Law:Tax Rebate Discounting Act

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R.s.c., 1985, c. T-3

An Act relating to the discounting of overpayments of tax under the Income Tax Act and related payments

Short title

1. This Act may be cited as the Tax Rebate Discounting Act.

1977-78, c. 25, s. 1.

Interpretation

2. (1) In this Act,

“client”

« client »

“client” means a person from whom a discounter acquires a right to a refund of tax to which that person is entitled;

“discounter”

« escompteur »

“discounter” means a person who acquires, for a consideration, a right to a refund of tax from a person entitled thereto;

“minimum consideration”

« contrepartie minimale »

“minimum consideration”, in relation to a refund of tax, means an amount equal to

(a) where the refund of tax is equal to or less than three hundred dollars, eighty-five per cent of the refund of tax, or

(b) where the refund of tax is greater than three hundred dollars, two hundred and fifty-five dollars plus ninety-five per cent of the amount by which the refund of tax is greater than three hundred dollars;

“Minister”

« ministre »

“Minister” means the Minister of National Revenue;

“prescribed”

Version anglaise seulement“prescribed” means

(a) in the case of a form, the information to be given on a form or the manner of filing a form, authorized by the Minister, and

(b) in any other case, prescribed by regulation;

“refund of tax”

« remboursement d’impôt »

“refund of tax” means the amount of

(a) an overpayment of tax paid or deemed to have been paid under the Income Tax Act or collected pursuant to an agreement entered into under section 7 of the Federal-Provincial Fiscal Arrangements Act, or of tax deemed to have been paid under an Act of the legislature of a province that imposes a tax on income that is collected by the Minister of National Revenue pursuant to such an agreement,

(b) a payment to an individual by virtue of an agreement referred to in paragraph (a) that is other than a refund of an overpayment of tax paid or collected,

(c) an overpayment of premiums paid under the Employment Insurance Act, or

(d) an overpayment of contributions paid under the Canada Pension Plan,

and any interest paid on any of those overpayments or payments;

“return of income”

« déclaration du revenu »

“return of income” means a return of income pursuant to subsection 150(1) of the Income Tax Act.

Where person acquires right to a refund

(2) For the purposes of this Act, a person acquires a right to a refund of tax where that person, as between himself and another person, acquires a right to a refund of tax or to an amount equal to the amount of a refund of tax, notwithstanding that, by virtue of section 67 of the Financial Administration Act or any provision of any other Act of Parliament or of the legislature of a province, the refund of tax is not assignable.

Enforcement of right to refund

(3) A right to a refund of tax acquired by a discounter from a client is enforceable only between the client and the discounter and nothing in this Act shall be construed as creating any liability between the discounter and Her Majesty.

R.S., 1985, c. T-3, s. 2; R.S., 1985, c. 53 (1st Supp.), s. 1; 1992, c. 1, s. 145(F); 1993, c. 27, s. 226; 1995, c. 1, s. 62, c. 17, s. 66; 1996, c. 23, s. 186; 1998, c. 19, s. 299.

Payment to discounter

2.1 (1) Where a discounter has acquired a client’s right to a refund of tax, the Minister of National Revenue may pay the amount of the refund to the discounter.

Effect of payment to discounter

(2) A payment of a client’s refund of tax made by the Minister of National Revenue under subsection (1) to a discounter shall be deemed to have been made to the client as a refund of tax at the time the payment was made to the discounter.

Deemed trust

(3) The amount by which the amount of a refund paid under subsection (1) exceeds the total of

(a) that portion of the refund that constitutes interest, and

(b) the amount estimated to be the client’s refund of tax at the time the right to the refund was acquired

shall, if it exceeds ten dollars, be deemed to be held in trust for the client by the discounter until such time as it is paid to the client or to the Receiver General.

Where bankruptcy, etc., of discounter

(4) In the event of any liquidation, assignment or bankruptcy of a discounter, the amount deemed by subsection (3) to be held in trust shall be deemed to be separate from and form no part of the estate in liquidation, assignment or bankruptcy, whether or not that amount has in fact been kept separate and apart from the discounter’s own moneys or from the assets of the estate.

1993, c. 24, s. 149.

Limitation of discount

3. (1) Any discounter who acquires a right to a refund of tax from a client for a consideration that is less than the minimum consideration in relation to the refund of tax is guilty of an offence.

Determination of consideration

(2) For the purposes of determining the consideration paid or provided by a discounter for the acquisition of a right to a refund of tax from a client, the discount charged by the discounter includes the amount of any fee or charge levied or made by the discounter, or by any person not acting at arm’s length (within the meaning of the Income Tax Act) with the discounter, for the service of preparing the client’s return of income or for any other service directly related to the discounting transaction.

Defence

(3) Subsection (1) does not apply where the refund of tax exceeds the amount estimated to be the refund of tax at the time the right to the refund was acquired if

(a) the consideration paid for the right at that time was equal to or greater than the minimum consideration calculated as if the amount estimated to be the refund of tax were the refund of tax; and

(b) where the refund of tax, calculated for the purposes of this paragraph without reference to any interest on the overpayment or payment making up the refund, exceeds by ten dollars or more the amount estimated to be the refund of tax, the discounter, forthwith after receipt of the refund, pays or makes every reasonable effort to pay to the client the full amount of the excess and, in the event that the excess is not so paid within thirty days thereafter, forthwith remits the excess, together with a true copy of the notice referred to in paragraph 5(b), to the Receiver General to be held on account of any future tax liability of the client or to be paid to the client on application by the client to the Minister of National Revenue.

R.S., 1985, c. T-3, s. 3; R.S., 1985, c. 53 (1st Supp.), s. 2; 1999, c. 31, s. 245(F).

Payment and disclosure

4. (1) Any discounter who does not, at or before the time a right to a refund of tax is acquired from a client,

(a) pay by cash or by a cheque or other bill of exchange drawn on a financial institution in Canada that is payable on demand and negotiable in Canada at the time it is given the amount by which

(i) the full amount of the minimum consideration for the right based on the estimated refund of tax

exceeds the total of

(ii) any tax imposed under Part IX of the Excise Tax Act that the discounter is required to collect from the client in respect of a taxable supply deemed under section 158 of that Act to have been made by the discounter to the client, and

(iii) any tax imposed under An Act respecting the Quebec sales tax and amending various fiscal legislation, being Chapter 67 of the Statutes of Quebec, 1991, that the discounter is required to collect from the client in respect of a taxable supply deemed under section 39 of that Act to have been made by the discounter to the client,

(b) provide the client with

(i) a statement in prescribed form describing the discounting transaction, and

(ii) if the client has so requested, a true copy of the client’s return of income and any related information return, and

(c) obtain from the client an address of record for the purposes of section 5,

is guilty of an offence.

Failure to file disclosure statement

(2) Any discounter who, having acquired from a client a right to a refund of tax, files a client’s return of income on the client’s behalf without

(a) including with the return of income, other than a return of income deemed by subsection 150.1(3) of the Income Tax Act to have been filed for the purposes of section 150 of that Act, a true copy of the statement referred to in subparagraph (1)(b)(i) as provided to the client and signed by the client to acknowledge receipt thereof, and

(b) providing to such person and within such period of time as the Minister may specify a true copy of the statement referred to in subparagraph (1)(b)(i) as provided to the client and signed by the client to acknowledge receipt thereof,

is guilty of an offence.

R.S., 1985, c. T-3, s. 4; R.S., 1985, c. 53 (1st Supp.), s. 2; 1993, c. 24, s. 150, c. 27, s. 227; 1998, c. 19, s. 300.

Failure to give notice

5. Any discounter who, having acquired from a client a right to a refund of tax, fails to send forthwith to the client at the client’s address of record obtained as described in paragraph 4(1)(c)

(a) any notice of assessment (within the meaning of the Income Tax Act) received by the discounter in relation to the client’s return of income, and

(b) a notice, in the prescribed form and containing the prescribed information, of the actual amount of the refund of tax received by the discounter to which the client would otherwise have been entitled,

is guilty of an offence.

R.S., 1985, c. T-3, s. 5; R.S., 1985, c. 53 (1st Supp.), s. 2; 1993, c. 34, s. 118(F); 1998, c. 19, s. 301(F).

Failure to maintain records or provide access

6. Any discounter who, having acquired from a client a right to a refund of tax, at any time fails during the three year period immediately following the acquisition of that right

(a) to maintain at the discounter’s principal place of business in Canada, or at such other place or places in Canada as are designated by the Minister, a true copy of

(i) every document provided by the discounter under this Act to the client, and

(ii) every other document made by the discounter or received by the discounter in the course of the discounter’s business and dealing with the discounting transaction, or

(b) to provide

(i) a peace officer, or

(ii) a person designated for the purposes of this section by the Minister or the Minister of the Crown in right of the province where the copies are maintained who is responsible for the administration of matters related to consumer affairs,

reasonable access to such copies for the purposes of examination and making copies thereof,

is guilty of an offence.

R.S., 1985, c. T-3, s. 6; R.S., 1985, c. 53 (1st Supp.), s. 2.

Misleading information

6.1 Any discounter who, in relation to any discounting transaction, knowingly provides to a client or to a person referred to in paragraph 6(b) any information, document or copy of a document that is false, misleading or incomplete is guilty of an offence.

R.S., 1985, c. 53 (1st Supp.), s. 2.

Punishment

7. Any person who commits an offence under this Act is liable on summary conviction to a fine not exceeding twenty-five thousand dollars.

1977-78, c. 25, s. 7.

Limitation period

8. Proceedings in respect of an offence under this Act may be instituted at any time within but not later than two years after the time when the subject-matter of the proceedings arose.

R.S., 1985, c. 53 (1st Supp.), s. 3.

Copies or information may be disclosed

9. Section 241 of the Income Tax Act does not apply to information or documents essential to the administration or enforcement of this Act and an official or authorized person, as defined for the purposes of that section, may make that information or a copy of any such documents available to

(a) any person, for a purpose related to the administration or enforcement of this Act; or

(b) an officer or employee of the government of a province who is engaged in the administration or enforcement of a law relating in whole or in part to the regulation of the conduct of discounters in the province, for any purpose related to the administration or enforcement of that law.

R.S., 1985, c. 53 (1st Supp.), s. 3.

Regulations

10. The Governor in Council may make regulations

(a) prescribing anything that by this Act is to be prescribed, and

(b) for carrying out the purposes and provisions of this Act

including, without restricting the generality of the foregoing, regulations setting the fees to be charged for any services or forms provided to discounters.

R.S., 1985, c. 53 (1st Supp.), s. 3.

Schedules I And Ii

(Repealed, R.S., 1985, c. 53 (1st Supp.), s. 4)


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