This is an official version.
Copyright © 2008: Queen's Printer,
Statutes of Newfoundland and Labrador 2008
AN ACT TO AMEND THE INCOME TAX ACT, 2000
INCOME TAX ACT, 2000
1. Part II.1 Added
2. RSNL1990 cF-9 Rep.
TRANSITIONAL, CONSEQUENTIAL AND COMMENCEMENT
4. RSNL 1990 cP-26 Amdt.
Be it enacted by the Lieutenant-Governor and House of Assembly in Legislative Session convened, as follows:
INCOME TAX ACT, 2000
1. The Income Tax Act, 2000 is amended by adding immediately after section 66 the following:
66.1 (1) In this Part
(a) "authorized foreign bank" means an
authorized foreign bank as defined in section 2 of the Bank Act (
(b) "Canadian banking business" means
the business carried on by an authorized foreign bank through a permanent establishment
(c) "capital", in the case of a financial institution other than an authorized foreign bank, means its capital for a taxation year that is the amount, if any, by which the total at the end of the year of
(i) the amount of its long-term debt,
(ii) the amount of its capital stock, or in the case of an institution incorporated without share capital, the amount of its members' contributions, retained earnings, contributed surplus and other surpluses, and
(iii) the amount of its reserves for the year except to the extent that the reserves were deducted in computing its income under Part I of the federal Act for the year,
exceeds the total at the end of the year of the amount of its deferred tax debit balance and the amount of a deficit deducted in computing its shareholders' equity;
(d) "financial institution" means
(i) a corporation which is a bank to which the Bank Act (
(ii) a trust and loan corporation including
(A) a corporation which carries on business, or holds itself out as a trust corporation,
(B) a corporation which carries on business, or holds itself out as a loan corporation, or
(C) a corporation which carries on business, or holds itself out as a trust and loan corporation,
and is a company which meets the requirements of section 3 of the Trust and Loan Corporations Act;
(e) "guidelines" means the risk-weighting guidelines issued by the superintendent;
(f) "long term debt" means a financial institution's subordinated indebtedness evidenced by obligations issued for a term of not less than 5 years;
(g) "reserves" means reserves as defined in section 190 of the federal Act;
(h) "subordinated indebtedness" means
subordinated indebtedness as defined in the Bank
(i) "superintendent" means the federal Superintendent of Financial Institutions;
(j) "taxable capital" means the amount, if any, by which the capital of a corporation for the year exceeds the total determined under section 66.4 with respect to its investments for the year in the financial institutions related to it; and
(k) "taxable capital employed in the province for the year" means an amount equal to taxable capital less the non-provincial amount taxable as prescribed by regulations made under section 66.6.
(2) Notwithstanding paragraph (1)(c), in the case of an authorized foreign bank, "capital" means the total of
(a) 10% of the total of all amounts, each of which is the risk-weighted amount at the end of the year of an on-balance sheet asset or an off-balance sheet exposure of the bank in respect of its Canadian banking business that the bank would be required to report under the guidelines if those guidelines applied and required a report at that time; and
(b) the total of all amounts, each of which is an amount at the end of the year in respect of the bank's Canadian banking business that
(i) if the bank were a bank listed in Schedule II to the Bank Act (Canada), would be required under the risk-based capital adequacy guidelines issued by the superintendent and applicable at that time to be deducted from the bank's capital in determining the amount of capital available to satisfy the superintendent's requirement that capital equal a particular proportion of risk-weighted assets and exposures, and
(ii) is not an amount in respect of a loss protection facility required to be deducted from capital under the superintendent's guidelines respecting asset securitization applicable at that time.
(3) Subsection 190(2) and sections 190.2 and 190.21 of the federal Act apply to this Part with those modifications that the circumstances may require.
Capital tax payable
66.2 (1) Every corporation that is a financial institution with a permanent establishment in the province at any time during a taxation year shall pay a tax under this Part for the year equal to 4% of the amount, if any, by which its taxable capital employed in the province for the year exceeds its capital deduction for the year.
(2) Subject to section 66.3, where the capital of a corporation is $10 million or less, the capital deduction is $5 million.
(3) Where the capital of a corporation is an amount other than the amount referred to in subsection (2), the deduction is nil.
Related financial institution
66.3 (1) A corporation
(a) that is a financial institution at any time during a taxation year; and
(b) that was related to another financial institution at the end of the year
may file with the minister an agreement for the allocation of capital deduction in the prescribed form on behalf of the related group of which the corporation is a member.
(2) Where a corporation referred to in subsection (1) files an agreement for the allocation of the capital deduction, the amount that does not exceed the $5 million capital deduction shall be allocated among the members of the related group for the taxation year.
Investment in related institutions
66.4 (1) A corporation's investment for a taxation year in a financial institution related to it is
(a) in the case of a corporation that was resident in Canada at any time in the year, the total of all amounts each of which is the carrying value, or in the case of contributed surplus, the amount, at the end of the year of an eligible investment of the corporation in the financial institution; and
(b) in the case of a corporation that is an authorized foreign bank, the total of all amounts each of which is the amount at the end of the year, before the application of risk-weights, that would be required to be reported under the guidelines if those guidelines applied and required a report at that time, of an eligible investment of the corporation in the financial institution that was used or held by the corporation in the year in the course of carrying on its Canadian banking business or, in the case of an eligible investment that is contributed surplus of the financial institution at the end of the year, the amount of the surplus contributed by the corporation in the course of carrying on that business.
(2) For the purpose of subsection (1), an eligible investment of a corporation in a financial institution is a share of the capital stock or long-term debt of the financial institution or a surplus of the financial institution contributed by the corporation, other than an amount otherwise included as a share or debt, if the financial institution at the end of the year is
(a) related to the corporation;
(b) resident in
(c) has a permanent establishment in the province at any time in the year.
Allocation by minister
66.5 (1) The minister may request a corporation that is a financial institution at any time during a taxation year and that was related to another financial institution at the end of the year to file with the minister an agreement referred to in section 66.3 and, if the corporation does not file the agreement within 30 days after receiving the request, the minister may allocate an amount among the members of the related group of which the corporation is a member for the year not exceeding $5 million.
(2) Subsections 190.15 (4), (5) and (6) of the federal Act apply to a corporation that is a financial institution.
Non-provincial amount taxable
66.6 The Lieutenant-Governor in Council may make regulations respecting the method of computing the non-provincial amount taxable of a financial institution under this Part.
Short taxation year
66.7 Where a taxation year of a corporation is less than 51 weeks, the tax payable determined under section 66.2 for the year in respect of the corporation shall be reduced to that proportion of that amount that the number of days in the year is of 365.
Part shall apply for every taxation year which begins after
RSNL1990 cF-9 Rep.
2. The Financial Corporations Capital Tax Act is repealed.
TRANSITIONAL, CONSEQUENTIAL AND COMMENCEMENT
3. Notwithstanding another provision of this Act, where, on the coming into force of this Act, a financial institution's taxation year has not ended, that financial institution shall continue to pay tax under the Financial Corporations Capital Tax Act for that year only as if that Act had not been repealed and this Act had not come into force.
RSNL 1990 cP-26 Amdt.
4. Subsection 3(1) of the Proceedings Against the Crown Act is amended by deleting the reference "Income Tax Act" and substituting the reference "Income Tax Act, 2000" and by deleting the word, reference and comma "the Financial Corporations Capital Tax Act,".
5. This Act shall be considered to have come into
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