The Minister of Finance, Bill Morneau, published new legislative proposals to amend the Excise Tax Act (“ETA”). The amendments introduce new rules regarding the GST/HST treatment of allowances, credit, or similar instruments issued by a government or international organization under a scheme or arrangement implemented to regulate greenhouse gas emissions, such as a cap-and-trade system. Such instruments are included in the new defined term “emission allowance”. Essentially, the amendments provide that under new subsection 221(2.1) of the ETA, issuers or suppliers of such “emission allowances” are not required to collect or remit the GST/HST. On the other hand, the purchaser of these “emission allowances” will be required to account for the tax payable (in other words, self-assess the tax) directly in their GST/HST returns. In most cases, such recipients will not have any amount to remit since the recipient could be entitled to claim an offsetting input tax credit. “Emission allowance” is a defined term. Accordingly, certain criteria must be met to be covered under the definition. Therefore, not all credit or allowances intended to regulate greenhouse emissions may be covered by the new rules. For example, an instrument that is required to undertake certain manufacturing activities that generate greenhouse gas emissions but that does not represent a specific quantity of emissions would not meet all the criteria of the definition and the new rules would not apply. The new rules, when enacted, will be effective as of June 27, 2018, the Announcement Date. Under transitional provisions the new rules will also apply before that date to the extent that tax was not collected on the supply of such “emissions allowance”. Prescribed persons may also be exempted from application of these rules although no persons have yet to be prescribed. If tax has been collected by the issuer, it must be remitted. The purchaser may be entitled, under certain circumstances to a rebate as tax paid in error.