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Fourth
Session, 45th General Assembly 56
Elizabeth II, 2007 |
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AN ACT TO AMEND THE
INCOME TAX ACT, 2000 NO. 2 |
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Received and Read the First Time................................................................................................... |
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Second |
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Committee............................................................................................................................................ |
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Third |
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Royal Assent...................................................................................................................................... |
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HONOURABLE
THOMAS W. MARSHALL, Q.C. Minister
of Finance and President of Treasury Board |
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Ordered
to be printed by the Honourable House of Assembly |
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EXPLANATORY NOTES Clause 1 of the Bill would amend section 15 of the Income Tax Act, 2000 to include a reference to the adoption tax credit. Clause 2 of the Bill would repeal and
replace section 20 of the Act. This
section establishes a dividend tax credit and is proposed for amendment as a
result of changes made to the Income Tax
Act ( Clause 3 of the Bill would amend the definition of "adjusted income" in section 21.1 of the Act to ensure that the new federal Universal Child Care Benefit does not affect the provincial low-income tax reduction. Clause 4 of the Bill would amend section 23 of the Act to reorder tax credits so that the credits appear in the same order as the federal tax credits on which they are based. Clause 5 of the Bill would amend section 31.1 of the Act by adding a reference to the adoption tax credit to ensure that the adoption tax credit will not be prorated on the basis of income earned in the province with the result that residents of the province will continue to receive the entire amount of the adoption tax credit. Clause 6 of the Bill would amend the
definition of "eligible expenditure" contained in paragraph 42(1)(a)
of the Act in order to give legislative effect to an administrative policy
respecting the effect of government assistance and contract payments on
expenditures made in relation to research and developmental activities. The amendment also provides that with respect
to claims filed on or after Clause 7 of the Bill would amend section 44 of the Act by introducing technical changes which will clarify the intent of the section and achieve greater consistency with the equivalent federal provision. Clause 8 of the Bill would amend subsection 89(5) of the Act to permit the negotiation of settlement agreements where a person or corporation is subject to taxation in the province and in another province or territory. Clause 9 of the Bill would provide
for the retroactive effect of the amendments at clauses 2, 3, 4, 5, 6 and 7. |
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A AN ACT TO AMEND THE INCOME TAX ACT, 2000 NO. 2 Analysis 1.
S.15 Amdt. 2. S.20 R&S 3.
S.21.1 Amdt. 4.
S.23 Amdt. 5.
S.31.1 Amdt. 6.
S.42 Amdt. 7.
S.44 Amdt. 8.
S.89 Amdt. 9. Commencement Be it enacted by the Lieutenant-Governor and House of Assembly in Legislative Session convened, as follows: SNL2000 cI-1.1 1. (1) Paragraph 15(1)(b) of the Income Tax Act, 2000 is amended by striking out the word and number "or 17" and by adding immediately after the number "12" a comma and the numbers and word "17 or 17.1". (2) Subsection 15(2) of the Act is amended by striking out the word and number "or 17" and by adding immediately after the number "12" a comma and the numbers and word "17 or 17.1". 2. Section 20 of the Act is repealed and the following substituted: Dividend tax credit 20. For the purpose of computing the tax payable under this Part for a taxation year by an individual who was resident in the province on the last day of the taxation year, there may be deducted an amount equal to the total of (a) 25% of any amount required under subparagraph 82(1)(b)(i) of the federal Act to be included in computing the individual's income for the year; and (b) 21.43% of any amount required under
subparagraph 82(1)(b)(ii) of the federal Act to be included in computing the
individual's income for the year. 3. Paragraph 21.1(1)(a) of the Act is repealed and the following substituted: (a) "adjusted income" of an individual for a taxation year means the total of all amounts, each of which would be the income for the year of the individual and the individual's qualified relation for the year, if any, calculated as if no amount was included in respect of (i) a gain from a disposition of property to which section 79 of the federal Act applies in computing that income, or (ii) benefits under the Universal Child Care Benefit Act ( and the income of a person who is a
non-resident of 4. (1) Paragraph 23(2)(a) of the Act is repealed and the following substituted: (a) subsections 9(1) and (2); (2) Paragraph 23(2)(b.1) of the Act is repealed and the following substituted: (b.1) subsection 9(3); (b.2) section 17.1; 5. Section 31.1 of the Act is amended by adding immediately after the words, numbers and brackets "subsection 9(3) and sections" the number "17.1" and a comma. 6. (1) Paragraph 42(1)(a) of the Act is repealed and the following substituted: (a) "eligible expenditure" means an expenditure in respect of scientific research carried out in the province made after 1995 by a taxpayer with a permanent establishment in the province that is a qualified expenditure under subsection 127(9) of the federal Act without reference to paragraph (d) of the definition of that term in that Act but, with respect to paragraph (h) of the definition of that term in that Act, (i) in the case of research and development tax
credit claims filed under subsection 37(11) of the federal Act prior to (ii) in the case of research and development tax credit claims filed under subsection 37(11) of the federal Act on or after December 1, 2005, eligible expenditures shall not be reduced by government assistance except with respect to Harmonized Sales Tax and Goods and Services Tax input tax credits, considered under subsection 248(16) of the federal Act to be assistance from a government, claimed after December 31, 2003, and (iii) in the case of research and development tax credit claims filed under subsection 37(11) of the federal Act on or after December 1, 2005, eligible expenditures shall be reduced by contract payments received after December 31, 2003; and (2) Subsection 42(1.1) of the Act is amended by renumbering it as (1.2) and adding immediately before that subsection the following: (1.1) For the purpose of subparagraph (1)(a)(ii),
reference to "Harmonized Sales Tax" means the harmonized sales tax defined
in the Schedule to the Tax Agreement Act
and reference to "Goods and Services Tax" means the tax imposed or
levied under Part IX of the Excise Tax
Act (Canada). 7. (1) Subsection 44(1) of the Act is amended by striking out the words "has claimed a deduction" and substituting the words "may deduct an amount". (2) Subparagraph 44(1)(a)(ii) of the Act is repealed and the following substituted: (ii) that proportion that the corporation's taxable income earned in the year in the province is of the corporation's taxable income earned in the year; or (3) Paragraph 44(1)(b) of the Act is amended (a) by striking out the word "a"
immediately following the words "the part of" and substituting the
word "any"; and (b) by striking out the words, numbers and brackets "of the deduction claimed by the corporation under subsection 126(1) of the federal Act that" and substituting the words, numbers and brackets "deductible by the corporation under subsection 126(1) of the federal Act in respect of that country that". 8. Subsection 89(5) of the Act is repealed and the following substituted: (5) The minister may negotiate and accept a settlement to relieve the effect of multiple taxation and, for the purposes of this section, multiple taxation occurs where (a) a person who is subject to income tax under section 6 (i) is also subject to income tax in another
province or territory, and (ii) as a result of a conflict of law or a disagreement between the province and another province or territory respecting an interpretation of law or fact, the aggregate of the person's income earned in the year in each province or territory as determined by the law of each province or territory exceeds the person's income earned in the year in a province; or (b) a corporation that is subject to tax under section 40 (i) is also subject to tax in another province or territory, and (ii) as a result of a conflict of law or a disagreement between the province and another province or territory respecting an interpretation of law or fact, the aggregate of the corporation's taxable income earned in the year in each province or territory as determined by the law of each province or territory exceeds the corporation's taxable income earned in the year in a province. Commencement 9. (1) Sections 2 and 5 of this Act are
considered to have come into force on (2) Section 3 of this Act is considered to have
come into force on (3) Sections 4, 6 and 7 of this Act are considered
to have come into force on ŠEarl G. Tucker, Queen's Printer |