FEDERAL REG

SOR/2016-306: Regulations Amending Various GST/HST Regulations, No. 10

REGISTRATION OF FEDERAL REGULATION - VIA OIC DATABASE, PRIOR TO PART II OF THE GAZETTE

Registered
December 2, 2016


REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Regulations.) Issues On April 14, 2016, the Government of Newfoundland and Labrador announced its intention to eliminate the provincial point-of-sale rebate of the Newfoundland and Labrador component of the Harmonized Sales Tax (HST) for books, effective January 1, 2017. Currently, the Newfoundland and Labrador component of t... (Click for more)


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Published on December 2, 2016

Bill Summary

SOR/2016-306: Regulations Amending Various GST/HST Regulations, No. 10

REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Regulations.) Issues On April 14, 2016, the Government of Newfoundland and Labrador announced its intention to eliminate the provincial point-of-sale rebate of the Newfoundland and Labrador component of the Harmonized Sales Tax (HST) for books, effective January 1, 2017. Currently, the Newfoundland and Labrador component of the HST is 10%. With the passage of the Provincial Choice Tax Framework Act on December 15, 2009, Parliament approved that regulations would serve as the mechanism to facilitate a change to HST rules related to a point-of-sale rebate of the provincial component of the HST. Amendments to existing Goods and Services Tax/Harmonized Sales Tax (GST/HST) regulations (see titles in the Description section below) are therefore required in order to implement the decision of Newfoundland and Labrador to eliminate the point-of-sale rebate of its provincial component of the HST for books. Background The HST is imposed in participating provinces under federal legislation and administration. The Comprehensive Integrated Tax Coordination Agreements (CITCAs) between the Government of Canada and each of the participating provinces detail the parameters that govern the imposition of the HST. Under the CITCAs, each participating province may exercise some flexibility in certain areas covered by the agreement, such as establishing the rate of its provincial component of the HST and limited provincial point-of-sale rebates of the provincial component of the HST. Objectives The Regulations Amending Various GST/HST Regulations, No. 10 (the Amending Regulations) amend existing GST/HST regulations made under the Excise Tax Act (the Act) to formalize and give legal effect to the decision of Newfoundland and Labrador to eliminate the provincial point-of-sale rebate of the Newfoundland and Labrador component of the HST for books. Description The Amending Regulations contain rules relating to the harmonized value-added tax system. Specifically, the Amending Regulations include amendments to the following regulations: Deduction for Provincial Rebate (GST/HST) Regulations; and New Harmonized Value-added Tax System Regulations, No. 2. Deduction for Provincial Rebate (GST/HST) Regulations Provinces participating in the HST framework have the flexibility of designating a limited number of provincial point-of-sale rebates of an amount equal to the provincial component of the HST paid or payable in respect of a taxable supply of property or a service. These Regulations facilitate the crediting, at the point of sale, of a rebate of the provincial component of the HST on items that the participating provinces provide to purchasers of those items. Federal regulations are required to facilitate the delivery of these rebates at the point of sale (e.g. to allow the vendor to refund the purchaser directly at the point of sale). These Regulations are amended consequential to Newfoundland and Labrador’s decision to eliminate the point-of-sale rebate for books, as announced by the province on April 14, 2016. In particular, these Regulations are amended by removing printed books and related items (e.g. an audio recording of a spoken reading of a printed book) from the province’s listed point-of-sale rebates, effective January 1, 2017. New Harmonized Value-added Tax System Regulations, No. 2 These Regulations are amended consequential to Newfoundland and Labrador’s decision to eliminate the provincial point-of-sale rebate for books. In particular, the amendments adapt the rules relating to another existing rebate (i.e. the “printed book rebate”) under the Excise Tax Act to extend it to include the provincial component of the HST in Newfoundland and Labrador. The printed book rebate is a rebate of the GST that can be claimed for printed books (including audio recordings of printed books and printed versions of religious scriptures) acquired by public libraries, educational institutions, as well as charities and qualifying non-profit organizations prescribed by regulations and whose primary purpose is the promotion of literacy. Prior to 2017, a point-of-sale rebate of the provincial component of the HST for books has been provided by all provinces participating in the HST framework. Accordingly, the provincial component of HST is not currently included in the determination of the printed book rebate, as relief was already provided by the point-of-sale rebate. However, since Newfoundland and Labrador is ending its point-of-sale rebate for books, the amendments adapt the printed book rebate, effective January 1, 2017, so that entities eligible for the printed book rebate will be able to include the Newfoundland and Labrador component of the HST, for which a point-of-sale rebate is no longer available, in determining the printed book rebate (in addition to any GST already permitted to be included in that determination). “One-for-One” Rule The Amending Regulations implement modifications to GST/HST rules consequential to the decision of Newfoundland and Labrador under the HST framework to eliminate the provincial point-of-sale rebate of the provincial component of the HST for books. Overall, the HST framework minimizes the compliance and administrative burden imposed on businesses by eliminating ongoing substantial duplicative provincial requirements. However, as per the Treasury Board of Canada Secretariat’s Canadian Cost-Benefit Analysis Guide: Regulatory Proposals, taxes, fees, levies and other charges, because they constitute transfers from one group to another, are not considered to be compliance or administrative costs, whether they are intended as incentives to foster compliance and change behaviour or whether their purpose is to recover the costs of providing a service. Accordingly, the Amending Regulations do not increase or decrease the level of administration burden imposed on business, therefore the “One-for-One” Rule does not apply. Small business lens The small business lens does not apply, because the Amending Regulations do not result in new incremental compliance or administrative costs for small businesses. Consultation The Amending Regulations are designed to reflect the provincial decision to eliminate the provincial point-of-sale rebate of the Newfoundland and Labrador component of the HST for books, as announced by Newfoundland and Labrador on April 14, 2016, and were developed in consultation with the Government of Newfoundland and Labrador. Rationale The Amending Regulations are required as a result of the decision of the Government of Newfoundland and Labrador to eliminate the provincial point-of-sale rebate of the Newfoundland and Labrador component of the HST for books, effective January 1, 2017. The Amending Regulations provide affected stakeholders with certainty in respect of the elimination of that rebate that was previously announced by the Government of Newfoundland and Labrador. Contacts Ryan Stammers Sales Tax Division Department of Finance 90 Elgin Street Ottawa, Ontario K1A 0G5 Telephone: 613-369-3790 Phillippe Nault Excise and GST/HST Rulings Directorate Canada Revenue Agency Place de Ville, Tower A, 14th Floor 320 Queen Street Ottawa, Ontario K1A 0L5 Telephone: 613-954-7656 Footnote a S.C. 1993, c. 27, s. 125(1) Footnote b S.C. 2009, c. 32, s. 37(1) Footnote c R.S., c. E-15 Footnote 1 SOR/2001-65 Footnote 2 SOR/2010-151

This Bill does not amend any statutes.

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