Non-creditable Tax Charged

GST/HST memorandum 13-5
September 2020

This version replaces the one dated January 2017. This publication was updated to reflect amendments to the Excise Tax Act and provincial legislation.

In this publication, all legislative references to the “Act” are to the Excise Tax Act and all references to the “Regulations” are to the Public Service Body Rebate (GST/HST) Regulations, unless otherwise specified. The information in this publication does not replace the law found in the Act and its regulations.

If this information does not completely address your particular situation, you may wish to refer to the Act or relevant regulation, or call GST/HST Rulings at 1-800-959-8287 for additional information. If you require certainty with respect to any particular GST/HST matter, you may request a ruling. GST/HST Memorandum 1-4, Excise and GST/HST Rulings and Interpretations Service, explains how to obtain a ruling or an interpretation and lists the GST/HST rulings centres.

If you are located in Quebec and wish to request a ruling related to the GST/HST, please call Revenu Québec at 1-800-567-4692. You may also visit the Revenu Québec website at revenuquebec.ca to obtain general information.

For listed financial institutions that are selected listed financial institutions (SLFIs) for GST/HST or Quebec sales tax (QST) purposes or both, whether or not they are located in Quebec, the CRA administers the GST/HST and the QST. If you wish to make a technical GST/HST or QST enquiry related to SLFIs, please call 1-855-666-5166.

GST/HST rates

Reference in this publication is made to supplies that are subject to the GST or the HST. The HST applies in the participating provinces at the following rates: 13% in Ontario and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%. If you are uncertain as to whether a supply is made in a participating province, see GST/HST Technical Information Bulletin B-103, Harmonized Sales Tax – Place of Supply Rules for Determining Whether a Supply is Made in a Province.

Table of Contents

• Meaning of significant terms
• Overview
• Definition of non-creditable tax charged
  • Amounts excluded from the calculation of non-creditable tax charged
• Determining the non-creditable tax charged
  • Non-creditable GST charged and the federal non-creditable HST charged
  • Provincial non-creditable HST charged
  • Total tax charged in respect of the property or service
    • Property or a service purchased in Canada
    • Goods imported into Canada
    • Imported taxable supplies
    • Tangible personal property brought into a participating province from another province
    • Intangible personal property or services acquired in a province for use in a participating province
    • Receipt of property from a non-resident
    • Registrant PSB that has a small supplier division
    • PSB ceases to be a registrant
    • PSB is a creditor who has seized or repossessed real or personal property
    • PSB is a builder of a residential complex to which section 191 applies
    • Employee or volunteer allowance
    • Employee or volunteer reimbursements
  • Deductions
    • PSB is a registrant that can claim input tax credits
    • Other rebates
    • Rebates that are not included in non-creditable tax charged
    • PSB obtains a remission order
    • PSB receives a credit note or issues a debit note
  • Non-creditable tax charged
• Calculating the PSB rebate for charities and qualifying non-profit organizations

Meaning of significant terms

1. Pursuant to its definition in subsection 259(1), the claim period of a person at any time means:

• where the person is at that time a registrant, the reporting period of the person that includes that time; and
• in any other case, the period that includes that time and consists of either:
  1. the first and second fiscal quarters in a fiscal year of the person; or
  2. the third and fourth fiscal quarters in a fiscal year of the person.

2. Participating province means a province that has harmonized its provincial sales tax with the GST to implement the HST. Participating provinces include New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario and Prince Edward Island but do not include the Nova Scotia offshore area or the Newfoundland offshore area except to the extent that offshore activities, as defined in subsection 123(1), are carried on in that area.

3. Public service body (PSB), for the purpose of this memorandum, means:

• a qualifying non-profit organization (qualifying NPO)
• a charity
• a municipality (including a determined municipality or a designated municipality)
• a school authority that is established and operated otherwise than for profit
• a university that is established and operated otherwise than for profit
• a public college that is established and operated otherwise than for profit
• a hospital authority
• an external supplier
• a facility operator

4. Resident, for the purposes of the PSB rebate, means resident in a province. For more information, refer to GST/HST Info Sheet GI-121, Determining Whether a Public Service Body is Resident in a Province for Purposes of the Public Service Bodies’ Rebate.

Overview

5. A PSB may be able to recover a percentage of the GST and the federal part of the HST paid or payable on its eligible purchases and expenses by claiming a PSB rebate.^{Footnote 1}

6. A PSB resident in a participating province may also be able to claim a PSB rebate to recover a percentage of the provincial part of the HST paid or payable on its eligible purchases and expenses.

7. The PSB rebate calculation is based on the non-creditable tax charged in respect of property or a service for a claim period. Generally, non-creditable tax charged is the GST/HST paid or payable on an eligible purchase or expense that a PSB cannot recover in any way other than by claiming the PSB rebate. This memorandum will assist a PSB in determining which amounts are included in the calculation of the non-creditable tax charged in respect of property or a service for a claim period.

8. The GST/HST paid or payable on supplies of property and services is generally required to be collected by the supplier. However, there are some situations where this is not the case and the recipient of the supply would be required to calculate the GST/HST it owes on a supply and remit any GST/HST owing on the supply directly to the Canada Revenue Agency (CRA). This is known as self-assessment. Some self-assessed amounts may be included in the PSB rebate calculation. Examples of self-assessed amounts that may be included are outlined in subsequent sections of this document. 

9. The non-creditable tax charged in respect of property or a service for a claim period is defined in subsection 259(1) and is generally equal to the total GST/HST that became payable during a claim period or that was paid during a claim period without having become payable minus the following amounts:

• any input tax credits the PSB claimed or is entitled to claim for any of that GST/HST
• any rebate, refund or remission of any of that GST/HST that it is reasonable to expect the PSB received or is entitled to receive under any other section of the Act or under any other Act of Parliament
• any amount of that GST/HST that is refunded, credited or adjusted in the PSB’s favour and for which it has either received a credit note from the supplier or has issued a debit note to the supplier

10. Subsections 259(3) and (4) provide rebates to PSBs of a percentage of the non-creditable tax charged.

11. The GST/HST paid or payable by a PSB on a prescribed property or service is excluded in subsections 259(3) and (4) from the PSB rebate calculation. Subsection 4(1) of the Regulations lists the prescribed property and services for purposes of section 259. Prescribed property and services are not eligible for the PSB rebate; therefore, it is not necessary for a PSB to determine the amount of non-creditable tax charged in respect of a prescribed property or service.

12. For more information on claiming a PSB rebate and the types of organizations that qualify for the PSB rebate, refer to Guide RC4034, GST/HST Public Service Bodies’ Rebate.

Definition of non-creditable tax charged

13. As defined in subsection 259(1), non-creditable tax charged, in respect of property or a service for a claim period of a person, means the amount, if any, by which

a. the total of all amounts each of which is

i. tax in respect of the supply (refer to paragraphs 27 and 28 of this memorandum), importation (refer to paragraphs 29 to 39), or bringing into a participating province (refer to paragraphs 40 to 50), of the property or service that became payable by the person during the period or that was paid by the person during the period without having become payable (other than tax deemed to have been paid by the person or in respect of which the person is, by reason only of section 226 (refer to paragraph 17), not entitled to claim an input tax credit),

ii. tax deemed under subsection 129(6) (refer to paragraph 55), 129.1(4) (refer to paragraph 56), 171(3) (refer to paragraph 58), or 183(4) (refer to paragraph 62), or section 191 (refer to paragraphs 65 to 67), to have been collected during the period by the person in respect of the property or service,

ii.1. where the person is not a charity to which subsection 225.1(2) applies, tax deemed under subsection 183(5) (refer to paragraph 63) or 183(6) (refer to paragraph 64) to have been collected during the period by the person in respect of the property or service,

iii. tax, calculated on the amount of an allowance in respect of the property or service, that is deemed under section 174 (refer to paragraphs 68 and 69) to have been paid during the period by the person,

iv. tax deemed under section 175 (refer to paragraphs 70 to 72) or 180 (refer to paragraphs 51 and 52) to have been paid during the period by the person in respect of the property or service, or

v. an amount in respect of the property or service that is required under subsection 129(7) (refer to paragraph 57) or paragraph 171(4)(b) (refer to paragraphs 59 and 60) to be added in determining the net tax of the person for the period,

exceeds

b. the total of all amounts each of which is included in the total determined under paragraph (a) and

i. is included in determining an input tax credit of the person in respect of the property or service for the period (refer to paragraphs 74 to 79),

ii. for which it can reasonably be regarded the person has obtained or is entitled to obtain a rebate (refer to paragraphs 80 to 121), refund or remission (refer to paragraphs 122 and 123) under any other section of the Act or under any other Act of Parliament, or

iii. is included in an amount adjusted, refunded or credited to or in favour of the person for which a credit note referred to in subsection 232(3) has been received by the person or a debit note referred to in that subsection has been issued by the person (refer to paragraphs 124 to 132).

14. Non-creditable tax charged is calculated on a property-by-property, service-by-service basis.

15. The amounts listed in subparagraphs (a)(i) to (v) of the definition of non-creditable tax charged in subsection 259(1) will be referred to in this memorandum as subparagraphs 259(1)(a)(i) to (v). The amounts included in subparagraphs (b)(i) to (iii) of the definition of non-creditable tax charged in subsection 259(1) will be referred to as subparagraphs 259(1)(b)(i) to (iii).

16. In addition to the amounts described in subparagraphs 259(1)(a)(i) to (v), there are other instances in the Act where a PSB may be deemed to have paid or collected GST/HST; however, only those amounts specifically enumerated in the definition of non-creditable tax charged in subsection 259(1) are included when calculating the non-creditable tax charged in respect of property or service for a claim period.

Amounts excluded from the calculation of non-creditable tax charged

17. Subparagraph 259(1)(a)(i) excludes from the calculation of non-creditable tax charged the GST/HST paid or payable by a PSB that is a registrant in respect of which the PSB is, by reason only of section 226, not entitled to claim an input tax credit. Section 226 denies an input tax credit in circumstances where a PSB that is a registrant acquires beverages in returnable containers for use in its commercial activities and pays a deposit in respect of the returnable containers, a portion of which is non-refundable. The PSB is required to pay tax on the non-refundable portion of the deposit and would otherwise be entitled to an input tax credit for the tax paid, but an input tax credit is denied because of section 226. Since the tax paid by the PSB is excluded from the calculation of non-creditable tax charged, the PSB cannot claim a PSB rebate of this amount.

Determining the non-creditable tax charged

18. The non-creditable tax charged in respect of property or a service in a claim period is the total of subparagraphs 259(1)(a)(i) to (v) minus the total of subparagraphs 259(1)(b)(i) to (iii) (refer to paragraph 13 of this memorandum).

19. The non-creditable tax charged for a particular claim period only includes the GST/HST that became payable during that claim period or that was paid during that claim period without having become payable.

20. Since a PSB may pay the GST and/or the HST at different rates in a claim period, the calculation of its non-creditable tax charged can be complex. To calculate the PSB rebate, a PSB must separately determine the non-creditable GST charged/federal non-creditable HST charged and the provincial non-creditable HST charged in respect of the property or service for the claim period. This is necessary because different rebate rates may apply for the PSB rebate of the GST and the federal part of the HST and the PSB rebate of the provincial part of the HST. These rebate amounts are also claimed on separate forms. Further, some of the amounts that are included or must be deducted in calculating non-creditable tax charged may apply only to the GST, only to the federal part of the HST, or only to the provincial part of the HST.

21. The definition of non-creditable tax charged does not differentiate between the GST and the federal part of the HST and the provincial part of the HST; however, there are other provisions in section 259 and the Regulations that require the federal and provincial amounts to be separated.

Non-creditable GST charged and the federal non-creditable HST charged

22. Pursuant to subsection 259(4.2), when calculating the PSB rebate of the GST and the federal part of the HST, no provincial amounts can be included in the calculation of non-creditable tax charged. The amount that may be included in the calculation is referred to in this memorandum as the non-creditable GST charged or the federal non-creditable HST charged.

23. Certain PSBs are required to calculate their PSB rebate in a prescribed manner which is set out in the Regulations. The calculations of the PSB rebate of the GST and the federal part of the HST set out in the Regulations are based on the federal qualifying amount, which is defined in section 2 of the Regulations and corresponds to the non-creditable GST charged and the federal non-creditable HST charged.

Provincial non-creditable HST charged

24. Pursuant to subsection 259(4.21), when calculating the PSB rebate of the provincial part of the HST, no federal amounts can be included in the calculation of non-creditable tax charged. The amount that may be included in the calculation is referred to in this memorandum as the provincial non-creditable HST charged.

25. Certain PSBs are required to calculate their PSB rebate in a prescribed manner which is set out in the Regulations. The calculations of the PSB rebate of the provincial part of the HST set out in the Regulationsare based on the provincial qualifying amount, which is defined in section 2 of the Regulations and corresponds to the provincial non-creditable HST charged.

Total tax charged in respect of the property or service

26. The non-creditable tax charged calculation includes the total of all amounts specifically listed in subparagraphs 259(1)(a)(i) to (v). These amounts are referred to in section 259 as the total tax charged in respect of the property or service. Paragraphs 27 to 72 of this memorandum explain which amounts are included in subparagraphs 259(1)(a)(i) to (v) when calculating the non-creditable tax charged in respect of property or a service for a claim period.

Property or a service purchased in Canada

27. Subsection 165(1) imposes 5% GST or the federal part of the HST on every recipient of a taxable supply (other than a zero-rated supply) made in Canada on the value of the consideration for the supply. In addition, subsection 165(2) imposes the provincial part of the HST at the applicable rate on every recipient of a taxable supply (other than a zero-rated supply) made in a participating province on the value of the consideration for the supply.

28. The amount of tax that became payable, or was paid without having become payable, under subsection 165(1) during the claim period is included in subparagraph 259(1)(a)(i) when calculating the non-creditable GST charged or the federal non-creditable HST charged in respect of property or a service for the claim period. The amount of tax that became payable, or was paid without having become payable, under subsection 165(2) during the claim period is included in subparagraph 259(1)(a)(i) when calculating the provincial non-creditable HST charged in respect of property or a service for the claim period.

Goods imported into Canada

29. Pursuant to section 212, a PSB that imports goods into Canada and is liable under the Customs Act to pay duty on such goods, or would be so liable if the goods were subject to duty, must pay tax (the GST or the federal part of the HST) at the rate of 5% on the value of the goods to the Canada Border Services Agency (CBSA) at the time of importation, except for goods specified as non-taxable importations. The amount of tax becoming payable or paid under section 212 during the claim period is included in subparagraph 259(1)(a)(i) when calculating the non-creditable GST charged or the federal non-creditable HST charged in respect of the imported goods for the claim period.

30. Commercial goods, under subsection 212.1(1), means goods that are imported for sale or for any commercial, industrial, occupational, institutional or other like use. Pursuant to subsection 212.1(2), a PSB resident in a participating province that imports goods into Canada that are not accounted for as commercial goods under section 32 of the Customs Act and that is therefore liable under the Customs Act to pay duty on imported goods, or would be so liable if the goods were subject to duty, must pay the provincial part of the HST at the tax rate for that province on the value of the goods to the CBSA at the time of importation, except for goods specified as non-taxable importations. The amount of tax paid under subsection 212.1(2) is included in subparagraph 259(1)(a)(i) when calculating the provincial non-creditable HST charged in respect of the imported goods for the claim period.

31. A PSB that brings goods into a participating province from a place outside Canada that are accounted for as commercial goods under section 32 of the Customs Act when imported must self-assess the provincial part of the HST on the value of the goods under subsection 220.07(1). The amount of tax that became payable, or was paid without becoming payable, under subsection 220.07(1) during the claim period is included in subparagraph 259(1)(a)(i) when calculating the provincial non-creditable HST charged in respect of the imported goods for the claim period.

32. However, subsection 220.07(2) relieves the requirement to self-assess the provincial part of the HST if the goods are for consumption, use or supply exclusively (90% or more) in the course of commercial activities of a PSB that is a registrant, are non-taxable importations, or are a mobile home or floating home that has been used or occupied in Canada as a place of residence for individuals.

33. A PSB that imports a specified motor vehicle into a participating province is generally required to pay the provincial part of the HST on the earlier of the day the PSB registers the vehicle or the day the vehicle is required to be registered. The provincial part of the HST in this case is collected by provincial authorities on behalf of the CRA at the time the vehicle is registered. The amount of tax that became payable, or was paid without becoming payable, during the claim period is included in subparagraph 259(1)(a)(i) when calculating the provincial non-creditable HST charged in respect of the imported vehicle for the claim period.

34. For GST/HST purposes, a specified motor vehicle is defined to generally mean all motor vehicles, other than racing cars, that, if they were imported, would be classified under particular provisions of heading number 87.03 of the Customs Tariff, as well as any prescribed motor vehicles (currently there are no prescribed motor vehicles under the Act). Specified motor vehicles would include cars, trucks, trailers, motorcycles, tractors and special purpose motor vehicles such as tow trucks, mobile cranes and firefighting vehicles.

35. For more information, refer to GST/HST Info Sheet GI-119, Harmonized Sales Tax – Place of Supply of Specified Motor Vehicles Delivered and Registered in a Different Province.

Imported taxable supplies

36. Under section 217, an imported taxable supply means, in part, a taxable supply (other than a zero-rated or prescribed supply) of a service, intangible personal property and certain tangible personal property made outside Canada to a person who is resident in Canada, other than a supply that is acquired for consumption, use or supply exclusively (90% or more) in the course of commercial activities of the person, or activities that are engaged in exclusively outside Canada by the person and that are not part of a business or an adventure or concern in the nature of trade engaged in by the person in Canada.

37. Pursuant to section 218, a PSB that is a recipient of an imported taxable supply is required to self-assess tax (the GST or the federal part of the HST) at the rate of 5% on the value of consideration for the imported taxable supply. The amount of tax paid or payable under section 218 is included in subparagraph 259(1)(a)(i) when calculating the non-creditable GST charged or the federal non-creditable HST charged in respect of the imported taxable supply for the claim period.

38. Pursuant to section 218.1, a PSB resident in a participating province that is the recipient of an imported taxable supply that is the supply of a service or intangible personal property is required to self-assess the provincial part of the HST when the service or intangible personal property is acquired outside Canada for consumption, use or supply significantly (10% or more) in participating provinces. The amount of tax is to be calculated to the extent (expressed as a percentage) to which the property or service is to be consumed, used or supplied in each participating province. The amount of tax that became payable, or was paid without having become payable, under section 218.1 during the claim period is included in subparagraph 259(1)(a)(i) when calculating the provincial non-creditable HST charged in respect of the imported taxable supply for the claim period.

39. In addition, a PSB may, in certain circumstances, be the recipient of an imported taxable supply of tangible personal property or intangible personal property. The PSB is required under section 218.1 to self-assess the provincial part of the HST each time an amount of consideration for the supply becomes due. Generally, in respect of tangible personal property, the amount of tax is to be calculated based on the tax rate for the relevant participating province, and in the case of intangible personal property, the amount of tax is to be calculated generally to the extent (expressed as a percentage) to which the property is to be consumed, used or supplied in the particular participating province.

Tangible personal property brought into a participating province from another province

40. Where, in a claim period, a PSB brings tangible personal property into a participating province from a non-participating province or a participating province with a lower rate of HST, the PSB may be required to self-assess the provincial part of the HST under the provisions of section 220.05 and Part 5 of the New Harmonized Value-added Tax System Regulations, No. 2. The amount of tax that became payable, or was paid without having become payable, under section 220.05 during the claim period is included in subparagraph 259(1)(a)(i) when calculating the provincial non-creditable HST charged in respect of the tangible personal property for the claim period.

41. The amount of the provincial part of the HST that is to be self-assessed under section 220.05 is calculated in the manner prescribed in the New Harmonized Value-added Tax System Regulations, No. 2 by multiplying a prescribed value (refer to paragraph 43) in respect of the tangible personal property by the appropriate rate. The rate is equal to the difference between the provincial rate for the participating province into which the property is brought and the provincial rate for the other province from which the property is brought (if the other province is a non-participating province, the provincial rate is equal to 0%). If the property is a specified item (refer to next paragraph) in respect of the other province, the rate is the provincial rate for the participating province that the property is brought into.

42. Under Part 5 of the New Harmonized Value-added Tax System Regulations, No. 2, specified item, in respect of a province, means property or a service that is an item included in a schedule to the Deduction for Provincial Rebate (GST/HST) Regulations and in respect of which an amount may be paid or credited under an Act of the legislature of the province (for example, specified items in Ontario include property subject to a provincial point of sale rebate, such as a printed book, a children’s diaper, children’s clothing and children’s footwear).

43. For purposes of the self-assessment of the provincial part of the HST under section 220.05, if the tangible personal property is a specified motor vehicle that the person is required to register under the laws of the participating province relating to the registration of motor vehicles, the prescribed value of the property in the New Harmonized Value-added Tax System Regulations, No. 2 is equal to the specified value (refer to next paragraph) of the vehicle. If the property is not a specified motor vehicle and the supply of the property was made by way of sale for consideration to a person with whom the supplier deals at arm’s length, the prescribed value of the property is equal to the lesser of the value of the consideration and the fair market value at the time it is brought into the participating province. In any other case, including where the property has been supplied by way of lease, the prescribed value is equal to the fair market value of the property at the time it is brought into the participating province.

44. Under section 220.01, specified value, in respect of a specified motor vehicle that a person is required to register under the laws of a participating province relating to the registration of motor vehicles, means the value that would be attributed to the specified motor vehicle by the provincial authority for that province for the purpose of calculating the specified provincial tax payable if, at the time of registration, that tax were payable in respect of the specified motor vehicle.

45. A PSB that is a GST/HST registrant, other than a registrant that uses the net tax calculation for charities or the special quick method of accounting for PSBs, is not required to self-assess where the property or service is brought into a participating province by the PSB for consumption, use or supply exclusively (90% or more) in the course of commercial activities of the PSB. Another significant exception generally applies where the provincial part of the HST has already been payable in respect of the property or service at a rate that is equal to or higher than the rate for the participating province into which the property or service is brought, including as a result of the supply of the property or service having been made in a participating province based on the application of the place of supply rules.

46. For more information, refer to GST/HST NOTICE 266, For discussion purposes only – Draft GST/HST Technical Information Bulletin, Harmonized Sales Tax – Self-assessment of the provincial part of the HST in respect of property and services brought into a participating province.

Intangible personal property or services acquired in a province for use in a participating province

47. Where, in a claim period, a PSB resident in a participating province is the recipient of a taxable supply of intangible personal property or a service made in a non-participating province (the provincial rate is equal to 0%) that is acquired for consumption, use or supply in whole or in part in a participating province, the PSB may be required under the provisions of section 220.08 and Part 5 of the New Harmonized Value-added Tax System Regulations, No. 2to self-assess the provincial part of the HST to the extent (expressed as a percentage) that the PSB acquired the intangible personal property or service for use in the participating province. The amount of tax paid or payable under section 220.08 is included in subparagraph 259(1)(a)(i) when calculating the provincial non-creditable HST charged in respect of the property or service for the claim period.

48. Where, in a claim period, a PSB resident in a participating province is the recipient of a taxable supply of intangible personal property or a service made in a particular participating province that is acquired for consumption, use or supply in whole or in part in a participating province (other than the particular participating province) with a higher rate of HST, the PSB may be required under the provisions of section 220.08 and Part 5 of the New Harmonized Value-added Tax System Regulations, No. 2 to self-assess an amount of tax. The tax to be self-assessed is based on the difference between the rates of HST in the two respective provinces and also on the extent (expressed as a percentage) that the PSB acquired the intangible personal property or service for use in the participating province. The amount of tax paid or payable under section 220.08 is included in subparagraph 259(1)(a)(i) when calculating the provincial non-creditable HST charged in respect of the property or service for the claim period.

49. A PSB that is a GST/HST registrant, other than a registrant that uses the net tax calculation for charities or the special quick method of accounting for PSBs, is not required to self-assess where the property or service is brought into a participating province by the PSB for consumption, use or supply exclusively (90% or more) in the course of commercial activities of the PSB. Another significant exception generally applies where the provincial part of the HST has already been payable in respect of the property or service at a provincial rate that is equal to or higher than the provincial rate for the participating province into which the property or service is brought, including as a result of the supply of the property or service having been made in a participating province based on the application of the place of supply rules.

50. For more information, refer to GST/HST Notice 266.

Receipt of property from a non-resident

51. Section 180 will apply where an unregistered non-resident pays the GST/HST on the importation of tangible personal property that the non-resident supplies to a PSB and:

• delivers, or makes available in Canada to the PSB before the tangible personal property is used in Canada by, or on behalf of, the non-resident; or
• if the PSB is a registrant, causes physical possession of the tangible personal property (other than property of a person that is resident in Canada) to be transferred in Canada to the PSB to make a taxable supply of a commercial service in Canada in respect of the tangible personal property to the non-resident.

52. Once the non-resident provides the PSB with evidence, satisfactory to the Minister, that the GST/HST has been paid on the importation of the tangible personal property, the PSB is deemed at the time that the non-resident paid the tax to have paid tax in respect of a supply of the tangible personal property to the PSB equal to the tax paid on the importation. The tax deemed paid is included in subparagraph 259(1)(a)(iv) when calculating the non-creditable tax charged in respect of the tangible personal property for the claim period during which the tax is deemed to have been paid.

Registrant PSB that has a small supplier division

53. PSBs may apply to have their branches or divisions that have $50,000 or less in annual taxable supplies designated to be small supplier divisions. A designated small supplier division is treated as a non-registrant even though the PSB itself may be registered. Generally, no tax is collected on the taxable supplies of the small supplier division and no input tax credits are claimed by the PSB or the small supplier division with respect to the purchases of the small supplier division.

54. For more information, refer to GST/HST Memorandum 2-4, Branches and Divisions.

Supply of property on becoming a small supplier division

55. Where, at any time in a claim period, a branch or division of a PSB that is a GST/HST registrant becomes a small supplier division and the PSB continues to be a registrant, the PSB is, under subsection 129(6), deemed to have made a supply of each of its properties, other than capital property or an improvement thereto, that was held by the small supplier division for consumption, use or supply in commercial activities immediately before the branch or division became a small supplier division, and that the PSB begins, immediately after that time, to hold for consumption, use or supply primarily (more than 50%) in activities engaged in by the PSB through the small supplier division. Except where the supply is an exempt supply, the PSB is deemed to have collected the GST/HST in respect of the supply equal to the total of all input tax credits in respect of the property that the PSB was entitled to claim at or before that time. The tax deemed collected is included in subparagraph 259(1)(a)(ii) when calculating the non-creditable tax charged in respect of the property for the claim period.

Change in use of non-capital property

56. Where at any time in a claim period a PSB that is a GST/HST registrant begins to hold some or all of its non-capital property for consumption, use or supply primarily in the course of its activities engaged in through its small supplier division and, immediately before that time, the PSB was holding the property for consumption, use or supply in its commercial activities and otherwise than primarily (50% or less) in the course of activities engaged in through its small supplier division, the PSB is deemed under subsection 129.1(4), except where subsection 129(6) (refer to paragraph 55 of this memorandum) or subsection 171(3) (refer to paragraph 58) applies, to have made a supply of the property and collected the GST/HST. The tax deemed collected is equal to the total of all input tax credits in respect of the property that the PSB was entitled to claim at or before that time. The tax deemed collected is included in subparagraph 259(1)(a)(ii) when calculating the non-creditable tax charged in respect of the property for the claim period.

Services and rented property on becoming a small supplier division

57. Where a registrant PSB claimed, or was entitled to claim, input tax credits for the GST/HST paid or payable in respect of services or rental property acquired during a reporting period and prior to its division becoming a small supplier division, the PSB must, under subsection 129(7), add to its net tax that portion of the input tax credits that reflect the extent to which the services or rental property were used by the PSB after becoming a small supplier division.

PSB ceases to be a registrant

Properties on ceasing to be a registrant

58. Where, at any time in a claim period, a PSB ceases to be a GST/HST registrant, the PSB is deemed under subsection 171(3) to have made a supply of each property (other than capital property) that, immediately before that time, was held by the PSB for consumption, use or supply in its commercial activities and to have collected the GST/HST on the supply calculated on the fair market value of the property. The tax is accounted for on the PSB’s final return as a registrant. Under subsection 171(3), the PSB is also deemed to have received at that time a supply of the property by way of sale and to have paid an equal amount of tax. The tax deemed collected is included in subparagraph 259(1)(a)(ii) when calculating the non-creditable tax charged in respect of the property for the claim period.

Services and rental properties

59. Where a PSB that engages in commercial activities ceases at any time to be a GST/HST registrant, the PSB is required under paragraph 171(4)(b) to add to net tax in its last reporting period amounts claimed as input tax credits for the GST/HST paid or payable in respect of services and rental properties where the input tax credits relate to the GST/HST paid or payable on services rendered in a period after ceasing to be a registrant or on rental payments for the use of property in a period after ceasing to be a registrant. The amounts added to net tax are included in subparagraph 259(1)(a)(v) when calculating the non-creditable tax charged in respect of the property or service for the claim period.

60. For more information, refer to GST/HST Memorandum 2-7, Cancellation of Registration.

PSB is a creditor who has seized or repossessed real or personal property

61. Section 183 provides rules for the application of the GST/HST to property seized or repossessed by a creditor. Subsection 183(1) provides, in part, that where property is seized or repossessed from a person to satisfy a debt or obligation (in whole or in part) owed to a creditor under a right or power exercisable by the creditor, a supply of property by way of sale will be deemed to have been made by the person and to have been received by the creditor. This deemed supply by the person to the creditor will generally be deemed to have been made for no consideration, and no GST/HST will apply to the seizure or repossession. In accordance with subsection 183(11), subsection 183(1) will not apply where a receiver has been appointed to manage the assets of the debtor.

Real property

62. Where, in a claim period, a PSB that is a creditor that has seized or repossessed real property, in circumstances in which subsection 183(1) applies or would, but for subsection 183(11), apply, begins at any time to use that property otherwise than in making a supply of the property, the PSB creditor is deemed under subsection 183(4) to have made a supply of the property and to have collected and paid the GST/HST (except where the supply is an exempt supply) on the fair market value of the real property. The tax deemed collected is accounted for by the PSB on line 103 (or on line 105 if filing electronically) of its GST/HST return. The tax deemed collected is included in subparagraph 259(1)(a)(ii) when calculating the non-creditable tax charged in respect of the real property for the claim period.

Personal property

63. Where, in a claim period, a PSB that is not a charity to which subsection 225.1(2) (net tax calculation for charities) applies and that is a creditor that has seized or repossessed personal property from a person before 1994, in circumstances in which subsection 183(1) applies or would, but for subsection 183(11), apply, begins at a particular time to use that property otherwise than in making a supply of the property, the PSB is deemed under subsection 183(5) to have made a taxable supply of the property. The PSB is deemed to have collected and paid the GST/HST on the fair market value of the property only if tax would have been payable had the property been purchased from the person in Canada at the time it was seized or repossessed. The tax deemed collected is accounted for by the PSB on line 103 (or on line 105 if filing electronically) of its GST/HST return. The tax deemed collected is included in subparagraph 259(1)(a)(ii.1) when calculating the non-creditable tax charged in respect of the property for the claim period.

64. Where, in a claim period, a PSB that is not a charity to which subsection 225.1(2) (net tax calculation for charities) applies, and that is a creditor that has seized or repossessed personal property from a person after 1993, in circumstances in which subsection 183(1) applies or would, but for subsection 183(11), apply, begins at a particular time to use that property otherwise than in making a supply of the property, the PSB is deemed under subsection 183(6) to have made a taxable supply of the property and to have paid the GST/HST on the fair market value of the property. The PSB is deemed to have collected the GST/HST on the fair market value of the property only if tax would have been payable had the property been purchased from the person in Canada at the time it was seized or repossessed. The tax deemed collected is accounted for by the PSB on line 103 (or on line 105 if filing electronically) of its GST/HST return. The tax deemed collected is included in subparagraph 259(1)(a)(ii.1) when calculating the non-creditable tax charged in respect of the property for the claim period.

PSB is a builder of a residential complex to which section 191 applies

65. If a PSB is a builder^{Footnote 2} of a newly constructed or substantially renovated residential complex and the PSB, under a lease, licence or similar arrangement, gives possession or use of the complex or any residential unit in the complex to a person for occupancy by an individual as a place of residence, the PSB is generally deemed under section 191 to have sold and repurchased (that is, self-supplied) the complex. The PSB is also considered to have collected and to have paid tax on the fair market value of the complex at that time^{Footnote 3}. The tax deemed to be collected must be accounted for by the PSB on line 103 (or on line 105 if filing electronically) of its GST/HST return. The tax deemed collected is included in subparagraph 259(1)(a)(ii) when calculating the non-creditable tax charged in respect of the residential complex for the claim period in which section 191 applies.

66. Note that special rules apply to determine the tax deemed collected on a self-supply by a PSB that receives government funding for social housing. Also note that pursuant to subsection 191(6), a university, public college or school authority that is a builder of a residential complex is not subject to the self-supply rules if the complex or addition is constructed, acquired or substantially renovated primarily for the purpose of providing a place of residence for students attending the university, college or school.

67. For more information, refer to GST/HST Memorandum 19-2-3, Residential Real Property – Deemed Supplies.

Employee or volunteer allowance

68. A PSB is deemed under section 174 to have received a supply of a property or service when, in a claim period, the PSB pays an allowance to an employee (or if the PSB is a charity or public institution, an employee or volunteer) for property or services acquired in Canada in relation to the activities of the PSB (or for the use in Canada, in relation to the activities of the PSB, of a motor vehicle) where the property or services are all or substantially all (90% or more) taxable supplies (other than zero-rated supplies). Some of the amount of the allowance must be an amount that would be deductible in computing income if the PSB were a taxpayer under the Income TaxAct and the PSB’s activities were a business. The PSB is deemed to have paid, at the time the allowance is paid, tax in respect of the supply equal to the amount determined, under section 174 and Part 2 of the New Harmonized Value-added Tax System Regulations, No. 2, by the formula:

A × (B ÷ C)

where

A is the amount of the allowance

B is

1. if 90% or more of the supplies for which the allowance is paid were made in a particular participating province, or if the allowance is paid for the use of a motor vehicle used 90% or more in a particular participating province, the HST rate for the participating province,
2. if 90% or more of the supplies for which the allowance is paid were made in two or more participating provinces, or if the allowance is paid for the use of a motor vehicle used 90% or more in two or more participating provinces, the lowest HST rate among the tax rates for those participating provinces, and
3. in any other case, 5%, and

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

The tax deemed paid is included in subparagraph 259(1)(a)(iii) when calculating the non-creditable tax charged in respect of the property or service for the claim period.

69. For more information, refer to GST/HST Memorandum 9-3, Allowances.

Employee or volunteer reimbursements

70. A PSB is deemed under section 175 to have received a supply of property or a service when, in a claim period, the PSB reimburses an employee (or if the PSB is a charity or public institution, an employee or volunteer) for property or services acquired, imported or brought into a participating province by the employee (or volunteer) for consumption or use by the PSB and on which the employee paid the tax payable. The PSB is deemed to have paid, at the time the reimbursement is paid, tax in respect of the supply of the property or service equal to the amount determined by the formula:

A × B

where

A is the tax paid by the employee or volunteer in respect of the acquisition, importation or bringing into a participating province of the property or service by the employee or volunteer, and

B is the lesser of

1. the percentage of the cost to the employee or volunteer of the property or service that is reimbursed, and
2. the extent (expressed as a percentage) to which the property or service was acquired, imported or brought into the province by the employee or volunteer for consumption or use in relation to the activities of the PSB.

The tax deemed paid is included in subparagraph 259(1)(a)(iv) when calculating the non-creditable tax charged in respect of the property or service for the claim period.

71. In calculating the amount of tax paid in respect of a reimbursement, the amount may be based on the deemed tax paid (the calculation of deemed tax paid as shown in paragraph 70) or using a factor to determine the deemed tax paid. When the factor method is used, 90% or more of the supplies for which the reimbursement is paid must have been subject to the related tax rate. The method of calculation selected must be used consistently within each category of reimbursed amounts (for example, airfare, hotel accommodation, food, beverages and entertainment) throughout the fiscal year. For example, if a PSB chooses to calculate the tax paid in respect of airfare expenses for one employee based on a factor of deemed tax paid, the PSB must use the same method for such expenses reimbursed to all other employees during the fiscal year. The factor rates are lower than the tax rates in recognition of the fact that the total expenses may include tips, provincial sales tax and other amounts that are not subject to the GST/HST.

72. For more information, refer to GST/HST Memorandum 9-4, Reimbursements.

Deductions

73. A PSB may be entitled to input tax credits, rebates (other than the PSB rebate), refunds, remissions of tax or an adjustment for the tax paid or payable on property and services in a claim period. These amounts are included in subparagraphs 259(1)(b)(i) to (iii) and must be subtracted from the total tax charged in respect of the property or service (the total of all amounts mentioned in paragraphs 27 to 72 of this memorandum) when calculating the non-creditable tax charged in respect of property or a service for the claim period. Paragraphs 74 to 132 of this memorandum explain which amounts are included in subparagraphs 259(1)(b)(i) to (iii).

PSB is a registrant that can claim input tax credits

74. Under subsection 169(1), where a PSB acquires or imports property or a service, or brings it into a participating province, and, during a reporting period of the PSB in which it is a registrant, the GST/HST in respect of the property or service becomes payable by the PSB or is paid by the PSB without having become payable, the PSB may be eligible to claim an input tax credit in respect of the tax (including self-assessed GST/HST) to the extent (expressed as a percentage) the property or service was acquired, imported or brought into a participating province for consumption, use or supply in the course of the PSB’s commercial activities, where all of the other conditions for claiming an input tax credit are met.

75. Furthermore, under subsection 141.01(2), the PSB is deemed to have acquired property or a service for consumption or use in commercial activities only to the extent that the property or service is acquired for the purpose of making taxable supplies for consideration in the course of an endeavour of the PSB. To the extent that the property or service is acquired for the purpose of making supplies in the course of an endeavour that are not taxable supplies made for consideration or for a purpose other than making supplies, the PSB is deemed to have acquired the property or service for consumption or use otherwise than in commercial activities.

76. The amount of an input tax credit that the PSB is eligible to claim in respect of property or a service is included in subparagraph 259(1)(b)(i). As a result, this amount is deducted from the amount determined under paragraph 259(1)(a) when calculating the non-creditable tax charged in respect of the property or service for the claim period.

77. For more information on input tax credit eligibility, refer to GST/HST Memorandum 8-1, General Eligibility Rules.

Simplified accounting methods

78. Where a registrant PSB uses the net tax calculation for charities or the special quick method of accounting for PSBs, the PSB cannot claim as input tax credits the GST/HST paid or payable on most supplies of property and services that it acquires, imports or brings into a participating province. However, the PSB is still entitled to claim a PSB rebate of the GST/HST paid or payable on eligible property and services, including tax that is not eligible for an input tax credit due to the net tax calculation for charities or the special quick method calculation.

79. For more information, refer to GST/HST Info Sheet GI-066, How a Charity Completes its GST/HST Return, or go to Special quick method of accounting for public service bodies.

Other rebates

80. A PSB may be entitled to claim other rebates instead of, or in addition to, the PSB rebate to recover some or all of the GST/HST paid or payable on a purchase of property or a service. If the PSB is entitled to claim a rebate, other than the PSB rebate, of an amount included in paragraph 259(1)(a), the amount of this other rebate is included in subparagraph 259(1)(b)(ii). As a result, this amount is deducted from the amount determined under paragraph 259(1)(a) when calculating the non-creditable tax charged in respect of the property or service for the claim period.

Rebate for printed books

81. Under subsection 259.1(2), a PSB that is a specified person may be eligible to claim a 100% rebate of the GST or the federal part of the HST payable on the acquisition or importation of specified property.

82. Specified property for the purposes of the federal printed book rebate is defined in subsection 259.1(1) and means one of the following:

• a printed book or an update of such a book
• an audio recording all or substantially all of which is a spoken reading of a printed book
• a bound or unbound printed version of scripture of any religion

83. Specified person for the purposes of the federal printed book rebate is defined in subsection 259.1(1) and means one of the following:

• a municipality
• a school authority
• a university
• an organization that operates a post-secondary college or post-secondary technical institute
  • that receives from a government or municipality funds that are paid for the purpose of assisting the organization in the ongoing provision of educational services to the general public, and
  • the primary purpose of which is to provide programs of instruction in one or more fields of vocational, technical or general education
• a charity, public institution or qualifying NPO that operates a public lending library
• a prescribed charity, or a prescribed qualifying NPO, the primary purpose of which is the promotion of literacy

84. The federal printed book rebate is not available if one of the following applies:

• the specified person has acquired or imported the specified property for the purpose of supply by way of sale, including giving the specified property away for free, (refer to paragraph 85 of this memorandum for an exception to this restriction)
• for GST/HST that becomes payable after July 27, 2018, without having been paid on or before that day, the specified person has acquired or imported the specified property for the purpose of transferring ownership of the specified property as part of a single supply of another property or service

85. Pursuant to paragraph 259.1(2)(a), prescribed charities and prescribed qualifying NPOs whose primary purpose is the promotion of literacy can claim a 100% rebate of the GST or the federal part of the HST under subsection 259.1(2) if the specified property was acquired or imported to be given away for free.

86. The specified person must file the application for the federal printed book rebate within 4 years after the end of the claim period in which the tax became payable.

87. If, in a claim period, the GST/HST was paid or payable by a PSB on a purchase of specified property and the PSB is entitled to claim a federal printed book rebate under subsection 259.1(2), the amount of the rebate is included in subparagraph 259(1)(b)(ii). As a result, this amount is deducted from the amount determined under paragraph 259(1)(a) when calculating the non-creditable tax charged in respect of the specified property for the claim period.

88. The rebate of the GST or the federal part of the HST under subsection 259.1(2) is distinct from the point-of-sale rebate of the provincial part of the HST that is available in the participating provinces to all persons who purchase qualifying printed books, audio recordings and printed scripture (refer to Example 26 of this memorandum). If a specified person purchases specified property that is subject to a point-of-sale rebate of the provincial part of the HST, the specified person cannot claim a rebate under subsection 259.1(2) of the provincial part of the HST.

89. The point-of-sale rebate for books was not available in Newfoundland and Labrador from January 1, 2017, to December 31, 2017. If a specified person is eligible to claim a rebate of the federal part of the HST payable in 2017 under subsection 259.1(2), it is also eligible to claim a rebate of the provincial part of the HST payable in 2017 for printed books, audio recordings of printed books and printed versions of religious scriptures that it purchased, imported or brought into Newfoundland and Labrador. As of January 1, 2018, the point-of-sale rebate for books was reinstated in Newfoundland and Labrador.

90. For more information, refer to GST/HST Memorandum 13-4, Rebates for Printed Books, Audio Recordings of Printed Books, and Printed Versions of Religious Scriptures, Guide RC4034 and GST/HST Notice 309, Amendments to the Printed Book Rebate – Questions and Answers.

Rebate for property or services exported by a charity or public institution

91. Under section 260, a charity or a public institution may claim a 100% rebate of the GST/HST paid on purchases of property or services that are exported from Canada by the charity or public institution.

92. The charity or public institution must file the application for the rebate within four years after the end of its fiscal year in which tax in respect of the supply of the property or service became payable.

93. If, in a claim period, a charity or public institution paid the GST/HST on a purchase of property or a service that it exported from Canada and is entitled to a rebate under section 260, the amount of the rebate is included in subparagraph 259(1)(b)(ii). As a result, this amount is deducted from the amount determined under paragraph 259(1)(a) when calculating the non-creditable tax charged in respect of the property or service for the claim period.

94. For more information, refer to Guide RC4034 and GST/HST Policy Statement P-132, 100% Rebate for Exports by a Charity or a Public Institution.

Tangible personal property acquired in a participating province and removed to another province

95. Under the provisions of subsection 261.1(1) and Part 5 of the New Harmonized Value-added Tax System Regulations, No. 2, a PSB that purchases tangible personal property in a participating province, pays HST on the property and removes the property within 30 days after delivery to a non-participating province or a participating province with a lower rate of HST for consumption, use or supply exclusively (more than 90%) in that province, may be entitled to a rebate of some or all of the provincial part of the HST paid on the property.

The rebate is determined by the formula:

A − B

where

A is the amount of the provincial part of the HST paid on the supply; and

B is

• zero if the property or service is a specified item (refer to paragraph 42) for the participating province, or
• in any other case, the amount of the provincial part of the HST that would have become payable by the person for the supply if that tax were calculated at the provincial rate for the other province^{Footnote 4}.

96. If, in a claim period, the PSB is entitled to a rebate under subsection 261.1(1) of the provincial part of the HST, or a portion of the provincial part of the HST, the amount of the rebate is included in subparagraph 259(1)(b)(ii). As a result, this amount is deducted from the amount determined under paragraph 259(1)(a) when calculating the provincial non-creditable HST charged in respect of the property for the claim period.

97. In order to claim the rebate under section 261.1, the PSB must pay any applicable provincial levies in respect of the property.

98. The PSB must file the application for the rebate within one year after the day the PSB removed the property from the participating province. The PSB will claim this rebate by completing Form GST495, Rebate Application for Provincial Part of Harmonized Sales Tax (HST).

99. For more information, refer to Form GST495.

Tangible personal property imported by resident of a participating province for use in another province

100. Under the provisions of section 261.2 and Part 5 of the New Harmonized Value-added Tax System Regulations, No. 2, a PSB resident in a particular participating province may be entitled to a rebate of all or part of the provincial part of the HST it paid on tangible personal property imported at a place in another province for consumption or use exclusively in any province (other than the particular participating province).

The rebate is determined by the formula:

A – B

where

A is the amount of the provincial part of the HST paid under subsection 212.1(2) on the supply; and

B is

• zero if the property or service is a specified item (refer to paragraph 42) for the province, or
• in any other case, the amount of the provincial part of the HST that would have become payable under subsection 212.1(2) by the person for the supply if that tax were calculated at the provincial rate for the other province.

101. If, in a claim period, the PSB is eligible for a rebate under subsection 261.1(2) of the provincial part of the HST or a portion of the provincial part of the HST, the amount of the rebate is included in subparagraph 259(1)(b)(ii). As a result, this amount is deducted from the amount determined under paragraph 259(1)(a) when calculating the provincial non-creditable HST charged in respect of the property for the claim period.

102. In order to claim the rebate under section 261.2, the PSB must pay any applicable provincial levies in respect of the property.

103. The PSB must file the application for the rebate within one year after the day the tax became payable. The PSB will claim this rebate by completing Form GST189, General Application for Rebate of GST/HST (using code 12).

Intangible personal property or services acquired in a participating province for use in another province

104. Under the provisions of section 261.3 and Part 5 of the New Harmonized Value-added Tax System Regulations, No. 2, a PSB may be entitled to a rebate of all or part of the provincial part of the HST it paid on acquisitions of intangible personal property or services if the supply of the intangible personal property or services is made in a particular participating province and is intended to be consumed, used or supplied a total of 10% or more in one or more non-participating provinces or participating provinces with a lower rate of HST.

The rebate available under section 261.3 is determined by the formula:

A − B

where:

A is the amount of the provincial part of the HST that becomes payable for the supply; and

B is the total of all amounts, each of which is determined for a participating province by the formula:

C × D

where:

C is

• zero if the property or service is a specified item (refer to paragraph 42) for the participating province, or
• in any other case, the provincial part of the HST that would have become payable by the person for the supply if that tax were calculated on the amount of consideration for the supply,
  • at the tax rate for the participating province, if the tax rate for the participating province is lower than the tax rate for the particular participating province, or
  • in any other case, at the tax rate for the particular participating province, and

D is the extent (expressed as a percentage) to which the PSB acquired the property or service for consumption, use, or supply in the participating province.

105. If, in a claim period, the PSB is entitled to a rebate under section 261.3, the amount of the rebate is included in subparagraph 259(1)(b)(ii). As a result, this amount is deducted from the amount determined under paragraph 259(1)(a) when calculating the provincial non-creditable HST charged in respect of the property or service for the claim period.

106. The PSB must file the application for the rebate within one year after the day that tax became payable. The PSB will claim this rebate by completing Form GST189 (using code 13).

107. For more information, refer to Guide RC4033, General Application for GST/HST Rebates.

Rebates that are not included in non-creditable tax charged

Provincial point-of-sale rebate

108. Most participating provinces provide a point-of-sale rebate of the provincial part of the HST payable on qualifying items. When vendors provide a point-of-sale rebate of the provincial part of the HST, they only collect the 5% federal part of the HST on supplies of such items. If a PSB purchases qualifying items, the amount of the point-of-sale rebate cannot be included in the calculation of the provincial non-creditable HST charged in respect of the qualifying item for the claim period, pursuant to subsection 234(4). The remaining amount paid or payable (which is the federal part of the HST) may be included in subparagraph 259(1)(a)(i) when calculating the non-creditable GST charged in respect of the qualifying item for the claim period. If a PSB does not receive a point-of-sale rebate of the provincial part of the HST payable on a qualifying item from a vendor, the amount may be recovered as a rebate of an amount paid in error. Refer to the section “Rebate for amounts paid in error” of this publication for details on this rebate.

109. For a detailed description of the qualifying items, refer to “Reason code 16-Provincial point-of-sale rebate on qualifying items” in Guide RC4033.

New residential rental property rebate

110. Generally, a person that is a landlord may be eligible under section 256.2 to claim a new residential rental property (NRRP) rebate of some of the GST or federal part of the HST payable on a rental property (refer to paragraph 111 of this memorandum regarding rebate restrictions under subsection 256.2(9)) if, for residential rental purposes, any of the following situations apply:

• it purchased a newly constructed or substantially renovated residential complex from a builder
• it constructed, or hired someone else to build, a residential complex or an addition to a multiple unit residential complex
• it substantially renovated, or hired someone else to substantially renovate, a residential complex
• it converted a non-residential property into a residential complex
• it made an exempt lease or sublease of land to another person

111. Pursuant to subsection 256.2(9), a PSB that is eligible to claim a PSB rebate of any part of the tax payable on a residential rental property cannot claim the NRRP rebate of the GST or the federal part of the HST.

112. If the residential rental property is situated in British Columbia and the tax became payable before April 1, 2013, or if the residential rental property is situated in Ontario, in addition to the PSB rebate of some of the federal part of the HST, a PSB may be entitled under section 256.21 and Part 8 of the New Harmonized Value-added Tax System Regulations, No. 2 to claim a NRRP rebate of a portion of the provincial part of the HST.

113. A PSB in Ontario or, where the HST became payable before April 1, 2013, in British Columbia, may meet the conditions for claiming both a provincial NRRP rebate and a PSB rebate of the provincial part of the HST. In this case, the PSB is entitled to claim either the provincial NRRP rebate or the PSB rebate of the provincial part of the HST, whichever has the higher rebate rate. If a PSB chooses to claim the provincial NRRP rebate, the PSB cannot claim a PSB rebate of any of the provincial part of the HST payable on the last acquisition of the rental property.

114. For more information regarding the new residential rental property rebate and the filing deadlines for claiming the rebate, refer to Guide RC4231, GST/HST New Residential Rental Property Rebate.

Rebate for amounts paid in error

115. Under subsection 261(1), a PSB may receive a rebate if one of the following applies:

• it paid or remitted an amount as or on account of, or that was taken into account as, tax or net tax that it should not have paid or remitted, or that was more than it had to pay or remit
• it paid an amount as penalty, interest or any other similar obligation that was not payable or remittable

116. GST/HST paid in error is not tax, which is defined in subsection 123(1) as tax payable under Part IX. Therefore, GST/HST paid in error cannot be included in the calculation of non-creditable tax charged. As such, there is no non-creditable tax charged in respect of property or services where the GST/HST was paid in error in respect of the supply, importation or bringing into a participating province of the property or service. If a PSB has paid or remitted an amount as or on account of tax in error, it cannot claim a PSB rebate to recover this amount; rather, it must claim a rebate under section 261.

117. A PSB would only be entitled to a rebate under section 261 if the supplier does not refund, adjust or credit amounts paid as tax by the PSB. A PSB is not entitled to both a refund, adjustment or credit of an amount as tax from a supplier and a rebate from the CRA in respect of the same amount.

118. The PSB must file the application for the rebate within two years after the day the PSB paid or remitted the amount in error. The PSB will claim this rebate by completing Form GST189 (using code 1C).

119. For more information, refer to Guide RC4033.

PSB claims a PSB rebate for a claim period and becomes entitled to another rebate in a subsequent claim period

120. If, for a given claim period, a PSB is entitled to a rebate other than the PSB rebate, the amount of the other rebate must match up with a specific amount of tax included in paragraph 259(1)(a) in order to be included in subparagraph 259(1)(b)(ii). Entitlement to some rebates will arise at the same time as the GST/HST becomes payable. However, other rebates have conditions that may not be satisfied until some point in the future (for example, rebates under section 260 for property or services exported and section 261.1 for tangible personal property acquired in a participating province and removed to a non-participating province).

121. If a PSB is not entitled to another rebate with respect to an amount of the GST/HST at the time it claims a PSB rebate for the claim period in which that amount was paid or payable, that amount will not be included in subparagraph 259(1)(b)(ii). If the PSB then becomes entitled to another rebate (non-PSB) after having claimed a PSB rebate for that same tax, the other rebate will not impact the calculation of the non-creditable tax charged. However, pursuant to section 263, the other rebate would not be paid or granted to the PSB to the extent that the amount of tax has previously been rebated to the PSB. The part of the other rebate amount that was not previously rebated will not be included in subparagraph 259(1)(b)(ii) for the subsequent claim period as there is no corresponding amount of tax included in paragraph 259(1)(a) for that claim period.

PSB obtains a remission order

122. Subsection 23(2) of the Financial Administration Act gives the federal government the authority to grant remission orders. A remission order is an extraordinary measure whereby the federal government provides full or partial relief from a tax, penalty, or other debt, under certain circumstances, when such relief is not otherwise available under the existing laws. For example, on November 21, 2014, the federal government granted the 2015 Pan American and Parapan American Games Remission Order, which granted remission of certain customs duties and all or a portion of the GST/HST paid or payable on goods such as personal effects, goods for free distribution, display goods and equipment imported into Canada in connection with the games that were held in and around Toronto, Ontario, in 2015.

123. If a PSB has received a remission order for an amount of tax that is included in paragraph 259(1)(a) in a particular claim period, the amount of the remission is included in subparagraph 259(1)(b)(ii). As a result, this amount is deducted from the amount determined under paragraph 259(1)(a) when calculating the non-creditable tax charged in respect of the property or service for the claim period.

PSB receives a credit note or issues a debit note

124. A supplier is permitted to adjust, refund or credit the GST/HST in situations where an excess amount of tax has been charged or collected, or where consideration for a supply is reduced sometime after the tax has been charged or collected.

Excess tax charged or collected

125. Under subsection 232(1), where a supplier has charged to or collected from a PSB an amount as or on account of GST/HST in excess of the amount of tax collectible, the supplier may adjust the amount of tax charged where the excess amount was charged but not collected, or refund or credit the excess amount where the excess amount was charged and collected.

126. The supplier has up to two years after the day on which the excess amount was charged but not collected to adjust the amount of tax charged, or if the excess amount was collected, two years after the day on which it was collected to refund or credit the excess tax.

Reduction of consideration

127. Under subsection 232(2), where a supplier has charged to or collected GST/HST from a PSB and the consideration for the supply is subsequently reduced, the supplier may, on the portion of the consideration that was reduced, adjust the excess amount of tax charged but not collected, or refund or credit the excess amount of tax charged and collected.

128. The supplier has up to four years after the end of the reporting period in which the consideration was reduced to adjust the amount of tax charged or to refund or credit the excess amount of tax collected to the PSB.

Credit or debit notes

129. Under subsection 232(3), where a supplier adjusts, refunds or credits an amount of tax that is in excess of the amount of tax collectible, or adjusts, refunds or credits an excess amount of tax on consideration that has subsequently been reduced, to a PSB, the supplier must issue a credit note that includes the prescribed information listed in the Credit Note and Debit Note Information (GST/HST) Regulations, within a reasonable time to the PSB, unless the PSB first issues a debit note containing the prescribed information to the supplier.

130. If a PSB has received a credit note or has issued a debit note for an amount in respect of property or a service that is included in paragraph 259(1)(a) for a particular claim period, the amount of tax that is adjusted, refunded or credited is included in subparagraph 259(1)(b)(iii) for the particular claim period. As a result, this amount is deducted from the amount determined under paragraph 259(1)(a) when calculating the non-creditable tax charged in respect of the property or service for the particular claim period.

131. Under paragraph 232(3)(d), if a supplier adjusts, refunds or credits an amount of tax to a PSB after a PSB rebate has been paid to, or applied to a liability of the PSB, the PSB is required to pay the excess back to the Receiver General. The excess is equal to the difference between the rebate received and the amount of the rebate, if any, to which the PSB would have been entitled if the amount of tax that was refunded, adjusted or credited by the supplier had never been charged or collected from the PSB in the first place. The amount of tax that is adjusted, refunded or credited after a PSB rebate for a claim period has been paid to, or applied to a liability, of the PSB would not be included in subparagraph 259(1)(b)(iii) for any claim period.

132. For more information, refer to GST/HST Memorandum 12-2, Refund, Adjustment, or Credit of the GST/HST under Section 232 of the Excise Tax Act.

Non-creditable tax charged

133. Once all the calculations have been performed to determine the non-creditable GST charged/federal non-creditable HST charged and the provincial non-creditable HST charged for a claim period on a property-by-property, service-by-service basis, the PSB can calculate its PSB rebate of the GST, the federal part of the HST and the provincial part of the HST.

Calculating the PSB rebate for charities and qualifying non-profit organizations

134. The following GST/HST info sheets will assist a PSB that is a charity or a qualifying NPO in calculating its PSB rebate of the GST, the federal part of the HST, and the provincial part of the HST:

Charities

• GST/HST Info Sheet GI-173, Public Service Bodies’ Rebate for Charities Resident Only in New Brunswick
• GST/HST Info Sheet GI-174, Public Service Bodies’ Rebate for Charities Resident Only in Newfoundland and Labrador
• GST/HST Info Sheet GI-175, Public Service Bodies’ Rebate for Charities Resident Only in Nova Scotia
• GST/HST Info Sheet GI-176, Public Service Bodies’ Rebate for Charities Resident Only in Ontario
• GST/HST Info Sheet GI-177, Public Service Bodies’ Rebate for Charities Resident Only in Prince Edward Island
• GST/HST Info Sheet GI-178, Public Service Bodies’ Rebate for Charities Resident in One or More Non-participating Provinces
• GST/HST Info Sheet GI-179, Public Service Bodies’ Rebate for Charities Resident in Two or More Provinces, at Least One of Which is a Participating Province

Qualifying NPOs

• GST/HST Info Sheet GI-181, Public Service Bodies’ Rebate for Qualifying Non-Profit Organizations Resident Only in New Brunswick
• GST/HST Info Sheet GI-182, Public Service Bodies’ Rebate for Qualifying Non-Profit Organizations Resident Only in Newfoundland and Labrador
• GST/HST Info Sheet GI-183, Public Service Bodies’ Rebate for Qualifying Non-Profit Organizations Resident Only in Nova Scotia
• GST/HST Info Sheet GI-184 Public Service Bodies’ Rebate for Qualifying Non-Profit Organizations Resident Only in Ontario
• GST/HST Info Sheet GI-185, Public Service Bodies’ Rebate for Qualifying Non-Profit Organizations Resident Only in Prince Edward Island
• GST/HST Info Sheet GI-186, Public Service Bodies’ Rebate for Qualifying Non-Profit Organizations Resident in One or More Non-participating Provinces
• GST/HST Info Sheet GI-187, Public Service Bodies’ Rebate for Qualifying Non-Profit Organizations Resident in Two or More Provinces, at Least One of Which is a Participating Province

Further information