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55 ELIZABETH II

——————

CHAPTER 4

An Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006

[Assented to 22nd June, 2006]

Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

SHORT TITLE

Short title

1. This Act may be cited as the Budget Implementation Act, 2006.

PART 1

AMENDMENTS RELATING TO THE GST/HST RATE REDUCTION

Amendments Relating to the GST/HST

R.S., c. E-15

Excise Tax Act

1997, c. 10, s. 150(6)

2. (1) The description of G in paragraph (a) of the definition “basic tax content” in subsection 123(1) of the Excise Tax Act is replaced by the following:

G is

(A) 7%, if the amount determined for D is included, or would be included if the tax became payable, in the description of A in subsection 225.2(2) for a reporting period of the selected listed financial institution that ends before July 1, 2006, and

(B) 6%, in any other case,

1997, c. 10, s. 150(6)

(2) The description of P in paragraph (b) of the definition “basic tax content” in subsection 123(1) of the Act is replaced by the following:

P is

(A) 7%, if the amount determined for M is included, or would be included if the tax became payable, in the description of A in subsection 225.2(2) for a reporting period of the selected listed financial institution that ends before July 1, 2006, and

(B) 6%, in any other case,

(3) Subsections (1) and (2) come into force, or are deemed to have come into force, on July 1, 2006.

1997, c. 10, s. 160(1)

3. (1) Subsection 165(1) of the Act is replaced by the following:

Imposition of goods and services tax

165. (1) Subject to this Part, every recipient of a taxable supply made in Canada shall pay to Her Majesty in right of Canada tax in respect of the supply calculated at the rate of 6% on the value of the consideration for the supply.

(2) Subsection (1) applies

(a) to any supply (other than a supply deemed under section 191 of the Act to have been made) made on or after July 1, 2006;

(b) for the purposes of calculating tax in respect of any supply (other than a supply by way of sale of real property) made before July 1, 2006, but only in respect of the portion of the tax that

(i) becomes payable on or after July 1, 2006, without having been paid before that day, or

(ii) is paid on or after July 1, 2006, without having become payable;

(c) for the purposes of calculating tax in respect of any supply (other than a supply deemed under Part IX of the Act to have been made) by way of sale of real property made before July 1, 2006, if ownership and possession of the property are transferred on or after July 1, 2006, to the recipient under the agreement for the supply, unless the supply is a supply of a residential complex pursuant to an agreement of purchase and sale, evidenced in writing, entered into on or before May 2, 2006;

(d) to any supply by way of sale of a residential complex, which is a single unit residential complex (as defined in subsection 123(1) of the Act) or a residential condominium unit, deemed under subsection 191(1) of the Act to have been made on or after July 1, 2006, unless the supply is deemed to have been made as a consequence of the builder giving possession of the complex to a person under an agreement, entered into on or before May 2, 2006, for the supply by way of sale of the building or part of it in which the residential unit forming part of the complex is situated;

(e) to any supply by way of sale of a residential condominium unit deemed under subsection 191(2) of the Act to have been made on or after July 1, 2006, unless possession of the unit was given to the particular person referred to in that subsection before July 1, 2006;

(f) to any supply by way of sale of a residential complex deemed under subsection 191(3) of the Act to have been made on or after July 1, 2006, unless the supply is deemed to have been made as a consequence of the builder giving possession of a residential unit in the complex to a person under an agreement for the supply by way of sale of the building or part of it forming part of the complex and

(i) the agreement was entered into on or before May 2, 2006, or

(ii) another agreement was entered into on or before May 2, 2006, by the builder and another person and that other agreement was not terminated before July 1, 2006, and was for the supply by way of sale of the building or part of it forming part of the complex;

(g) to any supply by way of sale of an addition to a residential complex deemed under subsection 191(4) of the Act to have been made on or after July 1, 2006, unless the supply is deemed to have been made as a consequence of the builder giving possession of a residential unit in the addition to a person under an agreement for the supply by way of sale of the building or part of it forming part of the complex and

(i) the agreement was entered into on or before May 2, 2006, or

(h) for the purposes of calculating tax on the cost to another person of supplying property or a service to a financial institution under paragraph (c) of the description of A in subsection 225.2(2) of the Act if the reporting period of the financial institution ends on or after July 1, 2006; and

(i) for the purposes of determining or calculating any of the following amounts if none of paragraphs (a) to (h) applies:

(i) tax on or after July 1, 2006,

(ii) tax that is not payable but would have been payable on or after July 1, 2006, in the absence of certain circumstances described in the Act, and

(iii) an amount or a number, at any time on or after July 1, 2006, by or in accordance with an algebraic formula that makes reference to the rate set out in subsection 165(1) of the Act.

1997, c. 10, s. 165(5)(E)

4. (1) The description of A in clause 173(1)(d)(vi)(B) of the Act is replaced by the following:

A is

(I) where

1. the benefit amount is required to be included under paragraph 6(1)(a) or (e) of the Income Tax Act in computing the individual’s income from an office or employment and the last establishment of the employer at which the individual ordinarily worked or to which the individual ordinarily reported in the year in relation to that office or employment is located in a participating prov-ince, or

2. the benefit amount is required under subsection 15(1) of that Act to be included in computing the individual’s income and the individual is resident in a participating prov- ince at the end of the year,

the total of 5% and the tax rate for the participating province, and

(II) in any other case, 5%,

(2) Subsection (1) applies to the 2006 and subsequent taxation years of an individual, except that for the 2006 taxation year, the reference to “5%” in the description of A in clause 173(1)(d)(vi)(B) of the Act shall be read as “5.5%”.

1997, c. 10, s. 166(1)

5. (1) Paragraph 174(e) of the French version of the Act is replaced by the following:

e) la personne est réputée avoir payé, au moment du versement de l’indemnité et relativement à la fourniture, une taxe égale au résultat du calcul suivant :

A × (B/C)

où :

A représente le montant de l’indemnité,

B :

(i) la somme du taux fixé au paragraphe 165(1) et du taux de taxe applicable à une province participante si, selon le cas :

(A) la totalité ou la presque totalité des fournitures relativement auxquelles l’indemnité est versée ont été effectuées dans des provinces participantes,

(B) l’indemnité est versée en vue de l’utilisation du véhicule à moteur dans des provinces participantes,

(ii) dans les autres cas, le taux fixé au paragraphe 165(1),

C la somme de 100 % et du pourcentage déterminé selon l’élément B.

1997, c. 10, s. 166(1)

(2) Paragraph 174(f) of the English version of the Act is replaced by the following:

(f) the person is deemed to have paid, at the time the allowance is paid, tax in respect of the supply equal to the amount determined by the formula

A × (B/C)

where

A is the amount of the allowance,

B is

(i) the total of the rate set out in subsection 165(1) and the tax rate for a participating province if

(A) all or substantially all of the supplies for which the allowance is paid were made in participating provinces, or

(B) the allowance is paid for the use of the motor vehicle in participating provinces, and

(ii) in any other case, the rate set out in subsection 165(1), and

C is the total of 100% and the percentage determined for B.

(3) Subsections (1) and (2) apply to any allowance paid by a person on or after July 1, 2006.

1997, c. 10, s. 169(3)

6. (1) The description of A in subsection 176(1) of the Act is replaced by the following:

A is

(a) if the supply is made in a participating province, the total of the rate set out in subsection 165(1) and the tax rate for that province, and

(b) in any other case, the rate set out in subsection 165(1),

(2) Subsection (1) applies to any supply made on or after July 1, 2006.

1997, c. 10, s. 174(1)

7. (1) The definition “tax fraction” in subsection 181(1) of the Act is replaced by the following:

“tax fraction”
« fraction de taxe »

“tax fraction” of a coupon value or of the discount or exchange value of a coupon means

(a) where the coupon is accepted in full or partial consideration for a supply made in a participating province, the fraction

A/B

where

A is the total of the rate set out in subsection 165(1) and the tax rate for that participating province, and

B is the total of 100% and the percentage determined for A; and

(b) in any other case, the fraction

C/D

where

C is the rate set out in subsection 165(1), and

D is the total of 100% and the percentage determined for C.

(2) Subsection (1) applies to any coupon that is accepted on or after July 1, 2006, in full or partial consideration for a supply.

1997, c. 10, s. 175(1)

8. (1) The description of A in paragraph 181.1(a) of the French version of the Act is replaced by the following:

A représente :

(i) si la taxe prévue au paragraphe 165(2) était payable relativement à la fourniture du bien ou du service au profit de la personne, la somme du taux fixé au paragraphe 165(1) et du taux de taxe applicable à la province participante dans laquelle cette fourniture a été effectuée,

(ii) dans les autres cas, le taux fixé au paragraphe 165(1),

1997, c. 10, s. 175(1)

(2) The description of A in paragraph 181.1(e) in the English version of the Act is replaced by the following:

A is

(i) if tax under subsection 165(2) was payable in respect of the supply of the property or service to the particular person, the total of the rate set out in subsection 165(1) and the tax rate of the participating province in which that supply was made, and

(ii) in any other case, the rate set out in subsection 165(1), and

(3) Subsections (1) and (2) apply to any supply of property or a service in respect of which tax became payable on or after July 1, 2006, if the supply is made to a person to whom a registrant pays a rebate in respect of the property or service.

1997, c. 10, s. 176(1)

9. (1) The description of B in paragraph 182(1)(a) of the Act is replaced by the following:

B is

(i) if tax under subsection 165(2) was payable in respect of the supply, the total of 100%, the rate set out in subsection 165(1) and the tax rate for the participating province in which the supply was made, and

(ii) in any other case, the total of 100% and the rate set out in subsection 165(1), and

(2) Subsection (1) applies to an amount that is paid or forfeited on or after July 1, 2006, and to a debt or other obligation that is reduced or extinguished, without payment on account of the debt or obligation, on or after that day.

1997, c. 10, s. 177(1)

10. (1) The description of A in paragraph 183(4)(a) of the Act is replaced by the following:

A is

(i) if the supply is made in a participating province, the total of the rate set out in subsection 165(1) and the tax rate for that province, and

(ii) in any other case, the rate set out in subsection 165(1),

1997, c. 10, s. 177(2)

(2) The description of A in subparagraph183(5)(b)(i) of the Act is replaced by the following:

A is

(A) if the property is situated in a participating province at the particular time, the total of the rate set out in subsection 165(1) and the tax rate for that province, and

(B) in any other case, the rate set out in subsection 165(1),

1997, c. 10, s. 177(3); 2000, c. 30, s. 35(2)

(3) The description of A in subparagraph183(6)(a)(ii) of the Act is replaced by the following:

A is

(I) the rate set out in subsection 165(1) if

1. the property is situated in a participating province at the particular time, it was seized or repossessed before the day that is three years after the implementation date for that province (as defined in section 348) and tax would not have been payable had the property been purchased in Canada from the person at the time it was seized or repossessed, or

2. the property is situated in a non-participating province at the particular time, and

(II) in any other case, the total of the rate set out in subsection 165(1) and the tax rate for the participating province in which the property is situated at the particular time,

1997, c. 10, s. 177(4)

(4) The description of A in paragraph 183(6)(b) of the Act is replaced by the following:

A is

(i) if the property is situated in a participating province at the particular time, the total of the rate set out in subsection 165(1) and the tax rate for that province, and

(ii) in any other case, the rate set out in subsection 165(1),

(5) Subsections (1) to (4) apply to property that is seized or repossessed by a creditor if the creditor begins, on or after July 1, 2006, to use the property otherwise than in the making of a supply of the property.

1997, c. 10, s. 178(1)

11. (1) The description of A in paragraph 184(3)(a) of the Act is replaced by the following:

A is

(i) if the supply is made in a participating province, the total of the rate set out in subsection 165(1) and the tax rate for that province, and

(ii) in any other case, the rate set out in subsection 165(1),

1997, c. 10, s. 178(2)

(2) The description of A in subparagraph 184(4)(b)(i) of the Act is replaced by the following:

A is

(A) if the property is situated in a participating province at the particular time, the total of the rate set out in subsection 165(1) and the tax rate for that province, and

(B) in any other case, the rate set out in subsection 165(1),

1997, c. 10, s. 178(3); 2000, c. 30, s. 36(2)

(3) The description of A in subparagraph184(5)(a)(ii) of the Act is replaced by the following:

A is

(A) the rate set out in subsection 165(1) if

(I) the property is situated in a participating province at the particular time, it was transferred before the day that is three years after the implementation date for that province (as defined in section 348) and tax would not have been payable had the property been purchased in Canada from the person at the time it was transferred, or

(II) the property is situated in a non-participating province at the particular time, and

(B) in any other case, the total of the rate set out in subsection 165(1) and the tax rate for the participating province in which the property is situated at the particular time,

1997, c. 10, s. 178(4)

(4) The description of A in paragraph 184(5)(b) of the Act is replaced by the following:

A is

(i) if the property is situated in a participating province at the particular time, the total of the rate set out in subsection 165(1) and the tax rate for that province, and

(ii) in any other case, the rate set out in subsection 165(1),

(5) Subsections (1) to (4) apply to property that is transferred to an insurer if the insurer begins, on or after July 1, 2006, to use the property otherwise than in the making of a supply of the property.

2000, c. 30, s. 37(1)

12. (1) The description of A in clause 184.1(2)(d)(i)(A) of the Act is replaced by the following:

A is

(I) if the supply deemed under subparagraph (a)(i) to be made by the surety is made in a participating province, the total of the rate set out in subsection 165(1) and the tax rate for the participating province, and

(II) in any other case, the rate set out in subsection 165(1), and

(2) Subsection (1) applies to a person acting as a surety under a performance bond in respect of a contract for a particular taxable supply of construction services if a contract payment (within the meaning of paragraph 184.1(2)(a) of the Act) becomes due or is paid without having become due to the person on or after July 1, 2006, by reason of the person carrying on the particular construction.

(3) Despite subsection (2) and for the purpose of determining the total amount of all input tax credits in respect of direct inputs (within the meaning of paragraph 184.1(2)(c) of the Act), where a surety is carrying on a particular construction of real property situated in Canada as full or partial satisfaction of the surety’s obligation under a bond, a contract payment (within the meaning of paragraph 184.1(2)(a) of the Act), other than a contract payment that is not in respect of the particular construction, becomes due or is paid without having become due before July 1, 2006, and another contract payment (within the meaning of paragraph 184.1(2)(a) of the Act), other than a contract payment that is not in respect of the particular construction, becomes due on or after that day, without having been paid before that day, or is paid without having become due on or after that day, clause 184.1(2)(d)(i)(A) of the Act shall be read as follows:

(A) the amount determined by the formula

(A × B) + (C × D)

where

A is

(I) if the supply deemed under subparagraph (a)(i) to be made by the surety is made in a participating province, the total of 7% and the rate of tax for that participating province, and

(II) in any other case, 7%,

B is the total of all contract payments (other than contract payments that are not in respect of the particular construction) that become due before July 1, 2006, or are paid, without having become due, to the surety before that day,

C is

(I) if the supply deemed under subparagraph (a)(i) to be made by the surety is made in a participating province, the total of 6% and the rate of tax for the participating province, and

(II) in any other case, 6%, and

D is the total of all contract payments (other than contract payments that are not in respect of the particular construction) that become due on or after July 1, 2006, without having been paid before that day, or are paid, without having become due, to the surety on or after that day

1997, c. 10, s. 181(1)

13. (1) The description of B in paragraph 187(c) of the Act is replaced by the following:

B is

(i) if that supply is made in a participating province, the total of 100%, the rate set out in subsection 165(1) and the tax rate for that province, and

(ii) in any other case, the total of 100% and the rate set out in subsection 165(1),

(2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2006.

1994, c. 9, s. 12(1)(F)

14. (1) Subsection 188(1) of the Act is replaced by the following:

Prizes

188. (1) If a commercial activity of a registrant (other than a registrant to whom subsection (5) applies) consists of taking bets or conducting games of chance and, in the course of that activity, the registrant pays an amount of money at any time in a reporting period as a prize or winnings to a bettor or a person playing or participating in the games, for the purpose of determining an input tax credit of the registrant, the registrant shall be deemed to have received at that time a taxable supply of a service for use exclusively in the activity and to have paid, at that time, tax in respect of the supply equal to the amount determined by the formula

(A/B) × C

where

A is

(a) if the supply is made in a participating province, the total of the rate set out in subsection 165(1) and the tax rate for that province, and

(b) in any other case, the rate set out in subsection 165(1),

B is the total of 100% and the percentage determined for A, and

C is the amount of money paid as the prize or winnings.

(2) Subsection (1) is deemed to have come into force on April 1, 1997.

1993, c. 27, s. 57(3)

15. (1) The portion of subsection 193(1) of the Act before paragraph (a) is replaced by the following:

Sale of real property

193. (1) Subject to subsection (2.1), if at a particular time a registrant makes a particular taxable supply of real property by way of sale, other than

1997, c. 10, s. 183(2)

(2) The portion of subsection 193(2) of the Act before paragraph (a) is replaced by the following:

Sale by public sector bodies

(2) Subject to subsection (2.1), if at a particular time a registrant that is a public sector body (other than a financial institution) makes a particular taxable supply of real property by way of sale (other than a supply that is deemed under subsection 200(2) or 206(5) to have been made) and, immediately before the time tax becomes payable in respect of the particular taxable supply, the property was not used by the registrant primarily in commercial activities of the registrant, except where subsection (1) applies, the registrant may, despite section 170 and Subdivision d, claim an input tax credit for the reporting period in which tax in respect of the particular taxable supply became payable or is deemed to have been collected, as the case may be, equal to the lesser of

(3) Section 193 of the Act is amended by adding the following after subsection (2):

Limitation

(2.1) If the particular taxable supply of property referred to in subsection (1) or (2) is made at a particular time by a public sector body to another person with whom the public sector body is not dealing at arm’s length, the value of A in subsection (1) and the input tax credit under subsection (2) shall not exceed the lesser of

(a) the basic tax content of the property at the particular time, and

(b) the amount determined by the formula

(A/B) × C

where

A is the basic tax content of the property at the particular time,

B is the amount that would be the basic tax content of the property at that time if that amount were determined without reference to the description of B in paragraph (a) and the description of K in paragraph (b) of the definition “basic tax content” in subsection 123(1), and

C is the tax that is or would, in the absence of section 167, be payable in respect of the particular taxable supply.

(4) Subsections (1) to (3) apply to any supply in respect of which tax becomes payable or would have become payable, in the absence of section 167 of the Act, on or after July 1, 2006.

1997, c. 10, s. 184(1)

16. (1) The description of A in paragraph 194(a) of the Act is replaced by the following:

A is

(i) if tax under subsection 165(2) was payable in respect of the supply, the total of the rate set out in subsection 165(1) and the tax rate for the participating province in which the supply was made, and

(ii) in any other case, the rate set out in subsection 165(1),

(2) Subsection (1) applies to any supply of real property in respect of which ownership and possession under the agreement for the supply are transferred on or after July 1, 2006.

1997, c. 10, s. 192(4)

17. (1) The description of A in paragraph 202(4)(b) of the Act is replaced by the following:

A is

(i) in the case of an acquisition or importation in respect of which tax is payable only under subsection 165(1) or section 212 or 218, as the case may require, and in the case of an acquisition deemed to have been made under subsection (5) of a vehicle or aircraft in respect of which no tax under subsection 165(2) was payable by the registrant, the amount determined by the formula

C/D

where

C is the rate set out in subsection 165(1), and

D is the total of 100% and the percentage determined for C,

(ii) in the case of the bringing into a participating province of the vehicle or aircraft from a non-participating province and in the case of an acquisition in respect of which tax under section 220.06 is payable, the amount determined by the formula

E/F

where

E is the tax rate for the participating province, and

F is the total of 100% and the percentage determined for E, and

(iii) in any other case, the amount determined by the formula

G/H

where

G is the total of the rate set out in subsection 165(1) and the tax rate for a participating province, and

H is the total of 100% and the percentage determined for G, and

(2) Subsection (1) applies to any taxation year of a registrant that ends on or after July 1, 2006, except that, for the taxation year of the registrant that includes that day, the description of A in paragraph 202(4)(b) of the Act, as amended by subsection (1), shall be read as follows:

A is

(iii) in any other case, 14.5/114.5, and

1993, c. 27, s. 76(4)

18. (1) Paragraphs 211(4)(a) and (b) of the Act are replaced by the following:

(a) to have made, immediately before that day, a taxable supply of the property by way of sale and to have collected, on that day, tax in respect of the supply equal to the basic tax content of the property on that day; and

(b) to have received, on that day, a taxable supply of the property by way of sale and to have paid, on that day, tax in respect of the supply equal to the basic tax content of the property on that day.

(2) Subsection (1) applies in respect of an election that is revoked and ceases to have effect on or after May 2, 2006.

1997, c. 10, s. 198(1)

19. (1) Section 212 of the Act is replaced by the following:

Imposition of goods and services tax

212. Subject to this Part, every person who is liable under the Customs Act to pay duty on imported goods, or who would be so liable if the goods were subject to duty, shall pay to Her Majesty in right of Canada tax on the goods calculated at the rate of 6% on the value of the goods.

(2) Subsection (1) applies to goods imported into Canada, or released (as defined in the Customs Act), on or after July 1, 2006.

1997, c. 10, s. 203(1)

20. (1) Section 218 of the Act is replaced by the following:

Imposition of goods and services tax

218. Subject to this Part, every recipient of an imported taxable supply shall pay to Her Majesty in right of Canada tax calculated at the rate of 6% on the value of the consideration for the imported taxable supply.

(2) Subsection (1) applies

(a) to any imported taxable supply made on or after July 1, 2006;

(b) for the purposes of calculating tax in respect of any imported taxable supply made before July 1, 2006, but only in respect of consideration that becomes due on or after that day without having been paid before that day or that is paid, without having become due, on or after July 1, 2006; and

(c) if neither paragraph (a) nor (b) applies, for the purposes of determining or calculating tax that is not payable but would have been payable on or after July 1, 2006, in the absence of certain circumstances described in the Act.

1997, c. 10, s. 208(1)

21. (1) The description of E in subsection 225.2(2) of the Act is replaced by the following:

E is the rate set out in subsection 165(1);

(2) Subsection (1) applies for the purposes of determining the net tax of a selected listed financial institution for a reporting period of the selected listed financial institution that ends on or after July 1, 2006.

2000, c. 30, s. 61(2)

22. (1) The description of A in subparagraph 233(2)(a)(i) of the Act is replaced by the following:

A is the total of 100%, the rate set out in subsection 165(1) and the tax rate for that province, and

2000, c. 30, s. 61(2)

(2) Subparagraph 233(2)(a)(ii) of the Act is replaced by the following:

(ii) the total consideration for all supplies (in this subparagraph referred to as the “non-participating provinces’ supplies”) that are specified supplies to which subsection 165(2) did not apply by the amount determined by the formula

(100%/A) × B

where

A is the total of 100% and the rate set out in subsection 165(1),

B is

(A) if the particular person has made an election under this subsection that is in effect for that fiscal year, the part of the dividend that is in respect of the non-participating province’s supplies, and

(B) in any other case, the amount determined by the formula

(C/D) × E

where

C is the portion of the total of the values determined, in computing the specified amount in respect of the dividend, for B and D in subsection (1) that is attributable to supplies made in non-participating provinces,

D is the total referred to in the description of C, and

E is the specified amount in respect of the dividend; and

(3) Subsections (1) and (2) apply in respect of a patronage dividend that is paid on or after July 1, 2006.

1997, c. 10, s. 220(3)

23. (1) The description of A in subsection 253(1) of the Act is replaced by the following:

A is

(a) where the tax paid by the individual includes only tax imposed under subsection 165(1) or section 212 or 218, the amount determined by the formula

D/E

where

D is the rate set out in subsection 165(1), and

E is the total of 100% and the percentage determined for D,

(b) where the tax paid by the individual does not include any tax imposed under any of those provisions, the amount determined by the formula

F/G

where

F is the tax rate for a participating province, and

G is the total of 100% and the percentage determined for F, and

H/I

where

H is the total of the rate set out in subsection 165(1) and the tax rate for a participating province, and

I is the total of 100% and the percentage determined for H,

1993, c. 27, s. 108(1)

(2) Subparagraph 253(2)(a)(ii) of the Act is replaced by the following:

(ii) paid tax in respect of the instrument equal to the amount determined by the formula

A × B

where

A is

(A) where the tax paid by the individual includes only tax imposed under subsection 165(1) or section 212 or 218, the amount determined by the formula

C/D

where

C is the rate set out in subsection 165(1), and

D is the total of 100% and the percentage determined for C,

(B) where the tax paid by the individual does not include any tax imposed under any of those provisions, the amount determined by the formula

E/F

where

E is the tax rate for a participating province, and

F is the total of 100% and the percentage determined for E, and

G/H

where

G is the total of the rate set out in subsection 165(1) and the tax rate for a participating province, and

H is the total of 100% and the percentage determined for G, and

B is the capital cost allowance in respect of that instrument that was deductible under the Income Tax Act in computing the individual’s income from the partnership for that calendar year;

1993, c. 27, s. 108(1)

(3) Subparagraph 253(2)(c)(ii) of the Act is replaced by the following:

(ii) paid, in that reporting period, tax in respect of that acquisition equal to the amount determined by the formula

A × B

where

A is

(A) where the tax paid by the individual includes only tax imposed under subsection 165(1) or section 212 or 218, the amount determined by the formula

C/D

where

C is the rate set out in subsection 165(1), and

D is the total of 100% and the percentage determined for C,

(B) where the tax paid by the individual does not include any tax imposed under any of those provisions, the amount determined by the formula

E/F

where

E is the tax rate for a participating province, and

F is the total of 100% and the percentage determined for E, and

G/H

where

G is the total of the rate set out in subsection 165(1) and the tax rate for a participating province, and

H is the total of 100% and the percentage determined for G, and

B is

(A) in the case of property imported by the individual, the amount (not exceeding the total of the value of the property determined under section 215 and the tax calculated on it) in respect of the acquisition and importation of the property by the individual that was deductible under the Income Tax Act in computing the individual’s income from the partnership for that calendar year, and

(B) in any other case, the amount in respect of the acquisition of the property or service by the individual that was so deductible in computing that income.

(4) Subsection (1) applies to any rebate for a calendar year after 2005, except that for the 2006 calendar year the description of A in subsection 253(1) of the Act, as amended by subsection (1), shall be read as follows:

A is

(a) where the tax paid by the individual includes only tax imposed under subsection 165(1) or section 212 or 218,6.5/106.5,

(b) where the tax paid by the individual does not include any tax imposed under any of those provisions, 8/108, and

(5) Subsections (2) and (3) are deemed to have come into force on April 1, 1997, except that for the purpose of determining a rebate under subsection 253(2) of the Act, as amended by subsections (2) and (3), for the 2006 calendar year, the expression “the rate set out in subsection 165(1)” shall be read as “6.5%”.

1990, c. 45, s. 12(1); 1997, c. 10, s. 221(2)(F)

24. (1) Paragraph 254(2)(h) of the Act is replaced by the following:

(h) where the total consideration is not more than $350,000, an amount equal to the lesser of $7,560 and 36% of the total tax paid by the particular individual, and

1990, c. 45, s. 12(1)

(2) The description of A in paragraph 254(2)(i) of the Act is replaced by the following:

A is the lesser of $7,560 and 36% of the total tax paid by the particular individual, and

(3) Subsections (1) and (2) apply to any rebate in respect of a supply by way of sale of a residential complex in respect of which ownership is transferred on or after July 1, 2006, to the particular individual referred to in section 254 of the Act, unless the tax payable under subsection 165(1) of the Act in respect of the supply of the complex applied at the rate of 7%.

1993, c. 27, s. 110(1)

25. (1) Paragraph 254.1(2)(c) of the Act is replaced by the following:

(c) the fair market value of the complex, at the time possession of the complex is given to the particular individual under the agreement, is less than $477,000,

1993, c. 27, s. 110(1); 1997, c. 10, s. 222(2)

(2) Paragraphs 254.1(2)(h) and (i) of the Act are replaced by the following:

(h) if the fair market value referred to in paragraph (c) is not more than $371,000, an amount equal to the lesser of $7,560 and 2.04% of the total (in this subsection referred to as the “total consideration”) of all amounts, each of which is the consideration payable by the particular individual to the builder for the supply by way of sale to the particular individual of the building or part of a building referred to in paragraph (a) or of any other structure that forms part of the complex, other than consideration that can reasonably be regarded as rent for the supplies of the land attributable to the complex or as consideration for the supply of an option to purchase that land, and

(i) if the fair market value referred to in paragraph (c) is more than $371,000 but less than $477,000, the amount determined by the formula

A × [($477,000 - B)/$106,000]

where

A is the lesser of $7,560 and 2.04% of the total consideration, and

B is the fair market value referred to in paragraph (c).

2000, c. 30, s. 72(3)

(3) Paragraph 254.1(2.1)(a) of the Act is replaced by the following:

(a) an individual is entitled to a rebate under subsection (2), or to be paid or credited the amount of such a rebate under subsection (4), in respect of a residential complex situated in Nova Scotia or would be so entitled if the fair market value of the complex, at the time possession of the complex is given to the individual under the agreement for the supply of the complex to the individual, were less than $477,000, and

(4) Subsections (1) to (3) apply in respect of a supply, to a particular individual referred to in section 254.1 of the Act, of a building or part of it in which a residential unit forming part of a residential complex is situated if possession of the unit is given to the particular individual on or after July 1, 2006, unless the builder is deemed under section 191 of the Act to have paid tax under subsection 165(1) of the Act calculated at the rate of 7% in respect of the supply referred to in paragraph 254.1(2)(d) of the Act.

1993, c. 27, s. 111(1)(F)

26. (1) Paragraph 255(2)(d) of the Act is replaced by the following:

(d) the total (in this subsection referred to as the “total consideration”) of all amounts, each of which is the consideration payable for the supply to the particular individual of the share or an interest in the corporation, complex or unit, is less than $477,000,

1990, c. 45, s. 12(1)

(2) Paragraphs 255(2)(g) and (h) of the Act are replaced by the following:

(g) if the total consideration is not more than $371,000, an amount equal to the lesser of $7,560 and 2.04% of the total consideration, and

(h) if the total consideration is more than $371,000 but less than $477,000, the amount determined by the formula

A × [($477,000 - B)/$106,000]

where

A is the lesser of $7,560 and 2.04% of the total consideration, and

B is the total consideration.

2000, c. 30, s. 73(1)

(3) Paragraph 255(2.1)(c) of the Act is replaced by the following:

(c) the individual is entitled to a rebate under subsection (2) in respect of the share or would be so entitled if the total (in this subsection referred to as the “total consideration”) of all amounts, each of which is the consideration payable for the supply to the individual of the share or an interest in the corporation, complex or unit, were less than $477,000,

(4) Subsections (1) to (3) apply for the purpose of determining a rebate in respect of a supply, by a cooperative housing corporation to an individual, of a share of the capital stock of the corporation if the individual is acquiring the share for the purposes of using a residential unit in a residential complex as the primary place of residence of the individual, or a relation (as defined in subsection 255(1) of the Act) of the individual, and the rebate application is filed on or after July 1, 2006, unless the corporation paid tax under subsection 165(1) of the Act in respect of the supply of the complex to the corporation calculated at the rate of 7%.

1993, c. 27, s. 112(3); 1997, c. 10, s. 224(2)(F)

27. (1) The portion of subsection 256(2) of the Act after subparagraph (d)(ii) is replaced by the following:

the Minister shall, subject to subsection (3), pay a rebate to the particular individual equal to the amount determined by the formula

A × ($450,000 - B)/$100,000

where

A is the lesser of 36% of the total tax paid by the particular individual before an application for the rebate is filed with the Minister in accordance with subsection (3), and

(i) if all or substantially all of that tax was paid at the rate of 6%, $7,560, and

(ii) in any other case, the lesser of $8,750 and the amount determined by the formula

(C × $1,260) + $7,560

where

C is the extent (expressed as a percentage) to which that tax was paid at the rate of 7%, and

B is the greater of $350,000 and the fair market value of the complex referred to in paragraph (b).

(2) Subsection (1) applies to any rebate in respect of a residential complex for which an application is filed with the Minister of National Revenue on or after July 1, 2006.

2001, c. 15, s. 16(1)

28. (1) The portion of the description of A in subsection 256.2(3) of the Act before the formula is replaced by the following:

A is the lesser of $7,560 and the amount determined by the formula

2001, c. 15, s. 16(1)

(2) The portion of the description of A in subsection 256.2(4) of the Act before the formula is replaced by the following:

A is the lesser of $7,560 and the amount determined by the formula

2001, c. 15, s. 16(1)

(3) The portion of the description of A in subsection 256.2(5) of the Act before the formula is replaced by the following:

A is the lesser of $7,560 and the amount determined by the formula

(4) Subsection (1) applies to

(a) a taxable supply to a recipient from another person of a residential complex or an interest in a residential complex, in respect of which ownership and possession under the agreement for the supply are transferred on or after July 1, 2006, unless the agreement for the supply is evidenced in writing and was entered into on or before May 2, 2006; and

(b) a deemed purchase (within the meaning of subparagraph 256.2(3)(a)(ii) of the Act) by a builder if the tax in respect of the deemed purchase of a complex or an addition to a complex is deemed to have been paid on or after July 1, 2006.

(5) Subsection (2) applies to a supply of a building or part of it forming part of a residential complex and a supply of land, described in subparagraphs 256.2(4)(a)(i) and (ii) of the Act, that result in a person being deemed under section 191 of the Act to have made and received a taxable supply by way of sale of the complex or of an addition to it on or after July 1, 2006, unless the supply is deemed to have been made as a consequence of the builder giving possession of a residential unit in the complex or the addition to a person under an agreement for the supply by way of sale of the building or part of it forming part of the complex or the addition and

(a) the agreement was entered into on or before May 2, 2006; or

(b) another agreement was entered into on or before May 2, 2006, by the builder and another person and that other agreement was not terminated before July 1, 2006, and was for the supply by way of sale of the building or part of it forming part of

(i) in the case of a deemed supply of a complex, the complex, or

(ii) in the case of a deemed supply of an addition, the addition.

(6) Subsection (3) applies to

(a) a taxable supply by way of sale to a recipient from another person of a residential complex, or an interest in a residential complex, in respect of which ownership and possession under the agreement for the supply are transferred on or after July 1, 2006, unless the agreement is evidenced in writing and was entered into on or before May 2, 2006; and

(b) a deemed purchase (within the meaning of subparagraph 256.2(5)(a)(ii) of the Act) by a builder if the tax in respect of the deemed purchase of a complex or an addition to a complex is deemed to have been paid on or after July 1, 2006.

29. (1) The Act is amended by adding the following after section 256.2:

Transitional rebate

256.3 (1) If a particular person, other than a cooperative housing corporation,

(a) pursuant to an agreement of purchase and sale, evidenced in writing, entered into on or before May 2, 2006, is the recipient of a taxable supply by way of sale from another person of a residential complex in respect of which ownership and possession under the agreement are transferred to the particular person on or after July 1, 2006,

(b) has paid all of the tax under subsection 165(1) in respect of the supply calculated at the rate of 7%, and

(c) is not entitled to claim an input tax credit or a rebate, other than a rebate under this subsection, in respect of the tax referred to in paragraph (b),

the Minister shall, subject to subsection (7), pay a rebate to the particular person equal to 1% of the value of the consideration for the supply.

Transitional rebate

(2) If a particular person, other than a cooperative housing corporation,

(b) has paid all of the tax under subsection 165(1) in respect of the supply calculated at the rate of 7%, and

the Minister shall, subject to subsection (7), pay a rebate to the particular person equal to the amount determined by the formula

A × [0.01 - ((B/A)/7)]

where

A is the consideration payable for the supply to the particular person of the complex, and

B is the amount of the rebate under subsection 256.2(3) that the particular person is entitled to claim in respect of the complex.

Transitional rebate

(3) If a particular person, other than a cooperative housing corporation,

(b) has paid all of the tax under subsection 165(1) in respect of the supply calculated at the rate of 7%, and

(c) is entitled to claim a rebate under section 259 in respect of the tax referred to in paragraph (b) and is not entitled to claim any input tax credit or any other rebate, other than a rebate under this subsection, in respect of that tax,

the Minister shall, subject to subsection (7), pay a rebate to the particular person equal to the amount determined by the formula

A × [0.01 - ((B/A)/7)]

where

A is the consideration payable for the supply to the particular person of the complex, and

B is

(i) in the case where the complex is situated in a participating province, the amount of the rebate under section 259 that the particular person would have been entitled to claim if no tax under subsection 165(2) would have been payable or paid in respect of the complex, and

(ii) in any other case, the amount of the rebate under section 259 that the particular person is entitled to claim in respect of the complex.

Transitional rebate

(4) If a cooperative housing corporation

(b) has paid all of the tax under subsection 165(1) in respect of the supply calculated at the rate of 7%, and

(c) is not entitled to claim an input tax credit or a rebate, other than a rebate under this subsection or under section 256.2 or 259, in respect of the tax referred to in paragraph (b),

the Minister shall, subject to subsection (7), pay a rebate to the corporation equal to the amount determined by the formula

A × [0.01 - ((B/A)/7)]

where

A is the consideration payable for the supply, and

B is

(i) if the corporation is entitled to claim a rebate under section 259 in respect of the complex,

(A) in the case where the complex is situated in a participating province, the amount of the rebate under section 259 that the corporation would have been entitled to claim if no tax under subsection 165(2) would have been payable or paid in respect of the complex, and

(B) in any other case, the amount of the rebate under section 259 that the corporation is entitled to claim in respect of the complex,

(ii) 36% of the tax paid under subsection 165(1) by the corporation in respect of the supply if the corporation is not entitled to claim a rebate under section 259 in respect of the complex, and

(A) the corporation is entitled to, or can reasonably expect to be entitled to, claim a rebate under section 256.2 in respect of any residential unit situated in the complex, or

(B) it is the case that, or it can reasonably be expected that, a share of the capital stock of the corporation is or will be sold to an individual for the purpose of using a residential unit in the complex as the primary place of residence of the individual, or of a relation (as defined in subsection 255(1)) of the individual, and that the individual is or will be entitled to claim a rebate under section 255 in respect of the share, and

(iii) in any other case, zero.

Transitional rebate

(5) If a particular individual

(b) has paid all of the tax under subsection 165(1) in respect of the supply calculated at the rate of 7%, and

the Minister shall, subject to subsection (7), pay a rebate to the particular individual equal to the amount determined by the formula

A × [0.01 - ((B/A)/7)]

where

A is the total of all amounts, each of which is the consideration payable for the supply to the particular individual of the complex or for any other taxable supply to the particular individual of an interest in the complex in respect of which the particular individual has paid tax under subsection 165(1) calculated at the rate of 7%, and

B is the amount of the rebate under subsection 254(2) that the particular individual is entitled to claim in respect of the complex.

Group of individuals

(6) If a supply of a residential complex is made to two or more individuals, the references in subsection (5) to a particular individual shall be read as references to all of those individuals as a group, but only the particular individual that applied for the rebate under section 254 may apply for the rebate under subsection (5).

Application for rebate

(7) A rebate under this section in respect of a residential complex shall not be paid to a person, unless the person files an application for the rebate within two years after the day on which ownership of the complex is transferred to the person.

Transitional rebate where section 254.1 applies

256.4 (1) If

(a) under an agreement, evidenced in writing, entered into on or before May 2, 2006, between a particular person and a builder of a residential complex that is a single unit residential complex or a residential condo- minium unit, the particular person is the recipient of

(i) an exempt supply by way of lease of the land forming part of the complex or an exempt supply of such a lease by way of assignment, and

(ii) an exempt supply by way of sale of the building or part of it in which the residential unit forming part of the complex is situated,

(b) possession of the complex is given to the particular person under the agreement on or after July 1, 2006,

(c) the builder is deemed under subsection 191(1) to have made and received a supply of the complex as a consequence of giving possession of the complex to the particular person under the agreement and to have paid tax under subsection 165(1) in respect of the supply calculated at the rate of 7%, and

(d) the particular person is entitled to claim a rebate under subsection 254.1(2) in respect of the complex,

the Minister shall, subject to subsection (4),

(e) pay a rebate to the particular person equal to the amount determined by the formula

A × [0.01 - ((B/A)/7)]

where

A is the amount determined by the formula

C × (100/D)

where

C is the total of all amounts, each of which is the consideration payable by the particular person to the builder for the supply by way of sale to the particular person of the building or part of the building referred to in subparagraph (a)(ii) or of any other structure that forms part of the complex, other than consideration that can reasonably be regarded as rent for the supplies of the land attributable to the complex or as consideration for the supply of an option to purchase that land, and

D is

(i) if the complex is situated in a participating province, 115, and

(ii) in any other case, 107, and

B is the amount of the rebate under subsection 254.1(2) that the particular person is entitled to claim in respect of the complex, and

(f) if the builder is not entitled to claim an input tax credit or a rebate, other than a rebate under this subsection or under subsection 256.2(4), in respect of the tax referred to in paragraph (c), pay a rebate to the builder equal to the amount determined by the formula

(E - F) × [0.01 - ((G/(E - F))/7)]

where

E is the fair market value of the complex at the time that the builder is deemed to have made the supply referred to in paragraph (c),

F is the amount determined for A under paragraph (e), and

G is the amount of the rebate, if any, that the builder is entitled to claim under subsection 256.2(4).

Transitional rebate where section 254.1 does not apply

(2) If

(i) an exempt supply by way of lease of the land forming part of the complex or an exempt supply of such a lease by way of assignment, and

(ii) an exempt supply by way of sale of the building or part of it in which the residential unit forming part of the complex is situated,

(b) possession of the complex is given to the particular person under the agreement on or after July 1, 2006,

(d) the particular person is not entitled to claim a rebate under subsection 254.1(2) in respect of the complex,

the Minister shall, subject to subsection (4),

(e) pay a rebate to the particular person equal to the amount determined by the formula

A/B

where

A is the total of all amounts, each of which is the consideration payable by the particular person to the builder for the supply by way of sale to the particular person of the building or part of the building referred to in subparagraph (a)(ii) or of any other structure that forms part of the complex, other than consideration that can reasonably be regarded as rent for the supplies of the land attributable to the complex or as consideration for the supply of an option to purchase that land, and

B is

(i) if the complex is situated in a participating province, 115, and

(ii) in any other case, 107, and

(f) if the builder is not entitled to claim an input tax credit or a rebate, other than a rebate under this subsection, in respect of the tax referred to in paragraph (c), pay a rebate to the builder equal to the amount determined by the formula

0.01 × [C - (D × (100 / E))]

where

C is the fair market value of the complex at the time the builder is deemed to have made the supply referred to in paragraph (c),

D is the total of all amounts, each of which is the consideration payable by the particular person to the builder for the supply by way of sale to the particular person of the building or part of the building referred to in subparagraph (a)(ii) or of any other structure that forms part of the complex, other than consideration that can reasonably be regarded as rent for the supplies of the land attributable to the complex or as consideration for the supply of an option to purchase that land, and

E is

(i) if the complex is situated in a participating province, 115, and

(ii) in any other case, 107.

Group of individuals

(3) If the supplies described in subsection (1) or (2) are made to two or more individuals, the references in that subsection to a particular person shall be read as references to all of those individuals as a group, but, in the case of a rebate where paragraph (1)(e) applies, only the individual that applied for the rebate under section 254.1 may apply for the rebate under subsection (1).

Application for rebate

(4) A rebate under this section in respect of a residential complex shall not be paid to a person, unless the person files an application for the rebate within two years after

(a) in the case of a rebate to a person other than the builder of the complex, the day on which possession of the complex is transferred to the person, and

(b) in the case of a rebate to the builder of the complex, the end of the month in which the tax referred to in paragraph (1)(c) or (2)(c) is deemed to have been paid by the builder.

Transitional rebate for purchaser

256.5 (1) Where

(a) under an agreement, evidenced in writing, entered into between a particular person and a builder of a residential complex, other than a single unit residential complex or a residential condominium unit, or an addition to it, the particular person is the recipient of

(i) an exempt supply by way of lease of the land forming part of the complex or an exempt supply of such a lease by way of assignment, and

(ii) an exempt supply by way of sale of the building or part of it in which a residential unit forming part of the complex or the addition is situated,

(b) possession of a residential unit forming part of the complex or the addition is given to the particular person under the agreement on or after July 1, 2006,

(c) the builder is deemed under subsection 191(3) or (4) to have made and received a supply of the complex or the addition as a consequence of giving possession

(i) of the residential unit to the particular person under the agreement, or

(ii) of a residential unit forming part of the complex or the addition to another person under an agreement described in paragraph (a) entered into between the other person and the builder,

(d) the builder is deemed to have paid tax under subsection 165(1) in respect of the supply calculated at the rate of 7%, and

(e) if the builder is deemed to have paid the tax referred to in paragraph (d) on or after July 1, 2006, it is the case that the builder and

(i) the particular person entered into the agreement on or before May 2, 2006, or

(ii) a person, other than the particular person, on or before May 2, 2006, entered into an agreement described in paragraph (a) in respect of a residential unit situated in the residential complex or in the addition that the builder is deemed to have supplied (as described in paragraph (c)) and that agreement was not terminated before July 1, 2006,

the Minister shall, subject to subsection (3),

(f) if the particular person is entitled to claim a rebate under subsection 254.1(2) in respect of the complex, pay a rebate to the particular person equal to the amount determined by the formula

A × [0.01 - ((B/A)/7)]

where

A is the amount determined by the formula

C × (100/D)

where

C is the total of all amounts, each of which is the consideration payable by the particular person to the builder for the supply by way of sale to the particular person of the building or part of the building referred to in subparagraph (a)(ii) or of any other structure that forms part of the complex or the addition, other than consideration that can reasonably be regarded as rent for the supplies of the land attributable to the complex or as consideration for the supply of an option to purchase that land, and

D is

(i) if the complex is situated in a participating province, 115, and

(ii) in any other case, 107, and

B is the amount of the rebate under subsection 254.1 that the particular person is entitled to claim in respect of the complex, and

(g) if the particular person is not entitled to claim a rebate under subsection 254.1(2) in respect of the complex, pay a rebate to the particular person equal to the amount determined by the formula

E/F

where

E is the total of all amounts, each of which is the consideration payable by the particular person to the builder for the supply by way of sale to the particular person of the building or part of a building referred to in subparagraph (a)(ii) or of any other structure that forms part of the complex or the addition, other than consideration that can reasonably be regarded as rent for the supplies of the land attributable to the complex or as consideration for the supply of an option to purchase that land, and

F is

(i) if the complex is situated in a participating province, 115, and

(ii) in any other case, 107.

Group of individuals

(2) If the supplies described in subsection (1) are made to two or more individuals, the references in that subsection to a particular person shall be read as references to all of those individuals as a group, but, in the case of a rebate under paragraph (1)(f), only the individual that applied for the rebate under section 254.1 may apply for the rebate under that paragraph.

Application for rebate

(3) A rebate under this section in respect of a residential complex shall not be paid to a person, unless the person files an application for the rebate within two years after the day on which possession of the unit referred to in paragraph (1)(b) is transferred to the person.

Transitional rebate for builder

256.6 (1) If

(i) an exempt supply by way of lease of the land forming part of the complex or a supply of such a lease by way of assignment, and

(ii) an exempt supply by way of sale of the building or part of it in which a residential unit forming part of the complex or the addition is situated,

(b) the builder is deemed under subsection 191(3) or (4) to have made and received on or after July 1, 2006, a supply of the complex or the addition as a consequence of giving possession

(i) of the residential unit to the particular person under the agreement, or

(ii) of a residential unit forming part of the complex or the addition to another person under an agreement described in paragraph (a) entered into between the other person and the builder,

(i) the particular person entered into the agreement on or before May 2, 2006, or

(ii) a person, other than the particular person, on or before May 2, 2006, entered into an agreement described in paragraph (a) in respect of a residential unit situated in the residential complex or in the addition that the builder is deemed to have supplied (as described in paragraph (b)) and that agreement was not terminated before July 1, 2006,

(d) the builder is deemed to have paid tax under subsection 165(1) in respect of the supply referred to in paragraph (b) calculated at the rate of 7%, and

(e) the builder is not entitled to claim an input tax credit or a rebate, other than a rebate under this subsection or under subsection 256.2(4), in respect of the tax referred to in paragraph (d),

the Minister shall, subject to subsection (2), pay a rebate to the builder equal to the amount determined by the formula

A × [0.01 - ((B/A)/7)]

where

A is the amount determined by the formula

C - [D × (100/E)]

where

C is the fair market value of the complex at the time the builder is deemed to have made the supply referred to in paragraph (b),

D is

(i) if the builder is deemed to have made a supply of a complex, the total of all amounts, each of which is the consideration payable by a person to the builder for the supply by way of sale to the person of the building or part of it forming part of the complex or of any other structure that forms part of the complex, or

(ii) if the builder is deemed to have made a supply of an addition, the total of all amounts, each of which is the consideration payable by a person to the builder for the supply by way of sale to the person of the building or part of it forming part of the addition or of any other structure that forms part of the addition, and

E is

(i) if the complex is situated in a participating province, 115, and

(ii) in any other case, 107, and

B is the rebate, if any, under subsection 256.2(4) that the builder is entitled to claim in respect of the complex or, if the builder is deemed to have made a supply of an addition, the addition.

Application for rebate

(2) A rebate under this section in respect of a residential complex or an addition to it shall not be paid to a builder, unless the builder files an application for the rebate within two years after the end of the month in which tax referred to in subsection (1) is deemed to have been paid by the builder.

(2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2006.

1997, c. 10, s. 226(1)

30. (1) The portion of subsection 257(1) of the Act before paragraph (a) is replaced by the following:

Non-registrant sale of real property

257. (1) If a person who is not a registrant makes a particular taxable supply of real property by way of sale, the Minister shall, subject to subsections (1.1) and (2), pay a rebate to the person equal to the lesser of

(2) Section 257 of the Act is amended by adding the following after subsection (1):

Limitation

(1.1) If the particular taxable supply referred to in subsection (1) is made at a particular time by a public sector body to another person with whom the public sector body is not dealing at arm’s length, the rebate under subsection (1) shall not exceed the lesser of

(a) the basic tax content of the property at the particular time, and

(b) the amount determined by the formula

(A/B) × C

where

A is the basic tax content of the property at the particular time,

C is the tax that is or would, in the absence of section 167, be payable in respect of the particular taxable supply.

(3) Subsections (1) and (2) apply to a supply in respect of which tax becomes payable or would have become payable, in the absence of section 167 of the Act, on or after July 1, 2006.

1997, c. 10, s. 227(1)

31. (1) Subparagraph (a)(ii) of the definition “non-creditable tax charged” in subsection 259(1) of the Act is replaced by the following:

(ii) tax deemed under subsection 129(6), 129.1(4), 171(3) or 183(4) or section 191 to have been collected during the period by the person in respect of the property or service,

(2) Subsection (1) applies to tax deemed to have been collected on or after May 2, 2006.

32. (1) The Act is amended by adding the following after section 274:

Rate change — variation of agreement

274.1 If

(a) at any time before July 1, 2006, a supplier and a recipient enter into an agreement for a taxable supply of property or a service,

(b) the supplier and the recipient at a later time either directly or indirectly

(i) vary or alter the agreement for the supply, or

(ii) terminate the agreement and enter into one or more new agreements with each other or with other persons and under one or more of those agreements the supplier supplies, and the recipient receives, one or more supplies that includes all or substantially all the property or service referred to in paragraph (a),

(c) the supplier, the recipient and, where applicable, the other persons are not dealing with each other at arm’s length at the time the agreement is entered into or at the later time,

(d) tax under subsection 165(1) or section 218 in respect of the supply referred to in paragraph (a) would have been calculated at the rate of 7% on all or part of the value of the consideration for the supply attributable to the property or service in the absence of the variation, alteration or termination of the agreement,

(e) tax under subsection 165(1) or section 218 in respect of the supply made under the varied or altered agreement or made under any of the new agreements would, in the absence of this section, be calculated at the rate of 6% on any part of the value of the consideration for the supply, attributable to any part of the property or service, on which tax, in respect of the supply referred to in paragraph (a), was initially calculated at the rate of 7%, and

(f) the variation or alteration of the agreement or the entering into of the new agreements may not reasonably be considered for both the supplier and the recipient to have been undertaken or arranged primarily for bona fide purposes other than to benefit in any manner from the rate change,

the following rule applies

(g) tax under subsection 165(1) or section 218 in respect of the supply made under the varied or altered agreement or made under any of the new agreements shall be calculated at the rate of 7% on any part of the value of the consideration, referred to in paragraph (e), attributable to any part of the property or service.

Definitions

274.2 (1) The following definitions apply in this section.

“person”
« personne »

“person” does not include a consumer.

“rate change”
« modification de taux »

“rate change” means any change in any rate of tax imposed under this Part.

“tax benefit”
« avantage fiscal »

“tax benefit” means a reduction, an avoidance or a deferral of tax or other amount payable under this Part or an increase in a refund or rebate of tax or other amount under this Part.

“transaction”
« opération »

“transaction” has the meaning assigned by subsection 274(1).

Rate change — transactions

(2) If

(a) a transaction, or a series of transactions, involving property is made between two or more persons, all of whom are not dealing with each other at arm’s length at the time any of those transactions are made,

(b) the transaction, any of the transactions in the series of transactions or the series of transactions would in the absence of this section result directly or indirectly in a tax benefit to one or more of the persons involved in the transaction or series of transactions, and

(c) it may not reasonably be considered that the transaction, or the series of transactions, has been undertaken or arranged primarily for bona fide purposes other than to obtain a tax benefit, arising from a rate change, for one or more of the persons involved in the transaction or series of transactions,

the amount of tax, net tax, input tax credit, rebate or other amount payable by, or refundable to, any of those persons under this Part, or any other amount that is relevant for the purposes of computing that amount shall be determined as is reasonable in the circumstances in order to deny the tax benefit to any of those persons.

Denying tax benefit on transactions

(3) Despite any other provision of this Part, a tax benefit shall only be denied under subsection (2) through an assessment, reassessment or additional assessment.

Request for adjustments

(4) If, with respect to a transaction, a notice of assessment, reassessment or additional assessment involving the application of subsection (2) with respect to the transaction has been sent to a person, any person (other than a person to whom such a notice has been sent) shall be entitled, within one hundred and eighty days after the day on which the notice was mailed, to request in writing that the Minister make an assessment, a reassessment or an additional assessment, applying subsection (2) with respect to that transaction.

Duties of Minister

(5) On receipt of a request by a person under subsection (4), the Minister shall, with all due dispatch, consider the request and, despite subsections 298(1) and (2), assess, reassess or make an additional assessment with respect to the person, except that an assessment, a reassessment or an additional assessment may be made under this subsection only to the extent that it may reasonably be regarded as relating to the transaction referred to in subsection (4).

(2) Section 274.1 of the Act, as enacted by subsection (1), applies to any agreement varied, altered, terminated or entered into on or after May 2, 2006.

(3) Section 274.2 of the Act, as enacted by subsection (1), applies to any transaction made on or after May 2, 2006.

Related Amendments

2002, c. 9, s. 5

Air Travellers Security Charge Act

2005, c. 30, s. 20(1)

33. (1) The portion of paragraph 12(1)(a) of the Air Travellers Security Charge Act before subparagraph (i) is replaced by the following:

(a) $4.67 for each chargeable emplanement included in the service, to a maximum of $9.34, if

2005, c. 30, s. 20(2)

(2) The portion of paragraph 12(1)(b) of the Act before subparagraph (i) is replaced by the following:

(b) $4.95 for each chargeable emplanement included in the service, to a maximum of $9.90, if

2005, c. 30, s. 20(4)

(3) The portion of paragraph 12(1)(d) of the Act before subparagraph (i) is replaced by the following:

(d) $8.42 for each chargeable emplanement included in the service, to a maximum of $16.84, if

2005, c. 30, s. 20(7)

(4) The portion of paragraph 12(2)(b) of the Act before subparagraph (i) is replaced by the following:

(b) $8.42 for each chargeable emplanement by an individual on an aircraft used to transport the individual to a destination outside Canada but within the continental zone, to a maximum of $16.84, if

(5) Subsections (1) to (4) apply in respect of any air transportation service that includes a chargeable emplanement on or after July 1, 2006 and for which any consideration is paid or becomes payable on or after that day.

Amendments Relating to the Taxation of Tobacco Products

2002, c. 22

Excise Act, 2001

34. (1) The Excise Act, 2001 is amended by adding the following after section 58:

PART 3.1

TOBACCO PRODUCTS INVENTORY TAX

Definitions

58.1 The following definitions apply in this Part.

“loose tobacco”
« tabac à cigarettes »

“loose tobacco” means loose, fine-cut manufactured tobacco for use in making cigarettes.

“separate retail establishment”
« établissement de détail distinct »

“separate retail establishment” of a person means a shop or store of the person

(a) that is geographically separate from other places of business of the person;

(b) at which, in the ordinary course of the person’s business, the person regularly sells, otherwise than through vending machines, tobacco products to consumers, within the meaning of section 123 of the Excise Tax Act, attending at the shop or store; and

“taxed tobacco”
« tabac imposé »

“taxed tobacco” of a person means cigarettes, tobacco sticks, loose tobacco and cigars, in respect of which duty has been imposed under section 42 before July 1, 2006 at a rate set out in paragraph 1(b), 2(b) or 3(b) of Schedule 1 or in section 4 of that Schedule, as those provisions read on June 30, 2006, and that, at the beginning of July 1, 2006,

(a) were owned by that person for sale in the ordinary course of a business of the person;

(b) were not held in a vending machine; and

“unit”
« unité »

“unit” means one cigarette, tobacco stick, gram of loose tobacco or cigar.

Imposition of tax

58.2 Subject to section 58.3, every person shall pay to Her Majesty a tax on all taxed tobacco of the person at the rate of

(a) 0.2799 cent per cigarette;

(b) 0.2517 cent per tobacco stick;

(d) 0.1814 cent per cigar.

Exemption for small retail inventory

58.3 Tax under this Part in respect of the inventory of all taxed tobacco of a person that is held at the beginning of July 1, 2006 at a separate retail establishment of the person is not payable if that retail establishment holds inventory of 30,000 or fewer units.

Taking of inventory

58.4 Every person liable to pay tax under this Part shall, for the purposes of this Part, determine that person’s inventory of all taxed tobacco.

Returns

58.5 (1) Every person liable to pay tax under this Part shall, on or before August 31, 2006, file a return with the Minister in the prescribed form and manner.

Separate returns

(2) A person authorized under subsection 239(2) of the Excise Tax Act to file separate returns in respect of a separate branch or division may file separate returns under this Part in respect of that branch or division.

Payment

58.6 (1) Every person shall pay to the Receiver General the total tax payable by the person under this Part on or before August 31, 2006.

Minimum interest

(2) No interest in respect of an amount payable by a person under this Part is payable if, at the time the person pays the amount, the total of that interest otherwise payable is less than $25.

Extension

(3) The Minister may at any time extend in writing the time for filing a return, or paying the tax payable, under this Part and, where the Minister so extends the time,

(a) the return shall be filed or tax payable shall be paid within the time as so extended; and

(b) interest is payable under section 170 as if the time had not been extended.

(2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2006.

35. (1) Subparagraphs 216(2)(a)(i) to (iv) of the Act are replaced by the following:

(i) $0.165 multiplied by the number of cigarettes to which the offence relates,

(ii) $0.121 multiplied by the number of tobacco sticks to which the offence relates,

(iii) $0.112 multiplied by the number of grams of manufactured tobacco other than cigarettes or tobacco sticks to which the offence relates, and

(iv) $0.284 multiplied by the number of cigars to which the offence relates, and

(2) Subparagraphs 216(3)(a)(i) to (iv) of the Act are replaced by the following:

(i) $0.246 multiplied by the number of cigarettes to which the offence relates,

(ii) $0.182 multiplied by the number of tobacco sticks to which the offence relates,

(iii) $0.168 multiplied by the number of grams of manufactured tobacco other than cigarettes or tobacco sticks to which the offence relates, and

(iv) $0.66 multiplied by the number of cigars to which the offence relates, and

(3) Subsections (1) and (2) come into force on the later of July 1, 2006 and the day on which this Act is assented to.

2003, c. 15, s. 46

36. (1) Paragraphs 240(a) to (c) of the Act are replaced by the following:

(a) $0.355548 per cigarette that was removed in contravention of that subsection,

(b) $0.205 per tobacco stick that was removed in contravention of that subsection, and

(c) $203.804 per kilogram of manufactured tobacco, other than cigarettes and tobacco sticks, that was removed in contravention of that subsection.

(2) Subsection (1) comes into force on the later of July 1, 2006 and the day on which this Act is assented to.

2003, c. 15, s. 47(2)

37. (1) Paragraph 1(b) of Schedule 1 to the Act is replaced by the following:

(b) $0.41025 for each five cigarettes or fraction of five cigarettes contained in any package, in any other case.

(2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2006.

2003, c. 15, s. 48(2)

38. (1) Paragraph 2(b) of Schedule 1 to the Act is replaced by the following:

(b) $0.0605 per stick, in any other case.

(2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2006.

2003, c. 15, s. 49(2)

39. (1) Paragraph 3(b) of Schedule 1 to the Act is replaced by the following:

(b) $55.90 per kilogram, in any other case.

(2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2006.

40. (1) Section 4 of Schedule 1 to the Act is replaced by the following:

4. Cigars: $16.60 per 1,000 cigars.

(2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2006.

2003, c. 15, s. 50(1)

41. (1) Paragraph (a) of Schedule 2 to the Act is replaced by the following:

(a) $0.066 per cigar, and

2003, c. 15, s. 50(2)

(2) The portion of paragraph (b) of Schedule 2 to the Act before subparagraph (i) is replaced by the following:

(b) 66%, computed on

(3) Subsections (1) and (2) come into force, or are deemed to have come into force, on July 1, 2006.