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Statutes of Newfoundland and Labrador 2016


CHAPTER 18

AN ACT TO AMEND THE
INCOME TAX ACT, 2000 NO. 5

(Assented to June 7, 2016)

Analysis


††††††† 1. S.20 R&S
Dividend tax credit

††††††† 2. S.34 R&S
Income supplement

††††††† 3. S.35 Amdt.
No set off

††††††† 4. S.36 Amdt.
Date on which amount applied

††††††† 5. S.41 Amdt.
Manufacturing and processing profits deduction

††††††† 6. S.50 Amdt.
Reassessment

††††††† 7. S.68 Amdt.
Regulations

††††††† 8. Repeal

††††††† 9. Commencement


Be it enacted by the Lieutenant-Governor and House of Assembly in Legislative Session convened, as follows:

SNL2000 cI-1.1
as amended

††††††† 1. Section 20 of the Income Tax Act, 2000 is repealed and the following substituted:

Dividend tax credit

††††† 20. (1) 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)3.5% of the total of the amount required under paragraph 82(1)(a) and subparagraph 82(1)(b)(i) of the federal Act to be included in computing the individualís income for the year; and

†††††††††††† (b)5.4% of the total of the amount required under paragraph 82(1)(a.1) and subparagraph 82(1)(b)(ii) of the federal Act to be included in computing the individualís income for the year.

†††††††††††† (2)Subsection (1) shall only apply to a dividend received on or after the coming into force of this section.

 

††††††† 2. Section 34 of the Act is repealed and the following substituted:

Income supplement

††††† 34. (1) In this section

†††††††††††† (a)"adjusted income", "cohabiting spouse or common-law partner", "qualified dependant" and "qualified relation" have the meanings assigned to them under subsection 122.5(1) of the federal Act;

†††††††††††† (b)"eligible individual" means an eligible individual as defined in subsection 122.5(1) of the federal Act and who is resident in the province in relation to a month specified for a taxation year; and

†††††††††††† (c)"return of income" in respect of a person for a taxation year means,

††††††††††††††††††††† (i)for a person who is resident in the province at the end of the taxation year, the personís return of income, other than a return of income under subsection 70(2) or 104(23), paragraph 128(2)(e) or subsection 150(4) of the federal Act, that is required to be filed for the taxation year or that would be required to be filed if the person had tax payable under that Act for the taxation year, and

†††††††††††††††††††† (ii)in any other case, a prescribed form containing prescribed information that is filed for the taxation year with the Minister of National Revenue.

†††††††††††† (2)Notwithstanding subsection (1), a person is not an eligible individual, a qualified relation or a qualified dependant of an individual in relation to a month specified for a taxation year where that person

†††††††††††† (a)died before the specified month;

†††††††††††† (b)is at the beginning of the specified month a person described in paragraph 149(1)(a) or (b) of the federal Act;

†††††††††††† (c)is confined to a prison or similar institution for a period of at least 90 days that includes the first day of the specified month; or

†††††††††††† (d)is a person in respect of whom a special allowance under the Childrenís Special Allowances Act (Canada) is payable for the specified month.

†††††††††††† (3)An eligible individual in relation to a month specified for a taxation year who files a return of income for the taxation year is considered to have paid during the specified month on account of his or her tax payable under this Act for the taxation year an amount equal to 25% of the amount, if any, calculated in accordance with the regulations.

†††††††††††† (4)Notwithstanding subsections (3) and (6), if an eligible individual is a shared-custody parent, within the meaning assigned by section 122.6 of the federal Act, but with the words "qualified dependant" in that section having the meaning assigned by subsection (1), in respect of one or more qualified dependants at the beginning of a month, the amount considered by subsection (3) to have been paid during a specified month is equal to the amount determined by the following formula:

1/2 ◊ (A + B)

where

††††††††††† A= the amount determined under subsection (3), calculated without reference to this subsection; and

††††††††††† B= the amount determined under subsection (3), calculated without reference to this subsection and subparagraph (b)(ii) of the definition "eligible individual" in section 122.6 of the federal Act.

†††††††††††† (5)Subsection (4) applies for amounts that are considered to be paid during months after June 2011.

†††††††††††† (6)Notwithstanding subsection (3), if an individual is a qualified relation of another individual, in relation to a month specified for a taxation year, only one of them is an eligible individual in relation to the specified month and if both of them claim to be eligible individuals, the individual that the Minister of National Revenue designates is the eligible individual in relation to the specified month.

†††††††††††† (7)Where a person considered to have paid an amount under subsection (3) dies prior to the month specified, that personís qualified relation who has filed a return of income for the taxation year is considered to be the eligible individual for the purpose of subsection (3) for that taxation year and the amount payable for the specified month shall be considered to be an amount paid on account of the personís qualified relationís tax payable under this Act for the specified month.

†††††††††††† (8)An individual shall notify the Minister of National Revenue of the occurrence of any of the following events before the end of the month following the month in which the event occurs

†††††††††††† (a)the individual ceases to be an eligible individual;

†††††††††††† (b)a person becomes or ceases to be the individualís qualified relation; and

†††††††††††† (c)a person ceases to be a qualified dependant of the individual, otherwise than because of attaining the age of 19 years.

†††††††††††† (9)For the purpose of this section, where, in a taxation year, an individual becomes bankrupt, the individualís income for that year shall include his or her income for the taxation year that begins on January 1 of the calendar year that includes the date of bankruptcy.

††††††††† (10)Subsection (11) applies in respect of an eligible individual in relation to a particular month specified for a taxation year, and each subsequent month specified for the taxation year, if

†††††††††††† (a)the amount considered by that subsection to have been paid by the eligible individual during the particular month specified for the taxation year is less than $10; and

†††††††††††† (b)it is reasonable to conclude that the amount considered by that subsection to have been paid by the eligible individual during each subsequent month specified for the taxation year will be less than $10.

††††††††† (11)Where this subsection applies, the total of the amounts that would otherwise be considered by subsection (3) to have been paid on account of the eligible individualís tax payable under this Part for the taxation year during the particular month specified for the taxation year, and during each subsequent month specified for the taxation year, is considered to have been paid by the eligible individual on account of his or her tax payable under this Part for the taxation year during the particular specified month for the taxation year, and the amount considered by subsection (3) to have been paid by the eligible individual during those subsequent months specified for the taxation year is considered, except for the purpose of this subsection, not to have been paid to the extent that it is included in an amount considered to have been paid by this subsection.

††††††††† (12)For the purpose of this section, the months specified for a taxation year are July and October of the immediately following taxation year and January and April of the second immediately following taxation year.

 

††††††† 3. Section 35 of the Act is amended by deleting the subsection reference "34(4)" wherever it occurs and substituting the subsection reference "34(3)".

 

††††††† 4. Section 36 of the Act is amended by deleting the subsection reference "34(4)" and substituting the subsection reference "34(3)".

 

††††††† 5. Subsections 41(1) to (3) of the Act are repealed and the following substituted:

Manufacturing and processing profits deduction

††††† 41. (1)  Where in a taxation year that ends before 2016 a portion of the taxable income earned in the year in the province by a corporation is Canadian manufacturing and processing profits of the corporation for the year, within the meaning assigned by subsection 125.1(3) of the federal Act, there may be deducted from the tax otherwise payable by the corporation under subsection 40(1) or paragraph 40(3)(b), whichever applies, 9% of the amount, if any, by which those manufacturing and processing profits earned in the year in the province by the corporation exceed the amount, if any, upon which tax is payable under paragraph 40(3)(a) by the corporation for the year.

†††††††† (1.1)Where in a taxation year that includes January 1, 2016, a portion of the taxable income earned in the year in the province by a corporation is Canadian manufacturing and processing profits of the corporation for the year, within the meaning assigned by subsection 125.1(3) of the federal Act, there may be deducted from the tax otherwise payable by the corporation under subsection 40(1) or paragraph 40(3)(b), whichever applies, the proportion that the number of days in the taxation year before January 1, 2016 is of the number of days in the taxation year multiplied by 9% of the amount, if any, by which those manufacturing and processing profits earned in the year in the province by the corporation exceed the amount, if any, upon which tax is payable under paragraph 40(3)(a) by the corporation for the year.

†††††††††††† (2)For the purpose of subsections (1) and (1.1), the manufacturing and processing profits earned in a taxation year in the province by a corporation are the Canadian manufacturing and processing profits of the corporation for the year, within the meaning assigned by subsection 125.1(3) of the federal Act, multiplied by the proportion that its taxable income earned in the year in the province bears to the total of all amounts each of which is its taxable income earned in the year in a province determined in accordance with federal regulations made for the purpose of the definition "taxable income earned in the year in a province" in subsection 124(4) of the federal Act.

†††††††††††† (3)Notwithstanding subsections (1), (1.1) and (2), no deduction may be made under this section unless the corporation has engaged in manufacturing or processing in the taxation year from a permanent establishment in the province.

 

††††††† 6. Subsection 50(2) of the Act is amended by deleting the subsection reference "34(4)" and substituting the subsection reference "34(3)".

 

††††††† 7. Paragraph 68(1)(c.1) of the Act is repealed and the following substituted:

††††††††† (c.1)respecting the calculation of the income supplement for the purposes of section 34;

Repeal

††††††† 8. The Seniors' Benefit Regulations, 2007, Newfoundland and Labrador Regulation 119/07, published under the Income Tax Act, 2000, is repealed.

Commencement

††††††† 9. (1) Section 1 comes into force on July 1, 2016.

†††††††††††† (2)Sections 2 to 8 are considered to have come into force on January 1, 2016.