Annual lists 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995

Ottawa, February 8, 2002
2002-014

Proposed GST/HST Amendments Relating to Beverage Container Deposits

Related documents:

• Backgrounder.
• Legislative Proposals Relating to the Excise Tax Act.

Secretary of State (International Financial Institutions) John McCallum, on behalf of Finance Minister Paul Martin, today tabled in the House of Commons a detailed Notice of Ways and Means Motion to amend the Excise Tax Act. These amendments relate to the treatment of beverage container deposits under the goods and services tax/harmonized sales tax (GST/HST). The amendments were developed following consultations with the industry.

Special GST/HST rules apply to deposits paid on returnable beverage containers for taxable consumer products, such as soft drink cans and beer bottles. These rules provide for the reimbursement of the GST/HST paid on the refundable deposit where the container is returned to a retailer or an authorized depot.

To simplify compliance, the amendments provide that deposits that are refundable to the consumer will be excluded from the GST/HST base. All non-refundable levies or handling charges would continue to be subject to tax on the same basis as the beverage, as is the case under the current rules.

In most provinces, provincially established deposits are currently treated as including the GST/HST. Therefore, in most cases, this change will affect neither the total amount charged as a deposit nor the total amount refunded to the consumer.

These amendments are proposed to apply to sales of new, filled and sealed returnable beverage containers made on or after May 1, 2002. Transitional rules are provided for the period between May 1 and July 15 to take into account that there will be containers in circulation on May 1 that would have been sold under the existing rules.

Another related amendment is proposed to clarify that the existing special rules for retail sales of beverages in returnable containers do not apply to sales of beverages for on-premises consumption, as is typically the case in bars and restaurants. This amendment is proposed to apply to sales made after today as well as to any previous sales where sellers did not apply the special rules in respect of their sales of beverages for on-premises consumption.

The accompanying backgrounder, Notice of Ways and Means Motion and explanatory notes provide further details of these measures. References in these documents to Announcement Date should be read as references to today’s date.

The Notice of Ways and Means Motion and explanatory notes can be viewed free of charge on the Department of Finance Web site at www.fin.gc.ca. Printed copies of the Notice and explanatory notes are available for $10 from the Department of Finance Distribution Centre at (613) 995-2855.

___________________
For further information:

If you would like to receive automatic e-mail notification of all news releases, please visit the Department of Finance Canada Web site at http://www.fin.gc.ca/scripts/register_e.asp.