Excise and GST/HST News - No. 105

December 2018

Table of Contents

• Cannabis excise duty
  • Excise Act, 2001 draft regulatory and legislative proposals
  • More information
• Bill C-86 − Budget Implementation Act, 2018, No. 2
• Draft tax legislation − GST/HST holding corporation rules
• Greenhouse Gas Pollution Pricing Act
• New online filing option for the GST/HST new housing rebate for owner-built homes
• New email notifications from the CRA
• Prescribed rates of interest
• What’s new in publications
• Contact us

Cannabis excise duty

As mentioned in the Excise and GST/HST News No. 104, Bill C 74, The Budget Implementation Act, 2018, No. 1, received royal assent on June 21, 2018. This act implemented a number of measures including amendments to the Excise Act, 2001 relating to cannabis excise duty. The amendments provide for a new federal excise duty framework on most legally available cannabis products. The Government of Canada subsequently announced the coming into force date of October 17, 2018, for the legalization of non‑medical cannabis.

As of October 17, 2018, a cannabis licence under the Excise Act, 2001 is required to cultivate, produce or package cannabis products. Please refer to Excise Duty Notice EDN52, Obtaining and Renewing a Cannabis Licence for information. Entities who have not been issued a cannabis license by the Canada Revenue Agency (CRA) as of October 17, 2018 who possess non-duty paid cannabis products will not be compliant with the Excise Act, 2001, and could be subject to enforcement action, including seizure and destruction of all cannabis products.

Licenced cultivators, producers, or packagers of cannabis or cannabis products must file a return by completing Form B300, Cannabis Duty and Information Return for each calendar month. Cannabis licensees should send the completed return to the CRA no later than the last day of the month that follows the calendar month to which the return relates. For example, persons accounting for cannabis excise duty starting in October 2018 must file their return for October by November 30, 2018. Even if there is nothing to report for a calendar month, licensees must send the completed return by the deadline.

Excise Act, 2001 draft regulatory and legislative proposals

On September 17, 2018, the Department of Finance released for consultation a set of draft regulatory and legislative proposals under the Excise Act, 2001 that would provide for the additional cannabis duty rates for each province or territory that has signed a Coordinated Cannabis Taxation Agreement with the Government of Canada, and in certain provinces, an adjustment to the additional cannabis duty rate.

These rates were effective October 17, 2018, when non‑medical cannabis became available for legal retail sale. Please refer to Excise Duty Notice EDN55, Calculation of Cannabis Duty and Additional Cannabis Duty on Cannabis Products for more detailed information.

Canadians were invited to provide comments by October 17, 2018, on additional regulatory proposals that would provide:

• exemptions for certain entities to allow the possession in a jurisdiction of cannabis products stamped for a different jurisdiction, under certain conditions;
• the ability for third parties to possess cannabis excise stamps for specific purposes; and
• exemptions from the proposed excise duty for certain cannabis-based products that are not intended for human consumption.

More information

Cultivators, producers and packagers of cannabis products should refer to the following technical information and forms the CRA has recently published for cannabis duty licensees:

Excise Duty Notices:

• EDN52, Obtaining and Renewing a Cannabis Licence
• EDN53, General Information for Cultivators, Producers and Packagers of Cannabis Products
• EDN54, General Overview of the Cannabis Excise Stamps
• EDN55, Calculation of Cannabis Duty and Additional Cannabis Duty on Cannabis Products

Forms:

• B300, Cannabis Duty and Information Return
• B301, Application for a Refund of Cannabis Duty
• L300, Cannabis Licence Application
• L300SCHA, Schedule A - Other Business Location(s) (to support a cannabis licence application)
• L300SCHB, Schedule B – Information Relating to Individuals, Partners, Directors, Officers or Shareholders (to support a Cannabis Licence Application)
• L301, Registration for the Cannabis Stamping Regime
• L302, Surety Bond for Cannabis

To remain up to date with the new excise duty technical publications go to the CRA electronic mailing lists web page and subscribe to the Excise Technical Publications mailing list.

For general information regarding the cannabis excise duties on cannabis products please go to canada.ca/cannabis-excise. To make a general enquiry on the application of excise duty on cannabis products call 1-866-330-3304 or send an email to cannabis@cra-arc.gc.ca. Please do not include any confidential information in your email.

Bill C-86 − Budget Implementation Act, 2018, No. 2

On November 6, 2018, Bill C-86, the Budget Implementation Act, 2018, No. 2, received second reading.  Bill C-86 includes most of the draft legislative proposals released on July 27, 2018 relating to outstanding measures announced in the 2018 federal budget as well as various other previously announced GST/HST legislative proposals and other measures relating to the Excise Tax Act, the Air Travellers Security Charge Act and the Excise Act, 2001.

These measures include:

Carbon emission allowances

Proposed measures previously announced on June 27, 2018, relate to the manner in which GST/HST is to be paid and reported in respect of taxable supplies of carbon emission allowances made in Canada, such as those traded in cap-and-trade systems. Information on these measures was published in Excise and GST/HST News, No. 104.

Investment limited partnerships

Proposed measures include legislative and regulatory changes which were announced on September 8, 2017 and in the 2018 federal budget. More information is published in Excise and GST/HST News, No. 104.

Excise duty on cannabis

Proposed measures include an amendment to the definition of dutiable amount in the Excise Duties on Cannabis Regulations and minor amendments to two penalty provisions to ensure consistency between the English and French versions of the Excise Act, 2001.

GST/HST printed book rebate for certain public service bodies

Proposed amendments include changes that pertain to the rules governing the printed book rebate available to certain public service bodies. The proposed amendments are intended to clarify that a specified person would generally be ineligible for a printed book rebate when the person intends to transfer ownership of the printed book or other specified property as part of a single supply of another property or service.

Reassessment period – requirement for information and compliance orders

Proposed measures relate to the Excise Tax Act, Excise Act, 2001 and the Air Travellers Security Charge Act. These measures propose to introduce a "stop-the-clock" rule for requirements for information served to taxpayers and for compliance orders and would extend the reassessment period of a taxpayer by the period of time during which the requirement or compliance order is contested.

Unlicensed diesel wholesalers – excise tax rebate

Proposed measures would allow a vendor to claim an excise tax rebate on diesel fuel sold for the generation of electricity (subject to certain restrictions), provided the quantity of the diesel fuel is at least 1,000 litres. Currently it is only the purchaser that can claim such a rebate.

Sharing information for criminal matters

Proposed measures would facilitate the sharing of information for criminal matters by:

• allowing the legal tools available under the Mutual Legal Assistance in Criminal Matters Act to be used with respect to the sharing of criminal tax information under Canada's tax treaties, Tax Information Exchange Agreements and the Convention on Mutual Administrative Assistance in Tax Matters;
• enabling the sharing of tax information under mutual legal assistance agreements in respect of acts that, if committed in Canada, would constitute offences listed in the Criminal Code; and
• enabling confidential information under Part IX of the Excise Tax Act and the Excise Act, 2001 to be disclosed to Canadian police officers in respect of offences listed in the Criminal Code.

Draft tax legislation − GST/HST holding corporation rules

Draft legislative proposals relating to GST/HST holding corporation rules were released by the Department of Finance on July 27, 2018. Proposed changes relate to the rules that allow holding corporations to claim input tax credits in respect of the GST/HST paid or payable on certain inputs that could reasonably be regarded as being in relation to the shares or indebtedness of a related corporation if the related corporation meets a property test. This test requires all or substantially all of the property of the related corporation to have been property acquired, imported or brought into a participating province for consumption, use or supply in the course of its commercial activities.

Generally, it is proposed that the property test would be amended, to instead require that all or substantially all of the property of the related corporation be property manufactured, produced, acquired, imported or brought into a participating province for consumption, use or supply in the course of its commercial activities. This amendment would also apply to the “takeover fees rule” in subsection 186(2) of the Excise Tax Act. The amendment would apply prior to July 28, 2018 as well as after July 27, 2018.

Also, it is proposed that effective July 28, 2018, more specific requirements would be used for determining whether a holding corporation may be eligible for an input tax credit in respect of the GST/HST paid or payable for a particular input based on the purpose for which the input was acquired.

These proposed amendments were not included in Bill C-86.

Greenhouse Gas Pollution Pricing Act

The Budget Implementation Act, 2018, No. 1, which received royal assent on June 21, 2018, contains the Greenhouse Gas Pollution Pricing Act that outlines the federal carbon pollution pricing system. As part of the Government of Canada’s initiative to implement a federal greenhouse gas emissions pricing structure, and taking into consideration provincial greenhouse gas emissions pricing systems, the Government has developed a federal carbon pollution pricing system composed of a fuel charge that applies on fossil fuels and an output‑based pricing system for industrial facilities.

On October 23, 2018, the Department of Finance Canada announced the next steps in the Government of Canada’s climate change plan including draft regulations amending Part 1 of Schedule 1 and Schedule 2 to the Greenhouse Gas Pollution Pricing Act and draft amendments to the Fuel Charge Regulations. 

The federal system will apply in provinces and territories where a carbon pricing mechanism has not been put into place or where the pricing mechanism does not meet the federal standard. As proposed, the CRA will be responsible for administering and enforcing the fuel charge component of the federal system beginning April 2019 in Manitoba, New Brunswick, Ontario and Saskatchewan, and July 2019 in Yukon and Nunavut.

Persons that have business activities in a listed province, such as producers, distributors, emitters, importers or certain users of fuel and combustible waste, as well as persons that are air, marine, rail or road carriers, may have to apply for registration with the CRA for the purposes of the fuel charge. Unless otherwise specified, the CRA recommends that applications for registration be submitted prior to the implementation of the fuel charge on April 1, 2019 for the proposed listed provinces of Manitoba, New Brunswick, Ontario and Saskatchewan and July 1, 2019 for the proposed listed provinces of Nunavut and Yukon.

Detailed information notices regarding the fuel charge will be published shortly.

New online filing option for the GST/HST new housing rebate for owner-built homes

Have you recently built or substantially renovated your home? If so, you may be eligible for a GST/HST new housing rebate. The new housing rebate for owner-built homes allows an individual to recover some of the GST/HST paid to construct or substantially renovate their home. Effective October 22, 2018, you are able to file an application for this rebate online using your CRA My Account. This option will be available on the main page of your My Account profile under Related Services.

For complete details and information on all eligibility requirements for the GST/HST new housing rebate for owner-built homes, refer to Guide RC4028, GST/HST New Housing Rebate, or go to GST/HST rebates. For more information go to My Account.

New email notifications from the CRA

In June 2018 the CRA launched an improved email notification service for businesses. This service sends email notifications when there is mail to view in My Business Account and when important changes are made to your account information.

When you sign up for email notifications from the CRA, we will send you an email to confirm your registration. After that, we will send you an email when:

• you have new mail to view in My Business Account;
• your address is changed;
• your banking information for direct deposit is changed; or
• mail sent to you by the CRA has been returned, meaning you need to update your mailing address.

To register for this service, go to My Business Account, select “Manage notification preferences”, and add your email address. If you were registered for our old “Online mail” service, you were automatically registered to receive email notifications from the CRA. If you would like to stop receiving these notifications, log into My Business Account and remove your email address.

For more information, go to Email notifications from the CRA - Businesses.

Prescribed rates of interest

The prescribed annual rate of interest in effect from January 1, 2019 to March 31, 2019, on overdue amounts payable to the Minister is 6%. The prescribed annual rate of interest on amounts owed by the Minister (such as, rebates or refunds) is 2% for corporate taxpayers and 4% for non-corporate taxpayers. These rates are applicable to income tax, excise tax, the softwood lumber products export charge, GST/HST, the air travellers security charge (ATSC) and excise duty on wine, spirits, tobacco and cannabis.

The prescribed annual rate of interest respecting excise duty on beer, on overdue amounts payable for the indicated period, is set at 4%. Refund interest rates are not applicable for amounts owed by the Minister (such as, rebates or refunds) for excise duty that is in relation to beer.

Prescribed interest rates for previous years are available on Canada.ca at Prescribed interest rates.

What’s new in publications

The following is a list of new or revised excise and GST/HST forms and publications.

Excise forms

• B249 Air Travellers Security Charge Return
• B273 Excise Return - Cigarette Inventory Tax
• B300 Cannabis Duty and Information Return under Excise Act, 2001
• RC627 Agreement Among Related or Associated Brewers for the Allocation of Production Volume Limits
• RC633 Beer Revenue Worksheet
• RC634 Credit Claim Worksheet

Excise duty circulars

• ED212-11 Application of Rates of Excise Duty on the First 75,000 Hectolitres of Beer Brewed in Canada
• ED212-12 Related or Associated Persons Rules for Brewers

Excise duty memoranda

• EDM1-1-2 Regional Excise Duty Offices (revised)

Excise duty notices

• EDN52 Obtaining and Renewing a Cannabis Licence
• EDN53 General Information for Cultivators, Producers and Packagers of Cannabis Products
• EDN54 General Overview of the Cannabis Excise Stamps
• EDN55 Calculation of Cannabis Duty and Additional Cannabis Duty on Cannabis Products

GST/HST guides

• RC4022 General Information for GST/HST Registrants
• RC4027 Doing Business in Canada - GST/HST Information for Non-Residents

GST/HST info sheets

• GI-118 Builders and GST/HST NETFILE

GST/HST memoranda

• 3-6 Conversion of Foreign Currency

GST/HST notices

• NOTICE308 GST/HST and Investment Limited Partnerships

GST/HST forms

• GST29 Educational Services - Election and Revocation of the Election to Make Certain Supplies Taxable
• GST30 Election for Passenger Vehicles or Aircraft to be Deemed to be Used Exclusively in Non-Commercial Activities
• GST31 Application by a Public Service Body to Have Branches or Divisions Designated as Eligible Small Supplier Divisions
• GST32 Application to Deem One Unincorporated Organization to Be a Branch of Another Unincorporated Organization
• GST44 Election Concerning the Acquisition of a Business or Part of a Business
• GST59 GST/HST Return for Imported Taxable Supplies, Qualifying Consideration, and Internal and External Charges
• GST60 GST/HST Return for Purchase of Real Property or Carbon Emission Allowances
• GST66 Application for GST/HST Public Service Bodies' Rebate and GST Self-Government Refund
• GST70 Election or Revocation of an Election to Change a GST/HST Fiscal Year
• GST71 Notification of Accounting Periods for GST/HST
• GST74 Election and Revocation of an Election to Use the Quick Method of Accounting
• GST111 Financial Institution GST/HST Annual Information Return
• GST145 Waiver of the Limitation Period for Assessment
• GST146 Notice of Revocation of Waiver
• GST189 General Application for Rebate of GST/HST
• GST190A GST/HST New Housing Rebate - Appendix A
• GST191 GST/HST New Housing Rebate Application for Owner-Built Houses
• GST192 GST/HST Transitional Rebate Application for Builders of New Housing on Leased Land
• GST193 GST/HST Transitional Rebate Application for Purchasers of New Housing
• GST287 Election or Revocation of the Election by Public Service Bodies to Use the Special Quick Method of Accounting
• GST288 Supplement to Forms GST189 and GST498
• GST303 Application to Offset Taxes by Refunds or Rebates
• GST322 Certificate of Government Funding
• GST367 Endorsement to the Bond for Non-Resident Person Without a Permanent Business Establishment in Canada
• GST370 Employee and Partner GST/HST Rebate Application
• GST386 Rebate Application for Conventions
• GST488 Election or Revocation of an Election Not to Use the Net Tax Calculation for Charities
• GST489 Return for Self-Assessment of the Provincial Part of Harmonized Sales Tax (HST)
• GST494 Goods and Services Tax/Harmonized Sales Tax (GST/HST) Final Return for Selected Listed Financial Institutions
• GST495 Rebate Application for Provincial Part of Harmonized Sales Tax (HST)
• GST498 GST/HST Rebate Application For Foreign Representatives, Diplomatic Missions, Consular Posts, International Organizations, Or Visiting Forces Units
• GST499-1 First Nations Tax (FNT) Schedule
• GST502 Election and Revocation of Election Between Auctioneer and Principal
• GST506 Election and Revocation of an Election Between Agent and Principal
• GST507 Third Party Authorization and Cancellation of Authorization for GST/HST Rebates
• GST518 GST/HST Specially Equipped Motor Vehicle Rebate Application
• GST523-1 Non-profit organizations - Government Funding
• GST524 GST/HST New Residential Rental Property Rebate Application
• GST525 Supplement to the New Residential Rental Property Rebate Application - Co-op and Multiple Units
• GST528 Authorization to Use an Export Distribution Centre Certificate
• GST531 Return for Self-Assessment of the First Nations Goods and Services Tax (FNGST)
• GST532 Agreement and Revocation of an Agreement Between Supplier and Constructive Importer
• RC1 Request for a Business Number
• RC59 Business Consent for Offline Access
• RC59X Cancel Business Consent or Delegated Authority
• RC151 GST/HST Credit Application for Individuals Who Become Residents of Canada
• RC4530 Election or Revocation of an Election to Use a Production Proxy to Report the Recapture of Input Tax Credits
• RC4531 Election or Revocation of an Election to Use the Estimation and Reconciliation Method to Report the Recapture of Input Tax Credits
• RC4600 Election or Revocation of an Election Under Subsection 217.2(1)
• RC4607 GST/HST Pension Entity Rebate Application and Election
• RC4616 Election or Revocation of an Election for Closely Related Corporations and/or Canadian Partnerships to Treat Certain Taxable Supplies as Having Been Made for Nil Consideration for GST/HST Purposes
• RC4618 Election or Revocation of an Election for GST/HST Purposes to have a Pension Entity be the Designated Pension Entity in Respect of a Master Pension Entity
• RC7000-PE Prince Edward Island Provincial Sales Tax Transitional New Housing Rebate
• RC7001-PE Prince Edward Island Provincial Sales Tax Transitional New Housing Rebate - Residential Condominiums
• RC7002-PE Prince Edward Island Provincial Sales Tax Transitional New Housing Rebate - Apartment Buildings
• RC7003-PE Prince Edward Island Provincial Sales Tax Transitional New Housing Rebate for Non-registrant First Resellers
• RC7003-ON Ontario Retail Sales Tax (RST) Transitional New Housing Rebate for Non-registrant First Resellers
• RC7004-BC British Columbia Transition Tax Rebate
• RC7066-SCH Provincial Schedule - GST/HST Public Service Bodies' Rebate
• RC7190-BC GST190 British Columbia Rebate Schedule
• RC7190-NS GST190 Nova Scotia Rebate Schedule
• RC7190-ON GST190 Ontario Rebate Schedule
• RC7190-WS GST190 Calculation Worksheet
• RC7191-BC GST191 British Columbia Rebate Schedule
• RC7191-ON GST191 Ontario Rebate Schedule
• RC7207 GST/HST Rebate Application and Election for GST/HST and QST Purposes for Pension Entities that are Selected Listed Financial Institutions
• RC7207-1 QST Rebate Application and Election for Pension Entities that are Selected Listed Financial Institutions for GST/HST Purposes Only
• RC7218 Elections or Revocation of Elections for GST/HST and/or QST Purposes to Designate a Pension Entity that is a Selected Listed Financial Institution in Respect of a Master Pension Entity
• RC7220 Election for GST/HST and QST Reporting Period for a Selected Listed Financial Institution
• RC7220-1 Notice of Revocation of an Election for GST/HST and QST Reporting Period by a Selected Listed Financial Institution
• RC7244 Elections Concerning the Acquisition of a Business or Part of a Business by a Recipient that is a Selected Listed Financial Institution for QST Purposes
• RC7245 Waiver of the Limitation Period for Assessment of a Selected Listed Financial Institution
• RC7246 Notice of Revocation of Waiver for Selected Listed Financial Institution (subsection 298(8) of the Excise Tax Act and section 25.3 of the Tax Administration Act)
• RC7257 Third Party Authorization and Cancellation of Authorization for GST/HST and QST Rebates for Selected Listed Financial Institutions
• RC7259 Business Consent for Certain Selected Listed Financial Institutions
• RC7259X Cancel Business Consent or Delegated Authority for Certain Selected Listed Financial Institutions
• RC7260 GST/HST and QST Return for Purchase of Real Property/Immovable or Carbon Emission Allowances by a Selected Listed Financial Institution
• RC7270 Election or Revocation of an Election to Change a GST/HST and QST Fiscal Year for a Selected Listed Financial Institution
• RC7271 Notification of Accounting Periods of a Selected Listed Financial Institution for GST/HST and QST
• RC7291 GST/HST and QST Annual Information Return for Selected Listed Financial Institutions
• RC7294 GST/HST and QST Final Return for Selected Listed Financial Institutions
• RC7301 Request for a business number and certain program accounts for certain selected listed financial institutions
• RC7321 Delegation of Authority for Certain Selected Listed Financial Institutions
• RC7524-BC GST524 British Columbia Rebate Schedule
• RC7524-ON GST524 Ontario Rebate Schedule

All GST/HST, excise duty and excise taxes and special levies publications can be found on the CRA website. Go to the Technical information – GST/HST, Excise taxes and other levies and Excise duty and webpages.

To receive email notification as soon as a document is published on the CRA website, go to electronic mailing lists and subscribe to the RSS feed for all new CRA publications and forms, or subscribe to any number of mailing lists for different types of publications.

Contact us

The Excise and GST/HST News is published quarterly and highlights recent developments in the administration of the GST/HST, First Nations goods and services tax (FNGST) and First Nations tax (FNT), air travellers security charge (ATSC) as well as excise taxes and duties. If you would like to receive a link to each new edition of the Excise and GST/HST News as it is published, subscribe to the electronic mailing list.

This publication is provided for information purposes only and does not replace the law, either enacted or proposed. Please note that any commentary in this newsletter regarding proposed measures should not be taken as a statement by the CRA that such measures will in fact be enacted into law in their current form. Comments or suggestions about the newsletter should be sent to the Editor, Excise and GST/HST News, Legislative Policy and Regulatory Affairs Branch, CRA, Ottawa, ON K1A 0L5.