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His Excellency the Governor General recommends to the House of
Commons the appropriation of public revenue under the circumstances,
in the manner and for the purposes set out in a measure entitled ``An Act
to amend the Excise Tax Act, the Federal-Provincial Fiscal Arrange
ments Act, the Income Tax Act, the Debt Servicing and Reduction
Account Act and related Acts''.
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These amendments to the Excise Tax Act and other Acts implement
measures proposed in the Notice of Ways and Means Motion tabled on
April 23, 1996 (Part I of the Bill). These measures are principally aimed
at improving the operation of the GST. Some adjustments have been
made to the legislation as proposed on April 23 in response to
consultations with the tax and business community.
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In addition, this Bill implements the harmonization of provincial
sales taxes with the federal sales tax in the provinces of Nova Scotia,
New Brunswick and Newfoundland provided for in agreements
announced on October 23, 1996 between the Her Majesty in right of
Canada and Her Majesty in right of those provinces (Part II of the Bill).
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Also included in this Bill are amendments announced in the Notice
of Ways and Means Motion tabled on October 23, 1996 which would
enact a rebate for certain institutions in respect of tax paid on purchases
of books.
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The principal measures included in Part I of the Bill are as follows:
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(1) Charities: increases the small supplier threshold for charities;
expands the range of exempt activities; introduces a streamlined
accounting method; simplifies procedures for filing returns.
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(2) Health Care Services: revises the list of exempt health care
providers to include dieticians and exclude psychoanalysts, osteopaths
and speech therapists; extends zero-rating of hospital beds when
purchased by long-term health care facilities; expands zero-rating of the
service of modifying a vehicle for disabled persons; introduces a
requirement for medical prescription for zero-rating of certain ortho
paedic devices and footwear.
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(3) Municipal services: broadens the scope of exemptions applica
ble to municipal services; excludes supplies of electricity, gas, water,
steam and telecommunication services from provisions exempting
supplies to municipalities by municipally owned or controlled utilities.
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(4) Used goods: eliminates notional input tax credits for most
transactions; introduces trade-in approach for taxation of used goods;
revises rules applicable to supplies made by agents and auctioneers.
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(5) International transactions: expands zero-rating to services
provided by sales and purchasing representatives, to a broader range of
services and goods in respect of international transportation and to
goods delivered abroad.
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(6) Financial services: provides that the references to ``taxable
supplies'' in the allocation rules refer to supplies made for consider
ation; clarifies the taxable status of management and administrative
services provided to certain entities; clarifies the treatment of imported
taxable supplies; introduces a new test for determining whether a
taxpayer is a de minimis financial institution.
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(7) Real property: broadens the exemption for inherited real
property; broadens entitlement for the new housing rebate for certain
condominiums; expands the definition of mobile home; provides new
rules for the self-assessment of tax in respect of construction of
subsidized housing; limits the exemption in respect of subdivisions of
lands to circumstances where no more than two lots are created.
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(8) Agriculture: expands the list of zero-rated supplies to include
irradiated grains and seeds; clarifies the treatment of topsoil.
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(9) Limitation periods: reduces the time period during which listed
financial institutions and large registrants engaged in exempt activities
may claim input tax credits from four to two years; reduces the time
period for claiming certain rebates from four to two years.
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The principal measures included in Part II of the Bill are as follows:
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(1) Application of harmonized sales tax: provides for the applica
tion and collection of tax at the rate of 15% in respect of taxable supplies
made in the provinces of Nova Scotia, New Brunswick and Newfound
land and in respect of taxable property or services brought into those
provinces; determines when a supply is made in a province; provides
input tax credits in respect of tax payable at 15%; provides rebates in
respect of tax paid on goods removed from those provinces and services
consumed outside those provinces.
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(2) Tax-inclusive pricing: implements a requirement that certain
federally-regulated industries display prices to consumers that include
the amount of tax applicable in respect of a good or service offered for
sale.
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(3) Consequential amendments: amends various provisions of the
Excise Tax Act necessary to implement the harmonized sales tax.
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The measures included in Part III are general transitional provisions
relating to the measures in Part I.
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Parts IV to IX include consequential amendments to the Federal
Provincial Fiscal Arrangements Act, the Income Tax Act, the Debt
Servicing and Reduction Account Act, the Income Tax Budget Amend
ment Act and previous Acts which amended the Excise Tax Act.
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