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

Marginal note:Winding-up

272 Where at any time a particular corporation is wound up and not less than 90% of the issued shares of each class of the capital stock of the particular corporation were, immediately before that time, owned by another corporation,

• (a) for the purposes of applying the provisions of this Part in respect of property or a service acquired, imported or brought into a participating province by the other corporation as a consequence of the winding-up, for the purposes of sections 231 and 249, and for prescribed purposes, the other corporation shall be deemed to be the same corporation as, and a continuation of, the particular corporation; and

• (b) for the purposes of this Part, the transfer of any property to the other corporation as a consequence of the winding-up shall be deemed not to be a supply.

SUBDIVISION B.1Partnerships and Joint Ventures

Marginal note:Partnerships

• 272.1 (1) For the purposes of this Part, anything done by a person as a member of a partnership is deemed to have been done by the partnership in the course of the partnership’s activities and not to have been done by the person.

• Marginal note:Acquisitions by member

  (2) Despite subsection (1), if property or a service is acquired, imported or brought into a participating province by a member of a partnership for consumption, use or supply in the course of activities of the partnership but not on the account of the partnership, the following rules apply:

  • (a) except as otherwise provided in subsection 175(1), the partnership is deemed

    • (i) not to have acquired or imported the property or service, and

    • (ii) where the property was brought by the member into a participating province, not to have so brought it into that province;

  • (b) where the member is not an individual, for the purpose of determining an input tax credit or rebate of the member in respect of the property or service and, in the case of property that is acquired or imported for use as capital property of the member, applying Subdivision D of Division II in relation to the property, subsection (1) does not apply to deem the member not to have acquired or imported the property or service and the member is deemed to be engaged in those activities of the partnership; and

  • (c) where the member is not an individual and the partnership at any time pays an amount to the member as a reimbursement and is entitled to claim an input tax credit in respect of the property or service in circumstances in which subsection 175(1) applies, any input tax credit in respect of the property or service that the member would, but for this paragraph, be entitled to claim in a return of the member that is filed with the Minister after that time shall be reduced by the amount of the input tax credit that the partnership is entitled to claim.

• Marginal note:Supply to partnership

  (3) Where a person who is or agrees to become a member of a partnership supplies property or a service to the partnership otherwise than in the course of the partnership’s activities

  • (a) where the property or service is acquired by the partnership for consumption, use or supply exclusively in the course of commercial activities of the partnership, any amount that the partnership agrees to pay to or credit the person in respect of the property or service is deemed to be consideration for the supply that becomes due at the time the amount is paid or credited;

  • (b) in the case of management or administrative services that are rendered by a general partner of an investment limited partnership to the investment limited partnership under an agreement for the particular supply of those services,

    • (i) if subsection 136.1(2) applies in respect of the particular supply, for each separate supply of those services that is deemed under paragraph 136.1(2)(a) to be made by the general partner for a billing period (within the meaning of that subsection), the separate supply is deemed, despite paragraph 136.1(2)(c), to be made for consideration that becomes due on the last day of the billing period equal to the fair market value of the services rendered under the agreement by the general partner to the investment limited partnership during the billing period, determined as if the general partner were not a member of the investment limited partnership and were dealing at arm’s length with the investment limited partnership, and

    • (ii) in any other case,

      • (A) the general partner is deemed to have made, and the investment limited partnership is deemed to have received, a separate supply of those services for each reporting period of the general partner during which those services are, or are to be, rendered under the agreement, and

      • (B) each separate supply of those services that is deemed to be made under clause (A) for a reporting period of the general partner is deemed to be made on the first day of the reporting period for consideration that becomes due on the last day of the reporting period equal to the fair market value of the services rendered under the agreement by the general partner to the investment limited partnership during the reporting period, determined as if the general partner were not a member of the investment limited partnership and were dealing at arm’s length with the investment limited partnership; and

  • (c) in any other case, the supply is deemed to have been made for consideration that becomes due at the time the supply is made equal to the fair market value at that time of the property or service acquired by the partnership determined as if the person were not a member of the partnership and were dealing at arm’s length with the partnership.

• Marginal note:Deemed supply to partner

  (4) Where a partnership disposes of property of the partnership

  • (a) to a person who, at the time the disposition is agreed to or otherwise arranged, is or has agreed to become a member of the partnership, or

  • (b) to a person as a consequence of that person ceasing to be a member of the partnership,

  the following rules apply:

  • (c) the partnership is deemed to have made to the person, and the person is deemed to have received from the partnership, a supply of the property for consideration that becomes due at the time the property is disposed of equal to the total fair market value of the property (including the fair market value of the person’s interest in the property) immediately before the time the property is disposed of, and

  • (d) subsection 172(2) does not apply in respect of the supply.

• Marginal note:Joint and several liability

  (5) A partnership and each member or former member (each of which is referred to in this subsection as the “member”) of the partnership (other than a member who is a limited partner and is not a general partner) are jointly and severally, or solidarily, liable for

  • (a) the payment or remittance of all amounts that become payable or remittable by the partnership under this Part before or during the period during which the member is a member of the partnership or, where the member was a member of the partnership at the time the partnership was dissolved, after the dissolution of the partnership, except that

    • (i) the member is liable for the payment or remittance of amounts that become payable or remittable before the period only to the extent of the property and money that is regarded as property or money of the partnership under the relevant laws of general application in force in a province relating to partnerships, and

    • (ii) the payment or remittance by the partnership or by any member thereof of an amount in respect of the liability discharges their liability to the extent of that amount; and

  • (b) all other obligations under this Part that arose before or during that period for which the partnership is liable or, where the member was a member of the partnership at the time the partnership was dissolved, the obligations that arose upon or as a consequence of the dissolution.

• Marginal note:Continuation of partnership

  (6) Where a partnership would, but for this subsection, be regarded as having ceased to exist, the partnership is deemed for the purposes of this Part not to have ceased to exist until the registration of the partnership is cancelled.

• Marginal note:Continuation of predecessor partnership by new partnership

  (7) Where

  • (a) a partnership (in this subsection referred to as the “predecessor partnership”) would, but for this section, be regarded as having ceased at any time to exist,

  • (b) a majority of the members of the predecessor partnership that together had, at or immediately before that time, more than a 50% interest in the capital of the predecessor partnership become members of another partnership of which they comprise more than half of the members, and

  • (c) the members of the predecessor partnership who become members of the other partnership transfer to the other partnership all or substantially all of the property distributed to them in settlement of their capital interests in the predecessor partnership,

  except where the other partnership is registered or applies for registration under section 240, the other partnership is deemed to be a continuation of and the same person as the predecessor partnership.

• Marginal note:Investment limited partnership — supply by general partner

  (8) For the purposes of this Part, if a general partner of an investment limited partnership renders a management or administrative service to the investment limited partnership,

  • (a) the rendering of the service is deemed not to be done by the general partner as a member of the investment limited partnership; and

  • (b) the supply by the general partner to the investment limited partnership that includes the service is deemed to have been made otherwise than in the course of the investment limited partnership’s activities.

Marginal note:Joint venture election

• 273 (1) Where a registrant (in this section referred to as the “operator”) is a participant in a joint venture (other than a partnership) under an agreement, evidenced in writing, with another person (in this section referred to as the “co-venturer”) for the exploration or exploitation of mineral deposits or for a prescribed activity, and the operator and the co-venturer jointly make an election under this subsection,

  • (a) all properties and services that are, during the period the election is in effect, supplied, acquired, imported or brought into a participating province under the agreement by the operator on behalf of the co-venturer in the course of the activities for which the agreement was entered into shall, for the purposes of this Part, be deemed to be supplied, acquired, imported or brought into the province, as the case may be, by the operator and not by the co-venturer;

  • (b) section 177 does not apply in respect of a supply referred to in paragraph (a); and

  • (c) all supplies of property or services made, during the period the election is in effect, under the agreement by the operator to the co-venturer shall, for the purposes of this Part, be deemed not to be supplies to the extent that the property or services are, but for this section, acquired by the co-venturer for consumption, use or supply in the course of commercial activities for which the agreement was entered into.

• Marginal note:Exception

  (1.1) Paragraph (1)(a) does not apply to the acquisition, importation or bringing into a participating province of property or a service by an operator on behalf of a co-venturer where the property or service is so acquired, imported or brought into the province for consumption, use or supply in the course of activities that are not commercial activities and the operator

  • (a) is a government other than a specified Crown agent; or

  • (b) would not be required, because of an Act of Parliament other than this Act, to pay tax in respect of the acquisition, importation or bringing into the province of the property or service if the operator acquired or, imported the property or service or brought it into the province for that purpose otherwise than on behalf of the co-venturer.

• Marginal note:Assignee of interest in joint venture

  (2) For the purposes of this section, where a particular person has made an election under this section with respect to a joint venture and at any time during the period the election is in effect another person becomes a participant in the venture by acquiring an interest in it from the particular person, the other person shall be deemed to have made, at that time, an election under this section in accordance with subsection (4) with respect to the venture jointly with the operator of the venture.

• Marginal note:Revocation

  (3) An operator and a co-venturer who have jointly made an election under this section may jointly revoke the election.

• Marginal note:Form of election or revocation

  (4) An election or revocation under this section made jointly by an operator and a co-venturer is not a valid election or revocation unless it is made in prescribed form containing prescribed information and specifies the effective date of the election or revocation.

• Marginal note:Joint and several liability

  (5) Where a registrant and another person make, or purport to make, an election under subsection (1) in respect of an agreement between the registrant and the person, the registrant and the other person are jointly and severally liable for all obligations under this Part that result from the activities for which the agreement was entered into and that are or would be, but for this section, engaged in by the registrant on behalf of the other person.

• Marginal note:Joint venture beginning before 1991

  (6) Where an operator who is a participant in a joint venture (other than a partnership) under an agreement referred to in subsection (1) entered into before 1991 with a co-venturer files a return for the operator’s first reporting period beginning after 1990 in which all properties and services supplied, acquired or imported by the operator on behalf of the co-venturer in the course of the activities for which the agreement was entered into are reported as having been supplied, acquired or imported, as the case may be, by the operator and not by the co-venturer, the operator shall be deemed to have made jointly with the co-venturer an election under this section in accordance with subsection (4).

• Marginal note:Application of subsection (6)

  (7) Subsection (6) applies as between an operator and a co-venturer, in respect of an agreement, only where

  • (a) the operator sends a notice in writing to the co-venturer not later than December 31, 1990 of the operator’s intention to file a return for the operator’s first reporting period beginning after 1990 reporting on the basis provided in subsection (6) with respect to all property and services supplied, acquired or imported by the operator on behalf of the co-venturer in the course of the activities for which the agreement was entered into; and

  • (b) the co-venturer has not, on or before the day that is the earlier of February 1, 1991 and the day that is 30 days after receipt of the notice from the operator, advised the operator in writing that all property and services supplied, acquired or imported by the operator on the co-venturer’s behalf in the course of the activities for which the agreement was entered into are not to be treated as having been supplied, acquired or imported by the operator.

SUBDIVISION B.2Export Distribution Centres

Marginal note:Definitions

• 273.1 (1) The definitions in this subsection apply in this section.

  added property

  added property that is in the possession of a person means tangible personal property (other than property that serves as evidence of the payment of postage) or software that the person incorporates into, attaches to, combines or assembles with, or uses to pack, other property that is not property of the person held otherwise than for sale by the person. (bien d’appoint)

  base value

  base value of property that a particular person imports or obtains physical possession of in Canada from another person means

  • (a) if the particular person imports the property, the value that is or would be, but for subsection 215(2), deemed under subsection 215(1) to be the value of the property for the purposes of Division III; and

  • (b) in any other case, the fair market value of the property at the time the particular person obtains physical possession of it in Canada. (valeur de base)

  basic service

  basic service means any of the following services performed at any time in respect of goods, to the extent that, if the goods were held in a bonded warehouse at that time, it would be feasible, given the stage of processing of the goods at that time, to perform that service in the bonded warehouse and it would be permissible to do so according to the Customs Bonded Warehouses Regulations:

  • (a) disassembling or reassembling, if the goods have been assembled or disassembled for packing, handling or transportation purposes;

  • (b) displaying;

  • (c) inspecting;

  • (d) labelling;

  • (e) packing;

  • (f) removing, for the sole purpose of soliciting orders for goods or services, a small quantity of material, or a portion, a piece or an individual object, that represents the goods;

  • (g) storing;

  • (h) testing; or

  • (i) any of the following that do not materially alter the characteristics of the goods:

    • (i) cleaning,

    • (ii) complying with any applicable law of Canada or of a province,

    • (iii) diluting,

    • (iv) normal maintenance and servicing,

    • (v) preserving,

    • (vi) separating defective goods from prime quality goods,

    • (vii) sorting or grading, and

    • (viii) trimming, filing, slitting or cutting. (service de base)

  bonded warehouse

  bonded warehouse has the meaning assigned by subsection 2(1) of the Customs Act. (entrepôt de stockage)

  customer’s good

  customer’s good, in respect of a particular person, means tangible personal property of another person that the particular person imports, or obtains physical possession of in Canada, for the purpose of supplying a service or added property in respect of the tangible personal property. (produit de client)

  domestic inventory

  domestic inventory of a person means tangible personal property that the person acquires in Canada, or acquires outside Canada and imports, for the purpose of selling the property separately for consideration in the ordinary course of a business carried on by the person. (stocks intérieurs)

  export revenue

  export revenue of a particular person for a fiscal year means the total of all amounts each of which is consideration, included in determining the specified total revenue of the person for the year, for

  • (a) a supply by way of sale of an item of domestic inventory of the person that is made outside Canada or included in Part V of Schedule VI (other than sections 2.1, 3, 11, 14 and 15.1 of that Part);

  • (b) a supply by way of sale of added property acquired by the person for the purpose of processing in Canada particular property where the particular property, or all the products resulting from that processing, as the case may be, are exported, after that processing is complete, without being consumed, used, transformed or further processed, manufactured or produced in Canada by another person except to the extent reasonably necessary or incidental to the transportation of the particular property or those products; or

  • (c) a supply of a service of processing, storing or distributing tangible personal property of another person if the property, or all the products resulting from that processing, as the case may be, are exported, after the processing in Canada, if any, by the particular person is complete, without being consumed, used, transformed or further processed, manufactured or produced in Canada by any person other than the particular person except to the extent reasonably necessary or incidental to the transportation of that property or those products. (recettes d’exportation)

  export revenue percentage

  export revenue percentage of a person for a year means the proportion (expressed as a percentage) that the person’s export revenue for the year is of the person’s specified total revenue for the year. (pourcentage de recettes d’exportation)

  finished inventory

  finished inventory of a person means property of the person (other than capital property) that is in the state at which it is intended to be sold by the person, or to be used by the person as added property, in the course of a business carried on by the person. (stocks finis)

  labelling

  labelling includes marking, tagging and ticketing. (étiquetage)

  packing

  packing includes unpacking, repacking, packaging and repackaging. (emballage)

  processing

  processing includes adjusting, altering, assembling and any basic service. (traitement)

  specified total revenue

  specified total revenue of a person for a fiscal year of the person means the total of all amounts each of which is consideration, included in determining the income from a business of the person for the year, for a supply made by the person (or that would be made by the person but for any provision of this Part that deems the supply to be made by another person), other than

  • (a) a supply of a service in respect of property that the person neither imports nor obtains physical possession of in Canada for the purpose of providing the service;

  • (b) a supply by way of sale of particular property that the person acquires for the purpose of selling the particular property (or selling other property to which the particular property has been added or with which the particular property has been combined) for consideration but that is neither acquired in Canada nor imported by the person;

  • (c) a supply by way of sale of added property that the person acquires for the purpose of processing tangible personal property that the person neither imports nor obtains physical possession of in Canada; and

  • (d) a supply by way of sale of capital property of the person. (recettes totales déterminées)

  substantial alteration of property

  substantial alteration of property by a person, in respect of a fiscal year of the person, means

  • (a) manufacturing or producing, or engaging another person to manufacture or produce, property (other than capital property of the person) at any time in the year in the course of a business carried on by the person; or

  • (b) any processing undertaken by or for the person during the year to bring property of the person to a state at which the property or the product of that processing is finished inventory of the person, if

    • (i) the person’s percentage value added attributable to non-basic services in respect of finished inventory of the person for the year exceeds 10%, and

    • (ii) the person’s percentage total value added in respect of finished inventory of the person for the year exceeds 20%. (modification sensible)

• Marginal note:Value added attributable to non-basic services in respect of finished inventory

  (2) A person’s percentage value added attributable to non-basic services in respect of finished inventory of the person for a fiscal year of the person is the amount (expressed as a percentage) determined by the formula

  A/B

  where

  A

  is the total of all amounts each of which

  • (a) is part of the total cost to the person of all property that was finished inventory of the person supplied, or used as added property, by the person during the year, and

  • (b) is reasonably attributable to

    • (i) salary, wages or other remuneration paid or payable to employees of the person, excluding any amounts that are reasonably attributable to the performance of basic services, or

    • (ii) consideration paid or payable by the person to engage other persons to perform processing, excluding any portion of such consideration that is reasonably attributed by the other persons to tangible personal property supplied in connection with that processing or that is reasonably attributable to the performance of basic services, and

  B

  is the total cost to the person of the property.

• Marginal note:Total value added in respect of finished inventory

  (3) The percentage total value added in respect of finished inventory of a person for a fiscal year of the person is the amount (expressed as a percentage) that would be determined for the year by the formula in subsection (2) if the total for A in that subsection did not exclude any amounts that are reasonably attributable to the performance of basic services.

• Marginal note:Value added attributable to non-basic services in respect of customers’ goods

  (4) A person’s percentage value added attributable to non-basic services in respect of customers’ goods for a fiscal year of the person is the amount (expressed as a percentage) determined by the formula

  A/(A + B)

  where

  A

  is the total of all consideration, included in determining the income from a business of the person for the year, for supplies of services, or of added property, in respect of customers’ goods, other than the portion of such consideration that is reasonably attributable to the performance of basic services or to the provision of added property used in the performance of basic services, and

  B

  is the total of the base values of the customers’ goods.

• Marginal note:Total value added in respect of customers’ goods

  (5) A person’s percentage total value added in respect of customers’ goods for a fiscal year of the person is the percentage that would be determined for the year by the formula in subsection (4) if the total for A in that subsection did not exclude any amounts that are reasonably attributable to the performance of basic services or the provision of added property used in the performance of basic services.

• Marginal note:Non-arm’s length transactions

  (6) For the purpose of determining a particular person’s export revenue percentage or an amount under any of subsections (2) to (5) in respect of finished inventory of a particular person or customers’ goods in respect of a particular person, if a supply between the particular person and another person with whom the particular person is not dealing at arm’s length is made for no consideration or for less than fair market value and any consideration for the supply would be included in determining the income from a business of the particular person for a year, the supply is deemed to have been made for consideration equal to fair market value and that consideration is deemed to be included in determining that income.

• Marginal note:Export distribution centre certificate

  (7) The Minister may, on the application of a person who is registered under Subdivision D of Division V and who is engaged exclusively in commercial activities, authorize the person to use, beginning on a particular day in a fiscal year of the person and subject to such conditions as the Minister may from time to time specify, a certificate (in this section referred to as an “export distribution centre certificate”) for the purposes of section 1.2 of Part V of Schedule VI and section 11 of Schedule VII, if it can reasonably be expected that

  • (a) the person will not engage in the substantial alteration of property in the year;

  • (b) either the person’s percentage value added attributable to non-basic services in respect of customers’ goods for the year will not exceed 10% or the person’s percentage total value added in respect of customers’ goods for the year will not exceed 20%; and

  • (c) the person’s export revenue percentage for the year will be at least 90%.

• Marginal note:Application

  (8) An application for an authorization to use an export distribution centre certificate shall be made in prescribed form containing prescribed information and be filed with the Minister in prescribed manner.

• Marginal note:Notice of authorization

  (9) If the Minister authorizes a person to use an export distribution centre certificate, the Minister shall notify the person in writing of the authorization, its effective date and its expiry date and the number assigned by the Minister that identifies the person or the authorization and that must be disclosed by the person when providing the certificate for the purpose of section 1.2 of Part V of Schedule VI or when accounting for imported goods in accordance with section 11 of Schedule VII.

• Marginal note:Revocation

  (10) The Minister may, after giving a person to whom an authorization has been granted under subsection (7) reasonable written notice, revoke the authorization, effective on a day in a particular fiscal year of the person, if

  • (a) the person fails to comply with any condition attached to the authorization or with any provision of this Part;

  • (b) it can reasonably be expected that

    • (i) one or both of the conditions described in paragraphs (7)(a) and (b) would not be met if the fiscal year referred to in those paragraphs were the particular fiscal year, or

    • (ii) the person’s export revenue percentage for the particular fiscal year will be less than 80%; or

  • (c) the person has requested in writing that the authorization be revoked as of that day.

• Marginal note:Deemed revocation

  (11) Subject to subsection (10), an authorization granted to a person under subsection (7) is deemed to have been revoked, effective immediately after a fiscal year of the person, if

  • (a) the person had engaged in the substantial alteration of property in that year;

  • (b) the person’s percentage value added attributable to non-basic services in respect of customers’ goods for the year exceeds 10% and the person’s percentage total value added in respect of customers’ goods for the year exceeds 20%; or

  • (c) the person’s export revenue percentage for the year is less than 80%.

• Marginal note:Cessation

  (12) An authorization granted under subsection (7) to a person ceases to have effect immediately before the earlier of

  • (a) the day on which a revocation of the authorization becomes effective, and

  • (b) the day that is three years after the day on which the authorization became effective.

• Marginal note:Application after revocation

  (13) If an authorization granted to a person under subsection (7) is revoked, effective on a particular day, the Minister shall not grant to the person another authorization under that subsection that becomes effective before

  • (a) if the authorization was revoked in circumstances described in paragraph (10)(a), the day that is two years after the particular day; and

  • (b) in any other case, the first day of the second fiscal year of the person beginning after the particular day.