First

Session, 48th General Assembly

Elizabeth II, 2016

BILL 19

AN ACT TO AMEND THE

REVENUE ADMINISTRATION ACT NO. 2

Received and Read the First Time .................................................................................................

Second Reading .................................................................................................................................

Committee ..........................................................................................................................................

Third Reading .....................................................................................................................................

Royal Assent ......................................................................................................................................

HONOURABLE

CATHY BENNETT

Minister of Finance and President of Treasury Board

Ordered

to be printed by the Honourable House of Assembly

EXPLANATORY NOTE

This Bill would amend the Revenue Administration Act to impose a retail

sales tax on insurance premiums.

A BILL

AN ACT TO AMEND THE REVENUE ADMINISTRATION

ACT NO. 2

Analysis

S.2 Amdt.

Definitions

S.5 Amdt.

Collection of tax

3. S.9 Amdt.

Books and records

S.32 Amdt.

Offences

Ss.91.1 to 91.5 Added

91.1 Tax on insurance

premiums

91.2 Registration certificate

91.3 Various sale outlets

91.4 Application for

certificate

91.5 Displaying certificate

S.111 Amdt.

Regulations re: retail sales tax

7. Sch. Amdt.

Commencement

Be it enacted by the Lieutenant-Governor and

House of Assembly in Legislative Session convened, as follows:

SNL2009 cR-15.01 as

amended

(1) Paragraph 2(

j) of the Revenue Administration Act is repealed

and the following substituted:

(j) "collector" means a wholesaler,

retailer or seller who

(

i) collects tax from another wholesaler, retailer

or retail purchaser,

(ii) holds the tax collected under subparagraph (

i) in trust for the Crown, and

(iii) is accountable to the minister for remittance

of that tax;

(2) Paragraph 2(

m) of the Act is repealed and the

following substituted:

(m) "consumer"

(

i) for the purpose of

Part VIII, means a person

who acquires tangible personal property, and applies that property, or intends to apply that property, in the province

(

A) to his or her own consumption or use or to the

consumption and use of another person at the expense of the first mentioned

person, or

(

B) on behalf of, or as the agent for, a

principal, to the consumption or use of the principal or of another person at

the expense of that principal, and

(ii) for the purpose of

Part IX, means a person who

(

A) in the province, purchases or receives

delivery of tobacco, or

(

B) brings into the province tobacco acquired

outside the province,

for that person's own use or consumption

or for the use or consumption by others at that person's expense, or on behalf

of, or as the agent for, a principal who wishes to acquire the tobacco for use

or consumption by the principal or other person at the principal's expense;

(3) Paragraph 2(

o) of the Act is repealed and the following substituted:

(o) "contract of insurance" includes a

policy, certificate, interim receipt, renewal receipt or writing evidencing a

contract of insurance whether sealed or not and a binding oral agreement of

insurance, and for the purpose of

Part VI includes an administrative services

only contract or any other financial arrangement for group insurance;

(4) Section

2 of the Act is amended by adding immediately after paragraph (ff) the

following:

(ff.1) "insurance" means an undertaking by

a person

(

i) to indemnify another person against loss or

liability for loss with respect to a certain risk or peril in the province to

which the object of insurance may be exposed, or

(ii) to pay a sum of money or thing of value upon

the happening of a certain event in the province;

(ff.2) "insurer" means a person who

undertakes or agrees or offers to undertake a contract of insurance and

includes a person who is licensed or is required to be licensed under the Insurance Companies Act whether or not

that person has a place of business in the province;

(ff.3) "insurer's agent" includes a person

who is licensed or is required to be licensed under the Insurance Adjusters, Agents and Brokers Act whether or not that

person has a place of business in the province;

(5) Section 2 of the Act is amended by adding

immediately after paragraph (ccc) the following:

(ccc.1) "policy" means the instrument

evidencing a contract of insurance;

(6) Paragraph 2(eee) of the Act is repealed and

the following substituted:

(eee) "premium" means the single or

periodic payment made as consideration under a contract of insurance including all

dues, assessments, transaction fees, processing fees, policy fees and other

consideration charged and includes

(

i) for the purpose of

Part VI, the amount

collected from a subscriber under a reciprocal contract of indemnity or

inter-insurance for the purpose of defraying losses incurred by the subscriber

to a reciprocal or inter-insurance exchange and the necessary operation expenses

of the exchange, and

(ii) for the purpose of

Part VIII, interest,

finance charges or underwriting fees, paid or payable by the consumer, unless

the interest, finance charges or underwriting fees are shown separately on a

valid bill or invoice of the person from whom the tangible personal property

was acquired;

(7) Paragraph 2(kkk) of the Act is amended by

deleting the word "or" at the end of subparagraph (ii) and by adding

immediately after that the following:

(ii.1) by a sale, tangible personal property not for

resale but as a consumer, or

(8) Paragraph 2(nnn) of the Act is repealed and

the following substituted:

(nnn) "sale" means a sale for cash or on

credit or a sale where the price is payable by instalments, and includes a

barter, an exchange and a contract by which at a price or for other consideration

a person gives gasoline, tobacco, a vehicle or tangible personal property to

another;

(9) Section 2 of the Act is amended by adding

immediately after paragraph (nnn) the following:

(nnn.1) "seller" means a person who in the

ordinary course of business sells tangible personal property at a retail sale

in the province, and for the purpose of

Part VIII includes an insurer and an

insurer's agent who is responsible for the collection of an insurance contract

premium and the tax on that premium;

2. Subsection 5(1) of the Act is repealed and the

following substituted:

Collection of tax

(1) The

minister may designate a person as an agent of the minister for the collection

of the tax imposed under Parts III, VIII and IX of this Act.

Section 9 of the Act is amended by adding

immediately after subsection (2) the following:

(2.1) An insurer or an insurer's agent shall keep

full, up-to-date and accurate books and records showing

(

a) particulars of insurance effected to which the

tax imposed by this Act applies together with the names and addresses of

persons effecting the insurance and the amount of premiums paid or charged for

the insurance;

(

b) the date of payment or charging of premiums

referred to in paragraph (a); and

(

c) other information required by the minister.

Section 32 of the Act is amended by adding

immediately after subsection (6) the following:

(6.1) A person is guilty of an offence who offers

for sale or sells tangible personal property at a retail sale in the province

at a time when he or she does not hold a registration certificate authorizing

the person to collect a tax imposed under

section 91.1.

(6.2) Subsection (6.1) does not apply to a person

who sells a form of insurance which is exempt under the regulations.

5. The Act is amended by adding after

section 91

the following:

Tax on insurance

premiums

91.1

(1) A person

who enters into, renews or amends a contract of insurance relating to property,

risk, peril or events in the province shall pay to the Crown a tax at the rate

of 15% of the premium for that insurance.

(2) The tax imposed by subsection (1) shall be collected

and this Act and the regulations applied for the purpose of the imposition, assessment,

collection and enforcement of the payment of that tax, as if

(

a) the contract of insurance were tangible

personal property; and

(

b) there were on each occasion when the premium

is due, a retail sale in the province at which the person paying the premium

was the retail purchaser and the insurer or insurer's agent was the seller.

(3) Where a contract of insurance relates to

property, risk, peril or events both in and out of the province, the tax shall

be calculated only upon the portion of the payment relating to property, risk,

peril or events in the province according to the following formula:

T = P/I x C

where

= consideration paid for the taxable

portion of the contract of insurance;

= total monetary value of property, risk,

peril or events covered by the contract of insurance which are in or relate to

the province;

= total monetary value of property, risk,

peril or events covered by the contract of insurance; and

= consideration paid for the entire

contract of insurance.

(4) A seller is considered to be an agent of the

Crown and as an agent shall levy and collect the tax imposed under subsection

(1) from a retail purchaser.

(5) The tax imposed under subsection (1) shall be

collected on each occasion when the premium is paid and shall not be collected

in its entirety when a contract of insurance is entered into, amended or renewed.

(6) Notwithstanding subsection (5), where a

contract of insurance is entered into, amended or renewed and the premium for

that insurance is to be paid in its entirety at the time the contract is

entered into, amended or renewed, the tax imposed under subsection (1) shall be

collected in its entirety at that time.

(7) The tax payable under this

section shall be

remitted in the manner required by the minister.

(8) Where tax has

been collected or remitted to the minister under this

section and a refund of

the whole or part of the premium is made by the insurer or the insurer's agent

within 6 months of the expiration, termination or cancellation of the contract

of insurance, the minister or collector shall refund to the person who paid the

premium an amount of tax proportionate to the amount of premium refunded.

(9) The

collector, when reporting the total amount of tax collected by him or her, may

deduct from the tax to be remitted to the minister the amount of tax he or she has

refunded under subsection (8).

(10) A

person who enters into, amends or renews a contract of insurance referred to in

subsection (1) is required to pay the tax imposed in this

section whether or

not the insurer or insurer's agent is registered under this Part, and that

person shall remit the tax in the manner referred to in subsection (7).

(11) The

retail purchaser remains liable for the tax imposed under this

section until it

is collected.

Registration certificate

91.2

(1) A seller shall apply for a

registration certificate authorizing the seller to collect tax, whether or not

that seller has a fixed place of business in the province.

(2) The

minister may issue to a seller a registration certificate, which is not

transferable, authorizing that seller to collect the tax referred to in

subsection 91.1(1).

(3) The

minister may refuse to issue a registration certificate to a seller or may

cancel or suspend a seller's registration certificate in the following

circumstances:

(

a) where

the minister is satisfied or has reason to believe that the seller has failed

to comply with a requirement of this Act or the regulations; or

(

b) where

the seller is under the supervision and control of a seller

(

i) whose certificate has been cancelled or suspended under paragraph

(a), or

(ii) who supervised or controlled a seller whose certificate has been

cancelled or suspended under paragraph (a).

(4) In

addition to the circumstances described in subsection (3), the minister may

refuse to issue a registration certificate to a corporation or may cancel or

suspend the registration certificate of a corporation where the corporation

fails to send to the minister a copy of the certificate of incorporation, together

with the names of the officers or directors of the corporation holding office

at the time the minister requests the names of the officers or directors of the

corporation.

Various sale outlets

91.3 Where a seller proposes to sell tangible

personal property by retail sale at 2 or more separate places of business, the seller

shall obtain a registration certificate in respect of all locations.

Application for certificate

91.4 An application for a registration certificate

shall be made to the minister in the form that may be prescribed.

Displaying certificate

91.5

(1) A seller who has a fixed place of

business in a province shall display his or her registration certificate at a

prominent place on the premises in respect of which it was issued.

(2) A

seller who has no fixed place of business in the province shall keep his or her

registration certificate on his or her person while soliciting or doing

business, and the seller shall produce it, upon request, to a retail purchaser

or an authorized representative of the minister.

Section

111 of the Act is amended by deleting the comma and the word "and" at

the end of paragraph (

b) and by substituting a semi-colon, by deleting the

period at the end of paragraph (

c) and substituting a semi-colon, and by adding

immediately after that paragraph the following:

(

d) exempting

generally from the application of

section 91.1 forms of insurance;

(

e) exempting

a person from the requirement to collect the tax imposed under

section 91.1;

(

f) exempting

a person or class of persons from the payment of the whole or a part of the tax

imposed under

section 91.1;

(

g) exempting

endorsements on contracts of insurance with an effective date before July 1,

2016 from the tax imposed under

section 91.1; and

(

h) prescribing

the information required to be contained on an invoice or bill for a contract

of insurance.

Sch. Amdt.

7. The

Schedule of the Act is amended in the first line referring to

section 32 after

the reference "(6)" by adding a comma and the reference

"(6.1)".

Commencement

8. This Act comes into force on July 1, 2016.

Queen's Printer