Vol. 144, No. 6 — March 17, 2010

Registration

SOR/2010-36 February 23, 2010

EXCISE TAX ACT

Regulations Amending the Ships’ Stores Regulations (Canadian Coast Guard)

P.C. 2010-205 February 23, 2010

Her Excellency the Governor General in Council, on the recommendation of the Minister of National Revenue, pursuant to subsection 59(3.2) (see footnote a) and paragraph 59(3.4)(a) (see footnote b) of the Excise Tax Act (see footnote c), hereby makes the annexed Regulations Amending the Ships’ Stores Regulations (Canadian Coast Guard).

REGULATIONS AMENDING THE SHIPS’ STORES REGULATIONS
(CANADIAN COAST GUARD)

AMENDMENT

1. Item 5 of the schedule to the Ships’ Stores Regulations (see footnote 1) is replaced by the following:

Item	Column I Class of Conveyances	Column II Class of Goods
5.	Canadian Coast Guard Ships
	(1) A Canadian coast guard ship that is required to report under section 95 of the Customs Act and that is proceeding on a voyage to the Arctic	(a) ales and beers8
		(b) wines and spirits9
		(c) domestic or imported cigars and domestic stamped manufactured tobacco or imported manufactured tobacco6
	(2) A Canadian coast guard ship that is proceeding outside Canada	(a) for the purpose of the Excise Tax Act, petroleum products and renewable fuels, except lubricants

COMING INTO FORCE

2. These Regulations are deemed to have come into force on April 1, 2008.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issue and objectives

The objective of this regulatory action is to amend the schedule to the Ships’ Stores Regulations (the Regulations) to provide federal excise tax (FET) relief for fuel purchased for use in Canadian Coast Guard (CCG) vessels proceeding outside Canada. This makes the tax treatment for fuel taken on board a CCG vessel proceeding outside Canada the same as that accorded Department of National Defence (DND) naval vessels.

Description and rationale

Currently, section 5 of the schedule to the Regulations provides relief of the duties and FET to a CCG ship that is proceeding on a voyage to the Arctic in respect of those goods listed in Column II. The CCG has requested that section 5 of the schedule be amended to provide FET relief for fuel purchased for use on a CCG ship proceeding outside Canada (outside 12 nautical miles). The wording of the amendment is similar to the exemption found in paragraph 3(1)(h) of the schedule to the Regulations such that the tax treatment for fuel taken on board a CCG vessel proceeding outside Canada will be the same as that accorded DND naval vessels. The amendment is deemed to have taken effect April 1, 2008.

There are no additional annual costs or savings associated with these amendments. The CCG currently pays the federal excise taxes imposed on fuel consumed on board CCG ships destined for international waters to the Government of Canada. The effect of this amendment would be a cost savings to the CCG each year of the amount that they no longer have to pay with a corresponding decrease to the amount collected by the Government of Canada. The net effect to the treasury is nil.

Some minor additional operating costs will accrue to the Canada Revenue Agency to process a limited number of additional refund claims for excise tax that this amendment will necessitate.

Consultation

The Department of Finance was consulted and expressed support for this amendment. No public consultation was conducted as the amendment is specific to the CCG.

Implementation, enforcement and service standards

This amendment offers no unique legal or policy issues and can be dealt with using existing compliance and enforcement resources. With this amendment, the CCG will no longer be required to pay FET on fuel purchased for use in CCG vessels destined for international waters and will be eligible to apply for a refund of excise tax paid on fuel that was used for this purpose retroactive to April 1, 2008.

Contact

Mr. Phil McLester
Director
Excise Duties and Taxes Division
Place de Ville, Tower A, 20th Floor
320 Queen Street
Ottawa, Ontario
K1A 0L5
Telephone: 613-954-0111
Fax: 613-954-2226
Email: Phil.McLester@cra-arc.gc.ca

Footnote a
S.C. 2002, c. 22, ss. 427(1)

Footnote b
S.C. 2003, c. 15, s. 96

Footnote c
R.S., c. E-15

Footnote 1
SOR/96-40

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