Vol. 150, No. 12 — June 15, 2016

Registration

SOR/2016-119 June 3, 2016

EXCISE TAX ACT

Regulations Amending Various GST/HST Regulations, No. 8

P.C. 2016-422 June 3, 2016

His Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to sections 277 (see footnote a) and 277.1 (see footnote b) of the Excise Tax Act (see footnote c), makes the annexed Regulations Amending Various GST/HST Regulations, No. 8.

Regulations Amending Various GST/HST Regulations, No. 8

PART 1

New Harmonized Value-added Tax System Regulations

1 The New Harmonized Value-added Tax System Regulations (see footnote 1) are amended by adding the following after section 33.3:

New Brunswick — tax rate

33.4 For the purposes of paragraph (a) of the definition tax rate in subsection 123(1) of the Act, the prescribed rate for New Brunswick is 10%.

Newfoundland and Labrador — tax rate

33.5 (1) For the purposes of paragraph (a) of the definition tax rate in subsection 123(1) of the Act, the prescribed rate for Newfoundland and Labrador is 10%.

Newfoundland offshore area — tax rate

(2) For the purposes of paragraph (b) of the definition tax rate in subsection 123(1) of the Act, the prescribed rate for the Newfoundland offshore area is 10%.

2 The Regulations are amended by adding the following after section 58.47:

PART 3.3

New Brunswick Transitional Rules — 2016 Rate Change

Additional disclosure — real property

58.48 (1) If a builder makes a taxable supply of a residential complex in New Brunswick under an agreement of purchase and sale entered into after March 30, 2016 but before July 1, 2016, the builder must indicate in the agreement of purchase and sale

• (a) the total tax payable in respect of the supply in a manner that clearly indicates the amount of that total and whether or not that amount takes into account any amount to be paid or credited in accordance with subsection 254(4) of the Act; or
• (b) the total of the rates at which tax is payable in respect of the supply.

Failure to disclose

(2) If a builder fails to comply with subsection (1) in respect of a supply and is required under section 221 of the Act to collect tax at a particular time in respect of the supply and if tax under subsection 165(2) of the Act applies in respect of the supply at a rate of 10%, the following rules apply:

• (a) the tax payable by the recipient in respect of the supply is to be calculated as if the tax under subsection 165(2) of the Act applied in respect of the supply at a rate of 8% and not at a rate of 10%; and
• (b) despite paragraph (a), the builder is deemed to have collected the tax at the particular time in respect of the supply at a rate of 10%.
  

Adaptation — paragraph 172.1(5)(c) of Act

58.49 (1) If a person is a participating employer of a pension plan that acquires property or a service for the purpose of making a supply of all or part of the property or service to a pension entity of the pension plan but not for the purpose of making a supply of any part of the property or service to a pension entity of the pension plan after June 2016, for the purposes of determining the value for B in paragraph 172.1(5)(c) of the Act, the amount for New Brunswick in respect of a taxable supply of all or part of the property or service deemed to have been made under paragraph 172.1(5)(a) of the Act is determined by adapting the description of F in paragraph 172.1(5)(c) of the Act to read as follows:

• F is the provincial factor in respect of the pension plan and the participating province for the particular fiscal year, determined as if the tax rate for New Brunswick on the last day of the particular fiscal year were 8%; and

Adaptation — paragraphs 172.1(6)(c) and (7)(c) of Act

(2) In respect of a fiscal year of a person that includes July 1, 2016, for the purposes of determining the value for B in paragraph 172.1(6)(c) of the Act and the value for B in paragraph 172.1(7)(c) of the Act, the amount for New Brunswick is determined by adapting the description of F in paragraph 172.1(6)(c) of the Act and the description of F in paragraph 172.1(7)(c) of the Act to read as follows:

• F is the provincial factor in respect of the pension plan and the participating province for the particular fiscal year, determined as if the tax rate for New Brunswick on the last day of the particular fiscal year were the rate determined by the formula

8% + (2% × G/H)

where

• G is the number of days in the particular fiscal year that are after June 2016, and
• H is the number of days in the particular fiscal year; and

Adaptation — employee and shareholder benefits

58.50 In respect of the 2016 taxation year, if

• (a) an amount is required to be included under paragraph 6(1)(a) or (e) of the Income Tax Act in computing an individual’s income from an office or employment and the last establishment of the employer at which the individual ordinarily worked or to which the individual ordinarily reported in the year in relation to that office or employment is located in New Brunswick, or
• (b) an amount is required under subsection 15(1) of the Income Tax Act to be included in computing an individual’s income and the individual is resident in New Brunswick at the end of the year

the portion of subclause (I) of the description of A in clause 173(1)(d)(vi)(B) of the Act after sub-subclause 2 is adapted as follows:

• 13%, and

Transitional specified year — subsection 218.1(1.2) of Act

58.51 For the purpose of determining the tax payable by a person under subsection 218.1(1.2) of the Act for a specified year (as defined in section 217 of the Act) of the person that includes July 1, 2016 and for New Brunswick, the tax rate for New Brunswick is deemed to be equal to the rate determined by the formula

8% + (2% × A/B)

where

• A is the number of days in the specified year that are after June 2016; and
• B is the number of days in the specified year.

Adaptation — rebate for pension entities

58.52 For the purposes of determining the provincial pension rebate amount for a claim period (as those terms are defined in subsection 261.01(1) of the Act) of a pension entity that includes July 1, 2016, the description of C in paragraph (a) of the definition provincial pension rebate amount in that subsection is adapted as follows if the participating province referred to in that paragraph is New Brunswick:

• C is the rate determined by the formula

8% + (2% × C₁/C₂)

where

• C₁ is the number of days in the claim period that are after June 2016, and
• C₂ is the number of days in the claim period, and

PART 3.4

Newfoundland and Labrador Transitional Rules — 2016 Rate Change

Additional disclosure — real property

58.53 (1) If a builder makes a taxable supply of a residential complex in Newfoundland and Labrador under an agreement of purchase and sale entered into after May 3, 2016 but before July 1, 2016, the builder must indicate in the agreement of purchase and sale

• (a) the total tax payable in respect of the supply in a manner that clearly indicates the amount of that total and whether or not that amount takes into account any amount to be paid or credited in accordance with subsection 254(4) of the Act; or
• (b) the total of the rates at which tax is payable in respect of the supply.

Failure to disclose

(2) If a builder fails to comply with subsection (1) in respect of a supply and is required under section 221 of the Act to collect tax at a particular time in respect of the supply and if tax under subsection 165(2) of the Act applies in respect of the supply at a rate of 10%, the following rules apply:

• (a) the tax payable by the recipient in respect of the supply is to be calculated as if the tax under subsection 165(2) of the Act applied in respect of the supply at a rate of 8% and not at a rate of 10%; and
• (b) despite paragraph (a), the builder is deemed to have collected the tax at the particular time in respect of the supply at a rate of 10%.

Adaptation — paragraph 172.1(5)(c) of Act

58.54 (1) If a person is a participating employer of a pension plan that acquires property or a service for the purpose of making a supply of all or part of the property or service to a pension entity of the pension plan but not for the purpose of making a supply of any part of the property or service to a pension entity of the pension plan after June 2016, for the purposes of determining the value for B in paragraph 172.1(5)(c) of the Act, the amount for Newfoundland and Labrador in respect of a taxable supply of all or part of the property or service deemed to have been made under paragraph 172.1(5)(a) of the Act is determined by adapting the description of F in paragraph 172.1(5)(c) of the Act to read as follows:

• F is the provincial factor in respect of the pension plan and the participating province for the particular fiscal year, determined as if the tax rate for Newfoundland and Labrador on the last day of the particular fiscal year were 8%; and

Adaptation — paragraphs 172.1(6)(c) and (7)(c) of Act

(2) In respect of a fiscal year of a person that includes July 1, 2016, for the purposes of determining the value for B in paragraph 172.1(6)(c) of the Act and the value for B in paragraph 172.1(7)(c) of the Act, the amount for Newfoundland and Labrador is determined by adapting the description of F in paragraph 172.1(6)(c) of the Act and the description of F in paragraph 172.1(7)(c) of the Act to read as follows:

• F is the provincial factor in respect of the pension plan and the participating province for the particular fiscal year, determined as if the tax rate for Newfoundland and Labrador on the last day of the particular fiscal year were the rate determined by the formula

8% + (2% × G/H)

where

• G is the number of days in the particular fiscal year that are after June 2016, and
• H is the number of days in the particular fiscal year; and

Adaptation — employee and shareholder benefits

58.55 In respect of the 2016 taxation year, if

• (a) an amount is required to be included under paragraph 6(1)(a) or (e) of the Income Tax Act in computing an individual’s income from an office or employment and the last establishment of the employer at which the individual ordinarily worked or to which the individual ordinarily reported in the year in relation to that office or employment is located in Newfoundland and Labrador or the Newfoundland offshore area, or
• (b) an amount is required under subsection 15(1) of the Income Tax Act to be included in computing an individual’s income and the individual is resident in Newfoundland and Labrador at the end of the year

the portion of subclause (I) of the description of A in clause 173(1)(d)(vi)(B) of the Act after sub-subclause 2 is adapted as follows:

• 13%, and

Transitional specified year — subsection 218.1(1.2) of Act

58.56 For the purpose of determining the tax payable by a person under subsection 218.1(1.2) of the Act for a specified year (as defined in section 217 of the Act) of the person that includes July 1, 2016 and for Newfoundland and Labrador or the Newfoundland offshore area, the tax rate for those participating provinces is deemed to be equal to the rate determined by the formula

8% + (2% × A/B)

where

• A is the number of days in the specified year that are after June 2016; and
• B is the number of days in the specified year.

Adaptation — rebate for pension entities

58.57 For the purposes of determining the provincial pension rebate amount for a claim period (as those terms are defined in subsection 261.01(1) of the Act) of a pension entity that includes July 1, 2016, the description of C in paragraph (a) of the definition provincial pension rebate amount in that subsection is adapted as follows if the participating province referred to in that paragraph is Newfoundland and Labrador:

• C is the rate determined by the formula

8% + (2% × C₁/C₂)

where

• C₁ is the number of days in the claim period that are after June 2016, and
• C₂ is the number of days in the claim period, and

PART 2

Games of Chance (GST/HST) Regulations

3 Subclauses (i)(A)(I) and (II) of the description of E₃ in subsection 7(7) of the Games of Chance (GST/HST) Regulations (see footnote 2) are replaced by the following:

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

PART 3

Streamlined Accounting (GST/HST) Regulations

4 (1) The portion of subparagraph 15(5)(a)(i) of the Streamlined Accounting (GST/HST) Regulations (see footnote 3) before clause (C.1) is replaced by the following:

• (i) if the registrant makes the supply through a permanent establishment of the registrant in Ontario,
  • (A) 4.4%, if the supply is made in Ontario,
  • (B) 6.1%, if the supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,
    

(2) The portion of subparagraph 15(5)(a)(ii) of the Regulations before clause (C.1) is replaced by the following:

• (ii) if the registrant makes the supply through a permanent establishment of the registrant in Nova Scotia, New Brunswick or Newfoundland and Labrador,
  • (A) 3.3%, if the supply is made in Ontario,
  • (B) 5%, if the supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,
    

(3) Clauses 15(5)(a)(iii.1)(A) and (B) of the Regulations are replaced by the following:

• (A) 3.9%, if the supply is made in Ontario,
• (B) 5.6%, if the supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,
  

(4) Clauses 15(5)(a)(iv)(A) and (B) of the Regulations are replaced by the following:

• (A) 8.8%, if the supply is made in Ontario,
• (B) 10.4%, if the supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,
  

(5) The portion of subparagraph 15(5)(b)(i) of the Regulations before clause (C.1) is replaced by the following:

• (i) if the registrant makes the supply through a permanent establishment of the registrant in Ontario,
  • (A) 8.8%, if the supply is made in Ontario,
  • (B) 10.4%, if the supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,
    

(6) The portion of subparagraph 15(5)(b)(ii) of the Regulations before clause (C.1) is replaced by the following:

• (ii) if the registrant makes the supply through a permanent establishment of the registrant in Nova Scotia, New Brunswick or Newfoundland and Labrador,
  • (A) 8.4%, if the supply is made in Ontario,
  • (B) 10%, if the supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,
    

(7) Clauses 15(5)(b)(iii.1)(A) and (B) of the Regulations are replaced by the following:

• (A) 8.6%, if the supply is made in Ontario,
• (B) 10.2%, if the supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,
  

(8) Clauses 15(5)(b)(iv)(A) and (B) of the Regulations are replaced by the following:

• (A) 10.5%, if the supply is made in Ontario,
• (B) 12%, if the supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,
  

5 Paragraphs (c) and (d) of the description of C in subsection 17(1) of the Regulations are 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 which are made through a permanent establishment of the registrant in Ontario 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, New Brunswick or Newfoundland and Labrador and to which the quick-method rate of 0% applies, or

6 (1) Clauses 19(3)(a)(i)(A) and (B) of the Regulations are replaced by the following:

• (A) 9.9%, if the particular supply is made in Ontario,
• (B) 11.4%, if the particular supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,

(2) The portion of subparagraph 19(3)(a)(ii) of the Regulations before clause (C.1) is replaced by the following:

• (ii) if the registrant makes the particular supply through a permanent establishment of the registrant in Nova Scotia, New Brunswick or Newfoundland and Labrador,
  • (A) 8.4%, if the particular supply is made in Ontario,
  • (B) 10%, if the particular supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,

(3) Subparagraph 19(3)(a)(iii) of the Regulations is repealed.

(4) Clauses 19(3)(a)(iv.1)(A) and (B) of the Regulations are replaced by the following:

• (A) 8%, if the particular supply is made in Ontario,
• (B) 9.6%, if the particular supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,

(5) Clauses 19(3)(a)(v)(A) and (B) of the Regulations are replaced by the following:

• (A) 10.5%, if the particular supply is made in Ontario,
• (B) 12%, if the particular supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,

(6) Clauses 19(3)(b)(i)(A) and (B) of the Regulations are replaced by the following:

• (A) 11%, if the particular supply is made in Ontario,
• (B) 12.6%, if the particular supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,

(7) Clauses 19(3)(b)(ii)(A) and (B) of the Regulations are replaced by the following:

• (A) 10.4%, if the particular supply is made in Ontario,
• (B) 12%, if the particular supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,

(8) Clauses 19(3)(b)(iii)(A) to (D) of the Regulations are replaced by the following:

• (A) 8.8%, if the particular supply is made in Ontario,
• (B) 10.4%, if the particular supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,
• (C) 9.6%, if the particular supply is made in Prince Edward Island, and
• (D) 1.9%, if the particular supply is made in a non-participating province,

(9) Clauses 19(3)(b)(iv.1)(A) and (B) of the Regulations are replaced by the following:

• (A) 9.1%, if the particular supply is made in Ontario,
• (B) 10.7%, if the particular supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,

(10) Clauses 19(3)(b)(v)(A) and (B) of the Regulations are replaced by the following:

• (A) 11.1%, if the particular supply is made in Ontario,
• (B) 12.7%, if the particular supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,

(11) Subclauses 19(3)(c)(i)(A)(I) and (II) of the Regulations are replaced by the following:

• (I) 10.2%, if the particular supply is made in Ontario,
• (II) 11.8%, if the particular supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,

(12) Subclauses 19(3)(c)(i)(B)(I) and (II) of the Regulations are replaced by the following:

• (I) 9.6%, if the particular supply is made in Ontario,
• (II) 11.2%, if the particular supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,

(13) Subclauses 19(3)(c)(i)(C)(I) to (IV) of the Regulations are replaced by the following:

• (I) 7%, if the particular supply is made in Ontario,
• (II) 8.6%, if the particular supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,
• (III) 7.8%, if the particular supply is made in Prince Edward Island, and
• (IV) 0%, if the particular supply is made in a non-participating province,

(14) Subclauses 19(3)(c)(i)(D.1)(I) and (II) of the Regulations are replaced by the following:

• (I) 7.4%, if the particular supply is made in Ontario,
• (II) 9%, if the particular supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,

(15) Subclauses 19(3)(c)(i)(E)(I) and (II) of the Regulations are replaced by the following:

• (I) 10.9%, if the particular supply is made in Ontario,
• (II) 12.4%, if the particular supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,

(16) Subclauses 19(3)(c)(ii)(A)(I) and (II) of the Regulations are replaced by the following:

• (I) 10.7%, if the particular supply is made in Ontario,
• (II) 12.3%, if the particular supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,

(17) Subclauses 19(3)(c)(ii)(B)(I) and (II) of the Regulations are replaced by the following:

• (I) 10.4%, if the particular supply is made in Ontario,
• (II) 12%, if the particular supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,

(18) Subclauses 19(3)(c)(ii)(C)(I) to (IV) of the Regulations are replaced by the following:

• (I) 8.9%, if the particular supply is made in Ontario,
• (II) 10.5%, if the particular supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,
• (III) 9.7%, if the particular supply is made in Prince Edward Island, and
• (IV) 2%, if the particular supply is made in a non-participating province,

(19) Subclauses 19(3)(c)(ii)(D.1)(I) and (II) of the Regulations are replaced by the following:

• (I) 9.1%, if the particular supply is made in Ontario,
• (II) 10.7%, if the particular supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,

(20) Subclauses 19(3)(c)(ii)(E)(I) and (II) of the Regulations are replaced by the following:

• (I) 11.1%, if the particular supply is made in Ontario,
• (II) 12.7%, if the particular supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,

(21) Clauses 19(3)(d)(i)(A) and (B) of the Regulations are replaced by the following:

• (A) 11%, if the particular supply is made in Ontario,
• (B) 12.5%, if the particular supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,

(22) Clauses 19(3)(d)(ii)(A) and (B) of the Regulations are replaced by the following:

• (A) 10.8%, if the particular supply is made in Ontario,
• (B) 12.4%, if the particular supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,

(23) Clauses 19(3)(d)(iii)(A) to (D) of the Regulations are replaced by the following:

• (A) 8.5%, if the particular supply is made in Ontario,
• (B) 10.1%, if the particular supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,
• (C) 9.3%, if the particular supply is made in Prince Edward Island, and
• (D) 1.6%, if the particular supply is made in a non-participating province,

(24) Clauses 19(3)(d)(iv.1)(A) and (B) of the Regulations are replaced by the following:

• (A) 8.8%, if the particular supply is made in Ontario,
• (B) 10.4%, if the particular supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,

(25) Clauses 19(3)(d)(v)(A) and (B) of the Regulations are replaced by the following:

• (A) 11.3%, if the particular supply is made in Ontario,
• (B) 12.8%, if the particular supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,

(26) Clauses 19(3)(e)(i)(A) and (B) of the Regulations are replaced by the following:

• (A) 11.1%, if the particular supply is made in Ontario,
• (B) 12.6%, if the particular supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,

(27) The portion of subparagraph 19(3)(e)(ii) of the Regulations before clause (C.1) is replaced by the following:

• (ii) if the registrant makes the particular supply through a permanent establishment of the registrant in Nova Scotia or New Brunswick,
  • (A) 10.5%, if the particular supply is made in Ontario,
  • (B) 12.1%, if the particular supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,

(28) The portion of subparagraph 19(3)(e)(ii) of the Regulations before clause (A), as amended by subsection (27), is replaced by the following:

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

(29) Subparagraph 19(3)(e)(iii) of the Regulations is repealed.

(30) Clauses 19(3)(e)(iii.1)(A) and (B) of the Regulations are replaced by the following:

• (A) 9.4%, if the particular supply is made in Ontario,
• (B) 11%, if the particular supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,

(31) Clauses 19(3)(e)(iv)(A) to (D) of the Regulations are replaced by the following:

• (A) 9.8%, if the particular supply is made in Ontario,
• (B) 11.4%, if the particular supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,
• (C) 10.6%, if the particular supply is made in Prince Edward Island, and
• (D) 2.9%, if the particular supply is made in a non-participating province, and

(32) Paragraph 19(3)(e) of the Regulations is amended by adding “and” at the end of subparagraph (iii.1) and by repealing subparagraph (iv), as amended by subsection (31).

(33) The portion of subparagraph 19(3)(e)(v) of the Regulations before clause (A) is replaced by the following:

• (v) if subparagraphs (i) to (iii.1) do not apply,
  

(34) Clauses 19(3)(e)(v)(A) and (B) of the Regulations are replaced by the following:

• (A) 11.5%, if the particular supply is made in Ontario,
• (B) 13%, if the particular supply is made in Nova Scotia, New Brunswick or Newfoundland and Labrador,

PART 4

Automobile Operating Expense Benefit (GST/HST) Regulations

7 (1) Subparagraphs 2(a)(i) and (ii) of the Automobile Operating Expense Benefit (GST/HST) Regulations (see footnote 4) are replaced by the following:

• (i) the individual is an employee of the registrant and is required under subsection 6(1) of the Income Tax Act to so include the amount and the last establishment of the registrant at which the individual ordinarily worked, or to which the individual ordinarily reported, in the year in relation to that office or employment is located in Ontario, or
• (ii) the individual is a shareholder of the registrant, is required under subsection 15(1) of the Income Tax Act to so include the amount and the individual is resident in Ontario at the end of the year;
  

(2) Subparagraphs 2(b)(i) and (ii) of the Regulations are replaced by the following:

• (i) the individual is an employee of the registrant and is required under subsection 6(1) of the Income Tax Act to so include the amount and the last establishment of the registrant at which the individual ordinarily worked, or to which the individual ordinarily reported, in the year in relation to that office or employment is located in Nova Scotia, New Brunswick or Newfoundland and Labrador, or
• (ii) the individual is a shareholder of the registrant, is required under subsection 15(1) of the Income Tax Act to so include the amount and the individual is resident in Nova Scotia, New Brunswick or Newfoundland and Labrador at the end of the year;
  

PART 5

Selected Listed Financial Institutions Attribution Method (GST/HST) Regulations

8 Section 46 of the Selected Listed Financial Institutions Attribution Method (GST/HST) Regulations (see footnote 5) is amended by striking out “and” at the end of paragraph (g), by adding “and” at the end of paragraph (h) and by adding the following after paragraph (h):

• (i) if the particular reporting period includes July 1, 2016 and the participating province is New Brunswick or Newfoundland and Labrador, the positive or negative amount determined by the formula

–1 × (G₄₄ – G₄₅) × G₄₆ × (2%/G₄₇) × (G₄₈/G₄₉)

where

• G₄₄ is the total of the following amounts, each of which is determined for the particular reporting period and the participating province:
  • (i) the total A amounts,
  • (ii) the total for G₃ in paragraph (a), and
  • (iii) the total for G₇ in paragraph (b),
• G₄₅ is the total of the following amounts, each of which is determined for the particular reporting period and the participating province:
  • (i) the total B amounts,
  • (ii) the total for G₂ in paragraph (a), and
  • (iii) the total for G₈ in paragraph (b),
• G₄₆ is the specified percentage of the financial institution for the participating province and for the particular reporting period,
• G₄₇ is the rate set out in subsection 165(1) of the Act,
• G₄₈ is
  • (i) if the financial institution is a distributed investment plan, the total of all amounts, each of which is determined by the formula

A x B

• where
• A is an amount of tax that became payable by the financial institution during the particular reporting period, or that was paid by the financial institution during the particular reporting period without having become payable
  • (A) under any of subsection 165(1) and sections 212 and 218 of the Act in respect of a supply or importation of property or a service, or
  • (B) under section 218.01 of the Act for a particular specified year of the financial institution, and
• B is
  • (A) in the case of an amount of tax described in clause (A) of the description of A, the extent to which the property is delivered or made available, or the service is rendered, before July 1, 2016, and
  • (B) in the case of an amount of tax described in clause (B) of the description of A, the amount determined by the formula

C/D

• where
• C is the number of days in the particular specified year before July 1, 2016, and
• D is the number of days in the particular specified year, and

• (ii) in any other case, the number of days in the particular reporting period before July 1, 2016, and

G₄₉ is

• (i) if the financial institution is a distributed investment plan, the total of all amounts, each of which is an amount of tax that became payable by the financial institution during the particular reporting period, or that was paid by the financial institution during the particular reporting period without having become payable, under any of subsection 165(1) and sections 212, 218 and 218.01 of the Act, and
• (ii) in any other case, the number of days in the particular reporting period.

PART 6

Electronic Filing and Provision of Information (GST/HST) Regulations

9 (1) The definition specified housing supply in section 1 of the Electronic Filing and Provision of Information (GST/HST) Regulations (see footnote 6) is replaced by the following:

specified housing supply means a particular supply made to a person of a residential complex that is a qualifying housing supply and in respect of which the total of all amounts, each of which is the consideration payable for the particular supply or for any other taxable supply made to the person of an interest in the residential complex, is equal to or greater than $450,000. (fourniture d’habitation déterminée)

(2) The definition qualifying housing supply in section 1 of the Regulations is amended by striking out “or” at the end of paragraph (a) and by adding the following after paragraph (b):

• (c) in respect of which section 33.4 of the New Harmonized Value-added Tax System Regulations does not apply but would have applied if
  • (i) in the case of a supply deemed to have been made under subsection 191(1) of the Act as a consequence of the builder of the complex having given possession or use of the complex under an agreement referred to in subparagraph 191(1)(b)(ii) of the Act, the agreement had been entered into after March 30, 2016, or
  • (ii) in any other case, the agreement under which the supply is made had been entered into after March 30, 2016; or
• (d) in respect of which section 33.5 of the New Harmonized Value-added Tax System Regulations does not apply but would have applied if
  • (i) in the case of a supply deemed to have been made under subsection 191(1) of the Act as a consequence of the builder of the complex having given possession or use of the complex under an agreement referred to in subparagraph 191(1)(b)(ii) of the Act, the agreement had been entered into after May 3, 2016, or
  • (ii) in any other case, the agreement under which the supply is made had been entered into after May 3, 2016. (fourniture d’habitation admissible)

10 Section 4 of the Regulations is amended by striking out “or” at the end of paragraph (a), by adding “or” at the end of paragraph (b) and by adding the following after paragraph (b):

• (c) a return for the reporting period in respect of which the person makes an election under section 8.1.

11 Section 8 of the Regulations is replaced by the following:

Sales of specified housing — consideration

8 If a builder makes specified housing supplies in respect of which tax under subsection 165(1) of the Act becomes payable at any time in a reporting period of the builder, for the purposes of section 284.01 of the Act, the total of all consideration for those specified housing supplies made in each of Ontario, Nova Scotia, New Brunswick, British Columbia, Prince Edward Island and Newfoundland and Labrador is each a prescribed amount in respect of a specified return for the reporting period.

Simplified reporting of specified housing supplies — election

8.1 (1) If a person makes specified housing supplies in respect of which tax under subsection 165(1) of the Act becomes payable before May 1, 2016 and the person files an election in respect of a particular reporting period of the person that ends on or after May 1, 2016 but before 2017 or, if no reporting period of the person ends on or after May 1, 2016 but before 2017, that is the first reporting period of the person that ends after 2016, for the purposes of section 284.01 of the Act, the following amounts are prescribed amounts in respect of a specified return for the particular reporting period:

• (a) for each calendar year, beginning with 2010 and ending with the calendar year in which the particular reporting period ends, the total of all consideration for specified housing supplies made by the person in Ontario in respect of which tax becomes payable during that calendar year but on or before the last day of the particular reporting period;
• (b) for each calendar year, beginning with 2010 and ending with the calendar year in which the particular reporting period ends, the total of all consideration for specified housing supplies made by the person in Nova Scotia in respect of which tax becomes payable during that calendar year but on or before the last day of the particular reporting period;
• (c) for each calendar year, beginning with 2010 and ending with 2013, the total of all consideration for specified housing supplies made by the person in British Columbia in respect of which tax becomes payable during that calendar year but before April 1, 2013;
• (d) for each calendar year, beginning with 2013 and ending with the calendar year in which the particular reporting period ends, the total of all consideration for specified housing supplies made by the person in Prince Edward Island in respect of which tax becomes payable during that calendar year but on or before the last day of the particular reporting period;
• (e) for each calendar year, beginning with 2016 and ending with the calendar year in which the particular reporting period ends, the total of all consideration for specified housing supplies made by the person in New Brunswick in respect of which tax becomes payable during that calendar year but on or before the last day of the particular reporting period; and
• (f) for each calendar year, beginning with 2016 and ending with the calendar year in which the particular reporting period ends, the total of all consideration for specified housing supplies made by the person in Newfoundland and Labrador in respect of which tax becomes payable during that calendar year but on or before the last day of the particular reporting period.

Non-application of sections 3 and 8

(2) If an election is filed by a person under subsection (1) in respect of a particular reporting period of the person,

• (a) section 3 does not apply to a return filed for the particular reporting period; and
• (b) section 8 does not apply to the particular reporting period and to any reporting period of the person ending before the particular reporting period.
  

Form and filing of election

(3) An election under subsection (1) in respect of a particular reporting period of a person

• (a) is to be made in prescribed form containing prescribed information; and
• (b) is to be filed by the person with the Minister in prescribed manner on or after May 1, 2016 but no later than the day on or before which the return for the particular reporting period is required to be filed.
  

12 Section 10 of the Regulations is replaced by the following:

Sales of formerly qualifying housing

10 If a builder is the recipient of supplies of residential complexes that are qualifying housing supplies made in Nova Scotia, New Brunswick or Newfoundland and Labrador and either the builder makes subsequent supplies (other than qualifying housing supplies) of the residential complexes in Nova Scotia, New Brunswick or Newfoundland and Labrador in respect of which tax under subsection 165(2) of the Act becomes payable at any time in a reporting period of the builder or the builder is, at any time in the reporting period, deemed under subsection 191(1) of the Act to have made taxable supplies (other than qualifying housing supplies) by way of sale of the residential complexes and to have collected tax payable under subsection 165(2) of the Act in respect of those taxable supplies, for the purposes of section 284.01 of the Act, the total of all consideration for those qualifying housing supplies made in each of Nova Scotia, New Brunswick and Newfoundland and Labrador is each a prescribed amount in respect of a specified return for the reporting period.

13 (1) Section 12 of the Regulations is replaced by the following:

Number of housing units

12 If a person is required to report an amount determined under any of sections 8 to 10 in respect of residential complexes in a specified return for a reporting period of the person, for the purposes of section 284.01 of the Act, the number (in these Regulations referred to as the specified number) of those residential complexes that were supplied by the person in each of Ontario, Nova Scotia, British Columbia and Prince Edward Island and in respect of which the amount is determined under any of sections 8 to 10 for the reporting period is prescribed information.

(2) Section 12 of the Regulations, as amended by subsection (1), is replaced by the following:

Number of housing units

12 If a person is required to report an amount determined under any of sections 8 to 10 in respect of residential complexes in a specified return for a reporting period of the person, for the purposes of section 284.01 of the Act, the number (in these Regulations referred to as the specified number) of those residential complexes that were supplied by the person in each of Ontario, Nova Scotia, New Brunswick, British Columbia, Prince Edward Island and Newfoundland and Labrador and in respect of which the amount is determined under any of sections 8 to 10 for the reporting period is prescribed information.

PART 7

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

14 (1) Subparagraphs 42(c)(i) to (v) of the New Harmonized Value-added Tax System Regulations, No. 2 (see footnote 7) are replaced by the following:

• (i) the references in that subsection to “$472,500” are to be read as references to “$517,500”,
• (ii) the references in that subsection to “$367,500” are to be read as references to “$402,500”,
• (iii) the reference in that subsection to “$105,000” is to be read as a reference to “$115,000”,
• (iv) the reference in paragraph (h) of that subsection to “1.71%” is to be read as a reference to “the lesser of $6,300 and 1.57%”, and
• (v) the reference in the description of A in the formula in paragraph (i) of that subsection to “1.71%” is to be read as a reference to “1.57%”;
  

(2) Subparagraphs 42(e)(i) to (v) of the Regulations are replaced by the following:

• (i) the references in that subsection to “$472,500” are to be read as references to “$517,500”,
• (ii) the references in that subsection to “$367,500” are to be read as references to “$402,500”,
• (iii) the reference in that subsection to “$105,000” is to be read as a reference to “$115,000”,
• (iv) the reference in paragraph (h) of that subsection to “1.71%” is to be read as a reference to “the lesser of $6,300 and 1.57%”, and
• (v) the reference in the description of A in the formula in paragraph (i) of that subsection to “1.71%” is to be read as a reference to “1.57%”.
  

15 (1) Subparagraphs 44(c)(i) to (v) of the Regulations are replaced by the following:

• (i) the references in that subsection to “$472,500” are to be read as references to “$517,500”,
• (ii) the references in that subsection to “$367,500” are to be read as references to “$402,500”,
• (iii) the reference in that subsection to “$105,000” is to be read as a reference to “$115,000”,
• (iv) the reference in paragraph (g) of that subsection to “1.71%” is to be read as a reference to “the lesser of $6,300 and 1.57%”, and
• (v) the reference in the description of A in the formula in paragraph (h) of that subsection to “1.71%” is to be read as a reference to “1.57%”;
  

(2) Subparagraphs 44(e)(i) to (v) of the Regulations are replaced by the following:

• (i) the references in that subsection to “$472,500” are to be read as references to “$517,500”,
• (ii) the references in that subsection to “$367,500” are to be read as references to “$402,500”,
• (iii) the reference in that subsection to “$105,000” is to be read as a reference to “$115,000”,
• (iv) the reference in paragraph (g) of that subsection to “1.71%” is to be read as a reference to “the lesser of $6,300 and 1.57%”, and
• (v) the reference in the description of A in the formula in paragraph (h) of that subsection to “1.71%” is to be read as a reference to “1.57%”.

PART 8

Regulations Amending Various GST/HST Regulations, No. 7 (Newfoundland and Labrador — Rebate for Municipalities)

16 Subsection 3(2) of the Regulations Amending Various GST/HST Regulations, No. 7 (Newfoundland and Labrador — Rebate for Municipalities) (see footnote 8) is deemed never to have produced its effects and is repealed.

PART 9

Application

17 Section 1 applies

• (a) to any supply (other than a supply deemed under subsection 191(1) of the Excise Tax Act to have been made) made on or after July 1, 2016;
• (b) to any supply of a residential complex — being a single unit residential complex or a residential condominium unit — deemed under subsection 191(1) of the Excise Tax Act to have been made on or after July 1, 2016, unless
  • (i) the residential complex is situated in New Brunswick and the supply is deemed to have been made as a consequence of the builder of the complex having given possession or use of the complex to a person under a written agreement, entered into on or before March 30, 2016 for the supply by way of sale of the building or part of it in which the residential unit forming part of the complex is situated, or
  • (ii) the residential complex is situated in Newfoundland and Labrador and the supply is deemed to have been made as a consequence of the builder of the complex having given possession or use of the complex to a person under a written agreement, entered into on or before May 3, 2016 for the supply by way of sale of the building or part of it in which the residential unit forming part of the complex is situated;
• (c) to any supply (other than a supply deemed under Part IX of the Excise Tax Act to have been made) by way of sale of real property made before July 1, 2016 if ownership and possession of the property are transferred to the recipient of the supply on or after that date, unless the real property is a single unit residential complex (as defined in subsection 254(1) of that Act) or a residential condominium unit and the supply is made
  • (i) in New Brunswick under an agreement in writing entered into on or before March 30, 2016, or
  • (ii) in Newfoundland and Labrador under an agreement in writing entered into on or before May 3, 2016;
• (d) to any consideration for a supply (other than a supply by way of sale of real property) made before July 1, 2016 that becomes due, or is paid without having become due, on or after July 1, 2016;
• (e) to goods imported into Canada on or after July 1, 2016;
• (f) to goods imported into Canada before July 1, 2016 that are, on or after that date, accounted for under subsection 32(1), paragraph 32(2)(a) or subsection 32(5) of the Customs Act or released in the circumstances set out in paragraph 32(2)(b) of that Act;
• (g) to property brought into New Brunswick, Newfoundland and Labrador or the Newfoundland offshore area on or after July 1, 2016;
• (h) to property that is brought into New Brunswick before July 1, 2016 by a carrier if the property is delivered in New Brunswick to a consignee on or after that date;
• (i) to property that is brought into Newfoundland and Labrador or the Newfoundland offshore area before July 1, 2016 by a carrier if the property is delivered in Newfoundland and Labrador or in the Newfoundland offshore area to a consignee on or after that date;
• (j) for the purpose of determining the tax rate for New Brunswick and Newfoundland and Labrador in determining the amount for each of those provinces that, under subsection 225.2(2) of the Excise Tax Act, is required to be added to, or may be deducted from, the net tax for a reporting period of a financial institution that ends after June 2016; and
• (k) for the purposes of determining the value of E₄ in subsection 7(7) of the Games of Chance (GST/HST) Regulations for any reporting period that ends on or after February 28, 2017, except that in respect of a reporting period that includes February 28, 2017, clause (A) of that E₄ is to be read as follows:
• (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,
  • (I) if the participating province is New Brunswick or Newfoundland and Labrador, 13 %, and
  • (II) in any other case, the total of 4% and the tax rate for the participating province,
• (l) for the purposes of determining or calculating any of the following if none of paragraphs (a) to (k) applies:
  • (i) tax in respect of New Brunswick, Newfoundland and Labrador or the Newfoundland offshore area on or after July 1, 2016,
  • (ii) tax that is not payable in respect of New Brunswick, Newfoundland and Labrador or the Newfoundland offshore area, but would have been payable in respect of that province on or after July 1, 2016 in the absence of certain circumstances described in the Excise Tax Act, or
  • (iii) an amount or number, at any time on or after July 1, 2016, by or in accordance with an algebraic formula that makes reference to the tax rate for a participating province if the amount or number is to be determined or calculated in respect of New Brunswick, Newfoundland and Labrador or the Newfoundland offshore area.

18 Part 3.3 of the New Harmonized Value-added Tax System Regulations, as enacted by section 2, is deemed to have come into force on March 30, 2016.

19 Part 3.4 of the New Harmonized Value-added Tax System Regulations, as enacted by section 2, and section 8 are deemed to have come into force on May 3, 2016.

20 Section 3 applies in respect of any reporting period of a provincial gaming authority that ends on or after February 28, 2017, except that in respect of the reporting period of the provincial gaming authority that includes February 28, 2017, subclause (i)(A)(II) of the description of E₃ in subsection 7(7) of the Games of Chance (GST/HST) Regulations, as enacted by section 3, is to be read as follows:

• (II) Nova Scotia, the percentage referred to in paragraph 2(b) of the Automobile Operating Expense Benefit (GST/HST) Regulations,
• (II.1) New Brunswick or Newfoundland and Labrador, 10%, or

21 Section 4 applies for the purpose of determining the net tax of a registrant for reporting periods ending after June 2016, except that the quick-method rate of the registrant for the reporting period of the registrant that includes July 1, 2016 and that applies in respect of a supply is, in respect of consideration for the supply that is paid or becomes due before July 1, 2016, the quick-method rate of the registrant for that reporting period that would apply if that section had not come into force.

22 Section 5 applies for the purpose of determining the net tax of a registrant for reporting periods ending after June 2016, other than in respect of the portion of the registrant’s net specified supplies (as described in subsection 15(5.1) of the Streamlined Accounting (GST/HST) Regulations) for the reporting period of the registrant that includes July 1, 2016 that is attributable to supplies that are made before July 1, 2016 through a permanent establishment of the registrant in New Brunswick or Newfoundland and Labrador.

23 Subsections 6(1) to (27), (29) to (31) and (34) apply for the purpose of determining the net tax of a registrant for reporting periods ending after June 2016, except that the special quick-method rate of the registrant for the reporting period of the registrant that includes July 1, 2016 and that applies in respect of a supply is, in respect of consideration for the supply that is paid or becomes due before July 1, 2016, the special quick-method rate of the registrant for that reporting period that would apply if those subsections had not come into force.

24 Subsections 6(28), (32) and (33) apply for the purpose of determining the net tax of a registrant for reporting periods ending after December 31, 2016, except that the special quick-method rate of the registrant for the reporting period of the registrant that includes January 1, 2017 and that applies in respect of a supply is, in respect of consideration for the supply that is paid or becomes due before January 1, 2017, the special quick-method rate of the registrant for that reporting period that would apply if those subsections had not come into force.

25 Section 7 applies to amounts that are required to be included in computing an individual’s income for the purposes of the Income Tax Act for the 2016 and subsequent taxation years except that, in respect of the 2016 taxation year, the reference in paragraph 2(b) of the Automobile Operating Expense Benefit (GST/HST) Regulations to “11%” is to be read as a reference to “10%” if the individual is

• (a) an employee of the registrant and the last establishment of the registrant at which the individual ordinarily worked, or to which the individual ordinarily reported, in the year in relation to that office or employment is located in New Brunswick or Newfoundland and Labrador; or
• (b) a shareholder of the registrant and is resident in New Brunswick or Newfoundland and Labrador at the end of the year.

26 Subsection 9(1) applies

• (a) in respect of any reporting period of a person that ends after March 22, 2016; and
• (b) to any supply made by a person of a residential complex that is a qualifying housing supply in respect of which tax under subsection 165(1) of the Act becomes payable on or after July 1, 2010 but on or before the last day of a reporting period if the person files an election under section 8.1 of the Electronic Filing and Provision of Information (GST/HST) Regulations, as enacted by section 11, in respect of the reporting period.
  

27 Subsection 9(2), section 8 of the Electronic Filing and Provision of Information (GST/HST) Regulations, as enacted by section 11, section 12 and subsection 13(2) apply in respect of any reporting period of a person that ends on or after July 1, 2016, except that no person is liable to a penalty the amount of which is determined under the Electronic Filing and Provision of Information (GST/HST) Regulations in respect of amounts that are prescribed under those Regulations in respect of New Brunswick or Newfoundland and Labrador and that are to be reported in a specified return that is filed before the day that is the later of July 1, 2016 and the day on which these Regulations are first published in the Canada Gazette.

28 Section 10, section 8.1 of the Electronic Filing and Provision of Information (GST/HST) Regulations, as enacted by section 11, and subsection 13(1) apply in respect of any reporting period of a person that ends on or after July 1, 2010.

29 Subsection 14(1) applies for the purposes of determining a rebate in respect of a supply to a particular individual referred to in subsection 254.1(2) of the Excise Tax Act of a building, or part of it, in which a residential unit forming part of a residential complex is situated if the supply of the complex referred to in paragraph 254.1(2)(d) of that Act is deemed under section 191 of that Act to have been made on or after July 1, 2016, unless possession or use of the complex is transferred to the recipient of the supply under a written agreement of purchase and sale entered into on or before March 30, 2016.

30 Subsection 14(2) applies for the purposes of determining a rebate in respect of a supply to a particular individual referred to in subsection 254.1(2) of the Excise Tax Act of a building, or part of it, in which a residential unit forming part of a residential complex is situated if the supply of the complex referred to in paragraph 254.1(2)(d) of that Act is deemed under section 191 of that Act to have been made on or after July 1, 2016, unless possession or use of the complex is transferred to the recipient of the supply under a written agreement of purchase and sale entered into on or before May 3, 2016.

31 Section 15 applies for the purposes of determining a rebate in respect of a supply, by a cooperative housing corporation to a particular individual, of a share of the capital stock of the corporation acquired by the particular individual for the purpose of using a residential unit in a residential complex as the primary place of residence of the particular individual or a relation (as defined in subsection 255(1) of the Excise Tax Act) of the particular individual if the corporation paid tax under subsection 165(2) of the Excise Tax Act at a rate of 10% in respect of a taxable supply of the residential complex to the corporation.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

On February 2, 2016, the Government of New Brunswick announced its intention to increase the rate of the New Brunswick component of the Harmonized Sales Tax (HST) from 8 per cent to 10 per cent, effective July 1, 2016. Also, on April 14, 2016, the Government of Newfoundland and Labrador announced its intention to increase the rate of the Newfoundland and Labrador component of the HST from 8 per cent to 10 per cent, effective July 1, 2016. Therefore, when combined with the 5 per cent federal component, the HST rate for New Brunswick and for Newfoundland and Labrador (including the Newfoundland offshore area) will increase to a rate of 15 per cent from the current rate of 13 per cent. Finally, on March 22, 2016, Budget 2016 announced simplification measures relating to the existing reporting requirements that apply to builders in respect of certain new housing sales (grandparented housing). These are sales that are subject to a special transitional relief under HST transitional rules when a province joins the HST or when the rate of the provincial component of the HST is increased.

Also, in order to facilitate the implementation of the increases to the HST rate in New Brunswick and in Newfoundland and Labrador, transitional rules were announced in the form of a detailed notice by the Government of New Brunswick on March 30, 2016, and by the Government of Newfoundland and Labrador on May 3, 2016. These rules specify the tax rate applicable to transactions that straddle the implementation date of July 1, 2016. With the passage of the Provincial Choice Tax Framework Act on December 15, 2009, Parliament approved that the regulatory approach would serve as the mechanism to facilitate a change in the provincial component of the HST. Amendments to existing Goods and Services Tax/Harmonized Sales Tax (GST/HST) regulations are therefore required in order to implement the decisions of New Brunswick and Newfoundland and Labrador to increase the rate of the provincial component of the HST in their respective province and to implement the simplification measures relating to the existing reporting requirements in respect of sales of grandparented housing. Where necessary, the amendments described below that relate to Newfoundland and Labrador also apply to the Newfoundland offshore area.

Background

The HST is imposed in participating provinces under federal legislation and administration. The Comprehensive Integrated Tax Coordination Agreements (CITCAs) between the Government of Canada and each of the participating provinces detail the parameters that govern the imposition of the HST. Under the CITCAs, each participating province may exercise some flexibility in certain areas covered by the agreement, such as establishing the rate of its provincial component of the HST.

Objectives

The Regulations Amending Various GST/HST Regulations, No. 8 (the Regulations) amend existing GST/HST regulations made under the Excise Tax Act (the Act) to formalize and give legal effect to the decisions of New Brunswick and Newfoundland and Labrador to increase the rate of the provincial component of the HST in their respective province and to the Budget 2016 announcement to simplify certain reporting rules related to the HST in respect of sales of grandparented housing.

Description

The Regulations contain rules relating to the harmonized value-added tax system. Specifically, the Regulations include amendments to the following regulations:

• — New Harmonized Value-added Tax System Regulations;
• — Games of Chance (GST/HST) Regulations;
• — Streamlined Accounting (GST/HST) Regulations;
• — Automobile Operating Expense Benefit (GST/HST) Regulations;
• — Selected Listed Financial Institutions Attribution Method (GST/HST) Regulations;
• — Electronic Filing and Provision of Information (GST/HST) Regulations; and
• — New Harmonized Value-added Tax System Regulations, No. 2.

New Harmonized Value-added Tax System Regulations

These Regulations contain various rules that relate to the harmonized value-added tax system under the Act. These Regulations are amended to prescribe the provincial component of the tax rate of the HST for New Brunswick and for Newfoundland and Labrador at 10 per cent. The Regulations set out the complete details of the transitional rules for transactions that straddle the July 1, 2016, implementation date of the rate increase.

The transitional rules that apply to the amendments to these Regulations vary depending on the type of property or service being supplied. Generally, under these transitional rules, businesses are required to charge and collect the provincial component of the HST at the rate of 10 per cent on any consideration that becomes due without having been paid, or is paid without having become due, on or after July 1, 2016, for supplies of services or property (other than real property). Additionally, the transitional rules stipulate what rate of HST is applicable to property and services that are brought into, or imported in, New Brunswick or Newfoundland and Labrador from another province or from outside Canada.

With respect to supplies of real property, the new HST rate of 15 per cent generally applies to a supply of real property by way of sale (including sales of newly constructed or substantially renovated housing) if both ownership and possession of the property are transferred to the purchaser on or after July 1, 2016. Conversely, the HST rate of 13 per cent generally applies to a supply of real property by way of sale if either ownership or possession of the property is transferred to the purchaser before July 1, 2016. However, this general rule may not apply in respect of certain sales of new housing under agreements entered into on or before March 30, 2016, in the case of New Brunswick, or May 3, 2016, in the case of Newfoundland and Labrador, which are subject to certain relieving grandparenting rules.

The transitional rules provide grandparenting of certain agreements for the purchase and sale of new housing. Subject to certain conditions and exceptions, a builder’s sale of a new or substantially renovated single-unit home, duplex, mobile home, floating home or residential condominium unit, in respect of which both ownership and possession are transferred on or after July 1, 2016, under a written agreement of purchase and sale, are grandparented (i.e. subject to HST at a rate of 13 per cent) if the agreement was entered into on or before March 30, 2016, in the case of housing in New Brunswick, or May 3, 2016, in the case of housing in Newfoundland and Labrador.

Additionally, these amendments provide special transitional rules that apply to participating employers and pension entities of pension plans for periods that begin before July 1, 2016, and end on or after that date. Generally, for these periods, tax liabilities in respect of the New Brunswick or Newfoundland and Labrador component of the HST would apply at a rate of 10 per cent based upon the number of days in the period that are on or after July 1, 2016, and at a rate of 8 per cent based upon the number of days in the period that are before that date.

Games of Chance (GST/HST) Regulations

These Regulations set out special rules under which provincial gaming authorities (e.g. provincial lottery and casino corporations) calculate their GST/HST remittances. These calculations are based upon the 5 per cent federal component and the various respective provincial components of the HST.

These Regulations are amended so that the GST/HST remittances of provincial gaming authorities take into account the change in the automobile operating expense benefit rates consequential to the increase in the HST rate in New Brunswick and Newfoundland and Labrador [see the description of the amendments to the Automobile Operating Expense Benefit (GST/HST) Regulations below]. Also, consequential to these rate increases of the provincial component of the HST, effective July 1, 2016, the Regulations provide a transitional rule for 2016, relating to the increased HST rates, in respect of other employment benefits (e.g. parking paid by the employer).

Streamlined Accounting (GST/HST) Regulations

These Regulations provide small businesses and eligible public service bodies with optional simplified methods (i.e. Quick Method and 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 separately keep track of the GST/HST paid on purchases and collected on sales. Certain 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, consequential to the increase in the HST rate in New Brunswick and Newfoundland and Labrador.

Automobile Operating Expense Benefit (GST/HST) Regulations

These Regulations prescribe the rates of GST/HST applicable to the value of an automobile operating expense benefit, which is the personal portion of automobile operating expenses paid by employers or corporations and reported as income for income tax purposes by an employee or shareholder. The GST/HST is applicable to the benefit and the employer or corporation must account for and remit the GST/HST at a prescribed rate.

These Regulations are amended to account for the new 15 per cent HST rate applicable in New Brunswick and Newfoundland and Labrador. The prescribed rate applicable to automobile operating expense benefits is lower than the new 15 per cent HST rate in New Brunswick and Newfoundland and Labrador to reflect the fact that a portion of the total automobile operating expense benefit reported for income tax purposes relates to GST/HST-exempt expenses, such as insurance.

Selected Listed Financial Institutions Attribution Method (GST/HST) Regulations

These Regulations, along with certain sections of the Act, set out special rules by which certain financial institutions are required to calculate the amount of the provincial component of the HST remittable by them, or refundable to them, for each of their reporting periods. The financial institutions to which these rules apply are referred to as “selected listed financial institutions” or “SLFIs” (generally speaking, these are financial institutions operating in an HST-participating province and at least one other province). Under these rules, SLFIs make adjustments to take into account the provincial component of the HST in respect of the SLFI’s purchases of goods and services for use in activities carried out within both the HST-participating provinces and the non-participating provinces.

These Regulations are amended to provide transitional rules applicable to SLFIs for the increase to the HST rate in New Brunswick and Newfoundland and Labrador. Generally, these transitional rules provide that if a reporting period of an SLFI straddles July 1, 2016, the SLFI’s liability for the provincial component of the HST for New Brunswick and for Newfoundland and Labrador is determined on an apportionment basis based on the number of days in the reporting period before July 1, 2016, and the numbers of days in that period that are on or after July 1, 2016, or, in the case of a distributed investment plan, based on the amount of GST/HST that becomes payable, or is paid without having become payable, before July 1, 2016, and on or after July 1, 2016.

Electronic Filing and Provision of Information (GST/HST) Regulations

These Regulations provide for mandatory filing of GST/HST returns under the Act, electronically, for certain registrants, and penalties for failing to file electronically or failing to report certain amounts specified by way of these Regulations. The specified amounts include information related to certain provincial transitional housing measures. These Regulations also provide rules and enforcement mechanisms to ensure that sufficient and accurate information is provided by GST/HST registrants to enable the federal government to administer the GST/HST and to allocate revenues between the federal government and the participating provinces under the HST.

These Regulations are amended consequential to the transitional rules with respect to the increase in the HST rate in New Brunswick and Newfoundland and Labrador. These Regulations set out which registrants are required to file GST/HST returns electronically and are amended to include builders that are affected by the transitional measures related to grandparented housing that were announced by New Brunswick on March 30, 2016, and by Newfoundland and Labrador on May 3, 2016 (see the description of the amendments to the New Harmonized Value-added Tax System Regulations above). These Regulations are also amended to provide the penalties for failing to accurately report certain amounts related to these transitional housing measures in New Brunswick and in Newfoundland and Labrador.

Additionally, these Regulations are amended to implement the simplification measures, announced on March 22, 2016, in Budget 2016, relating to the reporting of grandparented housing sales by builders. In particular, these Regulations are amended to limit the reporting requirement to those grandparented housing sales for which the consideration is equal to or greater than $450,000 and to provide builders with an opportunity to correct past misreporting (i.e. under-reporting, over-reporting or failing to report) and avoid potential penalties by allowing them to elect to report all past grandparented housing sales for which the consideration was equal to or greater than $450,000.

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

These Regulations contain various rules with respect to the harmonized value-added tax system under the Act. These Regulations include, in particular, rules that modify certain amounts and rates contained in the Act in respect of some new housing rebates related to property situated in participating provinces to take into account the provincial component of the HST. These modified amounts and rates are based on the level of embedded tax in the value of the property to which these rebates apply. For example, these Regulations currently provide that the maximum home value to qualify for a federal GST New Housing Rebate for the purchase of a new home situated on leased land in New Brunswick or in Newfoundland and Labrador is an amount determined by taking into account that HST applies at a rate of 13 per cent in these provinces. These amounts are different in provinces with a different provincial component of the HST to reflect embedded tax at a different rate. These Regulations are amended to adjust the applicable amounts and rates to reflect the new HST rate of 15 per cent for New Brunswick and Newfoundland and Labrador.

“One-for-One” Rule

Overall, the HST framework minimizes the compliance and administrative burden imposed on businesses by eliminating ongoing substantial duplicative provincial requirements.

The Regulations implement decisions of New Brunswick and Newfoundland and Labrador under the HST framework to increase the rate of the provincial component of the HST in their respective province and related HST amendments. Accordingly, the Regulations do not increase or decrease the level of administrative burden imposed on business; therefore the “One-for-One” Rule does not apply.

Small business lens

As per the Treasury Board of Canada Secretariat’s Canadian Cost-Benefit Analysis Guide: Regulatory Proposals, taxes, fees, levies and other charges, because they constitute transfers from one group to another, are not considered to be compliance or administrative costs, whether they are intended as incentives to foster compliance and change behaviour or whether their purpose is to recover the costs of providing a service.

Accordingly, the small business lens does not apply, because the Regulations do not result in new incremental compliance or administrative costs for small businesses.

Consultation

The Regulations are designed to reflect the decisions to increase the rate of the provincial component of the HST announced by New Brunswick on February 2, 2016, and by Newfoundland and Labrador on April 14, 2016. The Regulations also reflect the transitional rules announced by the Government of New Brunswick on March 30, 2016, and by the Government of Newfoundland and Labrador on May 3, 2016, which were developed in consultation with these provinces.

Rationale

The Regulations are required as a result of the decisions of the Government of New Brunswick and the Government of Newfoundland and Labrador to increase their rate of the provincial component of the HST effective July 1, 2016, and as a result of the simplification measures relating to the reporting requirements in respect of grandparented housing sales announced on March 22, 2016, in Budget 2016. The Regulations formalize and give legal effect to previously announced amendments.

Contacts

François Beaulieu
Sales Tax Division
Department of Finance Canada
90 Elgin Street
Ottawa, Ontario
K1A 0G5
Telephone: 613-369-3789

Patrick McKinnon
Excise and GST/HST Rulings Directorate
Canada Revenue Agency
Place de Ville, Tower A, 15th Floor,
320 Queen Street
Ottawa, Ontario
K1A 0L5
Telephone: 613-954-7959

• Footnote a
  S.C. 1993, c. 27, s. 125(1)
• Footnote b
  S.C. 2009, c. 32, s. 37(1)
• Footnote c
  R.S., c. E-15
• Footnote 1
  SOR/2010-117
• Footnote 2
  SOR/91-28; SOR/98-440, s. 1; SOR/2011-56, s. 7
• Footnote 3
  SOR/91-51; SOR/2006-162, s. 5
• Footnote 4
  SOR/99-176
• Footnote 5
  SOR/2001-171
• Footnote 6
  SOR/2010-150
• Footnote 7
  SOR/2010-151
• Footnote 8
  SOR/2016-4