HQR0000255 - 11630-1 - 11685-1 - 116953
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Subject:
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Application of section 318 of the Excise Tax Act
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Dear XXXXX
Thank you for your letter of January 4, 1996, concerning the application of section 318 of the ETA to offset a person's FST New Housing Rebate, pursuant to Part VIII of the ETA, against that same person's liability under Part IX of the ETA. We apologize for the delay in responding.
It should be noted that the deadline to file an application for the FST New Housing Rebate was prior to January 1995.
Part IX of the ETA provides two methods which allow persons to offset credits and liabilities. The most commonly used method is the simultaneous filing of a person's regular GST return and a rebate form (subsection 228(6) of the ETA). This method is limited to tax amounts remittable or payable under Part IX of the ETA or rebates payable under Division VI only and does not include rebates under Part VIII of the ETA. Bill C-70 was given Royal Assent on March 20, 1997 and amendments to subsection 228(6) of the ETA, deemed to come into force on April 23, 1996, permit the person to also offset tax payable under Division IV in a return by any net tax refund or rebate payable under Part IX, other than Division III.
The second method is through a joint filer application pursuant to subsection 228(7) of the ETA. This method permits a group of closely related corporations to file their returns and rebate applications as a group and provides the opportunity to reduce or offset the tax remittable or payable by one member by the amount of certain refunds or rebates due, under the ETA, to another member of the group. To file their GST returns and rebate applications jointly, the members of the group making the application have to adopt the same reporting periods. Also, one member must be designated as the coordinator, responsible for the joint filing all GST returns and rebate applications for the group as well as any notice or direction regarding the offset of any refund or rebates to which one group member is entitled against tax payable or remittable by another group member. Further information on this process may be found in the departmental form "Application to Offset Taxes by Refunds or Rebates" (GST 303A and GST 303B) or the regulations.
Amendments to subsection 228(7) of the ETA, deemed to come into force on April 23, 1996, limit the refunds and rebates eligible for offset under this subsection to be those refunds and rebates which are payable under Part IX of the ETA. As such, as of April 23, 1996 an offset under subsection 228(7) of the ETA cannot be made against an FST New Housing Rebate payable under Part VIII of the ETA.
The recent amendments to subsections 228(6) and 228(7) also reflect the inclusion of amounts required to be remitted under subsection 228(2.3) or amounts required to be paid under subsection 228(2.1) or Division IV.1, all of which apply to reporting periods ending after March 1997.
Generally speaking, section 318 of the ETA is an enforcement provision used by the government to recover delinquent payments of tax and other sums payable or remittable by a person under Part IX. The Department deducts these amounts from (or sets them off against) money owed by any government department to the person - which would include an FST New Housing Rebate payable under Part VIII of the ETA. The person may request the Minister to exercise the discretion provided in section 318 of the ETA, for the purpose of offsetting funds due by the Crown to the person. However, before the Minister can initiate offset action, section 315 of the ETA requires the amount of tax payable or remittable under Part IX of the ETA be assessed. Each case is considered on an individual basis.
The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed or future amendments to the legislation may result in changes to our interpretation. These comments are not rulings and, in accordance with the guidelines set out in GST Memoranda Series (1.4), do not bind the Department with respect to a particular situation.
Should you have any further questions regarding this matter, please call me at (613) 954-2560.
Yours truly,
KerriAnne Boyd
Rulings & Interpretations Officer
General Operations Unit
General Operations and Border Issues Division
GST Rulings & Interpretations Directorate
Policy and Legislation Branch
Authority: Subsections 121, 228(6), 228(7), 239(1), 315 and 318 of the ETA
GST Memoranda 500-5 Housing & Other Property Rebates
GST Memoranda 500-5-2: FST New Housing Rebates
GST Memoranda 900-1: New Housing P-194
Offset of Taxes by Refund or Rebate (GST) Regulations
GST Rulings and Interpretations
25 McArthur Avenue
Vanier, Ont.
K1A 0L5
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