PART IV

R.S., c. F-8, R.S., cc. 22, 39, 44 (1st Supp.); cc. 7, 15, 26, 28 (2nd Supp.); cc. 9, 11, 31 (3rd Supp.); cc. 7, 33, 35, 46 (4th Supp.); 1990, c. 39; SOR/91-40; 1991, cc. 9, 10, 38, 51; 1992, cc. 1, 10; 1993, cc. 28, 34; 1994, c. 2; 1995, cc. 17, 24, 28, 29; 1996, c. 8, 11, 18

FEDERAL-PROVINCIAL FISCAL ARRANGEMENTS ACT

261. Subsection 2(1) of the Federal-Provincial Fiscal Arrangements Act is amended by adding the following in alphabetical order:

``sales tax harmoniza-
tion agreement''
« accord d'harmonisa-
tion de la taxe de vente »

``sales tax harmonization agreement'' means an agreement or arrangement entered into by the Minister on behalf of the Government of Canada and authorized, or ratified and confirmed, under Part III.1 including any amendments or variations to the agreement or arrangement that are authorized, or ratified and confirmed, under that Part;

262. The Act is amended by adding the following after section 8.1:

PART III.1

SALES TAX HARMONIZATION AGREEMENTS

Definition of ``sales taxes''

8.2 (1) In this Part, ``sales taxes'' means the taxes imposed under Part IX of the Excise Tax Act and taxes levied under Acts of the legislature of a province in respect of supplies of property or services.

Meanings in Part IX to apply

(2) In this Part, ``property'', ``service'' and ``supply'' have the meanings assigned by subsection 123(1) of the Excise Tax Act.

Sales tax harmoniza-
tion agreement

8.3 (1) The Minister, with the approval of the Governor in Council, may on behalf of the Government of Canada enter into an agreement or arrangement with the government of a province respecting sales taxes and, without restricting the generality of the foregoing, respecting

    (a) the integration of sales taxes applicable in the province into taxes collected, administered and enforced under a single Act of Parliament;

    (b) the collection of taxes applicable in the province, whether imposed under an Act of Parliament or levied under an Act of the legislature of the province, and the administration and enforcement of the Acts imposing the taxes;

    (c) the provision to the Government of Canada by the government of the province, or to the government of the province by the Government of Canada, of information acquired in the administration and enforcement of Acts imposing taxes, Acts relating to the disclosure, displaying or advertisement of prices for property or services and Acts providing for rebates, refunds or reimbursements of sales taxes, paid or payable, or of amounts paid or payable as or on account of sales taxes, in respect of the supply, bringing into the province or importation of certain property or services;

    (d) the accounting for taxes collected in accordance with the agreement;

    (e) the implementation of the system of integration of the sales taxes contemplated under the agreement and the transition from the system of taxation administered before the agreement to the system of taxation contemplated under the agreement;

    (f) payments, and the eligibility for payments, by the Government of Canada to the government of the province in respect of the revenues from, and the transitional costs incurred in converting to, the system of taxation contemplated under the agreement and to which the province is entitled under the agreement, the time when such payments will be made, and the remittance by the government of the province to the Government of Canada of any overpayments by the Government of Canada or the right of the Government of Canada to set off any overpayments against other amounts payable by the Government of Canada to the government of the province, whether under the agreement or any other agreement or arrangement or any Act of Parliament;

    (g) the payment by the Government of Canada and its agents and subservient bodies, and by the government of the province and its agents and subservient bodies, of the sales taxes payable under the system of taxation contemplated under the agreement and the accounting for the sales taxes so paid;

    (h) the compliance by the Government of Canada and its agents and subservient bodies, and by the government of the province and its agents and subservient bodies, with the Act of Parliament under which the system of taxation is administered and regulations made under that Act;

    (i) the enactment, administration and enforcement of laws respecting the disclosure, display and advertisement of the prices for property and services in respect of the supply of which sales taxes are payable under the system of taxation contemplated under the agreement;

    (j) the administration and enforcement of Acts of Parliament or the legislature of the province respecting the rebate, refund or reimbursement of sales taxes paid in respect of the supply, bringing into the province or importation of certain property or services; and

    (k) other matters that relate to, and that are considered advisable for the purposes of implementing or administering, the system of taxation contemplated under the agreement.

Amending agreements

(2) The Minister, with the approval of the Governor in Council, may on behalf of the Government of Canada enter into an agreement with the government of a province amending or varying an agreement or arrangement with the province entered into under subsection (1) or this subsection or ratified and confirmed under section 8.7.

Payments to province

8.4 Where the Government of Canada has entered into a sales tax harmonization agreement with the government of a province, the federal Minister who, pursuant to the agreement, is responsible for the administration and enforcement of the system of taxation contemplated under the agreement may pay to a province out of amounts received in a fiscal year under Part IX of the Excise Tax Act

    (a) amounts determined in accordance with the agreement as provided, and at such times as are specified, in the agreement; and

    (b) subject to the regulations, advances in respect of the amounts referred to in paragraph (a).

Payments to other persons

8.5 (1) Subject to subsection (2), where, under a sales tax harmonization agreement, a federal Minister is responsible for the administration and enforcement of an Act of the legislature of a province respecting the refund, rebate or reimbursement to persons of sales taxes paid or payable by the persons, or of amounts paid or payable as or on account of sales taxes, in respect of the supply, bringing into the province or importation of certain property or services, that Minister may pay out of amounts received in a fiscal year under Part IX of the Excise Tax Act to a person an amount on account of any amount that is payable to the person under that Act in accordance with the agreement.

Advances from Consolidated Revenue Fund

(2) Where no amount is held on behalf of a province from which payment under subsection (1) may be made in accordance with a sales tax harmonization agreement with the province, or the amount of the payment exceeds the amount so held, payment under subsection (1) may be made as a recoverable advance out of amounts received in a fiscal year under Part IX of the Excise Tax Act if the repayment of the amount or excess by the government of the province is provided for in the sales tax harmonization agreement.

Statutory authority to make payments

8.6. Notwithstanding any other Act, the payments paid under a sales tax harmonization agreement under the authority of section 8.4 or 8.5 may be made without any other or further appropriation or authority.

Confirmation of past agreements, etc.

8.7 Agreements and arrangements that were entered into by the Minister after March 29, 1996, and that, if section 8.3 had been in force on and after that day, could have been authorized under that section, are, for greater certainty, ratified and confirmed and are deemed to have been entered into under that section and approved by the Governor in Council, and all actions taken and payments made under those agreements and arrangements after that day and before this Act is assented to are ratified and confirmed.

263. Section 32 of the Act is amended by adding the following after paragraph (b):

    (c) for the payment by Her Majesty in right of Canada to that province or the assignees of that province of amounts determined under the agreement in respect of amounts paid by Her Majesty in right of that province and amounts paid by persons identified in the agreement as or on account of any tax imposed under the Excise Tax Act;

1992, c. 10, s. 7(1)

264. (1) Paragraph 40(b) of the Act is replaced by the following:

    (b) providing for the payment to a province of advances on account of any amount that may become payable to the province under this Act, an administration agreement, a reciprocal taxation agreement or a sales tax harmonization agreement, the adjustment, by way of reduction or set off, of other payments to the province because of those advances and the recovery of overpayments;

1992, c. 10, s. 7(2)

(2) Paragraphs 40(d) and (e) of the Act are replaced by the following:

    (d) prescribing the time and manner of making any payment under this Act, an administration agreement or a sales tax harmonization agreement;

    (e) prescribing the accounts to be kept for the purposes of this Act or an agreement entered into under the authority of this Act and the management of those accounts;

265. Sections 261, 262 and 264 are deemed to have come into force on March 28, 1996.

266. Section 263 is deemed to have come into force on October 1, 1996.

PART V

R.S., c. 1 (5th Supp.); 1994, cc. 7, 8, 13, 21, 28, 29, 38, 41; 1995, cc. 1, 3, 11, 18, 21, 38, 46; 1996, cc. 11, 21, 23

INCOME TAX ACT

267. (1) Paragraph 6(1)(e.1) of the Income Tax Act is repealed.

(2) Subsection 6(7) of the Act is replaced by the following:

Cost of property or service

(7) To the extent that the cost to a person of purchasing a property or service or an amount payable by a person for the purpose of leasing property is taken into account in determining an amount required under this section to be included in computing a taxpayer's income for a taxation year, that cost or amount payable, as the case may be, shall include any tax that was payable by the person in respect of the property or service or that would have been so payable if the person were not exempt from the payment of that tax because of the nature of the person or the use to which the property or service is to be put.

(3) Subsections (1) and (2) apply to the 1996 and subsequent taxation years.

268. (1) Paragraph 12(1)(y) of the Act is replaced by the following:

Automobile provided to partner

    (y) where the taxpayer is an individual who is a member of a partnership or an employee of a member of a partnership and the partnership makes an automobile available in the year to the taxpayer or to a person related to the taxpayer, the amounts that would be included by reason of paragraph 6(1)(e) in the income of the taxpayer for the year if the taxpayer were employed by the partnership;

(2) Subsection (1) applies to the 1996 and subsequent taxation years.

269. (1) Subsections 15(1.3) and (1.4) of the Act are replaced by the following:

Cost of property or service

(1.3) To the extent that the cost to a person of purchasing a property or service or an amount payable by a person for the purpose of leasing property is taken into account in determining an amount required under this section to be included in computing a taxpayer's income for a taxation year, that cost or amount payable, as the case may be, shall include any tax that was payable by the person in respect of the property or service or that would have been so payable if the person were not exempt from the payment of that tax because of the nature of the person or the use to which the property or service is to be put.

(2) Subsection 15(5) of the Act is replaced by the following:

Automobile benefit

(5) For the purposes of subsection (1), the value of the benefit to be included in computing a shareholder's income for a taxation year with respect to an automobile made available to the shareholder, or a person related to the shareholder, by a corporation shall (except where an amount is determined under subparagraph 6(1)(e)(i) in respect of the automobile in computing the shareholder's income for the year) be computed on the assumption that subsections 6(1), (1.1), (2) and (7) apply, with such modifications as the circumstances require, and as though the references therein to ``the employer of the taxpayer'', ``the taxpayer's employer'' and ``the employer'' were read as ``the corporation''.

(3) Subsections (1) and (2) apply to the 1996 and subsequent taxation years.

PART VI

1992, c. 18

DEBT SERVICING AND REDUCTION ACCOUNT ACT

270. Section 5 of the Debt Servicing and Reduction Account Act is amended by adding the following after paragraph (a):

    (a.1) authorized under section 8.4 or 8.5 of the Federal-Provincial Fiscal Arrangements Act;

PART VII

1990, c. 45

AN ACT TO AMEND THE EXCISE TAX ACT, THE CRIMINAL CODE, THE CUSTOMS ACT, THE CUSTOMS TARIFF, THE EXCISE ACT, THE INCOME TAX ACT, THE STATISTICS ACT AND THE TAX COURT OF CANADA ACT

271. (1) Subsection 12(2) of An Act to amend the Excise Tax Act, the Criminal Code, the Customs Act, the Customs Tariff, the Excise Act, the Income Tax Act, the Statistics Act and the Tax Court of Canada Act, being chapter 45 of the Statutes of Canada, 1990, is amended by striking out the word ``and'' at the end of paragraph (b), by adding the word ``and'' at the end of paragraph (c) and by adding the following after paragraph (c):

    (d) with respect to any supply referred to in section 182 of the Act, as enacted by subsection (1), made before 1991, except that no tax is payable under Part IX of the Act in respect of any amount paid or forfeited, or any debt or other obligation reduced or extinguished, before 1991.

(2) Subsection (1) is deemed to have come into force on April 24, 1996.

PART VIII

1994, c. 9

AN ACT TO AMEND THE EXCISE TAX ACT AND A RELATED ACT

272. Subsection 4(2) of An Act to amend the Excise Tax Act and a related Act, being chapter 9 of the Statutes of Canada, 1994, is amended by adding the word ``and'' at the end of paragraph (a), by striking out the word ``and'' at the end of paragraph (b) and by repealing paragraph (c).