42. In this Part,

“duty paid value” means the value of the article as it would be determined for the purpose of calculating an ad valorem duty on the importation of the article into Canada under the laws relating to the customs and the Customs Tariff whether the article is in fact subject to ad valorem or other duty or not, plus the amount of the customs duties, if any, payable thereon;

“licensed manufacturer” means any manufacturer or producer licensed under this Part;

“licensed wholesaler” means any wholesaler, jobber or other dealer licensed under this Part;

“partly manufactured goods” means

(a) goods that are to be incorporated into or form a constituent or component part of an article that is subject to the consumption or sales tax, if the tax on the article has not yet been levied pursuant to section 50, or

(b) goods that are to be prepared for sale as goods subject to the consumption or sales tax by assembling, blending, mixing, cutting to size, diluting, bottling, packaging or repackaging the goods or by applying coatings or finishes to the goods, other than goods that are so prepared in a retail store for sale in that store exclusively and directly to consumers,

and the Minister is the sole judge as to whether or not goods are partly manufactured goods;

“producer or manufacturer” includes any printer, publisher, lithographer, engraver or commercial artist, but does not include, for the purposes of this Part and the Schedules, any restaurateur, caterer or other person engaged in the business of preparing in a restaurant, centralized kitchen or similar establishment food or drink, whether or not the food or drink is for consumption on the premises;

“sale price”, for the purpose of determining the consumption or sales tax, means

(a) except in the case of wines, the aggregate of

(i) the amount charged as price before any amount payable in respect of any other tax under this Act is added thereto,

(ii) any amount that the purchaser is liable to pay to the vendor by reason of or in respect of the sale in addition to the amount charged as price, whether payable at the same or any other time, including, without limiting the generality of the foregoing, any amount charged for, or to make provision for, advertising, financing, servicing, warranty, commission or any other matter, and

(iii) the amount of the excise duties payable under the Excise Act whether the goods are sold in bond or not,

and, in the case of imported goods, the sale price shall be deemed to be the duty paid value thereof, and

(b) in the case of wines, the aggregate of

(i) the amount charged as price including the amount of the excise tax payable pursuant to section 27,

(ii) any amount that the purchaser is liable to pay to the vendor by reason of or in respect of the sale in addition to the amount charged as price, whether payable at the same or any other time, including, without limiting the generality of the foregoing, any amount charged for, or to make provision for, advertising, financing, servicing, warranty, commission or any other matter, and

(iii) the amount of excise duties payable under the Excise Act whether the goods are sold in bond or not,

and, in the case of imported wines, the sale price shall be deemed to be the aggregate of the duty paid value thereof and the amount of the excise tax payable pursuant to section 27.

R.S., 1985, c. E-15, s. 42; R.S., 1985, c. 15 (1st Supp.), s. 16, c. 7 (2nd Supp.), s. 13.

43. Where a person has, in Canada,

(a) put a clock or watch movement into a clock or watch case,

(b) put a clock or watch movement into a clock or watch case and added a strap, bracelet, brooch or other accessory thereto, or

(c) set or mounted one or more diamonds or other precious or semi-precious stones, real or imitation, in a ring, brooch or other article of jewellery,

he shall, for the purposes of this Part, be deemed to have manufactured or produced the watch, clock, ring, brooch or other article of jewellery in Canada.

R.S., c. E-13, s. 26.

43.1 Where a person manufactures or produces in a retail outlet carbonated beverages or non-carbonated fruit flavoured beverages, other than alcoholic beverages, having less than twenty-five per cent by volume of natural fruit, for sale in that outlet exclusively and directly to consumers for immediate consumption, he shall, for the purposes of this Part, be deemed not to be, in relation to any such beverage so manufactured or produced by him, the manufacturer or producer thereof.

R.S., 1985, c. 7 (2nd Supp.), s. 14.

44. [Repealed, R.S., 1985, c. 7 (2nd Supp.), s. 15]

45. A person engaged in the business of retreading tires shall, for the purposes of this Part, be deemed to be the manufacturer or producer of tires retreaded by him, and tires retreaded by him for or on behalf of any other person shall be deemed to be sold, at the time they are delivered to that other person, at a sale price equal to the retreading charge.

R.S., c. E-13, s. 26.

45.1 For the purposes of this Part, a person who, pursuant to a contract for labour, manufactures or produces goods from any article or material supplied by another person, other than a licensed manufacturer, for delivery to that other person shall be deemed to have sold the goods, at a sale price equal to the charge made under the contract in respect of the goods, at the time they are delivered to that other person.

R.S., 1985, c. 15 (1st Supp.), s. 17.

46. For the purpose of determining the consumption or sales tax payable under this Part,

(a) in calculating the sale price of goods manufactured or produced in Canada, there shall be included the amount charged as price for or in respect of

(i) the wrapper, package, box, bottle or other container in which the goods are contained, and

(ii) any other goods contained in or attached to the wrapper, package, box, bottle or other container;

(b) in calculating the duty paid value of imported goods that, when imported, are wrapped, packaged, put up in boxes or bottles or otherwise prepared for sale, there shall be added to the value of the goods as determined in the manner prescribed in this Part the value, similarly determined, of the wrapper, package, box, bottle or other container in which the goods are contained; and

(c) in calculating the sale price of goods manufactured or produced in Canada, there may be excluded

(i) any fees paid to the Government of Canada or the government of a province for the inspection, marking, stamping or certification thereof in respect of capacity, accuracy, standard or safety, if the fees are shown as separate items on the manufacturers’ sales invoices, and

(ii) under such circumstances as the Governor in Council may, by regulation, prescribe, an amount representing

(A) the cost of erection or installation of the goods incurred by the manufacturer or producer where the goods are sold at a price that includes erection or installation, or

(B) the cost of transportation of the goods incurred by the manufacturer or producer in transporting the goods between premises of the manufacturer or producer in Canada, or in delivering the goods from the premises of the manufacturer or producer in Canada to the purchaser, where the goods are sold at a price that includes those costs of transportation,

determined in such manner as the Governor in Council may, by regulation, prescribe.

R.S., 1985, c. E-15, s. 46; R.S., 1985, c. 12 (4th Supp.), s. 13.

47. Where a person has, in Canada,

(a) processed exposed photographic film supplied by a customer to make a negative, transparency, photographic print or other photographic related good,

(b) produced or manufactured a negative, transparency, photographic print or other photographic related good from any good supplied by a customer, or

(c) sold a right to the processing, production or manufacture by him of goods described in paragraph (a) or (b),

he shall, for the purposes of this Part, be deemed to be the producer or manufacturer of the negative, transparency, photographic print or other photographic related good, and the goods shall be deemed to be sold

(d) in the case mentioned in paragraph (a) or (b), at the time the goods are delivered to the customer, and

(e) in the case mentioned in paragraph (c), at the time the right is sold,

and the charge made shall be deemed to be the sale price.

1980-81-82-83, c. 68, s. 8.

48. (1) Any licensed manufacturer may make an application in writing to the Minister to be considered, for the purposes of this Act, as the manufacturer or producer of all other goods, in this section and section 49 referred to as “similar goods”, that the licensed manufacturer sells in conjunction with his sales of goods of his manufacture or production in Canada or that are of the same class as goods the licensed manufacturer manufactures or produces in Canada.

(2) The Minister may at any time request an applicant under this section to supply additional information in respect of his application.

(3) On receiving an application, the Minister shall decide whether to approve or reject the application and shall send to the applicant a notice in writing setting out his decision and, where the Minister approves the application, the date on and after which the approval is effective.

(4) Subject to subsection 49(2), on and after the date set out in a notice of decision pursuant to subsection (3), the applicant shall be deemed to be the manufacturer or producer of all similar goods that the applicant sells and those goods shall be deemed to be

(a) at the time the applicant acquires them,

(i) for the purposes of this Part, partly manufactured goods, and

(ii) for the purposes of Part III, goods described in paragraph 23(7)(a); and

(b) thereafter, goods produced or manufactured in Canada.

R.S., 1985, c. E-15, s. 48; R.S., 1985, c. 15 (1st Supp.), s. 18, c. 12 (4th Supp.), s. 14; 2002, c. 22, s. 371.

49. (1) The Minister may at any time, and shall on request of the applicant, revoke any approval of an application given pursuant to subsection 48(3) and, where the Minister does so, he shall send to the applicant a notice in writing of the revocation setting out the date on and after which the revocation is effective.

(2) On and after the date set out in a notice of revocation pursuant to subsection (1),

(a) subsection 48(4) ceases to apply to the applicant; and

(b) all taxes imposed by this Act are payable, at the rate in force on that date, on any similar goods then in possession of the applicant that have been acquired free of tax by virtue of subsection 48(4) and shall be computed

(i) on the duty paid value of the goods, if they were imported by the applicant, or

(ii) on the price for which the goods were purchased by the applicant, if they were not imported by him, and the price shall include the amount of the excise duties on goods sold in bond.

(2.1) For the purposes of subparagraph (2)(b)(ii), where an applicant has purchased goods from, or property in goods has otherwise been transferred to an applicant by, a person with whom the applicant was not dealing at arm’s length at the time of the purchase or transfer for no price or for a price that was less than the price (in this subsection referred to as the “reasonable price”) that would have been reasonable in the circumstances if the applicant and that person had been dealing at arm’s length at that time, the applicant shall be deemed to have purchased the goods at that time for a price equal to the reasonable price.

(3) Where an application is rejected pursuant to subsection 48(3) or approval of an application is revoked pursuant to subsection (1), the applicant may not make an application under subsection 48(1) within two years after the date of the notice of decision or the date on and after which the revocation is effective, as the case may be.

R.S., 1985, c. E-15, s. 49; R.S., 1985, c. 12 (4th Supp.), s. 15.

50. (1) There shall be imposed, levied and collected a consumption or sales tax at the rate prescribed in subsection (1.1) on the sale price or on the volume sold of all goods

(a) produced or manufactured in Canada

(i) payable, in any case other than a case mentioned in subparagraph (ii) or (iii), by the producer or manufacturer at the time when the goods are delivered to the purchaser or at the time when the property in the goods passes, whichever is the earlier,

(ii) payable, in a case where the contract for the sale of the goods, including a hire-purchase contract and any other contract under which property in the goods passes on satisfaction of a condition, provides that the sale price or other consideration shall be paid to the manufacturer or producer by instalments (whether the contract provides that the goods are to be delivered or property in the goods is to pass before or after payment of any or all instalments), by the producer or manufacturer at the time each of the instalments becomes payable in accordance with the terms of the contract, and

(iii) payable, in a case where the goods are for use by the producer or manufacturer thereof, by the producer or manufacturer at the time the goods are appropriated for use;

(b) imported into Canada, payable in accordance with the provisions of the Customs Act by the importer, owner or other person liable to pay duties under that Act;

(c) sold by a licensed wholesaler, payable by him at the time of delivery to the purchaser, and the tax shall be computed

(i) on the duty paid value of the goods, if they were imported by the licensed wholesaler, or

(ii) on the price for which the goods were purchased by the licensed wholesaler, if they were not imported by him, which price shall include the amount of the excise duties on goods sold in bond; or

(d) retained by a licensed wholesaler for his own use or for rental by him to others, payable by the licensed wholesaler at the time the goods are put to his own use or first rented to others, and the tax shall be computed

(i) on the aggregate of the duty paid value of the goods and the amount of any taxes payable on the goods under section 27, if they were imported by the licensed wholesaler, or

(ii) on the aggregate of the price paid by the licensed wholesaler for the goods, the amount of any excise duties payable on the goods if sold in bond and the amount of any taxes payable on the goods under section 27, if they were not imported by the licensed wholesaler.

(1.1) Tax imposed by subsection (1) is imposed

(a) in the case of wines, and goods on which a duty of excise is imposed under the Excise Act or would be if the goods were produced or manufactured in Canada, at the rate of nineteen per cent;

(b) in the case of goods enumerated in Schedule IV (Construction Materials and Equipment for Buildings), at the rate of nine per cent;

(c) in the case of regular gasoline, unleaded gasoline, premium leaded gasoline, premium unleaded gasoline and diesel fuel, at the rate set opposite the applicable item in Schedule II.1, adjusted according to subsection 50.1(1) and multiplied by the rate of tax specified in paragraph (d), expressed as a decimal number and multiplied by one hundred;

(c.1) in the case of goods imported into Canada and classified under tariff item No. 9804.30.00 of Schedule I to the Customs Tariff, at the rate of tax specified in paragraph (d); and

(d) in any other case, at the rate of thirteen and one-half per cent.

(2) Notwithstanding subsection (1), where gasoline or diesel fuel is delivered to a retail outlet by or on behalf of the manufacturer or producer thereof, the gasoline or diesel fuel shall be deemed to have been sold and delivered to a purchaser thereof.

(2.1) Notwithstanding subsection (1), where gasoline, diesel fuel or aviation fuel was, immediately prior to March 1, 1987, held in inventory by or on behalf of a person described in paragraph (e) of the definition “manufacturer or producer” in subsection 2(1), as that subsection read immediately prior to March 1, 1987, who was a licensed manufacturer under this Act of gasoline, diesel fuel or aviation fuel solely by virtue of that paragraph, and the consumption or sales tax thereon had not been paid or become payable on or before February 28, 1987, the gasoline, diesel fuel or aviation fuel shall be deemed to have been sold and delivered to a purchaser thereof immediately prior to March 1, 1987.

(3) and (4) [Repealed, R.S., 1985, c. 7 (2nd Supp.), s. 16]

(5) Notwithstanding anything in subsection (1), the consumption or sales tax shall not be payable on goods

(a) sold by a licensed manufacturer to another licensed manufacturer if the goods are partly manufactured goods;

(b) imported by a licensed manufacturer if the goods are partly manufactured goods;

(c) imported by a licensed wholesaler otherwise than for his own use or for rental to others, on importation;

(d) sold by a licensed manufacturer to a licensed wholesaler otherwise than for his own use or for rental to others;

(e) sold by a licensed wholesaler to a licensed manufacturer if the goods are partly manufactured goods;

(f) sold by a licensed wholesaler to another licensed wholesaler, but if a licensed wholesaler sells goods to another licensed wholesaler at a price less than the value on which the tax would be computed under paragraph (1)(c), the vendor forthwith becomes liable to pay the tax on the difference between the value and his sale price;

(g) sold to or imported by a person described in paragraph (d) of the definition “manufacturer or producer” in subsection 2(1) who is a licensed manufacturer under this Act, if the goods are cosmetics;

(h) [Repealed, R.S., 1985, c. 12 (4th Supp.), s. 16]

(i) being new motor vehicles designed for highway use, or chassis therefor, imported by a person described in paragraph (g) of the definition “manufacturer or producer” in subsection 2(1) who is a manufacturer licensed for the purposes of this Part;

(j) being new motor vehicles designed for highway use, or chassis therefor, sold to a person described in paragraph (h) of the definition “manufacturer or producer” in subsection 2(1) who is a manufacturer licensed for the purposes of this Part;

(k) sold to or imported by a person described in paragraph (i) of the definition “manufacturer or producer” in subsection 2(1) who is a licensed manufacturer under this Act, if the goods are goods enumerated in Schedule III.1; or

(l) sold or leased to, or imported by, a person described in paragraph (j) of the definition “manufacturer or producer” in subsection 2(1) who is a licensed manufacturer under this Act, if the goods are prerecorded video cassettes that are new or have not been used in Canada.

(6) Where any person, other than the manufacturer or producer, importer, owner, licensed wholesaler or jobber mentioned in this section, acquires from or against any one of those persons the right to sell any goods, whether as a result of the operation of law or of any transaction not taxable under this section, the sale of the goods by him shall be taxable as if made by the manufacturer or producer, importer, owner, licensed wholesaler or jobber, as the case may be, and the person so selling is liable to pay the tax.

(7) Where a motor vehicle, tractor or aircraft or a ship or other marine vessel, or a machine or tool for operation by a motor vehicle or tractor or a part or equipment for an aircraft or ship or other marine vessel

(a) has been purchased or imported by a person for a use by that person that renders the purchase or importation exempt from tax imposed under this Part and Part III or either of those Parts, or

(b) has been purchased as described in subsection 68.19(1),

the following rules apply:

(c) if within five years of the time the article was first purchased or, if imported, released under the Customs Act for a use rendering the purchase or release exempt from tax imposed under this Part and Part III or either of those Parts, the article is applied to any use, other than of a casual nature, for which it could not, at the time of such first purchase, have been purchased or released exempt from the tax, the article shall be deemed to have been sold at the time of its first application to that use and tax imposed under this Part and Part III or either of those Parts, shall be imposed, levied and collected at the time of its first application to that use,

(i) in the case of an article mentioned in Schedule I having a specific rate of tax set opposite the item, at the lesser of the specific rate applicable at that time, and the specific rate, if any, applicable in the case of the article at the time the article was first purchased or imported for a use rendering the purchase or importation exempt from the tax or taxes, and

(ii) in any other case, on the sale price that would have been reasonable in the circumstances if the article had been sold, at the time of its first application to that use, to a person with whom the person so applying the article was dealing at arm’s length,

payable by the owner of the article at the time of its first application to the use rendering it subject to tax; and

(d) if within five years of the time the article was first purchased or, if imported, released under the Customs Act for a use rendering the purchase or release exempt from tax imposed under this Part and Part III or either of those Parts, the article is sold or leased, the article shall be deemed to have been sold at the time of the sale or lease and tax imposed under this Part and Part III or either of those Parts, shall, if applicable, be imposed, levied and collected at the time of the sale or lease,

(i) in the case of an article mentioned in Schedule I having a specific rate of tax set opposite the item, at the lesser of the specific rate applicable at that time, and the specific rate, if any, applicable in the case of the article at the time the article was first purchased or imported for a use rendering the purchase or importation exempt from the tax or taxes, and

(ii) in any other case,

(A) where the article was sold, on the sale price, or

(B) where the article was leased by a person to another person, on the sale price that would have been reasonable in the circumstances if the article had been sold, at the time of the lease, to that other person,

payable by the person who sold or leased the article.

(8) Where fuel that has been purchased or imported for heating or lighting is sold or appropriated by the purchaser or importer for a purpose for which the fuel could not have been purchased or imported exempt from tax under this Part at the time of the purchase or importation, the tax imposed under this Part shall be payable by the purchaser or importer

(a) where the fuel is sold, at the time of delivery to the person to whom it is sold, computed at the rate of tax in force at that time

(i) in the case of gasoline or diesel fuel, on the volume sold, and

(ii) in any other case, on the sale price; and

(b) where the fuel is appropriated, at the time of the appropriation, computed at the rate of tax in force at that time

(i) in the case of gasoline or diesel fuel, on the volume appropriated, and

(ii) in any other case, on the sale price that would have been reasonable in the circumstances if the fuel had been sold, at that time, to a person with whom the purchaser or importer was dealing at arm’s length.

(9) [Repealed, 2002, c. 22, s. 372]

R.S., 1985, c. E-15, s. 50; R.S., 1985, c. 15 (1st Supp.), s. 19, c. 1 (2nd Supp.), s. 190, c. 7 (2nd Supp.), s. 16, c. 42 (2nd Supp.), ss. 4, 5, c. 12 (4th Supp.), s. 16; 1988, c. 65, s. 114; 1989, c. 22, s. 3; 2002, c. 22, s. 372.

50.1 (1) Commencing on April 1, 1986, the rates enumerated in Schedule II.1 shall be adjusted each January 1, April 1, July 1 and October 1, so that the rates applicable during the three month period commencing on the adjustment day are equal to the amounts obtained

(a) by multiplying

(i) the rates so enumerated

by

(ii) the ratio, adjusted or altered in the manner prescribed pursuant to subsection (3) and rounded to the nearest one-thousandth or, where the ratio is equidistant from two one-thousandths, to the greater thereof, that

(A) the Industrial Product Price Index for Motor Gasoline, in the case of the rates enumerated in sections 1 and 2 of Schedule II.1, or

(B) the Industrial Product Price Index for Diesel Oil, in the case of the rate enumerated in section 5 of Schedule II.1,

for the twelve month period ending on the day before the three month period immediately preceding the adjustment day bears to

(C) the Industrial Product Price Index for Motor Gasoline, in the case of the rates enumerated in sections 1 and 2 of Schedule II.1, or

(D) the Industrial Product Price Index for Diesel Oil, in the case of the rate enumerated in section 5 of Schedule II.1,

for the twelve month period ending on September 30, 1985; and

(b) by rounding the product obtained under paragraph (a) to the nearest one hundred-thousandth of a dollar or, if the product is equidistant from two one-hundred-thousandths of a dollar, to the greater thereof.

(2) For the purposes of subsection (1), the Industrial Product Price Index for Motor Gasoline, or the Industrial Product Price Index for Diesel Oil, for a twelve month period is the result obtained

(a) by aggregating the most recent Industrial Product Price Index for Motor Gasoline or the most recent Industrial Product Price Index for Diesel Oil, as the case may be, for each month in the period, including the relevant data for the period from January 1, 1981 to December 31, 1985, released by Statistics Canada under the authority of the Statistics Act on or before the fifteenth day of the third month following the end of that period and adjusted or altered in the manner prescribed pursuant to subsection (3);

(b) by dividing the aggregate obtained under paragraph (a) by twelve; and

(c) by rounding the result obtained under paragraph (b) to the nearest one-thousandth or, if the result obtained is equidistant from two one-thousandths, to the greater thereof.

(3) The Governor in Council, on the recommendation of the Minister of Finance, may make regulations

(a) prescribing the manner in which the ratio referred to in subparagraph (1)(a)(ii) shall be adjusted or altered; and

(b) prescribing, for the purposes of subsection (2), the manner in which the Industrial Product Price Index for Motor Gasoline or the Industrial Product Price Index for Diesel Oil for any month shall be adjusted or altered.

(4) The Governor in Council may, by regulation, define the terms “regular gasoline”, “unleaded gasoline”, “premium leaded gasoline” and “premium unleaded gasoline” for the purposes of paragraph 50(1.1)(c) and of Schedule II.1.

R.S., 1985, c. 7 (2nd Supp.), s. 17, c. 42 (2nd Supp.), s. 6, c. 12 (4th Supp.), s. 17.

51. (1) The tax imposed by section 50 does not apply to the sale or importation of the goods mentioned in Schedule III, other than those goods mentioned in Part XIII of that Schedule that are sold to or imported by persons exempt from consumption or sales tax under subsection 54(2).

(2) The tax imposed by section 50 shall be imposed only on fifty per cent of the sale price if manufactured in Canada or fifty per cent of the duty-paid value if imported, of metric retail scales having a maximum weighing capacity of one hundred kilograms and specifically designed for the weighing of goods in retail operations, when sold or imported before January 1, 1984.

(3) The tax imposed by section 50 on the sale price of mobile homes and modular building units shall be imposed on only fifty per cent of the sale price thereof.

R.S., 1985, c. E-15, s. 51; R.S., 1985, c. 7 (2nd Supp.), s. 18.

52. (1) Where goods that were manufactured or produced in Canada are appropriated by the manufacturer or producer thereof for his own use, the sale price of the goods shall be deemed to be equal to the sale price that would have been reasonable in the circumstances if the goods had been sold, at the time of the appropriation, to a person with whom the manufacturer or producer was dealing at arm’s length.

(2) Subsection (1) does not apply in respect of goods, other than printed matter, manufactured by Her Majesty in right of Canada or a province (except goods manufactured by a company to which the Government Corporations Operation Act applies) for any purpose, other than

(a) sale;

(b) use by any board, commission, railway, public utility, university, manufactory, company or agency that is owned, controlled or operated by the Government of Canada or the government of a province or under the authority of Parliament or of the legislature of a province; or

(c) use by Her Majesty in right of Canada or a province or Her agents or servants for commercial or mercantile purposes.

(3) Where goods that were manufactured or produced in Canada are leased, or the right to use any such goods, but not the property therein, is sold or given, by the manufacturer or producer thereof to a person

(a) the goods shall be deemed to have been sold at the time the goods were so leased or the right to use them was so sold or given; and

(b) the sale price of the goods shall be deemed to be equal to the sale price that would have been reasonable in the circumstances if the goods had been sold at that time to that person.

(4) Where the sale price of goods consists in whole or in part of a royalty, or any other consideration, that is unascertained at the earlier of the time the goods are delivered or the property in the goods passes to the purchaser thereof, the sale price of the goods shall be deemed to be equal to the sale price that would have been reasonable in the circumstances if the whole of the consideration had been ascertained at that time.

(5) Where cosmetics were manufactured or produced in Canada by a licensed manufacturer for a non-resident person who is a person described in paragraph (d) of the definition “manufacturer or producer” in subsection 2(1) and who has failed to apply for a licence as required by section 54, the licensed manufacturer shall be deemed to have sold the cosmetics for a sale price equal to the sale price that would have been reasonable in the circumstances if the cosmetics had been sold in Canada, at the earlier of the time the cosmetics were delivered or the property in the cosmetics passed to that non-resident person, by that non-resident person to a third person with whom he was dealing at arm’s length.

(6) Where prerecorded video cassettes that are new or have not been used in Canada were manufactured or produced in Canada by a licensed manufacturer for a non-resident person who is a person described in paragraph (j) of the definition “manufacturer or producer” in subsection 2(1) and who has failed to apply for a licence as required by section 54, the licensed manufacturer shall be deemed to have sold the cassettes for a sale price equal to the sale price that would have been reasonable in the circumstances if the cassettes had been sold in Canada, at the earlier of the time the cassettes were delivered or property in the cassettes passed to that non-resident person, by that non-resident person to a third person with whom he was dealing at arm’s length.

R.S., 1985, c. E-15, s. 52; R.S., 1985, c. 15 (1st Supp.), s. 20, c. 7 (2nd Supp.), s. 19, c. 12 (4th Supp.), s. 18.

53. [Repealed, R.S., 1985, c. 15 (1st Supp.), s. 21]

54. (1) Subject to this section, every manufacturer or producer shall apply for a licence for the purposes of this Part.

(2) The Minister may grant a licence to any person applying therefor under subsection (1), but the Governor in Council, on the joint recommendation of the Minister of Finance and the Minister of National Revenue, may make regulations exempting any class of small manufacturer or producer from payment of consumption or sales tax on goods manufactured or produced by persons who are members of the class and persons so exempted are not required to apply for a licence.

(3) An exemption granted under subsection (2) may, on the joint recommendation of the Minister of Finance and the Minister of National Revenue, be withdrawn by the Governor in Council at any time.

(4) The Minister may cancel a licence issued under this Part if, in his opinion, it is no longer required for the purposes of this Part.

R.S., c. E-13, s. 31; 1976-77, c. 15, s. 9; 1980-81-82-83, c. 68, s. 13.

55. (1) A bona fide wholesaler or jobber may be granted a licence but, if a wholesaler was not in possession of a licence on September 1, 1938, no licence shall be issued to him unless he is engaged exclusively or mainly in the purchase and sale of lumber or unless fifty per cent of his sales for the three months immediately preceding his application were exempt from the sales tax under this Act.

(2) A person who proposes to operate and sell goods exclusively at a duty free shop licensed as such under the Customs Act or who operates and sells goods exclusively at such a duty free shop shall be deemed, for the purposes of this section, to be a bona fide wholesaler or jobber, and the Minister may grant a licence to that person notwithstanding that he does not fulfil the requirements of subsection (1).

(3) A wholesaler or jobber applying for a licence under this section shall give security that the wholesaler or jobber and any person other than the wholesaler or jobber who acquires from or against him the right to sell any goods, whether as a result of the operation of law or of any transaction not taxable under this Act, shall keep adequate books or accounts for the purposes of this Act and shall render true returns of sales as required by this Act, or any regulations made under this Act, and pay any tax imposed by this Act on those sales.

(4) The security referred to in subsection (3) shall be for an amount of not more than twenty-five thousand dollars and not less than two thousand dollars.

(5) The security referred to in subsection (3) shall be by a bank or by bond of an incorporated guarantee company authorized to do business in Canada, acceptable to the Minister, or by deposit of bonds or other securities of or guaranteed by the Government of Canada.

(6) Where the security referred to in subsection (3) is by bond of a guarantee company, the bond shall be in form approved by the Minister.

R.S., 1985, c. E-15, s. 55; R.S., 1985, c. 1 (2nd Supp.), s. 191.

56. (1) The licence of any wholesaler or jobber who contravenes any requirement of this Part shall be cancelled forthwith and the wholesaler or jobber shall not be granted a licence within a period of two years after the date of the cancellation.

(2) The licence of any person deemed by subsection 55(2) to be a bona fide wholesaler or jobber shall be cancelled forthwith if he ceases to operate and sell goods exclusively at a duty free shop licensed as such under the Customs Act, and on cancellation of the licence pursuant to this section, all taxes imposed by this Act are forthwith payable on all goods then in the possession of the licensee that have been purchased free of tax by virtue of the licence.

(3) On the cancellation under subsection (1) of the licence granted to any licensed wholesaler, or if the licence is cancelled at the request of the licensee, or if any such licence expires and is not renewed by the licensee, all taxes imposed by this Act are forthwith payable on all goods then in the possession of the licensee that have been purchased free of tax by virtue of the licence, which taxes shall be paid at the rate in force when the licence is cancelled or expires and is not renewed and shall be computed in accordance with paragraph 50(1)(c) and Part III.

(4) Notwithstanding that a bond of a guarantee company given under section 55 has been cancelled, the bond shall be deemed to remain in force in relation to all goods in the possession of the licensed wholesaler at the time of cancellation.

R.S., 1985, c. E-15, s. 56; R.S., 1985, c. 1 (2nd Supp.), s. 192; 1990, c. 45, s. 8; 2002, c. 22, s. 373.

57. (1) Notwithstanding anything in this Part, if it appears to the Minister that payment of the consumption or sales tax is being evaded by a licensed manufacturer or licensed wholesaler, the Minister may require that the consumption or sales tax shall be imposed, levied and collected on any material specified by the Minister sold to any licensed manufacturer or licensed wholesaler or to any class of licensed manufacturers or licensed wholesalers specified by the Minister, at the time of sale of the material when produced or manufactured in Canada, or prior to release under the Customs Act if the material is imported by the licensed manufacturer or licensed wholesaler.

(2) A deduction may be made, in respect of the tax imposed, levied and collected on material referred to in subsection (1), on submission by the licensed manufacturer or licensed wholesaler of proof that the material has been used in the manufacture of an article that is subject to the consumption or sales tax and on which the tax has been paid.

R.S., 1985, c. E-15, s. 57; R.S., 1985, c. 1 (2nd Supp.), s. 193.

58. (1) Notwithstanding any other provision of this Act other than subsections 52(5) and (6), for the purposes of this Part and Part III, where goods that were manufactured or produced, or deemed to have been manufactured or produced, in Canada are sold or deemed to be sold, or the property therein is otherwise transferred, by the manufacturer or producer thereof to a person with whom the manufacturer or producer was not dealing at arm’s length at the earlier of the time the goods were delivered or property in the goods passed to that person for no sale price or for a sale price that is less than the sale price (in this subsection referred to as the “reasonable sale price”) that would have been reasonable in the circumstances if the manufacturer or producer and that person had been dealing at arm’s length at that time, the manufacturer or producer shall be deemed to have sold the goods at that time for the reasonable sale price.

(2) Notwithstanding any other provision of this Act, for the purposes of this Part and Part III, where a licensed wholesaler has purchased goods from, or property in goods has otherwise been transferred to a licensed wholesaler by, a person with whom the licensed wholesaler was not dealing at arm’s length at the earlier of the time the goods were delivered or property in the goods passed to the licensed wholesaler for no price or for a price that was less than the price (in this subsection referred to as the “reasonable price”) that would have been reasonable in the circumstances if the licensed wholesaler and that person had been dealing at arm’s length at that time and the goods were not imported by the licensed wholesaler, the licensed wholesaler shall be deemed to have purchased the goods at that time for a price equal to the reasonable price.

(3) Notwithstanding any other provision of this Act, for the purposes of this Part and Part III, where a person has purchased or imported goods as described in subsection 68.19(1) or for a use rendering the purchase or importation exempt from tax under Part III or this Part and that person, under circumstances rendering him liable to pay the tax imposed by Part III or this Part, sells the goods or is deemed to sell the goods, or the property therein is otherwise transferred, to another person with whom he was not dealing at arm’s length at the time of the sale or transfer for no sale price or for a sale price that is less than the sale price (in this subsection referred to as the “reasonable sale price”) that would have been reasonable in the circumstances if they had been dealing at arm’s length at that time, that person shall be deemed to have sold the goods at that time for the reasonable sale price.

R.S., 1985, c. E-15, s. 58; R.S., 1985, c. 12 (4th Supp.), s. 19.