T-0.1 - Act respecting the Québec sales tax

Section 212.2 Disposition versions

1997-12-19

212.2. Where the beneficiary of a warranty (other than an insurance policy) in respect of the quality, fitness or performance of corporeal property acquires or brings into Québec property or a service in respect of which tax is payable by the beneficiary and a registrant pays to the beneficiary, under the terms of the warranty, an amount as a reimbursement in respect of the property or service and therewith provides written indication that a portion of the amount is on account of tax, the following rules apply:

(1)  the registrant may claim an input tax refund, for the reporting period of the registrant in which the reimbursement is paid, equal to the amount (in this section referred to as the “tax reimbursed”) determined by the formula

A × B / C; and

(2)  where the beneficiary is a registrant who was entitled to claim an input tax refund, or a rebate under Division I of Chapter VII, in respect of the property or service, the beneficiary is deemed to have made a taxable supply and to have collected, at the time the reimbursement is paid, tax in respect of the supply equal to the amount determined by the formula

D × E / F.

For the purposes of these formulas,

(1)  A is the tax payable by the beneficiary;

(2)  B is the amount of the reimbursement;

(3)  C is the cost to the beneficiary of the property or service;

(4)  D is the tax reimbursed;

(5)  E is the total of the input tax refunds and rebates under Division I of Chapter VII that the beneficiary was entitled to claim in respect of the property or service; and

(6)  F is the tax payable by the beneficiary in respect of the supply or bringing into Québec of the property or service.

1997, c. 85, s. 544.