Excise Taxes and Special Levies Notices

ET/SL 21

February 27, 1995

NOTICE TO LICENSED AIR CARRIERS

Air Transportation Tax (ATT)

The budgetary changes propose to increase the maximum amounts of ATT for domestic, transborder and international air transportation, effective May 1, 1995. These amounts will be increased through changes to the Excise Tax Act, the Air Transportation Tax Order and the Air Transportation Tax Regulations.

Domestic and Transborder Air Transportation:

The budget proposes to increase the maximum amounts under paragraphs 11(1)(b) and 11(2)(b) of the Excise Tax Act, for purposes of determining the amount of ATT applicable to an amount paid or payable for domestic and transborder air transportation.

Currently, in most cases for such air transportation, the rate of ATT applicable is 7% of the fare plus $6, to a combined maximum of $50. The budget proposes that the formula remain at 7 per cent of the amount paid or payable plus $6, but that the maximum amount of ATT be increased to $55.

The budget proposes a higher maximum amount applicable to one-way air travel. In these circumstances, the formula remains at 7 per cent of the amount paid or payable plus $3; however, the maximum amount of ATT is proposed to be increased from $25 to $27.50.

The budget also proposes a maximum amount of tax applicable to each emplanement under a charter ticket purchased in Canada, per subsection 11(2). For charter tickets, the maximum amount of tax is proposed to be increased from $25 to $27.50 for each emplanement, pursuant to the charter agreement, unless payment for the transportation is made before May 1, 1995. The formula remains at 7 per cent of the amount paid or payable plus $3 in respect of each emplanement.

In cases where the transportation is subject to the ad valorem air transportation tax imposed by the United States, and where the amount is paid or payable outside Canada, the budget proposes that the maximum amount of tax be increased from $25 to $27.50. The formula remains at 5 per cent of the amount paid or payable plus $4.

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International Air Transportation:

The budget proposes new maximum amounts under subparagraphs 13(1)(a)(i) and 13(2)(a)(i) and clauses 13(2.2)(a)(i)A and 13(2.2)(b)(i)A of the Excise Tax Act, for purposes of determining the amount of ATT applicable to an amount paid or payable for air transportation that begins at a point in the taxation area and ends at a point outside the taxation area.

The budget proposes that the rate of ATT stipulated under subparagraph 13(1)(a)(i), for such air transportation paid or payable in Canada, be increased from $50 to $55 and that the rate of ATT set in clause 13(2.2)(a)(i)A, for such air transportation, paid or payable outside Canada with a first emplanement in Canada, also be increased from $50 to $55.

The budget also proposes a specific rate of tax applicable to each emplanement under a charter ticket, purchased in Canada, with a destination outside the taxation area. For charter tickets, the rate of ATT stipulated under subparagraph 13(2)(a)(i) is proposed to be increased from $50 to $55 for each emplanement, unless payment for the transportation is made before May 1, 1995.

Pursuant to clause 13(2.2)(b)(i)A, for all other air transportation paid or payable outside Canada, the budget proposes that the rate of ATT be increased from $25 to $27.50.

The budget proposes that for all air transportation the rate increases apply, unless payment for the transportation is made before May 1, 1995.