News and Insights

CRA Issues New Memorandum on Other Taxes, Duties and Fees

Tax Development Apr 12, 2016

The CRA has issued GST/HST Memorandum 3.5, “Application of GST/HST to Other Taxes, Duties, and Fees”, which cancels and replaces GST/HST Policy Statement P-190, “The meaning of the word ‘imposed’ in section 154 of the Excise Tax Act”.

This new memorandum explains that a tax (other than GST/HST), duty or fee must generally be included in the value of the consideration for a taxable supply and will be subject to GST/HST at the appropriate rate. However, certain provincial levies are excluded from the value of the consideration for a supply where they have been prescribed by the Taxes, Duties and Fees (GST/HST) Regulations.

Generally, in order to be prescribed, a provincial levy must be payable by the recipient of a supply and calculated based on a percentage of the value or price of property or services. In addition, the provincial levy cannot exceed a specified tax rate. Note that provincial levies which are payable by suppliers do not generally qualify for exclusion from the value of the consideration for GST/HST purposes, despite the fact that these fees might be passed on to customers.

The memorandum also provides a few examples of the correct application of GST/HST to common provincial levies, including provincial sales taxes, tire stewardship fees, and carbon taxes.