Excise Tax Act (R.S.C., 1985, c. E-15)
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Act current to 2024-10-30 and last amended on 2024-06-28. Previous Versions
PART IXGoods and Services Tax (continued)
DIVISION IIGoods and Services Tax (continued)
SUBDIVISION CSpecial Cases (continued)
Non-resident
Marginal note:Drop shipment — deemed supply
179 (1) For the purposes of this Part, if
(a) a registrant
(i) makes a taxable supply in Canada of particular tangible personal property by way of sale to a non-resident person that is not registered under Subdivision D of Division V,
(ii) makes a taxable supply in Canada of a service of manufacturing or producing particular tangible personal property to a non-resident person that is not registered under Subdivision D of Division V,
(iii) acquires physical possession of particular tangible personal property (other than property of a person that is resident in Canada) for the purpose of making a taxable supply in Canada of a commercial service in respect of the particular property to a non-resident person that is not registered under Subdivision D of Division V, or
(iv) acquires — as the recipient of a supply of particular tangible personal property made by way of lease, licence or similar arrangement by a non-resident person that is not registered under Subdivision D of Division V — physical possession of the particular property and either
(A) gives a certificate described in paragraph (2)(d) in respect of that acquisition of physical possession of the particular property, or
(B) claims an input tax credit in respect of tax that is deemed to have been paid or payable by the registrant under subsection 178.8(2) or paragraph 180(d) in respect of the particular property,
(b) the registrant, at a particular time, causes physical possession of the particular property to be transferred, at a place in Canada, to a third person (in this subsection referred to as the “consignee”) or to the non-resident person, and
(c) the non-resident person is not a consumer of the particular property,
the following rules apply:
(d) the registrant is deemed to have made a particular taxable supply in Canada of the particular property to the non-resident person and the non-resident person is deemed to have received the particular taxable supply from the registrant,
(e) if the transfer of physical possession of the particular property occurs at a place in a participating province, the particular taxable supply is deemed to have been made in that province,
(f) the particular taxable supply is deemed to have been made for consideration, that becomes due and is paid at the particular time, equal to
(i) except if subparagraph (ii) applies, the fair market value of the particular property at the particular time, and
(ii) if the registrant has caused physical possession of the particular property to be transferred to a consignee that is acquiring physical possession of the particular property as the recipient of a supply made by the non-resident person by way of sale for no consideration, nil, and
(g) the registrant is deemed not to have made the taxable supply referred to in any of subparagraphs (a)(i) to (iii) in respect of the particular property to the non-resident person, unless that supply is a supply of a service of storing the particular property.
Marginal note:Exception — certificate of registered consignee
(2) For the purposes of this Part, if
(a) paragraphs (1)(a) to (c) apply to
(i) a taxable supply in respect of particular tangible personal property that is made by a registrant and is referred to in any of subparagraphs (1)(a)(i) to (iii), or
(ii) an acquisition by a registrant of physical possession of particular tangible personal property that is referred to in subparagraph (1)(a)(iv),
(b) the transfer referred to in paragraph (1)(b) of physical possession of the particular property is to a person (in this subsection referred to as the “consignee”) that is registered under Subdivision D of Division V,
(c) the consignee is acquiring physical possession of the particular property
(i) as the recipient of a taxable supply of the particular property made by a non-resident person that is not registered under Subdivision D of Division V,
(ii) for the purpose of making a taxable supply in Canada of a service of manufacturing or producing other tangible personal property to a non-resident person that is not registered under Subdivision D of Division V and is not a consumer of the other property, if the particular property
(A) is incorporated or transformed into, attached to, or combined or assembled with, the other property in the manufacture or production of the other property, or
(B) is directly consumed or expended in the manufacture or production of the other property,
(iii) if the particular property is not property of a person that is resident in Canada, for the purpose of making a taxable supply in Canada of a commercial service in respect of the particular property to a non-resident person that is not registered under Subdivision D of Division V and is not a consumer of the particular property, or
(iv) for the purpose of making a taxable supply in Canada of a commercial service in respect of other tangible personal property (other than property of a person that is resident in Canada) to a non-resident person that is not registered under Subdivision D of Division V and is not a consumer of the other property, if the particular property
(A) is incorporated into, attached to, or combined or assembled with, the other property in the provision of the commercial service, or
(B) is directly consumed or expended in the provision of the commercial service, and
(d) the consignee gives to the registrant, and the registrant retains, a certificate that
(i) states the consignee’s name and registration number assigned under section 241,
(ii) acknowledges that the consignee is acquiring physical possession of the particular property as the recipient of a supply referred to in subparagraph (c)(i) or for a purpose referred to in any of subparagraphs (c)(ii) to (iv), and
(iii) acknowledges that the consignee is assuming liability to pay or remit any amount that is or may become payable or remittable by the consignee
(A) under Division IV in respect of the particular property, or
(B) under this Part in respect of a supply, deemed under paragraph (1)(d) to have been made by the consignee, of the particular property or of the other property referred to in either of subparagraphs (c)(ii) or (iv),
the following rules apply:
(e) paragraphs (1)(d) to (g) do not apply to the taxable supply referred to in subparagraph (a)(i) or the acquisition referred to in subparagraph (a)(ii), as the case may be, and
(f) if subparagraph (a)(i) applies, the taxable supply referred to in that subparagraph is deemed to have been made outside Canada.
Marginal note:Exception — certificate of registered owner
(3) For the purposes of this Part, if
(a) paragraphs (1)(a) to (c) apply to
(i) a taxable supply in respect of particular tangible personal property that is made by a registrant and is referred to in any of subparagraphs (1)(a)(i) to (iii), or
(ii) an acquisition by a registrant of physical possession of particular tangible personal property that is referred to in subparagraph (1)(a)(iv),
(b) the transfer referred to in paragraph (1)(b) of physical possession of the particular property is to a person (in this subsection referred to as the “consignee”) that is not entitled, under subsection (2), to give to the registrant a certificate described in paragraph (2)(d) in respect of that transfer,
(c) either
(i) the particular property is, immediately after the particular time referred to in paragraph (1)(b), property of a particular person that is registered under Subdivision D of Division V and that is neither the registrant nor the consignee, and the registrant retains a certificate that
(A) is given to the registrant by the particular person,
(B) states the particular person’s name and registration number assigned under section 241,
(C) acknowledges that the particular property is, immediately after the particular time, property of the particular person, and
(D) if the particular property was acquired by the particular person by way of sale from a non-resident person that is not registered under Subdivision D of Division V, acknowledges that the particular person is assuming liability to pay any amount that is or may become payable by the particular person under Division IV in respect of the particular property, or
(ii) a particular person, other than the registrant, that is registered under Subdivision D of Division V makes a taxable supply by way of sale of the particular property to the consignee before the particular time, the consignee is acquiring physical possession of the particular property at the particular time as the recipient of that taxable supply, and the registrant retains a certificate that
(A) is given to the registrant by the particular person, or by the consignee provided that the consignee is registered under Subdivision D of Division V,
(B) states the particular person’s name and registration number assigned under section 241,
(C) if the certificate is given by the consignee, states the consignee’s name and registration number assigned under section 241, and
(D) acknowledges that the particular person made a taxable supply by way of sale of the particular property to the consignee before the particular time and that the consignee acquired physical possession of the particular property at the particular time as the recipient of that taxable supply, and
(d) if subparagraph (1)(a)(i) applies, the property is delivered or made available to the particular person referred to in subparagraph (c)(i) or (ii), as the case may be, after the property is delivered or made available to the non-resident person referred to in subparagraph (1)(a)(i) under the agreement for the taxable supply referred to in that subparagraph,
the following rules apply:
(e) paragraphs (1)(d) to (g) do not apply to the taxable supply referred to in subparagraph (a)(i) or the acquisition referred to in subparagraph (a)(ii), as the case may be, and
(f) if subparagraph (a)(i) applies, the taxable supply referred to in that subparagraph is deemed to have been made outside Canada.
Marginal note:Exception — distribution platform operator
(3.1) For the purposes of this Part, if
(a) paragraphs (1)(a) to (c) apply to a taxable supply in respect of particular tangible personal property that is made by a registrant and is referred to in any of subparagraphs (1)(a)(i) to (iii),
(b) the transfer referred to in paragraph (1)(b) of physical possession of the particular property is to a person (in this subsection referred to as the “consignee”) that is acquiring physical possession of the particular property as the recipient of a taxable supply made by way of sale of the particular property that
(i) is deemed under subsection 211.23(1) to have been made by a distribution platform operator (as defined in subsection 211.1(1)), and
(ii) would, in the absence of subsection 211.23(1), be made by a non-resident person that is not registered under Subdivision D of Division V,
(c) the distribution platform operator is registered under Subdivision D of Division V, and
(d) the non-resident person gives to the registrant, and the registrant retains, a certificate that
(i) acknowledges that the consignee acquired physical possession of the particular property as the recipient of a taxable supply and that the distribution platform operator is required to collect tax in respect of that taxable supply, and
(ii) states the distribution platform operator’s name and registration number assigned under section 241,
the following rules apply:
(e) paragraphs (1)(d) to (g) do not apply to the taxable supply referred to in paragraph (a), and
(f) the taxable supply referred to in paragraph (a) is deemed to have been made outside Canada.
Marginal note:Exception — export
(4) For the purposes of this Part, if
(a) paragraphs (1)(a) and (c) apply to
(i) a taxable supply in respect of particular tangible personal property that is made by a registrant and is referred to in any of subparagraphs (1)(a)(i) to (iii), or
(ii) an acquisition by a registrant of physical possession of particular tangible personal property that is referred to in subparagraph (1)(a)(iv), and
(b) either
(i) the registrant
(A) causes physical possession of the particular property to be transferred at a place outside Canada,
(B) ships the particular property to a destination outside Canada that is specified in the contract for carriage of the particular property,
(C) causes physical possession of the particular property to be transferred to a common carrier or consignee that has been retained to ship the particular property to a destination outside Canada, or
(D) sends the particular property by mail or courier to an address outside Canada, or
(ii) the following conditions are met:
(A) the registrant causes physical possession of the particular property to be transferred at a place in Canada to a person (referred to in this subparagraph as the “exporter”) for export,
(B) after that transfer, the exporter exports the particular property as soon as is reasonable having regard to the circumstances surrounding the exportation and, if applicable, the normal business practices of the exporter and of the owner of the particular property,
(C) the particular property has not been acquired by any owner of the particular property for consumuption use or supply in Canada at any time after that transfer and before the property is exported,
(D) after that transfer but before the particular property is exported, the particular property is not further processed, transformed or altered except to the extent reasonably necessary or incidental to its transportation, and
(E) the registrant maintains evidence satisfactory to the Minister of the exportation of the particular property or, if the exporter is authorized under subsection 221.1(2), the exporter provides the registrant with a certificate in which the exporter certifies that the particular property will be exported in the circumstances described in clauses (B) to (D),
the following rules apply:
(c) paragraphs (1)(d) to (g) do not apply to the taxable supply referred to in subparagraph (a)(i) or the acquisition referred to in subparagraph (a)(ii), as the case may be, and
(d) if subparagraph (a)(i) applies, the taxable supply referred to in that subparagraph is deemed to have been made outside Canada.
Marginal note:Retention of possession
(5) If
(a) a particular registrant makes a particular taxable supply in Canada of particular tangible personal property by way of sale to a particular non-resident person that is not registered under Subdivision D of Division V and is not a consumer of the particular property, and
(b) the particular registrant or another registrant has physical possession of the particular property at the particular time at which the particular property is delivered or made available to the particular non-resident person under the agreement for the particular taxable supply and retains physical possession of the particular property after the particular time
(i) solely for the purpose of transferring physical possession of the particular property to the particular non-resident person, a person (in this subsection referred to as a “subsequent purchaser”) that subsequently acquires ownership of the particular property or a person designated by the particular non-resident person or a subsequent purchaser,
(ii) for the purpose of making another taxable supply in Canada of a commercial service in respect of the particular property to the particular non-resident person or a subsequent purchaser,
(iii) for the purpose of making another taxable supply in Canada of a service of manufacturing or producing other tangible personal property to the particular non-resident person or to another non-resident person that is not registered under Subdivision D of Division V, if the particular non-resident person or the other non-resident person, as the case may be, is not a consumer of the other property and if the particular property
(A) is incorporated or transformed into, attached to, or combined or assembled with, the other property in the manufacture or production of the other property, or
(B) is directly consumed or expended in the manufacture or production of the other property,
(iv) for the purpose of making another taxable supply in Canada of a commercial service in respect of other tangible personal property (other than property of a person that is resident in Canada) to the particular non-resident person or to another non-resident person that is not registered under Subdivision D of Division V, if the particular non-resident person or the other non-resident person, as the case may be, is not a consumer of the other property and if the particular property
(A) is incorporated into, attached to, or combined or assembled with, the other property in the provision of the commercial service, or
(B) is directly consumed or expended in the provision of the commercial service, or
(v) if subsection (9) does not apply in respect of the particular taxable supply, as the recipient of another supply of the particular property made by the particular non-resident person, by a subsequent purchaser or by a lessee or sub-lessee of a subsequent purchaser,
the following rules apply:
(c) if the particular registrant has physical possession of the particular property at the particular time,
(i) for the purposes of this Part, the particular taxable supply is deemed to have been made outside of Canada,
(ii) if any of subparagraphs (b)(i) to (iv) applies, the particular registrant is deemed for the purposes of this section
(A) except if clause (B) applies, to have acquired, at the particular time, physical possession of the particular property for the purpose of making a taxable supply in Canada to the particular non-resident person of a commercial service in respect of the particular property that is not a storage service, or
(B) if subparagraph (b)(ii) applies and the other taxable supply referred to in that subparagraph is to be made to the particular non-resident person or to a non-resident subsequent purchaser that is not registered under Subdivision D of Division V and is not a consumer of the particular property or if subparagraph (b)(iii) or (iv) applies, to have acquired, at the particular time, physical possession of the particular property for the purpose referred to in whichever of subparagraphs (b)(ii) to (iv) applies, and
(iii) if subparagraph (b)(v) applies, for the purposes of this section and the definition imported taxable supply in section 217,
(A) the particular registrant is deemed to have acquired physical possession of the particular property, as the recipient of the other supply referred to in that subparagraph, from another person that is a registrant,
(B) that acquisition of physical possession of the particular property is deemed to have occurred at the time when, and at the place where, the particular property is delivered or made available to the particular registrant under the agreement for that other supply, and
(C) the particular registrant is deemed to have given to the other person referred to in clause (A) a certificate described in paragraph (2)(d) in respect of that acquisition of physical possession of the particular property, and
(d) if another registrant has physical possession of the particular property at the particular time, for the purposes of this section and the definition imported taxable supply in section 217,
(i) if subparagraph (b)(i) applies and the other registrant gives to the particular registrant a certificate that contains the information set out in paragraph (2)(d) in respect of the particular property,
(A) the particular registrant is deemed to have caused, at the particular time, physical possession of the particular property to be transferred at a place in Canada to the other registrant,
(B) the other registrant is deemed to have acquired, at the particular time, physical possession of the particular property for the purpose of making a taxable supply in Canada to the particular non-resident person of a commercial service in respect of the particular property that is not a storage service, and
(C) the certificate is deemed to be a certificate described in paragraph (2)(d) in respect of the transfer referred to in clause (A) and the acquisition referred to in clause (B),
(ii) if any of subparagraphs (b)(ii) to (iv) applies,
(A) the particular registrant is deemed to have caused physical possession of the particular property to be transferred at a place in Canada to the other registrant,
(B) the other registrant is deemed to have acquired physical possession of the particular property from the particular registrant for the purpose referred to in whichever of those subparagraphs applies, and
(C) the particular registrant is deemed to have caused that transfer, and the other registrant is deemed to have so acquired physical possession of the particular property, at
(I) except if subclause (II) applies, the particular time, or
(II) if subparagraph (b)(ii) applies and the other taxable supply referred to in that subparagraph is to be made to a subsequent purchaser that is registered under Subdivision D of Division V, the time at which the particular property is delivered or made available to the subsequent purchaser, and
(iii) if subparagraph (b)(v) applies,
(A) the particular registrant is deemed to have caused physical possession of the particular property to be transferred to the other registrant,
(B) the other registrant is deemed to have acquired physical possession of the particular property from the particular registrant as the recipient of the other supply referred to in that subparagraph, and
(C) the particular registrant is deemed to have caused that transfer, and the other registrant is deemed to have so acquired physical possession of the particular property, at the time when, and at the place where, the particular property is delivered or made available to the other registrant under the agreement for that other supply.
Marginal note:Transfer of possession to bailee
(6) For the purposes of this section, section 180 and the definition imported taxable supply in section 217, if a registrant at a particular time transfers physical possession of tangible personal property to a bailee solely for the purpose of storing or shipping the property and if the bailee does not, at or before the particular time, give to the registrant a certificate described in paragraph (2)(d) in respect of the transfer of physical possession of the property, the following rules apply:
(a) if, under the agreement with the bailee for storing or shipping the property, the bailee is required to transfer physical possession of the property to another person, other than the registrant, that is named at the particular time in the agreement,
(i) the registrant is deemed not to have caused physical possession of the property to be transferred to the bailee and the bailee is deemed not to have acquired physical possession of the property,
(ii) the registrant is deemed to have caused physical possession of the property to be transferred to the other person at the particular time and at the place where physical possession of the property is transferred to the other person by the bailee,
(iii) the other person is deemed to have acquired physical possession of the property from the registrant for the purpose for which the other person is acquiring physical possession of the property from the bailee, and
(iv) that acquisition of physical possession of the property is deemed to have occurred at the particular time and at the place where physical possession of the property is transferred to the other person by the bailee; and
(b) if, under the agreement with the bailee for storing or shipping the property, the bailee is required to transfer physical possession of the property to the registrant or to another person (in this paragraph referred to as the “consignee”) that is to be identified after the particular time,
(i) the registrant is deemed to retain physical possession of the property, and the bailee is deemed not to have acquired physical possession of the property, throughout the period beginning at the particular time and ending at another time that is the earliest of
(A) the time at which the bailee transfers physical possession of the property to the registrant,
(B) the time at which the registrant gives to the consignee sufficient documentation to enable the consignee to require the bailee to transfer physical possession of the property to the consignee,
(C) the time at which the registrant directs the bailee in writing to transfer physical possession of the property to the consignee,
(D) the time at which the bailee transfers physical possession of the property to the consignee, and
(E) if the bailee is acquiring physical possession of the property for the purpose of storing the property, the time at which the bailee gives to the registrant a certificate that contains the information set out in paragraph (2)(d) in respect of the property, and
(ii) if the other time referred to in subparagraph (i) is
(A) described in any of clauses (i)(B) to (D),
(I) the registrant is deemed to have caused physical possession of the property to be transferred to the consignee at the other time and at the place where physical possession of the property is transferred to the consignee by the bailee,
(II) the consignee is deemed to have acquired physical possession of the property from the registrant for the purpose for which the consignee is acquiring physical possession of the property from the bailee, and
(III) that acquisition of physical possession of the property is deemed to have occurred at the other time and at the place where physical possession of the property is transferred to the consignee by the bailee, or
(B) described in clause (i)(E),
(I) the transfer of physical possession of the property by the registrant to the bailee, and the acquisition of physical possession of the property by the bailee from the registrant, are deemed to have occurred at the other time and not at the particular time, and
(II) the certificate referred to in that clause is deemed to be a certificate described in paragraph (2)(d) in respect of that transfer and that acquisition.
Marginal note:Goods transferred to bailee by non-resident
(7) For the purposes of this section, section 180 and the definition imported taxable supply in section 217, if a non-resident person that is not registered under Subdivision D of Division V transfers physical possession of tangible personal property to a bailee that is a registrant for the sole purpose of storing or shipping the property and if the bailee either is a carrier that is acquiring physical possession of the property for the sole purpose of shipping the property or does not claim an input tax credit in respect of the property, the bailee is deemed not to have acquired physical possession of the property.
Marginal note:Fungible property
(7.1) For the purposes of this section, substitute tangible personal property is deemed to be the original tangible personal property if
(a) one of the following conditions is met:
(i) a registrant acquires physical possession of the original tangible personal property for the purpose of making a supply of a service of manufacturing or producing tangible personal property (in this subparagraph referred to as the “manufactured property”) and the substitute tangible personal property is used or consumed by being
(A) incorporated or transformed into, attached to, or combined or assembled with, the manufactured property in the manufacture or production of the manufactured property, or
(B) directly consumed or expended in the manufacture or production of the manufactured property,
(ii) the following conditions are met:
(A) a registrant acquires physical possession of the original tangible personal property for the purpose of making a supply of a commercial service in respect of that property,
(B) if the commercial service is not a storage service, a service identical to the commercial service is performed in respect of the substitute tangible personal property,
(C) the registrant causes physical possession of the substitute tangible personal property to be transferred to another person under the agreement for the supply, and
(D) if the substitute property is a continuous transmission commodity, the substitute tangible personal property is not being transferred to the other person by means of a wire, pipeline or other conduit, or
(iii) a registrant acquires physical possession of the original tangible personal property for the purpose of making a supply of a commercial service in respect of tangible personal property (in this subparagraph referred to as the “serviced property”) that is neither the original tangible personal property nor the substitute tangible personal property and the substitute tangible personal property is used or consumed by being
(A) incorporated into, attached to, or combined or assembled with, the serviced property in the provision of the commercial service, or
(B) directly consumed or expended in the provision of the commercial service; and
(b) the properties of the original tangible personal property are essentially identical to the properties of the substitute tangible personal property and the original tangible personal property and the substitute tangible personal property
(i) are of the same class or kind of property,
(ii) are in the same measure and state, and
(iii) are interchangeable for commercial purposes.
Marginal note:Beginning of lease from unregistered non-resident
(8) For the purposes of this section and the definition imported taxable supply in section 217, if
(a) a registrant (in this subsection referred to as the “lessee”)
(i) is the recipient of a particular taxable supply of tangible personal property made by way of lease, licence or similar arrangement by a particular non-resident person that is not registered under Subdivision D of Division V, and
(ii) is not deemed under clause (9)(c)(ii)(A) or subparagraph (9)(d)(ii) to have acquired physical possession of the property as the recipient of the particular taxable supply,
(b) either
(i) immediately before the particular time at which the property is delivered or made available to the lessee under the agreement for the particular taxable supply, another registrant has possession or use of the property as the recipient of another taxable supply of the property made by way of lease, licence or similar arrangement by the particular non-resident person or by another non-resident person that is not registered under Subdivision D of Division V, or
(ii) the following conditions are met:
(A) subparagraph (i) does not apply,
(B) another registrant has physical possession of the property immediately after the particular time, and
(C) the lessee did not have possession or use of the property immediately before the particular time as the recipient of another taxable supply of the property made by way of lease, licence or similar arrangement by the particular non-resident person or by another non-resident person that is not registered under Subdivision D of Division V, and
(c) it is not the case that a person that is a registrant acquired physical possession of the property before the particular time for the purpose of making a taxable supply in Canada of a commercial service in respect of the property to the particular non-resident person or to another non-resident person that is not registered under Subdivision D of Division V and continues to retain physical possession of the property until a time that is after the particular time,
the following rules apply:
(d) the other registrant referred to in subparagraph (b)(i) or (ii), as the case may be, is deemed to have caused physical possession of the property to be transferred to the lessee at the particular time and at the place where the property is delivered or made available to the lessee under the agreement for the particular taxable supply,
(e) the lessee is deemed to have acquired physical possession of the property from the other registrant as the recipient of the particular taxable supply, and
(f) that acquisition of physical possession of the property is deemed to have occurred at the particular time and at the place where the property is delivered or made available to the lessee under the agreement for the particular taxable supply.
Marginal note:Lease subsequent to sale
(9) If
(a) a particular registrant makes a particular taxable supply in Canada of tangible personal property by way of sale to a particular non-resident person that is not registered under Subdivision D of Division V and is not a consumer of the property, and
(b) at the particular time at which the property is delivered or made available to the particular non-resident person under the agreement for the particular taxable supply, the particular registrant or another registrant is, or is intended to be, the recipient of another supply of the property made by way of lease, licence or similar arrangement by the particular non-resident person or by another non-resident person that is not registered under Subdivision D of Division V,
the following rules apply:
(c) if the particular registrant is, or is intended to be, at the particular time the recipient of the other supply,
(i) for the purposes of this Part, the particular taxable supply is deemed to have been made outside of Canada,
(ii) for the purposes of this section and the definition imported taxable supply in section 217,
(A) the particular registrant is deemed to have acquired physical possession of the property, as the recipient of the other supply, from another person that is a registrant,
(B) that acquisition of physical possession of the property is deemed to have occurred at the time when, and at the place where, the property is delivered or made available to the particular registrant under the agreement for the other supply, and
(C) the particular registrant is deemed to have given to the other person referred to in clause (A) a certificate described in paragraph (2)(d) in respect of that acquisition of physical possession of the property, and
(d) if another registrant is, or is intended to be, at the particular time the recipient of the other supply, for the purposes of this section and the definition imported taxable supply in section 217,
(i) the particular registrant is deemed to have caused physical possession of the property to be transferred to the other registrant,
(ii) the other registrant is deemed to have acquired physical possession of the property, as the recipient of the other supply, from the particular registrant, and
(iii) the particular registrant is deemed to have caused that transfer, and the other registrant is deemed to have so acquired physical possession of the property, at the time when, and at the place where, the property is delivered or made available to the other registrant under the agreement for the other supply.
Marginal note:Deemed possession during lease
(10) For the purposes of this section and the definition imported taxable supply in section 217, if a registrant (in this subsection referred to as the “lessee”) acquires — as the recipient of a particular taxable supply of tangible personal property made by way of lease, licence or similar arrangement by a particular non-resident person that is not registered under Subdivision D of Division V — physical possession of the property at a particular time and either
(a) gives a certificate described in paragraph (2)(d) in respect of that acquisition of physical possession of the property, or
(b) claims an input tax credit in respect of tax that is deemed to have been paid or payable by the lessee under subsection 178.8(2) or paragraph 180(d) in respect of the property,
the lessee is deemed to retain physical possession of the property at all times throughout the period that begins at the particular time and ends at the earliest of
(c) the time at which the lessee causes physical possession of the property to be transferred to another registrant that
(i) is acquiring physical possession of the property for the purpose of making a taxable supply in Canada of a commercial service in respect of the property to the particular non-resident person or to another non-resident person that is not registered under Subdivision D of Division V, and
(ii) retains physical possession of the property during a part of the period during which possession or use of the property is provided to the lessee under the arrangement,
(d) the time at which the lessee causes physical possession of the property to be transferred to the particular non-resident person or to another non-resident person that is not registered under Subdivision D of Division V, and
(e) the time at which the lessee causes physical possession of the property to be transferred to a person that is not referred to in paragraph (c) or (d), if that time is not included in
(i) the period during which possession or use of the property is provided to the lessee under the arrangement, or
(ii) another period during which the lessee has possession or use of the property as the recipient of another taxable supply of the property made by way of lease, licence or similar arrangement by the particular non-resident person or by another non-resident person that is not registered under Subdivision D of Division V.
Marginal note:Possession by service provider during lease
(11) For the purposes of this section and the definition imported taxable supply in section 217, if
(a) a registrant (in this subsection referred to as the “lessee”) is the recipient of a particular taxable supply of tangible personal property made by way of lease, licence or similar arrangement by a particular non-resident person that is not registered under Subdivision D of Division V,
(b) another registrant acquires physical possession of the property at a particular time for the purpose of making a taxable supply in Canada of a commercial service in respect of the property to the particular non-resident person or to another non-resident person that is not registered under Subdivision D of Division V, and
(c) the other registrant retains physical possession of the property during a part of the particular period during which possession or use of the property is provided to the lessee under the arrangement,
the following rules apply:
(d) if a third person other than the lessee causes physical possession of the property to be transferred to the other registrant at the particular time, if the particular time is during the particular period and if the third person is not a registrant that acquires and retains physical possession of the property in the circumstances described in paragraphs (b) and (c),
(i) the third person is deemed not to have caused that transfer of physical possession of the property, and
(ii) the lessee is deemed to have caused, at the particular time, physical possession of the property to be transferred to the other registrant at the place where the other registrant acquires physical possession of the property, and
(e) if the other registrant causes, at a later time that is after the particular time but during the particular period, physical possession of the property to be transferred at a particular place to a third person other than the lessee and the third person is not a registrant that acquires and retains physical possession of the property in the circumstances described in paragraphs (b) and (c),
(i) the other registrant is deemed to have caused, at the later time, physical possession of the property to be transferred to the lessee at the particular place,
(ii) the lessee is deemed to have acquired physical possession of the property as the recipient of the particular taxable supply at the later time and at the place where the property is delivered or made available to the lessee under the arrangement, and
(iii) the other registrant is deemed not to have caused physical possession of the property to be transferred to the third person, and the third person is deemed not to have acquired physical possession of the property.
Marginal note:End of lease period
(12) For the purposes of this section and the definition imported taxable supply in section 217, if
(a) a registrant (in this subsection referred to as the “lessee”) is the recipient of a particular taxable supply of tangible personal property made by way of lease, licence or similar arrangement by a particular non-resident person that is not registered under Subdivision D of Division V,
(b) a particular person other than the lessee has physical possession of the property immediately after the particular time that is at the end of the period during which possession or use of the property is provided to the lessee under the arrangement,
(c) if the particular person is a registrant, the particular person did not acquire physical possession of the property before the particular time for the purpose of making a taxable supply in Canada of a commercial service in respect of the property to the particular non-resident person or to another non-resident person that is not registered under Subdivision D of Division V,
(d) the lessee does not retain possession or use of the property after the particular time as the recipient of a taxable supply of the property made by way of lease, licence or similar arrangement by the particular non-resident person or by another non-resident person that is not registered under Subdivision D of Division V, and
(e) another registrant does not have possession or use of the property immediately after the particular time as the recipient of a taxable supply of the property made by way of lease, licence or similar arrangement by the particular non-resident person or by another non-resident person that is not registered under Subdivision D of Division V,
the following rules apply:
(f) the lessee is deemed to have caused, at the particular time, physical possession of the property to be transferred to the particular person at the place where the particular person has physical possession of the property immediately after the particular time,
(g) if the particular person is a registrant and has physical possession of the property immediately after the particular time as the recipient of a supply referred to in subparagraph (2)(c)(i), the particular person is deemed to have acquired, at the particular time and at the place referred to in paragraph (f), physical possession of the property as the recipient of that supply, and
(h) if the particular person is a registrant and has physical possession of the property immediately after the particular time for the purpose of making a supply referred to in any of subparagraphs (2)(c)(ii) to (iv), the particular person is deemed to have acquired, at the particular time and at the place referred to in paragraph (f), physical possession of the property for that purpose.
Marginal note:Use of railway rolling stock
(13) For the purpose of clause (4)(b)(ii)(C), if the only use of railway rolling stock after physical possession of it is transferred as described in that clause and before it is next exported is for the purpose of transporting tangible personal property or passengers in the course of that exportation and that exportation occurs within 60 days after the day on which the transfer takes place, that use of the rolling stock is deemed to take place entirely outside Canada.
- [NOTE: Application provisions are not included in the consolidated text
- see relevant amending Acts and regulations.]
- 1990, c. 45, s. 12
- 1993, c. 27, s. 44
- 1997, c. 10, ss. 30, 173
- 2001, c. 15, s. 4
- 2014, c. 20, s. 42
- 2017, c. 33, s. 121
- 2021, c. 23, s. 105
- Date modified: