Excise Tax Act (R.S.C., 1985, c. E-15)

Relief from Tax

Marginal note:Relief from tax for residential telephone service

• 21.26 (1) No tax is payable under section 21.24 on any amount charged for

  • (a) the provision, commencement or cessation of residential telephone service, other than the provision of long distance telephone service; or

  • (b) the provision, installation, disconnection, replacement, repair or maintenance of any instrument, device, equipment or apparatus or any part thereof that is used in conjunction with residential telephone service.

• Marginal note:Relief from tax for pay telephone service

  (2) No tax is payable under section 21.24 on any amount charged for telephone service acquired and paid for by means of a coin-operated telephone, other than long distance telephone service for which the amount charged exceeds fifty cents.

• Marginal note:Relief from tax for international telecommunication service

  (3) No tax is payable under section 21.24 on any amount charged for any taxable service that is provided entirely outside Canada.

Marginal note:Relief from tax for diplomats

• 21.27 (1) No tax is payable under section 21.24 on any amount charged for a taxable service acquired by a person described in section 2 of Part II of Schedule III or by a member of the family of that person, if that member is not a Canadian citizen or a permanent resident of Canada.

• Marginal note:Relief from tax for international organizations

  (2) No tax is payable under section 21.24 on any amount charged for a taxable service acquired by an organization in respect of which the Governor in Council has provided, by order made pursuant to subsection 4(1) of the Privileges and Immunities (International Organizations) Act, that the organization shall have the privileges and immunities set out in paragraph 7(a) of Schedule I to that Act.

• Marginal note:Relief from tax for foreign military forces

  (3) No tax is payable under section 21.24 on any amount charged for a taxable service acquired by a government of a country designated by the Governor in Council pursuant to heading No. 98.10 of Schedule I to the Customs Tariff, or acquired by a Canadian government agency on behalf of such a government, if the amount charged relates to telecommunication originating or terminating at a military or defence establishment in Canada.

• Marginal note:Relief from tax for certain provinces

  (4) No tax is payable under section 21.24 on any amount charged for a taxable service acquired by Her Majesty in right of a province, other than a province in respect of which there is in force at the time that the service is acquired a reciprocal taxation agreement referred to in section 32 of the Federal-Provincial Fiscal Arrangements and Federal Post-Secondary Education and Health Contributions Act.

• Marginal note:Relief from tax for Indians

  (5) No tax is payable under section 21.24 on any amount charged for a taxable service acquired by an Indian or band within the meaning of subsection 2(1) of the Indian Act, if the amount charged is billed to the Indian or band at a reserve within the meaning of that subsection and relates to telecommunication originating or terminating at a reserve.

Marginal note:Relief from tax for licence holders under this Part

• 21.28 (1) No tax is payable under section 21.24 on any amount charged for a taxable service acquired by a person to whom a licence has been issued under subsection 21.3(2) for provision to another person or for use directly in providing another taxable service, other than a paging service, to another person.

• Marginal note:Relief from tax for licence holders under Part II.1

  (2) No tax is payable under section 21.24 on any amount charged for a taxable service acquired by a person to whom a licence has been issued under section 21.18 for use in providing, by means of telecommunication, a programming service within the meaning of subsection 21.1(1) to another person for an amount charged within the meaning of that subsection or in producing a programming service for such provision.

• Marginal note:Relief from tax for foreign telecommunications carriers

  (3) Subject to subsection (4), no tax is payable under section 21.24 on any amount charged for a taxable service acquired, by a telecommunications carrier who provides telecommunication service solely outside Canada, for provision to another person outside Canada or for use directly in providing another taxable service to another person outside Canada.

• Marginal note:Exception

  (4) Subsection (3) does not apply in respect of any telecommunication service between a place in Canada and a place outside Canada that is provided by means of a telecommunication line, channel or other facility that is dedicated to the sole use of a person.

Diversions

Marginal note:Diversions

• 21.29 (1) Where, pursuant to subsection 21.28(1) or (2), no tax is payable in respect of a taxable service by reason of the use for which the service is acquired (in this section referred to as the “relieved use”) and that service is subsequently diverted by the person acquiring it to any other use for which the service would not, at the time of the acquisition, have been so relieved, that person is liable to pay tax under this Part in respect of the amount charged that person for the service.

• Marginal note:Tax payable

  (2) The tax payable pursuant to subsection (1) is payable at the time the taxable service is diverted and shall be computed as the amount of tax that would have been payable at the time of the acquisition of the service for the relieved use had the service not been acquired for that use.

• Marginal note:Presumption

  (3) For the purposes of sections 21.32 and 21.33, the tax payable pursuant to subsection (1) shall be deemed to be a tax imposed by this Part that was collected or collectible by the person at the time of the diversion.

Licences

Marginal note:Application for licence

• 21.3 (1) Every telecommunications carrier who provides taxable services in Canada for an amount charged shall make an application in the prescribed form to the Minister for a licence for the purposes of this Part not later than the last day of the first month immediately following the first month, after December 31, 1987, in which that person so provides a taxable service.

• Marginal note:Issue of licence

  (2) The Minister may issue a licence for the purposes of this Part to any person applying therefor under subsection (1).

• Marginal note:Cancellation

  (3) The Minister may cancel a licence issued under subsection (2) if, in the Minister’s opinion, it is no longer required for the purposes of this Part.

Collection of Tax

Marginal note:Duty of licensee

• 21.31 (1) Every licensee is an agent of the Minister for the purpose of collecting taxes under this Part and as such shall

  • (a) levy and collect any taxes imposed by this Part on the amount charged for a taxable service acquired from the licensee;

  • (b) make adjustments in or refund any portion of the tax paid on the amount charged for a taxable service that has not been provided or has been only partially provided by the licensee; and

  • (c) make adjustments in or refund any portion of any tax that has been collected in error by the licensee.

• Marginal note:Election by licence holder to pay tax directly

  (2) Notwithstanding subsection (1), where a person, other than a person who provides a paging service and no other taxable service, to whom a licence has been issued under subsection 21.3(2) acquires a taxable service from another licensee and the acquisition is not relieved from tax pursuant to subsection 21.28(1) or (2), that person may, in lieu of paying to that other licensee any tax payable on the amount charged for the taxable service, elect to pay the tax directly to the Receiver General.

• Marginal note:Presumption

  (3) For the purposes of sections 21.32 and 21.33, where a person makes an election pursuant to subsection (2), the tax shall be deemed to be a tax imposed by this Part that was collected or collectible by that person at the time the tax became payable by that person.

• Marginal note:Debt due to Her Majesty

  (4) Every person who, being required by or pursuant to this Part to collect tax, fails to do so as required is liable to Her Majesty in right of Canada for the amount of the tax.

Returns and Remittance of Tax

Marginal note:Monthly return of taxes

• 21.32 (1) Every licensee shall make each month a true return, in the prescribed form and containing the prescribed information, of all amounts collected or collectible by the licensee by way of the tax imposed by this Part in the last preceding month.

• Marginal note:Nil return

  (2) Every licensee shall, if no amounts were collected or collectible by the licensee by way of the tax imposed by this Part in the last preceding month, make a return as required by subsection (1) stating that fact.

• Marginal note:Alternate periods for making returns

  (3) Notwithstanding subsections (1) and (2), the Minister may, by regulation,

  • (a) authorize any licensee to make a return in respect of any accounting period of not less than twenty-one days and not more than thirty-five days;

  • (b) authorize any licensee to make a return in respect of any period longer than one month but not longer than six months, if the amounts collected or collectible by the licensee by way of the tax imposed by this Part in the last preceding calendar year did not exceed four thousand eight hundred dollars; or

  • (c) authorize any licensee whose taxable services are predominantly limited to a seasonal period of operation to make a return in respect of any period longer than one month but not longer than six months, if the amounts collected or collectible by the licensee by way of the tax imposed by this Part in the equivalent period in the last preceding calendar year did not exceed an average of four hundred dollars per month throughout that equivalent period.

• Marginal note:Date for filing and remittance

  (4) Subject to subsection (8) and sections 21.33 and 79.2, the return required by this section shall be filed and the taxes on amounts charged for taxable services that are collected or collectible by a licensee shall be remitted

  • (a) in a case where the return is required to be made in accordance with subsection (1) or (2), not later than the last day of the first month succeeding that in which the amounts charged for the taxable service were paid or became payable to the licensee;

  • (b) in a case where the return is authorized to be made in accordance with a regulation made under paragraph (3)(a), not later than the last day of the first authorized accounting period following the end of the accounting period to which the return relates; and

  • (c) in a case where the return is authorized to be made in accordance with a regulation made under paragraph (3)(b) or (c), not later than the last day of the first month following the end of the period to which the return relates.

• Marginal note:Penalty and interest on default in remitting taxes

  (5) Subject to subsections (6) to (9), a licensee who defaults in remitting tax within the time prescribed by subsection (4), in addition to the amount in default, shall pay

  • (a) in the case of tax required to be remitted not later than the last day of a month, a penalty of one-half of one per cent and interest at the prescribed rate, in respect of each month or fraction of a month between that day and the day on which the total tax, penalty and interest outstanding is remitted, calculated on the total tax, penalty and interest outstanding in that month or fraction of a month; and

  • (b) in the case of tax required to be remitted not later than the last day of an accounting period, a penalty of one-half of one per cent and interest at the prescribed rate, in respect of each accounting period or fraction of an accounting period between that day and the day on which the total tax, penalty and interest outstanding is remitted, calculated on the total tax, penalty and interest outstanding in that accounting period or fraction of an accounting period.

• Marginal note:Minimum penalty and interest

  (6) No penalty or interest is payable under subsection (5) if the licensee remits all taxes collected or collectible by the licensee under this Part and, at the time of the remittance, the total penalty and interest payable is less than ten dollars.

• Marginal note:Time for paying penalty or interest

  (7) A licensee who is liable to pay penalty or interest under subsection (5) shall pay the penalty or interest not later than the last day of the month or accounting period in respect of which the penalty or interest was calculated.

• Marginal note:Extension

  (8) The Minister may, before or after the expiration of the time prescribed by subsection (4), extend in writing the time for filing a return or remitting any tax, and where the Minister so extends the time,

  • (a) the return shall be filed or the tax shall be remitted within the time as so extended;

  • (b) interest accrues under subsection (5) in respect of the tax as if the time had not been so extended;

  • (c) no penalty accrues or shall be deemed to have accrued under subsection (5) in respect of the tax before the expiration of the time as so extended; and

  • (d) penalty accrues under subsection (5) in respect of a default in remitting the tax or any portion thereof within the time as so extended as if the default were a default referred to in that subsection.

• Marginal note:Security

  (9) Where the Minister holds security under section 80.1 for the remittance of any tax under this Part that is not remitted within the time prescribed by subsection (4),

  • (a) interest accrues under subsection (5) in respect of the tax from the expiration of that time; and

  • (b) penalty accrues under subsection (5) only if the total tax, penalty and interest outstanding, as calculated in respect of each month or accounting period or fraction of a month or accounting period during which the default continues, exceeds the value of the security at the time it is accepted by the Minister and, if accruing, the penalty shall be calculated only on the amount of the excess.

Marginal note:Interpretation

• 21.33 (1) For the purposes of this section,

  • (a) a licensee’s “instalment base”

    • (i) for a month is the lesser of

      • (A) the tax imposed by this Part that was collected or collectible by that licensee in that month, and

      • (B) the tax so collected or collectible in the last preceding month,

    • (ii) for an accounting period is the lesser of

      • (A) the tax imposed by this Part that was collected or collectible by that licensee in that accounting period, and

      • (B) the tax so collected or collectible in the last preceding accounting period, and

    • (iii) for any other period to which a return relates is the lesser of

      • (A) the tax imposed by this Part that was collected or collectible by that licensee in that period, and

      • (B) the tax so collected or collectible in the last preceding period multiplied by the ratio that the number of days in the period to which the return relates is to the number of days in the last preceding period; and

  • (b) a licensee is a “large taxpayer” at any particular time if

    • (i) the aggregate amount of taxes payable under Parts II.1, III, IV and VI, other than taxes payable in accordance with the Customs Act, and collected or collectible under Part II and this Part by that licensee in the last preceding calendar year ending at least ninety days, or ninety-one days where that time falls in a leap year, before that time exceeded twelve million dollars, or

    • (ii) the licensee

      • (A) was, at any time in the last preceding calendar year ending at least ninety days, or ninety-one days where that time falls in a leap year, before that time, a member of a group of associated corporations (within the meaning of section 256 of the Income Tax Act) and the aggregate amount of taxes payable under Parts II.1, III, IV and VI, other than taxes payable in accordance with the Customs Act, and collected or collectible under Part II and this Part by the group in that year exceeded twelve million dollars, and

      • (B) is not, at that time, authorized to make a return in accordance with a regulation made under paragraph 21.32(3)(b) or (c).

• Marginal note:Instalment payments by large taxpayers

  (2) A large taxpayer who is required to file a return and remit tax within the time prescribed by subsection 21.32(4) shall pay instalments on account of the tax in accordance with the following rules:

  • (a) in the case where the return is required to be made in accordance with subsection 21.32(1), the large taxpayer shall pay two instalments, each equal to one-half of the taxpayer’s instalment base for the month in which the tax was collected or became collectible, the first to be paid not later than the last day of that month and the second not later than the fifteenth day of the next following month; and

  • (b) in the case where the return is authorized to be made in accordance with a regulation made under paragraph 21.32(3)(a), the large taxpayer shall pay two instalments, each equal to one-half of the taxpayer’s instalment base for the accounting period to which the return relates, the first to be paid not later than the last day of that accounting period and the second not later than the fifteenth day of the next following accounting period.

• Marginal note:Instalment payments by other licensees

  (3) A licensee, other than a large taxpayer, who is required to file a return and remit tax within the time prescribed by subsection 21.32(4) shall pay an instalment on account of the tax in accordance with the following rules:

  • (a) in the case where the return is required to be made in accordance with subsection 21.32(1), the licensee shall pay an instalment, equal to the licensee’s instalment base for the month in which the tax was collected or became collectible, not later than the twenty-first day of the next following month;

  • (b) in the case where the return is authorized to be made in accordance with a regulation made under paragraph 21.32(3)(a), the licensee shall pay an instalment, equal to the licensee’s instalment base for the accounting period to which the return relates, not later than the twenty-first day of the next following accounting period; and

  • (c) in the case where the return is authorized to be made in accordance with a regulation made under paragraph 21.32(3)(b) or (c), the licensee shall pay an instalment, equal to the licensee’s instalment base for the period to which the return relates, not later than the twenty-first day of the month next following the end of that period.

• Marginal note:Penalty and interest on default by large taxpayer in paying instalment

  (4) Subject to subsections (6) to (8), a large taxpayer who defaults in paying an instalment within the time prescribed by subsection (2) shall, in addition to the amount in default, pay in respect of the period between the end of that time and the end of the time prescribed for remittance of the tax on account of which the instalment was payable

  • (a) in the case of an instalment required to be paid not later than the last day of a month or an accounting period, a penalty of one-half of one per cent and interest at the prescribed rate, calculated on the amount by which

    • (i) one-half of the taxpayer’s instalment base for that month or accounting period

    exceeds

    • (ii) the aggregate of all taxes on account of which the instalment was payable that were remitted not later than that day; and

  • (b) in the case of an instalment required to be paid not later than the fifteenth day of a month or an accounting period, a penalty of one-quarter of one per cent and interest at one-half of the prescribed rate, calculated on the amount by which

    • (i) one-half of the taxpayer’s instalment base for the last preceding month or accounting period

    exceeds

    • (ii) the amount by which the aggregate of all taxes on account of which the instalment was payable that were remitted not later than that day exceeds the lesser of

      • (A) the aggregate of all taxes on account of which the instalment was payable that were remitted not later than the last day of the last preceding month or accounting period, and

      • (B) one-half of the taxpayer’s instalment base for the last preceding month or accounting period.

• Marginal note:Penalty and interest on default by other licensees in paying instalment

  (5) Subject to subsections (6) to (8), a licensee who defaults in paying an instalment within the time prescribed by subsection (3) shall, in addition to the amount in default, pay in respect of the period between the end of that time and the end of the time prescribed for remittance of the tax on account of which the instalment was payable

  • (a) in the case of an instalment required by paragraph (3)(a) or (b) to be paid not later than the twenty-first day of a month or an accounting period, a penalty of one-sixth of one per cent and interest at one-third of the prescribed rate, calculated on the amount by which

    • (i) the licensee’s instalment base for the last preceding month or accounting period

    exceeds

    • (ii) the aggregate of all taxes on account of which the instalment was payable that were remitted not later than that day; and

  • (b) in the case of an instalment required by paragraph (3)(c) to be paid not later than the twenty-first day of a month next following the end of a period, a penalty of one-sixth of one per cent and interest at one-third of the prescribed rate, calculated on the amount by which

    • (i) the licensee’s instalment base for that period

    exceeds

    • (ii) the aggregate of all taxes on account of which the instalment was payable that were remitted not later than that day.

• Marginal note:Minimum penalty and interest

  (6) No penalty or interest is payable under subsection (4) or (5) if the large taxpayer or other licensee liable to pay the instalment remits all taxes collected or collectible by the taxpayer or other licensee under this Part and, at the time of the remittance, the total penalty and interest payable in respect of the instalment is less than five dollars and in respect of all those taxes is less than ten dollars.

• Marginal note:Time for paying penalty or interest

  (7) A large taxpayer or other licensee who is liable to pay penalty or interest under subsection (4) or (5) in respect of a default in paying an instalment shall pay the penalty or interest within the time prescribed by subsection 21.32(4) for the remittance of the tax on account of which the instalment is payable.

• Marginal note:Extension

  (8) The Minister may, before or after the expiration of the time prescribed by subsection (2) or (3), extend in writing the time for paying an instalment, for any period within the time prescribed by subsection 21.32(4) for the remittance of the tax on account of which the instalment is payable, and where the Minister so extends the time

  • (a) the instalment shall be paid within the time as so extended;

  • (b) interest accrues under subsection (4) or (5), as the case may be, in respect of the instalment as if the time had not been so extended;

  • (c) no penalty accrues or shall be deemed to have accrued under subsection (4) or (5), as the case may be, in respect of the instalment before the expiration of the time as so extended; and

  • (d) penalty accrues under subsection (4) or (5), as the case may be, in respect of a default in paying an instalment within the time as so extended as if the default were a default referred to in that subsection.