First Session, 48th General Assembly
65 Elizabeth II, 2016
AN ACT TO AMEND THE REVENUE ADMINISTRATION ACT NO. 2
Received and Read the First Time.................................................................................................
HONOURABLE CATHY BENNETT
Minister of Finance and President of Treasury Board
Ordered to be printed by the Honourable House of Assembly
This Bill would amend the Revenue Administration Act to impose a retail sales tax on insurance premiums.
AN ACT TO AMEND THE REVENUE ADMINISTRATION ACT NO. 2
3. S.9 Amdt.
Ss.91.1 to 91.5 Added
7. Sch. Amdt.
Be it enacted by the Lieutenant-Governor and House of Assembly in Legislative Session convened, as follows:
SNL2009 cR-15.01 as amended
1. (1) Paragraph 2(j) of the Revenue Administration Act is repealed and the following substituted:
(j) "collector" means a wholesaler, retailer or seller who
(i) collects tax from another wholesaler, retailer or retail purchaser,
(ii) holds the tax collected under subparagraph (i) in trust for the Crown, and
(iii) is accountable to the minister for remittance of that tax;
(2) Paragraph 2(m) of the Act is repealed and the following substituted:
(i) for the purpose of Part VIII, means a person who acquires tangible personal property, and applies that property, or intends to apply that property, in the province
(A) to his or her own consumption or use or to the consumption and use of another person at the expense of the first mentioned person, or
(B) on behalf of, or as the agent for, a principal, to the consumption or use of the principal or of another person at the expense of that principal, and
(ii) for the purpose of Part IX, means a person who
(A) in the province, purchases or receives delivery of tobacco, or
(B) brings into the province tobacco acquired outside the province,
for that person's own use or consumption or for the use or consumption by others at that person's expense, or on behalf of, or as the agent for, a principal who wishes to acquire the tobacco for use or consumption by the principal or other person at the principal's expense;
(3) Paragraph 2(o) of the Act is repealed and the following substituted:
(o) "contract of insurance" includes a policy, certificate, interim receipt, renewal receipt or writing evidencing a contract of insurance whether sealed or not and a binding oral agreement of insurance, and for the purpose of Part VI includes an administrative services only contract or any other financial arrangement for group insurance;
(4) Section 2 of the Act is amended by adding immediately after paragraph (ff) the following:
(ff.1) "insurance" means an undertaking by a person
(i) to indemnify another person against loss or liability for loss with respect to a certain risk or peril in the province to which the object of insurance may be exposed, or
(ii) to pay a sum of money or thing of value upon the happening of a certain event in the province;
(ff.2) "insurer" means a person who undertakes or agrees or offers to undertake a contract of insurance and includes a person who is licensed or is required to be licensed under the Insurance Companies Act whether or not that person has a place of business in the province;
(ff.3) "insurer's agent" includes a person who is licensed or is required to be licensed under the Insurance Adjusters, Agents and Brokers Act whether or not that person has a place of business in the province;
(5) Section 2 of the Act is amended by adding immediately after paragraph (ccc) the following:
(ccc.1) "policy" means the instrument evidencing a contract of insurance;
(6) Paragraph 2(eee) of the Act is repealed and the following substituted:
(eee) "premium" means the single or periodic payment made as consideration under a contract of insurance including all dues, assessments, transaction fees, processing fees, policy fees and other consideration charged and includes
(i) for the purpose of Part VI, the amount collected from a subscriber under a reciprocal contract of indemnity or inter-insurance for the purpose of defraying losses incurred by the subscriber to a reciprocal or inter-insurance exchange and the necessary operation expenses of the exchange, and
(ii) for the purpose of Part VIII, interest, finance charges or underwriting fees, paid or payable by the consumer, unless the interest, finance charges or underwriting fees are shown separately on a valid bill or invoice of the person from whom the tangible personal property was acquired;
(7) Paragraph 2(kkk) of the Act is amended by deleting the word "or" at the end of subparagraph (ii) and by adding immediately after that the following:
(ii.1) by a sale, tangible personal property not for resale but as a consumer, or
(8) Paragraph 2(nnn) of the Act is repealed and the following substituted:
(nnn) "sale" means a sale for cash or on credit or a sale where the price is payable by instalments, and includes a barter, an exchange and a contract by which at a price or for other consideration a person gives gasoline, tobacco, a vehicle or tangible personal property to another;
(9) Section 2 of the Act is amended by adding immediately after paragraph (nnn) the following:
(nnn.1) "seller" means a person who in the ordinary course of business sells tangible personal property at a retail sale in the province, and for the purpose of Part VIII includes an insurer and an insurer's agent who is responsible for the collection of an insurance contract premium and the tax on that premium;
2. Subsection 5(1) of the Act is repealed and the following substituted:
Collection of tax
5. (1) The minister may designate a person as an agent of the minister for the collection of the tax imposed under Parts III, VIII and IX of this Act.
3. Section 9 of the Act is amended by adding immediately after subsection (2) the following:
(2.1) An insurer or an insurer's agent shall keep full, up-to-date and accurate books and records showing
(a) particulars of insurance effected to which the tax imposed by this Act applies together with the names and addresses of persons effecting the insurance and the amount of premiums paid or charged for the insurance;
(b) the date of payment or charging of premiums referred to in paragraph (a); and
(c) other information required by the minister.
4. Section 32 of the Act is amended by adding immediately after subsection (6) the following:
(6.1) A person is guilty of an offence who offers for sale or sells tangible personal property at a retail sale in the province at a time when he or she does not hold a registration certificate authorizing the person to collect a tax imposed under section 91.1.
(6.2) Subsection (6.1) does not apply to a person who sells a form of insurance which is exempt under the regulations.
5. The Act is amended by adding after section 91 the following:
Tax on insurance premiums
91.1 (1) A person who enters into, renews or amends a contract of insurance relating to property, risk, peril or events in the province shall pay to the Crown a tax at the rate of 15% of the premium for that insurance.
(2) The tax imposed by subsection (1) shall be collected and this Act and the regulations applied for the purpose of the imposition, assessment, collection and enforcement of the payment of that tax, as if
(a) the contract of insurance were tangible personal property; and
(b) there were on each occasion when the premium is due, a retail sale in the province at which the person paying the premium was the retail purchaser and the insurer or insurer's agent was the seller.
(3) Where a contract of insurance relates to property, risk, peril or events both in and out of the province, the tax shall be calculated only upon the portion of the payment relating to property, risk, peril or events in the province according to the following formula:
T = P/I x C
T = consideration paid for the taxable portion of the contract of insurance;
P = total monetary value of property, risk, peril or events covered by the contract of insurance which are in or relate to the province;
I = total monetary value of property, risk, peril or events covered by the contract of insurance; and
C = consideration paid for the entire contract of insurance.
(4) A seller is considered to be an agent of the Crown and as an agent shall levy and collect the tax imposed under subsection (1) from a retail purchaser.
(5) The tax imposed under subsection (1) shall be collected on each occasion when the premium is paid and shall not be collected in its entirety when a contract of insurance is entered into, amended or renewed.
(6) Notwithstanding subsection (5), where a contract of insurance is entered into, amended or renewed and the premium for that insurance is to be paid in its entirety at the time the contract is entered into, amended or renewed, the tax imposed under subsection (1) shall be collected in its entirety at that time.
(7) The tax payable under this section shall be remitted in the manner required by the minister.
(8) Where tax has been collected or remitted to the minister under this section and a refund of the whole or part of the premium is made by the insurer or the insurer's agent within 6 months of the expiration, termination or cancellation of the contract of insurance, the minister or collector shall refund to the person who paid the premium an amount of tax proportionate to the amount of premium refunded.
(9) The collector, when reporting the total amount of tax collected by him or her, may deduct from the tax to be remitted to the minister the amount of tax he or she has refunded under subsection (8).
(10) A person who enters into, amends or renews a contract of insurance referred to in subsection (1) is required to pay the tax imposed in this section whether or not the insurer or insurer's agent is registered under this Part, and that person shall remit the tax in the manner referred to in subsection (7).
(11) The retail purchaser remains liable for the tax imposed under this section until it is collected.
91.2 (1) A seller shall apply for a registration certificate authorizing the seller to collect tax, whether or not that seller has a fixed place of business in the province.
(2) The minister may issue to a seller a registration certificate, which is not transferable, authorizing that seller to collect the tax referred to in subsection 91.1(1).
(3) The minister may refuse to issue a registration certificate to a seller or may cancel or suspend a seller's registration certificate in the following circumstances:
(a) where the minister is satisfied or has reason to believe that the seller has failed to comply with a requirement of this Act or the regulations; or
(b) where the seller is under the supervision and control of a seller
(i) whose certificate has been cancelled or suspended under paragraph (a), or
(ii) who supervised or controlled a seller whose certificate has been cancelled or suspended under paragraph (a).
(4) In addition to the circumstances described in subsection (3), the minister may refuse to issue a registration certificate to a corporation or may cancel or suspend the registration certificate of a corporation where the corporation fails to send to the minister a copy of the certificate of incorporation, together with the names of the officers or directors of the corporation holding office at the time the minister requests the names of the officers or directors of the corporation.
Various sale outlets
91.3 Where a seller proposes to sell tangible personal property by retail sale at 2 or more separate places of business, the seller shall obtain a registration certificate in respect of all locations.
Application for certificate
91.4 An application for a registration certificate shall be made to the minister in the form that may be prescribed.
91.5 (1) A seller who has a fixed place of business in a province shall display his or her registration certificate at a prominent place on the premises in respect of which it was issued.
(2) A seller who has no fixed place of business in the province shall keep his or her registration certificate on his or her person while soliciting or doing business, and the seller shall produce it, upon request, to a retail purchaser or an authorized representative of the minister.
6. Section 111 of the Act is amended by deleting the comma and the word "and" at the end of paragraph (b) and by substituting a semi-colon, by deleting the period at the end of paragraph (c) and substituting a semi-colon, and by adding immediately after that paragraph the following:
(d) exempting generally from the application of section 91.1 forms of insurance;
(e) exempting a person from the requirement to collect the tax imposed under section 91.1;
(f) exempting a person or class of persons from the payment of the whole or a part of the tax imposed under section 91.1;
(g) exempting endorsements on contracts of insurance with an effective date before July 1, 2016 from the tax imposed under section 91.1; and
(h) prescribing the information required to be contained on an invoice or bill for a contract of insurance.
7. The Schedule of the Act is amended in the first line referring to section 32 after the reference "(6)" by adding a comma and the reference "(6.1)".
8. This Act comes into force on July 1, 2016.