebate. Thus, as previously noted, [CRA] has the discretion to reassess a previously filed rebate application to make an adjustment to the claim to allow a missed rebate amount providing the time limit for doing so has not expired and the person has met all the eligibility requirements for claiming the rebate.
[…][INTERPRETATION REQUESTED]
Does subsection 296(2.1) allow for new matter if there is a rebate application already filed in that claim period? Can new, previously unclaimed amounts be considered and allowed under section 296 when the Minister is assessing the net tax of a person even if there was already a rebate application filed for that claim period?
[INTERPRETATION GIVEN]
Where the net tax of a person for a reporting period or an amount of tax payable by the person is being assessed, then under subsection 296(2.1) any amount of an allowable unclaimed rebate must be applied where the conditions of that provision are met. To be an allowable amount, it must be an amount as determined by the Minister that would have been payable to the person as a rebate if it had been claimed in an application filed by the applicable date set out in subsection 296(2.1). In the situation where a PSB has filed a PSB rebate application for a particular claim period but missed claiming an eligible rebate amount for that claim period in that application, then subsection 296(2.1) may apply where all the other conditions are met under that subsection. The auditor would have to determine whether the conditions are met for claiming the rebate including meeting the time limitation(s) under subsection 296(2.1). Note also that subsections 296(3.1) and 296(4.1) set out conditions for applying and paying out any allowable rebate amount.
[…][INTERPRETATION REQUESTED]
Is there a definition for “unclaimed” under section 296?
[INTERPRETATION GIVEN]
We note that the legislative text of section 296 does not use the term “unclaimed”. There is no definition in the ETA for that term. Basically, it means that the amount has not been claimed by the person in a rebate application.
[…]
When a person requests a reassessment of a PSB rebate application for a particular claim period to allow for missed or misstated amounts for that period, then the question arises of when does interest on the resulting rebate amount take effect. While missed amounts could be considered as new matter and misstated amounts as old matter, the fact remains that the condition under subsection 259(6) still applies for filing one PSB rebate application per claim period. This is supported by subsection 262(1), which sets out that an application for a rebate under Division VI (other than section 253) has to be made in prescribed form and manner and contain prescribed information.
So, in either case, if [CRA] reassesses a PSB rebate application for a claim period to allow for missed or misstated amounts and, as a result of that reassessment, determines a rebate is payable, then under subsection 297(3), the Minister must pay the rebate to the person. Under subsection 297(4), interest is payable on the rebate beginning on the 30th day after the day the application “in which” the rebate is claimed is filed with the Minister. As legislatively we cannot accept a second application for a PSB rebate for the same claim period, subsection 297(4) will apply since there is no other codified date for interest to begin in such a situation.
We can contrast this with the wording under subsection 296(6.1). That provision, which addresses the situation where a person has paid an amount of interest or penalty and the Minister subsequently cancels that amount, the Minister must refund the amount together with interest on the amount for the period beginning on the day that is 30 days after the day on which the Minister received a request in a satisfactory manner to apply section 281.1 and ending on the day on which the refund is paid.
[In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the interpretation given in this letter, including any additional information, is not a ruling and does not bind the CRA with respect to a particular situation. Future changes to the ETA, regulations, or the CRA’s interpretative policy could affect the interpretation or the additional information provided herein.]
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-670-9879. […].