Vol. 137, No. 13 — June 18, 2003

Registration
SOR/2003-204 5 June, 2003

EXCISE ACT, 2001

Continuation of Amalgamated or Merged Corporations Regulations

P.C. 2003-858 5 June, 2003

Her Excellency the Governor General in Council, on the recommendation of the Minister of National Revenue, pursuant to paragraph 304(1)(o) of the Excise Act, 2001 (see footnote a) , hereby makes the annexed Continuation of Amalgamated or Merged Corporations Regulations.

CONTINUATION OF AMALGAMATED OR MERGED CORPORATIONS REGULATIONS

PRESCRIBED PURPOSES

1. For the purposes of section 213 of the Excise Act, 2001, the purpose of applying any provision of Parts 5 and 6, other than section 213, of that Act is a prescribed purpose.

COMING INTO FORCE

2. These Regulations take effect on July 1, 2003.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Description

The new Excise Act, 2001 (the "Act") received Royal Assent on June 13, 2002, thereby replacing the legislative provisions of the existing Excise Act, regarding the production and distribution of alcohol and tobacco products as well as general provisions. The Act authorizes the Governor in Council to make identified related regulations in support of the new legislation.

One of the goals in developing the Act was to align excise legislation more closely with other statutes administered by the Canadian Customs and Revenue Agency (CCRA). As a result, section 213 of the Act was written to reflect section 271 of the Excise Tax Act which states that, where two or more corporations amalgamate or merge, the general rule is that the resultant corporation becomes a new legal person, separate from each of the corporations that formed it. However, for prescribed purposes, the new corporation may be regarded as the same as, and a continuation of, each of its predecessor corporations.

The Continuation of Amalgamated or Merged Corporations Regulations were written to identify Parts 5 and 6 of the Act as "prescribed purpose" which means that corporations that have amalgamated or merged are still liable under Parts 5 and 6 even though they have formed a new corporation. Part 5 deals with General Provisions concerning Duty and Other Amounts Payable and Part 6 contains the Enforcement provisions.

Alternatives

There is no reasonable alternative to making these Regulations. In order to fulfill the requirements of section 213 of the Act, these Regulations are necessary to identify the "prescribed purpose" which applies.

Benefits and Costs

There are no increased costs as a result of these Regulations. The benefit is that section 213 of the new Act now aligns the treatment of amalgamations and mergers with other legislation administered by the CCRA and allows for fair and equitable collection of duty payable and application of the enforcement provisions.

Consultation

The CCRA and the Department of Finance carried out extensive consultations with the affected industries. Draft regulations were released in December 2001 and a Notice distributed in April 2002 to all current and potential licence and registration holders drawing their attention to the draft regulations and asking for submissions by June 30, 2002. Personal presentations and meetings were held with industry groups expressing interest and their comments and suggestions were actively sought and taken into consideration. There were no comments received with respect to these Regulations.

These Regulations were pre-published in the Canada Gazette, Part I, on March 22, 2003. No comments were received in response to that pre-publication.

Compliance and Enforcement

The existing Excise Act does not contain any specific provisions for amalgamations or mergers and how they are to be treated. These Regulations will allow for consistent and equitable treatment under the collection and enforcement provisions of the new Act.

Contact

• Mr. Mark Hartigan
  Manager, Excise Act, 2001 - Implementation
  Excise Duties and Taxes Division
  Excise and GST/HST Rulings Directorate
  Policy and Legislation Branch
  Place de Ville, 20th Floor
  320 Queen Street
  Ottawa, Ontario
  K1A 0L5
  Telephone: (613) 954-5894
  FAX: (613) 954-2226

Footnote a

S.C. 2002, c. 22

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