CITY POLICY
POLICY NUMBER:
REFERENCE:
Memorandum January 16, 1986
(Reference #491)
A1201
ADOPTED BY:
City Manager
SUPERSEDES:
1150
PREPARED BY:
Real Estate & Supply Services
DATE:
TITLE:
FEDERAL SALES AND EXCISE TAX MANAGEMENT
1986 01 20
Policy Statement:
THE CITY OF EDMONTON SHALL PROVIDE A PROGRAM FOR THE EFFECTIVE MANAGEMENT OF
FEDERAL TAXES IMPOSED BY REVENUE CANADA, EXCISE ON:
A.
B.
THE ACQUISITION AND PURCHASE OF MANUFACTURED GOODS, PRODUCTS AND SERVICES;
THE MANUFACTURE OF GOODS BY THE CORPORATION FOR ITS OWN USE AND/OR
SALE.
The purpose of this policy is to:
Ensure that:
a)
A program for the management of taxes levied under provisions of the Federal Excise Tax Act is
established.
b)
A consistent application of said taxes thereof is achieved and the financial impact therefrom is minimized.
This policy is subject to any specific provisions of the Municipal Government Act or other relevant legislation or Union Agreement.
CITY PROCEDURE
POLICY NUMBER:
A1201
EFFECTIVE DATE:
1986 01 20
AUTHORITY:
City Manager
TITLE:
FEDERAL SALES AND EXCISE TAX MANAGEMENT
PAGE:
1.
2.
1 of 6
DEFINITIONS
1.01
Federal Sales Tax - A single incidence tax applicable on the sale price of all goods
manufactured, produced or sold in Canada, or on goods imported into Canada unless
such goods are exempted from tax under the provisions of the Excise Tax Act.
1.02
Federal Excise Tax - A special single incidence tax applicable on specified goods
enumerated under provisions of the Excise Tax Act.
1.03
Manufacture - something made from raw materials; the act or process of making wares
by hand or by machinery; a productive industry using mechanical power and machinery.
Refer also to sec. 2(1) of the Excise Tax Act, chap. E-13, R.S.C. 1970 for further
definition.
1.04
Produce - to give being, form or shape to; to make; the manufacture of crude materials
into articles of use. Refer also to sec. 2(1) of the Excise Tax Act, chap. E-13, R.S.C.
1970 for further definition.
1.05
Marginal Manufacturer - any person who, by himself or through another person acting for him,
prepares goods for sale by assembling, blending, mixing, cutting to size, diluting, bottling,
packaging, or repackaging the goods or by applying coatings or finishes to the goods, other than
a person who so prepares goods in a retail store for sale in that store.
1.06
Goods Manufactured for Own Use - goods for use by the manufacturer or producer and not for
sale; such goods manufactured are subject sales tax and/or excise tax; the appropriation of
goods for own use by the manufacturer or producer is considered to be a sale under the Excise
Tax Act and the Minister of Revenue Canada may determine the value for tax on such goods.
RESPONSIBILITIES
2.01
General Manager of Real Estate & Supply Services Department - is responsible for:
(a)
administering policies, procedures and systems required for the consolidated corporate
management of federal sales and excise taxes and the application thereof.
(b)
coordinating and being the liaison with the Federal Government on all matters related to
said taxes for the Corporation.
(c)
encouraging an awareness and knowledge of such taxes and the liabilities therefore, to
ensure efficient and effective application to maximize benefits to the Corporation.
CITY PROCEDURE
POLICY NUMBER:
A1201
EFFECTIVE DATE:
1986 01 20
AUTHORITY:
City Manager
TITLE:
FEDERAL SALES AND EXCISE TAX MANAGEMENT
PAGE:
2.02
2.03
2 of 6
General Managers of all Civic Departments - shall:
(a)
determine the manufacturing operations, if any, performed by their department
and prepare a list outlining the type of facility involved, location, description of
goods produced, and the name and telephone number of the person in charge.
Forms for this purpose are available from and are to be completed and returned
to the Sales Tax Section of the Materials Management Branch of Real Estate
and Supply Services Department. These forms are to be reviewed annually,
and/or are to be revised as manufacturing operations are undertaken or
discontinued. Should no manufacturing or producing be performed, this
information is to be so indicated.
(b)
designate, where necessary, a departmental coordinator to be responsible for matters
related to the liabilities, payment and/or recoveries of federal sales and excise taxes, and
inform the Sales Tax Section of the Materials Management Branch of that employee's
name and telephone number. A separate form for this purpose is also available from the
Sales Tax Section, and is to be completed and returned thereto when applicable.
(c)
maintain adequate books and records in accordance with government
regulations for audit purposes regarding the calculation of taxes payable on
manufacturing operations, and rebates or recoveries of said taxes. Reference
should be made to Revenue Canada, Excise Memoranda ET 102 - Books and
Records, available from the Sales Tax Section of the Materials Management
Branch.
General Manager of Finance - shall:
(a)
provide a corporate clearing account for the establishment of federal sales and
excise tax liabilities on manufacturing operations and the payment thereof by the
Corporation.
(b)
establish the necessary controls and procedures within the accounts payable
system to ensure the proper and accurate payment of federal sales and excise
taxes on corporate purchasing.
(c)
provide access to corporate financial documents and records to facilitate or assist
Revenue Canada, Excise the conduct periodic audits of the City of Edmonton for sales
and excise tax purposes.
CITY PROCEDURE
POLICY NUMBER:
A1201
EFFECTIVE DATE:
1986 01 20
AUTHORITY:
City Manager
TITLE:
FEDERAL SALES AND EXCISE TAX MANAGEMENT
PAGE:
3.
3 of 6
PROCEDURES
3.01
Manufacturing or Producing
(a)
Federal regulations require sales and excise taxes to be computed and paid on
or before the last day of the month following the month in which goods were
manufactured or produced, or when goods were appropriated for use.
(b)
Failure to comply with the foregoing will result in the assessment of penalty and
interest. Currently, penalty is payable at the rate of one half of one percent per
month and interest at the rate of one percent per month. This combined monthly
total of one and one half percent is calculated on the total tax, penalty and
interest outstanding. These rates are to be periodically reviewed by the Minister
of National Revenue, and may be adjusted accordingly.
(c)
The official tax return reporting all taxable manufacturing for the Corporation together with
payment in full must be postmarked, if mailed, or hand delivered to the District Excise
Office by the due date.
Department Coordinator will (d)
Monthly, or as required, identify and assemble data (direct material and direct
labour costs) related to their manufacturing for the period and compute the
federal taxes payable thereto.
(e)
Prepare the necessary forms, summaries, calculations, working papers, etc.
which support the determined taxes payable and submit these to the Sales Tax
Section of the Materials Management Branch of Real Estate and Supply Services
Department at least five working days prior to the end of the month to enable
verification and consolidation of such information.
(f)
Prepare a journal voucher to accompany their tax calculation to set up their tax liability.
The credit entry of this voucher will be to the Finance Department's Account established
for sales tax purposes.
(g)
Produce and maintain the internal forms to be used for tax calculations, summaries, etc.
of their department based on guidance, samples and an outline of required information as
provided by the Sales Tax Section of the Materials Management Branch.
(h)
Retain adequate books and records to support their tax calculations and assist in
periodic reviews by the Sales Tax Section of the Materials Management Branch
and federal audits.
CITY PROCEDURE
POLICY NUMBER:
A1201
EFFECTIVE DATE:
1986 01 20
AUTHORITY:
City Manager
TITLE:
FEDERAL SALES AND EXCISE TAX MANAGEMENT
PAGE:
4 of 6
Sales Tax Section, Materials Management Branch will -
3.02
(i)
Maintain a ledger by department listing the manufacturing operations performed
and the due dates for reporting taxes payable thereto.
(j)
Coordinate, verify and consolidate all departmental manufacturing data for the City of
Edmonton into one tax return monthly for submission to the Government by the due date.
k)
Prepare the necessary forms and documents to obtain a cheque as payment of the
monthly tax liability ensuring to post or hand deliver by the due date.
(l)
Conduct periodic reviews of departmental manufacturing operations to ensure
adherence to requirements and guidelines.
(m)
Be the primary liaison and contact with the Federal Government for audit
purposes.
Purchasing
(a)
All goods manufactured, produced or sold in Canada and Goods imported into
Canada attract federal sales and/or excise taxes unless exemption from such tax
is provided under the Excise Tax Act.
(b)
The City of Edmonton qualifies for exemption from such taxes under various provisions of
the Act.
Sales Tax Section, Materials Management Branch will (c)
Scrutinize all Material Purchase Requisitions received for the purchase or
acquisition of goods and services by the Materials Management Branch, and
determine the federal sales and excise tax application to such commodities.
(d)
Prepare and assign appropriate clauses and certificates for incorporation in
purchasing documents and specifications which provide the tax status of such
goods.
(e)
Review all purchasing documents produced by Materials Management Branch to
confirm the tax status embodied therein conforms to that on the Materials
Purchase Requisition.
(f)
Be the central civic authority and provide interpretation/guidance on the application of tax
on departmental purchasing.
CITY PROCEDURE
POLICY NUMBER:
A1201
EFFECTIVE DATE:
1986 01 20
AUTHORITY:
City Manager
TITLE:
FEDERAL SALES AND EXCISE TAX MANAGEMENT
PAGE:
5 of 6
Departments will -
3.03
(g)
When coordinators have been designated, have them act as that department's
liaison on all sales and excise tax matters related to the purchase or acquisition
of goods, as required.
(h)
Where coordinators have not been designated (due to no manufacturing
operations), the head of the Accounting Section will be the contact person for the
Sales Tax Section of the Materials Management Branch on such matters.
Rebates, Recoveries of Taxes
(a)
Regularly, federal sales and excise taxes paid by the corporation may be recovered
either from the Federal Government and/or suppliers. These recoveries may be due to
revised or new interpretations, the requirement that certain goods must be purchased on
a tax paid basis or similar situations.
(b)
Recoveries must be applied for in writing by completion of the appropriate government
forms, or by letter to suppliers, and be supported by applicable documents.
Departments will (c)
When required, research and gather information necessary to support recovery
requests.
(d)
Prepare where required, summaries, forms, working papers, etc. for recovery
purposes.
Sales Tax Section, Materials Management will -
3.04
(e)
Coordinate and assemble all data for the Corporation for tax recoveries.
(f)
Prepare necessary forms and letters and maintain records of all claims.
(g)
Receive and record all rebates, credits; ascertain accounting distribution; and forward
such receipts to Finance Department or department concerned.
Tax Interpretations, Rulings
(a)
The application of sales and excise taxes may be influenced by the design, type,
or use of goods. Rulings or decisions are issued by the Federal Government
which outline their current position on a wide variety of goods/subjects. These
interpretations, which appear in various publications or can be obtained directly
from the government, may be used as a reference for tax application, given that
CITY PROCEDURE
POLICY NUMBER:
A1201
EFFECTIVE DATE:
1986 01 20
AUTHORITY:
City Manager
TITLE:
FEDERAL SALES AND EXCISE TAX MANAGEMENT
PAGE:
6 of 6
the same or similar conditions exist. Alternatively, specific written interpretations
may be obtained should they be necessary.
Departments will (b)
Through their coordinator or accounting department head direct all inquiries to
the Sales Tax Section of the Materials Management Branch.
(c)
Where required, research and obtain all information necessary to determine tax
application.
Sales Tax Section, Materials Management will -
3.05
(d)
Research and provide information outlining current interpretations and/or request
official written decisions from the Federal Government.
(e)
Maintain an up-to-date reference library and keep abreast of
current interpretations/legislation.
Briefs, Submissions, Reports, Etc.
Departments will (a)
Where required, provide the Sales Tax Section of the Materials Management
Branch with information, statistical data, etc. regarding the application of sales
and excise taxes for their department for use in the submission of briefs,
resolutions, etc. to any other government and/or organization by the Sales Tax
Section of the Materials Management Branch. Where Departments prepare any
presentation for their own submission, they will consult with and keep the Sales
Tax Section of the Materials Management advised of such matters.
Sales Tax Section, Materials Management Branch will (b)
3.06
Directly, and in coordination with the Intergovernmental Office where required,
prepare and submit briefs, resolutions, etc. related to Federal Sales and Excise
Tax matters on behalf of the Corporation to any other government, public or
private organization/association.
Detailed instructions and specifications required for departmental coordinators to properly
implement this policy are the responsibility of the departments concerned.