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DOF Proposes Excise Tax Act Changes Related to Diesel Fuel, Printed Book Rebates and Time Limits for Assessments

Tax Development Aug 31, 2018

Department of Finance Proposes Excise Tax Act Changes Related to Diesel Fuel, Printed Book Rebates and Time Limits for Assessments

The Department of Finance recently released several proposed legislative changes to the Excise Tax Act (ETA), as well as accompanying explanatory notes.  The proposals concerning changes to the holding corporation rules have been discussed in a separate tax development (see New Rules Concerning GST/HST and Holding Corporations).  However, three other interesting commodity tax changes have also been proposed.

Diesel fuel used exclusively as heating oil or to generate electricity

The Department of Finance has proposed amending the ETA to allow a refund to be paid to a vendor (or to a purchaser, where a vendor cannot make an application) in relation to the sale of excise tax-paid diesel fuel used to generate electricity, other than to generate electricity in or by a vehicle, including a conveyance attached to a vehicle, or any mode of transportation.  Currently, the rules allow a vendor to apply for a refund only where the diesel fuel is purchased for exclusive use as heating oil, even though the relevant section of the ETA allows for a refund to be paid to the purchaser in both of the situations described above.

In order for the refund application to be processed when submitted by a vendor, the purchaser must certify that the diesel fuel is to be used exclusively to generate electricity, subject to the previously noted conditions.  This change to the rules for excise tax rebates on diesel fuel will take effect upon the enacting legislation receiving Royal Assent.

Rebate for printed books

The ETA and accompanying regulations will be amended to clarify the GST/HST treatment of printed books and other specified property acquired or imported by specified persons where the items are sold as part of a single supply of another property or service.  This change is the result of a recent court decision, in which an exception to the eligibility criteria for the GST/HST printed book rebate available to specified public service bodies was successfully challenged.  The court found that the exception to the rebate for property acquired or imported for the purpose of supply by way of sale did not apply to the acquisition of books by a university for the supply of an educational course for an all-inclusive fee, since a separate supply of the books had not been made. 

The proposed rules will clarify that the exception to the rebate applies where a specified person makes property that would otherwise qualify for the rebate available to others by way of sale or by transferring ownership of the specified property in the course of supplying another property or service.  This change will be effective for the acquisition of specified property for which the tax is paid and payable after July 27, 2018.

Stop-the-clock rules

Another proposed set of rules will prevent the period of time that elapses between an application for judicial review (or other challenge to a compliance order) and the final disposition of such an application from counting towards the statutory time limit for making an assessment under the ETAAs a result, any attempt to delay a reassessment through an application for judicial review or similar challenge will effectively extend the time limit for any potential assessment.  This change will take effect once the legislation receives Royal Assent.