Section 122 - Application

Cases

Canada (Attorney General) v. British Columbia Investment Management Corp., 2019 SCC 63

s. 122 does not preclude imposition of collection duties

Before going on to find that the GST in question was being borne by provincial Crown property (which would have contravened s. 125 of the Constitution Act, 1867 but for any consent thereto under Intergovernmental Agreements) rather than merely being imposed as a requirement to collect tax from non-Crown property, Karakatsanis J stated (at para. 50):

While Part IX applies in its entirety to the federal Crown, the provincial Crown’s obligations are limited to collecting and remitting GST. The provincial Crown must therefore collect and remit GST when it makes taxable supplies to private parties … .

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(1) statutory trust was not necessarily a “trust” 255
Tax Topics - Other Legislation/Constitution - Constitution Act, 1867 - Section 125 ETA taxes that would be borne by portfolio of which a Crown agent was legal owner would contravene s. 125 288
Tax Topics - Statutory Interpretation - Interpretation Act - Section 8.1 “trust” interpreted in accordance with its common law meaning 337

British Columbia Investment Management Corp. v. Canada (A. G.), 2018 BCCA 47, aff'd 2019 SCC 63

deeming services provided by B.C. Crown agent in managing assets held in trust trenched on B.C. crown immunity

bcIMC was a BC Crown agent which was formed to manage and hold investments for the provincial pension plans. The governing Act created a statutory trust under which each pension plan only had an entitlement to units in the investment pools managed by bcIMC and did not have ownership in any investment pool assets.

CRA took the view (and ultimately assessed bcIMC for $40M in uncollected GST on the basis) that ETA s. 267.1(5)(a) deemed the statutory trust to be a person separate from bcIMC as agent for the provincial Crown, so that the investment services of bcIMC were supplied to that separate person. Willcock JA found that s. 267.1(5)(a) indeed had this effect, which was an “effect of separating the Crown from its assets” and that instead “bcIMC is immune from Canada’s taxation” under s. 125 of the Constitution Act, 1867.

However, he found that such immunity was taken away by the reciprocal taxation agreement between B.C. and Canada in which the Province committed itself and its agents to pay any tax imposed under the ETA. He stated that “agreements between the federal and provincial governments may be mere political agreements,” but found that the terms of the Agreement here evinced an intention to be legally bound, and stated that “enforcement of the [Agreement] is possible” pursuant to s. 19 of the Federal Courts Act (Canada) and s. 1(1)(a) of the Federal Courts Jurisdiction Act (B.C.).

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Constitution Act, 1867 - Section 125 imposition of GST on investment assets held by a provincial Crown agent would have been prohibited by its governmental immunity but for the reciprocal taxation agreement 483
Tax Topics - Excise Tax Act - Section 267.1 - Subsection 267.1(5) - Paragraph 267.1(5)(a) services of trustees of managing assets held in trust would not be supply in absence of s. 267.1(5)(a) 164
Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(1) arrangement under which the beneficiaries only had rights to units and no ownership of underlying assets was treated as a trust 164
Tax Topics - Other Legislation/Constitution - Federal - Federal Courts Act - Section 19 enforcement of a reciprocal taxation agreement was possible pursuant to the Federal Courts Act 232

Reference re Bill C-62, [1992] GSTC 2 (SCC)

The collection and remittance obligations imposed on a province by s. 122(b) could not be equated to an appropriation of money from the Provincial Consolidated Revenue Fund, without the consent of the provincial legislature, for federal purposes. Accordingly, the province was required to bear this administrative burden.

See Also

British Columbia Investment Management Corp. v. Canada (A. G.), 2016 BCSC 1803

BC Crown agent bound by agreement only to pay tax on fees chargeable against the investments held by it

The petitioner (bcIMC) was a BC Crown agent which was formed to manage and hold, under a provincial statutory trust, investments for the provincial pension plans. Weatherill J rejected a federal Crown argument that bcIMC was not immune under s. 125 of the Constitution Act from HST otherwise payable on the fees taken out of the funds under its management on the grounds that ETA s. 267.1(5) deemed the statutory trust impressed on bcIMC’s investments to be a separate (non-Crown) person who thus was not exempt from federal tax on such fees, stating that “Canada cannot, under the guise of the deemed trust provisions of the ETA or otherwise, defeat the Province’s immunity from taxation.” However, he found that such immunity was taken away by agreements between B.C. and Canada in which the Province committed itself and its agents to pay any tax imposed under the ETA. He stated:

Section 16 of [bcIMC’s incorporating legislation] states that bcIMC “…is not liable for taxation except as the government is liable for taxation”. That language, in my view, is the specific legislative authority required to bind bcIMC to the Agreements and should be interpreted accordingly.

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Constitution Act, 1867 - Section 125 BC Crown agent immune from HST otherwise imposed on investments held by it in a statutory trust, but bound to such HST based on intergovernmental agreement 472

Administrative Policy

GST/HST Memorandum 18-2 “Provincial Governments” February 2020

Listed entitities

5. Listed entity means, for the purposes of this memorandum, a provincial or territorial government department/ministry, Crown corporation, board, commission or agency that is specifically named in a list of Crown agents either listed in Schedule A to an RTA or provided to the Canada Revenue Agency (CRA) by the province in circumstances in which the province is not a signatory to an RTA (as is the case for New Brunswick and Alberta).

Two models: pay and rebate; or point of purchase exemption

22. As purchasers, there are 2 ways in which a provincial or territorial government and its listed entities may be eligible for relief from the GST/HST:

  • where a provincial or territorial government has agreed to a pay-and-rebate model, all government departments and Crown agents pay the GST/HST at the time of purchase and listed entities subsequently claim a government rebate of 100% of the GST/HST paid or payable
  • claiming point-of-purchase relief from payment of the GST/HST through the use of an exemption certificate or a certification clause in a contract

23. The governments of all the participating provinces, as well as Quebec, British Columbia and Nunavut, have agreed to use the pay and rebate model. Therefore, their government departments and all of their Crown agents will pay the GST/HST on their purchases of taxable property and services. Their listed entities are eligible to claim a government rebate of 100% of the GST/HST paid or payable.

24. The governments of the remaining provinces and territories claim point-of-purchase relief from payment of the GST/HST. Listed entities in Manitoba, Saskatchewan, Alberta, the Northwest Territories and Yukon do not pay the GST/HST on purchases of taxable property and services, provided that an authorized official of the listed entity provides sufficient evidence to the supplier that the supplies are being purchased by a listed entity on its own behalf.

Purchase exemption certificate

26. Suppliers must charge the GST/HST on their taxable supplies of property or services made to a government entity of a province that is entitled to point-of-purchase relief from the GST/HST (Manitoba, Saskatchewan, Alberta, the Northwest Territories and Yukon) unless the entity meets both of the following conditions:

  • it is a listed entity purchasing the taxable property or service on its own behalf
  • it provides sufficient documentary evidence to show that it is eligible for point-of-purchase relief from the GST/HST

27. Where a supplier has not charged the GST/HST on taxable supplies of property or services to a listed entity that is entitled to point-of-purchase relief, the supplier must maintain sufficient documentary evidence that the listed entity was the recipient of the supply and was eligible for that relief. For example, the supplier should retain a copy of an exemption certificate or contract containing a certification clause.

28. An exemption certificate or certification clause is a statement detailing that a purchase is being made by a listed entity of a province or territory that is entitled to point-of-purchase relief from the GST/HST. The exemption certificate or certification clause should be similar in form and content to the following:

This is to certify that the property and/or services ordered/purchased hereby are being purchased by

________________________________________________
(Name of Provincial/Territorial Government Department or Entity)

and are not subject to the GST/HST.

____________________________________
(Signature of Authorized Official)

Taxability of purchases by employees of listed entities (other than with government credit card)

31. Purchases of taxable property or services made by employees of a listed entity in the employee’s own name are subject to the GST/HST even if the employee makes the purchase in the course of employment. Examples of these types of purchases include hotel and meal expenses incurred by employees of a listed entity while on travel status. Listed entities in the provinces and territories that are eligible to claim point-of-purchase relief cannot issue exemption certificates certifying entitlement to relief from paying the GST/HST for purchases of taxable property and services made by an employee in the employee’s name.

32. The GST/HST is not payable on purchases of taxable property and services if the employee uses a credit card for which a listed entity is solely liable. In such cases, the credit card must clearly indicate that it is for use in acquiring supplies for a listed entity entitled to point-of-purchase relief from the GST/HST. Purchases made by employees with a credit card issued in the name of the employee, or for which the employee and the listed entity are jointly liable, are subject to the GST/HST even if the purchase is made in the course of employment.

31 May 2012 Quebec Information Bulletin 2012-4

To achieve greater harmonization of Québec's sales tax (QST) system with the federal goods and services tax (GST) and harmonized sales tax (HST) system, the governments of Canada and Québec entered into, in March 2012, a comprehensive integrated tax coordination agreement (Canada-Québec CITCA) with various commitments in this regard. This information bulletin specifies the changes that will be made to the QST system pursuant to the undertakings to harmonize it with the GST/HST system applicable in 2013. Essentially, these commitments are as follows:

  • the GST will be removed from the QST base as of January 1, 2013; to ensure that this removal has no impact on Québec's public finances, the 9.5% rate of the QST will, at the same time, be raised to 9.975%, i.e. the effective rate of the QST applicable until then;
  • financial services that are currently zero-rated under the QST system will become exempt as under the GST/HST system as of January 1, 2013; as a corollary, the portion of the compensation tax on financial institutions attributable to the impact on public finances to the fact that input tax refunds are granted to suppliers of financial services will be eliminated as of the same date;
  • the existing exemption mechanism from payment of taxes by governments and certain of their mandataries will be replaced by a tax payment and rebate mechanism as of April 1, 2013.

Related Provisions

Comprehensive Integrated Tax Coordination Agreement Between The Government of Canada and The Government of Ontario

Part XVI Government Purchases

51. Canada and the Province agree to pay the harmonized sales taxes in respect of supplies acquired by their respective governments or by agents and entities thereof.

52. Where inter-jurisdictional immunity from taxation applies, any harmonized sales taxes paid by Canada or the Province, as provided for in clause 51, will be subject to rebate on application to the Minister of National Revenue, except to the extent that any such taxes are payable under any agreement regarding the reciprocal payment of sales or commodity taxes as between Canada and the Province or are otherwise recoverable.

53. In the case of the provincial government or of agents and entities thereof, any rebates payable under clause 52 shall be made on a bi-weekly basis and, at the direction of the Province, shall be paid either to the Province or to the government entity of the Province which paid the tax and which is identified as the recipient of the rebate in the application therefor.

Paragraph 122(b)

Administrative Policy

GST/HST Memorandum 18-2 “Provincial Governments” February 2020

Requirement for provincial governments making taxable supplies to register, perhaps with one BN and multiple branches

10. Paragraph 122(b) of the Act binds Her Majesty in right of a province in respect of obligations as a supplier to collect and to remit tax in respect of taxable supplies it makes. As a result, all provincial/territorial governments and their Crown agents are generally subject to the provisions of the Act that apply to suppliers, including the obligation to register, charge and collect the GST/HST on taxable supplies, file GST/HST returns and remit net tax to the CRA.

11. Generally, each provincial/territorial government, including all of its departments/ministries and some of its agencies, boards and commissions, has registered for GST/HST purposes under a single Business Number (BN) with various filing branches/divisions. …

12. Transactions between entities that are branches/divisions of the same provincial/territorial government registrant are not treated as supplies for purposes of the GST/HST. …

13. Crown corporations, and certain boards, commissions and agencies involved predominantly in commercial activities that are not registered for GST/HST under a BN of a provincial or territorial government are required to register separately for GST/HST purposes and are generally subject to all the provisions in the Act that apply to registrants.