Vol. 134, No. 6 — March 15, 2000

Registration
SOR/2000-68 24 February, 2000

EXCISE TAX ACT

Regulations Amending the Agriculture and Fishing Property (GST) Regulations

P.C. 2000-211 24 February, 2000

Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to section 277(see footnote a) of the Excise Tax Act and section 10(see footnote b) of Part IV of Schedule VI to that Act, hereby makes the annexed Regulations Amending the Agriculture and Fishing Property (GST) Regulations.

REGULATIONS AMENDING THE AGRICULTURE AND FISHING PROPERTY (GST) REGULATIONS

AMENDMENTS

1. Section 1 of the Agriculture and Fishing Property (GST) Regulations(see footnote 1) is replaced by the following:

1. These Regulations may be cited as the Agriculture and Fishing Property (GST/HST) Regulations.

2. (1) Subparagraph 1(1)(b)(vii) of the schedule to the Regulations is replaced by the following:

(2) Paragraph 1(1)(c) of the schedule to the Regulations is amended by adding the following after subparagraph (vi):

(3) Paragraph 1(1)(c) of the schedule to the Regulations is amended by adding the following after subparagraph (xiii):

(4) Subparagraph 1(1)(c)(xiv) of the schedule to the Regulations is replaced by the following:

(5) Paragraph 1(1)(e) of the schedule to the Regulations is amended by adding the following after subparagraph (viii):

(6) Subparagraph 1(1)(f)(ii) of the schedule to the Regulations is replaced by the following:

(7) Paragraph 1(1)(f) of the schedule to the Regulations is amended by adding the following after subparagraph (xi):

(8) Paragraph 1(1)(g) of the schedule to the Regulations is amended by adding the following after subparagraph (iv):

(9) Paragraph 1(1)(g) of the schedule to the Regulations is amended by adding the following after subparagraph (vi):

(10) Subparagraph 1(1)(g)(vii) of the schedule to the Regulations is replaced by the following:

(11) Subparagraph 1(1)(g)(viii) of the schedule to the Regulations is replaced by the following:

(12) Paragraph 1(1)(g) of the schedule to the Regulations is amended by adding the following after subparagraph (x):

(13) Paragraphs 1(2)(a) and (b) of the schedule to the Regulations are replaced by the following:

(a) is a complete feed, supplement, macro-premix or micro-premix, all as defined in the Feeds Regulations, 1983,

(b) is labelled in accordance with those Regulations, and

(14) Paragraph 1(2)(a) of the schedule to the Regulations, as enacted by subsection (13), is replaced by the following:

(a) is a complete feed, supplement, macro-premix, micro-premix or mineral feed (other than a trace mineral salt feed), all as defined in the Feeds Regulations, 1983,

(15) Paragraph 1(2)(c) of the schedule to the Regulations is replaced by the following:

(c) is designed for

(16) Section 1 of the schedule to the Regulations is amended by adding the following after subsection (2):

(2.1) Feed, when sold in bulk quantities of at least 20 kg (44 lbs) or in bags that contain at least 20 kg (44 lbs), that is designed for ostriches, rheas, emus or bees.

(17) Subsection 1(3) of the schedule to the Regulations is replaced by the following:

(3) By-products of the food processing industry and plant or animal products, when sold in bulk quantities of at least 20 kg (44 lbs) or in bags that contain at least 20 kg (44 lbs), that are ordinarily used as feed, or as ingredients in feed, for farm livestock, fish or poultry described in subparagraph (2)(c)(i) or for rabbits, ostriches, rheas, emus or bees.

(18) Subsection 1(4) of the schedule to the Regulations is replaced by the following:

(4) Pesticides labelled in accordance with the Pest Control Products Regulations as having a purpose that includes agricultural use and a product class designation other than "Domestic".

APPLICATION

3. (1) Section 1 is deemed to have come into force on April 1, 1997.

(2) Subsections 2(1), (3), (10), (13), (15) and (17) are deemed to have come into force on December 31, 1990, except that

(a) in respect of supplies of feed delivered to recipients before December 11, 1992, paragraph 1(2)(c) of the schedule to the Regulations, as enacted by subsection 2(15), shall be read as follows:

(c) is designed for a single species or class of farm livestock (other than rabbits), fish or poultry ordinarily raised or kept to produce, or to be used as, food for human consumption or to produce wool.

(b) in respect of supplies of by-products, and plant or animal products, delivered to recipients before December 11, 1992, subsection 1(3) of the schedule to the Regulations, as enacted by subsection 2(17), shall be read as follows:

(3) By-products of the food processing industry and plant or animal products, when sold in bulk quantities of at least 20 kg (44 lbs) or in bags that contain at least 20 kg (44 lbs), that are ordinarily used as feed, or as ingredients in feed, for farm livestock, fish or poultry described in paragraph (2)(c).

and

(c) in respect of supplies of by-products and plant or animal products, delivered to recipients after December 10, 1992 and for which all of the consideration became due or was paid on or before April 23, 1996, subsection 1(3) of the schedule to the Regulations, as enacted by subsection 2(17), shall be read as follows:

(3) By-products of the food processing industry and plant or animal products, when sold in bulk quantities of at least 20 kg (44 lbs) or in bags that contain at least 20 kg (44 lbs), that are ordinarily used as feed, or as ingredients in feed, for farm livestock, fish or poultry described in subparagraph (2)(c)(i) or for rabbits.

(3) Subsections 2(2), (5), (7), (11), (12) and (14) apply to supplies of property delivered to recipients after June 10, 1993 except that, before the day on which these Regulations are published in the Canada Gazette, subparagraph 1(1)(g)(viii) of the schedule to the Regulations, as enacted by subsection (11), shall be read without reference to "cultivator-mounted".

(4) Subsections 2(4), (6), (8), (9) and (16) apply to supplies of property for which any consideration becomes due after April 23, 1996 or is paid after that day without having become due.

(5) Subsection 2(18) applies to supplies of pesticides delivered to recipients after March 10, 1992.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Description

The Agriculture and Fishing Property (GST) Regulations have the effect of relieving the purchase of certain items from the Goods and Services Tax and Harmonized Sales Tax (GST/HST). The list of tax-free items is limited to major items purchased exclusively by farmers and fishermen. The non-taxable status of these items addresses cash-flow difficulties of farmers and fishermen with respect to major purchases.

These amendments to the Regulations expand the list of tax-free items to include:

• certain mechanical fruit or vegetable harvesters,
• bean rods,
• farm-type land packers,
• mulchers,
• silage baggers and round-bale wrapping machines,
• transportable conveyors,
• transportable elevators,
• grain dryers,
• certain wagons or trailers,
• shredders,
• certain automated feeding systems,
• rock and root rakes,
• certain field sprayers,
• certain granular fertilizer and pesticide applicators,
• leafcutter bees, and
• certain feed and products ordinarily used as ingredients in feed.

These amendments to the Regulations also extend tax-free status to certain pesticides by removing the restriction that the total value of the purchase of pesticides be at least $500. This change is applicable to sales of pesticides delivered to purchasers after March 10, 1992.

The addition of mechanical fruit or vegetable harvesters, land packers, root rakes and certain products ordinarily used as fish feed or as ingredients in fish feed comes into force on December 31, 1990. The effective dates of the remaining additions to the list of tax-free items correspond to the dates of their respective announcement. The amendment to extend the existing provision for field sprayers to cover cultivator-mounted sprayers comes into force on the day of publication of these Regulations in the Canada Gazette.

The short title of these Regulations is also changed to reflect the implementation of the HST on April 1, 1997.

Alternatives

The alternative to amending these Regulations is to continue to tax the goods at the time of purchase and allow farmers to apply for a refund of the tax by way of input tax credits. This would not address the cash-flow concerns of farmers.

Benefits and Costs

These amendments will not have a significant effect on federal revenues as the tax that would otherwise be collected on sales to farmers of the prescribed items would be fully refundable to them through input tax credits. The fact that farmers will not have to pay the tax on these items and await a refund means that they will obtain a cash flow benefit as a result of these amendments.

Consultation

Representations regarding additions to the list of tax-free farming and fishing equipment were made by various private sector groups to the House of Commons Standing Committee on Agriculture, which in turn made recommendations to the Minister of Finance concerning additions to the list of prescribed items. The Committee's report was tabled on December 3, 1992. Further representations were made to the Department of Finance and Revenue Canada by the Government of Quebec as similar rules apply in the case of the Quebec Sales Tax. In addition, various industry associations, such as the Canadian Feed Industry Association and the Canadian Federation of Agriculture, various provincial marketing boards, private companies and individuals made submissions directly to the Department of Finance.

Following these consultations and reflecting the various requests where consistent with the intended scope of these Regulations, draft amendments to the Regulations were proposed in press releases issued by the Minister of Finance on June 10, 1993 and April 23, 1996. These draft amendments included proposed changes that were announced in press releases on March 10, 1992 and December 10, 1992. The purpose of releasing the Regulations in draft form was to give the general public, industry associations, farmers, fishermen and their respective advisors the opportunity to examine the draft amendments and to comment on them.

Compliance and Enforcement

The Excise Tax Act provides the necessary compliance and enforcement mechanisms for these Regulations.

Contacts

Tom Boucher
Sales Tax Division
Department of Finance
L'Esplanade Laurier
16th Floor, East Tower
140 O'Connor Street
Ottawa, Ontario
K1A 0G5
Tel.: (613) 996-3366

Industries Unit
General Operations and Border Issues Division
GST/HST Rulings and Interpretations Directorate
Policy and Legislation Branch
Canada Customs and Revenue Agency
16th Floor, Place de Ville "A"
320 Queen Street
Ottawa, Ontario
K1A 0L5
Tel.: (613) 952-0301

Footnote a

S.C. 1993, c. 27, s. 125(1)

Footnote b

S.C. 1990, c. 45, s. 18

Footnote 1

SOR/91-39

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