SNL1996 CHAPTER T-0.01 - TAX AGREEMENT ACT - Point in Time

Be it enacted by the Lieutenant-Governor and House of Assembly in Legislative Session convened, as follows:

Short title

1. This Act may be cited as the Tax Agreement Act.

1996 cT-0.01 s1

Definitions

2. In this Act

(a) "acquisition" includes purchasing, leasing or bringing into the province for consumption or use and all derivatives of this term;

(b) "agreement", unless the context indicates otherwise, means the agreement referred to in section 3 and set out in the Schedule to this Act and amendments to that agreement;

(d) "registrant" means a registrant as defined in Part IX of the Excise Tax Act (Canada ); and

(e) "vehicle" means a vehicle propelled, driven or controlled otherwise than by muscular power and includes an aircraft, boat, ship, trailer and vessel.

1996 cT-0.01 s2

PART I
AGREEMENT

Agreement

3. The Comprehensive Integrated Tax Coordination Agreement executed on October 18, 1996 between the Minister of Finance and Treasury Board and the Premier as Minister Responsible for Intergovernmental Affairs on behalf of the Government of Newfoundland and Labrador and the Minister of Finance on behalf of the Government of Canada is ratified and confirmed.

1996 cT-0.01 s3

PART II
EXCEPTIONS AND REGULATIONS

Retail sales tax not imposed

4. (1) After March 31, 1997 , a tax shall not be imposed under the Retail Sales Tax Act .

(2) The Retail Sales Tax Act shall continue to apply in all respects, including penalties and interest, to tangible personal property or a service taxable under that Act on or before March 31, 1997 .

1996 cT-0.01 s4

Non-application of section 4

5. (1) Notwithstanding section 4, tax under the Revenue Administration Act shall continue to be imposed upon

(a) a consumer who acquires a vehicle from a person who is not a registrant; and

(b) [Rep. by 2008 c22 s5]

(2) Subsection (1)(a) shall not apply to a consumer who imports a vehicle into the province from outside Canada .

(3) If a vehicle is acquired on or before March 31, 1997 by a consumer, from a person who is not a registrant, and tax on that vehicle is not paid on or before April 10, 1997 , tax shall be paid on that vehicle in accordance with subsection (1) as if that vehicle were acquired after March 31, 1997 .

(4) For the purposes of this section, "consumer" has the same meaning as in the Revenue Administration Act .

1996 cT-0.01 s5; 2008 c22 s5; 2009 cR-15.01 s126

Regulations

6. (1) The Lieutenant Governor in Council may make regulations

(a) respecting the application of the Retail Sales Tax Act to transactions relating to the retail sale, acquisition, consumption or use of tangible personal property or a service in the province which commence on or before March 31, 1997 and which are completed subsequent to that date;

(b) providing for the rebate of tax imposed under the Retail Sales Tax Act to builders of new residential homes and new multi unit residential establishments where the construction of the home commences on or before March 31, 1997, but is not completed or is not sold until subsequent to that date;

(c) respecting a refund, rebate or reimbursement of an amount equal to a tax paid by a recipient under Part IX of the Excise Tax Act (Canada) and in accordance with the agreement;

(d) providing for the transition from the application of retail sales tax under theRetail Sales Tax Act to a tax referred to in this Act; and

(e) for the proper and effective administration of this Act.

(2) Regulations made under subsection (1) respecting a rebate for building materials in Labrador may be made with retroactive effect.

1996 cT-0.01 s6; 1997 c9 s1

PART III
TAX INCLUSIVE PRICING

Interpretation

7. (1) In this Part

(a) "consumer", of property or a service, means a particular person who acquires in the province property or a service for that person's personal consumption, use or enjoyment or the personal use, consumption or enjoyment of another person at that particular person's expense, but does not include a person who acquires the property or service for consumption, use or supply in the course of commercial activities or other activities in the course of which the particular person makes an exempt supply as defined in section 123 of the Excise Tax Act (Canada);

(b) "person" means an individual, partnership, corporation, trust or estate, or a body that is a society, union, club, association, commission or other organization of any kind;

(c) "property" means real or personal property which is moveable or immoveable, tangible or intangible, corporeal or incorporeal and includes a right or interest of any kind, a share and a chose in action but does not include money;

(d) "service" means anything other than

(i) property,

(ii) money, and

(iii) anything that is supplied to an employer by a person who is or who agrees to become an officer or an employee of the employer in the course of or in relation to the office or employment of that person;

(e) "supplier", in respect of a supply, means the person making the supply;

(f) "supply" means, subject to subsections (2) and (3), the provision of property or a service in any manner, including sale, transfer, barter, exchange, licence, rental, lease, gift or disposition; and

(g) "tax" means a tax imposed under section 165 of the Excise Tax Act (Canada ).

(2) Where an agreement is entered into to provide property or a service,

(a) the entering into the agreement shall be considered to be a supply of the property or service made at the time the agreement is entered into; and

(b) the provision, if any, of property or a service under the agreement shall be considered to be part of the supply referred to in paragraph (a) and not a separate supply.

(3) Where, under an agreement entered into in respect of a debt or obligation, a person transfers property or an interest in property for the purpose of securing payment of the debt or performance of the obligation, the transfer shall not be considered to be a supply of a property or service and where, on payment of the debt or performance of the obligation the property or interest is retransferred, the retransfer of the property or interest shall not be considered to be a supply of property or service.

1996 cT-0.01 s7

Manner of expressing price and cost

8. (1) Subject to the regulations, a supplier or other person who includes a price when making or offering to make a supply to a consumer in the province shall advertise, display, express or indicate a tax included price for that supply which is the sum of the supplier's selling price and the tax payable for that supply.

(2) A receipt or invoice for a supply in the province shall, in accordance with the regulations, indicate the amount of tax due or the rate of tax applicable to that supply separate from the supplier's selling price or tax included price for that supply.

1996 cT-0.01 s8

Regulations

9. The Lieutenant-Governor in Council may make regulations

(a) respecting the manner, form and circumstances in which the price of property or services is to be advertised, displayed, expressed or indicated;

(b) respecting circumstances in which the tax shall be indicated as an amount in addition to the advertised, displayed, expressed or indicated price of the property or service;

(c) that make different provisions with respect to different classes of supplier and circumstances of property or services pricing;

(d) respecting the pricing of property and services by a supplier including pricing on price tags, packaging, bins, shelves, containers, displays and windows;

(e) respecting the advertisement of a price for property and services in newspapers, magazines, catalogues, posters, flyers and other written and print material distributed or displayed in the province;

(f) respecting the advertisement of a price for property and services on a banner, sandwich board, billboard, electronic display device or other similar device in the province;

(g) respecting the advertisement of a price for property and services on radio and television and other forms of telecommunication where that advertisement originated and is broadcast in the province;

(h) respecting the manner in which pricing and tax are to be indicated on receipts and invoices provided to consumers in the province;

(i) respecting an oral or written offer made to a consumer with respect to a supply of property or services to a consumer in the province;

(j) respecting a contract being negotiated or made with respect to property or services to be supplied to a consumer in the province;

(k) respecting discount and other coupons distributed in the province;

(l) exempting a supply of a property or service from the application of this Part;

(m) defining for the purposes of this Part, a term not defined in this Part; and

(n) generally to give effect to the purpose of this Part.

1996 cT-0.01 s9

Offence

10. (1) A person who contravenes this Part commits an offence and is liable on summary conviction to a fine of not less than $100 and not more than $5,000 or to imprisonment for not more than 30 days or to both a fine and imprisonment.

(2) Every continuance for a day or a part of a day of a contravention under subsection (1) constitutes a separate offence.

(3) In a prosecution for an offence under this Part, it is sufficient proof of the offence to establish that it was committed by an employee or an agent of the accused whether or not the employee or agent is identified or has been prosecuted for the offence, unless the accused establishes that due diligence was exercised to prevent its commission.

(4) In determining the punishment for an offence under this section the court may consider

(a) whether the offence was deliberate or inadvertent;

(b) the incompetence, negligence or lack of concern of the offender;

(d) evidence from which the court may reasonably conclude that the offender has a history of non-compliance with this Part.

1996 cT-0.01 s10

Enforcement

11. The minister may appoint those persons that he or she considers necessary for the administration and enforcement of this Part.

1996 cT-0.01 s11

PART IV
AGREEMENTS AND CONFIDENTIALITY

Agreement

12. The minister, on behalf of the Crown in right of the province may enter into agreements with the Government of Canada respecting the administration and enforcement of this Act and respecting the exchange and sharing of information and technology necessary for the administration and enforcement of this Act.

1996 cT-0.01 s12

Confidentiality

13. (1) The minister may authorize the persons who may receive information, records or returns under this Act and he or she shall not authorize a person to receive that information or those records or returns unless it is necessary to do so for the purposes of this Act.

(2) A person who has custody or control over information, records or returns under this Act shall not disclose that information or those records or returns to another person except

(a) for the purpose of administering or enforcing a taxation Act;

(b) for the purpose of administering or enforcing the Liquor Control Act or the Liquor Corporation Act ;

(i) is between the government of the province and another government,

(ii) relates to the administration or enforcement of a taxation Act and this Act, and

(iii) provides for the disclosure of information, returns and records to and the exchange of similar information, returns and records with that other government; or

(d) for the purpose of the compilation of statistical information by the government of the province or the government of Canada .

1996 cT-0.01 s13

PART V
CONSEQUENTIAL AND COMMENCEMENT

RSN1990 cB-1 Rep.

14. The Baie Verte Mines Inc. Tax Exemption Act is repealed.

RSN1990 cF-8 Amdt.

15. TheFinancial Administration Act is amended by adding immediately after section 22 the following:

Payment under tax agreement

22.1 (1) Notwithstanding section 22, an issue of public money may be made out of the Consolidated Revenue Fund for payment of a tax referred to in an agreement between the province and the Government of Canada which provides for the rebate of that tax.

(2) A tax paid out of the Consolidated Revenue Fund under subsection (1) shall be recorded as a receivable in the books of the province and a rebate of that tax received shall be recorded as a reduction of the receivable account.

Reimbursement under tax agreement

22.2 A refund, rebate or reimbursement of an amount equal to tax paid by a recipient under Part IX of the Excise Tax Act (Canada) and provided for in the agreement referred to in the Tax Agreement Act shall be considered to be a reduction of the revenue which would otherwise be payable to the province in accordance with that agreement.

RSN1990 cH-3 Amdt.

16. (1) Paragraph 11(4)(d) of the Highway Traffic Act is amended by striking out the words "the retail sales tax payable under the Retail Sales Tax Act " and substituting the words "a tax".

(2) Paragraph 16(7)(c) of the Act is amended by adding immediately after the words "the Retail Sales Tax Act " the words "or under Part IX of the Excise Tax Act (Canada )".

RSN1990 cL-5 Rep.

17. The Labrador Tax Exemption Act is repealed.

RSN1990 cP-45 Amdt.

18. Paragraph 3(2)(b) of the Public Tender Act is amended by striking out the words "goods and services" and the words "retail sales".

RSN1990 cR-15 Amdt.

19. Sections 3 and 16 of the Retail Sales Tax Act are amended by striking out the figure "12%" and substituting the figure "15%".

SN1993 cT-4.1 Amdt.

20. Paragraph 2(d) of the Tobacco Control Act is repealed and the following substituted:

(d) "retailer" means a person who in the ordinary course of business sells or supplies tobacco to another person;.

RSN1990 cT-5 Amdt.

21. (1) Paragraph 2(h) of the Tobacco Tax Act is repealed and the following substituted:

(h) "registrant" means a person who is a registrant under Part IX of the Excise Tax Act (Canada );.

(2) Section 2 of the Act is amended by adding immediately after paragraph (g.1) the following:

(g.2) "permanent establishment" means a permanent establishment as defined in theExcise Tax Act (Canada );.

(3) Paragraph 2(k) of the Act is repealed and the following substituted:

(k) "retailer" means a person who sells tobacco at a retail sale and who is either a registrant who has a permanent establishment in the province, or who is designated as a retailer by the minister;.

(4) The Act is amended by adding immediately after section 7 the following:

Retailer

7.1 (1) The minister may, for the purposes of this Act designate a person as a retailer.

(2) A person who is not a registrant who has a permanent establishment in the province may apply to the minister for designation as a retailer.

(5) Paragraph 9(1)(a) of the Act is amended by striking out the figures "$0.1028" and substituting the figures "$0.11".

(6) Section 14 of the Act is amended by striking out the words "holds a valid registration certificate" and substituting the words "is a retailer".

(7) Section 16 of the Act is amended by striking out the words "holds a valid registration certificate" and substituting the words "is a retailer".

(8) Paragraph 45(1)(i) of the Act is repealed.

(9) Subsection 49(1) of the Act is repealed and the following substituted:

Sale by non-retailer

49. (1) Where a person who is not a retailer sells tobacco to a consumer in the province, that person, without the interposition of a court, is liable to, and shall pay to the minister, a penalty in an amount equal to the total of

(a) the amount of the tax imposed on the tobacco under this Act; and

(b) 10% of the amount determined under paragraph (a) unless the minister decides not to require that 10%.

(10) Paragraph 66(b) of the Act is repealed.

Commencement

22. (1) Section 5 and Part V of this Act shall come into force on April 1, 1997 .

(2) Part III of this Act shall come into force on a date to be proclaimed by the Lieutenant-Governor in Council.

Schedule

Comprehensive Integrated Tax Coordination Agreement

BETWEEN

The Government of Canada, represented by the Minister of Finance, hereinafter referred to as "Canada "

AND

The Government of Newfoundland and Labrador , represented by the Minister of Finance and Treasury Board and the Premier as Minister Responsible for Intergovernmental Affairs, hereinafter referred to as the "Province"

TOGETHER referred to as the "parties" hereto.

WHEREAS the parties agree that a number of federal and provincial taxes should be subject to a single administration;

The parties wish to build upon the existing federal and provincial tax collection measures;

An integrated sales tax system would be economically efficient and would enhance the collection of revenues while reducing administrative duplication and costs, simplify compliance for business and promote federal-provincial fiscal co-operation and harmonization; and,

The parties recognize the needs of governments to maintain a tax system which is responsive to the citizens and business community and preserves the accountability of federal and provincial finance Ministers;

NOW THEREFORE, Canada and the Province agree as follows:

INTERPRETATION
PART I

1. In this Agreement,

"Agreement" means this agreement, including the Annexes hereto, a similar agreement between Canada and another province, or a successor agreement to this agreement;

"CVAT" means the value-added tax, or that portion of the tax, imposed under Part IX of the Excise Tax Act in respect of property and services supplied in or imported into Canada , and that generally applies to both a participating province and a non-participating province;

Excise Tax Act means the Excise Tax Act , S.C. 1985, c. E-15, as amended from time to time;

"harmonized sales taxes" means the CVAT and the PVAT;

"harmonized sales tax rate" means the aggregate of the tax rates under the CVAT and the PVAT;

"non-participating province" means a province, other than a participating province, which is not a party to the Agreement;

"participating provinces" means the provinces of Newfoundland, Nova Scotia, and New Brunswick, and such other provinces as may join in the Agreement from time to time; and

"PVAT" means a value-added tax, or that portion of the tax, substantially the same as the CVAT and that is imposed in respect of property and services supplied in or imported or brought into a participating province and that would not apply if the property or services were supplied in or imported or brought into a non-participating province.

2. Unless otherwise specified herein, words or expressions used in this Agreement have the same meaning as in Part IX of the Excise Tax Act .

TAX POLICY
PART II

3. Canada and the Province, together with the other participating provinces, will establish a Tax Policy Review Committee, which shall review issues related to the legislation governing the harmonized sales taxes, including the common tax base, tax rates, tax structure, and tax inclusive pricing mechanisms, and provide timely advice to Ministers as appropriate.

4. The Minister of Finance (Canada ) and the Minister of Finance of the Province shall each appoint one member to the Tax Policy Review Committee to serve from time to time.

5. Canada will chair the meetings of the Tax Policy Review Committee.

6. The Tax Policy Review Committee shall meet no less frequently than twice in each twelve calendar month period.

7. Results of the deliberations of the Tax Policy Review Committee shall be communicated by the Committee to the Deputy Minister of Finance (Canada ) and his or her designated counterparts in the Province and the other participating provinces.

8. The Tax Policy Review Committee may, in its discretion, establish special working groups to consider issues or matters related to the mandate of the Committee as set forth under clause 3.

9. The Tax Policy Review Committee shall establish a Revenue Allocation Sub-Committee which will monitor the on-going application of the revenue allocation mechanism set forth in Annex A to ensure that it is functioning as intended and to determine any needed changes to the revenue allocation mechanism. The Revenue Allocation Sub-Committee will meet at least once a year or at the request of the Tax Policy Review Committee.

10. Where the Tax Policy Review Committee cannot reach consensus in respect of an issue under its review, such issue shall be referred to the Deputy Minister of Finance (Canada ) and his or her counterpart with the Province and the other participating provinces.

11. Where an issue referred to Deputy Ministers under clause 10 remains unresolved, the issue shall be referred to the dispute resolution process as set forth in Part XIV.

12. At the request of any party made within three years of the effective date of the implementation of the harmonized sales taxes, and in any case every five years following the implementation date of the harmonized sales taxes, the parties will review the harmonized tax system and its operation and administration with a view to improving the system.

HARMONIZED TAX RATE
PART III
Common Rate

13. The Province agrees that as one of the participating provinces, any amendment to the PVAT rate will be identical as between all participating provinces so as to maintain a common PVAT rate and that any change to the PVAT rate will be implemented simultaneously for the participating provinces.

14. The Province agrees that, as one of the participating provinces, any decision as between the participating provinces to propose an increase to the PVAT rate will require a simple majority of such provinces.

15. Where Canada or the Province (together with the other participating provinces) proposes a change to the harmonized sales tax rates such party shall give notice of the proposal in writing to the other party and the other participating provinces, which notice shall indicate a proposed effective date for such change not less than two months and not more than six months from the date of the notice.

Rate Decrease

16. The Province agrees that, as one of the participating provinces, any reduction in the common PVAT rate will require the unanimous approval of all participating provinces.

Rate Increase

17. The Province agrees that the PVAT rate will not be subject to any increase during the four year period commencing on the effective date of the PVAT.

18. For the purposes of this Part the base rates of the CVAT or the PVAT are those in effect as of the effective date of the PVAT, or those as may be constituted under clause 27, from time to time.

19. Neither the CVAT nor the PVAT rate may be increased otherwise than in accordance with the provisions of this Part.

20. Any increase in the base rate of either the CVAT or the PVAT, at a particular time, will be limited to increments of one-half of one percent only, at that time.

21. Where Canada proposes to increase the tax rate under the CVAT, notice shall be given to that effect to the Province and the other participating provinces.

22. Where the participating provinces propose a change in the PVAT rate, in accordance with this Agreement, the Province shall announce such change in the Legislature of the Province if the Legislature is then sitting, and if it is not sitting, by other public announcement, given on or before the proposed effective date of the change and a copy of such notice shall be provided to Canada by the Province.

23. Where only the CVAT rate has been increased from the base rate, the rate of that tax will not be further increased if, within two months of the notice received from Canada under clause 15, notice is given to Canada by the Province to the effect that the Province, in conjunction with the other participating provinces, has agreed upon an increase in the rate of the PVAT from the base rate.

24. Where only the rate of the PVAT has been increased from the base rate, the rate of that tax will not be further increased if, within two months of the notice received from the Province and the other participating provinces under clause 15, notice is given to the Province by Canada to the effect that it proposes to increase the rate of the CVAT from the base rate.

25. Where the rate of the CVAT has been raised from the base rate, successively, by two increments of one-half of one percent, the CVAT rate will not be further increased unless the rate of the PVAT has been increased from the base rate.

26. Where the rate of the PVAT has been raised from the base rate, successively, by two increments of one-half of one percent, the PVAT rate will not be further increased until the rate of the CVAT has been increased from the base rate.

27. Where both the rate of the CVAT and the PVAT have been increased, the new rates then in effect shall constitute the base rate of the CVAT and the PVAT, respectively.

28. Notwithstanding the provisions of this Part, neither the CVAT rate nor the PVAT rate shall be increased if such increase would result in a change in the difference between the base rate of each tax that is more than one percentage point.

29. Where either the rate of the CVAT or the PVAT is reduced, that reduced rate shall not affect the base rate for that tax.

30. The provisions of this Agreement governing changes to the PVAT rate shall remain effective as other provinces join in the implementation of the harmonized sales taxes, provided that any such province agrees to participate using the PVAT tax rate in effect as between the participating provinces which were parties to the Agreement immediately preceding such province joining in the Agreement.

31. Where either the CVAT rate or the PVAT rate is to be changed, legislation will be introduced to implement the request in a timely manner and with an effective date as specified in the notice given under clause 15.

32. Should Canada enter into an agreement regarding harmonized sales taxes with a non-participating province under which the applicable PVAT rate could be increased above that in effect under this Agreement otherwise than in accordance with provisions similar to those specified in this Part, the parties, including the newly participating province, will enter into negotiations to determine a new procedure governing amendments to the PVAT rate to reflect common principles or set of rules regarding changes to the PVAT rate which shall apply as between all participating provinces.

PART IV
HARMONIZED TAX BASE

33. The Province agrees that the PVAT tax base must remain common with the CVAT tax base, so as to maintain a harmonized tax base as between the CVAT and the PVAT.

34. A change to the harmonized tax base may be proposed at any regular meeting of the Tax Policy Review Committee.

35. All participating provinces will exercise best efforts to reach unanimous agreement regarding any change to the harmonized tax base that may be proposed under clause 34, including the referral of outstanding issues to the dispute resolution process under Part XIV.

36. A proposal to change the harmonized tax base which would have the effect of reducing, by more than one percent, the aggregate revenues which would accrue to the participating provinces from the harmonized sales tax will not be implemented without the unanimous agreement of the participating provinces.

37. Where Canada proposes a change to the harmonized tax base that would result in an increase, by more than one percent, in the aggregate revenues which would accrue to the participating provinces and the Province provides notice, in writing, of its opposition to such a change, the proposed change to the tax base may only be implemented on the condition that Revenue Canada administer, on behalf of the Province at its request, at no charge, a refundable PVAT credit the annual value of which is not less than the increase in revenues which accrue to the Province as a result of the tax base expansion, or a point of sale rebate in respect of all the PVAT payable as a result of the base increase if such a rebate would be administratively and practically feasible.

38. When a previously non-participating province joins in the Agreement, and the aggregate tax base under the PVAT for all of the participating provinces, including the newly participating province, is greater than 50% of the tax base under the CVAT, Canada and the Province, together with the other participating provinces, will enter into negotiations to determine successor provisions to this Part so as to reflect a broader level of provincial participation while retaining the principles of consensus and revenue certainty reflected in this Part.

ALLOCATION OF REVENUES
PART V

39. The amount of revenues of the Province raised under the harmonized sales taxes shall be determined in accordance with the formulae as set forth in Annex A attached hereto and forming a part of this Agreement.

INTER PROVINCIAL SUPPLIES
PART VI

40. Legislation will be introduced to ensure that

(a) the harmonized sales taxes apply to all inter provincial taxable supplies made as between the participating provinces;

(b) a registrant in a non-participating province is required to collect the harmonized sales taxes in respect of taxable supplies made by that registrant to a recipient in the Province; and

(c) supplies made by a supplier in the Province to a recipient in a non-participating province are relieved from the PVAT.

IMPOSITION OF TAX AT CANADIAN INTERNATIONAL BORDERS
PART VII

41. In this Part, unless otherwise defined for the purposes of Part IX of the Excise Tax Act , the term non-commercial imported goods means imported goods, other than goods imported into Canada for sale or for any commercial, industrial, occupational, institutional or other like use.

42. Unless otherwise provided in this Part, the importation into Canada of non-commercial imported goods which are destined for consumption by a resident (including a "seasonal resident" as defined for the purposes of the Seasonal Residents, Remission Order, 1991 ) of the Province will be subject to the PVAT in accordance with the rules generally applicable to the importation of goods into Canada under Part IX of the Excise Tax Act , and any other special rules developed for purposes of the PVAT.

43. Canada will neither assess nor collect under this agreement any product-specific tax, levy or mark-up imposed by the Province in respect of the importation of goods subject to a specific tax collection agreement between Canada and the Province.

44. The PVAT will not be applicable at the time of importation in respect of the importation into Canada of any goods other than non-commercial imported goods.

45. Goods, other than non-commercial imported goods, which are imported into Canada for consumption, use or supply in whole or in part as an exempt supply in the Province by a person will be subject to self-assessment of the PVAT by the person.

46. The Province will assess and collect, at the time of vehicle registration in the Province, any PVAT payable in respect of motor vehicles imported into Canada as non-commercial imported goods.

TAX INCLUSIVE PRICING
PART VIII

47. The Province will introduce legislation to implement Tax Inclusive Pricing requirements to facilitate consumers awareness of the tax included price of any and all supplies prior to the point of purchase.

48. Canada will introduce legislation to implement Tax Inclusive Pricing, applicable on a national basis, regarding commercial transactions under its jurisdiction.

49. The Tax Inclusive Pricing requirements, including the effective dates and implementation thereof, shall be as set forth in the Federal-Provincial Technical Paper on the harmonized sales taxes.

50. The Province agrees that as one of the participating provinces it shall maintain substantive legislative uniformity as between the Tax Inclusive Pricing legislation of the Province and such legislation as is enacted by other participating provinces.

HARMONIZED TAX ADMINISTRATION
PART IX

51. The harmonized sales taxes will be administered initially by Revenue Canada .

52. Legislation will be introduced to establish a new agency (the "Agency") which will assume responsibility, inter alia , for the administration of the harmonized sales taxes.

53. Canada and the participating provinces recognize that discussions between Canada and all provinces and territories of Canada are proceeding regarding the Agency.

54. The Agency shall be designed and structured so as to promote federal-provincial partnership in the administration of the harmonized sales taxes.

55. The Agency will contribute to the following objectives:

(a) ensure ongoing federal-provincial participation and accountability regarding the revenue stream of the harmonized sales taxes;

(b) enable the pooling of federal and provincial expertise regarding sales tax administration;

(c) ensure the efficient and effective administration of the harmonized sales taxes and to maximize the compliance under such taxes;

(d) enable greater participation by the Province in the administration of other provincial taxes and programs administered by the Agency; and,

(e) provide advice to Canada and the Province regarding the administrative implications of legislation governing the taxes or programs that are under its administration.

56. Canada will exercise best efforts to provide a possible model of the Agency, based on continuing discussions with the provinces and territories, by December 31, 1996 .

57. Canada and the Province will exercise best efforts to realize the goal of administration of the harmonized sales taxes by the Agency by January 1, 1998 .

58. The administration by the Agency will not diminish provincial participation in the administration of the harmonized sales taxes from that provided by this Agreement, unless otherwise agreed to by the parties. In particular, regardless of the structure of the new Agency, federal and provincial Revenue and Finance Ministers will be fully involved in policy and administrative issues with respect to the harmonized sales taxes.

59. If the administration of the harmonized sales taxes is not assumed by the Agency, Canada and the Province, together with the other participating provinces, will review and implement measures agreed upon to achieve the objectives contemplated under this Part otherwise than through the administration by the Agency.

FEDERAL-PROVINCIAL TAX ADMINISTRATION LIAISON COMMITTEE
PART X

60. Canada and the Province, together with the other participating provinces, will establish a committee, to be called the Federal-Provincial Tax Administration Liaison Committee, the terms of reference of which are set forth in an agreement which is attached hereto as Annex B and, including amendments to that agreement as may be made from time to time, forms a part of this Agreement.

HUMAN RESOURCES
PART XI

61. Provision for the transfer to or employment by Revenue Canada of persons from the Province including the number of such persons, the sequencing and timing of personnel transfers or acquisitions, the work location of service sites and staff, and the conditions of employment, is contained within the agreement regarding Human Resources entered into between Canada (as represented by the Minister of National Revenue) and the Province.

EXCHANGE OF INFORMATION
PART XII

62. The exchange of information between Canada and the Province providing for co-operation, assistance and the timely exchange of such information as is necessary to ensure the efficient administration of the harmonized sales taxes, is provided for in the agreement regarding information exchange and mutual assistance entered into between Canada (as represented by the Minister of National Revenue) and the Province.

LITIGATION
PART XIII

63. Canada shall be responsible for the conduct of litigation under the harmonized sales taxes.

DISPUTE RESOLUTION
PART XIV

64. Best efforts will be exercised by federal and provincial officials to reach consensus in respect of issues arising in respect of matters governed by this Agreement.

65. Subject to clause 66, issues not resolved by federal and provincial officials shall be referred to the Minister of Finance (Canada ) and the Minister of Finance of the Province and the other participating provinces.

66. Where the issue relates directly to the mandate of the Federal-Provincial Tax Administration Liaison Committee the issue shall be referred to the Minister of National Revenue (Canada) in addition to the Minister of Finance (Canada) and the Minister of Finance (and other Ministers, as appropriate) of the Province and the other participating provinces.

67. Where an unresolved issue has been referred to Ministers, the Ministers may refer the issue to a third party for consideration and advice.

AMENDMENT AND TERMINATION
PART XV

68. This agreement may only be amended by mutual agreement, in writing, subject to any necessary approvals, authorizations or legislative requirements.

69. Any amending document will form a part of this Agreement and shall be effective as of the date specified therein.

70. Canada or the Province may terminate this Agreement by written notice, effective as of the end of the eighteen month period that immediately follows the last day of the calendar quarter in which the notice of termination is received, or such other time as may be agreed to as between the parties.

71. On termination of this Agreement, all rights and obligations of Canada and the Province under this Agreement cease, except for the obligations of Canada and the Province to settle accounts relating to amounts outstanding under this Agreement.

PART XVI
GOVERNMENT PURCHASES

72. Canada and the Province agree to pay the harmonized sales taxes in respect of supplies acquired by their respective governments, agents and entities thereof.

73. Where interjurisdictional immunity from taxation applies, any harmonized sales taxes paid by Canada or the Province, as provided for in clause 72, will be subject to rebate on application to Revenue Canada, except to the extent that any such taxes are payable under any agreement regarding the reciprocal payment of sales or commodity taxes as between Canada and the Province and are not recoverable.

74. In the case of provincial government entities, any rebates payable under clause 73 shall be made on a bi-weekly basis and, at the direction of the Province, shall be paid either to the Province or to the government entity of the Province which paid the tax and which is identified as the recipient of the rebate in the application therefore.

PART XVII
MISCELLANEOUS

75. If Canada should enter into a sales tax harmonization agreement with a non-participating province on terms that differ from those of the Agreement then in effect between Canada and the Province, the parties shall, at the option of the Province acting jointly with the other participating provinces, enter into a succeeding agreement regarding harmonization on the same terms as that agreement with the other province.

76. This Agreement may be executed in counterparts each of which so executed shall be deemed to be an original and such counterparts together shall constitute one and the same instrument and, notwithstanding the date of execution, will be deemed to bear date as of the date hereof. Facsimile signatures shall be accepted the same as original signatures.

77. The effective date of this Agreement is October 18, 1996 .

IN WITNESS WHEREOF, this agreement is signed in duplicate, in English and in French, each version being equally authentic,

The Government of Canada

at Ottawa

This 18th day of October, 1996

(Sgd.) P. Martin
Minister of Finance for
the Government of Canada

The Government of
Newfoundland and Labrador

at St. John's

This 18th day of October, 1996

(Sgd.) Paul D. Dicks
Minister of Finance and
Treasury Board for the
Government of Newfoundland
and Labrador

(Sgd.) Brian Tobin
Approved pursuant to the
Intergovernmental Affairs
Act by the Premier as
Minister Responsible for
Intergovernmental Affairs
or the Secretary to Cabinet

1996 cT-0.01 Sch

ANNEX A

AGREEMENT REGARDING REVENUE ALLOCATION

Preamble

This Annex to the Agreement sets forth the provisions governing the determination of tax revenues as defined in clause 1 and the provincial annual revenue entitlement from tax revenues. Tax revenues, defined in clause 1, consist of the aggregate of the tax payable by registrants under the CVAT and the PVAT less specified refunds and rebates. The annual revenue entitlement of a province out of the tax revenues is determined based on a share which is a function of the PVAT rate, CVAT rate, national and provincial economic data as supplied by Statistics Canada, administrative data provided by Revenue Canada, and other data sources determined by Finance (Canada). This Annex also sets forth the rules regarding the payment mechanism, including payment adjustments and the final settlement procedure, with respect to the provincial annual revenue entitlement.

Interpretation

1. In this Annex,

"annual revenue entitlement" means the amount of tax revenues payable by Canada to the Province in respect of a particular tax entitlement year including all sub-periods thereof as determined under clause 5, according to the formulae set forth in clause 6, and accounting for adjustments, if any, as set forth in subclause 10(3);

"business day" means a day that is not a holiday;

"harmonized sales taxes" means, in the case of a participating province, the CVAT and the PVAT, and, in the case of a non-participating province, the CVAT;

"holiday" means any of the following days: Saturday, or a day defined as a holiday within the preamble to the definition of that word within subsection 35(1) of the Interpretation Act, R.S. 1985, c. I-21;

"province" means a province or territory of Canada ;

"public sector body" means those persons that are entitled to claim a rebate in respect of CVAT under section 259 of the Excise Tax Act ;

"tax entitlement year" means a calendar year, or portion thereof, after the effective date of the PVAT and during which the Province is a party to the Agreement; and

"tax revenues" means net tax, payable as or on account of the CVAT or PVAT as determined by Canada, or estimated by Canada to become payable as such net tax, in whole or in part, in respect of a particular tax entitlement year, less

(a) any refund or rebate payable or claimable, as or on account of CVAT or PVAT, as determined or estimated by Canada, other than rebates paid under sections 254, 254.1, 255, 256 and 259 of the Excise Tax Act in respect of CVAT and any similar or matching rebates that may be claimable as or on account of PVAT, or such other refunds or rebates of CVAT or PVAT (including any point-of-sale rebate thereof) as may be agreed to as between Canada and the Province from time to time;

(b) any rebates paid to Canada or the Province (including agents or entities thereof) under this Agreement or under an agreement similar to this Agreement in effect between Canada and a participating province as determined or estimated by Canada, other than a rebate deducted from tax revenues under subclause (a); and

(c) taxes paid by federal departments as reported to Revenue Canada by the Department of Public Works and Government Services (or as estimated by Canada), other than taxes rebated and deducted from tax revenues under subclause (b).

2. For greater certainty, tax revenues shall not include any amount deducted or deductible under section 234 of the Excise Tax Act in determining net tax.

Tax Revenues

3. In determining tax revenues in respect of a particular tax entitlement year, Canada shall take into account all amounts reported as CVAT and PVAT, including amounts declared on any and all returns filed with Revenue Canada under Part IX of the Excise Tax Act, any and all amounts accounted for under the Customs Act in respect of tax under Part IX of the Excise Tax Act , any amounts payable by way of an assessment under Part IX of the Excise Tax Act , and any amounts payable as a result of a determination, re-determination or re-appraisal under the Customs Act .

4. Tax revenues does not include amounts collected as interest or penalty payable under the Excise Tax Act .

Segmentation of Tax Revenues

5. (1) For the purposes of clause 6, a particular tax entitlement year may contain any number of sub-periods each of which commences on a date in that year on which a measure (other than a change to the harmonized sales taxes base) becomes effective which affects the tax revenues, including:

(a) the effective date of the PVAT;

(b) the beginning of a new tax entitlement year;

(d) the date on which a previously non-participating province joins in the Agreement; or

(e) any other date during the year as may be agreed upon as between Canada and the Province (acting in conjunction with the other participating provinces).

(2) A particular sub-period shall end at the time that a subsequent measure becomes effective which changes, varies or terminates the earlier measure which commenced the particular sub-period.

(3) For the purposes of this Annex, notwithstanding the return in which any part of tax revenues in respect of a particular tax entitlement year are reported or the reporting period of any person filing a return in which any part of tax revenues are reported, Canada shall allocate tax revenues to a particular tax entitlement year, or any sub-period thereof, from any reporting period using the following ratio:

NUMDAYS_p x AVGTXR_p ________________________
_TP S (NUMDAYS_p x AVGTXR_p )
¹

where

p — means a time period that is a portion, if any, of a reporting period of a person that is within a particular sub-period of a tax entitlement year;

NUMDAYS_p — means the number of days in a particular time period "p";

AVGTXR_p — means the weighted average of the rates of the CVAT and PVAT across Canada as a function of the tax bases of the CVAT and the PVAT with respect to a particular sub-period, determined by Canada in consultation with the Province and the other participating provinces; and

TP — means the total number of time periods "p" within a particular reporting period of a person.

Provincial Revenue Entitlement
Under Revenue Allocation

6. (1) In this clause,

"allocated unrecoverable CVAT" means that portion of unrecoverable CVAT attributable to a particular province that is equal to

CVAT x X%

where

CVAT is the CVAT paid or payable by listed financial institutions in a particular calendar year;

X% is the ratio for that province determined on the basis of sections 402 through 405 and section 2603 of the Income Tax Regulations (Canada), for all listed financial institutions required to allocate corporate or business income by province pursuant to these Regulations or as may be set forth in the Excise Tax Act or Regulations thereunder; and

where a listed financial institution is not required to allocate corporate or business income by province, the CVAT for that listed financial institution will be attributed to the province where the institution is located;

"consumer expenditure" means that part of personal expenditure on consumer goods and services within the Canadian System of National Accounts which represents the expenditures of households and those organizations which are not entitled to any rebate under section 259 of the Excise Tax Act ;

"i" identifies a particular province or territory of Canada ;

"input-output tables" means the set of economic accounts which is that part of the Canadian System of National Accounts, representing the input-output structure of the Canadian or provincial economy, as determined by Statistics Canada;

"j" identifies a particular personal expenditure category within the data representing personal expenditures on consumer goods and services of the Provincial Accounts;

"k" identifies a particular type of public sector body;

"m" identifies a particular industry or group of industries within the interprovincial input-output tables of Statistics Canada;

"n" identifies a particular commodity within the interprovincial input-output tables of Statistics Canada;

"Provincial Accounts" means the Provincial Economic Accounts which is that part of the Canadian System of National Accounts, representing the provincial income-based and expenditure-based Gross Domestic Product, as determined by Statistics Canada;

"t" identifies a particular tax entitlement year other than a tax entitlement year in respect of which the annual revenue entitlement is no longer open to a re-estimate as a result of the limitation imposed under clause 11 (in certain circumstances, t identifies a particular sub-period of a tax entitlement year as determined under clause 5); and

"unrecoverable CVAT" means CVAT paid or payable in respect of which an input tax credit may not be claimed.

(2) The amount of tax revenues payable to the Province in respect of a particular tax entitlement year prior to adjustments, if any, set forth in clause 10, or a sub-period thereof as determined under clause 5 (so as to reflect the segmentation of tax revenues as between particular sub-periods within the particular tax entitlement year), shall be determined as follows:

Formula A

PROVREV_t = TOTREV_t x PROVSHARE_t

where

PROVREV_t — means the amount of tax revenues payable to the Province in respect of a particular tax entitlement year "t", or a sub-period thereof as determined under clause 5;

TOTREV_t — means the tax revenues in respect of a particular tax entitlement year "t", or a sub-period thereof as determined under clause 5; and

PROVSHARE_t — means the provincial share of tax revenues, as determined by Formula B, in respect of a particular tax entitlement year "t", or a sub-period thereof as determined under clause 5.

Formula B

PROVSHARE_t = (PROVBASE_{t X} PROVRATE_t) _______________________________

(FEDBASE_t x FEDRATE_t )
+ S (PROVBASEⁱ _t x PROVRATEⁱ _t )
ⁱ

where

PROVBASE_t — means the estimated tax base under the harmonized sales taxes for the Province in calendar year t, as determined by Formula D;

PROVRATE_t — means the PVAT rate applicable in the Province in a particular tax entitlement year "t", or a sub-period thereof as determined under clause 5;

FEDBASE_t — means the estimated CVAT base in calendar year "t", as determined by Formula C;

FEDRATE_t — means the CVAT rate applicable in a particular tax entitlement year "t", or a sub-period thereof as determined under clause 5;

PROVBASEⁱ _t — means the estimated tax base under the harmonized sales taxes for a province "i": in calendar year "t", as determined by Formula D; and

PROVRATEⁱ _t — means the PVAT rate applicable in a province "i" in a particualr tax entitlement year "t", or a sub-period thereof as determined under clause 5 (the PVAT rate in a non-participating province is zero).

Formula C