1. Effective date
This policy is effective October 1, 1996 and supersedes section 10.7.9 of the Treasury Board Guide on Financial
Administration for Departments and Agencies of the Government of
Canada, consolidated revision, dated April 1991.
2. Preface
(a) A fundamental principle of parliamentary control over
expenditures is that all receipts must be deposited in the
Consolidated Revenue Fund (CRF) and that Parliament alone retains
the right to determine spending priorities including the
appropriation of revenues received.
(b) However, section 39 of the Financial Administration
Act (FAA) allows certain funds that are repaid or returned to
be credited to the appropriation from which they were originally
spent.
3. Policy objective
To ensure proper use of the authority to credit refunds of
expenditures and repayments of advances to the appropriations
from which they were originally spent.
4. Policy statement
It is government policy that, in accordance with statutory
authority, departments be allowed to replenish the appropriation
from which it was originally disbursed with certain moneys
received as refunds or repayments.
5. Application
This policy applies to all organizations considered to be
departments within the meaning of section 2 of the FAA.
6. Policy requirements
(a) Departments must establish policies and procedures to
ensure that:
(i) only when received in the same fiscal year as the original
charge to the appropriation or during the supplementary
accounting periods at year end are the following refunds and
repayments to be credited to the appropriation and the economic
object that was originally charged:
- recoveries of overpayments, duplicate payments, and
erroneous payments;
- repayments of accountable advances;
- repayments of budgetary loans where there is authority to
reuse receipts for making additional loans;
- repayments of losses of money;
- refunds from the return of goods;
- refunds of sales or excise taxes and customs duties;
- refunds of advance payments;
- refunds arising from the settlement of contractual
disputes;
- refunds arising from manufacturers' rebates, price
reductions, volume discounts or other price adjustments;
- refunds arising from landlords' rebates representing cash
lease inducements where a government department is a lessee;
- payment of an indemnification;
- payment from a claim for loss of or damage to a Crown
asset;
- reimbursement by another party (including other government
departments) for its agreed share of the costs pursuant to a
cost-sharing agreement; and
- repayment of travel expenses such as personal stopovers and
side trips that were included on an invoice payable by the
department but that are the responsibility of the traveller.
(ii) refunds of expenditures and recoveries of overpayments of
statutory appropriations are credited to the statutory
appropriation for the fiscal year in which the refund or recovery
is actually received; and,
(iii) receipts of repayments of advances that have been made
from statutory appropriations and repayments of budgetary loans
are credited to the statutory appropriation for the fiscal year
in which the amounts are received.
(b) Except as noted in 6(a)(ii) and (iii), when a refund,
reimbursement or repayment relates to expenditures made in a
prior fiscal year, and is received after the final date for
depositing that fiscal year's receipts at year end, the amount
must be credited to the CRF as non-tax revenue as a refund of
previous years' expenditures.
7. Monitoring
(a) Departments should undertake periodic audits which focus
on the appropriate crediting of funds received as provided by
section 39 of the FAA.
(b) The Treasury Board Secretariat will monitor the
effectiveness of this policy by reviewing departmental audit
reports.
8. References
8.1 Legislation
Financial Administration Act.
8.2 Treasury Board publications
Policy on Special Revenue Spending Authorities, Chapter 5-6 of
the "Comptrollership" volume of the Treasury Board
Manual.
Policy on Specified Purpose Accounts, Chapter 5-7 of the
"Comptrollership" volume of the Treasury Board Manual.
Policy on the Application of the Goods and Services Tax in the
Departments and Agencies of the Government of Canada, Chapter 5-8
of the "Comptrollership" volume of the Treasury Board
Manual.
9. Enquiries
Please direct enquiries about this policy to the responsible
office in departmental headquarters who, in turn, may seek
interpretations from:
Financial and Contract Management Sector
Deputy Comptroller General Branch
Treasury Board Secretariat
L'Esplanade Laurier
300 Laurier Ave. West
Ottawa, Ontario
K1A 0R5
Telephone: (613) 957-7233
Facsimile: (613) 952-9613
Appendix A
General Guidelines
1. Situations Not Eligible for Credit to
the Appropriation Originally Charged
The following are cases where section 39 of the FAA does
not provide the authority to credit the appropriation that
was originally charged:
- receipts resulting from interdepartmental charges;
- reimbursements of expenditures or other forms of
cost-recovery;
- receipts resulting from payments from departments or others
as a result of receiving commensurate goods or services in
return;
- receipts resulting from charges for a service or for
attendance at an event;
- receipts resulting from payments from departments or others
not pursuant to a cost-sharing agreement;
- receipts resulting from payments from revolving funds since
they are governed by separate revenue re-spending authority;
- revenues received under net voting authority; and,
- repayments of non-budgetary loans, investments and
advances.
2. Treatment of Goods and Services
Tax
2.1 Current year refunds
Departments that return goods to suppliers are responsible for
matching refunds back to the original Goods and Services Tax
payments and for making the necessary credit entries to the GST
Refundable Advance Accounts.
2.2 Refunds of previous year's
expenditures
(a) For refunds of previous year's expenditures, even where
part of the refund is for Goods and Services Tax paid, the full
amount of the refund received is to be coded against "refund of
previous year's expenditures."
(b) See the Goods and Services Tax policy for greater
detail.
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