In Question Period in the Ontario Legislature on May 31, 2010 (I was in attendance), a liberal MPP threw a soft-ball question to a colleague about the harmonized sales tax (HST) point of sale rebate for aboriginal peoples of Ontario. The Minister responded that on May 27, 2010 (not sure this is the correct date), a Memorandum of Understanding was signed by the McGuinty Government and certain aboriginal peoples.
The answer provided during Question Period suggested that Ontario was waiting for a response from Ottawa. However, one must look at the Comprehensive Integrated Tax Coordination Agreement (CITCA) to see that Ontario is responsible for point of sale rebates/exemptions. In other words, the McGuinty Government has the right under the CITCA Agreement to say that they want certain point of sale rebates (presumably for tax policy reasons).
Here are the provisions in the CITCA relating to point of sale rebates:
Provincial Flexibility in respect of Rebates
- Unless otherwise defined in this Annex, terms used in this Annex have the same meaning as in the Agreement to which this Annex is attached. For the purposes of this Annex, the following terms have the following meanings:
“GST Base” in respect of the Province for a calendar year means the estimated tax base under the harmonized sales taxes for the Province in the calendar year, as determined by Finance (Canada) pursuant to Formula D of Annex “A” (referred to in that Annex as “PROVBASEt”).
“PVAT-POS Rebate”, in respect of a province, and in relation to a taxable supply of property or a service made in the province, means the provincial rebate under an Act of the Legislature of the province paid to, or credited at the time of supply in favour of, the recipient of the taxable supply, the amount of which the supplier is permitted to deduct in computing the supplier’s net tax under Part IX of the Excise Tax Act.
- The Parties agree that a supply of property or a service may be eligible for a PVAT-POS Rebate in respect of the Province if:
- (a) subject to the reasonable capacity of the Minister of National Revenue to administer and enforce such a PVAT-POS Rebate and subject to the reasonable capacity of businesses to comply with such a PVAT-POS Rebate, the definition of the property or service is used in the Canadian System of National Accounts and sufficient data is available from that system to determine the amount of expenditure in the Province attributable to the supply of that property or service; or
- (b) other data sources, definitions and methodologies mutually agreed upon between the Parties can be used to determine the amount of expenditure in the Province attributable to the supply of that property or service.
- Where the Province advises Canada of its desire to designate particular property or services as items eligible for a PVAT-POS Rebate in respect of the Province effective on and from a particular day, the Parties agree that the Province will be permitted to designate those property and services as such items if the total value, as determined by Finance (Canada) in consultation with the Province, of all such items that would be eligible for a PVAT-POS Rebate in respect of the Province immediately after the particular day (including the particular property or services) and that were supplied in the Province during the last calendar year for which the GST Base in respect of the Province has been determined, in accordance with Annex “A”, does not exceed 5% of that GST Base.
- If a condition under clause 2 in respect of data or definitions is not met, any cost involved in obtaining or establishing such data or definitions for the purpose of achieving the mutual agreement of the Parties referred to in that clause will be the sole responsibility of the Province. If obtaining or establishing such data or definitions benefits the Province and another participating province, the Province may enter into a separate agreement with the other participating province in respect of sharing, between the Province and the other participating province, the cost involved in obtaining or establishing such data or definitions.
- On and from the Implementation Date, subject to the definitions mutually agreed upon between the Parties, the Parties agree that in general terms the items eligible for a PVAT-POS Rebate in respect of the Province will be, unless such items are removed in accordance with the Agreement:
- (a) books;
- (b) children’s clothing and footwear;
- (c) children’s diapers;
- (d) children’s car seats and car booster seats;
- (e) feminine hygiene products;
- (f) printed newspapers;
- (g) prepared food and beverages sold for a total consideration of $4 or less; and
- (h) other property or service proposed from time to time by the Province that may, in accordance with the Agreement, become property or service eligible for a PVAT-POS Rebate in respect of the Province.
- Unless otherwise mutually agreed upon between the Parties, where an item that the Province proposes to be eligible for a PVAT-POS Rebate in respect of the Province is of the same class or kind as an existing item that is subject to an existing PVAT-POS Rebate in respect of another province, the Province agrees that the proposed item will have the same definition as the existing definition in respect of the existing item.
Provincial Point-of-Sale Rebates
If under the Indian Act (Canada) and signed treaties with aboriginal peoples in Ontario, aboriginal peoples do not pay sales taxes (and other forms of taxes), then the point of sale rebate should not be factored into the 5% threshold.
This should be a non-issue for Ontario. If the point of sale rebate is not granted for aboriginal off-reserve purchases (to be used on the reserve), then it would be McGuinty's lack of commitment to this point of sale exemption.
Are Ontario aboriginal peoples closer to a point of sale rebate - yes and no.