Revenue Canada Policy Statement P-230.

August 20, 1999

On August 20, 1999, Tax Executives Institute submitted comments to Revenue Canada regarding the agency's Policy Statement P-230, relating to the application of the excise tax act to leases, licenses, and similar arrangements of tangible personal property by indians, indian bands, and band empowered entities. TEI's comments were prepared under the aegis of the Institute's Canadian Commodity Tax Committee, whose chair is Glen S. Pye of Nortel Networks Corporation.

On behalf of Tax Executives Institute, I am pleased to respond to your June 4, 1999, request for comments on Revenue Canada Policy Statement P-230, Application of the Excise Tax Act to Leases, Licenses, and Similar Arrangements of Tangible Personal Property By Indians, Indian Bands, and Band Empowered Entities, which was issued on May 13, 1999. Policy P-230 addresses specific issues that arise from the interaction of Technical Interpretation Bulletin B-039R, GST Administrative Policy: Application of GST to Indians, and section 136.1 of the Excise Tax Act. TEI believes that the policy statement has broad ramifications not only for lease-purchase agreements with Indians, but also for lease-purchase agreements where possession of the property is initially given to the lessee outside Canada. Background.

Tax Executives Institute is the preeminent association of business tax executives in North America. The Institute's 5,000 professionals manage the tax affairs of the leading 2,800 companies in Canada and the United States and must contend daily with the planning and compliance aspects of Canada's business tax laws. Canadians make up 10 percent of TEI's membership, with our Canadian members belonging to chapters in Calgary, Montreal, Toronto, and Vancouver, which together make up one of our eight geographic regions. Our non-Canadian members (including those in Europe) work for companies with substantial activities in Canada. In sum, TEI's membership includes representatives from most major industries including manufacturing, distributing, wholesaling, and retailing; real estate; transportation; financial services; telecommunications; and natural resources (including timber and integrated oil companies). The comments in this letter reflect the views of the Institute as a whole, but more particularly those of our Canadian constituency.

TEI is concerned with issues of tax policy and administration and is dedicated to working with government agencies in Ottawa (and Washington), as well as in the provinces (and the states), to reduce the costs and burdens of tax compliance and administration to our common benefit. We are convinced that the administration of the tax laws in accordance with the highest standards of professional competence and integrity, as well as an atmosphere of mutual trust and confidence between business and government, will promote the efficient and equitable operation of the tax system. In furtherance of this principle, TEI supports efforts to improve the tax laws and their administration at all levels of government.

Overview of Section 136.1(1)

Subsection 136.1(1) of the Excise Tax Act was enacted...