Section 232.1 — Excise Tax Act: Promotional allowances

For the purposes of this Part, if a particular registrant acquires particular tangible personal property exclusively for supply by way of sale for a price in money in the course of commercial activities of the particular registrant, and another registrant, who has made taxable supplies of the particular property by way of sale, whether to the particular registrant or another person, pays to or credits in favour of the particular registrant, or allows as a discount on or credit against the price of any property or service (in this section referred to as the “discounted property or service”) supplied by the other registrant to the particular registrant, an amount in return for the promotion of the particular property by the particular registrant, the following rules apply: the amount is deemed not to be consideration for a supply by the particular registrant to the other registrant, where the amount is allowed as a discount on or credit against the price of the discounted property or service, if the other registrant has previously charged to or collected from the particular registrant tax under Division II calculated on the consideration or part of it for the supply of the discounted property or service, the amount of the discount or credit is deemed to be a reduction in the consideration for that supply for the purposes of subsection 232(2),

and in any other case, the value of the consideration for the supply of the discounted property or service is deemed to be the amount, if any, by which the value of the consideration as otherwise determined for the purposes of this Part exceeds the amount of the discount or credit, and if the amount is not allowed as a discount on or credit against the price of any discounted property or service supplied to the particular registrant, the amount is deemed to be a rebate in respect of the particular property for the purposes of section 181.1.