Section 221.1 — Excise Tax Act: Meaning of inventory

In this section, inventory of a person means tangible personal property of the person acquired in Canada or imported by the person for supply by way of sale in the ordinary course of a business carried on by the person in Canada. The Minister may, on the application of a person who is registered under Subdivision D, authorize the person to use, beginning on a particular day in a fiscal year of the person and subject to such conditions as the Minister may from time to time specify, a certificate (in this section referred to as an “export certificate”) for the purpose of section 1.1 of Part V of Schedule VI, if it can reasonably be expected that at least 90% of the total of all consideration for supplies to the person of items of inventory acquired in Canada by the person in the 12-month period commencing immediately after the particular day will be attributable to supplies that would be included in section 1 of that Part if it were read without reference to paragraph (e) of that section; and that the total of all consideration, included in determining the income of a business of the person for the year, for supplies made outside Canada by the person of items of inventory of the person that are not consumed, used, processed, transformed or altered after having been acquired in Canada or imported by the person and before being so supplied by the person will equal or exceed 90% of the total of all consideration, included in determining that income, for supplies made by the person of items of inventory of the person. An application for authority to use an export certificate shall be made in prescribed form containing prescribed information and be filed with the Minister in prescribed manner. If the Minister authorizes a registrant to use an export certificate, the Minister shall notify the registrant in writing of the authorization, its effective date and its expiry date and the number assigned by the Minister that identifies the registrant or the authorization and that must be disclosed by the registrant when providing the certificate for the purpose of section 1.1 of Part V of Schedule VI. The Minister may revoke, as of a particular day, an authorization granted under subsection (2) to a registrant where the registrant fails to comply with any condition attached to the authorization or any provision of this Part, or it can reasonably be expected that the requirements of paragraphs (2)(a) and (b) would not be met if the period referred to in paragraph (2)(a) were the twelve month period commencing on the particular day, and, where the Minister revokes the authorization, the Minister shall notify the registrant in writing of the revocation and the effective date of the revocation. An authorization granted to a registrant at any time under subsection (2) shall be deemed to have been revoked, effective after the last day of a fiscal year of the registrant ending after that time, where the fraction determined by the formula A/B where A is the total of all consideration paid or payable by the registrant for items of inventory that were acquired in Canada by the registrant in the year in the course of a business of the registrant and in respect of which the registrant provided to the suppliers thereof an export certificate, and B is the total of all consideration paid or payable by the registrant for items of inventory acquired in Canada by the registrant in the year in the course of that business, exceeds the fraction determined by the formula C/D where C is the total of all consideration, included in determining the income from that business for the year, for supplies made outside Canada by the registrant of items of inventory of the registrant that were not consumed, used, processed, transformed or altered after having been acquired in Canada or imported by the registrant and before being so supplied by the registrant, and D is the total of all consideration, included in determining that income, for supplies made by the registrant of items of inventory of the registrant. An authorization granted under subsection (2) to a registrant ceases to have effect on the earlier of the day on which a revocation of the authorization becomes effective, and the day that is three years after the day on which the authorization, or its renewal, became effective. Where an authorization granted to a registrant under subsection (2) is revoked, effective on a particular day, the Minister shall not grant to the registrant another authorization under that subsection that becomes effective before where the authorization was revoked in circumstances described in paragraph (5)(a), the day that is two years after the particular day;

and in any other case, the first day of the second fiscal year of the registrant commencing after the particular day.