Vol. 145, No. 6 — March 16, 2011

Registration

SOR/2011-56 March 3, 2011

EXCISE TAX ACT

ARCHIVED — Regulations Amending Various GST/HST Regulations, No. 2

P.C. 2011-263 March 3, 2011

His Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to sections 236.01 (see footnote a), 277 (see footnote b) and 277.1 (see footnote c) of the Excise Tax Act (see footnote d), hereby makes the annexed Regulations Amending Various GST/HST Regulations, No. 2.

REGULATIONS AMENDING VARIOUS GST/HST REGULATIONS, NO. 2

PART 1

CLOSELY RELATED CORPORATIONS (GST/HST) REGULATIONS

1. The long title of the Closely Related Corporations (GST/HST) Regulations (see footnote 1) is replaced by the following:

CLOSELY RELATED CORPORATIONS (GST/HST) REGULATIONS

2. Section 1 of the Regulations and the heading before it are repealed.

3. The portion of section 3 of the Regulations before paragraph (a) is replaced by the following:

3. For the purposes of paragraph 128(1)(b) of the Act, a corporation (in this section referred to as the “other corporation”) is a prescribed corporation in relation to a particular corporation

PART 2

FINANCIAL SERVICES (GST/HST) REGULATIONS

4. The long title of the Financial Services (GST/HST) Regulations (see footnote 2) is replaced by the following:

FINANCIAL SERVICES (GST/HST) REGULATIONS

5. Section 1 of the Regulations and the heading before it are repealed.

6. Paragraphs 4(3)(b) and (c) of the Regulations are replaced by the following:

(b) a person that is a member of the same closely related group as a person at risk, if the recipient of the service is not the person at risk or another person that is a member of the same closely related group as the person at risk, or

(c) an agent, salesperson or broker who arranges for the issuance, renewal or variation, or the transfer of ownership, of the instrument for a person at risk or a person that is a member of the same closely related group as the person at risk.

PART 3

GAMES OF CHANCE (GST/HST) REGULATIONS

7. The long title of the Games of Chance (GST/HST) Regulations (see footnote 3) is replaced by the following:

GAMES OF CHANCE (GST/HST) REGULATIONS

8. Section 1 of the Regulations and the heading before it are repealed.

9. Section 2 of the Regulations is replaced by the following:

Definition of “Act”

2. In these Regulations, “Act” means the Excise Tax Act.

10. (1) Paragraph 3(d) of the Regulations is replaced by the following:

(d) the Ontario Lottery and Gaming Corporation;

(2) Paragraph 3(k) of the Regulations is repealed.

(3) Section 3 of the Regulations, as amended by subsection (2), is amended by adding the following after paragraph (j):

(k) the New Brunswick Lotteries and Gaming Corporation;

(4) Paragraph 3(m) of the Regulations is replaced by the following:

(m) a corporation that is a wholly-owned subsidiary of a registrant referred to in any paragraph of this section (other than paragraph (g) and this paragraph) and that is referred to in section 15.

11. (1) The definition “promotional supply” in subsection 5(1) of the Regulations is replaced by the following:

“promotional supply”
« fourniture de promotion »

“promotional supply”, by a provincial gaming authority, means

(a) a supply of property (other than a supply by way of sale of capital property of the authority) made by the authority for no consideration or for nominal consideration; or

(b) a supply by way of sale of

(i) a service, or intangible personal property, that was purchased by the authority, or

(ii) tangible personal property (other than capital property of the authority),

made by the authority for consideration that is less than the basic cost to the authority of the property or service.

(2) The portion of the definition “reimbursement” in subsection 5(1) of the Regulations before paragraph (a) is replaced by the following:

“reimbursement”
« montant de remboursement »

“reimbursement” means an amount of consideration (as defined in subsection 123(1) of the Act) that

(3) Paragraph (a) of the definition “non-taxable reimbursement” in subsection 5(1) of the Regulations is replaced by the following:

(a) consideration (other than interest) for a supply made to the distributor (other than a supply that would be deemed under subsection 188.1(4) of the Act not to be a supply if it were made to the authority instead of to the distributor) that is

(i) an exempt supply of personal property or a service,

(ii) a zero-rated supply, or

(iii) a taxable supply all or part of the consideration for which is, due to the application of section 166 of the Act, not included in calculating the tax payable in respect of the supply; or

(4) Subsection 5(1) of the Regulations is amended by adding the following in alphabetical order:

“lease interval”
« période de location »

“lease interval”, in respect of a supply by way of lease of property, means a period to which a payment forming part of the consideration for the supply is attributable and that is all or part of the period during which possession or use of the property is provided under the agreement for the supply.

“non-gaming reimbursement”
« montant de remboursement non lié au jeu »

“non-gaming reimbursement” means a reimbursement paid or payable by a provincial gaming authority that is in respect of an expense incurred by a distributor of the authority and that is part of the cost to the authority of making non-gaming supplies.

“period cost”
« coût imputable »

“period cost” for a particular period, in respect of a supply to a provincial gaming authority of tangible personal property or real property made by way of lease, means the total of

(a) the total of all amounts each of which is the portion of the capital cost of the property to the supplier that is reasonably allocated to a lease interval for which a payment forming part of the consideration for the supply becomes due in the particular period or is paid in the particular period without having become due;

(b) the total of all amounts each of which is an amount not included in paragraph (a) that is a cost to the supplier that is reasonably attributable to the making of the supply for a lease interval referred to in that paragraph other than, in the case of a supply to which section 16 applies, the portion, if any, of that cost that is deducted from the value of the consideration for the supply in determining under that section the amount deemed to be the tax payable in respect of the supply;

(c) any capital loss on the disposition of the property by the supplier that is recovered from the authority during the particular period; and

(d) an amount that, at any time in the particular period, the supplier recognizes in the supplier’s books of account as an unrecoverable loss, being the amount by which the unamortized capital cost of the property exceeds its fair market value at that time.

(5) The portion of subsection 5(2) of the Regulations before paragraph (a) is replaced by the following:

Basic cost

(2) For the purposes of this Part, the basic cost to a provincial gaming authority of personal property or a service is equal to

(6) Paragraph 5(2)(d) of the Regulations is replaced by the following:

(d) in the case of intangible personal property or a service, the consideration paid or payable by the authority to purchase the property or service.

(7) Section 5 of the Regulations is amended by adding the following after subsection (2):

Exclusion from “promotional supply”

(2.1) Despite the definition “promotional supply” in subsection (1), a supply of a particular property or service made by a provincial gaming authority is not included in that definition if the authority would, in the absence of this subsection, be entitled to include, in determining a total for A₂ in subsection 7(7), or a total for B in section 8, all or a portion of an input tax credit in respect of

(a) the particular property or service;

(b) a service of manufacturing the particular property; or

(c) other tangible personal property acquired, imported or brought into a participating province by the authority for use as an ingredient in preparing the particular property or for the purpose of being incorporated into, forming a constituent or component part of, or being consumed or expended directly in the process of manufacturing, the particular property.

Reduction in consideration

(2.2) For the purpose of the definition “promotional supply” in subsection (1), if, in making a supply of property or a service, a provincial gaming authority

(a) accepts from the recipient of the supply a coupon, a voucher, a receipt, a ticket, a device that, without regard to section 181.2 of the Act, is a gift certificate or any other device that may be exchanged for the property or service or that entitles the recipient to a reduction of, or a discount on, the price of the property or service (the amount of the reduction or discount is in this subsection referred to as the “coupon value”), or

(b) applies, as a discount on, or credit against, the price of the property or service, an amount (in this subsection referred to as the “credit value”) that has been credited in favour of the recipient by the authority,

the consideration for the supply is deemed to be equal to the amount that would, without regard to section 181 of the Act, be the consideration for the supply less the coupon value or credit value, as the case may be.

Exception

(2.3) Subsection (2.2) does not apply in respect of a supply of property or a service by a provincial gaming authority if

(a) subsection 181(2) of the Act applies in respect of the supply;

(b) the consideration for the supply is reduced in circumstances in which subsection 232(2) of the Act applies; or

(c) the property or service is given in exchange, or the reduction, discount or credit is provided, in lieu of refunding or reducing all or part of the consideration for a non-gaming supply by the authority of another property or service.

12. (1) The description of A in subsection 7(2) of the Regulations is replaced by the following:

A is

(a) if the person placed the bet in a participating province, the total of 6% and the tax rate for that province, and

(b) in any other case, 6%;

(2) The description of A in subsection 7(2) of the Regulations, as enacted by subsection (1), is replaced by the following:

A is

(a) if the person placed the bet in a participating province, the total of the rate set out in subsection 165(1) of the Act and the tax rate for that province, and

(b) in any other case, the rate set out in subsection 165(1) of the Act;

(3) The description of A in subsection 7(3) of the Regulations is replaced by the following:

A is

(a) if the instant win ticket was or is to be delivered to the distributor in a participating province, the total of 6% and the tax rate for that province, and

(b) in any other case, 6%;

(4) The description of A in subsection 7(3) of the Regulations, as enacted by subsection (3), is replaced by the following:

A is

(a) if the instant win ticket was or is to be delivered to the distributor in a participating province, the total of the rate set out in subsection 165(1) of the Act and the tax rate for that province, and

(b) in any other case, the rate set out in subsection 165(1) of the Act;

(5) The description of A in subsection 7(4) of the Regulations is replaced by the following:

A is

(a) if the bet in respect of which the prize or winnings becomes payable was placed in a participating province, the total of 6% and the tax rate for that province, and

(b) in any other case, 6%;

(6) The description of A in subsection 7(4) of the Regulations, as enacted by subsection (5), is replaced by the following:

A is

(a) if the bet in respect of which the prize or winnings becomes payable was placed in a participating province, the total of the rate set out in subsection 165(1) of the Act and the tax rate for that province, and

(b) in any other case, the rate set out in subsection 165(1) of the Act;

(7) The description of A in subsection 7(5) of the Regulations is replaced by the following:

A is

(a) if the instant win ticket was or is to be delivered to the distributor in a participating province, the total of 6% and the tax rate for that province, and

(b) in any other case, 6%;

(8) The description of A in subsection 7(5) of the Regulations, as enacted by subsection (7), is replaced by the following:

A is

(b) in any other case, the rate set out in subsection 165(1) of the Act;

(9) The description of A₁in subsection 7(7) of the Regulations is amended by adding the following after paragraph (b):

(b.1) an amount (other than an amount described in subparagraph (d)(ii)) of tax in respect of a supply deemed under subsection 143(1) of the Act to have been made outside Canada (other than a supply described in subsection 178.8(2) of the Act) that would have become payable by the authority during the particular period if the supply had been made in Canada by a registrant,

(10) The portion of the description of A₃in subsection 7(7) of the Regulations before subparagraph (i) is replaced by the following:

A₃ is a reimbursement (other than a non-gaming reimbursement) that became payable during the particular period, or that was paid during the particular period without having become payable, by the authority to a distributor of the authority, other than

(11) The description of A₄in paragraph 7(7) of the Regulations is replaced by the following:

A₄ is

(i) if the reimbursement is in respect of a supply made by the distributor to the authority in a participating province, the total of 6% and the tax rate for that province, and

(ii) in any other case, 6%, and

(12) The description of A₄in paragraph 7(7) of the Regulations, as enacted by subsection (11), is replaced by the following:

A₄ is

(i) if the reimbursement is in respect of a supply made by the distributor to the authority in a participating province, the total of the rate set out in subsection 165(1) of the Act and the tax rate for that province, and

(ii) in any other case, the rate set out in subsection 165(1) of the Act, and

(13) Paragraph (d) of the description of A₁in subsection 7(7) of the Regulations is amended by striking out “or” at the end of subparagraph (ii) and by replacing subparagraph (iii) with the following:

(iii) the amount by which

(A) the total of all amounts each of which is tax that would have become payable by the authority during the particular period under Division II of Part IX of the Act in respect of a supply (other than a supply referred to in subparagraph (iv) or (v)) made to the authority that is a taxable supply of property or a service for consideration less than fair market value, or an exempt supply by way of lease of tangible personal property or real property, if the supply had been a taxable supply made for consideration equal to fair market value,

exceeds

(B) the total amount of tax under that Division that became payable by the authority during the particular period in respect of supplies included in clause (A),

(iv) the amount of tax that would have become payable by the authority during the particular period under Division II of Part IX of the Act in respect of an exempt supply of real property made to the authority by way of lease by a wholly-owned subsidiary of the authority that had acquired the property for consideration equal to fair market value if the supply had been a taxable supply and if the amount of consideration for the supply that had become due in the period or was paid in the period without having become due were equal to the greater of the period cost of the supply for the period and the total of any amounts of consideration for the supply, as otherwise determined for the purposes of Part IX of the Act, that became due in the period or were paid in the period without having become due, or

(v) the amount, if any, by which

(A) the amount of tax that would have become payable by the authority during the particular period under Division II of Part IX of the Act in respect of a taxable supply of property made to the authority by way of lease by a wholly-owned subsidiary of the authority that had acquired the property for consideration equal to fair market value if consideration for the supply, equal to the period cost of the supply for the period, became due in the period and if that were the only consideration for the supply that became due in the period or was paid in the period without having become due,

exceeds

(B) the total amount of tax under that Division that became payable by the authority during the particular period in respect of the supply, and

(14) The descriptions of B₄and B₅in subsection 7(7) of the Regulations are replaced by the following:

B₄ is a particular amount of salaries, wages or other remuneration (other than an amount described in the description of B₆) paid or payable by the distributor, or by a person (in this description and in the description of B₆ referred to as the “distributor’s subsidiary”) that is a wholly-owned subsidiary of the distributor, to an employee of the distributor or of the distributor’s subsidiary, and

B₅ is the extent (expressed as a percentage) to which the particular amount is

(i) a cost to the distributor of supplying the casino operating service to the authority, or

(ii) a cost to the authority of the management, administration and carrying on of the day-to-day operations of the authority’s gaming activities that are connected with a casino of the authority, and

(15) The descriptions of B₆and B₇in subsection 7(7) of the Regulations are replaced by the following:

B₆ is a particular amount that is paid by, or is in respect of a supply of property or a service made by, the distributor or the distributor’s subsidiary to an employee of the distributor or of the distributor’s subsidiary or to a person related to such an employee, and that the employee is required under section 6 of the Income Tax Act to include in computing the employee’s income for a taxation year of the employee, and

B₇ is the extent (expressed as a percentage) to which the particular amount is

(i) a cost to the distributor of supplying the casino operating service to the authority, or

(ii) a cost to the authority of the management, administration and carrying on of the day-to-day operations of the authority’s gaming activities that are connected with a casino of the authority;

(16) The portion of the description of C ₁ in subsection 7(7) of the Regulations before paragraph (a) is replaced by the following:

C₁ is the total of all amounts each of which is an amount that, in the absence of subsection 188.1(4) of the Act, would be consideration (other than charitable proceeds from Superstar Bingo) for a supply (other than a supply of a casino operating service) by a distributor of the authority to the authority or would be a reimbursement paid or payable by the authority to a distributor of the authority (other than a reimbursement that is a non-gaming reimbursement, a non-taxable reimbursement, a reimbursement of the cost to the distributor of a right to play or participate in a game of chance given away free of charge by the distributor or a reimbursement of salaries, wages or other remuneration paid or payable by the distributor to an employee of the distributor to the extent that that remuneration is a cost to the distributor of supplying a casino operating service to the authority), where

(17) The description of C₂in subsection 7(7) of the Regulations is replaced by the following:

C₂ is

(a) if the particular supply by the distributor to the authority relates to the making of supplies of rights of the authority in a participating province, the total of 6% and the tax rate for that province, and

(b) in any other case, 6%;

(18) The description of C₂in subsection 7(7) of the Regulations, as enacted by subsection (17), is replaced by the following:

C₂ is

(a) if the particular supply by the distributor to the authority relates to the making of supplies of rights of the authority in a participating province, the total of the rate set out in subsection 165(1) of the Act and the tax rate for that province, and

(b) in any other case, the rate set out in subsection 165(1) of the Act;

(19) The description of D₃in subsection 7(7) of the Regulations is replaced by the following:

D₃ is

(a) if the distributor acquired the devices for the purpose of supplying them in a participating province, the total of 6% and the tax rate for that province, and

(b) in any other case, 6%; and

(20) The description of D₃in subsection 7(7) of the Regulations, as enacted by subsection (19), is replaced by the following:

D₃ is

(a) if the distributor acquired the devices for the purpose of supplying them in a participating province, the total of the rate set out in subsection 165(1) of the Act and the tax rate for that province, and

(b) in any other case, the rate set out in subsection 165(1) of the Act; and

(21) The description of E₂in subsection 7(7) of the Regulations is replaced by the following:

E₂ is the extent (expressed as a percentage) to which the benefit amount is a cost to the authority of making non-gaming supplies other than the supply referred to in clause (i)(B) of the description of E₁, and

(22) Clauses (i)(A) and (B) of the description of E₃in subsection 7(7) of the Regulations are replaced by the following:

(A) if the last establishment of the authority at which the individual ordinarily worked or to which the individual ordinarily reported in the previous calendar year in relation to the individual’s office or employment with the authority is located in a participating province, 10%, and

(B) in any other case, 4%, and

(23) Clauses (i)(A) and (B) of the description of E ₃ in subsection 7(7) of the Regulations, as enacted by subsection (22), are replaced by the following:

(B) in any other case, 3%, and

(24) Clause (i)(A) of the description of E ₃ in subsection 7(7) of the Regulations, as enacted by subsection (23), is replaced by the following:

(I) Ontario, New Brunswick or Newfoundland and Labrador, the percentage referred to in paragraph 2(a) of the Automobile Operating Expense Benefit (GST/HST) Regulations,

(II) Nova Scotia, the percentage referred to in paragraph 2(b) of the Automobile Operating Expense Benefit (GST/HST) Regulations, or

(III) British Columbia, the percentage referred to in paragraph 2(c) of the Automobile Operating Expense Benefit (GST/HST) Regulations, and

(25) The description of E₄in subsection 7(7) of the Regulations is replaced by the following:

E₄ is

(A) if the benefit amount is required to be included under paragraph 6(1)(a) or (e) of the Income Tax Act and the last establishment at which the individual ordinarily worked or to which the individual ordinarily reported in the previous calendar year in relation to the individual’s office or employment with the authority is located in a participating province, the total of 5% and the tax rate for the participating province, and

(B) in any other case, 5%, and

(26) The description of E₄in subsection 7(7) of the Regulations, as enacted by subsection (25), is replaced by the following:

E₄ is

(A) if the benefit amount is required to be included under paragraph 6(1)(a) or (e) of the Income Tax Act and the last establishment at which the individual ordinarily worked or to which the individual ordinarily reported in the previous calendar year in relation to the individual’s office or employment with the authority is located in a participating province, the total of 4% and the tax rate for the participating province, and

(B) in any other case, 4%, and

13. Paragraph 9(1)(a) of the Regulations is replaced by the following:

(a) was acquired or imported, or brought into a participating province, by the authority for consumption or use in gaming activities of the authority, in improving capital property used in gaming activities of the authority, in making promotional supplies or in making supplies of financial services that relate to gaming activities of the authority;

14. The portion of section 11 of the English version of the Regulations before the formula is replaced by the following:

Presumption concerning tax on supply

11. For the purposes of this Part and for the purposes of applying Part IX of the Act in determining the net tax of the Interprovincial Lottery Corporation, if the Corporation makes a supply of property or a service to a provincial gaming authority, the tax payable in respect of the supply is deemed to be the tax that would be payable in respect of the supply if the value of the consideration for the supply were the amount determined by the formula

15. (1) The first formula in section 13 of the Regulations is replaced by the following:

6% × (A - B)

(2) The first formula in section 13 of the Regulations, as enacted by subsection (1), and the descriptions in that formula are replaced by the following:

A × (B - C)

where

A is the rate set out in subsection 165(1) of the Act,

B is the amount of those expenses, and

C is the total of all amounts each of which is determined by the formula

C₁ × C₂

where

C₁ is a particular amount that is

(a) salary, wages or other remuneration paid or payable to an employee of the Corporation, other than an amount that the employee is required under section 6 of the Income Tax Act to include in computing the employee’s income for the purposes of that Act,

(b) consideration paid or payable by the Corporation for an exempt supply of a service or a zero-rated supply, or

C₂ is the extent (expressed as a percentage) to which the particular amount is a cost to the Corporation of conducting the game and is included in the expenses referred to in the description of B.

16. The Regulations are amended by adding the following after section 14:

PROVINCIAL GAMING AUTHORITY AS DISTRIBUTOR

Special rule

14.1 If a provincial gaming authority, other than the Interprovincial Lottery Corporation, (in this section referred to as the “reporting authority”) is a distributor of another provincial gaming authority in relation to a game of chance conducted by or on behalf of the other authority,

(a) in applying subsection 7(7) and sections 8 and 9 of these Regulations and Part IX of the Act in determining the imputed tax payable on gaming expenses and the input tax credits of the reporting authority and of the other authority, any amount paid or payable by the reporting authority on behalf of the other authority in respect of the acquisition or importation, or bringing into a participating province, of property or a service for consumption, use or supply in relation to the conduct of the game is to be taken into account as if

(i) the game were conducted by the reporting authority as part of the gaming activities of the reporting authority and not of the other authority,

(ii) the property or service were acquired or imported, or brought into the participating province, and the amount were paid or payable, by the reporting authority on its own account and not by the other authority,

(iii) the rights to play or participate in the game were rights of the reporting authority and not of the other authority, and

(iv) persons, other than the reporting authority, acting as distributors of the other authority in relation to the game were distributors of the reporting authority, and not of the other authority, in relation to the game;

(b) no amount that would, but for subsection 188.1(4) of the Act, be consideration for a supply by the reporting authority to the other authority in relation to the game is to be included in the total for C₁ in subsection 7(7); and

(c) no amount of a reimbursement paid or payable by the other authority to the reporting authority in respect of an expense incurred or to be incurred by the reporting authority that is attributable to the game is to be included in the amount determined for A₃ or C₁ in subsection 7(7).

PART 4

JOINT VENTURE (GST/HST) REGULATIONS

17. (1) Subsection 3(1) of the Joint Venture (GST/HST) Regulations (see footnote 4) is amended by striking out “and” at the end of paragraph (a) and by adding the following after paragraph (b):

(c) the marketing by the operator of a joint venture, under any agreement between the operator and a co-venturer, of all or part of the co-venturer’s share of the output of the joint venture provided that the output arises from an activity conducted under the agreement referred to in subsection 273(1) of the Act;

(d) the transportation of natural gas liquids by means of a pipeline that operates as a common carrier of natural gas liquids;

(e) the operation of a facility that is used to generate electricity;

(f) the operation of a transmission line that is used to transmit electrical power;

(g) the processing of output (in this paragraph referred to as the “refinement”) that arises from the exploration or exploitation of a timber resource, including any jointly conducted exploration or exploitation activity of which the output is processed under the agreement referred to in subsection 273(1) of the Act in respect of the refinement and the marketing of the processed or unprocessed output that arises from that activity; and

(h) the production of a fertilizer and its marketing.

(2) Subsection 3(1) of the Regulations, as amended by subsection (1), is amended by striking out “and” at the end of paragraph (g) and by adding the following after paragraph (h):

(i) the disposal of waste, including the collection and transportation of waste that is in furtherance of that disposal;

(j) the exercise of rights or privileges, or the performance of duties or obligations, of ownership of an interest in an animal for the purposes of deriving revenue from prizewinning, stud service fees or sale;

(k) the maintenance of a road, other than maintenance that is an exempt supply;

(l) the operation and maintenance of the North Warning System;

(m) the operation of a farming business within the meaning of the Income Tax Act; and

(n) the production of liquid methanol from natural gas.

(3) Subsection 3(1) of the Regulations, as amended by subsections (1) and (2), is amended by striking out “and” at the end of paragraph (m) and by adding the following after paragraph (n):

(o) the generation and recording of seismic data; and

(p) the operation of a lumber, plywood, shake and shingle, pulp, paper or similar wood processing facility.

PART 5

STREAMLINED ACCOUNTING (GST/HST) REGULATIONS

18. (1) Subparagraphs 15(5)(a)(i) to (iv) of the Streamlined Accounting (GST/HST) Regulations (see footnote 5) are replaced by the following:

(i) if the registrant makes the supply in a non-participating province through a permanent establishment of the registrant in a non-participating province, 1.8%,

(ii) if the registrant makes the supply in a participating province through a permanent establishment of the registrant in a non-participating province, 8.8%,

(iii) if the registrant makes the supply in a non-participating province through a permanent establishment of the registrant in a participating province, 0%, and

(iv) if the registrant makes the supply in a participating province through a permanent establishment of the registrant in a participating province, 4.4%; and

(2) Subparagraphs 15(5)(a)(i) to (iv) of the Regulations, as enacted by subsection (1), are replaced by the following:

(i) if the registrant makes the supply through a permanent establishment of the registrant in Ontario, New Brunswick or Newfoundland and Labrador,

(A) 4.4%, if the supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(B) 6.1%, if the supply is made in Nova Scotia,

(D) 0%, if the supply is made in a non-participating province,

(ii) if the registrant makes the supply through a permanent establishment of the registrant in Nova Scotia,

(A) 3.3%, if the supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(B) 5%, if the supply is made in Nova Scotia,

(D) 0%, if the supply is made in a non-participating province,

(iii) if the registrant makes the supply through a permanent establishment of the registrant in British Columbia,

(A) 5%, if the supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(B) 6.6%, if the supply is made in Nova Scotia,

(D) 0%, if the supply is made in a non-participating province, and

(iv) if the registrant makes the supply through a permanent establishment of the registrant in a non-participating province,

(A) 8.8%, if the supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(B) 10.4%, if the supply is made in Nova Scotia,

(D) 1.8%, if the supply is made in a non-participating province; and

(3) Subparagraphs 15(5)(b)(i) to (iv) of the Regulations are replaced by the following:

(i) if the registrant makes the supply in a non-participating province through a permanent establishment of the registrant in a non-participating province, 3.6%,

(ii) if the registrant makes the supply in a participating province through a permanent establishment of the registrant in a non-participating province, 10.5%,

(iii) if the registrant makes the supply in a non-participating province through a permanent establishment of the registrant in a participating province, 1.8%, and

(iv) if the registrant makes the supply in a participating province through a permanent establishment of the registrant in a participating province, 8.8%.

(4) Subparagraphs 15(5)(b)(i) to (iv) of the Regulations, as enacted by subsection (3), are replaced by the following:

(i) if the registrant makes the supply through a permanent establishment of the registrant in Ontario, New Brunswick or Newfoundland and Labrador,

(A) 8.8%, if the supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(B) 10.4%, if the supply is made in Nova Scotia,

(D) 1.8%, if the supply is made in a non-participating province,

(ii) if the registrant makes the supply through a permanent establishment of the registrant in Nova Scotia,

(A) 8.4%, if the supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(B) 10%, if the supply is made in Nova Scotia,

(D) 1.4%, if the supply is made in a non-participating province,

(iii) if the registrant makes the supply through a permanent establishment of the registrant in British Columbia,

(A) 9%, if the supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(B) 10.6%, if the supply is made in Nova Scotia,

(D) 2.1%, if the supply is made in a non-participating province, and

(iv) if the registrant makes the supply through a permanent establishment of the registrant in a non-participating province,

(A) 10.5%, if the supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(B) 12%, if the supply is made in Nova Scotia,

(D) 3.6%, if the supply is made in a non-participating province.

(5) Paragraph 15(5.02)(a) of the Regulations is replaced by the following:

(a) if substantially all of the specified supplies made by the registrant in the reporting period through that permanent establishment are made in a participating province, treat all of the specified supplies made by the registrant in the reporting period through that establishment as having been made in the participating province; and

19. (1) Paragraph (c) of the description of C in subsection 17(1) of the Regulations is replaced by the following:

(c) an amount equal to 2.8% of the portion of the registrant’s net specified supplies for the particular reporting period that is attributable to supplies to which the quick-method rate of 0% applies; and

(2) The description of C in subsection 17(1) of the Regulations is amended by striking out “or” at the end of paragraph (b) and by replacing paragraph (c), as enacted by subsection (1), with the following:

(c) an amount equal to 2.8% of the portion of the registrant’s net specified supplies for the particular reporting period that is attributable to supplies which are made through a permanent establishment of the registrant in Ontario, New Brunswick or Newfoundland and Labrador and to which the quick-method rate of 0% applies,

(d) an amount equal to 4% of the portion of the registrant’s net specified supplies for the particular reporting period that is attributable to supplies which are made through a permanent establishment of the registrant in Nova Scotia and to which the quick-method rate of 0% applies, or

(e) an amount equal to 2.3% of the portion of the registrant’s net specified supplies for the particular reporting period that is attributable to supplies which are made through a permanent establishment of the registrant in British Columbia and to which the quick-method rate of 0% applies; and

20. (1) Subparagraphs 19(3)(a)(i) and (ii) of the Regulations are replaced by the following:

(i) if the registrant makes the particular supply through a permanent establishment of the registrant in Nova Scotia, New Brunswick or Newfoundland and Labrador,

(A) 8.8%, if the particular supply is made in a participating province, and

(B) 1.8%, if the particular supply is made in a non-participating province, and

(ii) if subparagraph (i) does not apply,

(A) 10.5%, if the particular supply is made in a participating province, and

(B) 3.6%, if the particular supply is made in a non-participating province;

(2) Subparagraphs 19(3)(a)(i) and (ii) of the Regulations, as enacted by subsection (1), are replaced by the following:

(i) if the registrant makes the particular supply through a permanent establishment of the registrant in Ontario,

(A) 9.9%, if the particular supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(B) 11.4%, if the particular supply is made in Nova Scotia,

(D) 3%, if the particular supply is made in a non-participating province,

(ii) if the registrant makes the particular supply through a permanent establishment of the registrant in Nova Scotia,

(A) 8.4%, if the particular supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(B) 10%, if the particular supply is made in Nova Scotia,

(D) 1.4%, if the particular supply is made in a non-participating province,

(iii) if the registrant makes the particular supply through a permanent establishment of the registrant in New Brunswick or Newfoundland and Labrador,

(A) 8.8%, if the particular supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(B) 10.4%, if the particular supply is made in Nova Scotia,

(D) 1.8%, if the particular supply is made in a non-participating province,

(iv) if the registrant makes the particular supply through a permanent establishment of the registrant in British Columbia,

(A) 9.2%, if the particular supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(B) 10.8%, if the particular supply is made in Nova Scotia,

(D) 2.3%, if the particular supply is made in a non-participating province, and

(v) if subparagraphs (i) to (iv) do not apply,

(A) 10.5%, if the particular supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(B) 12%, if the particular supply is made in Nova Scotia,

(D) 3.6%, if the particular supply is made in a non-participating province;

(3) Subparagraphs 19(3)(b)(i) to (iii) of the Regulations are replaced by the following:

(i) if the registrant makes the particular supply through a permanent establishment of the registrant in Nova Scotia,

(A) 10.5%, if the particular supply is made in a participating province, and

(B) 3.7%, if the particular supply is made in a non-participating province,

(ii) if the registrant makes the particular supply through a permanent establishment of the registrant in New Brunswick or Newfoundland and Labrador,

(A) 9.3%, if the particular supply is made in a participating province, and

(B) 2.4%, if the particular supply is made in a non-participating province, and

(iii) if neither subparagraph (i) nor (ii) applies,

(A) 11.1%, if the particular supply is made in a participating province, and

(B) 4.4%, if the particular supply is made in a non-participating province;

(4) Subparagraphs 19(3)(b)(i) to (iii) of the Regulations, as enacted by subsection (3), are replaced by the following:

(i) if the registrant makes the particular supply through a permanent establishment of the registrant in Ontario,

(A) 11%, if the particular supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(B) 12.6%, if the particular supply is made in Nova Scotia,

(D) 4.2%, if the particular supply is made in a non-participating province,

(ii) if the registrant makes the particular supply through a permanent establishment of the registrant in Nova Scotia,

(A) 10.4%, if the particular supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(B) 12%, if the particular supply is made in Nova Scotia,

(D) 3.6%, if the particular supply is made in a non-participating province,

(iii) if the registrant makes the particular supply through a permanent establishment of the registrant in New Brunswick or Newfoundland and Labrador,

(A) 9.3%, if the particular supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(B) 10.9%, if the particular supply is made in Nova Scotia,

(D) 2.4%, if the particular supply is made in a non-participating province,

(iv) if the registrant makes the particular supply through a permanent establishment of the registrant in British Columbia,

(A) 10.9%, if the particular supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(B) 12.5%, if the particular supply is made in Nova Scotia,

(D) 4.1%, if the particular supply is made in a non-participating province, and

(v) if subparagraphs (i) to (iv) do not apply,

(A) 11.1%, if the particular supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(B) 12.7%, if the particular supply is made in Nova Scotia,

(D) 4.4%, if the particular supply is made in a non-participating province;

(5) Clauses 19(3)(c)(i)(A) to (C) of the Regulations are replaced by the following:

(A) if the registrant is in Nova Scotia,

(I) 9.8%, if the particular supply is made in a participating province, and

(II) 3%, if the particular supply is made in a non-participating province,

(B) if the registrant is in New Brunswick or Newfoundland and Labrador,

(I) 7.8%, if the particular supply is made in a participating province, and

(II) 0.8%, if the particular supply is made in a non-participating province, and

(I) 10.9%, if the particular supply is made in a participating province, and

(II) 4.1%, if the particular supply is made in a non-participating province, and

(6) Clauses 19(3)(c)(i)(A) to (C) of the Regulations, as enacted by subsection (5), are replaced by the following:

(A) if the registrant makes the particular supply through a permanent establishment of the registrant in Ontario,

(I) 10.2%, if the particular supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(II) 11.8%, if the particular supply is made in Nova Scotia,

(III) 9.4%, if the particular supply is made in British Columbia, and

(IV) 3.3%, if the particular supply is made in a non-participating province,

(B) if the registrant makes the particular supply through a permanent establishment of the registrant in Nova Scotia,

(I) 9.6%, if the particular supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(II) 11.2%, if the particular supply is made in Nova Scotia,

(III) 8.8%, if the particular supply is made in British Columbia, and

(IV) 2.7%, if the particular supply is made in a non-participating province,

(C) if the registrant makes the particular supply through a permanent establishment of the registrant in New Brunswick or Newfoundland and Labrador,

(I) 7.8%, if the particular supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(II) 9.4%, if the particular supply is made in Nova Scotia,

(III) 7%, if the particular supply is made in British Columbia, and

(IV) 0.8%, if the particular supply is made in a non-participating province,

(D) if the registrant makes the particular supply through a permanent establishment of the registrant in British Columbia,

(I) 10.2%, if the particular supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(II) 11.8%, if the particular supply is made in Nova Scotia,

(III) 9.4%, if the particular supply is made in British Columbia, and

(IV) 3.4%, if the particular supply is made in a non-participating province, and

(E) if clauses (A) to (D) do not apply,

(I) 10.9%, if the particular supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(II) 12.4%, if the particular supply is made in Nova Scotia,

(III) 10.1%, if the particular supply is made in British Columbia, and

(IV) 4.1%, if the particular supply is made in a non-participating province, and

(7) Clauses 19(3)(c)(ii)(A) to (C) of the Regulations are replaced by the following:

(A) if the registrant is in Nova Scotia,

(I) 10.5%, if the particular supply is made in a participating province, and

(II) 3.7%, if the particular supply is made in a non-participating province,

(B) if the registrant is in New Brunswick or Newfoundland and Labrador,

(I) 9.3%, if the particular supply is made in a participating province, and

(II) 2.4%, if the particular supply is made in a non-participating province, and

(I) 11.1%, if the particular supply is made in a participating province, and

(II) 4.4%, if the particular supply is made in a non-participating province;

(8) Clauses 19(3)(c)(ii)(A) to (C) of the Regulations, as enacted by subsection (7), are replaced by the following:

(A) if the registrant makes the particular supply through a permanent establishment of the registrant in Ontario,

(I) 10.7%, if the particular supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(II) 12.3%, if the particular supply is made in Nova Scotia,

(III) 9.9%, if the particular supply is made in British Columbia, and

(IV) 3.9%, if the particular supply is made in a non-participating province,

(B) if the registrant makes the particular supply through a permanent establishment of the registrant in Nova Scotia,

(I) 10.4%, if the particular supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(II) 12%, if the particular supply is made in Nova Scotia,

(III) 9.6%, if the particular supply is made in British Columbia, and

(IV) 3.6%, if the particular supply is made in a non-participating province,

(C) if the registrant makes the particular supply through a permanent establishment of the registrant in New Brunswick or Newfoundland and Labrador,

(I) 9.3%, if the particular supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(II) 10.9%, if the particular supply is made in Nova Scotia,

(III) 8.5%, if the particular supply is made in British Columbia, and

(IV) 2.4%, if the particular supply is made in a non-participating province,

(D) if the registrant makes the particular supply through a permanent establishment of the registrant in British Columbia,

(I) 10.7%, if the particular supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(II) 12.3%, if the particular supply is made in Nova Scotia,

(III) 9.9%, if the particular supply is made in British Columbia, and

(IV) 3.9%, if the particular supply is made in a non-participating province, and

(E) if clauses (A) to (D) do not apply,

(I) 11.1%, if the particular supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(II) 12.7%, if the particular supply is made in Nova Scotia,

(III) 10.3%, if the particular supply is made in British Columbia, and

(IV) 4.4%, if the particular supply is made in a non-participating province;

(9) Subparagraphs 19(3)(d)(i) to (iii) of the Regulations are replaced by the following:

(i) if the registrant is in Nova Scotia,

(A) 10.9%, if the particular supply is made in a participating province, and

(B) 4.1%, if the particular supply is made in a non-participating province,

(ii) if the registrant is in New Brunswick or Newfoundland and Labrador,

(A) 9.1%, if the particular supply is made in a participating province, and

(B) 2.1%, if the particular supply is made in a non-participating province, and

(iii) if neither subparagraph (i) nor (ii) applies,

(A) 11.3%, if the particular supply is made in a participating province, and

(B) 4.5%, if the particular supply is made in a non-participating province; and

(10) Subparagraphs 19(3)(d)(i) to (iii) of the Regulations, as enacted by subsection (9), are replaced by the following:

(i) if the registrant makes the particular supply through a permanent establishment of the registrant in Ontario,

(A) 11%, if the particular supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(B) 12.5%, if the particular supply is made in Nova Scotia,

(D) 4.2%, if the particular supply is made in a non-participating province,

(ii) if the registrant makes the particular supply through a permanent establishment of the registrant in Nova Scotia,

(A) 10.8%, if the particular supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(B) 12.4%, if the particular supply is made in Nova Scotia,

(D) 4%, if the particular supply is made in a non-participating province,

(iii) if the registrant makes the particular supply through a permanent establishment of the registrant in New Brunswick or Newfoundland and Labrador,

(A) 9.1%, if the particular supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(B) 10.7%, if the particular supply is made in Nova Scotia,

(D) 2.1%, if the particular supply is made in a non-participating province,

(iv) if the registrant makes the particular supply through a permanent establishment of the registrant in British Columbia,

(A) 10.5%, if the particular supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(B) 12%, if the particular supply is made in Nova Scotia,

(D) 3.6%, if the particular supply is made in a non-participating province, and

(v) if subparagraphs (i) to (iv) do not apply,

(A) 11.3%, if the particular supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(B) 12.8%, if the particular supply is made in Nova Scotia,

(D) 4.5%, if the particular supply is made in a non-participating province; and

(11) Subparagraphs 19(3)(e)(i) to (iii) of the Regulations are replaced by the following:

(i) if the registrant is in Nova Scotia or New Brunswick,

(A) 10.7%, if the particular supply is made in a participating province, and

(B) 3.9%, if the particular supply is made in a non-participating province,

(ii) if the registrant is in Newfoundland and Labrador,

(A) 9.7%, if the particular supply is made in a participating province, and

(B) 2.8%, if the particular supply is made in a non-participating province, and

(iii) if neither subparagraph (i) nor (ii) applies,

(A) 11.5%, if the particular supply is made in a participating province, and

(B) 4.7%, if the particular supply is made in a non-participating province.

(12) Subparagraphs 19(3)(e)(i) to (iii) of the Regulations, as enacted by subsection (11), are replaced by the following:

(i) if the registrant makes the particular supply through a permanent establishment of the registrant in Ontario or British Columbia,

(A) 11.1%, if the particular supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(B) 12.6%, if the particular supply is made in Nova Scotia,

(D) 4.3%, if the particular supply is made in a non-participating province,

(ii) if the registrant makes the particular supply through a permanent establishment of the registrant in Nova Scotia,

(A) 10.5%, if the particular supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(B) 12.1%, if the particular supply is made in Nova Scotia,

(D) 3.7%, if the particular supply is made in a non-participating province,

(iii) if the registrant makes the particular supply through a permanent establishment of the registrant in New Brunswick,

(A) 10.7%, if the particular supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(B) 12.3%, if the particular supply is made in Nova Scotia,

(D) 3.9%, if the particular supply is made in a non-participating province,

(iv) if the registrant makes the particular supply through a permanent establishment of the registrant in Newfoundland and Labrador,

(A) 9.7%, if the particular supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(B) 11.2%, if the particular supply is made in Nova Scotia,

(D) 2.8%, if the particular supply is made in a non-participating province, and

(v) if subparagraphs (i) to (iv) do not apply,

(A) 11.5%, if the particular supply is made in Ontario, New Brunswick or Newfoundland and Labrador,

(B) 13%, if the particular supply is made in Nova Scotia,

(D) 4.7%, if the particular supply is made in a non-participating province.

(13) Paragraph 19(4)(b) of the Regulations is replaced by the following:

(b) the supplier is deemed to have made the supply through a permanent establishment of the supplier in a non-participating province.

(14) Subsection 19(5) of the Regulations is replaced by the following:

(5) For the purpose of determining under subsection (3) the special quick-method rate of a registrant for a reporting period, the registrant may,

(a) if substantially all of the supplies (other than specified supplies) made in the reporting period by the registrant through a permanent establishment of the registrant are made in a participating province, treat all of the supplies made by the registrant in the reporting period through that establishment as having been made in the participating province; and

(b) if substantially all of the supplies (other than specified supplies) made in the reporting period by the registrant through a permanent establishment of the registrant are made in non-participating provinces, treat all of the supplies made by the registrant in the reporting period through that establishment as having been made in a non-participating province.

21. Subsection 21(3) of the Regulations is replaced by the following:

(3) If an election by a registrant that is a university or public college to determine the net tax for reporting periods of the registrant in accordance with this Part becomes effective in the particular fiscal year of the registrant that is the first fiscal year of the registrant in which the registrant carries on the business of making taxable supplies through a retail establishment (other than a restaurant, cafeteria, pub or similar establishment) and those supplies are primarily supplies of tangible personal property, the special quick-method rate for a particular supply made by the registrant in the course of an activity that the registrant engages in acting in the registrant’s capacity as a university or public college and for reporting periods of the registrant ending in the particular fiscal year is, if it is reasonable to expect that the special quick-method rate for such a supply and for reporting periods of the registrant ending in the fiscal year of the registrant immediately following the particular fiscal year will be a particular percentage set out in subparagraph 19(3)(c)(i), that particular percentage.

PART 6

DEDUCTION FOR PROVINCIAL REBATE (GST/HST) REGULATIONS

22. Paragraph 2.1(a) of the Deduction for Provincial Rebate (GST/HST) Regulations (see footnote 6) is replaced by the following:

(a) the reference to “a supply made in a participating province” in paragraph (a) of the definition “tax fraction” in subsection 181(1) of the Act is to be read as “a supply made in a participating province (other than a supply in respect of which the supplier pays to, or credits in favour of, the recipient of the supply an amount prescribed for the purposes of subsection 234(3) or a supply in respect of which the supplier credits a qualifying amount (as defined in section 1 of the Credit for Provincial Relief (HST) Regulations) to a person)”; and

PART 7

NEW HARMONIZED VALUE-ADDED TAX SYSTEM REGULATIONS

23. The portion of subsection 13(1) of the New Harmonized Value-added Tax System Regulations (see footnote 7) before paragraph (a) is replaced by the following:

General rule for services — address obtained

13. (1) Subject to sections 14 to 17, a supply of a service is made in a province if, in the ordinary course of business of the supplier, the supplier obtains an address in the province that is

24. The Regulations are amended by adding the following after section 47:

Definition of “interment property”

47.1 (1) In this section, “interment property” means real property that is for the interment, entombment or inurnment of human remains.

Interment property

(2) No tax is payable under subsection 165(2) of the Act in respect of a supply of interment property made by way of lease, licence or similar arrangement in a specified province under an agreement for the supply of interment property if the agreement is entered into in writing before July 1, 2010.

PART 8

NEW HARMONIZED VALUE-ADDED TAX SYSTEM REGULATIONS, NO. 2

25. Paragraph 2(1)(c) of the New Harmonized Value-added Tax System Regulations, No. 2 (see footnote 8) is replaced by the following:

26. The Regulations are amended by adding the following before section 8:

Additional specified item

7.1 For the purposes of this Division, property or a service in respect of which a person has been paid or credited, or is entitled to be paid or credited, a qualifying amount (as defined in section 1 of the Credit for Provincial Relief (HST) Regulations) is a specified item in respect of Ontario.

Specified provincial tax

7.2 For the purposes of the new harmonized value-added tax system, paragraph (c) of the definition “specified provincial tax” in section 220.01 of the Act is adapted as follows:

(c) in the case of a vehicle registered in the province of Newfoundland and Labrador, the tax imposed under Part VIII of the Revenue Administration Act, S.N.L. 2009, c. R-15.01, as amended from time to time; and

27. Section 12 of the Regulations is replaced by the following:

Non-taxable property — restriction

12. For the purposes of paragraphs 220.05(3)(a) and 220.06(3)(a) of the Act, property that is included in section 18, 20 or 21 of Part I of Schedule X to the Act is prescribed property, except if the property is included in another section (other than sections 18, 20 and 21) of that Part.

28. Section 14 of the Regulations is replaced by the following:

Non-taxable property and services — restriction

14. For the purposes of paragraph 220.08(3)(a) of the Act, a supply that is included in section 4 of Part II of Schedule X to the Act is a prescribed supply, except if the supply is included in another section of that Part.

29. Paragraph 15(b) of the French version of the Regulations is replaced by the following:

b) le total des montants, dont chacun représente un montant de taxe qui, en l’absence du présent alinéa et des alinéas 10b) et 11b), deviendrait payable par la personne en vertu de la section IV.1 de la partie IX de la Loi et à l’égard duquel le paragraphe 220.09(3) de la Loi ne s’appliquerait pas si cette taxe devenait payable par la personne, correspond à 25 $ ou moins au cours du mois civil qui comprend le moment donné.

30. The Regulations are amended by adding the following before section 23:

Additional specified item

22.1 For the purposes of this Division, property in respect of which a person has been paid or credited, or is entitled to be paid or credited, a qualifying amount (as defined in section 1 of the Credit for Provincial Relief (HST) Regulations) is a specified item in respect of Ontario.

31. Subsection 29(1) of the Regulations is amended by striking out “and” at the end of paragraph (d) and by adding the following after paragraph (e):

(f) in the case of a supply of the specified property or service made between persons not dealing with each other at arm’s length for no consideration, the supply had been made for consideration, paid at the time the supply was made, of a value equal to the fair market value of the property or service at that time; and

(g) in the case of a supply of the specified property or service made between persons not dealing with each other at arm’s length for consideration less than the fair market value of the specified property or service at the time the supply is made, the value of the consideration were equal to the fair market value of the specified property or service at that time.

32. The portion of section 34 of the Regulations before the formula is replaced by the following:

Prescribed manner

34. For the purposes of subsection 236.01(3) of the Act, if a qualifying motor vehicle in respect of which a person added an amount under subsection 236.01(2) of the Act in determining its net tax and in respect of which paragraph 28(1)(a) applies is supplied by way of sale by the person to another person that is not related to the person, or is removed from a specified province and registered outside the specified province by the person, the person may deduct from its net tax for the reporting period of the person that includes the time prescribed in section 33 the amount determined by the formula

33. (1) Subsection 51(5) of the Regulations is replaced by the following:

Input tax credit — first reseller

(5) If an individual makes a particular taxable supply by way of sale of a single unit residential complex (other than a floating home or a mobile home) to a person under an agreement evidenced in writing, the individual is the recipient of a previous supply of the complex in respect of which no tax is payable under subsection 165(2) of the Act pursuant to subsection (1) or (2) and tax under subsection 165(2) of the Act is payable in respect of the particular supply, for the purposes of determining an input tax credit of the individual and for the purposes of section 54, the individual is deemed to have received another taxable supply in respect of the complex and to have paid, at the time possession of the complex is transferred to the person, tax in respect of the other supply equal to 2% of the consideration for the previous supply made to the individual by the original vendor of the complex.

(2) Subsection 51(9) of the Regulations is amended by adding “and” at the end of paragraph (b), by striking out “and” at the end of paragraph (c) and by repealing paragraph (d).

34. (1) Subsection 52(5) of the Regulations is replaced by the following:

Input tax credit — first reseller

(5) If a particular person makes a particular taxable supply by way of sale of a residential condominium unit to another person under an agreement evidenced in writing, the particular person is the recipient of a previous supply of the unit in respect of which no tax is payable under subsection 165(2) of the Act pursuant to subsection (1) or (2) and tax under subsection 165(2) of the Act is payable in respect of the particular supply, for the purposes of determining an input tax credit of the particular person and for the purposes of section 54, the particular person is deemed to have received another taxable supply in respect of the unit and to have paid, at the time possession of the unit is transferred to the other person, tax in respect of the other supply equal to 2% of the consideration for the previous supply made to the particular person by the original vendor of the unit.

(2) Subsection 52(9) of the Regulations is amended by adding “and” at the end of paragraph (b), by striking out “and” at the end of paragraph (c) and by repealing paragraph (d).

35. (1) Subsection 53(5) of the Regulations is replaced by the following:

Input tax credit — first reseller

(5) If a particular person makes a particular taxable supply by way of sale of a condominium complex, or any residential condominium unit located in a condominium complex, to another person under an agreement evidenced in writing, the particular person is the recipient of a previous supply of the complex in respect of which no tax is payable under subsection 165(2) of the Act pursuant to subsection (1) or (2) and tax under subsection 165(2) of the Act is payable in respect of the particular supply, for the purposes of determining an input tax credit of the particular person and for the purposes of section 54,

(a) if the particular supply is a supply of a condominium complex, the particular person is deemed to have received another taxable supply in respect of the complex and to have paid, at the time possession of the complex is transferred to the other person, tax in respect of the other supply equal to 2% of the consideration for the previous supply made to the particular person by the original vendor of the complex; or

(b) if the particular supply is a supply of a residential condominium unit located in a condominium complex, the particular person is deemed to have received another taxable supply in respect of the complex and to have paid, at the time possession of the unit is transferred to the other person, tax in respect of the other supply equal to 2% of the consideration for the previous supply made to the particular person by the original vendor of the complex multiplied by the percentage of total floor space (as defined in subsection 256.2(1) of the Act) of the unit.

(2) Subsection 53(11) of the Regulations is amended by adding “and” at the end of paragraph (b), by striking out “and” at the end of paragraph (c) and by repealing paragraph (d).

36. Subsection 54(1) of the Regulations is replaced by the following:

Non-registrant rebate

54. (1) For the purposes of subsection 256.21(1) of the Act, if a person that is not a registrant is deemed to have paid tax under subsection 51(5), 52(5) or 53(5) in respect of a taxable supply that is in respect of a residential complex, the person is a prescribed person and the amount of the rebate in respect of the complex under subsection 256.21(1) of the Act is equal to the amount of that tax.

37. Subparagraphs (ii) and (iii) of the description of A in paragraph (b) of the definition “estimated provincial levy” in subsection 55(1) of the Regulations are replaced by the following:

(ii) in the case where tax was deemed under paragraph 52(1)(e) to have been collected in respect of a taxable supply that is in respect of the complex and the rebate is a rebate under subsection 256.21(1) of the Act, the amount of which is determined under subsection 57(4), that is payable to the builder of the complex, the consideration for the supply,

(iii) in the case of a complex that is a residential condominium unit, if tax was deemed under paragraph 53(1)(e) to have been collected in respect of a taxable supply that is in respect of the condominium complex in which the unit is situated and the rebate is a rebate under subsection 256.21(1) of the Act, the amount of which is determined under subsection 57(4), that is payable to the builder of the complex, the portion of the consideration for the supply that is attributable to that unit,

38. Subparagraph 56(1)(a)(i) of the Regulations is replaced by the following:

(i) is deemed under section 191 of the Act to have made a taxable supply of the complex as a consequence of giving possession or use of the complex to a person or of occupying it as a place of residence, or

PART 9

TRANSITIONAL PROVISIONS AND APPLICATION

TRANSITIONAL PROVISIONS

39. For the purposes of Part IX of the Excise Tax Act , if a provincial gaming authority is, or would be in the absence of subsection 261(3) of the Excise Tax Act , entitled to a rebate under subsection 261(1) of the Excise Tax Act of the difference between the amount that was paid by the authority, before the day on which these Regulations are published in the Canada Gazette, as imputed tax payable under subsection 7(7) of the Games of Chance (GST/HST) Regulations on gaming expenses for a reporting period of the authority ending after June 30, 2006 and before January 1, 2008 and the amount of the imputed tax payable by the authority on gaming expenses for that reporting period that is computed under subsection 7(7) of the Games of Chance (GST/HST) Regulations, as amended by subsections 12(11), (17), (19), (22) and (25), the authority may, despite subsection 261(3) of the Excise Tax Act , file an application, on or before the day that is one year after the day on which these Regulations are published in the Canada Gazette, for a rebate under subsection 261(1) of the Excise Tax Act of the portion of that difference that is solely attributable to the enactments under those subsections.

40. For the purposes of Part IX of the Excise Tax Act , if a provincial gaming authority is, or would be in the absence of subsection 261(3) of the Excise Tax Act, entitled to a rebate under subsection 261(1) of the Excise Tax Act of the difference between the amount that was paid by the authority, before the day on which these Regulations are published in the Canada Gazette, as imputed tax payable under subsection 7(7) of the Games of Chance (GST/HST) Regulations on gaming expenses for a reporting period of the authority ending on or after January 1, 2008 and the amount of the imputed tax payable by the authority on gaming expenses for that reporting period that is computed under subsection 7(7) of the Games of Chance (GST/HST) Regulations, as amended by subsections 12(12), (18), (20), (23) and (26), the authority may, despite subsection 261(3) of the Excise Tax Act, file an application, on or before the day that is one year after the day on which these Regulations are published in the Canada Gazette, for a rebate under subsection 261(1) of the Excise Tax Act of the portion of that difference that is solely attributable to the enactments under those subsections.

APPLICATION

41. Section 3 is deemed to have come into force on November 17, 2005.

42. Section 6 applies to supplies made on or after November 17, 2005.

43. Subsections 10(1) and (2) are deemed to have come into force on April 1, 2000.

44. Subsection 10(3) is deemed to have come into force on June 26, 2008.

45. Subsections 10(4), 11(2) and (4), 12(10), (13), (16) and (21) and sections 13, 14 and 16 are deemed to have come into force on December 31, 1990 except that, in respect of any supply made on or before October 3, 2003,

(a) the definition “period cost” in subsection 5(1) of the Games of Chance (GST/HST) Regulations, as enacted by subsection 11(4), is to be read without reference to paragraphs (c) and (d) of that definition;

(b) the reference to “tangible personal property or real property” in clause (d)(iii)(A) of the description of A ₁ in subsection 7(7) of the Games of Chance (GST/HST) Regulations, as enacted by subsection 12(13), is to be read as a reference to “real property”; and

(c) section 13 does not apply to an input tax credit or an imputed input tax credit that a provincial gaming authority claimed in a return that was filed before October 3, 2003 under Division V of Part IX of the Excise Tax Act .

46. Subsections 11(1) and (5) to (7) apply to any supply made after July 5, 2000.

47. Subsection 11(3) is deemed to have come into force on October 3, 2003.

48. Subsections 12(1), (3), (5) and (7) are deemed to have come into force on July 1, 2006.

49. Subsections 12(2), (4), (6) and (8) are deemed to have come into force on January 1, 2008.

50. Subsection 12(9) applies to any supply made after October 3, 2003.

51. Subsections 12(11), (17) and (19) apply to any reporting period of a provincial gaming authority that ends on or after July 1, 2006.

52. Subsections 12(12), (18) and (20) apply to any reporting period of a provincial gaming authority that ends on or after January 1, 2008.

53. Subsections 12(14) and (15) apply for the purpose of determining, under subsection 7(7) of the Games of Chance (GST/HST) Regulations, the imputed tax payable by a provincial gaming authority on gaming expenses for any reporting period of the authority that ends after January 1, 1996.

54. Subsection 12(22) applies to the 2006 and 2007 calendar years, except that, in respect of the 2006 calendar year, the references to “10%” and “4%” in the description of E₃in subsection 7(7) of the Games of Chance (GST/HST) Regulations, as enacted by subsection 12(22), are to be read as references to “10.5%” and “4.5%”, respectively.

55. Subsection 12(23) applies to the 2008 and 2009 calendar years.

56. Subsection 12(24) applies to the 2010 and subsequent calendar years, except that, in respect of the 2010 calendar year,

(a) the reference in subclause (i)(A)(I) of the description of E₃in subsection 7(7) of the Games of Chance (GST/HST) Regulations, as enacted by subsection 12(24), to “the percentage referred to in paragraph 2(a) of the Automobile Operating Expense Benefit (GST/HST) Regulations” is to be read as a reference to “6%” if the last establishment of the authority at which the individual ordinarily worked, or to which the individual ordinarily reported, in the year in relation to the individual’s office or employment with the authority is located in Ontario;

(b) the reference in subclause (i)(A)(II) of the description of E₃in subsection 7(7) of the Games of Chance (GST/HST) Regulations, as enacted by subsection 12(24), to “the percentage referred to in paragraph 2(b) of the Automobile Operating Expense Benefit (GST/HST) Regulations” is to be read as a reference to “10%”; and

(c) the reference in subclause (i)(A)(III) of the description of E₃in subsection 7(7) of the Games of Chance (GST/HST) Regulations, as enacted by subsection 12(24), to “the percentage referred to in paragraph 2(c) of the Automobile Operating Expense Benefit (GST/HST) Regulations” is to be read as a reference to “4%”.

57. Subsection 12(25) applies to the 2006 and 2007 calendar years, except that, in respect of the 2006 calendar year, the references to “5%” in the description of E₄in subsection 7(7) of the Games of Chance (GST/HST) Regulations, as enacted by subsection 12(25), are to be read as references to “5.5%”.

58. Subsection 12(26) applies to the 2008 and subsequent calendar years.

59. Subsection 15(1) applies for the purpose of determining, under subsection 7(7) of the Games of Chance (GST/HST) Regulations, the imputed tax payable by a provincial gaming authority in respect of expenses incurred by the Interprovincial Lottery Corporation in conducting a game of chance for any reporting period of the authority that ends on or after July 1, 2006.

60. Subsection 15(2) applies for the purpose of determining, under subsection 7(7) of the Games of Chance (GST/HST) Regulations, the imputed tax payable by a provincial gaming authority in respect of expenses incurred by the Interprovincial Lottery Corporation in conducting a game of chance for any reporting period of the authority that ends on or after January 1, 2008.

61. Subsection 17(1) is deemed to have come into force on January 1, 1991.

62. Subsection 17(2) is deemed to have come into force on June 1, 1991.

63. Subsection 17(3) is deemed to have come into force on September 1, 1991.

64. Subsections 18(1) and (3) apply for the purpose of determining the net tax of a registrant for reporting periods ending after December 2007, except that the quick-method rate of the registrant for the reporting period of the registrant that includes January 1, 2008 and that applies in respect of a supply is, in respect of consideration for the supply that is paid or becomes due before that day, the quick-method rate of the registrant for that period that would apply if those subsections did not come into force.

65. Subsections 18(2), (4) and (5) apply for the purpose of determining the net tax of a registrant for reporting periods ending after June 2010, except that the quick-method rate of the registrant for the reporting period of the registrant that includes July 1, 2010 and that applies in respect of a supply is, in respect of consideration for the supply that is paid or becomes due before that day, the quick-method rate of the registrant for that period that would apply if those subsections did not come into force.

66. Subsection 19(1) applies for the purpose of determining the net tax of a registrant for reporting periods ending after December 2007, except that if a reporting period of the registrant includes January 1, 2008, paragraph (c) of the description of C in subsection 17(1) of the Streamlined Accounting (GST/HST) Regulations, as enacted by subsection 19(1), is to be read as follows:

[(2.5% × C₁) + (2.8% × C₂)] - [(2.1% × C₃) + (2.5% × C₄) + (2.8% × C₅)]

where

C₁ is, in respect of specified supplies to which the quick-method rate of 0% applies, the total of

(i) all consideration for specified supplies made by the registrant that became due, or was paid without having become due, to the registrant during that particular reporting period but before January 1, 2008, and

(ii) all amounts that became collectible, and all other amounts collected, by the registrant during that particular reporting period as or on account of tax under Division II at the rate of 6% in respect of specified supplies made by the registrant,

C₂ is, in respect of specified supplies to which the quick-method rate of 0% applies, the total of

(ii) all amounts that became collectible, and all other amounts collected, by the registrant during that particular reporting period as or on account of tax under Division II at the rate of 5% in respect of specified supplies made by the registrant,

C₃is the total of all amounts each of which is an amount that the registrant has, in that particular reporting period, paid or credited to a person as or on account of

(i) a reduction in, or a rebate or refund of, all or part of the consideration for a specified supply made by the registrant to the person, if the consideration for the specified supply became due, or was paid without having become due, before July 1, 2006 and the quick-method rate in respect of the specified supply is 0%, or

(ii) a refund of, or a credit for, tax under Division II charged to or collected from the person at the rate of 7% in respect of a specified supply made by the registrant, if the quick-method rate in respect of the specified supply is 0%,

C₄ is the total of all amounts each of which is an amount that the registrant has, in that particular reporting period, paid or credited to a person as or on account of

(i) a reduction in, or a rebate or refund of, all or part of the consideration for a specified supply made by the registrant to the person, if the consideration for the specified supply became due, or was paid without having become due, on or after July 1, 2006 and before January 1, 2008 and the quick-method rate in respect of the specified supply is 0%, or

(ii) a refund of, or a credit for, tax under Division II charged to or collected from the person at the rate of 6% in respect of a specified supply made by the registrant, if the quick-method rate in respect of the specified supply is 0%, and

C₅ is the total of all amounts each of which is an amount that the registrant has, in that particular reporting period, paid or credited to a person as or on account of

(i) a reduction in, or a rebate or refund of, all or part of the consideration for a specified supply made by the registrant to the person, if the consideration for the specified supply became due, or was paid without having become due, on or after January 1, 2008 and the quick-method rate in respect of the specified supply is 0%, or

(ii) a refund of, or a credit for, tax under Division II charged to or collected from the person at the rate of 5% in respect of a specified supply made by the registrant, if the quick-method rate in respect of the specified supply is 0%; and

67. Subsection 19(2) applies for the purpose of determining the net tax of a registrant for reporting periods ending after June 2010, except that in applying paragraph (d) of the description of C in subsection 17(1) of the Streamlined Accounting (GST/HST) Regulations , as enacted by subsection 19(2), in respect of a reporting period of the registrant that includes July 1, 2010 and in respect of consideration for a supply that is paid or becomes due before that day, the reference to “4%” is to be read as a reference to “2.8%”.

68. Subsections 20(1), (3), (5), (7), (9) and (11) apply for the purpose of determining the net tax of a registrant for reporting periods ending after December 2007, except that the special quick-method rate of the registrant for the reporting period of the registrant that includes January 1, 2008 and that applies in respect of a supply is, in respect of consideration for the supply that is paid or becomes due before that day, the special quick-method rate of the registrant for that period that would apply if those subsections did not come into force.

69. Subsections 20(2), (4), (6), (8), (10) and (12) to (14) apply for the purpose of determining the net tax of a registrant for reporting periods ending after June 2010, except that the special quick-method rate of the registrant for the reporting period of the registrant that includes July 1, 2010 and that applies in respect of a supply is, in respect of consideration for the supply that is paid or becomes due before that day, the special quick-method rate of the registrant for that period that would apply if those subsections did not come into force.

70. Section 21 applies for the purpose of determining the net tax of a registrant for reporting periods ending on or after April 1, 1997.

71. Section 22, section 7.1 of the New Harmonized Value-Added System Regulations, No. 2 , as enacted by section 26, and section 30 are deemed to have come into force on September 1, 2010.

72. Section 23 applies to any supply made

(a) on or after May 1, 2010; and

(b) after February 25, 2010 and before May 1, 2010 unless any part of the consideration for the supply becomes due or is paid before May 1, 2010.

73. Section 24 is deemed to have come into force on October 15, 2009.

74. Sections 25, 27, 37 and 38 are deemed to have come into force on July 1, 2010.

75. Section 7.2 of the New Harmonized Value-Added System Regulations, No. 2 , as enacted by section 26, is deemed to have come into force on May 28, 2009.

76. Sections 28 and 29 apply

(a) to any supply made on or after July 1, 2010; and

(b) in respect of any consideration for a supply that becomes due, or is paid without having become due, on or after July 1, 2010.

77. Sections 31 and 32 apply in respect of any reporting period of a person that ends on or after July 1, 2010.

78. Subsections 33(1), 34(1) and 35(1) are deemed to have come into force on June 18, 2009, except that, before July 1, 2010, subsection 51(5) of the New Harmonized Value-added Tax System Regulations, No. 2 , as enacted by subsection 33(1), subsection 52(5) of those Regulations, as enacted by subsection 34(1), and subsection 53(5) of those Regulations, as enacted by subsection 35(1), are to be read without reference to “and for the purposes of section 54”.

79. Subsection 33(2) applies in respect of any taxable supply by way of sale of a single unit residential complex made after the day on which these Regulations are published in the Canada Gazette, unless the supply is made pursuant to an agreement of purchase and sale, evidenced in writing, entered into on or before that day.

80. Subsection 34(2) applies in respect of any taxable supply by way of sale of a residential condominium unit made after the day on which these Regulations are published in the Canada Gazette, unless the supply is made pursuant to an agreement of purchase and sale, evidenced in writing, entered into on or before that day.

81. Subsection 35(2) applies in respect of any taxable supply by way of sale of a condominium complex or residential condominium unit made after the day on which these Regulations are published in the Canada Gazette, unless the supply is made pursuant to an agreement of purchase and sale, evidenced in writing, entered into on or before that day.

82. Section 36 applies to any rebate in respect of a residential complex for which an application is filed after the day on which these Regulations are published in the Canada Gazette, unless the rebate is in respect of tax deemed under subsection 51(9), 52(9) or 53(11) of the New Harmonized Value-added Tax System Regulations, No. 2, as the case may be, to have been paid in respect of the taxable supply by way of sale, referred to in whichever of those subsections is applicable, of the residential complex that is made pursuant to an agreement of purchase and sale, evidenced in writing, entered into on or before that day.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issue and objectives

The Government of Ontario and the Government of British Columbia announced their intention to adopt the Harmonized Sales Tax (HST) on March 26, 2009, and July 23, 2009, respectively, with an effective date of July 1, 2010. On April 6, 2010, the Government of Nova Scotia announced its intention to change, effective July 1, 2010, the rate of the Nova Scotia component of the HST from 8% to 10%.

Under the Comprehensive Integrated Tax Co-ordination Agreements (CITCAs) between Canada and Ontario, Canada and Nova Scotia, and Canada and British Columbia, each of these provinces is entitled to certain elements of provincial tax policy flexibility, such as establishing the rate of the provincial component of the HST, limited point-of-sale rebates for the provincial component of the HST and the rate of some targeted rebates. The CITCAs are the federal-provincial agreements that detail the parameters agreed upon between Canada and each of these provinces to govern the application of the HST under federal legislation and administration, on the same tax base as the federal Goods and Services Tax (GST). The Excise Tax Act (ETA) applies the provincial component of the HST on transactions related to provinces that participate in the HST. Amendments to existing regulations are required to implement, in accordance with the CITCAs and the new harmonized value-added tax system under the ETA, the elements of provincial tax policy flexibility previously announced by each of these provinces.

In order to facilitate the transition to the HST, various announcements of rules have been made. For instance, the Department of Finance announced on June 30, 2010, revised remittance rates for streamlined accounting methods which reflect the adoption of the HST by Ontario and British Columbia and the change from 8% to 10% of the Nova Scotia component of the HST. The same announcement also included a clarification regarding the application of the provincial component of the HST to supplies of interment rights under the general HST transitional rules for Ontario and British Columbia.

The Regulations Amending Various GST/HST Regulations, No. 2 (the Regulations) formalize and give legal force to the measures related to provincial tax policy flexibility of Ontario, Nova Scotia and British Columbia as well as introduce other rules required to accommodate the elements of provincial tax policy flexibility permitted under the new harmonized value-added tax system.

In addition to regulatory changes required in relation to the new harmonized value-added tax system under the ETA, the Department of Finance has previously announced a number of amendments to the Games of Chance (GST/HST) Regulations and the Joint Venture (GST/HST) Regulations. Certain amendments are consequential to reductions in the rate of the GST and the federal component of the HST. Also included in the Regulations are amendments to the Closely Related Corporations (GST/HST) Regulations and the Financial Services (GST/HST) Regulations. These amendments are consequential to previously announced amendments to the ETA that received Royal Assent on June 22, 2007. The Regulations also make technical housekeeping amendments to address oversights and ensure the proper functioning of certain regulations. All of the provisions contained in the Regulations are amendments to existing GST/HST regulations.

On June 17, 2010, the Government of Ontario announced its intention to offer a credit, effective September 1, 2010, for the provincial component of the HST generally in respect of a supply of qualifying property or services made in Ontario to a status Indian, a band or a council of a band (as those terms are defined in the Indian Act, R.S.C. 1985, c. I-5). To accommodate Ontario’s decision of providing provincial relief to its status Indians equivalent to the Ontario portion of the HST, an amendment to the CITCA with the Government of Ontario was executed and the Government of Canada subsequently released the Credit for Provincial Relief (HST) Regulations in draft form on August 30, 2010. The Regulations Amending Various GST/HST Regulations, No. 2 also include certain rules necessary to facilitate delivery of the credit offered by Ontario.

Description and rationale

With the passage of the Provincial Choice Tax Framework Act on December 15, 2009, Parliament has approved the implementation on July 1, 2010, of the HST in Ontario with a provincial component of 8% and in British Columbia with a provincial component of 7% as well as the mechanisms to facilitate the application of certain HST rules by way of regulations.

The Regulations contain rules relating to the new harmonized value-added tax system under the ETA, as well as other elements such as rules relating to certain joint venture activities, refinements to rules for provincial gaming authorities and changes to streamlined accounting rates. Specifically, these Regulations cover amendments to

Streamlined Accounting (GST/HST) Regulations;
Games of Chance (GST/HST) Regulations;
New Harmonized Value-added Tax System Regulations, No. 2;
New Harmonized Value-added Tax System Regulations;
Deduction for Provincial Rebate (GST/HST) Regulations;
Joint Venture (GST/HST) Regulations;
Closely Related Corporations (GST/HST) Regulations; and
Financial Services (GST/HST) Regulations.

Streamlined Accounting (GST/HST) Regulations

These Regulations provide small businesses and eligible public service bodies optional simplified methods (i.e. a Quick or Special Quick Method) of calculating their GST/HST remittances. These methods allow the business or public service body to remit an amount of tax that is a percentage (the “remittance rate”) of its eligible GST/HST-included sales. This allows the entity to avoid having to keep track of the GST/HST paid on purchases and collected on sales separately. Certain extraordinary transactions are excluded from these rules (e.g. the sale or purchase of real property). In such cases, the tax must be accounted for separately under the normal GST/HST rules.

These Regulations are amended to provide for new remittance rates under the streamlined accounting methods to reflect the implementation of an HST in Ontario and British Columbia, effective on July 1, 2010, as well as Nova Scotia’s increase in the provincial component of the HST, from 8% to 10%, also effective on July 1, 2010. The amendments to these regulations also include previously announced remittance rates resulting from the GST rate reduction of January 1, 2008.

In addition, the former rules generally enabled a small business or eligible public service body to use one remittance rate for its eligible supplies made through a permanent establishment of the entity provided that those supplies were made either substantially all in any of the participating provinces or substantially all in non-participating provinces. These rules are amended to reflect the introduction of provincial tax policy flexibility (e.g. setting the rate of the provincial component of the HST).

Games of Chance (GST/HST) Regulations

These Regulations provide the methodology by which provincial gaming authorities are required to remit GST/HST on gaming supplies. The Regulations are updated to reflect the GST rate reductions of July 1, 2006, and January 1, 2008; the timing of the introduction of HST in the provinces of British Columbia and Ontario and the rates of HST imposed by those provinces; and the timing and increase in the provincial component of the HST in Nova Scotia.

In addition, the New Brunswick Lotteries and Gaming Corporation has been added to the list of prescribed registrants that are required to remit GST/HST based on these rules. Further updates incorporate previously proposed amendments of a technical nature including extending relief for non-taxable reimbursements to payments made by casino operators to small suppliers; amending the calculation of imputed tax to exclude certain remuneration to a contract operator’s employees; updating the definition of what constitutes a “promotional supply”; and providing the method by which a provincial gaming authority is to account for tax when it is a distributor of another provincial gaming authority in relation to a game of chance.

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

Part 5 of these Regulations sets out rules for self-assessment and rebates of the provincial component of the HST for property or services moved between participating provinces with different rates of the provincial component of the HST. These Regulations are amended to ensure that a person who has received a credit for the provincial component of the HST in respect of property or a service supplied to a status Indian, a band or a council of a band cannot also, in respect of the same property or service, receive a rebate, or be relieved from a self-assessment of tax, the amount of which is determined under Part 5 of these Regulations.

Since implementation of the HST in Ontario and British Columbia on July 1, 2010, affected stakeholders have raised technical concerns regarding the proper application of certain rules. In general, these Regulations are amended to address these technical concerns. For instance, with respect to the transitional housing rebate in respect of certain real property, the rebate is adjusted to ensure that it can also be paid to a person that is a non-registrant for GST/HST purposes. In addition, with respect to the rules relating to the recapture of specified provincial input tax credits, technical changes are required to ensure that situations involving non-arm’s length transactions for no consideration or for consideration that is less than fair market value are treated as intended as fair-market-value transactions.

New Harmonized Value-added Tax System Regulations

The general HST transitional rules for Ontario and British Columbia provide that the provincial component of the HST does not apply to a funeral or cemetery service if it is supplied pursuant to a written arrangement that is entered into before July 1, 2010, and, at the time that the arrangement is entered into, it is reasonable to expect that all or a part of the funds for the service would be paid before the individual’s death. These Regulations clarify that the provincial component of the HST also does not apply to interment property (i.e. real property for the interment, entombment or inurnment of human remains) supplied under a written agreement that is entered into before July 1, 2010.

Deduction for Provincial Rebate (GST/HST) Regulations

In general, these Regulations facilitate the delivery of point-of-sale rebates of the provincial component of the HST that are provided by provinces that participate in the new harmonized value-added tax system. These Regulations are amended consequential to the introduction by Ontario of the credit to status Indians described above so that, in circumstances where a coupon is accepted as consideration, the treatment of the credit is similar to the treatment of a point-of-sale rebate in such circumstances.

Joint Venture (GST/HST) Regulations

These Regulations describe certain joint venture activities in respect of which an election under the ETA may be available. The operator of a joint venture and a co-venturer in that joint venture may elect to have the operator account for the GST/HST on property and services that are supplied, acquired, imported or brought into a participating province by the operator on behalf of the co-venturer if, generally, two conditions exist. First, the supply, acquisition, importation or bringing in must be made pursuant to a written joint venture agreement between the operator and the co-venturer and, secondly, it must be made in the course of joint venture activities that are described in the ETA or that are prescribed by regulation. These Regulations are amended to prescribe a number of eligible joint venture activities that were previously announced or confirmed by the Department of Finance. Some of these prescribed activities include the operation of a facility that is used to generate electricity, the operation of a transmission line that is used to transmit electrical power and the operation of a lumber, plywood, shake and shingle, pulp, paper or similar wood processing facility.

Closely Related Corporations (GST/HST) Regulations

These Regulations set out the circumstances where two corporations are closely related for the purposes of the GST/HST, which allows for the corporations to make certain elections under the ETA for the GST/HST-free transfer of goods and services between them. Amendments to the ETA that previously received Royal Assent removed the requirements that two corporations be resident in Canada and be registrants for GST/HST purposes in order to be closely related. The previously announced proposed technical amendments to these Regulations are consequential to those ETA amendments and remove the same requirements for corporations that are prescribed, by way of regulations, to be closely related.

Financial Services (GST/HST) Regulations

These Regulations prescribe certain services to either be or not be financial services for the purposes of the ETA. Amendments to the ETA that previously received Royal Assent removed the requirements that two corporations be resident in Canada and be registrants for GST/HST purposes in order to be closely related and moved those requirements to the definition of a “closely related group.” The previously announced proposed technical amendments to these Regulations are consequential to those ETA amendments and replace references to a person that is closely related with references to a person that is a member of the same closely related group.

Consultation

Most of the Regulations dealing with the harmonized sales taxes were developed in consultation with the governments of Ontario and British Columbia. The Canada Revenue Agency was also consulted on the Regulations. The Regulations are also designed to reflect previous GST/HST announcements of rules made on various dates by the Department of Finance, on which stakeholders have had the opportunity to comment.

Contacts

Ryan Stammers
Sales Tax Division
Department of Finance
140 O’Connor Street
Ottawa, Ontario
K1A 0G5
Telephone: 613-943-2908

Costa Dimitrakopoulos
Excise and GST/HST Rulings Directorate
Canada Revenue Agency
320 Queen Street
Ottawa, Ontario
K1A 0L5
Telephone: 613-954-7959

Footnote a
S.C. 2009, c. 32, s. 23(1)

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

Footnote c
S.C. 2009, c. 32, s. 37(1)

Footnote d
R.S., c. E-15

Footnote 1
SOR/91-21; SOR/2001-169

Footnote 2
SOR/91-26; SOR/2001-61

Footnote 3
SOR/91-28; SOR/98-440

Footnote 4
SOR/91-36; SOR/2006-162

Footnote 5
SOR/91-51; SOR/2006-162

Footnote 6
SOR/2001-65

Footnote 7
SOR/2010-117

Footnote 8
SOR/2010-151

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