Excise Tax Act — E-15 178.4
a subsequent reporting period, in a return under Division V filed by the distributor within four years after the day on or before which the return under Division V for the particular reporting period is required to be filed. Adjustment where supply is in participating province (6) Where (a) a distributor of a direct seller makes a supply outside the participating provinces of an exclusive product of the direct seller in circumstances in which an amount is required under paragraph (1)(d) to be added in determining the net tax of the distributor, (b) no tax under subsection 165(2) in respect of the supply is included in the amount required under paragraph (1)(d) to be added in determining the net tax of the distributor, and (c) a particular independent sales contractor of the direct seller (other than the distributor) makes at a particular time a supply of the product in a participating province, in determining the net tax of the distributor for the reporting period of the distributor that includes the particular time, there shall be added an amount equal to the tax that would be payable under subsection 165(2) in respect of the supply, calculated on the suggested retail price of the product at the particular time, if the supply by the distributor were made in that participating province at the particular time. Adjustment in respect of participating provinces (6.1) In determining the net tax of a distributor of a direct seller for a reporting period of the distributor that includes a prescribed time, the distributor shall add or may deduct, as the case may require, an amount determined in prescribed manner if (a) the distributor makes a supply of an exclusive product of the direct seller in a participating province in circumstances in which an amount is required under paragraph (1)(d) to be added in determining the net tax of the distributor; (b) tax payable under subsection 165(2) in respect of the supply is included in the amount required under paragraph (1)(d) to be added in determining the net tax of the distributor; (c) a particular independent sales contractor of the direct seller (other than the distributor) makes a supply of the exclusive product in another participating province; and (d) prescribed conditions, if any, are satisfied. Bad debt on sale by contractor (7) If (a) a distributor of a direct seller has made a supply of an exclusive product of the direct seller in circumstances in which an amount was required under paragraph (1)(d) to be added in determining the net tax of the distributor, (b) a particular independent sales contractor of the direct seller (other than the distributor) has or would have, but for paragraph (2)(d), also made a supply of the product to a person with whom the particular contractor was dealing at arm’s length (other than the direct seller, distributor and another independent sales contractor of the direct seller), (c) the distributor has obtained evidence satisfactory to the Minister that the consideration and the tax payable in respect of the supply by the particular contractor have become in whole or in part a bad debt and that the amount of the bad debt has, at a particular time, been written off in the particular contractor’s books of account, and (d) the distributor pays to, or credits in favour of, the particular contractor an amount in respect of the product equal to the amount determined by the formula A × B/C where A is the tax payable in respect of the supply by the particular contractor, B is the total of the consideration and tax, and any applicable provincial tax, in respect of that supply remaining unpaid and written off at the particular time as a bad debt, and C is the total of the consideration and tax, and applicable provincial tax, payable in respect of that supply, the distributor may, in determining the net tax for the particular reporting period of the distributor in which the payment or credit is given or for a subsequent reporting period, deduct the amount paid o