New Harmonized Value-Added Tax System Regulations, No. 2


Section 55

Section 57

Subsection 57(4)

Paragraph 57(4)(c)_

Subpargraph 57(4)(c)(iv)

See Also

Metrogate Inc. v. The Queen, 2018 TCC 91

the degree of completion of a condo project should reflect land costs

The question for determination in the context of a Rule 58 motion was whether the appellant (“Metrogate”) could take the cost to it of land into account in determining whether a condominium complex (which was a specified residential complex as defined in s. 55(1) of the New Harmonized Value-added Tax System Regulations, No. 2 (the “Regulations”)) qualified under s. 57(4)(c)(iv) of the Regulation as a condominium complex for which “the construction … of the condominium complex … is, immediately after June 2010, 25% or more …completed”. The Crown appeared to acknowledge that this test was to be applied based on the proportion of the total project costs that had been incurred to that date, and that the issue was whether the cost of the land could be taken into account (along with the building costs) for this purpose.

In finding that the land costs should be so included, Favreau J first discussed 1096288 Ontario, and then stated (at para. 22):

Based on the foregoing, the applicant’s position appears to be the correct one on the textual analysis. The Regulations specifically use the term “condominium complex” and “residential complex” which are defined to include the land. The applicant’s position is the only one which is supported by case law. The land is a necessary element in any construction.

After noting that the context was ambiguous, Favreau J turned to purpose and stated (at paras 31, 34, 36, 40, 41 and 56):

…The … rebate has no correlation with actual RST incurred, which the Minister acknowledges by allowing labour costs to be factored in to the calculation.

The purpose of the Regulations is to rebate estimated embedded RST in the complex based on the percentage completion of the construction.

The only indication of what is meant by embedded comes in the Regulatory Impact Analysis Statement … which specifically refers to provincial sales tax charged on building materials as an example of a building with embedded RST…

This …implies that a home has RST embedded in it because of provincial sales tax charged directly on supplies used in the construction of the home. This passage does not consider indirect RST embedded in a supply (though it doesn’t rule it out either). As a result, I conclude that the purpose of the rebate is to reimburse for RST directly incurred but not indirect RST.

… [Thus] the contextual and purposive analysis is more ambiguous but I am convinced that the wording of the legislative provisions is not ambiguous enough to have any of the respondent’s arguments succeed.

Words and Phrases

Subsection 2(2)

Administrative Policy

23 June 2015 Interpretation 144489

federally-incorporated charity resident where office located

A federally-incorporated charity which managed its activities out of a single office in “Province 1” was resident for HST purposes in Province 1.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 132.1 - 132.1(3) federally-incorporated charity resident where office located 228

12 June 2014 Ruling 133588r [30 continuous-days test for use of substantial equipment]

30 continuous-days test for use of substantial equipment

The Charity, which was incorporated in Participating Province X, was found not to have a permanent establishment in Participating Province Y, i.e., what, by virtue of s. 2(2) of the New Harmonized Value-added Tax System Regulations, No. 2, would be a permanent establishment under Part IV of the ITA Regs if Charity's activities were a business.

In commenting on Reg. 400(2), CRA stated:

…A fixed place of activities includes a determined or ascertained space in which there is some presence or routine over which the charity has some degree of control and in which some undertaking or operations of the charity occur. … It does not mean that the place of activities must exist for a long time or be located in a durable building; for instance, a temporary field office on a construction site could be a fixed place of activities.

…Generally, where a charity uses (rented or owned) substantial machinery or equipment in a province either for 30 continuous days or for 90 cumulative days in a 12-month period, the charity would meet [the] requirement [in Reg. 400(2)(e)].

Locations of other summaries Wordcount
Tax Topics - Income Tax Regulations - Regulation 400 - Subsection 400(2) - Paragraph 400(2)(e) 30 continuous-days test for use of substantial equipment 187

Section 13

Administrative Policy

GST/HST Memorandum 13.5 Non-creditable Tax Charged January 2017

Public service body acquiring software programming services for use in two provinces

Example 7 references a PSB that is charged at the Ontario rate of 13% on software programming services acquired by it for “use” 80% at its Ontario head office and 20% at one of its offices in PEI – and goes on to note that the PSB would be required to self-assess itself for the 2% higher PEI HST rate on the 20% portion for use in PEI, before then calculating its s. 259 rebate.

NOTICE 266 Draft GST/HST Technical Information Bulletin, Harmonized Sales Tax "Self-assessment of the provincial part of the HST in respect of property and services brought into a participating province" 9 September 2011

Sofware acquired by NPO for use in two provinces

Example 47
For a single fee of $10,000, a supplier in Ontario supplies software by way of licence to a non-profit organization that is resident in Ontario for use exclusively in its exempt activities by its employees located at its head office in Ontario and at one of its offices in Nova Scotia. The software is supplied electronically over the Internet and there are no restrictions with respect to where the software may be used. The business address of the non-profit organization in Canada that is obtained by the supplier in the ordinary course of its business that is most closely connected with the supply is in Ontario. The supply of the software is therefore made in Ontario and the supplier collects HST at a rate of 13% in respect of the supply. The extent to which the software is acquired by the non-profit organization for use in Ontario is 60% and the extent to which the software is acquired by the non-profit organization for use in Nova Scotia is 40%.
As a resident of a participating province that is a recipient of a taxable supply of intangible personal property made in a province, the non-profit organization is required to self-assess tax under Division IV.1 in respect of the property based on the extent to which the property is acquired for use in any participating province (Nova Scotia) for which the provincial rate is higher than the provincial rate of the province in which the supply was made (Ontario). The amount of tax payable by the non-profit or ganization is equal to $80 (2% (10% Nova Scotia provincial rate – 8% Ontario provincial rate) × $10,000 (the value of the consideration for the supply) × 40% (the extent to which the non-profit organization acquired the property for use in Nova Scotia)).

Subsection 27(6)

Administrative Policy

28 March 2013 Interpretation Case No. 141341

In finding that in the situation where the operator under a joint venture is not a large business and one of the three joint venture participants is a large business, the purchase of electricity by the operator for $100,000 plus HST of $13,000 would result in the recapture of the provincial component of HST based on the proportionate (33 1/3%) interest of the large business participant, CRA stated:

…as one of the participants is a large business and the joint venture election is in effect, the operator would be deemed to be a large business in respect of purchases made on behalf of the large business participant pursuant to subsection 27(6) of the Regulations. Therefore, the amount of ITC to be recaptured would be limited to the large business participant's interest, or $2,666.64 ($8,000 [HST Provincial Component] X 33 1/3 %).

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 236.01 - Subsection 236.01(2) 124

Paragraph 28(1)(d)

Administrative Policy

6 June 2014 Ruling 143085 [loaner vehicles are provided as part of a single supply of repair services – no RITC]

loaner vehicles are provided as part of a single supply of repair services – no RITC

Corp A, which is a large business per s. 236.01, and s. 27 of the New Harmonized Value-Added Tax System Regulations, No.2 (the Regulations), sells and leases vehicles through its Dealership), reimburses the Dealerships for basic warranty repair services, and repairs performed under "Service Contracts," and reimburses Dealerships for providing loaner cars (from the Dealership's lot or, failing that, from a car rental agency) for their basic warranty customers whose vehicles cannot be driven and must be kept at the Dealership overnight.

After ruling that Corp A is not required to recapture the input tax credits with respect to the provincial part of the HST paid to the Dealerships for loaner vehicle charges included in the weekly electronic claim statements for repair services performed on vehicles, CRA stated:

[Corp A] is acquiring a single supply of a repair service that is subject to the GST/HST. The charge in respect of a loaner vehicle under either the basic warranty coverage or Service Contract is part of the consideration for the supply of the repair service. …

Subsection 30(1)

Administrative Policy

National Commodity Tax, Customs and Trade Section – 2014 GST/HST Questions for Revenue Canada, Q. 22

penalty for delayed reporting of ITC and RITC
available with membership password at

A large registered business with a monthly reporting period acquires a specified property or service in Ontario in January of Year 1, is charged 13% HST, but does not claim the input tax credit until its return for January of Year 2, in which it also reports the corresponding recaptured input tax credit. Before noting that CRA would assess a penalty for failure to report the RITC in the February of Year 1 return, CRA noted:

[U]nder paragraph 30(1)(d) of the NHVATS No. 2 Regulations, the large business would have been required to report the RITC no later than the reporting period following the reporting period that the tax became payable… or… was paid, whichever is earlier. [T]he assumption is made that the earlier of these two reporting periods would be the February Year 1 reporting period.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Regulations - Electronic Filing and Provision of Information (GST/HST) Regulations - Section 7 penalty for delayed reporting of ITC and RITC 162
Tax Topics - Excise Tax Act - Section 284.01 penalty for delayed reporting of ITC and RITC 160

Section 35

Section 40


Canada v. Cheema, 2018 FCA 45

co-purchaser with no intended beneficial interest was required to satisfy ETA s. 254(2) rules

In order to satisfy lender requirements, the individual taxpayer persuaded a friend (Dr. Akbari) to jointly sign an agreement for the purchase of a new home. S. 40, when read in light of ETA s. 254(2)(b), effectively required that each individual who becomes liable under the purchase agreement is acquiring the new house as the primary place of residence of that individual or a relation. “From the beginning it was understood that Dr. Akbari would not have any real interest in the property” (para. 4) and, indeed, at the closing of the purchase Dr. Akbari executed a declaration of trust in favour of the taxpayer.

Stratas JA (speaking for the majority, with Webb JA dissenting) nonetheless found that Dr. Akbari’s co-signing of the purchase agreement precluded access to the rebate. The fact that Dr. Akbari “had no beneficial interest in the property” was “irrelevant” (paras. 93-94) as what mattered was that Dr. Akbari became liable to the builder under the purchase agreement when he signed it.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 254 - Subsection 254(2) - Paragraph 254(2)(b) third party who did not intend to occupy was liable at the purchase agreement time 355
Tax Topics - Excise Tax Act - Section 133 s. 133 deemed an acquisition of future home on co-purchaser's signing purchase agreement, notwithstanding that no beneficial interest received on closing 268
Tax Topics - Statutory Interpretation - Ordinary Meaning Court should not depart from usual interpretation principles in seeking a sensible result 128
Tax Topics - Statutory Interpretation - Ease of Administration interpretation that favours administrative efficiency is to be favoured 206
Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(1) "legal acquirer" rather than intended beneficial owner was the purchaser 219

Subsection 56(3)

Subsection 58(1)


Administrative Policy

27 June 2013 Interpretation Case No. 146556

cardboard baling not production

The baling of cardboard (i.e., receiving loose cardboard boxes and putting them through a baler to create bales which are easier to store and transport) "does not change the form, qualities or properties of the cardboard to such a degree that there is a new product created," and therefore would not qualify as production.

Estimated Provincial Levy