Vol. 151, No. 26 — December 27, 2017

Registration

SOR/2017-274 December 8, 2017

EXCISE TAX ACT

P.C. 2017-1520 December 8, 2017

Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to sections 277 (see footnote a) and 277.1 (see footnote b) of the Excise Tax Act (see footnote c), makes the annexed Regulations Amending the Deduction for Provincial Rebate (GST/HST) Regulations.

Regulations Amending the Deduction for Provincial Rebate (GST/HST) Regulations

Amendments

1 The definition provincial schedule in section 1 of the Deduction for Provincial Rebate (GST/HST) Regulations (see footnote 1) is amended by striking out “and” at the end of paragraph (c), by adding “and” at the end of paragraph (d.1) and by adding the following after paragraph (d.1):

2 The Regulations are amended by adding, after Schedule 4.1, the Schedule 5 set out in the schedule to these Regulations.

Application

3 Section 1 comes into force or is deemed to have come into force on January 1, 2018.

4 Section 2 applies in respect of tax that

SCHEDULE

(Section 2)

SCHEDULE 5

(Section 1)

Newfoundland and Labrador Items

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

On August 22, 2017, the Government of Newfoundland and Labrador announced its intention to reinstate the provincial point-of-sale rebate of the Newfoundland and Labrador component of the harmonized sales tax (HST) for books, effective January 1, 2018. Currently, the Newfoundland and Labrador component of the HST is 10%. With the passage of the Provincial Choice Tax Framework Act on December 15, 2009, Parliament approved that regulations would serve as the mechanism to facilitate a change to HST rules related to a point-of-sale rebate of the provincial component of the HST. Amendments to existing goods and services tax/harmonized sales tax (GST/HST) regulations (namely, the Deduction for Provincial Rebate (GST/HST) Regulations) are therefore required in order to implement the decision of Newfoundland and Labrador to reinstate the point-of-sale rebate of its provincial component of the HST for books.

Background

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

Objectives

The Regulations Amending the Deduction for Provincial Rebate (GST/HST) Regulations (the Amending Regulations) amend existing GST/HST regulations made under the Excise Tax Act (the Act) to formalize and give legal effect to the decision of Newfoundland and Labrador to reinstate the provincial point-of-sale rebate of the Newfoundland and Labrador component of the HST for books.

Description

The Amending Regulations contain rules relating to the harmonized value-added tax system. Specifically, the Amending Regulations include amendments to the Deduction for Provincial Rebate (GST/HST) Regulations.

Deduction for Provincial Rebate (GST/HST) Regulations

Provinces participating in the HST framework have the flexibility of designating a limited number of provincial point-of-sale rebates of an amount equal to the provincial component of the HST paid or payable in respect of a taxable supply of property or a service. These Regulations facilitate the crediting, at the point of sale, of a rebate of the provincial component of the HST on items that the participating provinces provide to purchasers of those items. Federal regulations are required to facilitate the delivery of these rebates at the point of sale (e.g. to allow the vendor to refund the purchaser directly at the point of sale).

These Regulations are amended consequential to Newfoundland and Labrador’s decision to reinstate the point-of-sale rebate for books, as announced by the province on August 22, 2017. In particular, these Regulations are amended by adding printed books and related items (e.g. an audio recording of a spoken reading of a printed book) to the province’s listed point-of-sale rebates, effective January 1, 2018.

“One-for-One” Rule

The Amending Regulations implement modifications to GST/HST rules consequential to the decision of Newfoundland and Labrador under the HST framework to reinstate the provincial point-of-sale rebate of the provincial component of the HST for books.

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

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

Accordingly, the Amending Regulations do not increase or decrease the level of administration burden imposed on business, therefore the “One-for-One” Rule does not apply.

Small business lens

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

Consultation

The Amending Regulations are designed to reflect the provincial decision to reinstate the provincial point-of-sale rebate of the Newfoundland and Labrador component of the HST for books, as announced by Newfoundland and Labrador on August 22, 2017, and were developed in consultation with the Government of Newfoundland and Labrador.

Rationale

The Amending Regulations are required as a result of the decision of the Government of Newfoundland and Labrador to reinstate the provincial point-of-sale rebate of the Newfoundland and Labrador component of the HST for books, effective January 1, 2018. The Amending Regulations provide affected stakeholders with certainty in respect of the application at the point of sale of the reinstated rebate, as previously announced by the Government of Newfoundland and Labrador.

Contacts

Ryan Stammers
Sales Tax Division
Department of Finance Canada
90 Elgin Street
Ottawa, Ontario
K1A 0G5
Telephone: 613-369-3790

Philippe Nault
Excise and GST/HST Rulings Directorate
Canada Revenue Agency
Place de Ville, Tower B, 9th Floor
112 Kent Street
Ottawa, Ontario
K1A 0L5
Telephone: 613-670-7939