Annexes for Chapter 4 – Solicitation process

Annex 4.1: General conditions and supplemental general conditions

Effective date: 2012-07-16

1. If any software must be delivered under the contract, including any software necessary to run the hardware, supplemental general conditions 4003 must form part of the contract. Other supplemental general conditions must also be incorporated, if applicable.
2. General conditions and supplemental general conditions must be used as complete sets. Do not include two sets of general conditions. A clause can be taken from a set of general conditions and added to the Articles of Agreement (i.e. a warranty provision in a contract mainly for services but that includes the delivery of some equipment).
3. A specific procurement may require the modification or deletion of individual conditions. These changes must be discussed with the client department before inclusion in the solicitation or contract, to ensure that complete understanding exists as to the extent of the client department's rights and responsibilities. Modifications may be discussed with Legal services to ensure that the rights of Canada are protected.

Annex 4.2: Intellectual Property

Effective date: 2010-01-11

Structure for use of Intellectual Property terms

General conditions, supplemental general conditions, clauses

Annex 4.3: Taxes and duties

Effective date: 2015-09-17

1. Goods and Services Tax or Harmonized Sales Tax
   Suppliers must show the Goods and Services Tax/Harmonized Sales Tax (GST/HST) separately in the bid/offer/arrangement. They must also indicate whether their items are fully taxable, zero-rated, or exempt (see Annex 4.4: Supplies exempt from Goods and Services Tax/Harmonized Sales Tax), and must show into which category each item falls.
2. Customs Duties
   1. Solicitations must contain all customs duties information necessary to permit suppliers to submit responsive bids/offers/arrangements.
   2. Canadian-based suppliers must include all applicable customs duties in their prices, unless otherwise specified. In resulting contracts, all applicable customs duties and taxes must be included in the price and the total estimated price.
   3. Foreign-based suppliers must not include Canadian customs duties, except when it is specifically requested that the prices include the customs duties and taxes in Canadian dollars. In resulting contracts, customs duties must not be included in the price, but will be paid by the client department, upon the importation of goods. However, a foreign-based supplier who subcontracts in Canada for the manufacture and delivery of goods in Canada will include all customs duties applicable to the subcontract.
   4. For the purpose of the solicitation, suppliers with an address in Canada are considered Canadian-based suppliers and suppliers with an address outside of Canada are considered foreign-based suppliers.
3. Customs Duties and Excise Taxes
   1. Suppliers located in Canada must include all applicable excise taxes in the solicitations. In resulting contracts, the applicable taxes must be included in the total estimated price. Suppliers located outside Canada must not include excise taxes. In resulting contracts, the applicable taxes must not be included in the total estimated price.
   2. When foreign-based suppliers are requested to submit firm prices in their bids/offers, in Canadian dollars, Canadian customs duties and excise taxes and GST/HST must be excluded from those prices. See Standard Acquisition Clauses and Conditions (SACC) Manual clause A0222T for bid solicitations and M0222T for standing offers.
   3. In resulting contracts, customs duties must not be included in the price, but will be paid, upon the importation of goods, by the client department. However, a foreign-based supplier who subcontracts in Canada for manufacture and delivery of goods in Canada will include all acceptable customs duties, applicable to the subcontract.
   4. Occasionally, it may be appropriate to request foreign-based suppliers to respond on prices, in Canadian dollars, inclusive of these customs duties and excise taxes. (See SACC Manual clause A0220T.) However, this may have an effect on the number of suppliers, many of who are accustomed to bidding FOB plant, and who are not prepared to take the time to gather the required information and make the necessary calculations. Note: it is the importer of record who is responsible for paying these customs duties and excise taxes, so a foreign-based supplier has no direct interest in the calculations unless the requirement is to be FOB destination.
4. Goods and Services Tax/Harmonized Sales Tax
   This section provides information on GST/HST and the application of GST/HST to the federal government.
   1. GST/HST, as applicable, is payable on the invoiced amount, before any discount for prompt payment or penalty for late payment.
   2. GST/HST is payable when the progress payment, milestone payment or advance payment becomes due, or the client department pays it.
   3. Canada Revenue Agency (CRA) considers advance payments to be progress payments.
   4. GST/HST is normally paid on the total amount claimed before any holdback is deducted. No GST/HST is paid when the holdback is released.
   5. The exception is a holdback under legislation or under a contract for the construction, renovation or repair of a marine vessel or real property. GST/HST calculated on the holdback amount becomes payable on the earlier part of the day on which the holdback is paid or the day on which the holdback period expires.
   6. The GST/HST applies to supplies made in Canada of real property, tangible personal property (that is, goods), intangible personal property (such as intellectual property) and services. "Supply" means provision of property or service in any manner.
   7. The GST/HST on a supply made in Canada is payable by the recipient of the supply to a supplier who is registered for GST/HST. The supplier is responsible to remit the tax to CRA.
   8. A supply is declared to be made in Canada if:
      1. for a supply of goods, the goods are made available or delivered in Canada to the recipient of the supply. This means the goods are in Canada when they are sold and transferred from the supplier to the purchaser, or they are imported into Canada for the delivery to the purchaser;
      2. for a supply of intangible personal property, the property may be used in Canada or relate to real property situated in Canada, to tangible personal property situated in Canada or to a service to be performed in Canada;
      3. for a supply of real property or a service in respect of real property when the property is situated in Canada;
      4. for a supply of other services, the service is performed in whole, or in part, in Canada;
      5. for a supply of a telecommunications service consisting of making available telecommunication facilities when the facilities, or any part thereof, are located in Canada.
   9. The GST/HST applies also to goods imported into Canada. The GST/HST on the importation of goods is payable on the duty paid value of the goods (determined under the Customs Act) and is payable by the importer of the goods directly to Canada Border Services Agency. It is payable at the time of importation or when the goods are taken out of bond for use.
   10. Goods imported into Canada for supply are subject to GST at the time of importation and are subject to GST/HST when supplied in Canada by a supplier who is registered for GST/HST.
   11. The GST/HST also applies to supplies of services and intangible personal properties made outside Canada (generally by a non-resident supplier) to a person who is resident in Canada, if the person acquires the supply for use in Canada, but not exclusively in the course of commercial activities. These supplies are referred to as "imported taxable supplies". The GST/HST on imported taxable supplies is determined by the Canadian recipient of the supply (self-assessment) and remitted directly to Canada Revenue Agency (CRA).
   12. Lease payments on tangible goods under a lease entered into before August 8, 1989, are not subject to GST. If a lease for tangible goods is amended to alter its term, or the property is leased on or after August 8, 1989, then the payments become subject to GST/HST, as applicable.
   13. The trade-in of a used good on the purchase of a new good constitutes two separate transactions for the purposes of the GST/HST. The GST/HST applies to the full sale price of the new good, regardless of the allowance for the trade-in. Each party must collect GST/HST on the fair market value of the supply to the other, and both pay the GST/HST. This treatment applies where the person trading in the used goods on the purchase of new goods is a GST/HST registrant.
   14. If the person trading in the used goods is not required to charge tax on the supply (for example, non-registrant supplier, or goods not used in commercial activities), then the supplier of the new goods deducts the value of the old goods accepted as a trade-in from the value of the new goods when determining the GST/HST on the supply.
   15. The GST/HST does not apply to: exempt supplies; zero-rated supplies; or certain imports. These areas are covered in Annex 4.4: Supplies exempt from Goods and Services Tax/Harmonized Sales Tax. Also, it generally does not apply to Indian, Indian Bands and Band-empowered Entities; this is also covered in Annex 4.4: Supplies exempt from Goods and Services Tax/Harmonized Sales Tax.
   16. The GST/HST does not apply to transactions between parts of the same organization. As the federal government has registered its departments (those entities listed in Schedule I, Schedule I.I and Schedule II of the Financial Administration Act), as a single person, the GST/HST does not apply to transactions between departments. However, the GST/HST will apply to taxable transactions between departments and Crown corporations.
   17. Government-supplied Materiel (GSM) is not subject to additional GST/HST costs, as the owner/end-user has already paid it. Contractors should not charge GST/HST against the value of GSM used in the performance of a contract. Foreign-based contractors must identify the GST separately on Canada Border Services Agency's Form CI1 - Canada Customs Invoice (PDF, 429 KB) - (Help on File Formats), describing them as Canadian goods returned and providing a value. Should GSM be provided from one foreign-based contractor directly to another, this value should be included in the value of the item for customs clearance purposes, as this GSM would not have had GST paid yet.
   18. The federal government does not pay GST/HST on imported taxable supplies, as the federal government is not required to self-assess tax. Imported taxable supplies include services performed wholly outside Canada for use in Canada, or services performed in Canada and supplied by a non-resident supplier who is not registered for GST/HST purposes. They also include intangible personal property supplied by a non-resident supplier who is not registered for GST/HST purposes.
   19. The federal government is required to pay tax on importation of goods if it is the importer of record, unless the goods qualify as non-taxable importations.
5. Taxes and Duties Associated with Payments
   This section provides information on the taxes and duties associated with progress and final payments made to the contractor.
   1. After-imposed and after-relieved taxes
      1. A contract price will be increased by the actual amount of any after-imposed taxes, provided the contractor forwards to the contracting officer a certified statement, showing that the increase in cost is directly attributable to the after-imposed taxes, and that no amount for such newly imposed taxes was included in the contract price.
      2. A contract price will be decreased by the actual amount of any after-relieved taxes.
   2. After-imposed and after-relieved duties – firm price contract
      1. Provision for price adjustments, upward or downward, may be made in firm price contracts, in the event that changes in duties, which affect the cost of the work to the contractor, are made after the contract date.
      2. The contract price must be increased by the actual amount of any after-imposed duties, provided the contractor forwards to the contracting officer a certified statement, showing that the increase in cost is directly attributed to the after-imposed duties, and that no amount for such newly imposed duties was included in the contract price.
      3. The contract price must be decreased by the actual amount of any after-relieved duties.
   3. Excise taxes: the general conditions provide for contract price, in the event of changes in duties, excise taxes, charges and impositions after the contract date.
6. Taxes and Duties Associated with Customs and Imports/Exports
   This section provides information relevant to customs, imports/exports, drawbacks and taxes and duties.
   1. Excise taxes, duties and GST/HST
      1. Excise taxes are payable on certain goods (see Annex 4.5: Goods subject to Excise Tax.)
         1. When goods are manufactured or produced and sold in Canada, the excise tax is payable by the manufacturer or producer, at the time of delivery of such goods.
         2. When goods are imported, the excise tax is payable by the importer or transferee, who takes the goods out of bond, at the time of importation or when taken out of bond for consumption.
      2. Federal government contract enquiries regarding excise taxes and duties; including those relating to rates, exemptions, refunds, other methods of valuation, prohibited items, and other applications of legislation concerning excise taxes and duties, should be referred to the nearest Canada Border Services Agency (CBSA) office.
      3. Federal government contract enquiries related to the GST/HST, Defence Supplies Remission of Customs Duty and Federal/Provincial Reciprocal Tax Agreements should be referred to the Acquisitions Program Policy Directorate.
   2. Customs duty
      1. Imported goods are charged with duties from the time of importation. The rates of duties on imported goods will be the rates applicable to the goods at the time when the documentation is presented to obtain release of the goods from CBSA.
      2. The primary basis for determining the value of duty on imported goods is the Transaction Value System of Valuation, which is generally the invoice price (see Memorandum D13-3-1 from CBSA). For assistance, contact the CBSA Business Enquiry and Registration.
      3. If this method cannot be used, contact the nearest CBSA office.
   3. Drawbacks and duties relief
      1. Drawbacks and duties relief programs are intended to help exporters become and remain more competitive in foreign markets, by granting them relief from the duties and taxes paid in respect of:
         1. goods imported and then exported before any use is made of those goods;
         2. goods imported and used in the manufacture in Canada of goods that are exported; or
         3. materials imported and consumed or expended in the manufacture in Canada of exported goods.
      2. The Duty Deferral Program grants relief from duties on imported goods that are exported either in the same condition or after having been manufactured. Those goods qualify for relief from the customs duties, anti-dumping and countervailing duties, and excise duties and taxes other than the GST. Relief is granted at the time the goods are imported. For more information, see Memorandum D7-4-1.
      3. The Duty Drawback Program has similar characteristics and advantages as the Duties Relief Program, with the exception that duties and taxes must be paid at the time of importation and are refunded after the goods have been exported. For more information, see Memorandum D7-4-2.
7. Remission of Customs Duty for Defence Supplies
   1. Remission of customs duty payable (for more information, see Memorandum D13-3-1) is granted under the Tariff Item No. 9982.00.00 when:
      1. the total contract value of the defence supplies is $250,000 or more. This reflects the import value of the goods plus the duty that would be applicable in the absence of the customs tariff;
      2. the goods are certified by Public Works and Government Services Canada (PWGSC) to be defence supplies;
      3. for more information, see Memorandum D8-9-3.
   2. Since duty rates vary depending on the type of product, country of origin and mix of imported components, it may be difficult to decide whether the defence supply is subject to the tariff. Where there is uncertainty as to whether the total estimated expenditure would exceed the $250,000 threshold, contracting officers should request prices with customs duty identified as a separate item.
   3. When the party responsible for importation is other than the Department of National Defence (DND), a copy of the following certification must be attached to the contract.
      Certificate for defence supplies
      I certify that the items purchased under contract number____________ are "defence supplies," as defined in the Defence Production Act, pursuant to Tariff Item No. 9982.00.00.
      Approved by Authorized Officer:
      Signature ___________________
      Date _______________________
      Title _______________________
      The only proof acceptable to the Canada Border Services Agency (CBSA) from the contractor that the import is a defence supply is a copy of the certification.
   4. A copy of the certification may be requested by the DND Director Supply Chain Operations/Customs, or by the investigating Regional Compliance Verification Division of the CBSA. These parties investigate claims for remission and may contact the contracting officer to verify the claim.
   5. When DND is the party responsible for importation, a copy of the contract for defence supplies is accepted by the CBSA, as sufficient proof for remission. A copy of the certification for defence supplies does not need to be attached to the awarded contract.
   6. When the total estimated value of a standing offer exceeds $250,000, each call-up is subject to the Tariff Item No. 9982.00.00.
8. Duty and the GST/HST on Tools, Equipment or Spare Parts in Contracts for Services by Non-residents
   1. Customs duty and the GST/HST, as applicable, may be imposed on any tools, equipment or spare parts that are brought into Canada by non-resident personnel performing certain services under a PWGSC contract. When assessed, such duties and the GST/HST are payable to the CBSA.
   2. The following interpretation of applicable regulations is intended as background information only. If necessary, specific questions relating to actual cases should be directed to the nearest regional CBSA Office. The application or relief of customs duty and the GST/HST is stated in each item below in italics:
      1. a non-resident worker entering Canada with personal tools or other equipment to erect, install or repair machinery or other plant equipment, the said worker being sent here by the foreign manufacturer of the machinery or plant equipment, may import the tools or other equipment under authority of the Temporary Importation (Tariff Item no. 9993.00.00) Regulations. For more information, see CBSA Memorandum D8-1-1;
         (Full relief of customs duty. The GST/HST is payable on 1/60^th of the value of the tools and/or equipment for each month the goods remain in Canada.)
      2. a non-resident worker entering Canada with tools or other equipment supplied by the manufacturer of the machine to be erected, installed or repaired may bring the tools or other equipment into Canada on a 1/60^th basis under the Temporary Importation (Tariff Item No. 9993.00.00) Regulations. For more information, see Memorandum D8-1-1;
      3. a non-resident worker entering Canada with tools or other equipment to repair, erect or install machinery or other equipment, when the contract is with a foreign-based supplier, which is not the manufacturer of the machinery or other equipment;
         (Full customs duty will apply. The GST/HST is also payable on full value where there is no relief available under any other provision ([for example, Canadian Goods Returned])
      4. duty and the GST/HST are levied on all spare parts at the time of entry. Following the export from Canada of the balance of the unused spare parts under CBSA supervision, a drawback claim may be filed for return of the customs duty applicable to the unused spare parts under authority of the Goods Imported and Exported Drawback Regulations.
         (The GST is not refundable.)
   3. Contracts for the services in Canada of a non-resident must contain a provision, which instructs the non-resident contractor, its employees or a subcontractor and its employees, to comply with CBSA's requirements and to pay customs duties, excess taxes and the GST/HST, as applicable.
   4. If it is anticipated that a non-resident may be required to import tools, equipment or spare parts to perform services in Canada, Standard Acquisition Clauses and Conditions(SACC) Manual clause C2604C must be used.
   5. When customs duties, excise taxes and GST/HST associated with payment or customs and imports/exports apply, see Chapter 8 - Contract management.
9. Duty and GST/HST on the Repair and Overhaul of Canadian Goods Abroad
   1. The treatment of Canadian goods returning to Canada, having been repaired or overhauled abroad, varies depending on the country where the repair or overhaul is done. Where the country is a free trade partner country, the goods return to Canada under the provisions of Tariff Item No. 9992.00.00; or in the case of vessels, Tariff Item No. 9971.00.00. The policy and procedures relating to the administration of these tariff items are outlined in CBSA Memorandum D8-2-26 and Memorandum D8-2-25, respectively. When the country is not a free trade partner country, the goods may be entitled to the provisions of the Canadian Goods Abroad Program contained in sections 101-105 of the Customs Tariff. Under certain conditions, subsection 101(1) of the Customs Tariff provides full customs duties and GST/HST relief on the Canadian export value of goods when the goods are returned to Canada. The policy and procedures relating to the administration of this program are outlined in CBSA Memorandum D8-2-1.
   2. Goods imported under Tariff Item Nos. 9992.00.00 and 9971.00.00 are customs duty free. Under the Canadian Goods Abroad Program, customs duties are owed on the value of the repair or overhaul. Whichever provision is used to account for the customs duties, GST is owed on the value of the repair or overhaul, unless it is done under a warranty arrangement.
   3. The goods qualify for Tariff Item Nos. 9992.00.00 and 9971.00.00 if the following conditions are met:
      1. the required documents are submitted according to the Tariff Item Nos. 9971.00.00 and 9992.00.00 Accounting Regulations (see CBSA Memorandum D8-2-25 and Memorandum D8-2-26), including an invoice and proof of export;
      2. the invoice or written statement from the foreign processor should include the value of the repair or alteration;
      3. proof of export can be a customs or transportation document, an exporter declaration, or other documents, set out in the Regulations, which describe the goods sufficiently, to establish that the re-imported goods are the same goods that were exported. Records of the make, model, and serial numbers help identify the goods.
   4. The goods qualify under the Canadian Goods Abroad Program where:
      1. the goods are documented in a manner acceptable to the CBSA;
      2. the CBSA is satisfied that the repair or overhaul could not have been done in Canada; and
      3. the goods are returned to Canada within 12 months from the day on which they are exported.
   5. Contracting officers should verify:
      1. that no claim for drawback has been paid in respect of the goods temporarily exported; and
      2. in the case of the Canadian Goods Abroad Program, that repair facilities are not available within a reasonable distance in Canada.
   6. The CBSA imposes different requirements, depending upon the type of work carried out abroad, and may accept a verbal declaration from the consignee, or PWGSC, that proper facilities are not available to do the repairs or overhaul within a reasonable distance in Canada.
   7. In addition, Canadian and US government agencies establish lists of approved repair suppliers for certain articles for use at defence establishments that are manufactured to rigid specifications. In such cases, if no Canadian-based supplier is approved to perform the repairs, this will be accepted as satisfactory evidence that the repairs could not be made in Canada.
   8. When calculating duty and the GST/HST on the service performed abroad, the pricing factors to be taken into consideration are: the cost of the material used; the cost of labour; factory overhead; and a normal profit mark-up. The value for duty remains the same, even where the repair is done under a warranty arrangement, and there is no charge made for the repair or overhaul.
   9. Where it is not possible to repair the goods, and they are replaced under a warranty arrangement, the replacement goods are subject to full customs duties, but under Section 5 of Schedule VII to the Excise Tax Act are non-taxable for GST purposes.
   10. There is no GST/HST payable on goods imported after having been exported for warranty repair work. This is provided for under paragraph 3.(j) of the Non-Taxable Imported Goods (GST/HST) Regulations.
10. Duty and GST/HST on Canadian Goods Returned
    1. The following paragraphs discuss the application of duty and GST/HST for goods that are re-imported into Canada after having been exported for reasons other than for repairs, equipment additions, or work done abroad.
       1. Customs duty does not apply to Canadian goods returned from abroad without having been advanced in value or improved in condition by any process of manufacture or other means, or combined with any other article abroad. For more information, see CBSA Memorandum D10-14-11.
          For more information on the application of the GST/HST, see CBSA Customs Notice CN-118.
       2. Articles to be tested only and not adjusted, altered or enhanced in value in any way in conjunction with, or as a result of, a test regardless of whether a charge is made for the test.
       3. Customs duty and the GST/HST do not apply to Canadian government-owned munitions and supplies of war, on their return from abroad to a department or agency of the government. This is not intended for the remission of the duty and the GST/HST on goods that have been purchased by government departments and agencies, specifically for import into Canada. It applies only to munitions and military stores being shipped to departments or agencies of the government from a Canadian Armed Forces Establishment abroad. For more information, consult section 27 of the CBSA Memorandum D10-14-11.
11. Reciprocal Taxation Agreements and Comprehensive Integrated Tax Coordination Agreements
    1. The federal government has agreed to pay, directly or indirectly, most provincial and territorial taxes on the goods and/or services it purchases, as set out in the general conditions of the Standard Acquisition Clauses and Conditions Manual. The federal government does not pay the general Provincial Sales Tax (PST). In addition, when the department or agency is a supplier, it must collect and remit PST to the province.
    2. The Treasury Board (TB) ARCHIVED - Policy on the Collection and Remittance of Provincial Sales Taxes includes all the information that may be required by contracting officers to comply with the Application of Reciprocal Taxation Agreements (RTAs) and Comprehensive Integrated Tax Coordination Agreements (CITCA). ARCHIVED - Appendix C - Details of the Reciprocal Taxation Agreements and CITCA by Province and Territory, of the same policy, also provides details of the RTA and CITCA by province and territory. Contracting officers should also consult the TB ARCHIVED - Policy on the Application of the Goods and Services Tax and Harmonized Sales Tax in the Departments and Agencies of the Government of Canada.
       Provinces and territories are grouped as follows:
       1. the provinces that have not entered into a RTA are considered "non-partaking" and at the present time, the only non-partaking provinces are Alberta and New Brunswick;
       2. a non-participating province is a province that did not enter into a CITCA and at the present time, the non-participating provinces include all provinces and territories, except New Brunswick, Nova Scotia and Newfoundland and Labrador (the participating provinces);
       3. the PST is paid in non-participating provinces by Crown corporations, except in Alberta, Northwest Territories, Yukon and Nunavut, where there is no PST;
       4. federal departments pay the Harmonized Sales Tax (HST), ancillary taxes and reimburse tax on third party purchases in the participating provinces;
       5. when federal departments and Crown corporations are suppliers, they must charge, collect and remit HST when the goods or services are delivered or rendered in a participating province.
    3. Crown corporations are not covered by the RTAs, and are required to pay PST on their purchases, for delivery to or consumption in the partaking provinces, on the same basis as companies in the private sector. Crown corporations may not use the license numbers or certificates in the RTAs. HST is paid in the participating provinces.
       Some Crown corporations hold their own special PST licences, which enable them to purchase goods and services, for their own use, free of PST at the time of purchase.
    4. Persons selling to federal departments may not quote the federal government's license numbers to their own suppliers.
    5. Contracting officers should take special care when dealing with the following:
       1. ancillary taxes: The federal government has agreed to pay certain ancillary provincial taxes. These taxes apply to specific goods and services, and their applicability varies from province to province. In addition, departments will reimburse third parties for PST paid for goods or services purchased on behalf of a department or during work-related travel;
       2. fuel taxes: Liquid fuels may be taxed in certain provinces under the provincial fuel tax or under provincial retail sales tax, depending on the end use. Under certain circumstances, liquid fuel may be exempt from provincial tax;
       3. construction contracts: In all contracts for the construction or repair of a building or structure, the contractor is declared to be the consumer of any materials used. The contractor usually is not registered as a supplier, and must pay tax on purchases of materials. PST is an element of cost to the contractor, and as such is included in the price to PWGSC. No further PST is imposed on the transaction between the contractor and PWGSC.
    6. Construction contracts should not contain a mix of "real property" and "tangible personal property." If unavoidable, the use of the license numbers applies only to the acquisition of the "tangible personal property" component of the requirement.
    7. In contracts for the supply and installation of equipment that remains free standing, and is affixed to a building or structure for purposes other than providing a direct service to such building or structure, the PST is not to be included in the contract price, and the license number or certificate should be quoted in the contract. In New Brunswick, such contracts are treated as real property contracts and, therefore, are subject to the procedure, outlined in the preceding paragraph.
12. United States Sales Tax, Use Tax and Personal Property Tax
    1. When there is a possibility that United States-based suppliers may be submitting responses, contracting officers must specify in the solicitation that prices do not include any United States Sales Tax or Use Tax, from which exports are exempted. Any resulting contract awarded to a foreign-based contractor must include SACC Manual clause C2000C.
    2. Items exported from the United States of America (U.S.A.) by the purchaser, are entitled to exemption from state Sales and Use Taxes. Care should be taken to ensure that such procurements are not taxed in error.
    3. Particular care is required in dealing with the State of California, which has Sales, Use and Personal Property taxes that may affect PWGSC procurement.
    4. In these procedures, the State of California is highlighted because of its stringent tax requirements. Similar precautions should be taken to deal with requirements in the other states.
    5. California Sales and Use taxes (Cal Tax) are collected by the seller from the purchaser and, if applicable, will require the contract to provide for payment of the tax. The Use Tax is not payable on items for which Sales Tax is payable.
    6. Items exported outside the State by the purchaser are exempt from Cal Tax but, as California law is very precise about what constitutes an export, contracting officers should ensure that procurement in California is considered an export by the State.
    7. For example, goods may not be subject to Cal Tax if:
       1. they are delivered California FCA Free Carrier (...named place) with title passing upon such delivery, and are shipped to a point outside California; or
       2. title passes at time of delivery, and the goods are delivered by the seller to a conveyance furnished by the purchaser (for example, where they are picked up by the Canadian Armed Forces), and are shipped to a point outside the U.S.A.
    8. California Personal Property tax is assessed against work-in-process, finished work and baled items, title to which is vested in either PWGSC or the contractor, which are located in California at 12:00 o'clock noon on the first Monday in March on an annual basis. It is immaterial whether such items relate to a fixed price or cost reimbursable type of contract.
    9. Contracting officers should confirm the manner in which California contractors charge the Personal Property Tax on PWGSC contracts. If the tax is charged as a direct charge to the PWGSC contract, there should not also be an indirect charge, and overhead should not be applied to the direct charge.
    10. Another area for particular attention is the use of progress payments or advance payments. California taxes may be payable when ownership is transferred to the purchaser - and this transfer of ownership may be declared by the State to take place when the progress payment or advance payment is made. Contracting officers should ensure that ownership is not transferred until the goods are delivered.
13. Purchases from the State of California
    1. The State of California has a sales and use tax, which a supplier must apply to goods when title to the goods is transferred to the purchaser in the State and the goods will be used in the State. However, imports and exports are not taxed. The use tax is the same as the sales tax but the use tax is the one that applies when the goods are purchased by an out-of-state entity for use in the state.
    2. To be exempt as an export, the good sold must be intended for a destination in a foreign country and actually delivered to the foreign country before making any use of the property. This means that the sales and use tax will not apply when the good pursuant to the contract is shipped to Canada. Therefore, if Canada desires to have title to the goods transferred in California, the contract must state that the goods are to be shipped to Canada and are for use in Canada only. Canada can still take title in California and also be responsible for loss of goods during transport.
    3. If the contract provides for progress or advance payments or if the goods are to be left in California for a period of time, Canada's normal contract provisions would cause the sales and use tax to be payable since ownership would be transferred to Canada before delivery of the goods. Therefore, in order for Canada to avoid paying this sales tax, it must ensure that ownership will not be transferred until delivery of the goods.
    4. To avoid paying the use tax inappropriately, the following SACC Manual clauses should be included in the contract: D4003C, C2002C and K9010C.

Annex 4.4: Supplies exempt from Goods and Services Tax/Harmonized Sales Tax

Effective date: 2015-02-25

1. Overview
   An exempt supply is not taxable. Thus, a supplier does not collect the Goods and Services Tax or the Harmonized Sales Tax (GST/HST) on sales of exempt supplies. The supplier is not eligible for any input tax credits on purchases related to the exempt supply. As a result, the supplier passes on to the consumer the GST/HST that the supplier has paid, as part of the overhead. This is where exempt supplies differ from zero-rated supplies. The following are exempt supplies.
   1. Health and dental services (only services performed for medical or reconstructive purposes are exempt. Services performed for cosmetic reasons are not exempt.) This includes:
      1. hospital and nursing home services;
      2. medical devices prescribed by a medical practitioner **;
      3. diagnostics, treatments and other health care services prescribed by a medical practitioner;
      4. ambulance services;
      5. nursing services;
      6. dental hygienist services.
         **A medical practitioner is a person who is entitled under the laws of a province to practise the profession of medicine or dentistry.
   2. Day care services for children less than 15 years old.
   3. Personal care services in an institution for children or disabled or underprivileged persons.
   4. Legal aid services. That is, the person receiving the services pays no GST/HST. The lawyer performing the service bills the legal aid plan and charges GST/HST.
   5. Most educational services. This includes virtually everything associated with primary or secondary education, including tutoring. Most other educational services are exempt, except for those that are purely recreational in nature. University and college meal plans are also exempt.
   6. Most supplies by charities and many supplies of a public service nature by public service bodies. These are exempt except for exclusions given in Schedule V, Part VI, section 2 of the Excise Tax Act. Example: The sale by a charity of property acquired for resale and any service in connection with it are not exempt (2(e)). Most universities in Canada are charities for the purposes of the GST/HST, and therefore their supplies are generally exempt.
   7. Most financial services provided in Canada.
   8. Long-term residential rents and sales of used housing.
2. Zero-Rated Supplies
   1. Zero-rated supplies are taxable supplies on which the tax rate is 0 percent. Persons involved in the production of zero-rated supplies can claim input tax credits on the supplies they use. This ensures that there is no GST/HST paid by the consumer. The following are zero-rated supplies.
      1. Goods and services supplied or to be supplied to a purchaser outside of Canada.
      2. Basic groceries, except soft drinks, candies and confections and snack foods.
      3. Agriculture and fisheries products, except the following:
         1. cut flowers, foliage or trees;
         2. bedding plants;
         3. sod;
         4. soil and soil additives;
         5. seeds, in quantity ordinarily sold or offered to consumers;
         6. natural fertilizer, unless sold in bulk;
         7. wood;
         8. horses;
         9. wool other than in an unprocessed state;
         10. fur and animal hide.
   2. Prescription drugs for human use, dispensed by a medical practitioner or on the prescriptions of a medical practitioner for the personal use of the recipient or a related individual.
   3. Medical devices (includes replacement parts and charges for installation and repair).
   4. International freight services. This includes freight outbound from Canada and freight into Canada from outside. Freight from one part of Canada to another is included if it is part of a continuous movement into or from Canada.
3. Non-taxable Importations
   1. Non-taxable importations under the GST/HST refers to certain imports listed in Schedule VII of the Excise Tax Act. No tax is paid on the importation of these supplies.
   2. Certain goods, which are exempt from customs duties; for example, foreign-based conveyances coming into Canada, settler's effects, foreign diplomat's effects, tourist's baggage, foreign purchases brought back by returning residents.
   3. Prizes and trophies won abroad (other than saleable goods, such as an automobile).
   4. Tourist literature supplies by foreign governments or like organizations, which is to be distributed for free.
   5. Goods donated to charities.
   6. Warranty replacement parts.
   7. Zero-rated supplies in Section 2 of Part I or in parts Il, Ill, IV, or VIII of Schedule VI of the Excise Tax Act.
   8. Imported goods valued at under $20 when delivered by mail or courier. This parallels current customs remission orders and like them does not cover alcohol, tobacco, etc.
   9. Prescribed imports. Provision is made for granting relief from GST/HST on importation of goods by way of regulations of the Governor in Council.
4. Indians, Indian Bands and Band-empowered Entities
   1. Canada Revenue Agency Technical Information Bulletin B-039R3, GST/HST Administrative Policy - Application of GST/HST to Indians, sets out Canada Revenue Agency's (CRA) guidelines concerning the treatment of purchases made by Indians, Indian bands and band-empowered entities (BEEs). The conditions described therein must be satisfied for tax relief to apply (e.g., an Indian must present proof of registration under the Indian Actto a vendor in order to acquire goods or services on reserve without the payment of GST/HST.
   2. Generally, GST/HST does not apply to:
      1. goods acquired on reserve by Indians, Indian bands or BEEs;
      2. goods acquired off reserve by Indians, Indian bands or BEEs, where the vendor or the vendor's agent delivers the goods to the reserve;
      3. services performed totally on reserve where they are acquired by Indians;
      4. services performed on or off reserve, such as legal or accounting services, where they are acquired by Indian bands or BEEs for band management activities or for real property on reserve (exception: Indian bands or BEEs pay GST/HST on off-reserve purchases of transportation, short-term accommodation, meals and entertainment and recover the GST/HST paid through a rebate mechanism if the purchases are for band management activities or for real property on reserve);
      5. services acquired by Indians for real property interests on a reserve.
   3. Unincorporated Indian-owned businesses receive the same tax relief on the acquisition of goods and services as that of their Indian owner. Indian-owned corporations are treated like all other businesses and are required to pay GST/HST on their purchases unless they qualify as BEEs and the conditions set out in Technical Information Bulletin B-039R3, are met.
   4. Indian bands and BEEs (e.g., band-run schools and hospitals) may also be entitled to file the applicable Public Service Body Rebate to recover a partial rebate on any remaining GST/HST paid. Funding provided by Indian bands to non-profit organizations is the same as government funding to qualify for the 50 percent GST/HST rebate to non-profit organizations.
      Note: Indian-owned businesses are required to collect and remit GST/HST on the supply of taxable goods and services to non Indians on or off a reserve.

Annex 4.5: Goods subject to excise tax

Effective date: 2010-01-11

1. Petroleum Products
   1. gasoline: gasoline, aviation, unleaded aviation, and unleaded
   2. fuel: diesel and aviation
2. Automobiles
   1. automobiles (not including ambulances) in excess of 2,007 kg; station wagons and vans in excess of 2,268 kg
   2. air conditioners designed for use in automobiles, station wagons, vans or trucks
3. Jewellery, Watches
   1. jewellery, real or imitation; certain goldsmiths' and silversmiths' products
   2. clocks and watches, which the duty paid value exceeds $50
4. Others
   1. amusement devices: coins, discs or token operated games
   2. cigarettes and manufactured tobacco
   3. cigars
   4. lighters (cigarette)
   5. matches
   6. playing cards (per pack)
   7. wines

Insurance premiums on policies placed with unlicensed insurers or through non-resident brokers or agents.

Annex 4.6: Ontario Labour Legislation

Effective date: 2022-05-12

1. Overview
   1. On November 5, 1992, Ontario Bill 40 received royal assent. Included in the legislation were certain amendments to the Employment Standards Act (ESA) intended to protect the jobs and the level of benefits of workers who work primarily at one specific site to provide building cleaning, food and security services.
   2. Although the federal government is not bound by provincial legislation, contractors bidding on federal government work are subject to the Act and any amendments. Canada, as building owner, has an information-handling role under this legislation.
   3. Departmental contracting authorities are required to observe the intent of the Ontario labour legislation, and, in practice, to follow its provisions.
   4. On November 1995, Ontario Bill 7 received royal assent. It amended Ontario Bill 40 by repealing Part XIII.2, "Successor Employers", of the ESA and adding section 13.1 'Successor Employers'. The Ontario Regulation 138/96 sets out successor employer exemptions from compliance with Part XIV of the ESA(termination and severance provisions) and the type of information that building owners or managers may obtain from incumbent contractors and provide to prospective bidders or successor employers. The Employment Standards Act (R.S.O. 1990, c. E14) was repealed and replaced by the Employment Standards Act, 2000 (ESA 2000) and the Ontario Regulation 138/96 was superseded by Ontario Regulation 287/01. ESA 2000 came into force on September 4, 2001, and governs employment standards entitlements arising out on or after that date.
   5. Employment Standards Act, 2000 Section 77(1) applies to contracts for building cleaning, food catering and security services which are provided at a specific premise directly or indirectly by or to a building owner manager in the province of Ontario, and which commenced on or after 31 October 1995. Not included are construction, maintenance, such as snow removal, lawn care, window cleaning, and the production of goods, other than goods related to the provision of food services at the premises for consumption on the premises.
2. Expiry of Existing Contract

   1. Contracting officers must obtain from the outgoing contractor the following information as set out in Ontario Regulation 287/01 for each employee providing services at the premises, preferably four months before the completion date of the existing contract:

      1. the employee's name, residential address, and telephone number;
      2. the employee's job classification or job description, wage rate, benefits, average weekly hours and initial hire date;
      3. the number of weeks worked in the preceding 26 weeks (or a longer period if services were temporarily discontinued or an employee was on pregnancy or parental leave);
      4. a statement indicating whether the employee was not primarily employed at the premises during the 13 weeks before the request date or during the most recent 13 weeks of active employment.

      In addition to the above information, the contractor must provide, within seven days following a request from the contracting officer, an up-to-date copy of the collective agreement, or a copy of the union certificate or a copy of any pending union application if it exists.

   2. The information should be obtained by filling out form PWGSC-TPSGC 5116 (Information on Incumbent Employees) (PDF, 740 KB) (accessible only on the Government of Canada network). Copies of the form could be attached to the letter proposed for obtaining information from the outgoing contractor. When contracts contain a provision for obtaining information, a suggested letter is provided for this purpose at Exhibit A 4.6.1: Proposed letter - Requesting information from outgoing contractor (with a clause). If contracts do not contain a provision for obtaining this information, the suggested letter at Exhibit B 4.6.2: Proposed Letter - Requesting information from outgoing contractor (no clause) should be used.
3. Bid Solicitation
   1. In accordance with the Ontario labour legislation, information concerning each employee of the previous supplier, with the exception of his/her name, residential address and telephone number, must be provided to potential bidders in the bid solicitation for building cleaning, food catering and security services.
   2. Contracting officers must include Standard Acquisition Clauses and Conditions (SACC) Manual clause A0075T in their bid solicitation. The clause informs the bidder of the requirements of Bill 7 and the purpose to which information required under Bill 7 should be used.
4. Contract Award
   1. After contract award, the name, residential address and telephone number of each employee as they appear in the previous employer's records must be provided to the successful bidder.
   2. Contracting officers must include SACC Manual clause A0075C in their contract. The clause informs the contractor of its obligation to keep employee's records up to date and to provide the information, upon request, to the contracting officer, in accordance with the Ontario labour legislation.
   3. It is important to remember that there is no onus on the PWGSC to mediate between the outgoing and incoming contractors in the event that the information provided is incomplete or erroneous. If there are any difficulties, enquiries should be referred to the local Ontario Ministry of Labour offices for resolution.
   4. Performance problems require prompt follow up action and reporting, preferably in writing, to the contractor. Written reports should identify the location, date, situation or circumstances surrounding the performance difficulties. The contractor is responsible for remedying the situation or improving the performance as required.

Exhibit A 4.6.1: Proposed letter - Requesting information from outgoing contractor (with a clause)

Effective date: 2010-01-11

Dear _______________(insert name of contractor),

As you are aware, contract ___________(insert contract no .) for the provision of ____________(insert type of building-related services) will expire on ____________(insert date).

Pursuant to the clause included in the above-noted contract, you are hereby required to provide, within seven days of the date of this letter, the following information with respect to your current employees at these premises and providing the services performed under this contract:

1. the employee's name, residential address and telephone number;
2. the employee's job classification or job description;
3. the wage rate actually paid to the employee;
4. a description of the benefits, if any, provided to the employee including the cost of each benefit and the benefit period to which the cost relates;
5. the number of hours that the employee works in a regular work day and in a regular work week; or if the employee's hours of work vary from week to week, the number of the employee's non-overtime hours for each week that the employee worked during the thirteen (13) weeks before the date of the request for information;
6. the date on which the employer hired the employee;
7. any period of employment attributed to the employer under section 10 of the Act;
8. the number of weeks that the employee worked at the premises during the twenty-six (26) weeks before the request date. The 26-week period must be calculated without including any period during which the provision of services at the premises was temporarily discontinued, or during which the employee was on leave of absence under Part XIV of the Act;
9. a statement indicating whether:
   1. the employee's work, before the request date, included the provision of services at the premises, but the employee did not perform his or her job duties primarily at those premises during the 13 weeks before the request date; or
   2. the employee's work included the provision of services at the premises, but the employee was not actively at work immediately before the request date, and did not perform his or her job duties primarily at the premises during the most recent 13 weeks of active employment.

In addition to the above information, you are required to provide an up-to-date copy of the collective agreement regarding the employees at the premises, or, if no collective agreement exists for these premises, a copy of the union certificate regarding these employees or, if no union certificate was issued, a copy of any pending union application, if it exists.

You are also required to provide to the Contracting Authority with updated information if changes occur between the date the requested information to the Contracting Authority is provided and the expiry date of the contract.

All information must be provided using form PWGSC-TPSGC 5116 or any other form as directed by the contracting authority. With the exception of (a), this information will be provided to potential bidders for a future contract for these services relating to the premises. The name, residential address and telephone number of each employee must only be given to the successful bidder.

Signed by:

________________________
Contracting Authority

Exhibit B 4.6.2: Proposed letter - Requesting information from outgoing contractor (no clause)

Effective date: 2010-01-11

Dear _______________(insert name of contractor),

As you are aware, contract ___________(insert contract no.) for the provision of ____________(insert type of building-related services) will expire on ____________(insert date).

Pursuant to the laws of the province of Ontario, you are hereby requested to provide the following information with respect to your current employees at these premises and providing the services performed under this contract:

1. the employee's name, residential address and telephone number;
2. the employee's job classification or job description;
3. the wage rate actually paid to the employee;
4. a description of the benefits, if any, provided to the employee including the cost of each benefit and the benefit period to which the cost relates;
5. the number of hours that the employee works in a regular work day and in a regular work week, or if the employee's hours of work vary from week to week, the number of the employee's non-overtime hours for each week that the employee worked during the thirteen (13) weeks before the date of the request for information;
6. the date on which the employer hired the employee;
7. any period of employment attributed to the employer under section 10 of the Act;
8. the number of weeks that the employee worked at the premises during the twenty-six (26) weeks before the request date. The 26-week period must be calculated without including any period during which the provision of services at the premises was temporarily discontinued, or during which the employee was on leave of absence under Part XIV of the Act;
9. a statement indicating whether:
   1. the employee's work, before the request date, included the provision of services at the premises, but the employee did not perform his or her job duties primarily at those premises during the thirteen (13) weeks before the request date; or
   2. the employee's work included the provision of services at the premises, but the employee was not actively at work immediately before the request date, and did not perform his or her job duties primarily at the premises during the most recent thirteen (13) weeks of active employment.

In addition to the above information, you are required to provide an up-to-date copy of the collective agreement regarding the employees at the premises or, if no collective agreement exits for these premises, a copy of the union certificate regarding these employees or, if no union certificate was issued, a copy of any pending union application, if it exists.

With the exception of (a), this information will be provided to potential bidders for a future contract for these services relating to the premises. The name, residential address and telephone number of each employee must only be given to the successful bidder.

Your reply is requested no later than _____________(insert date).

Signed by:

________________________
Contracting Authority

Annex 4.7: Insurance clauses

Effective date: 2010-01-11

Risk concerning

Depending on the requirement, one or more of the following clauses may also need to be included in the bid solicitation and contract.

Annex 4.8: Insurance of Government-owned or leased Vehicles

Effective date: 2010-01-11

Annex 4.9: Insurance of Government-owned or leased Equipment

Effective date: 2013-01-28

1. Government-owned equipment
   • 1. Operated by government employees
        Self-underwriting option must be utilized.
     2. Leased to contractor
        1. Without operator or driver: equipment floater insurance or any equivalent insurance coverage must respond to any loss or damage to government equipment.
        2. With operator or driver:

           Government owned equipment

           Control of Work	Policy Requirement
           Work of operator or driver controlled by government	Self-underwriting option is applicable concerning any loss or damage to government equipment while being driven or operated by government employees. However, contractor's insurance must respond to any loss or damage to the equipment while property is in the care, custody and control of the contractor.
           Work of driver controlled by contractor	Contractor's insurance must respond to any loss or damage to government equipment (contractor's responsibility because the property is in the care, custody and control of the contractor).

2. Leased from dealer
   • 1. Operated by government employees
        Self-underwriting option must be utilized.
     2. Operator or driver being employees of the contractor

        Leased from dealer

        Control of Their Work	Policy Requirement
        By government: - employer-employee relationship	Self-underwriting option must be utilized for any damage or loss to equipment while being operated or driven by government employees
        Work of driver controlled by dealer	Contractor's insurance must respond to any loss or damage to government equipment

Annex 4.10: Summary of guidance on minimum solicitation periods

Effective date: 2021-05-20

Suppliers must always be provided a reasonable amount of time to prepare and submit responsive tenders, regardless of any prescribed minimum solicitation period. The nature and complexity of the procurement, the extent of subcontracting anticipated, and the time necessary for transmitting tenders by non-electronic means must be considered when determining the solicitation period for a procurement. Complete guidance on minimum solicitation periods can be found in 4.75.5 Determining the solicitation period.

If there is an urgency that renders the normal minimum solicitation period (established per the above) impracticable, the minimum solicitation period may be reduced:

1. For procurements subject to no trade agreements, to less than 15 calendar days.
2. For procurements subject to the Canadian Free Trade Agreement only, to less than 15 calendar days.
3. For procurements subject to one or more international trade agreements:
   1. To a minimum of 10 calendar days, provided that the state of urgency can be duly substantiated by the procuring entity; or
   2. To less than 10 calendar days, where limited tendering is used.

Standing Offers

The minimum solicitation period for Requests for Standing Offers (RFSOs) should be determined in accordance with the above solicitation period guidance.

Supply Arrangements and One-Time Prequalification Lists

If one or more international trade agreements apply, the Invitation to Qualify or the Request for Supply Arrangement (RFSA) must be posted for at least 25 calendar days before any resulting bid solicitation(s) can close. If a state of urgency that is duly substantiated by the procuring entity renders this time impracticable, this time period may be reduced to no less than 10 days.

If no trade agreements apply, or if only the CFTA applies, Invitations to Qualify and RFSAs do not need to be posted for a minimum period of time before any resulting bid solicitation(s) can close.

In all circumstances, suppliers must always be provided a reasonable amount of time to prepare and submit their prequalifications, taking into account the nature and complexity of the qualification process, etc.

The minimum solicitation period for procurements done under SAs or one-time prequalification lists should be determined in accordance with the above solicitation period guidance.

Further guidance can be found in Sections 4.10.25. Request for Supply Arrangements and 4.75.5. Determining the solicitation period.