Section 154

Administrative Policy

GST/HST Memorandum 3.5 “Application of GST/HST to Other Taxes, Duties, and Fees” April 2016

Provincial levies payable by the supplier

19. A provincial levy that is payable by the supplier either in respect of a supply of property or services or in respect of the consumption or use of the property or services, which the supplier recovers, usually by embedding the provincial levy in the cost of the property or services being supplied, is included in the value of the consideration for the supply made by the supplier to a recipient. This will be the case even if the tax, duty, or fee is prescribed by the Regulations.

Provincial levies collectible by the supplier

20. A provincial levy that is collectible by the supplier either in respect of a supply of property or services or in respect of the consumption or use of the property or services, is included in the value of the consideration for the supply unless the provincial levy is payable by the recipient of the supply and is a prescribed provincial levy.

Example 3

A non-participating province’s waste diversion legislation creates a regulatory framework under which a tire manufacturer is required to pay stewardship fees to a waste diversion organization equal to $4.80 for every tire it supplies. …

As the stewardship fee is a "provincial levy" for purposes of section 154 that is imposed on and payable by the manufacturer (that is, the supplier) on its supply of the tires, under subsection 154(2), this fee is included in the consideration for the supply of the tires by the manufacturer to the retailer. Note that as the stewardship fee is imposed on the manufacturer, it is a cost to the manufacturer that it chooses to pass on and would be included in the consideration for the supply of tires even in the absence of section 154, whether or not this amount is separately identified on the manufacturer’s invoice to the retailer. …

The tire retailer then sells 4 tires in the non-participating province to a customer for $130 per tire. The retailer’s invoice to the customer includes $520 ($130 × 4) for the tires and an additional $19.20 ($4.80 × 4) which it separately lists as a stewardship fee representing the cost to the retailer of the stewardship fee passed on by the manufacturer.… .

As the stewardship fee imposed under the provincial legislation is not payable by the supplier of tires (that is, the retailer) or the recipient (that is, the customer), section 154 does not apply to the amount identified as the stewardship fee; that amount is simply an input cost of the retailer that the retailer has chosen to pass on in the price charged to the customer, regardless of whether or not this amount was separately identified on the retailer’s invoice to the customer. Accordingly, under the Act, the amount identified by the retailer as a "stewardship fee" on the invoice forms part of the consideration for the tires and is subject to the GST.

Example 4

A carbon tax is imposed by provincial legislation on the supply of fuels such as gasoline, diesel, natural gas, heating fuel, propane, and coal sold in the province. The province is a participating province with an HST rate of 13%. This carbon tax is payable by purchasers/recipients of such products in the province and is collectible by suppliers at the time the fuel is purchased.

A motor vehicle owner in the province purchases 30 litres of gasoline. …

The carbon tax is a provincial levy as defined in subsection 154(1) and is payable by the purchaser/recipient in respect of the supply of gasoline. Since the carbon tax levied by the provincial legislation is not prescribed in the Regulations, the carbon tax is not a prescribed provincial levy for the purposes of section 154. The amount of the carbon tax is included in the consideration payable for the supply of the gasoline upon which the supplier will calculate the HST.

Subsection 154(1)

See Also

GF Partnership v. The Queen, 2013 TCC 53, aff'd 2013 FCA 260

A housing developer recouped the cost to it of (GST-exempt) development levies paid by it to the relevant municipality in its sales agreement with home purchasers. After finding that these amounts were part of the taxable consideration for such home sales, Woods J. indicated in obiter dicta that s. 154(1) should not apply because the development levies were regulatory charges, and a regulatory charge is not a tax (see Westbank, [1999] 3 S.C.R. 134). The present charges were similar to those considered in Ontario Home Builders' Association v. York Region Board of Education, [1996] 2 S.C.R. 929, which the Court concluded were regulatory charges. She also noted that the charges were never called a "tax" in the relevant authorising legislation. Finally, the Crown had not argued that these amounts were "duties or fees."

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 153 - Subsection 153(1) recoupment of development charges included in consideration 205
Tax Topics - Excise Tax Act - Section 254 - Subsection 254(6) developer ought to have known that development levies not incurred by it as agent 286
Tax Topics - Excise Tax Act - Section 296 - Subsection 296(2) 155

Administrative Policy

GST M 300-7 "Value of Supply" under "Other Taxes"

Custom duties, excise duties and air transportation tax and excise taxes will be included in the value of the consideration for a supply.

Subsection 154(2)

Administrative Policy

Excise and GST/HST News, No. 104, July 2018

GST on B.C. sales tax applicable to sales of expensive autos

New higher tax on expensive autos

Effective April 1, 2018, the [B.C.] provincial sales tax rate on sales of passenger vehicles with a purchase price of $125,000 to $149,999 has increased to 15% … [and] with a purchase price of $150,000 or more has increased to 20%.

No exclusion under Regs. of high-rate taxes

… With respect to the provincial levies imposed under an Act set out in subsection 2(1) of the Regulations, any provincial levy which exceeds the specified tax rate for a province is not prescribed for purposes of section 154, and therefore is included in the value of the consideration for the related supply of property or services on which the GST/HST is calculated. For purposes of section 154 and the Regulations, the specified tax rate in B.C. is 12%. … [T]he new proposed provincial sales tax rates of 15% and 20% on new and used passenger vehicles with a purchase price of $125,000 or more exceeds the 12% specified tax rate for B.C. set out in the Regulations.

Imposition of GST on PST

As a result, effective April 1, 2018, for all sales of new and used passenger vehicles in B.C. with a purchase price of $125,000 or more, the GST is calculated on the total consideration paid for the passenger vehicle, including the amount of the provincial sales tax imposed on the purchase of the passenger vehicle.

18 September 2015 Ruling 168521r

on-charges made to an Ontario tire seller’s customers for waste diversion fees imposed on it by Ontario Tire Stewardship are subject to HST

A company (“ACo”) which imports tires into Ontario is required to pay a per-tire “stewardship fee” to Ontario Tire Stewardship (“OTS”) to help cover the costs of the used tire recycling program carried on by OTS. ACo then adds a separately-identified “OTS charge” on its invoices for its tire sales in order to recoup those OTS fees.

In 144133, CRA had ruled that the “fees” charged by OTS were not subject to HST because OTS was not supplying anything to the companies required to pay them. Here, CRA has ruled that the charges made by ACo to its customers to recoup the OTS fees paid by it are part of the consideration for its sales to them, so that those charges are subject to HST. CRA stated:

…[T]he tire stewardship fee is payable by [ACo] when [ACo] is the first importer of the tire … . As a result…the tire stewardship fee is not payable by the recipient of [ACo]’s supply of tires (i.e. [ACo]’s tire customer) and it is not excluded from the consideration for the tire charged to the tire customer by virtue of section 154… .

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Consideration HST applicable to on-charges for waste diversion fees imposed on Ontario tire seller 395

Paragraph 154(2)(b)

Administrative Policy

9 February 2017 Ruling 181234

Alberta carbon levy included in consideration subject to GST

Does the GST apply to the Alberta carbon levy required to be collected on the sale of natural gas by a natural gas distributor (the “Distributor”) to its customers.” After referencing s. 154(2)(b), CRA stated:

[T]he carbon levy is a “provincial levy” as defined in section 154 of the ETA. As the carbon levy is imposed in respect of the supply of natural gas, is payable by [the Distributor]’s customers as recipients (for purposes of the ETA) of the supply of natural gas, is collectible by [the Distributor] as the supplier (for purposes of the ETA) of the supply of natural gas, and is not a prescribed provincial levy for purposes of section 154 of the ETA, the consideration for the supply of natural gas made by [the Distributor] will include the carbon levy. As the supply of natural gas made by a gas distributor in Alberta to its customers in Alberta is a taxable supply, the consideration payable for this supply (which includes the carbon levy) is subject to the GST.