This is an official version.

Copyright 2000: Queen’s Printer,
St. John's, Newfoundland and Labrador, Canada

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Revised Statutes of Newfoundland 1990


CHAPTER F-9

AN ACT RESPECTING THE IMPOSITION OF A CAPITAL TAX ON FINANCIAL CORPORATIONS

Analysis

1. Short title

2. Definitions

3. Liability for tax

4. Interest

5. Interpretation

6. Paid-up capital

7. Paid-up capital employed in Canada

8. Artificial transactions

9. Rate of tax

10. Short fiscal year

11. Incomplete year

12. Capital tax return

13. Verification of returns

14. Minister may require return

15. Extension for filing return

16. Return by trustee

17. Return not binding

18. Accrual

19. Payments

20. Records to be available

21. Order of minister

22. Additional information

23. Recovery of tax

24. Assessments

25. Appeal to minister

26. Review of interest

27. Onus of proof

28. Certificate of judgment

29. Collection of tax from 3rd party

30. Inspectors

31. Investigations

32. Power to search and seize

33. Production of documents

34. Copies of documents

35. Actions against inspectors

36. Refund of overpayments

37. Time limit on refund

38. Use of refund

39. Appeal to Trial Division

40. Court of Appeal

41. Irregularity in assessment

42. Effect of delay, etc.

43. Failure to file return

44. Failure to comply with order

45. Evasion of tax

46. Failure to produce

47. Obstruction

48. General offence

49. Directors, etc. guilty of an offence

50. Criminal Code

51. No time limitation

52. Presumptive proof

53. Service of documents

54. Secrecy of officers

55. Remission

56. Application of F.A.A.

57. Affidavit

58. Delegation of functions

59. Change in fiscal year

60. Consolidated Revenue Fund

61. Powers of minister

62. Regulations


Short title

1. This Act may be cited as the Financial Corporations Capital Tax Act.

1982 c8 s1

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Definitions

2. In this Act

(a) "amount" means

(i) money expressed in terms of the amount of money, or

(ii) rights or things expressed in terms of the monetary value of the rights or things;

(b) "amount taxable" means

(i) in the case of a resident corporation, the taxable paid-up capital of the corporation, or

(ii) in the case of a non-resident corporation, the taxable paid-up capital of the corporation employed in Canada, as at the close of the fiscal year less the non-Newfoundland amount taxable, as prescribed;

(c) "assessment" means an assessment of tax payable by a corporation and includes a reassessment or an estimate by the minister;

(d) "bank" means a bank to which the Bank Act (Canada) or the Quebec Savings Bank Act (Canada) applies;

(e) "business" means an undertaking of any kind and includes a profession, calling, trade, manufacture or an adventure or concern in the nature of trade;

(f) "corporation" means a bank and trust and loan corporation and includes an agent, assignee, trustee, liquidator, receiver or other official having possession or control of a part of the corporation's property but does not include a corporation incorporated without share capital;

(g) "department" means the Department of Finance;

(h) "fiscal year" means the period for which the business accounts of a corporation are made up and accepted for the purposes of the Income Tax Act;

(i) "Income Tax Act" means the Income Tax Act (Canada);

(j) "inspector" means a person appointed or designated an inspector under section 30;

(k) "jurisdiction" means a province or territory of Canada or a state outside Canada having sovereign power;

(l) "minister" means the Minister of Finance;

(m) "non-resident corporation" means a corporation which is not resident in Canada;

(n) "other surplus" includes an amount by which

(i) the value of an asset of a corporation, as carried on its account books or on its balance sheet, is in excess of the cost of the asset, or

(ii) the value of an asset of a corporation has been written down and deducted from its income or undivided profits, where that amount

(A) is not deductible under the Income Tax Act; or

(B) is deductible under paragraph 20(1)(n) or subparagraph 40(1)(a)(iii) of the Income Tax Act,

but, unless required in the regulations to be included, does not include an amount by which the value of an asset of a corporation has been written down and deducted from its income or undivided profits, where that amount is deductible under a provision of the Income Tax Act other than those mentioned in clause (ii)(B);

(o) "paid-up capital" means the paid-up capital of a resident corporation as at the close of a fiscal year, computed in accordance with section 6;

(p) "paid-up capital employed in Canada" means the paid-up capital employed by a non-resident corporation as at the close of a fiscal year, computed in accordance with section 7;

(q) "permanent establishment" means a fixed place of business and includes a branch office, office and agency, and

(i) where a corporation carries on business through an employee or agent who has general authority to contract for the corporation, the place where the employee or agent operates is a permanent establishment of the corporation,

(ii) where a corporation which has a permanent establishment in Canada owns land in a province, the land is a permanent establishment of the corporation,

(iii) where a corporation has no fixed place of business, it has a permanent establishment in the principal place in which its business is conducted,

(iv) where a corporation designates a head office in its charter or by-laws, the head office is a permanent establishment of the corporation,

(v) the fact that a corporation has business dealings through a commission agent, broker or other independent agent in a place is not of itself to be held to mean that the corporation has a permanent establishment in that place,

(vi) the fact that a corporation has a subsidiary controlled corporation in a place, or a subsidiary controlled corporation engaged in a trade or business in a place, is not of itself to be held to mean that the corporation is operating a permanent establishment in that place;

(r) "property" means any kind of property and includes a right of any kind, a share or a thing in action, and, unless a contrary intention is evident, money;

(s) "resident corporation" means a corporation which is resident in Canada;

(t) "resident in Canada" means resident in Canada as determined in the Income Tax Act;

(u) "return" means the prescribed corporation capital tax return required under section 12, and includes another return which may be demanded under section 14;

(v) "share" means a share of capital stock of a corporation;

(w) "shareholder" means a shareholder of a corporation and includes a member of a corporation or other person entitled to receive payment of a dividend or to a share in a distribution on the winding-up of the corporation;

(x) "subsidiary controlled corporation" means a corporation of which more than 50% of the issued share capital, with full voting rights under all circumstances, is owned, directly or indirectly, by another corporation;

(y) "subsidiary wholly owned corporation" means a corporation of which all its issued share capital, other than directors' qualifying shares, is owned, directly or indirectly, by another corporation;

(z) "tax" means the tax imposed under this Act and includes a penalty or interest that is, or may be, payable;

(aa) "tax payable" means the tax payable by a corporation for a fiscal year to the Crown under this Act, and includes an amount fixed by assessment;

(bb) "taxation year" means the fiscal year in relation to which the amount of tax is being computed;

(cc) "total assets" includes an amount by which

(i) the value of an asset of a corporation, as carried on its account books or on its balance sheet, is in excess of the cost of the asset, or

(ii) the value of an asset of a corporation has been written down and deducted from its income or undivided profits, where that amount

(A) is not deductible under the Income Tax Act, or

(B) is deductible under paragraph 20(1)(n) or subparagraph 40(1)(a)(iii) of the Income Tax Act

but, unless required in the regulations to be included, does not include an amount by which the value of an asset of a corporation has been written down and deducted from its income or undivided profits, where that amount is deductible under a provision of the Income Tax Act other than those mentioned in clause (ii)(B); and

(dd) "trust and loan corporation" means

(i) a corporation that carries on business, or holds itself out, as a trust corporation,

(ii) a corporation that carries on business, or holds itself out, as a loan corporation, or

(iii) a corporation that carries on business, or holds itself out, as a trust and loan corporation, and

is a company licensed under the Trust and Loan Companies Licensing Act.

1982 c8 s2; 1985 c29 s1; 1987 c24 s1

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Liability for tax

3. A corporation that has a permanent establishment within the province is liable to pay to the Crown a tax computed on the amount taxable of the corporation.

1982 c8 s3

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Interest

4. (1) The amount of tax or other amount payable by a corporation under this Act shall bear interest at the prescribed rate a month or part of a month from the date on which the tax is required by this Act to be paid to the Crown until the date on which it is paid.

(2) Where the actual tax payable by a corporation for a fiscal year exceeds a payment made on account of an estimate under section 19, interest shall be imposed at the prescribed rate on the difference between the estimated tax payable under section 19 and the actual tax payable under this Act as if the actual tax payable had been required to be paid in 12 equal monthly instalments during the fiscal year.

(3) No interest may be levied under subsection (1) or (2) for the month in which the Crown receives payment of the tax.

(4) The amount of interest payable is a debt due to the Crown and may be recovered in the same manner as tax payable.

1982 c8 s5; 1985 c29 s2

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Interpretation

5. (1) In this section and sections 6 and 7

(a) "related group" means a group of persons of which each member is related to every other member of the group;

(b) "related persons" or "persons related to each other" means

(i) individuals connected by blood relationship, marriage or adoption,

(ii) a corporation and

(A) a person who controls the corporation, where it is controlled by 1 person,

(B) a person who is a member of a related group that controls the corporation, or

(C) a person related to a person described in clause (A) or (B), or

(iii) 2 corporations where

(A) they are controlled by the same person or the same group of persons,

(B) each of the corporations is controlled by 1 person and the person who controls 1 of the corporations is related to the person who controls the other corporation,

(C) 1 of the corporations is controlled by 1 person and that person is related to a member of a related group that controls the other corporation,

(D) 1 of the corporations is controlled by 1 person and that person is related to each member of an unrelated group that controls the other corporation,

(E) a member of a related group that controls 1 of the corporations is related to each member of an unrelated group that controls the other corporation, or

(F) each member of an unrelated group that controls 1 of the corporations is related to at least 1 member of an unrelated group that controls the other corporation.

(2) Where 2 corporations are related to a 3rd corporation, they are considered to be related to each other.

(3) Where a related group is in a position to control a corporation, it is considered to be a related group that controls the corporation, whether or not it is part of a larger group which in fact controls the corporation.

(4) A person who has a right under a contract

(a) to acquire shares in a corporation; or

(b) to control the voting rights of shares in a corporation,

is considered to be the owner of the shares, except where the contract provides that the right is not exercisable until the death of an individual designated in the contract.

(5) Where a person owns shares in 2 or more corporations, that person is, as shareholder of 1 of the corporations, considered to be related to himself or herself as shareholder of each of the corporations.

(6) In paragraph (1)(b), 2 individuals are connected

(a) by blood relationship, where 1 is the child or other descendant of the other or is the brother or sister of the other;

(b) by marriage, where 1 is married to the other or to a person who is connected by blood relationship to the other; and

(c) by adoption, where 1 has been adopted, either legally or in fact, as a child of the other or as the child of a person who is connected to the other by blood relationship, other than as a brother or sister.

(7) For the purpose of this Act

(a) related persons are considered not to deal with each other at arm's length; and

(b) it is a question of fact whether persons not related to each other were at a particular time dealing with each other at arm's length.

1982 c8 s6

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Paid-up capital

6. (1) The taxable paid-up capital of a bank is the aggregate, computed at the close of the fiscal year, of

(a) its issued and fully paid-up capital stock;

(b) its contributed surplus;

(c) its retained earnings;

(d) its general reserve; and

(e) any tax paid appropriations included in its "appropriation for contingencies" account,

as calculated under paragraph 215(3)(c) or (d) and Schedules M and N of the Bank Act (Canada), less $500,000.

(2) The taxable paid-up capital of a trust and loan corporation is the aggregate of

(a) its paid-up capital stock;

(b) its earned, capital and other surpluses; and

(c) all its reserves, but, unless required in the regulations to be included, not including a reserve, an amount for the creation of which is allowed as a charge against income under the Income Tax Act,

less $500,000 computed at the close of the fiscal year.

1982 c8 s7; 1985 c29 s3

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Paid-up capital employed in Canada

7. (1) The paid-up capital employed in Canada of a non-resident corporation is the greater of

(a) the amount equal to the product of

(i) its taxable income earned in Canada in the fiscal year, determined for the purposes of the Income Tax Act, and

(ii) 12.5; or

(b) the amount by which the amount of the total assets of the corporation in Canada, as at the close of the fiscal year, exceeds the amount of the indebtedness of the corporation, as at the close of the fiscal year, relating to its permanent establishments in Canada, excluding

(i) amounts that are advanced or loaned to its permanent establishments in Canada

(A) by the corporation,

(B) by its shareholders directly or indirectly,

(C) by a person related to 1 of its shareholders, or

(D) by another corporation, and

(ii) any other indebtedness that is represented by bonds, bond mortgages, debentures, mortgages, lien notes or other securities to which a part of the property in Canada is subject.

(2) The paid-up capital employed in Canada computed in accordance with subsection (1) is to be treated as though

(a) the non-resident corporation had no permanent establishment outside Canada;

(b) the paid-up capital employed in Canada were the total paid-up capital of the corporation; and

(c) the taxable paid-up capital employed in Canada were allocated, in the prescribed manner, among the provinces and territories of Canada.

(3) The indebtedness of the corporation mentioned in subparagraph (1)(b)(ii) does not include a trade account payable by the corporation and reported as a current liability, other than an indebtedness to a shareholder or to a person related to 1 of its shareholders, where the trade account

(a) is outstanding for more than 90 days as at the close of the fiscal year; or

(b) is a portion of a long-term debt to another corporation.

(4) The paid-up capital employed in Canada of a non-resident corporation does not include capital invested in a ship or aircraft operated by the corporation in Canada in the fiscal year where the corporation is entitled under paragraph 81(1)(c) of the Income Tax Act, in computing its income for the fiscal year, to exclude the income earned in the fiscal year in Canada from the operation of that ship or aircraft.

1982 c8 s8

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Artificial transactions

8. When computing taxable paid-up capital or taxable paid-up capital employed in Canada, no reduction may be made with respect to a transaction that would unduly or artificially reduce the taxable paid-up capital or taxable paid-up capital employed in Canada of the corporation.

1982 c8 s9

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Rate of tax

9. (1) The tax payable by a corporation is 3% of its amount taxable.

(2) Notwithstanding subsection (1), where a corporation's fiscal year ends after March 31, 1990 and before March 31, 1991, the tax payable for that fiscal year shall be the aggregate of

(a) 2% times its amount taxable times the number of months in the fiscal year before April 1, 1990 divided by 12; and

(b) 3% times its amount taxable times the number of months in the fiscal year after March 31, 1990 divided by 12.

1990 c6 s1

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Short fiscal year

10. Where a corporation has a fiscal year of less than 362 days, the tax payable by the corporation for that fiscal year is equal to the product of

(a) the tax payable by the corporation; and

(b) the number of days in its fiscal year divided by 365.

1982 c8 s12

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Incomplete year

11. Where a corporation ceases to have a permanent establishment in the province during a fiscal year, it shall, in respect of the incomplete fiscal year, pay the tax in the same manner as though the fiscal year had ended on the day on which it ceased to have a permanent establishment in the province.

1982 c8 s13

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Capital tax return

12. (1) A corporation which is liable to pay tax and which has taxable paid-up capital or taxable paid-up capital employed in Canada shall, on or before the last day of the month that ends 6 months following the close of its fiscal year, without notice or demand

(a) file a corporation capital tax return for the fiscal year with the minister; and

(b) pay to the minister the tax payable for the fiscal year, less the amount of a payment made in respect of the fiscal year under section 19.

(2) For the purpose of subsection (1) a corporation that is liable to pay tax shall file with the minister, along with its return for a taxation year

(a) a financial statement that the corporation has presented to its shareholders during the taxation year;

(b) copies of corporation tax returns filed for the purposes of the Income Tax Act including copies of schedules that are requested under the Income Tax Act and that the corporation has filed with its income tax returns during the taxation year.

1982 c8 s14

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Verification of returns

13. (1) A return required to be filed under this Act is to be verified by a certificate certifying that the financial statements included in, or attached to, the return are in agreement with the books of the corporation.

(2) The certificate is to be signed

(a) by the president of the corporation or other officer having personal knowledge of the affairs of the corporation;

(b) in the case of a corporation having its head office outside the province, by the manager or chief agent of the corporation in the province; or

(c) by another person connected with the corporation that the minister may require.

1982 c8 s15

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Minister may require return

14. (1) Notwithstanding section 12, the minister may demand that a corporation file a return

(a) covering a fiscal year; and

(b) including the information,

that the minister may determine, and the minister may specify a reasonable time within which the demand is to be complied with.

(2) A corporation to which a demand is issued under subsection (1) shall

(a) file the return with the minister;

(b) pay to the minister the tax payable for that fiscal year, less the amount of a payment made in respect of the fiscal year under section 19,

within the specified time.

1982 c8 s16

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Extension for filing return

15. The minister may defer the date by which a corporation is required to file a return or to pay the tax payable, or an instalment of tax payable, to a date that he or she may determine, and may set those conditions that the minister considers appropriate on the deferral.

1982 c8 s17

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Return by trustee

16. A trustee in bankruptcy, assignee, liquidator, receiver, administrator or other person administering, managing, winding up, controlling or otherwise dealing with the property or business of a corporation shall

(a) file a return under section 12 or 14;

(b) pay the tax payable by the corporation as required by section 12 or 14; and

(c) before distributing assets under his or her control, obtain a certificate from the minister certifying that no tax, interest and penalties chargeable against, or payable by, the corporation under this Act remains unpaid.

1982 c8 s18

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Return not binding

17. The minister is not bound by a return or information supplied by or on behalf of a person and may

(a) notwithstanding a return filed or information supplied; or

(b) where no return has been filed,

make an assessment.

1982 c8 s19

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Accrual

18. The tax accrues proportionately as the days of the fiscal year for which the tax is imposed pass.

1982 c8 s20

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Payments

19. (1) For the purpose of this section, a corporation's fiscal year ends on the last day of the month in which its fiscal year ends.

(2) A corporation which is liable to pay tax shall pay to the minister, on or before the 20th day of each month of the fiscal year, an instalment payment equal to 1/12 of the tax payable, as estimated by the corporation.

(3) In addition to the tax payable under subsection (2), a corporation shall submit to the minister the information that may be prescribed by the regulations.

(4) Notwithstanding subsection (2), where a corporation has a fiscal year ending after March 31, 1990 and before March 31, 1991, the instalment payable each month shall be, where the last day of a month occurs

(a) prior to April 1, 1990, 1/12 times 2% of the amount taxable, as estimated by the corporation; and

(b) after March 31, 1990, 1/12 times 3% of the amount taxable, as estimated by the corporation.

1982 c8 s21; 1985 c29 s4; 1987 c24 s4; 1990 c6 s2

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Records to be available

20. A corporation shall

(a) keep and maintain, and make available, within the province; or

(b) make an arrangement with the minister, that is satisfactory to the minister, to make available,

books and records relating to the operations of the corporation for the purposes of inspection, examination and audit by the minister.

1982 c8 s22

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Order of minister

21. (1) Where the books and records kept by a corporation are, in the opinion of the minister, inadequate for the purpose of this Act, the minister may, by written order

(a) require suitable books and records to be kept by the corporation;

(b) prescribe their form and the nature of the entries to be made in the books and records,

and the minister may specify a reasonable time within which the order is to be complied with.

(2) A corporation to which an order is issued under subsection (1) shall, within the specified time, keep the books and records in the manner required by that subsection.

1982 c8 s23

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Additional information

22. The minister may, by order, require a person

(a) to provide him or her or an appointed officer with information;

(b) to file a return or supplementary return with him or her or an appointed officer;

(c) to produce a book, record, writing or other document in the possession or control of the person; or

(d) to make available books, records or documents of a corporation,

and the minister may specify a reasonable time within which the order is to be complied with.

1982 c8 s24

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Recovery of tax

23. (1) The amount of the tax may be recovered with costs by action in the name of the minister in court as a debt due to the Crown.

(2) An action under subsection (1) shall be tried without a jury, and the court may make an order as to costs in favour of or against the Crown.

1982 c8 s25

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Assessments

24. (1) Where

(a) a corporation fails to file a return in respect of a fiscal year;

(b) a return in respect of a fiscal year is not, in the opinion of the minister, substantiated by books and records of the corporation; or

(c) upon inspection or examination of a return or audit of books, records and documents, it appears to the minister that tax payable by a corporation in respect of a fiscal year has not been paid in accordance with this Act,

the minister may make an assessment of the amount of tax payable by the corporation in respect of the fiscal year, and the amount assessed shall be conclusively considered to be the amount of tax payable by the corporation in respect of that fiscal year.

(2) Where

(a) the books and records kept by a corporation are, in the opinion of the minister, inadequate for the purpose of this Act;

(b) after being requested by the minister to produce its books and records, a corporation fails or refuses to produce its books and records for examination; or

(c) a corporation alleges that its books and records have been lost or destroyed,

the minister may make an assessment of the tax payable by the corporation in respect of a fiscal year on the basis of the minister's valuation of the amount taxable of the corporation, and the amount assessed shall be conclusively considered to be the amount of tax payable by the corporation in respect of that fiscal year.

(3) Where the minister has made an assessment, he or she is not, by reason of the assessment, prevented or prohibited from making a further assessment of the amount of tax payable by the corporation in respect of that fiscal year.

(4) The minister may serve a written notice of an assessment on the corporation and may require the corporation to pay, or otherwise account for, the assessed tax payable within 30 days after service of the notice of assessment.

(5) A corporation that is served with a notice of assessment shall pay, or otherwise account for, the assessed tax payable within 30 days after the day on which it is served with the notice of assessment, whether or not an appeal is taken from, or an objection is made to, the assessment.

(6) The notice of assessment mentioned in subsection (4) is admissible in evidence, without proof of the office or signature of the person appearing to have signed the notice, as, in the absence of evidence to the contrary, proof that the amount stated in the notice is due.

(7) An assessment is not to be varied or disallowed by reason only of an irregularity or informality.

1982 c8 s26

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Appeal to minister

25. (1) Notwithstanding section 24, where a corporation disputes liability for the assessed tax payable as set out in the notice of assessment, it may directly or by its agent serve a written notice of appeal on the minister within 90 days after the day on which the notice is served.

(2) The notice of appeal shall set out clearly the reasons for the appeal and all relevant facts.

(3) Upon receipt of the notice of appeal, the minister shall

(a) consider the matter and affirm or amend the assessment; and

(b) notify the appellant of his or her decision.

(4) Where a corporation is successful in an appeal under this section, an overpayment of tax by it is to be

(a) applied against other liability of the corporation to the Crown; or

(b) refunded to the corporation,

together with interest at the prescribed rate for the period commencing on the day the overpayment occurred and ending on the day that the overpayment is disposed of in accordance with paragraph (a) or (b), but no interest is to be paid where the amount of interest is less than $1.

1982 c8 s27

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Review of interest

26. (1) A corporation that is dissatisfied by interest or a penalty imposed under section 4 or 45 may apply to the minister for a review of the amount fixed and the minister, after considering the application, shall confirm or amend the amount imposed by way of interest or penalty or may, where the minister is satisfied that no loss has been sustained by the Crown, revoke the imposition of the interest and notify the person accordingly.

(2) The amount of interest fixed in the notification given under this section shall for the purpose of this Act be considered to be the amount fixed by the minister.

1982 c8 s28

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Onus of proof

27. Proof that a notification given under sections 25 and 26 has been mailed or served is, in the absence of evidence to the contrary, proof that the amount stated in the notification is due.

1982 c8 s29

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Certificate of judgment

28. (1) The minister may certify the amount of tax

(a) assessed by him or her after the expiry of the 90 day period described in subsection 25(1); or

(b) determined after the expiry of 1 month from the date of the decision and in the absence of a further notice of appeal.

(2) Notwithstanding section 24, where a corporation fails to pay the amount of tax owing by it as shown in a return, the minister may certify the amount payable, including interest and penalty, up to the date of certification.

(3) A certificate made under this section may be filed in the Registry of the Supreme Court and is then enforceable as a judgment of that court.

(4) All reasonable costs and charges incurred by the minister with respect to the filing of a certificate are recoverable in the same manner as tax payable.

(5) Notwithstanding subsection (2), interest shall be payable by a corporation after certification up to and including the date of final payment.

1982 c8 s30

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Collection of tax from 3rd party

29. (1) In this section and in section 33, "3rd party" means a person who is, or is about to become, indebted to or liable to pay money to a person liable to pay tax.

(2) Where the minister has knowledge, or reasonable grounds to believe, that a person is, or is about to become, a 3rd party, the minister may serve a demand on the 3rd party requiring that all or part of the money which is payable by the 3rd party to a person liable to pay tax be paid to the minister within

(a) 30 days after the day on which the demand is served; or

(b) a longer period that the minister may specify.

(3) The receipt of the minister for money paid under this section is a complete discharge of the liability of the 3rd party to the extent of the payment under this section.

(4) Where a 3rd party is served with a demand under this section and subsequently pays an amount to the person liable to pay tax, the 3rd party is liable to the Crown to the extent of the lesser of

(a) the amount paid to the person liable to pay tax; or

(b) the amount specified in the demand,

and the amount described in paragraph (a) or (b) may be recovered from the 3rd party in the same manner as tax payable.

1982 c8 s31

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Inspectors

30. The Lieutenant-Governor in Council may appoint or designate inspectors, officers and other persons necessary for the proper carrying out of this Act and the regulations.

1982 c8 s32

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Investigations

31. For the purposes of enforcing and administering this Act and the regulations, an inspector appointed or designated under section 30 may, from time to time, and at all reasonable times, enter into a premises or place where a corporation or business is carried on, property is kept, anything is done in connection with a corporation or business or books or records are, or should be, kept under this Act and may

(a) audit or examine the books and records and an account, voucher, letter, telegram or other document that relates or may relate to

(i) the information that is or should be in the books or records, or

(ii) the amount of tax payable;

(b) require

(i) a person who is or may be liable to pay tax, or

(ii) in the case of a corporation liable to pay tax, the president, manager, secretary or a director, agent or representative or other individual on the premises or in the place,

to give all reasonable assistance with the audit or examination and to answer all questions relating to the audit or examination, orally, in writing, on oath or by statutory declaration;

(c) for the purposes of paragraph (b), require a person mentioned in that paragraph to be present at the premises or place with him or her; and

(d) when, during the course of an audit or examination, the minister, or inspector, believes on reasonable grounds that there has been a violation of this Act or the regulations, the minister or inspector may with a warrant issued under section 32 seize and take away, in the case of an inspector, with the written permission of the minister, the records, books, accounts, vouchers, letters, telegrams and other documents that may be required as evidence of a violation and may retain those documents until the time they are required in a court proceeding.

1982 c8 s33; 1985 c11 s44

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Power to search and seize

32. (1) A Provincial Court judge or justice of the peace who is satisfied by information upon oath that there are reasonable grounds for believing that there is on a premises or place where a corporation or business is carried on anything that there are reasonable grounds to believe will afford evidence with respect to an offence under this Act may issue a warrant authorizing an investigator named in the warrant to enter and search those premises or place and to make those inquiries and copies of records, books, accounts, vouchers, letters, telegrams and other documents that are necessary, subject to those conditions that may be specified in the warrant.

(2) The owner or person in charge of the premises or place referred to in this section and a person found there shall give an investigator all reasonable assistance to enable the inspector to carry out his or her duties and functions under this section and shall furnish the information that the investigator may reasonably require.

1985 c11 s44

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Production of documents

33. (1) For the purposes of enforcing and administering this Act and the regulations, the minister may demand from a person, including the president, manager, secretary, director, agent or representative of a partnership or corporation

(a) a return, a supplementary return and information related to a return or supplementary return; and

(b) the production, including the production on oath, of books, letters, accounts, invoices, financial or other statements or other document,

which relates to a person liable to pay tax.

(2) For the purposes of administering and enforcing this Act and the regulations, the minister may demand from

(a) a person, syndicate, trust or corporation; and

(b) an agent or official of a person, syndicate, trust or corporation,

which is or may become a 3rd party, the production, including the production on oath of books, letters, accounts, invoices financial or other statements or other documents.

(3) The minister may specify a reasonable time within which a demand under this section is to be complied with, and a person to whom a demand is made shall comply with the demand within the specified time.

1982 c8 s34

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Copies of documents

34. Where a book, record or other document has been seized, examined or produced under this Act, the minister or an inspector may make copies of the book, record or other document, and a document certified by the minister or an inspector to be a copy made under this section is admissible in evidence, without proof of the office or signature of the person appearing to have certified the document, and has the same probative force as the original document.

1982 c8 s35

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Actions against inspectors

35. Where a court before which a proceeding is taken against an inspector for anything done by the inspector under this Act or the regulations is satisfied that there was probable cause for the action of the inspector, and that the action was not malicious, a verdict or judgment shall not be given against the inspector for more than $0.05 damages or for costs of suit.

1982 c8 s36

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Refund of overpayments

36. (1) Where it is disclosed upon an assessment that the amount of tax actually paid by a corporation for a fiscal year exceeds the amount of tax that the corporation is required to pay for that fiscal year, the minister shall refund the amount of the overpayment to the corporation, together with interest at the prescribed rate for the period commencing on the day the overpayment occurred and ending on the day that the overpayment is disposed, but no interest is to be paid where the amount of interest is less than $1.

(2) Notwithstanding subsection (1), where the corporation owes tax to the Crown under this or another Act

(a) the amount of the overpayment, or as much of the overpayment as is required, is to be retained by the minister and applied to the tax owing; and

(b) the minister shall notify the corporation of the set-off.

1982 c8 s37

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Time limit on refund

37. (1) No refund is payable under section 36 where the overpayment is not discovered within 3 years after the day on which it is paid.

(2) No action is to be brought to recover an overpayment after the expiration of 3 years from the day on which it is paid.

1982 c8 s38

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Use of refund

38. Refunds paid under section 36 are to be paid out of the Consolidated Revenue Fund and are to be accounted for as a reduction of revenues receivable under this Act.

1982 c8 s39

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Appeal to Trial Division

39. (1) A corporation may appeal to a judge of the Trial Division where

(a) the corporation disputes the amount of assessed tax confirmed or amended by the minister under section 25, the amount as certified under section 28 or its liability for the tax; or

(b) the corporation feels aggrieved by interest, as confirmed or amended by the minister under section 26.

(2) In order to appeal under subsection (1), the appellant shall, within 30 days after the notification under section 25 or 26 has been mailed or served on it, file in the Registry of the Supreme Court a notice of appeal.

(3) The notice of appeal filed under subsection (2) shall set out the grounds of the appeal; and a copy of the notice of appeal shall be served on the minister.

(4) The appellant shall, within 14 days after service of a copy of the notice of appeal on the minister under subsection (3), apply to a judge of the Trial Division for the appointment of a day for the hearing of the appeal and shall, not less than 14 days before the day appointed for the hearing, serve upon the minister a written notice of that day.

(5) The appeal and the evidence adduced by the appellant and the Crown shall be heard by the judge in a summary manner; and the judge shall, after considering all the aspects that he or she in his or her discretion considers proper to consider in the interests of justice, equity and fairness, decide the appeal

(a) by upholding, reducing or cancelling

(i) the estimate of tax as confirmed or amended by the minister,

(ii) the penalty or interest as confirmed or amended by the minister; or

(b) by making whatever other decision that the judge considers proper in the circumstances.

(6) All papers and documents in the possession of the minister and affecting the matter of the appeal shall be produced before the judge on the hearing of the appeal.

(7) The costs of the appeal are in the discretion of the judge who hears the appeal and the judge may make an order respecting costs in favour of or against the Crown and may fix the amount of the costs.

1982 c8 s40

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Court of Appeal

40. An appeal may be taken to the Court of Appeal from a decision of a judge of the Trial Division upon a point of law raised upon the hearing before that judge.

1982 c8 s41

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Irregularity in assessment

41. An assessment made by the minister and confirmed or amended under sections 24 and 25 shall not be varied or disallowed because of an irregularity, informality, omission or error on the part of a person in the observation of a directory provision of this Act or the regulations up to the date of the issuing of the notice of the assessment.

1982 c8 s42

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Effect of delay, etc.

42. Neither the giving of a notice of appeal by a person nor a delay in the hearing of that appeal

(a) affects

(i) the due date of a tax or part of the tax under this Act that is the subject-matter of an appeal,

(ii) the interest or penalties provided by this Act in respect of a tax due, or

(iii) the liability for payment of a tax provided by this Act; or

(b) delays the collection of a tax,

but where the tax is set aside or reduced on appeal, the minister shall refund to the person entitled to it the excess of tax paid and of additional interest or penalty paid on the tax.

1982 c8 s43

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Failure to file return

43. (1) A corporation which is liable to file a return and which fails to file a return or to verify a completed return in the manner prescribed in subsection 13(1) for a fiscal year is guilty of an offence and liable on summary conviction to a fine of not more than $100 for each day during which the failure continues.

(2) A corporation that fails to comply with a demand of the minister or an inspector is guilty of an offence and liable on summary conviction to a fine of not more than $200 for each day during which the failure continues.

1982 c8 s44

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Failure to comply with order

44. A corporation that fails to comply with an order made under section 21 is guilty of an offence and liable on summary conviction to a fine of not more than $1,000 and, in the case of a continuing offence, to a further fine of not more than $1,000 for each day during which the offence continues.

1982 c8 s45

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Evasion of tax

45. (1) A corporation that attempts to evade payment of all, or a part, of the tax payable by it by wilfully

(a) understating the value of the amount taxable of the corporation; or

(b) overstating a deduction that it is entitled to make from its paid-up capital or its paid-up capital used in a jurisdiction outside the province,

is liable to a penalty to be assessed by the minister of not more than 50% of the amount of the tax sought to be evaded.

(2) A penalty assessed under this section is in addition to a tax, interest or other penalty payable under this Act and the regulations and to a prosecution for an offence under this Act and the regulations and may be collected in the same manner as tax payable.

1982 c8 s46

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Failure to produce

46. A person who

(a) refuses, or wilfully neglects, to produce books, records or documents to a person entitled under this Act to inspect, examine or audit the books, records or documents;

(b) refuses, or wilfully neglects, to answer a question which

(i) is put to him or her by a person entitled under this Act to direct questions, and

(ii) he or she is required under this Act and the regulations to answer;

(c) refuses, or wilfully neglects, to file a return or make a report required from him or her under this Act and the regulations;

(d) files or makes a false or misleading return or report or gives false or misleading answers or information in a return or report under this Act and the regulations, or makes a false or misleading answer to a question described in paragraph (b);

(e) destroys, alters, mutilates, conceals or disposes of the books or records of a corporation in order to evade tax;

(f) makes or permits, or assents to or acquiesces in the making of, false or misleading entries or omissions in the books or records of a corporation in order to evade tax; or

(g) wilfully evades, or attempts to evade, complying with this Act or payment of tax,

is guilty of an offence and liable on summary conviction to

(h) a fine of not more than $1,000; and

(i) a penalty in an amount not less than double the amount of the tax which was evaded or sought to be evaded,

and in the case of a continuing offence, to a further fine of not more than $1,000 for each day during which the offence continues.

1982 c8 s47

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Obstruction

47. A person who obstructs the minister or an inspector, while making an inspection, examination or audit, is guilty of an offence and liable on summary conviction to a fine of not more than $1,000, and, in the case of a continuing offence, to a further fine of not more than $1,000 for each day during which the offence continues.

1982 c8 s48

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General offence

48. A person who contravenes this Act or the regulations, for which no other penalty is specifically provided, is guilty of an offence and is liable on summary conviction to a fine of not more than $1,000, and, in the case of a continuing offence, to a further fine of not more than $1,000 for each day during which the offence continues.

1982 c8 s49

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Directors, etc. guilty of an offence

49. (1) Where a corporation has committed an offence under this Act, an officer, director, employee or agent of the corporation who directed, authorized, assented to or participated in the commission of the offence is a party to and guilty of the offence and is liable on summary conviction to the punishment provided for the offence, whether or not the corporation has been prosecuted or convicted.

(2) Where a corporation fails to pay the tax payable, an officer, director, employee or agent of the corporation who is responsible for the failure is guilty of an offence and liable on summary conviction to

(a) the fine to which the corporation would be liable under section 43; and

(b) a penalty in an amount equal to the amount of tax that should have been paid.

(3) In a proceeding under this Act, a corporation shall be considered to be a party to the act, omission, neglect or failure of an officer, employee, agent or other person acting for the corporation where the officer, employee, agent or person acted within the scope of his or her employment.

1982 c8 s50

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Criminal Code

50. Section 736 or 737 of the Criminal Code shall not be applied in disposing of a complaint made or in imposing punishment for an offence under this Act or the regulations.

1982 c8 s51

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No time limitation

51. A complaint may be made and all proceedings may be taken in respect of an offence under this Act or the regulations, without a limitation of time.

1982 c8 s52

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Presumptive proof

52. An affidavit by an officer of the department sworn before a person authorized to take affidavits that the officer has charge of the appropriate records and that after careful examination and search of those records the officer has been unable to find in a given case that a return or remittance required by this Act has been received in the Department shall be received as, in the absence of evidence to the contrary, proof that the required return or remittance has not been received or paid.

1985 c11 s27

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Service of documents

53. (1) Where under this Act or the regulations a notice, order, demand or other document is authorized or required to be served on or delivered or sent to a person, the document may be served

(a) by personal service;

(b) in the case of a corporation, by delivering it to an office of the corporation in the province; or

(c) by registered mail addressed to the person at the address in the province as shown on the most recent return filed under this Act or as shown on the records of the department.

(2) A notice, order, demand or other document, which is served by registered mail, shall be considered to have been received on the 2nd day following the day of its mailing, unless the person to whom it was mailed establishes that, through no fault of his or her own, that person did not receive the document or he or she received it at a later date.

1982 c8 s54

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Secrecy of officers

54. (1) A return made by a corporation under this Act is not open to inspection except by the minister or an inspector.

(2) A person employed in the public service of the province and a police officer or peace officer shall not

(a) communicate, or allow to be communicated, to a person who is not legally entitled to it information obtained under this Act; or

(b) allow a person who is not legally entitled to do so to inspect or have access to information obtained under this Act.

(3) Notwithstanding subsections (1) and (2) but subject to subsection (4), the minister may

(a) communicate a return, record or information submitted by a corporation under this Act; or

(b) allow inspection of or access to a return, record or information,

to a person employed by the Government of Canada or by a province of Canada, where

(c) the information, records and returns obtained by that government for the purposes of an Act that imposes a tax are communicated or made accessible on a reciprocal basis to the minister; and

(d) the information, records and returns communicated or made accessible by the minister will not be used for a purpose other than the administration and enforcement of a federal or provincial law that provides for the imposition of a similar tax.

(4) Subject to the approval of the Lieutenant-Governor in Council, the minister may, on behalf of the Crown, enter into agreements with the Government of Canada or the government of another province of Canada

(a) for the purpose of making the application and administration of this Act and a similar Act of another province more equitable; and

(b) respecting the payment or the relief from the payment of the tax under this Act or imposed under a similar Act of a province to avoid the duplicate imposition of tax.

1982 c8 s55

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Remission

55. (1) Notwithstanding another Act or another provision of this Act, the minister, where he or she considers it appropriate to do so, may remit interest or penalty imposed under section 4 or 45.

(2) A remission under this section may be total or partial, conditional or unconditional, and may be granted whether before or after or pending a suit or proceeding for the recovery of a penalty or interest and before or after a payment of a penalty or interest has been made or enforced by process or execution.

1982 c8 s56

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Application of F.A.A.

56. Subsections 19(3) and (4) of the Financial Administration Act apply, with the necessary changes, to remissions under section 55.

1982 c8 s57

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Affidavit

57. (1) In a proceeding under this Act an affidavit signed by the minister or an inspector is admissible in evidence as, in the absence of evidence to the contrary, proof of the facts set out in the affidavit.

(2) Proof is not required of the signature or the official position of the minister or an inspector on an affidavit made under this section.

1982 c8 s58

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Delegation of functions

58. (1) Without affecting subsection 22(2) of the Interpretation Act, the Lieutenant-Governor in Council may assign to an officer of the Department of Finance the performance of a duty and the exercise of a power imposed or conferred on the minister by or under this Act.

(2) An officer to whom the performance of a duty or the exercise of a power is assigned in accordance with subsection (1) shall perform the duties and may exercise the powers as if they were imposed or conferred on him or her by this Act.

(3) This section does not apply to a power of review conferred upon the minister by sections 25 and 26.

1982 c8 s59

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Change in fiscal year

59. A corporation shall not change its fiscal year for the purpose of this Act, unless

(a) it gives written notice to the minister prior to the proposed change; and

(b) the minister has not, within 60 days of the receipt of the notice mentioned in paragraph (a), objected to the proposed change.

1982 c8 s60

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Consolidated Revenue Fund

60. All amounts received by the minister by way of tax forms part of the Consolidated Revenue Fund.

1982 c8 s61

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Powers of minister

61. The minister may

(a) require a person connected with a corporation that the minister considers appropriate to sign and forward a certificate verifying a return;

(b) specify information that is to be included in a return; and

(c) issue certificates for the purpose of paragraph 16(c).

1982 c8 s62

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Regulations

62. (1) The Lieutenant-Governor in Council may make regulations

(a) prescribing the forms to be used for the purpose of this Act or the regulations;

(b) prescribing the records to be kept by corporations;

(c) respecting information required to be disclosed in a return or other prescribed form;

(d) prescribing the information to be made or furnished by each corporation each month under section 19 and prescribing the forms to be used for this purpose;

(e) requiring amounts or portions of amounts to be included in total assets, other surplus or reserves of a corporation or a class of corporations for the purposes of paragraph 2(n), paragraph 6(1)(b) and paragraph 6(2)(c);

(f) prescribing the allocation formula for the paid-up capital of each corporation for the purpose of paragraph (d);

(g) defining, enlarging or restricting the meaning of a word or expression used in this Act but not defined in this Act;

(h) prescribing the rates of interest payable under sections 4 and 36;

(i) prescribing certain classes of corporations resident in Canada that are considered, for the purpose of this Act, to be corporations that are not resident in Canada;

(j) prescribing rules governing the manner in which assets and liabilities of and capital used in a partnership or joint venture carried on by a corporation with some other person are to be accounted for in determining the amount taxable of the corporation;

(k) prescribing rules for determining the value of the amount taxable of a corporation that is used by the corporation in a jurisdiction outside the province; and

(l) prescribing those other matters or things that are required or authorized by this Act to be prescribed in the regulations.

(2) Regulations made under this section may be made with retroactive effect to a date stated in the regulations, which shall not in any event be more than the period of 12 months before the date of their publication in the Gazette.

1982 c8 s63; 1985 c29 s5

©Earl G. Tucker, Queen's Printer