Archived - Amendments to the Excise Tax Act, the Excise Act, 2001 and Related Acts and the Air Travellers Security Charge Act: 2

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Clause 39

Nova Scotia Cooperative Housing Rebate

ETA
255(2.01) to (2.1)

Subsection 255(2.1) effectively provides for a partial rebate of the provincial component of the HST embedded in the cost of a share in a cooperative housing corporation acquired for the purpose of using a new residential unit in a residential complex of the corporation situated in Nova Scotia as the primary place of residence of the purchaser or a relation of the purchaser.

Under existing subsection 255(2.1), the rebate is equal to 1.39 per cent of the purchase price of the share, to a maximum of $2,250.

As announced in Nova Scotia’s 2001 budget, this rebate is amended to target the rebate to first-time homebuyers, effective January 1, 2002. Further, the maximum rebate is reduced to $1,500.

The eligibility condition relating to previous owner-occupant status under subsection 255(2.01) is the same for this rebate as for the Nova Scotia First-time Homebuyers’ Rebate under subsection 254(2.1, as described in the commentary on the amendments to that subsection and on new subsections 254(2.01) and (2.02). However, in the case of the rebate under subsection 255(2.1), new subsection 255(2.02) provides that the "relevant transfer date" is the date on which ownership of the share in the cooperative housing corporation is transferred.

The new rebate rules apply where:

Existing paragraph 255(2.1)(c) refers to the amount of total consideration payable for the supply of the share at which a purchaser ceases to qualify for the rebate under subsection (2). Due to a previous amendment to section 165 in 2006, which reduced the GST/HST rate, subsection 255(2) and paragraph 255(2.1)(c) were previously amended to reduce the amount referred to in that paragraph from $481,500 to $477,000 to reflect the reduced embedded tax. Since the amendment applies also to cases where the federal component of the HST applied at the higher rate, the amendment first refers to $481,500. Paragraph 255(2.1)(c) is subsequently amended to refer to $477,000 where the federal component of the HST applies at the lower rate. The amendment applies in respect of a rebate application filed on or after July 1, 2006, unless the cooperative housing corporation paid tax calculated at the higher rate under section 165 in respect of the supply to the corporation of the complex in which the residential unit is situated.

Clause 40

New Housing Rebate for Owner-built Homes

ETA
256

Section 256 of the Act provides for a partial rebate of the GST, or of the federal component of the HST, in respect of new homes constructed by the owner, as well as a partial rebate of the provincial component of the HST in the case of such homes situated in Nova Scotia.

Subclause 40(1)

Nova Scotia New Housing Rebate for Owner-built Homes

ETA
256(2.02) to (2.1)

Under existing subsection 256(2.1), the rebate in respect of a new owner-built home situated in Nova Scotia is equal to 18.75 per cent of the provincial component of the HST paid by the owner that is eligible for the rebate, to a maximum of $2,250.

As announced in Nova Scotia’s 2001 budget, this rebate is amended to target the rebate to first-time homeowners, effective January 1, 2002. Further, the maximum rebate is reduced to $1,500.

The eligibility condition relating to previous owner-occupant status during the preceding five-year period is the same for this rebate as for the Nova Scotia First-time Homebuyers’ Rebate under subsection 254(2.1) of the Act, as described in the commentary on the amendments to that subsection and on the new subsections 254(2.01) and (2.02). However, in the case of the rebate under subsection 256(2.1), new subsection 256(2.03) provides that the end of the five-year period (referred to as the "relevant completion date") is the day on which the construction of the home is substantially completed.

The new rebate rules apply where:

Subclause 40(2)

Application for New Housing Rebate

ETA
256(3)

Section 256 of the Act provides for a GST New Housing Rebate to an individual who constructs or substantially renovates their home. This rebate parallels the GST New Housing Rebate that is available to an individual who purchases a new home from a builder.

While the rebate for purchased homes is usually credited by the builder at the time of sale, the rebate for owner-built homes must, in all cases, be claimed by the owner-builder by filing an application with the Canada Revenue Agency within a specified period from the day the construction or renovation of the home is substantially completed or the date of occupation, depending on the circumstances. The process of claiming the rebate for an owner-built home thus requires construction information and other details to be provided along with the rebate application.

The amendment to subsection 256(3) permits the Minister of National Revenue to accept an application for the rebate for an owner-built home after the period otherwise allowed for making an application. The amendment recognizes that exceptional circumstances may prevent an owner-builder from filing the rebate application by the due date.

The amendment also applies in respect of the Nova Scotia Housing Rebate provided under subsections 256(2.1) and (2.2).

The amendment to subsection 256(3) comes into force on December 20, 2002.

Clause 41

Non-registrant Sale of Real Property

ETA
257(1)(b)

Subsection 257(1) of the Act allows a non-registrant who makes or is deemed to make a taxable sale of real property to claim a rebate to recover previously non-recoverable tax paid by the non-registrant in respect of the property. The rebate is equal to the lesser of the basic tax content of the property at the time of the sale and the tax that is or would, in the absence of section 167 of the Act, be payable in respect of the sale.

An amendment is made to paragraph 257(1)(b), consequential to the addition of new section 167.11 of the Act, to add a reference to section 167.11. As a result, the rebate under subsection 257(1) is equal to the lesser of the basic tax content of the property at the time of the sale and the tax that is or would, in the absence of section 167 or 167.11, be payable in respect of the sale.

The amendment is deemed to have come into force on June 28, 1999.

Clause 42

Rebate for Qualifying Motor Vehicle

ETA
258.1(1) and (6)

Subsection 258.1(1) of the Act defines the term "qualifying motor vehicle" for the purposes of a rebate of the tax on that portion of the vehicle’s purchase price attributable to its special features for use by individuals with disabilities. The rebate applies to new and used vehicles that are specially equipped but that were not previously used while so equipped.

The amendment modifies the definition "qualifying motor vehicle" under subsection 258.1(1) by removing the restriction that for as long as the vehicle has been specially equipped, it has never been used. Consequently, subsection 258.1(6) is also amended to allow for a rebate of the tax paid on specially equipped vehicles used before being imported into Canada or being brought into a participating province.

The amendments are deemed to have come into force on April 4, 1998. To the extent that the rebate was previously unavailable to a person, a transitional rule provides a four-year period from Announcement Date for the person to claim this rebate as a result of the extended definition "qualifying motor vehicle" and consequential removal of a usage restriction. A special rule is also provided in cases where a person previously filed a rebate claim that was assessed based on the pre-amended provision, since the Act generally does not permit a person to file more than one rebate application with respect to the same matter. The special rule provides a person four years from Announcement Date to file a second application for a rebate in respect of a vehicle that was previously used while specially equipped.

Clause 43

Rebate for Modification Service

ETA
258.2(b)

Section 258.2 of the Act allows persons in certain circumstances to claim a rebate of the tax attributable to modification services paid on the importation or bringing in a participating province of a vehicle that is specially equipped or adapted in a manner that transports a wheelchair or allows a disabled individual to operate the vehicle.

The amendment removes the restriction that the vehicle could only be used to the extent reasonably necessary to bring the vehicle to the supplier of the modification service and bring the vehicle back to Canada or back to the participating province after modification.

The amendment is deemed to have come into force on April 4, 1998. To the extent that the rebate was previously unavailable to a person, a transitional rule provides the person four years from the Announcement Date to claim this rebate as a result of the importation or bringing into a participating province of a vehicle that had the modification service performed on it. A special rule is also provided in cases where a person previously filed a rebate claim that was assessed based on the pre-amended provision, since the Act generally does not permit a person to file more than one rebate application with respect to the same matter. The special rule provides a person four years from the Announcement Date to file a second application for a rebate in respect of the tax paid on importing or bringing a modified vehicle into Canada or into the participating province, as the case may be.

Clause 44

Public Service Body Rebate

ETA
259

Section 259 of the Act provides for rebates to charities, substantially government-funded non-profit organizations and other public service bodies (i.e., universities, public colleges, school authorities, hospital authorities and municipalities).

Subclause 44(1)

Definition "non-creditable tax charged"

ETA
259(1)(a)(i)

The term "non-creditable tax charged" refers to amounts that an entity eligible for a rebate is or was required to pay as GST/HST (net of input tax credits or other rebates) and is not otherwise recoverable by the entity.

Under the definition "non-creditable tax charged", an amount of tax in respect of a returnable container that the entity would otherwise not be entitled to recover under the special rules for returnable container deposits in section 226 of the Act is not eligible to be rebated under section 259. The definition thus contains a cross-reference to existing subsection 226(4).

The amendment to the definition "non-creditable tax charged" is consequential on the amendments to section 226. Under new section 226, the restrictions on the claiming of input tax credits are found under a new subsection. Therefore, the amendment to the definition "non-creditable tax charged" replaces the reference therein to subsection 226(4) with a reference to section 226.

The amendment is deemed to have come into force on May 1, 2002.

Subclause 44(2)

Exclusions

ETA
259(4.2)

Subsection 259(4.2) provides that, subject to certain exceptions provided in subsection 259(4.21), no provincial component of the HST is to be included in determining rebates to public service bodies under section 259. The French version of subsection 259(4.2) is amended to replace the term "taux" with the term "pourcentage" to ensure that the defined term "pourcentage provincial établi" is properly referred to, thereby ensuring consistency between both official versions of the Act.

The amendment applies for the purposes of determining the rebate of a person under section 259 for claim periods ending on or after January 1, 2005. However, the rebate is determined as if the amendment had not come into force for the purposes of determining the rebate of a person for the claim period of the person that includes January 1, 2005, in respect of

Clause 45

Rebates in Respect of Beverages in Returnable Containers

ETA
263.2

Under sections 252, 260 and 261.1 of the Act, rebates are provided for exported goods and goods removed from HST participating provinces in certain circumstances. New section 263.2 of the Act addresses a case where a person purchases a beverage in a returnable container and is charged a non-refundable container deposit. In that case, the tax in respect of the non-refundable container deposit is deemed under new section 226 of the Act to be in respect of a deemed supply of a service received by the person (see commentary on amendments to section 226).

New section 263.2 also addresses a case where a person has purchased used and empty returnable containers (or the material resulting from their compaction) for consideration in excess of the refundable deposits for the containers. In that case, the tax on the excess amount is deemed under new section 226 to be in respect of a service received by the person.

In both cases, without new section 263.2, the person would not be entitled to a rebate under any of sections 252, 260 and 261.1 for the tax amount since it is considered to be in respect of a service instead of a good. New section 263.2 ensures that the tax is considered to be part of the tax on the beverage for purposes of those rebate provisions.

The amendment is deemed to have come into force on May 1, 2002.

Clause 46

Waiver or Cancellation of Interest or Penalties

ETA
281.1(1) and (2)

Effective April 1, 2007, section 281.1 of the Act will introduce a ten-year limitation period in respect of waivers or cancellations of interest or penalties, such that the Minister of National Revenue may, on or before the day that is ten calendar years after the end of a reporting period of a person, waive or cancel interest or penalties payable by the person in respect of that reporting period.

Section 281.1 is amended to enable the Minister to waive or cancel interest or penalties in respect of a reporting period beyond the ten-year limitation period, provided the person makes an application for relief before the end of that period.

The amendment comes into force on April 1, 2007.

Clause 47

Requirement to Provide Documents or Information

ETA
289(1)

Subsection 289(1) of the Act provides that, despite any other provision of Part IX of the Act, the Minister of National Revenue may by notice require that any person provide information or any document for any purpose relating to the administration or enforcement of Part IX. An exception is made where the information or document relates to an unnamed person or persons, in which case the procedure set out in subsections 289(2) to (6) of the Act must be followed.

Subsection 289(1) is amended to provide that the Minister may by notice require any person to provide information or any document relating to the administration or enforcement of a listed international agreement or Part IX. A "listed international agreement" is newly defined in subsection 123(1) of the Act to mean the Convention on Mutual Administrative Assistance in Tax Matters, as amended from time to time, concluded at Strasbourg on January 25, 1988.

The amendment comes into force on Royal Assent.

Clause 48

Disclosure of Personal Information

ETA
295(5)

Existing section 295 of the Act prohibits the use or communication of information obtained by the Canada Revenue Agency under Part IX of the Act unless specifically authorized by one of the exceptions found in that section.

Subclause 48(1)

Disclosure of Confidential Information

ETA
295(5)(d)(v)

Subparagraph 295(5)(d)(v) currently permits disclosure of the name, address, occupation and size or type of business of a person to a government department or agency for the purpose of enabling that department or agency to obtain statistical data for research and analysis.

Subparagraph 295(5)(d)(v) is amended to add "telephone number" to the list of data that may be disclosed in those circumstances.

The amendment comes into force on Royal Assent.

Subclause 48(2) and (3)

Disclosure of Confidential Information

ETA
295(5)(m) and (n)

Subsection 295(5) is amended to add new paragraph (m), which allows the communication of confidential information with respect to business activities carried on in a province to a statistical agency in that province. The information may be provided solely for the agency’s research and analysis and only if the agency is authorized under its provincial law to collect the same or similar information on its own behalf. New paragraph (m) parallels existing paragraph 241(4)(o) of the Income Tax Act.

Subsection 295(5) is also amended to add new paragraph (n), which authorizes an official to provide or to allow the inspection of or access to confidential information solely for the purposes of a provision contained in a listed international agreement. The term "listed international agreement" is newly defined in subsection 123(1) of the Act to mean the Convention on Mutual Administrative Assistance in Tax Matters, as amended from time to time, concluded at Strasbourg on January 25, 1988.

The amendment adding new paragraph 295(5)(m) comes into force on Royal Assent and applies to information relating to fiscal years ending after 2003. The amendment adding new paragraph 295(5)(n) comes into force on Royal Assent.

Clause 49

Exception for Extension of Time by Minister

ETA
303(4)

Subsection 303(4) of the Act allows the Minister of National Revenue to accept an application to extend the time for filing a notice of objection under subsection 303(1) that is not made or sent in the manner specified in subsection 303(3). Subsection 303(4) of the French version of the Act is amended to replace the term "faire droit à" by the term "recevoir" to ensure consistency between both official versions of the Act.

The amendment comes into force on Royal Assent.

Clause 50

Provision of Document to the Court

ETA
308(2)

Subsection 308(2) of the Act requires the Commissioner to forward copies of all returns, applications, notices of assessment, notices of objection and notifications that are relevant to an appeal to the Court and the appellant. Once forwarded, the copies become part of the Court record and are evidence of the existence of the documents and the making of the statements contained therein. Subsection 308(2) is parallel to subsection 176(1) of the Income Tax Act.

The amendment repeals subsection 308(2) since the Federal Court of Appeal found subsection 176(1) of the Income Tax Act to be unconstitutional.

The amendment comes into force on Royal Assent.

Clause 51

Offence re Confidential Information

ETA
328(2)(a)

Existing paragraph 328(2)(a) of the Act makes it an offence for any person who receives confidential information for a particular purpose specified in certain paragraphs of subsection 295(5) of the Act to use that information, or provide the information to another person, for any other purpose. A person who is found guilty of an offence under this provision is liable on summary conviction to a fine of up to $5,000, to a term of imprisonment of up to one year, or to both.

Paragraph 328(2)(a) is amended to refer to new paragraph 295(5)(m), which allows the communication of confidential information with respect to business activities carried on in a province to a statistical agency in that province. Paragraph 328(2)(a) is also amended to refer to new paragraph 295(5)(n), which allows the disclosure of confidential information for the purposes of a provision contained in a "listed international agreement" (a term newly defined in subsection 123(1) of the Act).

The amendments come into force on Royal Assent.

Clause 52

Definitions

ETA
Schedule V, Part II, section 1

Section 1 of Part II of Schedule V to the Act contains definitions of key terms referred to in this Part, which sets out the health care services that are exempt.

Subclause 52(1)

Definition "practitioner"

ETA
Schedule V, Part II, section 1

The definition "practitioner" in section 1 of Part II of Schedule V identifies the types of health care professionals who are not required to charge tax on their health care services itemized in sections 7 and 7.1 of Part II of Schedule V.

The definition "practitioner" is amended to add those persons practicing the profession of speech-language pathology to the list. An amendment contained in the Sales Tax and Excise Tax Amendments Act, 2001 had the effect of including speech therapists (as speech-language pathologists were formerly referred to) in the definition "practitioner" until the end of 2001, to allow time for the completion of a regulatory process then underway. A subsequent announcement proposed a similar amendment for the year 2002, during which the regulatory process was completed. The definition "practitioner" in the English version also replaces the term "speech therapy" with the modern term "speech-language pathology". No change is needed in the terminology used in the French version of this provision.

The amendment applies to any supply made after 2000.

Subclause 52(2) and (3)

Definition "health care facility"

ETA
Schedule V, Part II, section 1

Subparagraph (c)(i) of the French version of the definition "health care facility" is amended to correct minor inconsistencies with the English version of the definition. The French version of the definition is further amended by the re-introduction of subparagraph (c)(iii), which covers meals and accommodation, to correct the fact that the subparagraph was inadvertently deleted during the printing process in Parliament when the provision was last amended.

The amendments are deemed to have come into force on December 17, 1990.

Clause 53

Speech-language Pathology Services

ETA
Schedule V, Part II, section 7

Section 7 of Part II of Schedule V to the Act lists health care practitioners’ services that are exempt in all provinces from the GST/HST even when supplied in a province that does not cover the particular service under its own provincial health care plan.

The amendment has the effect of confirming the exemption for speech-language pathology services under section 7 of Part II of Schedule V to the Act. Amendments contained in the Sales Tax and Excise Tax Amendments Act, 2001 added the services of speech therapists (as speech-language pathologists were formerly referred to) to the list of exempt services under paragraph 7(h), until the end of 2001, in order to allow time for the completion of a regulatory process then underway. A subsequent announcement extended the exemption for the year 2002 during which the regulatory process was completed. The exemption is therefore being added to the list. The amendment to paragraph 7(h), in the English version also replaces the term "speech therapy" with the modern term "speech-language pathology". This change in terminology does not alter the scope of coverage of the provision. No change is needed in the terminology used in the French version of this provision.

The amendment applies to supplies made after 2000.

Clause 54

Social Workers’ Services

ETA
Schedule V, Part II, section 7.2

The amendment adds section 7.2 to Part II of Schedule V to the Act. It adds to the list of exempt supplies of healthcare services the supply of a service of counselling individuals for the prevention or treatment of physical or mental disorders or to assist afflicted individuals or their caregivers in coping with such conditions, where the service is rendered in the practise of the profession of social work.

The exemption of this service under section 7.2 does not depend on whom the service is supplied to (i.e., it is not dependant on who the recipient of the supply is within the meaning of subsection 123(1) of the Act). For instance, a social worker may counsel an individual for an alcohol dependency, but that service may be paid for by an aid organization. In this case, even though the supply is made to the organization, and not the individual, it is an exempt supply because the service is rendered to an individual. In addition, in order for the service to be exempt, it must be rendered within a professional-client relationship between the social worker and the individual to whom the service is rendered. Thus, if an organization hired a social worker to give a talk on alcohol dependency at a seminar open to the general public, the social worker’s service would not be provided in the context of a professional-client relationship between the social worker and each of the individuals attending the seminar. Therefore, the social worker’s charge to the organization would not be exempt.

The exemption applies not only to services rendered to the individual who is afflicted with a physical or mental disorder, but also to any other individual who is a relative or caregiver of the individual suffering from the disorder. The exemption does not, however, cover services provided by a social worker to another professional, such as another social worker, in relation to a client of the other professional, unless the services are rendered to the client in the course of a professional-client relationship with the service provider. For example, a supply by a social worker of the service of giving non-client-specific advice to another social worker about the general arrangement of client care would not be exempt.

A final condition of the exemption is that the social worker must be licensed or otherwise certified to practise the profession of social work in the province in which the services are supplied. If that province has no such license or certification requirements, the social worker must possess the qualifications equivalent to those necessary to be licensed or certified to practise in another province in which such requirements exists.

The amendment applies to supplies made after October 3, 2003. If the time to file an application for a rebate under subsection 261(1) of the Act would otherwise expire earlier, a transitional rule gives a person until the day that is one year after the day the enactment of new section 7.2 is given Royal Assent to file an application for a refund under that subsection of an amount that was paid by the person before the day of Royal Assent in respect of tax in respect of a supply that is exempt as a result of new section 7.2. Another transitional rule provides that, if the time for a supplier to adjust, credit or refund an amount under subsection 232(1) of the Act would otherwise expire earlier, the supplier has until the day that is one year after the day the enactment of new section 7.2 is given Royal Assent to adjust, credit or refund an amount in respect of tax that was charged or collected before the day of Royal Assent in respect of a supply that is exempt as a result of new section 7.2. These rules do not apply to an amount charged, collected or paid on account of tax in respect of a supply that was already exempt under another provision.

Clause 55

Goods Supplied by a Charity in Conjunction with Real Property

ETA
Schedule V, Part V.1, section 1

Section 1 of Part V.1 of Schedule V to the Act provides for a general exemption for supplies made by charities. However, supplies that are included in any of paragraphs 1(a) to (m) are carved out of this general exemption.

As part of a package of measures to simplify GST/HST compliance for charities, previous amendments were made (which were generally applicable to supplies for which consideration became due after 1996) to provide that supplies by charities of real property under short-term leases and licences are exempt under the general exemption for supplies by charities. The exemption was intended to also extend to any goods supplied together with such real property, such as audio-visual equipment rented with a meeting room. However, the exclusion under paragraph 1(d) prevents that exemption from applying as intended when the goods supplied together with the real property have been acquired, manufactured or produced by the charity for the purpose of being supplied.

The amendment to paragraph 1(d) corrects this problem to ensure that the exemption for goods supplied together with exempt real property applies as it was intended.

The amendment applies retroactively in the same manner as the earlier amendment that added the exemption for short-term leases and licences by charities, which is generally for supplies for which consideration became due after 1996. However, the exemption for goods supplied together with exempt real property does not apply where the charity has already treated the supply of the goods as taxable and charged or collected tax on them. Further, as was the case when the exemption for the short-term leases and licences of real property was added, a transitional rule is provided to ensure that the enactment of the amendment does not trigger any change-in-use liability for the charity.

Clause 56

Supply by Government, Municipality, etc.

ETA
Schedule V, Part VI, Section 20

Existing section 20 of Part VI of Schedule V to the Act sets out a number of supplies relating to regulatory and administrative functions that are exempt when made by a government, municipality, or a board, commission or other body established by a government or municipality.

The exemptions provided under section 20 include exemptions under existing paragraphs 20(a), (b), (b.1), (d) and (e) for services of filing and retrieval of certain documents or information in official registration systems, such as those for vital statistics (e.g. birth, deaths and marriages), property (e.g. land registration) and courts.

Paragraphs 20(a), (b), (b.1), (d) and (e) are amended to extend the application of exemption under these paragraphs to include supplies made in circumstances when a supply of filing or retrieval of documents or information is characterized as the supply of a right rather than the supply of a service (e.g. when such a supply is made with little or no human intervention through providing a right to access or use an electronic database).

Paragraphs 20(a) and (b) are also amended to provide that supplies of the processing of applications for filing or retrieval of documents and information are exempt even when the processing leads to the rejection of an application.

Existing paragraph 20(b.1) provides that the service of filing a document in accordance with legislative requirements is exempt. Paragraph 20(b.1) is combined with existing paragraph 20(b) which provides exempt status for filing or procuring of a document in a court. Paragraph 20(b) is also amended to confirm that exemption applies regardless of whether a fee is considered to be for filing or for issuing, providing or obtaining a document from a court and that exemption extends to issuing, providing or obtaining a document from a tribunal similar to a court.

The amendments to paragraphs 20(a), (b), (b.1), (d) and (e) are deemed to have come into force on December 17, 1990, except that they do not apply to supplies in respect of which the supplier charges or collects an amount of tax on or before Announcement Date.

Existing paragraph 20(c) provides that supplies of, and services in respect of processing an application for, a licence, permit, quota or similar right are exempt. This paragraph is amended to ensure consistency with the wording of the exemptions for services of processing of applications provided under paragraphs (a) and (b) and to confirm that exemption does not extend to services other than the processing of an application, such as inspection services. The amendments also extend the exemption to include the supply of a right to have access to, or to use, a filing or registration system to make application for a licence, permit, quota or similar right.

The amendments to paragraph 20(c) are deemed to have come into force on December 17, 1990, except that they do not apply to supplies of services made on or before Announcement Date in respect of which either tax is not charged or collected, or a refund of tax is claimed, on or before that day. The amendments also do not apply to supplies of rights to have access to, or to use, a filing or registration system in respect of which the supplier charges or collects an amount of tax on or before that day.

Existing paragraph 20(l) excludes supplies of rights to have access to, or to use, property of a government, municipality, or a board, commission or other body established by a government or municipality from exemption under section 20. Paragraph 20(l) is amended consequential to amendments to paragraphs 20(a) to (e) so that the exclusion does not apply to supplies of rights to have access to or to use a filing or registration system that are made exempt by those amendments.

The amendments to paragraphs 20(l) are deemed to have come into force on December 17, 1990, except that they do not apply to supplies made in respect of which the supplier charges or collects an amount of tax on or before Announcement Date.

Clause 57

Prescription Drugs and Biologicals

ETA
Schedule VI, Part I, section 2

Section 2 of Part I of Schedule VI to the Act contains a listing of drugs and substances that are unconditionally zero-rated at all levels of production and distribution. Section 2 is amended to add to the list of zero-rated prescription drugs and biologicals a blood substitute product known as plasma expander. This product is purchased by the blood agencies and distributed to hospitals and other health care providers for use in maintaining patients’ circulatory blood volume during surgical procedures or trauma care.

Section 2 is also amended by adding paragraph (d.1) to provide zero-rated status for drugs listed in Schedule 1 to the Benzodiazepines and Other Targeted Substances Regulations that were previously zero-rated under paragraph (b) because they were listed in Schedule F to the Food and Drug Regulations.

The change reflects the transfer of federal regulatory control of Benzodiazepines from the Food and Drug Regulations to regulations made under the Controlled Drugs and Substances Act, the Benzodiazepines and Other Targeted Substances Regulations, on September 1, 2000.

The amendments in respect of plasma expander apply to supplies made after April 12, 2001 and to supplies for which consideration becomes due after that day or is paid after that day without having become due.

The amendment in respect of Benzodiazepines is deemed to have come into force on September 1, 2000, except that it does not apply to any supply, importation or bringing into a province occurring after August 2000, but on or before Announcement Date, and for which tax was charged or paid on or before that day.

Clause 58

Sales of Industrial Hemp Seeds and Straw

ETA
Schedule VI, Part IV, section 3

The amendment to section 3 of Part IV of Schedule VI to the Act adds to the list of zero-rated supplies of agriculture products, supplies of grain or seeds, or the mature bare stalks (i.e., straw), of industrial hemp plants. This treatment applies where the supply is made in accordance with the Controlled Drugs and Substances Act or is excluded from the application of that Act. In the case of grain or seeds, they must not be further processed than sterilized or treated for seeding purposes and must not be for sale or use as feed for wild birds or pets.

The amendment applies to supplies for which consideration becomes due after April 12, 2001 or is paid after that day without having become due.

Clause 59

Importations of Industrial Hemp Seed or Straw

ETA
Schedule VII, section 6

The amendment to section 6 of Schedule VII to the Act coincides with other amendments made to Part IV of Schedule VI to the Act, which has the effect of zero-rating domestic sales of industrial hemp grain or seed or the mature bare stalks (i.e., straw), and Schedule VII, which ensures that importations of these products are likewise not taxable.

Existing section 6 of Schedule VII is amended so as not to apply to the importation of industrial hemp grain or seed and straw since such importations are specifically addressed in new section 12 of Schedule VII in order to apply the condition relating to compliance with the Controlled Drugs and Substances Act.

The amendment applies to goods imported after April 12, 2001.

Clause 60

Imported Goods Relieved Under Exporters of Processing Services Program

ETA
Schedule VII, section 8.3

Section 8.1 of Schedule VII to the Act sets out the conditions for a registrant to obtain GST/HST relief on certain importations of goods that are imported solely for the purposes of having services performed that are supplied by the registrant to a non-resident person. One of those conditions, set out in subparagraph 8.1(e)(iii), is that the registrant not be closely related to that non-resident person or to any non-resident owner of the imported goods or of the processed products. Section 8.3 of the Schedule provides that a non-resident referred to in section 8.1 is considered to be closely related to the registrant where they would be closely related to each other under section 128 of the Act if the non-resident were a registrant resident in Canada.

Schedule VII is amended to repeal section 8.3. This amendment is consequential to amendments to section 128 of the Act, which removes the requirement that two corporations be registrants and resident in Canada in order to be closely related to each other.

The amendment to Schedule VII is deemed to have come into force on November 17, 2005.

Clause 61

Importations of Industrial Hemp Seed or Straw

ETA
Schedule VII, section 12

The amendment to section 12 of Schedule VII to the Act coincides with the amendment under Part IV of Schedule VI to the Act that has the effect of zero-rating domestic sales of industrial hemp grain or seed, or the mature bare stalks (i.e., straw), by ensuring that importations of these products are likewise not taxable.

New section 12 sets out the particular circumstances in which an importation of industrial hemp grain or seed or straw can be imported on a non-taxable basis. Specifically, since the Controlled Drugs and Substances Act regulates the importation of these products in certain cases, one of the conditions for relief from tax at the border is that the importation must be in accordance with that Act where applicable.

The amendment applies to grains or seeds and stalks imported after April 12, 2001.

Clause 62

Goods Brought into a Participating Province

ETA
Schedule X, Part I, section 22

Section 22 of Part I of Schedule X to the Act describes goods that are relieved from the tax imposed under Division IV.1 of Part IX of the Act (i.e., the provincial component of the HST) on bringing the goods into a participating province. Generally, relief is provided for goods brought in by a registrant for consumption, use or supply exclusively in the course of commercial activities of the registrant. In that case, if the tax were not relieved, the registrant would otherwise be entitled to claim a full input tax credit for the tax.

Existing section 22 excludes returnable beverage containers from relief from the tax payable under Division IV.1. This is because, under existing rules, a registrant would not, in all cases, be entitled to claim an input tax credit for the tax component of the container deposits even if the beverages in the filled and sealed containers were brought into a participating province exclusively for supply in the course of commercial activities of the registrant. Under existing section 226 of the Act, registrants are disallowed from claiming these input tax credits if the registrants are, in turn, not required to include in their net tax the tax component of the container deposits when selling the beverages in the filled and sealed containers.

The existing exclusion in section 22 for returnable containers is not necessary under the amended rules for returnable containers in section 226 (see commentary on that section). Under those rules, a registrant is entitled to claim input tax credits for tax (including the tax on the container deposit) in respect of beverages in filled and sealed returnable containers that are brought into a participating province. It is only in circumstances where a beverage in a filled and sealed container is both purchased and sold in a participating province that the registrant may be denied the input tax credit (see commentary on subsection 226(8)).

The amendment applies to containers brought into a participating province after April 2002.

Clause 63

Replacing "(GST)" with "(GST/HST)" and "(TPS)" with "(TPS/TVH)"

ETA
195.2(1)(b), 195.2(2), 220.07(2)(a), 225.1(10), 227(4.2), 227(6), 352(9)(a), 352(9)(c), 352(10)(a)(i), 352(10)(c)(i), 354(2)(a)(i), 354(2)(c)(i), and section 1 of Part II of Schedule X

The amendments replace the reference to "(GST)" with "(GST/HST)" in regulation titles throughout the Act. The amendments also replace the references to "(TPS)" with "(TPS/TVH)" in regulation titles throughout the French version of the Act.

The amendments are deemed to have come into force on April 1, 1997.

Amendments in Respect of Excise Taxes

Clause 64

Interpretation

ETA
2

Section 2 of the Act defines terms that apply in section 2, Parts I to VIII (other than section 121) and Schedules I to IV to the Act.

Definition "listed international agreement"

ETA
2(1)

The definition "listed international agreement" is added to subsection 2(1) of the Act as a consequence of the amendments to subsection 99(1) of the Act. The agreement included in the definition is the Convention on Mutual Administrative Assistance in Tax Matters, as amended from time to time, concluded at Strasbourg on January 25, 1988. That Convention provides a framework for governments to combat tax avoidance and tax evasion on a global scale by facilitating the exchange of information between national tax administrations.

The amendment comes into force on Royal Assent.

Clause 65

Waiver or Cancellation of Interest or Penalty

ETA
88(1)

Effective April 1, 2007, subsection 88(1) of the Act will introduce a ten-year limitation period in respect of waivers or cancellations of interest or penalties, such that the Minister of National Revenue may, on or before the day that is ten calendar years after the end of a reporting period of a person, waive or cancel interest or penalties payable by the person in respect of that reporting period.

Subsection 88(1) is amended to enable the Minister to waive or cancel interest or penalties in respect of a reporting period beyond the ten-year limitation period, provided the person makes an application for relief before the end of that limitation period.

The amendment comes into force on April 1, 2007.

Clause 66

Provision of Documents May be Required

ETA
99(1)

Subsection 99(1) of the Act provides that the Minister of National Revenue may by notice require that any person provide any book, record, writing or other document or any information or further information for any purpose relating to the administration or enforcement of the Act.

Subsection 99(1) is amended to provide that the Minister may by notice require any person to provide any book, record, writing or other document or any information or further information relating to the administration or enforcement of the Act, or of a listed international agreement.

A "listed international agreement" is newly defined in subsection 2(1) of the Act to mean the Convention on Mutual Administrative Assistance in Tax Matters, as amended from time to time, concluded at Strasbourg on January 25, 1988.

The amendment applies on Royal Assent.


Part 2 
Amendments in Respect of Excise Duty on Alcohol and Tobacco Products

Excise Act, 2001

Clause 67

Interpretation

EA, 2001
2

Section 2 of the Excise Act, 2001 defines terms that apply for the purposes of the Act.

Subclauses 67(1) to (4)

Definitions

EA, 2001
2

Definition "tobacco dealer"

"Tobacco dealer" is currently defined under the Act to mean a person, other than a tobacco licensee, who purchases and sells raw leaf tobacco on which duty is not imposed, without taking physical possession of the tobacco.

The definition "tobacco dealer" is amended to remove the reference to licensed tobacco dealers not taking physical possession of raw leaf tobacco. This change is consistent with other amendments to the Act to permit licensed tobacco dealers to possess and import raw leaf tobacco on which duty is not imposed (see clauses 77 and 80(2)).

The proposed amendment is deemed to have come into force on April 1, 2003, the same date as other provisions of the Excise Act, 2001 relating to licensing came into force.

Definition "spirits"

For the purposes of the Act, "spirits" means any material or substance containing more than 0.5% absolute ethyl alcohol by volume other than wine, beer, vinegar, denatured alcohol, specially denatured alcohol, an approved formulation or any product made from any of the aforementioned products except wine.

The definition "spirits" is amended to exclude fusel oil or other refuse from the definition. Fusel oil and other refuse are by-products of the distillation process. They are non-potable and are either disposed of or used in the manufacture of products other than beverage alcohol. This change ensures that fusel oil and other refuse are not considered "spirits" and therefore are neither subject to duty nor the controls over spirits.

The proposed amendment is deemed to have come into force on April 1, 2003, the same date as other provisions of the Excise Act, 2001 relating to licensing came into force.

Definition "mark"

The French version of the definition of "mark" (« marquer ») is amended to bring it in line with the English version. The amended definition specifies that the form and manner in which a special container of alcohol is marked is prescribed by regulation.

The proposed amendment is deemed to have come into force on April 1, 2003, the same date as other provisions of the Excise Act, 2001 relating to licensing came into force.

Definition "listed international agreement"

The definition "listed international agreement" is added to section 2 as a consequence of the amendments to subsections 208(1) and 211(6) and paragraph 221(2)(a). The agreement included in the definition is the Convention on Mutual Administrative Assistance in Tax Matters, as amended from time to time, concluded at Strasbourg on January 25, 1988. That Convention provides a framework for governments to combat tax avoidance and tax evasion on a global scale by facilitating the exchange of information between national tax administrations.

The amendment comes into force on Royal Assent.

Definition "restricted formulation"

The Act is amended to add a new definition, "restricted formulation". "Restricted formulation" means an approved formulation on which the Minister of National Revenue imposes the condition or restriction under section 143 of the Act that the formulation may only be used by a licensed user or be exported. The definition is relevant for the purposes of describing a sub-category of approved formulations in respect of which controls on their possession, use and disposal are imposed under the Act.

The proposed amendment is deemed to have come into force on April 1, 2003, the same date as other provisions of the Excise Act, 2001 relating to licensing came into force.

Clause 68

Licences

EA, 2001
14

Section 14 provides that the Minister of National Revenue may issue a licence to a person, who meets the requirements set out in the regulations, authorizing the person to carry out certain activities under the Act. This section also specifies that a person is not entitled to an alcohol licence solely because the person is deemed to have produced or packaged alcohol under the Act.

Subclause 68(1)

Issuance

EA, 2001
14(1)(c)

Existing paragraph 14(1)(c) provides that the Minister of National Revenue may issue a user’s licence to a person authorizing the person to use bulk alcohol and non-duty-paid packaged alcohol.

Paragraph 14(1)(c) is amended to indicate that a user’s licence entitles the licence holder to use restricted formulations. This amendment is required as a result of controls being imposed on restricted formulations under the Act. These controls are consistent with the treatment of certain approved formulae under theformer excise framework.

The proposed amendment is deemed to have come into force on April 1, 2003, the same date as other provisions of the Excise Act, 2001 relating to licensing came into force.

Subclause 68(2)

Production Excluded and Issuance of Wine Licence

EA, 2001
14(3) and (4)

Existing subsection 14(3) specifies that a person will not be entitled to hold a spirits licence solely because the person is deemed to have produced spirits under subsection 131(2) of the Act. Subsection 131(2) deems spirits to be produced at the time bulk wine is blended with spirits and the resulting product is spirits.

Subsection 14(3) is amended to replace the reference to subsection 131(2) with a reference to new section 131.2. Section 131.2 deems spirits to be produced at the time wine is blended with bulk spirits and the resulting product is spirits and also deems spirits to be produced at the time a material or substance containing absolute ethyl alcohol, other than spirits or wine, is blended with bulk spirits or wine and the resulting product is spirits.

Subsection 14(3) is also amended to ensure that a person will not be entitled to hold a spirits licence solely because the person produced spirits as a result of, or for the purpose of, analyzing the composition of a substance containing ethyl alcohol.

New subsection 14(4) provides that the Minister of National Revenue may issue a wine licence to a person, who is a holder of a spirits licence and a user’s licence, authorizing the person to fortify wine. The amendment ensures the continuation of the practice under the former excise framework where spirits licensees who were licensed as a bonded manufacturer could fortify wine that would be used to flavour other spirits. The amendment is consistent with other controls under the Act on the possession and disposition of bulk wine, as well as to the amendment of new section 62.1 that prohibits the fortification of wine other than in accordance with section 130 of the Act, specifically other than in accordance with a user’s licence and wine licence (see clause 91).

The proposed amendments are deemed to have come into force on April 1, 2003, the same date as other provisions of the Excise Act, 2001 relating to licensing came into force.

Clause 69

Alcohol Registration

EA, 2001
17

Section 17 provides that the Minister of National Revenue may issue an alcohol registration to a person who meets the requirements set out in the regulations. An alcohol registration authorizes the person to store or transport bulk alcohol and specially denatured alcohol.

Section 17 is amended to authorize a person who holds an alcohol registration to also store or transport a restricted formulation. The amendment is necessary as a result of new controls being introduced on the possession, use and disposal of restricted formulations.

The proposed amendment is deemed to have come into force on April 1, 2003, the same date as other provisions of the Excise Act, 2001 relating to licensing came into force.

Clause 70

Issuance of Excise Warehouse Licence

EA, 2001
19(1)

Existing subsection 19(1) provides that the Minister of National Revenue may, subject to the regulations, issue an excise warehouse licence to a person who is not a retailer of alcohol, authorizing the person to possess non-duty-paid packaged alcohol or unstamped tobacco products in the person’s excise warehouse.

Subsection 19(1) is amended to replace the reference to "tobacco product" with "manufactured tobacco or cigars". "Tobacco product" is defined under the Act to mean manufactured tobacco, packaged raw leaf tobacco or cigars. Packaged raw leaf tobacco means raw leaf tobacco that is packaged in a prescribed package. Because packaged raw leaf tobacco is not supplied to the export market or the domestic duty-free market (i.e., cigars and manufactured tobacco for sale to accredited representatives and cigars and imported manufactured tobacco for sale in a duty free shop or as ships’ stores), a number of provisions, including subsection 19(1), are amended to specify that only manufactured tobacco or cigars may be placed in an excise warehouse.

The proposed amendment is deemed to have come into force on April 1, 2003, the same date as other provisions of the Excise Act, 2001 relating to licensing came into force.

Clause 71

Issuance of Special Excise Warehouse Licence

EA, 2001
20(1)

Existing subsection 20(1) provides that the Minister of National Revenue may, subject to the regulations, issue a special excise warehouse licence to a person who is authorized by a tobacco licensee to be the sole distributor of the licensee’s tobacco products to accredited representatives.

Subsection 20(1) is amended to replace the reference to "tobacco product" with "manufactured tobacco or cigars". Because packaged raw leaf tobacco is not supplied to accredited representatives, the amended subsection specifies that only manufactured tobacco or cigars may be distributed by a special excise warehouse licensee.

The proposed amendment is deemed to have come into force on April 1, 2003, the same date as other provisions of the Excise Act, 2001 relating to licensing came into force.

Clause 72

Return of Tobacco

EA, 2001
21

Section 21 sets out requirements for the return of the tobacco products of a tobacco licensee from a special excise warehouse where the licensee of the special excise warehouse ceases to be authorized by the tobacco licensee to distribute the licensee’s tobacco products to accredited representatives.

Section 21 is amended to replace the references to "tobacco product" with "manufactured tobacco or cigars". This amendment is consistent with other changes being made to the Act, including the amendment to section 20 in respect of special excise warehouses, that restrict the types of tobacco that may be supplied to the duty-free and export markets to manufactured tobacco and cigars.

The proposed amendment is deemed to have come into force on April 1, 2003, the same date as other provisions of the Excise Act, 2001 relating to licensing came into force.

Clause 73

Licences and Registrations not Statutory Instruments

EA, 2001
24.1

New section 24.1 clarifies that any licence or registration issued under this Act is not a statutory instrument for the purposes of the Statutory Instruments Act. This provision ensures that licences and registrations may be issued without meeting the requirements of the Statutory Instruments Act, such as pre-publication.

The proposed amendment is deemed to have come into force on April 1, 2003, the same date as other provisions of the Excise Act, 2001 relating to licensing came into force.

Clause 74

Exception – Manufacturing for Personal Use

EA, 2001
25(3)

Subsection 25(3) currently provides that an individual may, without holding a tobacco licence, manufacture tobacco products from duty-paid packaged raw leaf tobacco for the individual’s personal use. In addition, an individual may manufacture tobacco products from raw leaf tobacco grown on land on which the individual resides, provided the quantity of products manufactured for the personal use of the individual and each adult family member who lives with the individual does not exceed 15 kg per person each year.

Subsection 25(3) is amended to replace the reference to "tobacco product" with "manufactured tobacco or cigars". "Tobacco product" is defined under the Act to mean manufactured tobacco, packaged raw leaf tobacco or cigars. Raw leaf tobacco that is intended for personal use in the circumstances described in this subsection would not be "packaged" for purposes of the Act. As a result, subsection 25(3) is amended to give a more accurate description of the types of tobacco that an individual would manufacture for personal use.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 75

Unlawful Removal from Premises of Tobacco Licensee

EA, 2001
28(2)(a)

Existing paragraph 28(2)(a) authorizes a tobacco licensee to remove raw leaf tobacco from the licensee’s premises for return to a tobacco grower, delivery to another tobacco licensee or export.

Paragraph 28(2)(a) is amended to permit removals of raw leaf tobacco by a tobacco licensee from the premises of the licensee for return to a licensed tobacco dealer. This change is one of the amendments made to the Act to authorize licensed tobacco dealers, who are in the business of buying and selling raw leaf tobacco, to possess raw leaf tobacco on which duty is not imposed.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 76

Unlawful Removal from Premises of Tobacco Dealer

EA, 2001
28.1

New section 28.1 places controls on removals of raw leaf tobacco from the premises of a licensed tobacco dealer. Subsection 28.1(1) prohibits the removal of raw leaf tobacco from a licensed tobacco dealer’s premises. However, subsection 28.1(2) provides three exceptions to this prohibition. A licensed tobacco dealer may remove raw leaf tobacco from the licensee’s premises for return to a tobacco grower, delivery to a tobacco licensee or another licensed tobacco dealer, or export.

The new controls on removals of raw leaf tobacco from the premises of a licensed tobacco dealer are required as a result of licensed tobacco dealers being authorized under section 30 to possess raw leaf tobacco on which duty is not imposed (see clause 77).

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 77

Selling, etc., Unstamped Raw Leaf Tobacco

EA, 2001
30(2)(a) and (b)

Subsection 30(2) provides exceptions to the prohibition against the possession, sale, offering for sale, purchase or disposal of raw leaf tobacco that is not packaged and stamped. The prohibition currently does not apply to:

Subsection 30(2) is amended to permit licensed tobacco dealers to possess raw leaf tobacco that is not packaged and stamped, in addition to being able to purchase, sell or offer it for sale. This change is consistent with other amendments to the Act to permit licensed tobacco dealers to possess raw leaf tobacco on which duty is not imposed.

The subsection is also amended to authorize a prescribed person to transport raw leaf tobacco under prescribed circumstances and conditions. This amendment provides greater flexibility to tobacco growers, licensed tobacco dealers and tobacco licensees by enabling them to use a common carrier to transport raw leaf tobacco that is not packaged and stamped.

The proposed amendments are deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 78

Exceptions to Sections 26 and 30

EA, 2001
31(a)(ii)

Section 31 exempts tobacco growers from some of the restrictions imposed under sections 26 and 30 on raw leaf tobacco. Under paragraph 31(a), a tobacco grower may possess or deal in raw leaf tobacco that the grower has grown for sale to a licensed tobacco dealer or for sale or other disposition to a tobacco licensee, if the tobacco is:

Subparagraph 31(a)(ii) is amended to permit raw leaf tobacco to be delivered to, or returned from, a licensed tobacco dealer. This change is consistent with other amendments to the Act to permit licensed tobacco dealers to possess raw leaf tobacco on which duty has not been imposed.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 79

Unlawful Possession or Sale of Tobacco Products

EA, 2001
32

Section 32 prohibits a person from selling, offering for sale or possessing any tobacco product that is not stamped, unless one of the exceptions described in either subsection 32(2) or 32(3) applies.

Subclauses 79(1) to (4)

Exceptions – Possession

EA, 2001
32(2)

Subsection 32(2) currently lists the exceptions to the prohibition against the possession of unstamped tobacco products.

Specific paragraphs under subsection 32(2) are amended to replace the references to "tobacco product" with "manufactured tobacco or cigars". These changes reflect the fact that packaged raw leaf tobacco is not supplied to the export market or the domestic duty-free market (i.e., cigars and manufactured tobacco for sale to accredited representatives and cigars and imported manufactured tobacco for sale in a duty free shop or as ships’ stores) and are consistent with other amendments made to the Act that restrict the tobacco that may be supplied to the duty-free or export market to manufactured tobacco and cigars.

The proposed amendments are deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Subclauses 79(5) to (10)

Exceptions – Sale or Offer for Sale

EA, 2001
32(3)

Existing subsection 32(3) sets out the exceptions to the prohibition against the sale or offer for sale of unstamped tobacco products.

Subsection 32(3) is amended by replacing the references to "tobacco product" in certain paragraphs with "manufactured tobacco or cigars". These changes are part of a series of amendments that restrict the types of tobacco products that may be supplied to the duty-free or export market to manufactured tobacco and cigars.

The proposed amendments are deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 80

Packaging and Stamping of Imported Tobacco

EA, 2001
35

Subsection 35(1) requires all imported tobacco products and raw leaf tobacco to be packaged and stamped before they are released under the Customs Act for entry into the duty-paid market. Subsection 35(2) sets out the exceptions to this requirement.

Subclause 80(1)

Exception for Certain Importations

EA, 2001
35(2)(b)

Paragraph 35(2)(b) currently provides that a tobacco licensee may import unstamped tobacco products that it manufactured if they are imported for re-working or destruction by the licensee in accordance with subsection 41(2) of the Act.

Paragraph 35(2)(b) is amended by replacing the reference to "tobacco product" with "manufactured tobacco or cigars". The amendment recognizes that there is no export market for packaged raw leaf tobacco, and is consistent with other amendments that restrict the types of tobacco products that may be supplied to the duty-free and export markets.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Subclause 80(2)

Exception for Certain Importations

EA, 2001
35(2)(d)

Paragraph 35(2)(d) authorizes a tobacco licensee to import raw leaf tobacco that is not packaged and stamped.

Paragraph 35(2)(d) is amended to permit importations by a licensed tobacco dealer of raw leaf tobacco that is not packaged and stamped. This change allows persons who were licensed as tobacco packers under the Excise Act, but who would not qualify for a tobacco licence under the Excise Act, 2001, to be able to continue to import raw leaf tobacco on which duty is not imposed, provided they hold a tobacco dealer’s licence.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 81

Unstamped Products to be Warehoused

EA, 2001
37

Section 37 requires any Canadian-manufactured tobacco product not stamped by a tobacco licensee to be placed immediately into an excise warehouse. "Tobacco product" is defined under the Act to mean manufactured tobacco, packaged raw leaf tobacco or cigars.

Section 37 is amended to replace the reference to "tobacco product" with "manufactured tobacco or cigars" in order to restrict the types of tobacco products that may be supplied to the duty-free and export markets. Since the only market for packaged Canadian raw leaf tobacco is the domestic duty-paid market, all packaged raw leaf tobacco should be stamped to show that duty has been paid and no packaged raw leaf tobacco should be entered into an excise warehouse.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 82

No Warehousing or Delivery of Tobacco Without Markings

EA, 2001
38(1) to (4)

Section 38 requires all tobacco products being placed in an excise warehouse and imported tobacco products being delivered to a duty free shop, accredited representative or customs bonded warehouse to have tobacco markings and other prescribed information printed on, or affixed to, the products’ containers. Exceptions to the marking and information requirements are set out for prescribed tobacco products not commonly sold in Canada in subsection 38(3) and for prescribed cigarettes of a particular type or formulation in subsection 38(4).

Consistent with the new restrictions on the types of tobacco products that may be supplied to the duty-free and export markets, the references to "tobacco products" in subsections 38(1) to (3) are replaced with "manufactured tobacco or cigars".

Section 38 is also amended to specify that only tobacco markings are not required to be placed or affixed on containers of prescribed manufactured tobacco not commonly sold in Canada and prescribed cigarettes of a particular type or formulation. Other prescribed information, such as the origin of the tobacco product, must be on all tobacco containers. This amendment puts in place a statutory requirement for information that is consistent with the practices of Canadian tobacco manufacturers and it brings the Act into compliance with specifications of the Framework Convention on Tobacco Control, an international treaty on tobacco controls sponsored by the World Health Organization.

The proposed amendments are deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 83

Importation for Re-working or Destruction

EA, 2001
41(2)

Under subsection 41(2), the Minister of National Revenue may authorize a tobacco licensee to import any tobacco product manufactured by the licensee in Canada for re-working or destruction by the licensee in the manner approved by the Minister.

Subsection 41(2) is amended to replace the reference to "tobacco product" with "manufactured tobacco or cigars", in order to reflect the restrictions under the Act on the types of tobacco products that may be supplied to the export market.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 84

Duty Relieved – Raw Leaf Tobacco

EA, 2001
46

Under section 46, the duty imposed on imported raw leaf tobacco under section 42 is relieved if the raw leaf tobacco is imported by a tobacco licensee for manufacture by the licensee.

In recognition that some imported raw leaf tobacco could be imported by one tobacco manufacturer and processed by another under the former excise framework, section 46 of the Act is amended to remove the requirement that the tobacco licensee who imports the raw leaf tobacco must also use it for further manufacture.

Section 46 is also amended to relieve raw leaf tobacco that is imported by licensed tobacco dealers from the duty imposed under section 42. This change is consistent with other amendments made to the Act to permit licensed tobacco dealers to possess and import raw leaf tobacco.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 85

Prohibition on Removal from an Excise Warehouse

EA, 2001
50(3) and (10)

Section 50 restricts the removal of Canadian-manufactured tobacco products from an excise warehouse or special excise warehouse. Subsection 50(3) imposes a general prohibition against the removal of Canadian tobacco products. Under subsection 50(10), a tobacco licensee may remove Canadian tobacco products that were manufactured by the licensee, if they are removed for re-working or destruction under section 41.

Subsections 50(3) and (10) are amended to replace the references to "tobacco product" with "manufactured tobacco or cigars". "Tobacco product" is defined to mean manufactured tobacco, packaged raw leaf tobacco or cigars. However, because packaged raw leaf tobacco is not supplied to the export market or the domestic duty-free market (i.e., cigars and manufactured tobacco for sale to accredited representatives and cigars and imported manufactured tobacco for sale in a duty free shop or as ships’ stores), only manufactured tobacco or cigars should be placed in an excise warehouse. The amendments to section 50 are consistent with other changes made to the Act that restrict the types of tobacco products that may be placed in an excise warehouse and a special excise warehouse.

The proposed amendments are deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 86

Removal of Imported Tobacco

EA, 2001
51(1) and (2)

Section 51 restricts the removal of imported tobacco products from an excise warehouse. The section is amended by replacing the references to "tobacco product" with "manufactured tobacco or cigars". This change is consistent with other amendments made to the Act to reflect the fact that there is no duty-free or export market for packaged raw leaf tobacco.

The proposed amendments are deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 87

Restriction – Special Excise Warehouse

EA, 2001
52

Section 52 restricts a special excise warehouse licensee’s possession of tobacco products in the licensee’s warehouse for the purpose of selling and distributing them to an accredited representative for the representative’s personal or official use.

Section 52 is amended to replace the reference to "tobacco product" with "manufactured tobacco or cigars". The amendment is consistent with other changes to the Act, including those to sections 20 and 21, that recognize that packaged raw leaf tobacco is not supplied to accredited representatives (see clauses 71 and 72).

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 88

Importations Involving a Provincial Authority

EA, 2001
59.1

New section 59.1 recognizes that subsection 3(1) of the Importation of Intoxicating Liquors Act (IILA) provides for Her Majesty in right of a province or a liquor authority to be the importer of alcohol into the province. However, for purposes of the Excise Act, 2001 and subsection 21.2(3) of the Customs Tariff, the person who would have been the importer in the absence of subsection 3(1) of the IILA (i.e., the physical importer) is deemed to be the importer of the alcohol.

Section 59.1 applies to both bulk and packaged alcohol and replaces the current section 75 of the Act, which only deals with bulk alcohol. Section 59.1 continues to ensure that the physical importer of bulk alcohol is the person to whom the restrictions under the Act on the importation and possession of bulk alcohol would apply. In addition, the new provision ensures that if a physical importer of packaged alcohol is an excise warehouse licensee or a licensed user, duty on the packaged alcohol is not payable at the time of importation if, after the release from customs, the alcohol is directly delivered to the importer in accordance with subsection 21.2(3) of the Customs Tariff.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 89

Prohibition – Production and Packaging of Spirits

EA, 2001
60(2)

Subsection 60(1) prohibits any person, other than a spirits licensee, from producing or packaging spirits. Subsection 60(2) provides an exception to the prohibition, by permitting a purchaser at a bottle-your-own premises to package duty-paid spirits that are obtained from a marked special container.

Subsection 60(2) is amended to add a further exception with respect to spirits produced in the course of, or for the purpose of, analyzing the composition of a substance containing absolute ethyl alcohol. This change reflects the fact that under former provisions of the Excise Act certain persons other than licensed distillers were permitted to possess stills or other equipment for the purpose of analysis of a substance, which may have resulted in small amounts of spirits being produced. The amendment to the Excise Act, 2001 ensures that persons who undertake the analysis of a substance, and as a result produce spirits, will be exempt from the requirement to have a spirits licence.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 90

Prohibition – Possession of Still

EA, 2001
61

Section 61 of the Act currently authorizes a spirits licensee or a person who has a pending application for a spirits licence to possess, with the intention of producing spirits, a still or other equipment suitable for the production of spirits.

Section 61 is amended to also permit a person to possess a still or other equipment suitable for producing spirits if the possession is limited to the production of spirits for the purpose of, or as a result of, the analysis of the composition of a substance containing absolute ethyl alcohol.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 91

Prohibition – Fortification of Wine

EA, 2001
62.1

New section 62.1 prohibits a person from fortifying bulk wine with bulk spirits other than in accordance with section 130. Under section 130, a person who is both a licensed user and a wine licensee may fortify wine to an alcoholic strength not in excess of 22.9% absolute ethyl alcohol by volume. Section 62.1 is consistent with other controls under the Excise Act, 2001 on the possession and disposition of bulk wine and reflects the fortification of wine under the former excise framework, where only a bonded manufacturer licensed under the Excise Act could fortify wine with non-duty-paid spirits.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 92

Application – In-Transit and Transhipped Alcohol

EA, 2001
66

Section 66 concerns imported alcohol and specially denatured alcohol which, in accordance with customs legislation, is shipped by customs bonded carrier through Canada or stored in Canada in a sufferance or customs bonded warehouse en route to a foreign destination. Such alcohol is exempted by section 66 from the application of certain controls under the Excise Act, 2001, including restrictions on the importation of bulk spirits and wine under section 74.

Section 66 is amended to reflect the fact that section 74 is renumbered as section 75 (see clause 95).

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 93

Prohibition – Possession of Bulk Alcohol

EA, 2001
70(2)(c.1)

Subsection 70(2) sets out exceptions to the prohibition, under subsection 70(1), on the possession of bulk alcohol. New paragraph 70(2)(c.1) provides an additional exception for a person who produced bulk spirits in the course of the person’s analysis of the composition of a substance containing absolute ethyl alcohol and who possesses the spirits during the period of analysis. This new exception is consistent with other amendments that permit, for purposes of analysis, the production of spirits from substances containing ethyl alcohol by persons who are not licensed as spirits licensees.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 94

Restriction – Licensed User

EA, 2001
73(d)

Section 73 sets out how a licensed user may use or dispose of bulk alcohol. Under paragraph 73(d), a licensed user may use bulk spirits to fortify wine in accordance with section 130 or blend bulk wine with spirits in accordance with section 131.

Paragraph 73(d) is amended to permit a licensed user to use bulk wine to produce spirits in accordance with new section 131.1.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fullycame into force.

Clause 95

Disposal and Importation of Bulk Alcohol

EA, 2001
74 and 75

Section 74

– Disposal of Bulk Spirits

New section 74 requires a person, who produced spirits in the course of, or for the purpose of, analyzing the composition of a substance containing absolute ethyl alcohol, to destroy or dispose of those spirits in a manner approved by the Minister of National Revenue once the analysis is complete. The provision is one of a number of amendments made to the Act to permit persons who are not spirits licensees to produce spirits in the course of their analysis of substances containing ethyl alcohol.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Section 75

– Importation of Bulk Alcohol

Currently, section 74 of the Excise Act, 2001 restricts the importation of bulk alcohol to specified licensees. Section 74 is renumbered as section 75 and the existing section 75 is replaced by new section 59.1 (see clause 88).

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 96

Prohibition – Possession of Non-Duty-Paid Packaged Alcohol

EA, 2001
88(2)(i) and (j)

Subsection 88(2) provides exceptions to the prohibition under subsection 88(1) against the possession of non-duty-paid packaged alcohol. Subsection 88(2) is amended to introduce two more exceptions to the prohibition.

First, new paragraph 88(2)(i) permits a wine licensee or an individual to possess at the licensee’s premises non-duty-paid packaged wine that was produced or packaged by the wine licensee and removed from the licensee’s excise warehouse, if the wine is for supply to individuals for consumption as a free sample at the premises where the licensee produces or packages wine. This amendment is consistent with other amendments to the Act that will exempt from the payment of duty wine given as free samples to individuals at the premises of wine licensees. The provisions related to duty-free wine samples are consistent with the excise tax treatment of wine given away as samples at a vintner’s premises under the former excise framework.

Second, new paragraph 88(2)(j) provides that any person may possess wine that is described under paragraph 135(2)(b). Under that paragraph, duty is not imposed on wine that is produced by a wine licensee and packaged by or on behalf of the licensee during a fiscal month, if the wine licensee’s total sales of wine in both the previous fiscal year and the current fiscal year before that month did not exceed $50,000.

The proposed amendments are deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 97

Restricted Formulations

EA, 2001
93.1 and 93.2

Section 93.1

– Restriction to Licensed Users

New section 93.1 prohibits a licensed user from using or disposing of a restricted formulation except in accordance with conditions or restrictions imposed on the formulation by the Minister of National Revenue under section 143. Restricted formulations are a sub-category of approved formulations in respect of which the Act imposes further controls on their possession, use and disposal because, for instance, they contain significant levels of absolute ethyl alcohol. Section 93.1 provides the foundation for stronger offence and penalty provisions in respect of restricted formulations.

Section 93.2

– Prohibition on the Possession of Restricted Formulations

New section 93.2 prohibits any person from possessing a restricted formulation unless the person is a licensed user or an alcohol registrant. The measure is consistent with the tighter controls that are required in respect of restricted formulations, which reflects the treatment of certain approved formulae under the former excise framework, and it provides a basis for stronger offence and penalty provisions with respect to this particular sub-category of approved formulations.

The proposed amendments are deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 98

Responsibility for Wine Ceases

EA, 2001
117.1

The responsibility rules under the Act establish who is responsible for bulk alcohol. The person who is responsible for bulk alcohol is liable for duty on the alcohol at the time it is packaged or taken for use. Under the Act, only a spirits licensee or licensed user will be responsible for bulk spirits, while a wine licensee or licensed user will be responsible for bulk wine.

New section 117.1, along with other related amendments to the Act, clarifies the treatment under the Act of wine that is distilled to produce spirits. The section provides that at the time spirits are produced from bulk wine, the wine licensee or licensed user who was responsible for the wine ceases to be responsible for it. The general responsibility rule under section 104 for bulk spirits then applies in respect of the spirits that are produced from the wine. As a result, a spirits licensee or licensed user is responsible for the resulting spirits and liable for the duty on them.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 99

Production of Spirits Using Wine

EA, 2001
131 to 131.2

Section 131

– Blending Wine with Spirits

Subsection 131(1) currently provides that a licensed user may blend bulk wine and spirits to produce spirits if the user is also a spirits licensee. Subsection 131(2) relieves the duty that was imposed on the spirits that were blended with the wine and deems the resulting spirits to have been produced at the time of blending. By deeming the spirits to be produced at the time of blending, duty will then be imposed under section 122 on the resulting spirits.

Section 131 is amended by moving subsection 131(2) to new subsection 131.2(1) and renumbering subsection 131(1) as section 131.

Section 131.1

– Producing Spirits from Wine

New section 131.1 provides that a licensed user who is also a spirits licensee may produce spirits from bulk wine. This change is linked with an amendment to section 73 that sets out the permitted uses of bulk alcohol by a licensed user (see clause 94). Both amendments to the Act ensure greater flexibility in regard to the production of spirits from wine and are consistent with the Act’s controls over the possession of bulk alcohol.

Section 131.2

– Deemed Production of Spirits – Blending Wine

New section 131.2 sets out the duty treatment of spirits that are produced from the blending of either bulk spirits with wine or bulk alcohol with a substance containing absolute ethyl alcohol, other than spirits or wine. The duty previously imposed on any spirits used in the blend (under section 122 of the Act or section 21.1 of the Customs Tariff) is relieved and the resulting spirits are deemed to have been produced at the time of blending.

Subsection 131.2(1), which replaces existing subsection 131(2), has been broadened to apply in all circumstances where wine and bulk spirits are blended and the resulting product is spirits. Subsection 131.2(2) is intended to apply to situations where spirits are produced through the blending of spirits or wine with another product containing ethyl alcohol, other than spirits or wine, such as a restricted formulation.

The proposed amendments are deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 100

Wine Produced for Personal Use and by Small Producers

EA, 2001
135(2)(b)

Currently, paragraph 135(2)(b) provides that duty is not imposed on wine that is produced by a wine licensee and packaged by the licensee during a particular fiscal month if the licensee’s sales of wine in the twelve fiscal months preceding the particular fiscal month do not exceed $50,000.

Paragraph 135(2)(b) is amended to provide that wine that is produced by a wine licensee and packaged by or on behalf of the licensee during a fiscal month of a particular fiscal year of the licensee will not be subject to duty if:

The amendment to paragraph 135(2)(b) reflects more accurately the administrative treatment of the former excise tax exemption for wine produced by small vintners under the Excise Tax Act. The amendment also permits wine to be packaged on behalf of a small vintner in recognition that many of the smallest vintners do not have their own packaging facilities and equipment.

The proposed amendments are deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 101

Removals of Wine for Consignment Sales

EA, 2001
136

Section 136 currently sets out the general rule that when packaged wine, which was entered into an excise warehouse, is removed from a warehouse for entry into the duty-paid market, the duty on the wine is payable by the excise warehouse licensee.

New subsection 136(2) introduces an exception to the general rule. It deems wine to be removed from the excise warehouse of the small wine licensee who produced or packaged the wine at the time the wine is sold, if the wine was removed for delivery and sale on a consignment basis in a retail store that is operated by or on behalf of two or more small wine licensees and that is not located at a wine licensee’s premises. Under new subsection 136(3), a wine licensee is defined as a small wine licensee during a fiscal year if the licensee sold no more than 60,000 litres of wine in the licensee’s previous fiscal year.

This amendment puts in place rules that ensure the excise tax treatment of wine sold on consignment under the former excise framework continues to apply to wine sold on consignment by small vintners under the Excise Act, 2001.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 102

Duty Payable on Unaccounted Packaged Wine

EA, 2001
138(1)(a.1)

Subsection 138(1) currently provides that duty is payable on non-duty-paid packaged wine that has been received by an excise warehouse licensee or licensed user who cannot account for it as being present in the licensee’s excise warehouse or the licensed user’s specified premises, as having been removed, used or destroyed in accordance with the Act, or as having been lost in prescribed circumstances.

New paragraph 138(1)(a.1) provides that duty is not payable on non-duty-paid packaged wine described in subsection 136(2), if the wine can be accounted for as being at a retail store described in that subsection. The wine described by subsection 136(2) is wine produced or packaged by a small wine licensee and delivered for sale on a consignment basis in a retail store, which is operated by or on behalf of two or more small wine licensees and is not located at a wine licensee’s premises.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 103

Duty not Payable – Packaged Alcohol

EA, 2001
145(2)(d)

Section 145 specifies the circumstances under which duty will not be payable in respect of bulk and non-duty-paid packaged alcohol that is analyzed, destroyed or used in a manner approved by the Minister of National Revenue.

New paragraph 145(2)(d) provides that duty is not payable on packaged wine that an excise warehouse licensee takes for use as free samples given to individuals, if the excise warehouse licensee is also the wine licensee who produced or packaged the wine and the wine is provided for consumption at the wine licensee’s premises. This amendment is consistent with other amendments made to the Act that ensure the excise tax treatment of wine given away as free samples at vintners’ premises under the former excise framework continues to apply to wine supplied for this purpose under the Excise Act, 2001.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 104

Duty not Payable – Wine Samples

EA, 2001
147(4)

Section 147 specifies the circumstances under which duty will not be payable when non-duty-paid packaged alcohol is removed from an excise warehouse.

New subsection 147(4) provides that duty on non-duty-paid packaged wine, other than marked special containers of wine, is not payable if the wine is removed from the excise warehouse of the wine licensee who produced or packaged the wine for free supply to individuals as a sample for consumption at the premises where the licensee produces or packages wine. The amendment is part of a series of changes to the Act that are intended to continue the excise tax treatment of wine given away as samples at vintners’ premises under the former excise framework.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 105

Restriction on Removal from Excise Warehouse

EA, 2001
151(2)(a)(viii) and (a.1)

Subsection 151(1) prohibits any person from removing non-duty-paid packaged alcohol from an excise warehouse. Subsection 151(2) specifies the exceptions to the prohibition.

Paragraph 151(2)(a) sets out the circumstances under which non-duty-paid packaged alcohol, other than a marked special container of alcohol, may be removed from an excise warehouse. Paragraph 151(2)(a) is amended to renumber subparagraph 151(2)(a)(viii) as subparagraph 151(2)(a)(ix) and to permit, under subparagraph 151(2)(a)(viii), removals of wine for delivery to a retail store as described by new subsection 136(2). Under that subsection, wine may be removed from the excise warehouse of the small wine licensee who produced or packaged the wine for delivery and sale on a consignment basis at a retail store that is operated by or on behalf of two or more small wine licensees and that is not located on a wine licensee’s premises. This amendment is consistent with other changes being made in respect of consignment sales of wine by small vintners.

Subsection 151(2) is also amended to add new paragraph 151(2)(a.1), which authorizes non-duty-paid packaged wine, other than marked special containers of wine, to be removed from the excise warehouse of the wine licensee who produced or packaged the wine, if the wine is removed for supply to individuals for consumption as a free sample at the premises where the licensee produces or packages wine. This amendment is one of a series of amendments to the Act to permit wine samples to be provided without the payment of duty, consistent with the excise tax treatment of wine given away as free samples at vintners’ premises under the former excise framework.

The proposed amendments are deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 106

Return of Non-Duty-Paid Wine

EA, 2001
153.1

New section 153.1 permits non-duty-paid wine that was removed from an excise warehouse in the circumstances described by subparagraph 151(2)(a)(viii) to be returned, under prescribed conditions, to the warehouse as non-duty-paid packaged wine, provided the wine had not entered the duty-paid market. Under that subparagraph, non-duty-paid wine may be removed from the excise warehouse of the small wine licensee who produced or packaged the wine for delivery and sale on a consignment basis at a retail store that is operated by or on behalf of two or more small wine licensees and that is not located on a wine licensee’s premises. This change is consistent with other amendments made to the Act in respect of consignment sales of wine by small vintners.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 107

Filing by Licensee

EA, 2001
160

Subsection 160(1) requires every licensee under the Act to file, by the last day of the first month following each fiscal month of the licensee, a return for the fiscal month and to calculate and remit duty, if any, in respect of that fiscal month. Under subsection 160(2), licensed tobacco dealers are currently not required to file monthly returns.

The provision is amended by repealing subsection 160(2) and renumbering subsection 160(1) as section 160. As a result, licensed tobacco dealers are required to file returns in respect of their fiscal months. This amendment is consistent with other changes made to the Act to permit licensed tobacco dealers to possess raw leaf tobacco.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 108
Ten-Year Limitation Period on Waiving or Reducing Interest

EA, 2001
173

Effective April 1, 2007, section 173 will introduce a ten-year limitation period in respect of waivers or reductions of interest, such that the Minister of National Revenue may, on or before the day that is ten calendar years after the day an amount was required to be paid by a person, waive or reduce interest on the amount payable by the person.

Section 173 is amended to enable the Minister to waive or reduce interest beyond the ten-year limitation period, provided the person makes an application for relief before the end of that limitation period.

This amendment was not previously announced. It comes into force on April 1, 2007.

Clause 109

Restriction on Refunds

EA, 2001
177(a)

Paragraph 177(a) provides that a person is not entitled to a refund or payment of an amount under the Act to the extent that the amount was previously refunded, remitted, applied or paid to that person under this or any other Act of Parliament.

The paragraph is amended to clarify that "applied" is in respect of an amount previously applied against an amount owed by the person to Her Majesty under this or any other Act of Parliament. The English version of the provision is thus brought in line with the French version.

The proposed amendment comes into force upon Royal Assent.

Clause 110

Destroyed Imported Manufactured Tobacco

EA, 2001
181.1

New section 181.1 permits a duty free shop licensee to apply for a refund in respect of the special duty imposed on imported manufactured tobacco under section 53 and paid by the licensee, provided the licensee destroys the tobacco in accordance with the Customs Act and an application for the refund is made within two years of the tobacco being destroyed. This provision ensures that duty free shop operators will be able to obtain refunds of the special duty on imported manufactured tobacco that becomes stale-dated.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 111

Limitation on Refunding Overpayments; Limitation

EA, 2001
188(6) and 188(7)(b)(ii)

Effective April 1, 2007, subsection 188(6) and subparagraph 188(7)(b)(ii) will provide that no overpayment, refund or part of refund shall be applied or refunded to a person until the person has filed all returns and other records of which the Minister of National Revenue has knowledge and that are required to be filed under various federal taxation statutes including the Customs Act.

Each of the provisions is amended by adding a reference to the Minister of Public Safety and Emergency Preparedness, who is responsible for the Customs Act.

This measure was not previously announced. It comes into force on April 1, 2007.

Clause 112

Restriction on Refunds

EA, 2001
189(4)

Effective April 1, 2007, subsection 189(4) will provide that a refund shall not be paid to a person until the person has filed all returns and other records of which the Minister of National Revenue has knowledge and that are required to be filed under various federal taxation statutes including the Customs Act.

The subsection is amended by adding a reference to the Minister of Public Safety and Emergency Preparedness, who is responsible for the Customs Act.

This measure was not previously announced. It comes into force on April 1, 2007.

Clause 113

Extension of Time by Minister

EA, 2001
196

Section 196 of the Act allows a person to make an application to the Minister of National Revenue to extend the time for filing a notice of objection to an assessment, subject to certain conditions.

Subclause 113(1)

Exception for Extension of Time by Minister

EA, 2001
196(4)

Subsection 196(4) of the French version of the Act is amended to replace the term "faire droit à" by the term "recevoir" to ensure consistency between both official versions of the Act.

The amendment comes into force upon Royal Assent.

Subclause 113(2)

Conditions

Grant of Application

EA, 2001
196(7)(b)(i)

Subsection 196(7) sets conditions that must be met in order for an application to extend the time for filing a notice of objection to an assessment to be granted. Currently, the conditions include a requirement that the person demonstrate that, within the time limited under the Act, the person

(A) was unable to act or to give a mandate to act in their name, and

(B) had a bona fide intention to object to the assessment.

The provision is amended by replacing the conjunction "and" with "or", bringing the extension of time provision in line with those in other taxation statutes.

This amendment comes into force upon Royal Assent.

Clause 114

Extension of Time to Appeal Assessment

EA, 2001
197(6)(b)(i)

Subsection 197(6) sets conditions that must be met in order for an application to the Tax Court of Canada to extend the time for filing a notice of objection to an assessment to be granted. Currently, the conditions include a requirement that the person demonstrate that, within the time limited under the Act, the person

(A) was unable to act or to give a mandate to act in their name, and

(B) had a bona fide intention to object to the assessment.

The provision is amended by replacing the conjunction "and" with "or", bringing the extension of time provision in line with those in other taxation statutes.

This amendment comes into force upon Royal Assent.

Clause 115

Extension of Time to Appeal to Tax Court of Canada

EA, 2001
199(5)(b)(i)

Subsection 199(5) sets conditions that must be met in order for an application to the Tax Court of Canada to extend the time for appealing an assessment to be granted. Currently, the conditions include a requirement that the person demonstrate that, within the time limited under the Act, the person

(A) was unable to act or to give a mandate to act in their name, and

(B) had a bona fide intention to appeal.

The provision is amended by replacing the conjunction "and" with "or", bringing the extension of time provision in line with those in other taxation statutes.

This amendment comes into force upon Royal Assent.

Clause 116

Requirement to Provide Records or Information

EA, 2001
208(1)

Subsection 208(1) of the Act provides that, despite any other provision of the Act, the Minister of National Revenue may by notice require that any person provide information or any record for any purpose relating to the administration or enforcement of the Act. An exception is made where the information or record relates to an unnamed person or persons, in which case the procedure set out in subsections 208(2) to (6) of the Act must be followed.

Subsection 208(1) is amended to provide that the Minister may by notice require any person to provide information or any record for any purpose relating to the administration or enforcement of the Act, or of a listed international agreement.

A "listed international agreement" is newly defined in section 2 to mean the Convention on Mutual Administrative Assistance in Tax Matters, concluded at Strasbourg on January 25, 1988.

This amendment applies on Royal Assent.

Clause 117

Disclosure of Personal Information

EA, 2001
211

Section 211 provides for the confidentiality of information obtained by the Minister of National Revenue in the administration or enforcement of the Act that reveals, directly or indirectly, the identity of a person. This information cannot be used or communicated unless specifically authorized by one or more of the exceptions contained in the section.

Subclause 117(1)

Disclosure of Confidential Information

EA, 2001
211(6)(e)(v)

Subparagraph 211(6)(e)(v) currently permits disclosure of the name, address, occupation and size or type of business of a person to a government department or agency for the purpose of enabling that department or agency to obtain statistical data for research and analysis.

Subparagraph 211(6)(e)(v)is amended to add "telephone number" to the list of data that may be disclosed in those circumstances.

The amendment comes into force on Royal Assent.

Subclause 117(2)

Disclosure of Confidential Information

EA, 2001
211(6)(l) and (m)

Subsection 211(6) is amended to add new paragraph (l) which authorizes an official to provide or to allow the inspection of or access to confidential information solely for the purposes of a provision contained in a listed international agreement. The term "listed international agreement" is newly defined in section 2 of the Act to mean the Convention on Mutual Administrative Assistance in Tax Matters, as amended from time to time, concluded at Strasbourg on January 25, 1988.

Subsection 211(6) is also amended to add new paragraph (m), which allows the communication of confidential information with respect to business activities carried on in a province to a statistical agency in that province. The information may be provided solely for the agency’s research and analysis and only if the agency is authorized under its provincial law to collect the same or similar information on its own behalf. New paragraph (m) parallels existing paragraph 241(4)(o) of the Income Tax Act.

The proposed amendments come into force upon Royal Assent.

Clause 118

Punishment for Certain Alcohol Offences

EA, 2001
217

Section 217 currently makes certain unauthorized activities involving alcohol or specially denatured alcohol an offence under the Act. A person convicted of an offence under this section is liable to a fine determined in accordance with subsections 217(2) and (3) or to imprisonment, on indictment, for a term not exceeding five years or, on summary conviction, for a term not exceeding 18 months or to both the fine and imprisonment.

Section 217 is amended to remove the references to "denatured alcohol" since the provision does not cover offences involving denatured alcohol. The section is also amended to add references to new sections 93.1, which restricts the use and disposal of a restricted formulation, and 93.2, which restricts the possession of a restricted formulation. Furthermore, section 217 is amended by including references to a "restricted formulation" when determining the minimum and maximum fines under subsections 217(2) and (3). The fines that are applied in respect of contraventions involving restricted formulations are equivalent to the fines determined in respect of specially denatured alcohol.

The proposed amendment comes into force upon Royal Assent.

Clause 119

Punishment for More Serious Alcohol Offences

EA, 2001
218(1)

Section 218 deals with more serious alcohol-related offences. Among the contraventions to the Act that constitute an offence under section 218 are contraventions of section 74, which restricts who may import bulk alcohol. The amendment to section 218 is consequential to section 74 being renumbered as section 75.

The proposed amendment comes into force upon Royal Assent.

Clause 120

Offence – Confidential Information

EA, 2001
221(2)(a)

Section 221 makes it an offence to contravene the confidentiality provisions in section 211 regarding information gathered by the Canada Revenue Agency in the administration or enforcement of the Act. Conviction carries a fine of up to $5,000, imprisonment for up to 12 months, or both.

Paragraph 221(2)(a) is amended to refer to new paragraph 211(6)(l), which allows the disclosure of confidential information for the purposes of a provision contained in a "listed international agreement" (a term newly defined in section 2 of the Act). Paragraph 221(2)(a) is also amended to refer to new paragraph 211(6)(m), which allows the communication of confidential information with respect to business activities carried on in a province to a statistical agency in that province.

The proposed amendments come into force upon Royal Assent.

Clause 121

Contravention of Section 38, 40, 41, 49, 61, 62.1, 99, 149 or 151

EA, 2001
234

Section 234 currently provides a maximum penalty of $25,000 for certain contraventions of the Excise Act, 2001.

Section 234 is amended to include a reference to new section 62.1, in order to specify a penalty in respect of the fortification of wine by an unauthorized person. Section 62.1 prohibits a person from using bulk spirits to fortify wine unless the person is both a licensed user and a wine licensee.

The proposed amendment comes into force upon Royal Assent.

Clause 122

Diversion of Black Stock Tobacco

EA, 2001
236(1)

Section 236 currently provides a penalty on tobacco licensees who pay duty on tobacco products at the lower rates set out in Schedule 1 to the Act, which apply to deliveries, in Canada and abroad, to duty free shops and as ships’ stores, but deliver the products to other destinations. Permitted deliveries of tobacco products subject to lower rates, known as black stock tobacco, by tobacco licensees also include to a customs bonded warehouse.

Subsection 236(1) is amended to ensure that this diversion penalty also applies to customs bonded warehouse licensees who deliver black stock tobacco to destinations other than to a person for use as ships’ stores in accordance with the Ships’ Stores Regulations. This amendment is consistent with the current administrative treatment of black stock tobacco in customs bonded warehouses and former provisions of the Customs Bonded Warehouses Regulations that limited the removals of this tobacco for use as ships’ stores.

The proposed amendment comes into force upon Royal Assent.

Clause 123

Diversion of Non-Duty-Paid Alcohol

EA, 2001
237(1)

Subsection 237(1) currently provides that if non-duty-paid packaged alcohol is removed from an excise warehouse for a purpose described by section 147, and the alcohol is not exported or delivered for that purpose, the excise warehouse licensee is liable to a penalty equal to 200% of the duty imposed on the alcohol.

Subsection 237(1) is amended to provide that if an excise warehouse licensee removes wine from the licensee’s warehouse in accordance with subsection 147(4) for the purpose of providing the wine as a free sample to individuals for consumption at the licensee’s premises and the wine is not provided for that purpose, the licensee is liable to a penalty equal to 200% of the duty imposed on the wine.

The proposed amendment comes into force upon Royal Assent.

Clause 124

Certain Contraventions Involving Alcohol

EA, 2001
243 and 243.1

Section 243

– Contravention of Section 73, 74 or 90

Section 243 currently provides that a person who contravenes any of sections 73, 76 or 89 to 91 of the Act is liable to a penalty. If the contravention involves spirits, the penalty is equal to the duty imposed on the spirits. If wine is involved, the penalty is equivalent to $0.62 per litre of the wine. Contraventions of these provisions relate to unauthorized activities involving persons who are either licensed or registered under the Act.

Section 243 is amended to ensure that the amount of penalty a person is liable to pay takes into account the amount of duty, if any, that is payable by the person in respect of the alcohol involved in the contravention. The section is also amended to provide a penalty for contraventions of new section 74, which requires that spirits produced during, or as a result of, the analysis of the composition of a substance containing absolute ethyl alcohol be destroyed or disposed of in a manner approved by the Minister of National Revenue after the analysis is complete. A further amendment to the section involves moving contraventions of sections 76, 89 and 91 to new section 243.1.

Section 243.1

– Contravention of Section 76, 89 or 91

Under new section 243.1, a person is liable to a penalty if the person contravenes any of sections 76, 89 or 91. If the contravention involves spirits, the person is liable to a penalty equal to the duty imposed on the spirits, and if the contravention involves wine, the person is liable to a penalty equal to $0.62 per litre of the wine. These penalty amounts are the same as provided for under section 243 before it was amended and contraventions of sections 76, 89 and 91 moved to new section 243.1.

The proposed amendments come into force upon Royal Assent.

Clause 125

Unauthorized Possession, etc. of Restricted Formulation

EA, 2001
247.1

New section 247.1 introduces a penalty for contraventions of the Act involving restricted formulations, by providing that a person who uses, disposes or possesses a restricted formulation in contravention of either section 93.1 or 93.2 is liable to a penalty equal to $10 per litre of restricted formulation involved in the contravention. The amount of the penalty is equivalent to the penalty that applies for similar contraventions of the Act involving specially denatured alcohol.

The proposed amendment comes into force upon Royal Assent.

Clause 126

Waiving or Reducing Failure to File Penalty

EA, 2001
255.1

Effective April 1, 2007, section 255.1 will introduce a ten-year limitation period in respect of waivers or reductions of penalty under section 251.1, such that the Minister of National Revenue may, on or before the day that is ten calendar years after the end of a fiscal month of a person, waive or reduce any penalty payable under section 251.1 by the person in respect of that fiscal month.

Section 255.1 is amended to enable the Minister to waive or reduce any penalty under section 251.1 in respect of a fiscal month beyond the ten-year limitation period, provided the person makes an application for relief before the end of that fiscal month.

This amendment was not previously announced. It comes into force on April 1, 2007.

Clause 127

Certain Things not to be Returned

EA, 2001
264

Section 264 currently provides that alcohol, specially denatured alcohol, raw leaf tobacco or tobacco products seized in the course of an inspection under section 260 may not be returned to any person, unless they were seized in error. Section 264 is amended to also prevent a seized restricted formulation from being returned to any person, except if the seizure was made in error. This amendment is consistent with other controls being introduced on the possession, use and disposal of restricted formulations.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 128

Dealing with Things Seized

EA, 2001
266(2)(d)

Subsection 266(1) specifies that the Minister of National Revenue may sell, destroy or otherwise deal with any item seized in the course of an inspection under section 260. However, under subsection 266(2), the Minister may only sell seized spirits or specially denatured alcohol to a spirits licensee, seized wine to a wine licensee and seized raw leaf tobacco or tobacco products to a tobacco licensee.

New paragraph 266(2)(d) is introduced to restrict the sale by the Minister of a seized restricted formulation to a licensed user. This amendment is consistent with the new controls on the possession, use and disposal of restricted formulations under the Act.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 129

Definition "common-law partner"

EA, 2001
297(6)

Section 297 provides an anti-avoidance rule for non-arm’s length transfers of property by a person liable to make a payment under the Act. Under this section, the transferor and the transferee, who for example may be a spouse or common-law partner, are jointly and severally or solidarily liable to pay the amount determined under subsection 297(1). For the purposes of this section, "common-law partner" is currently defined in subsection 297(6) in relation to an individual to mean a person who is cohabitating with the individual in a conjugal relationship for a period of at least one year.

Subsection 297(6) is amended to define the "common-law partner" of an individual to mean a person who, at that particular time, is a common-law partner of the individual for purposes of the Income Tax Act. This amendment to the Excise Act, 2001 brings the definition of "common-law partner" into alignment with the Excise Tax Act and the Income Tax Act and therefore ensures consistent administration of the anti-avoidance rule for non-arm’s length transfers.

The proposed amendment comes into force upon Royal Assent.

Clause 130

Regulations – Governor in Council

EA, 2001
304(1) and (3)

Section 304 provides the authority to the Governor in Council to make regulations to carry out the purposes and provisions of the Act, including, under paragraph 304(1)(n), respecting the sale under section 266 of alcohol, tobacco products, raw leaf tobacco or specially denatured alcohol seized under section 260.

Subclause 130(1)

Regulations – Sale of Restricted Formulations

EA, 2001
304(1)(n)

Paragraph 304(1)(n) is amended to also provide regulation making authority in respect of the sale of restricted formulations. This amendment is consistent with the new controls on the possession, use and disposal of restricted formulations under the Act and, in particular, with amended subsection 266(2) that restricts the sale by the Minister of National Revenue of a restricted formulation seized under the Act to a licensed user (see clause 128).

The proposed amendment comes into force upon Royal Assent.

Subclause 130(2)

Regulations – Incorporation by Reference

EA, 2001
304(3)

New subsection 304(3) clarifies that a regulation made under the Act may include a reference to any material, regardless of the material’s source, as it exists at a particular time or as periodically amended.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 131

Application of Regulations made under the Excise Act

EA, 2001
315.1

Section 1.1 of the Excise Act currently provides that upon Parts 3 and 4 of the Excise Act, 2001 coming into force, the Excise Act, including the regulations made under it, cease to apply in respect of any good or substance other that beer, malt liquor and malt products manufactured in accordance with subsection 169(2) of that Act. Consequently, the Excise Act ceases to apply in respect of spirits on the coming into force of those Parts of the Excise Act, 2001, which by an order of the Governor in Council occurred on July 1, 2003.

Under new section 315.1 of the Excise Act, 2001, the provisions of regulations made under the Excise Act relating to the blending and certification of age and origin of spirits continue to apply until July 1, 2009. This transitional measure is intended to maintain the regulatory provisions of the former excise framework that play an important role in the specification of standards for Canadian spirits, pending their permanent transfer to more appropriate legislation.

This transitional measure is being extended to July 1, 2009, two years longer than was originally announced, in order to provide additional time to permanently transfer the blending and certification regulatory provisions to more appropriate legislation.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 132

Refund for Re-worked or Destroyed Tobacco Product

EA, 2001
316.1

Under the former excise framework, tobacco products manufactured in Canada were subject to two separate excise levies: an excise duty imposed under the Excise Act, payable at the time of packaging, and an excise tax imposed under the Excise Tax Act, payable at the time of delivery to a purchaser. With the implementation of the Excise Act, 2001, tobacco products, other than cigars, are only subject to duty at a rate equal to the combined former excise duty and excise tax rates.

New section 316.1 applies to tobacco products manufactured in Canada in respect of which both the excise duty and excise tax were payable before the implementation date (i.e., the day on which Parts 3 and 4 of the Act came into force or specifically, July 1, 2003) and that are destroyed or re-worked on or after that day by the tobacco licensee who manufactured the products. It provides that section 181 of the Excise Act, 2001 applies to those tobacco products as if the excise duty and excise tax were a duty paid under the Excise Act, 2001. This amendment ensures that a tobacco licensee can recover an amount equal to the duty and tax paid in respect of tobacco products that were delivered to a purchaser before the implementation date and subsequently returned to the licensee for re-working or destruction on or after that day.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 133

Imported Tobacco Delivered to Duty Free Shop before Implementation Date

EA, 2001
317.1

New section 317.1 provides that if a duty free shop licensee possesses imported manufactured tobacco on the implementation date of the Excise Act, 2001, the excise tax paid under section 23.12 of the Excise Tax Act in respect of the tobacco is treated as though it were special duty under section 53 of the Excise Act, 2001 (which replaces the excise tax under section 23.12 of the Excise Tax Act), provided that no application for a refund of the tax has been made under the Excise Tax Act. By treating the excise tax as special duty under the new Act, the duty free shop licensee may apply for a refund under section 181.1, if the imported manufactured tobacco is destroyed by the licensee on or after the implementation date, or for a refund under section 183, if the tobacco is sold on or after that day to a non-resident who is about to depart Canada.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Access to Information Act

Clause 134

Statutory Prohibitions against Disclosure

AIA
Schedule II

The Access to Information Act sets out statutory obligations for public access to information under the control of the federal government. Under section 24, the head of a government institution shall refuse to disclose a record if the record contains information the disclosure of which is restricted under any legislative provision set out in Schedule II to the Act. An amendment is made to Schedule II to include a reference to section 211 of the Excise Act, 2001, which provides for the confidentiality of information obtained in the administration or enforcement of the Act that reveals, directly or indirectly, the identity of a person.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Customs Act

Clause 135

Interpretation

CA
2(1)

Subsection 2(1) of the Customs Act is amended by adding definitions of "licensed user" and "restricted formulation", both of which reference the corresponding definition of the term in section 2 of the Excise Act, 2001. The definitions are necessary because of other amendments to the Customs Act that utilize these terms, such as the new controls being introduced on the sale or disposal of restricted formulations under clauses 136 to 140.

The proposed amendments are deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 136

Sale of Detained Goods

CA
97.25(3)

Subsection 97.25(3) provides that the Minister may direct, after giving 30 days written notice to the debtor, the sale, by public auction or tender or by the Minister of Public Works and Government Services, of any good imported or reported for export by or on behalf of the debtor that has been detained because the debtor has failed to pay an amount as required by the Customs Act.

Subsection 97.25(3) is amended to restrict the sale of detained spirits or specially denatured alcohol to a spirits licensee, detained wine to a wine licensee, detained raw leaf tobacco or tobacco products to a tobacco licensee, and detained restricted formulations to a licensed user. The amendment ensures consistency with other provisions of the Customs Act and the Excise Act, 2001 that restrict the sale of seized alcohol, specially denatured alcohol, restricted formulations and tobacco.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 137

No Return of Certain Goods

CA
117(2)

Subsection 117(2) of the Customs Act provides that spirits, wine, specially denatured alcohol, raw leaf tobacco or tobacco products that were seized under the Act may not be returned, unless they were seized in error.

Subsection 117(2) is amended to also prevent the return of a restricted formulation, unless it was seized in error. This amendment is consistent with other restrictions on the sale or disposal of seized restricted formulations under the Excise Act, 2001 and Customs Act, including the restriction on returns of seized restricted formulations under section 264 of the Excise Act, 2001 (see clause 127).

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 138

Dealing with Goods Seized

CA
119.1(1.1)(d)

Subsection 119.1(1.1) of the Customs Act currently provides that the Minister may, subject to the regulations, only sell seized spirits or specially denatured alcohol to a spirits licensee, seized wine to a wine licensee, and seized raw leaf tobacco and tobacco products to a tobacco licensee.

The subsection is amended to also restrict the sale of seized restricted formulations to a licensed user. This amendment is consistent with other controls being placed on the sale or disposal of detained and abandoned or forfeited restricted formulations under the Customs Act, as well as the sale restrictions on seized restricted formulations under section 266 of the Excise Act, 2001 (see clause 128).

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 139

Disposal of Things Abandoned or Forfeit

CA
142(1)

Subsection 142(1) of the Customs Act currently excludes spirits, specially denatured alcohol, wine, raw leaf tobacco and tobacco products from the rules under that subsection covering the disposal of goods abandoned or forfeited under the Act.

Subsection 142(1) is amended to also exclude abandoned or forfeited restricted formulations from the general rules under that subsection. This amendment is consistent with other changes being made to the Customs Act in respect of restricted formulations, in particular the amendment to section 142.1 in respect of the sale or disposal of abandoned or forfeited restricted formulations (see clause 140).

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 140

Dealing with Abandoned or Forfeited Alcohol, etc.

CA
142.1

Section 142.1 of the Customs Act currently restricts the sale of abandoned or forfeited spirits, specially denatured alcohol, wine, raw leaf tobacco and tobacco products. The section is amended to also restrict the sale of an abandoned or forfeited restricted formulation to a licensed user, which is consistent with the new controls being placed on the possession, use and disposal of restricted formulations under the Excise Act, 2001.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Clause 141

Regulations

CA
164(1)

Subsection 164(1) of the Customs Act provides the authority to the Governor in Council to make regulations to carry out the purposes and provisions of the Act. This subsection is amended to add, under new paragraph 164(1)(h.2), regulation making authority respecting the sale of alcohol, tobacco products, raw leaf tobacco, specially denatured alcohol or a restricted formulation detained, seized, abandoned or forfeited under the Act. This amendment is consistent with the restrictions imposed on the sale of similar seized products under the Excise Act, 2001.

The proposed amendment comes into force upon Royal Assent.

Customs Tariff

Clause 142

Definitions – Beer, Wine, Utilisateur Agréé

CT
21

Section 21 of the Customs Tariff defines terms that apply for the purposes of sections 21.1 to 21.3.

Subclause 142(1)

CT
21

Section 21 of the Customs Tariff defines "beer" and "wine" in relation to their meaning under the Excise Act or the Excise Act, 2001 and by specified tariff items or headings for alcoholic product under these terms. Section 21 is amended to remove the tariff items related to ginger beer and mead from the definition of "beer" and to add them to the definition of "wine" to ensure that these imported products are provided comparable duty treatment to like domestic product, which are treated as "wine" under the Excise Act, 2001.

The proposed amendment comes into force upon Royal Assent.

Subclause 142(2)

CT
21

In addition, section 21 of the French version of the Customs Tariff is amended by adding a definition for «utilisateur agréé» ("licensed user"), which references the definition of the term as provided under section 2 of the Excise Act, 2001. This definition is consistent with the definition of "licensed user" that already exists under the English version of the Customs Tariff.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.

Excise Tax Act

Clause 143

Value of Goods

ETA
215(1)(b)

Subsection 215(1) provides that GST on imported goods is to be calculated on the excise- and duty-paid value of the goods. Paragraph 215(1)(b) is amended to include duty payable on imported goods under the Excise Act, 2001.

The proposed amendment is deemed to have come into force on July 1, 2003, corresponding with the date that the Excise Act, 2001 fully came into force.


Part 3 
Amendments to the Air Travellers Security Charge Act

Clause 144

Definitions

ATSCA
2

Section 2 contains definitions of terms and expressions that apply in the Air Travellers Security Charge Act ("the Act").

Subclause 144(1)

Definition "listed airport"

ATSCA
2

The definition of "listed airport" is being amended to remove the phrase "and a prescribed airport" in that definition. This portion of the definition will no longer be needed, as other proposed amendments will allow the Governor in Council to use regulations to add, remove or vary the reference to an airport in the schedule to the Act that lists the airports where the Air Travellers Security Charge is levied.

This amendment comes into force upon Royal Assent.

Subclause 144(2)

Definition "registered charity"

ATSCA
2

A definition of "registered charity" is being added to clarify the scope of the tax relief for air travel donated by air carriers to charities for no consideration.

This amendment is deemed to have come into force on April 1, 2002.

Clause 145

Exceptions

ATSCA
11(1.1)

New subsection 11(1.1) contains two relieving measures in respect of the Air Travellers Security Charge (ATSC) that were previously announced in a Department of Finance press release dated April 19, 2002.

New paragraph 11(1.1)(a) provides that the charge is not payable in respect of an air transportation service sold by a reseller of air travel, such as a tour operator, prior to the introduction of the charge on April 1, 2002, if final payment was made to the air carrier after that date but before May 1, 2002. This measure provides transitional relief in circumstances where resellers of air travel would find it difficult to recover the cost of the charge from air travellers to whom they had sold an air transportation service prior to the introduction of the ATSC.

New paragraph 11(1.1)(b) provides that the charge is not payable in circumstances where an air carrier donates, for no consideration, an air transportation service to a registered charity that donates the service to an individual for no consideration and in pursuit of its charitable purposes.

New subsection 11(1.1) is deemed to have come into force on April 1, 2002.

Clause 146

Waiving or Reducing Interest

ATSCA
30(1)

Effective April 1, 2007, subsection 30(1) will introduce a ten-year limitation period in respect of waivers or reductions of interest, such that the Minister of National Revenue may, on or before the day that is ten calendar years after the end of a fiscal month of a person, waive or reduce interest payable by the person in respect of that fiscal month.

Subsection 30(1) is amended to enable the Minister to waive or reduce interest in respect of a fiscal month beyond the ten-year limitation period, provided the person makes an application for relief before the end of that period.

This amendment comes into force on April 1, 2007.

Clause 147

Extension of Time by Minister

ATSCA
44

Section 44 allows the Minister of National Revenue to accept an application to extend the time for filing a notice of objection and outlines the content of the application as well as the conditions that must be met in order for the Minister to grant the application.

Subclause 147(1)

How Application Made

ATSCA
44(3)

Subsection 44(3) currently provides that applications to extend the time for filing a notice of objection must be made by delivering or mailing, to the Chief of Appeals in a Tax Services Office or Taxation Centre of the Canada Revenue Agency, the application accompanied by a copy of the notice of objection.

The amendment to subsection 44(3) removes the reference "or Taxation Centre".

This amendment comes into force upon Royal Assent.

Subclause 147(2)

Demande non conforme

ATSCA
44(4)

Subsection 44(4) allows the Minister of National Revenue to accept an application under subsection 44(1) that is not made or sent in the manner specified in subsection 44(3). Subsection 44(4) of the French version of the Act is amended to replace the term "faire droit à" by the term "recevoir" to ensure consistency between both official versions of the Act.

This amendment comes into force upon Royal Assent.

Clause 147(3)

Conditions - Grant of Application

ATSCA
44(7)(b)(i)

Subsection 44(7) sets conditions that must be met in order for an application to extend the time for filing a notice of objection to an assessment to be granted. Currently, the conditions include a requirement that the person demonstrate that, within the time limited under the Act, the person

(A) was unable to act or to give a mandate to act in their name, and

(B) had a bona fide intention to object to the assessment.

The provision is amended by replacing the conjunction "and" with "or", bringing the extension of time provision in line with those in other taxation statutes.

This amendment comes into force upon Royal Assent.

Clause 148

When Application to be Granted

ATSCA
45(6)(b)(i)

Subsection 45(6) sets conditions that must be met in order for an application to the Tax Court of Canada to extend the time for filing a notice of objection to an assessment to be granted. Currently, the conditions include a requirement that the person demonstrate that, within the time limited under the Act, the person

(A) was unable to act or to give a mandate to act in their name, and

(B) had a bona fide intention to object to the assessment.

The provision is amended by replacing the conjunction "and" with "or", bringing the extension of time provision in line with those in other taxation statutes.

This amendment comes into force upon Royal Assent.

Clause 149

When Order to be Made

ATSCA
47(5)(b)(i)

Subsection 47(5) sets conditions that must be met in order for an application to the Tax Court of Canada to extend the time for appealing an assessment to be granted. Currently, the conditions include a requirement that the person demonstrate that, within the time limited under section 46 for appealing, the person

(A) was unable to act or to give a mandate to act in their name, and

(B) had a bona fide intention to appeal.

The provision is amended by replacing the conjunction "and" with "or", bringing the extension of time provision in line with those in other taxation statutes.

This amendment comes into force upon Royal Assent.

Clause 150

Appeal

ATSCA
52(6)

Subsection 52(6) currently provides that if a question set out in an application is determined by the Tax Court of Canada, the Minister of National Revenue or any of the persons who have been served with a copy of the application and who are named in an order of the Court under subsection 52(4) may, in accordance with the provisions of the Act, the Tax Court of Canada Act or the Federal Court Act, as they relate to appeals from or applications for judicial review of decisions of the Tax Court, appeal from the determination.

In March 2002, the Courts Administration Service Act replaced the name of the Federal Court Act with the Federal Courts Act, effective July 2, 2003.

In order to reflect that change, the amendment to subsection 52(6) replaces the reference to the "Federal Court Act"with the "Federal Courts Act".

This amendment is deemed to have come into force on July 2, 2003.

Clause 151

Waiving or Cancelling Penalties

ATSCA
55(1)

Effective April 1, 2007, subsection 55(1) will introduce a ten-year limitation period in respect of waivers or cancellations of any penalty payable under section 53, such that the Minister of National Revenue may, on or before the day that is ten calendar years after the end of a fiscal month of a person, waive or cancel any penalty payable by the person under section 53 in respect of that fiscal month.

Subsection 55(1) is amended to enable the Minister to waive or cancel any penalty payable under section 53 in respect of a fiscal month beyond the ten-year limitation period, provided the person makes an application for relief before the end of that period.

This amendment comes into force on April 1, 2007.

Clause 152

Regulations

ATSCA
84(1.1)

Subsection 84(1) provides the Governor in Council with authority to make regulations. The new subsection 84(1.1) provides the Governor in Council with authority to make regulations amending the schedule to the Act that lists airports where the Air Travellers Security Charge is levied by adding, removing or varying the reference to any airport in the schedule. This new authority replaces the current authority provided in the Act to the Governor in Council to make regulations prescribing new airports where the charge is levied.

New subsection 84(1.1) comes into force upon Royal Assent.

Clause 153

Reference to Subsection 84(1.1)

ATSCA
Schedule

The schedule to the Act lists airports where the Air Travellers Security Charge is applicable. The schedule is amended by adding a reference to subsection 84(1.1), which provides the Governor in Council with the authority to make regulations amending the schedule to the Act by adding, removing or varying the reference to any airport in the schedule.

This amendment comes into force upon Royal Assent.

Clause 154

Deletions From the List of Designated Airports

ATSCA
Schedule

The schedule to the Act lists airports where the Air Travellers Security Charge is applicable. This amendment removes La Grande-3 and La Grande-4 airports in Quebec from the schedule, as previously announced in a Transport Canada news release dated December 20, 2004.

This amendment is deemed to have come into force on December 23, 2004.

Clauses 155 and 156

Additions to the List of Designated Airports

ATSCA
Schedule

The schedule to the Act lists airports where the Air Travellers Security Charge (ATSC) is applicable. These amendments add Red Deer Regional and Rivière-Rouge (Mont Tremblant International) airports to the schedule. These additions are necessary because the Listed Airport Regulations, which currently prescribe those two airports as "listed airports" where the ATSC is levied, will no longer be valid regulations upon Royal Assent (i.e. since the phrase "and a prescribed airport" is being removed from the definition of "listed airport" in section 2 of the Act). In other words, these amendments simply maintain the status quo for these two airports.

These amendments come into force upon Royal Assent.


Part 4 
Coordinating Amendment

Clause 157

Bill C-28 (Budget Implementation Act, 2006, No. 2)

Section 57 of Bill C-28 (Budget Implementation Act, 2006, No. 2) proposes to amend section 135(2)(a) of the Excise Act, 2001 to provide that duty will not apply to wine that is produced and packaged in Canada and composed wholly of agricultural or plant product grown in Canada. This coordinating amendment ensures that the amendment proposed in clause 96 of this Act, which deals with new exceptions to the prohibition against the possession of non-duty packaged alcohol, takes into account the proposed amendment to section 135(2)(a) of the Excise Act, 2001in Bill C-28.

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