Excise Tax Act (R.S.C., 1985, c. E-15)

Marginal note:Restriction

• 170 (1) In determining an input tax credit of a registrant, no amount shall be included in respect of the tax payable by the registrant in respect of

  • (a) a supply of a membership, or a right to acquire a membership, in a club the main purpose of which is to provide dining, recreational or sporting facilities, except where the registrant acquires the membership or right, as the case may be, exclusively for supply in the ordinary course of a business of the registrant of supplying such memberships or rights;

  • (a.1) a supply, importation or bringing into a participating province of property or a service that is acquired, imported or brought in by the registrant for consumption or use by the registrant (or, where the registrant is a partnership, an individual who is a member of the partnership) in relation to any part (in this paragraph referred to as the “work space”) of a self-contained domestic establishment in which the registrant or the individual, as the case may be, resides unless the work space

    • (i) is the principal place of business of the registrant, or

    • (ii) is used exclusively for the purpose of earning income from a business and is used on a regular and continuous basis for meeting clients, customers or patients of the registrant in respect of the business;

  • (b) a supply, importation or bringing into a participating province of property or a service that is acquired, imported or brought in by the registrant at any time in or before a reporting period of the registrant exclusively for the personal consumption, use or enjoyment (in this paragraph referred to as the “benefit”) in that period of a particular individual who was, is or agrees to become an officer or employee of the registrant, or of another individual related to the particular individual, except where

    • (i) the registrant makes a taxable supply of the property or service to the particular individual or the other individual for consideration that becomes due in that period and that is equal to the fair market value of the property or service at the time the consideration becomes due, or

    • (ii) if no amount were payable by the particular individual for the benefit, no amount would be included under section 6 of the Income Tax Act in respect of the benefit in computing the income of the particular individual for the purposes of that Act; and

  • (c) a supply made in or before a reporting period of the registrant of property, by way of lease, licence or similar arrangement, primarily for the personal consumption, use or enjoyment in that period of

    • (i) where the registrant is an individual, the registrant or another individual related to the registrant,

    • (ii) where the registrant is a partnership, an individual who is a member of the partnership or another individual who is an employee, officer or shareholder of, or related to, a member of the partnership,

    • (iii) where the registrant is a corporation, an individual who is a shareholder of the corporation or another individual related to the shareholder, and

    • (iv) where the registrant is a trust, an individual who is a beneficiary of the trust or another individual related to the beneficiary,

    except where the registrant makes a taxable supply of the property in that period to such an individual for consideration that becomes due in that period and that is equal to the fair market value of the supply at the time the consideration becomes due.

• Marginal note:Further restriction

  (2) In determining an input tax credit of a registrant, no amount shall be included in respect of the tax payable by the registrant in respect of property or a service acquired, imported or brought into a participating province by the registrant, except to the extent that

  • (a) the consumption or use of property or services of such quality, nature or cost is reasonable in the circumstances, having regard to the nature of the commercial activities of the registrant; and

  • (b) the amount is calculated on consideration for the property or service or on a value of the property that is reasonable in the circumstances.

SUBDIVISION CSpecial Cases

Becoming and Ceasing to be Registrant

Marginal note:Person becoming registrant

• 171 (1) Where at any time a person becomes a registrant and immediately before that time the person was a small supplier, for the purpose of determining an input tax credit of the person, the person shall be deemed

  • (a) to have received, at that time, a supply by way of sale of each property of the person that was held immediately before that time for consumption, use or supply in the course of commercial activities of the person; and

  • (b) to have paid, at that time, tax in respect of the supply equal to the basic tax content of the property at that time.

• Marginal note:Services and rental property

  (2) Subject to this Division, where at any time a person becomes a registrant, in determining the input tax credits of the person for the first reporting period of the person ending after that time,

  • (a) there may be included the total of any tax that became payable by the person before that time, to the extent that the tax was payable in respect of services to be supplied to the person after that time for consumption, use or supply in the course of commercial activities of the person or was calculated on the value of consideration that is a rent, royalty or similar payment attributable to a period after that time in respect of property that is used in the course of commercial activities of the person; and

  • (b) there shall not be included any tax that becomes payable by the person after that time, to the extent that the tax is payable in respect of services supplied to the person before that time or is calculated on the value of consideration that is a rent, royalty or similar payment attributable to a period before that time.

• Marginal note:Properties on ceasing to be registrant

  (3) For the purposes of this Part, where a person ceases at any time to be a registrant,

  • (a) the person shall be deemed

    • (i) to have made, immediately before that time, a supply of each property of the person (other than capital property) that immediately before that time was held by the person for consumption, use or supply in the course of commercial activities of the person and to have collected, immediately before that time, tax in respect of the supply, calculated on the fair market value of the property at that time, and

    • (ii) to have received, at that time, a supply of the property by way of sale and to have paid, at that time, tax in respect of the supply equal to the amount determined under subparagraph (i); and

  • (b) where the person was, immediately before that time, using capital property of the person in commercial activities of the person, the person shall be deemed to have, immediately before that time, ceased using the property in commercial activities.

• Marginal note:Services and rental properties

  (4) Where a person who engages in commercial activities ceases at any time to be a registrant,

  • (a) in determining the input tax credits of the person for the last reporting period of the person beginning before that time, there may be included the total of any tax that becomes payable by the person after that time, to the extent that the tax is payable in respect of services that were supplied to the person before that time for consumption, use or supply in the course of commercial activities of the person or is calculated on the value of consideration that is a rent, royalty or similar payment attributable to a period before that time in respect of property that is used in the course of commercial activities of the person; and

  • (b) in determining the net tax of the person for the last reporting period of the person beginning before that time, there shall be added to the total for A in the formula set out in subsection 225(1) any input tax credit claimed by the person before that time, to the extent that it relates to services to be supplied to the person after that time or to the value of consideration that is a rent, royalty or similar payment attributable to a period after that time.

• Marginal note:Exception

  (5) Subsections (1) to (4) do not apply where section 171.1 applies and subsection (3) does not apply to property held by a person immediately before the person ceases to be a registrant where subsection 178.3(1), 178.4(1) or 178.5(1) or (2) applied to that property at an earlier time.

Taxi Businesses

Marginal note:Small suppliers

• 171.1 (1) Where at any time a person who is a small supplier is engaged in a taxi business and other commercial activities in Canada, other than the supply by way of sale of real property, and the registration of the person under this Part does not apply to those other activities,

  • (a) the person shall be deemed, for the purposes of this Part, not to be a registrant at that time except in respect of that business and anything done by the person in the course of that business or in connection with it; and

  • (b) for the purposes of section 169 and Subdivision d, those other activities shall be deemed not to be commercial activities of the person at that time.

• Marginal note:Becoming a registrant for other activities

  (2) Where at any time a person is engaged in a taxi business and other commercial activities in Canada, other than the supply by way of sale of real property, and the person’s registration under this Part begins, at that time, to apply to those other activities, the following rules apply:

  • (a) for the purpose of determining an input tax credit of the person, the person is deemed to have received, at that time, a supply by way of sale of each property of the person, other than capital property, that was held immediately before that time for consumption, use or supply in the course of those other activities and to have paid, at that time, tax in respect of the supply equal to the basic tax content of the property at that time; and

  • (b) for the purpose of determining the input tax credits of the person for the reporting period that includes that time, there may be included the total of any tax that became payable by the person before that time, to the extent that the tax is calculated on consideration, or a part thereof,

    • (i) that is reasonably attributable to a service that is to be rendered to the person after that time and that was acquired by the person for consumption, use or supply in the course of those other activities, or

    • (ii) that is a rent, royalty or similar payment in respect of property and that is reasonably attributable to a period after that time during which the property is used in the course of those other activities.

• Marginal note:Ceasing to be a registrant for other activities

  (3) Where at any time a person is engaged in a taxi business and other commercial activities in Canada, other than the supply by way of sale of real property, and the person’s registration under this Part ceases, at that time, to apply to those other activities, the following rules apply:

  • (a) for the purposes of this Part, the person shall be deemed

    • (i) to have made, immediately before that time, a supply of each property of the person, other than capital property, that was held immediately before that time for consumption, use or supply in the course of those other activities, and to have collected, immediately before that time, tax in respect of the supply calculated on the fair market value of the property at that time, and

    • (ii) to have received, at that time, a supply of the property by way of sale and to have paid, at that time, tax in respect of the supply equal to the amount determined under subparagraph (i);

  • (b) in determining the input tax credits of the person for the reporting period that includes that time, there may be included tax that becomes payable by the person after that time, to the extent that the tax is calculated on consideration, or a part thereof,

    • (i) that is reasonably attributable to services that were rendered to the person before that time and that were acquired by the person for consumption, use or supply in the course of those other activities, or

    • (ii) that is a rent, royalty or similar payment in respect of property and that is reasonably attributable to a period before that time during which the property was used in the course of those other activities; and

  • (c) where, in determining an input tax credit claimed by the person in a return under section 238 for a reporting period of the person ending before that time, there was included an amount in respect of tax calculated on consideration, or a part thereof,

    • (i) that is reasonably attributable to services that are to be rendered to the person after that time, or

    • (ii) that is a rent, royalty or similar payment in respect of property and that is reasonably attributable to a period (in this paragraph referred to as the “lease period”) after that time,

    the amount shall be added in determining the net tax for the reporting period of the person that includes that time, to the extent to which the property is used by the person during the lease period, or the services were acquired by the person for consumption, use or supply, in the course of those other activities.