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Her 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''.
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This enactment mainly implements measures relating to the Goods
and Services Tax and Harmonized Sales Tax (GST/HST), including
sales tax initiatives proposed in the February 28, 2000 Budget. These
measures are aimed principally at improving the operation and fairness
of the GST/HST in the affected areas and ensuring that the legislation
accords with the policy intent.
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This enactment also implements two amendments to the excise tax
provisions of the Act. The first is made for greater certainty to clarify the
deferral of the existing excise taxes on air conditioners installed in
automobiles, and on new heavy automobiles, at the time of importation
by a licensed manufacturer or sale to a licensed manufacturer. The
second amendment provides discretionary power to the Minister of
National Revenue to waive or cancel interest, or penalties calculated in
the same manner as interest, under the excise tax system, consistent with
the discretion already provided to the Minister in relation to the sales tax
and income tax systems.
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The principal GST/HST measures included in this enactment are as
follows:
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(1) Export Distribution Centre and Export Trading House
Programs: implements new rules that ensure that the GST/HST does
not present an impediment to the establishment of North American
distribution centres in Canada by permitting export-oriented
non-manufacturing businesses to purchase or import inventory, certain
inputs and customers' goods on a tax-free basis, rather than having to
pay the tax and later claim a refund; parallels certain administrative
aspects of the new export distribution centre rules in the existing Export
Trading House program to ensure consistency between these two
measures.
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(2) Non-residents and Cross-border Transactions: ensures that no
tax is payable on the importation of defective goods imported solely to
be replaced under warranty, at no additional cost, by other goods that are
subsequently exported; ensures that businesses in Canada can import,
on a tax-free basis, non-resident customers' goods solely for storage or
distribution in Canada and subsequent export without incurring
cash-flow costs due to the tax; ensures that there is no tax on the service
of storing goods for a non-resident business in certain circumstances in
which the business is relieved from paying tax on the goods themselves
and would otherwise be unable to recover the tax; removes an
unnecessary condition on the tax-free treatment of sales of exported
railway rolling stock to a non-resident business that would otherwise be
unable to recover the tax.
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(3) Real Property: implements the New Residential Rental Property
Rebate, which is a partial rebate of GST paid in respect of newly
constructed or substantially renovated long-term residential rental
accommodation; permits a new home used primarily as a place of
residence of the owner and also to provide short-term accommodation
to the public (e.g., a Bed-and-Breakfast establishment) to qualify for the
New Housing Rebate; allows a person who purchased real property and
paid tax to recover that tax if the property is returned to the original
vendor within one year and pursuant to the original contract; ensures
that real property cannot be sold exempt from tax if the seller was
previously leasing it to other persons on a taxable basis and was
therefore entitled to recover any tax paid on the purchase of the property
or improvements to it; clarifies that charities are not required to charge
tax on the rental of real property or on any goods rented in conjunction
with the real property.
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(4) Health: continues in force an existing GST/HST exemption for
speech therapy services that are billed by individual practitioners and
not covered by the applicable provincial health care plan. The
amendment extends the exemption to provide time for the profession to
complete a process now under way of becoming regulated in a fifth
province.
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(5) Education: ensures that similar vocational training across the
country is provided the same exempt treatment regardless of how
vocational schools are regulated in each province; exempts from tax
vocational training supplied by a government entity or agency; allows
suppliers of vocational training to elect to treat that training as taxable
where it is provided to registrants that are able to recover the tax by way
of input tax credits.
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(6) Electronic Filing: removes the requirement to apply to the
Minister of National Revenue for permission to file GST/HST returns
electronically (e.g., over the telephone or the Internet) and therefore
allows anyone to do so provided they meet the criteria set out by the
Minister.
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(7) Miscellaneous Amendments: corrects ambiguities in existing
provisions consistent with current industry practice, administrative
interpretation and the underlying policy intent.
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