Section 181.1

Table of Contents


Tele-Mobile Company Partnership v. Canada, 2013 FCA 149, aff'g 2012 TCC 256

Service Charge $100
Cred 2 Yr -$105 -$5
GST $5
Total current charge owing 0

The taxpayer, a registered cellphone service provider ("TM"), issued invoices similar to the above example. TM offered rebates such as the "Cred 2 Yr" rebate based on the number of years of service which the customers contracted to receive.

The trial judge found that TM was not entitled to input tax credits under s. 181.1 because it was not "sufficiently clear" that the rebate included GST.

Mainville JA varied the trial judge's reasons, which incorrectly implied that an invoice (or other written advice) meets the requirements under s. 181.1 if the invoice is clear enough that the customer has an "opportunity" to calculate the GST component of the rebate - an "actual written indication" is required (para. 35). The requirement for written indications serves two purposes - to allow a customer-registrant to determine if the GST component of a rebate should be treated in accordance with s. 181.1(f), and to inform the customer that the rebate is reduced by its GST component (para. 15).

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 181 - Subsection 181(1) - Coupon coupon can be electronic 204

Administrative Policy

8 July 2013 Interpretation Case No. 145134

s. 232 trumps s. 181 in direct supplies

In Scenario 1, Corp A, a registrant, makes a taxable supply of tangible personal property to Corp B, also a registrant. On a subsequent refund of a portion of the consideration, Corp A also refunds an amount on account of GST but does not issue (or receive) a credit note (or debit note).

In Scenario 2, Corp A makes a taxable supply of the property to Corp B which, in turn, sells it to Corp C. Corp A then pays a rebate to Corp C and indicates in writing that its amount includes GST.

In finding that s. 181.1 applied only to Scenario 2, CRA stated:

[G]enerally, section 232 applies to refunds paid or credited by a supplier directly to a recipient in respect of a supply made by the supplier to that recipient, and section 181.1 applies to rebates paid by a supplier to third parties with whom the supplier was not dealing directly (e.g., rebates paid by a manufacturer to consumers in respect of property originally supplied by the manufacturer to a distributor or other intermediary). … [I]f subsection 232(3) applies, then section 181.1 cannot apply by virtue of paragraph 181.1(d).

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 232 - Subsection 232(3) recipient required to remit refunded GST even if no credit note/s. 232 trumps s. 181.1 259

Memorandum 300-7-6 "Value of Supply - Manufacturers' Rebate" 13 February 1991

Discussion of former s. 181(2), the predecessor of s. 181.1.