2021 Bill 54

	54


First Session, 50th General Assembly 71 Elizabeth II, 2022
BILL 54
AN ACT TO AMEND THE INCOME TAX ACT, 2000
Received and Read the First Time................................................................
Second Reading............................................................................................
Committee.....................................................................................................
Third Reading...............................................................................................
Royal Assent.................................................................................................
HONOURABLE SIOBHAN COADY Minister of Finance and President of Treasury Board
Ordered to be printed by the Honourable House of Assembly

EXPLANATORY NOTES

This Bill would amend the Income Tax Act, 2000 to

· reinstate limitations respecting an individual's ability to claim the equivalent to spouse amount, the caregiver credit and the infirm dependent credit;

· ensure continued availability of the education credit;

· allow the physical activity tax credit to be claimed for a deceased individual who had eligible fitness expenses in the year of death;

· clarify that the physical activity tax credit may not be claimed by a person who is exempt from paying tax in the province;

· require income earned by a taxpayer in the province and in other provinces and territories of Canada to be included in the calculation of tax on split income;

· remove the overseas employment tax credit that was eliminated in 2016 from the calculation of the tax credits available where income is earned outside of the province;

· include the child care tax credit, volunteer firefighters' tax credit and search and rescue volunteer tax credit in the calculation of the tax credits available where income is earned outside of the province;

· include the deduction for employee stock options in the calculation of an individual's foreign tax deduction to align with the calculation of taxable income under the federal Act and remove a reference to a provision of the federal Act that has been repealed;

· introduce a manufacturing and processing investment tax credit;

· introduce a green technology tax credit;

· exclude amounts calculated for the federal temporary wage subsidy program from amounts to be remitted for income tax withholdings and remove references to provisions of the federal Act that have been repealed;

· clarify that instalment payments are not required for graduated rate estates;

· remove a reference in section 54 to a provision of the federal Act that has been repealed;

· include by reference provisions of the federal Act to suspend statutory notice periods and time periods for a reassessment when a requirement to provide foreign-based information is contested;

· allow the Canada Revenue Agency to provide provincial specific taxpayer information to the federal Minister of Finance for the purposes of formulation or evaluation of fiscal policy;

· include by reference provisions of the federal Act to allow the Canada Revenue Agency to send requirements for information electronically to banks and credit unions and allow an affidavit of an official of the Canada Revenue Agency to serve as proof of personal service delivery;

· replace references to "Canada Customs and Revenue Agency" with "Canada Revenue Agency";

· replace references to "Commissioner of Customs and Revenue" with "Commissioner of Revenue";

· replace references to the "Canada Customs and Revenue Agency Act" with "Canada Revenue Agency Act"; and

· incorporate gender-neutral language.

A BILL

AN ACT TO AMEND THE INCOME TAX ACT, 2000

Analysis

1. S.2 Amdt.
Interpretation

2. S.7.1 Amdt.
Temporary deficit reduction levy

3. S.9 Amdt.
Personal credits

4. S.14 R&S
Education credit

5. S.16.1 Amdt.
Student loan tax credit

6. S.17.5 Amdt.
Physical activity tax credit

7. S.18 Amdt.
Tax credit transfer

8. S.21.1 Amdt.
Low income reduction

9. S.29 Amdt.
Tax on split income

10. S.31.1 Amdt.
Pro-rating where income earned outside province

11. S.33 Amdt.
Foreign tax deduction

12. S.34 Amdt.
Income supplement

13. S.35 Amdt.
No set off

14. S.36 Amdt.
Date on which amount applied

15. Ss.41.1 and 41.2 Added
41.1 Manufacturing and

processing investment

tax credit

41.2 Green technology tax

credit

16. S.47 Amdt.
Political contribution deduction

17. S.49 R&S
Returns of income, assessments and withholding

18. S.50 Amdt.
Reassessment

19. S.52 R&S
Instalments by other individuals

20. S.54 R&S
Returns, payments and interest

21. S.56 Amdt.
Amount on which instalment computed

22. S.62 Amdt.
Appeals

23. S.63 Amdt.
Reply to appeal

24. S.78 Amdt.
Books and records

25. S.79 R&S
Inspections, privileges, etc.

26. S.83 Amdt.
Actions or suits

27. S.84 Amdt.
Revealing confidential information

28. S.87 R&S
Information or complaint

29. S.89 Amdt.
Collection agreement

30. S.92 Amdt.
Deduction at source

31. S.93 Amdt.
Non-agreeing provinces

32. 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. (1) Subsection 2(1) of the Income Tax Act, 2000 is amended by adding immediately after paragraph (a) the following:

(a.1) "Canadian-controlled private corporation" means Canadian-controlled private corporation as defined in subsection 125(7) of the federal Act;

(2) Clause 2(1)(d)(ii)(B) of the Act is amended by deleting the words "Canada Customs and Revenue Agency" and substituting the words "Canada Revenue Agency".

(3) Subparagraph 2(1)(e)(iii) of the Act is repealed and the following substituted:

(iii) where a collection agreement is in effect, the Commissioner of Revenue appointed under section 25 of the Canada Revenue Agency Act;

(4) Subsection 2(2) of the Act is amended by deleting the words "he or she" and substituting the words "the individual".

(5) Subsection 2(3) of the Act is amended by deleting the words "him or her" and substituting the words "the taxpayer".

(6) The Table in paragraph 2(9)(i) of the Act is amended by deleting the words "Commissioner of Customs and Revenue appointed under section 25 of the Canada Customs and Revenue Agency Act (Canada)" and substituting the words "Commissioner of Revenue appointed under section 25 of the Canada Revenue Agency Act".

2. Paragraph 7.1(4)(a) of the Act is amended by deleting the words "his or her" and substituting the words "the individual's".

3. Paragraph 9(1)(f) of the Act is repealed and the following substituted:

(f) in the case of an individual entitled to a deduction in respect of a person because of paragraph (b) and who would also be entitled, but for paragraph 118(4)(c) of the federal Act, as that provision existed for the 2016 taxation year and as it applies to this Act, to a deduction because of paragraph (d) or (e) in respect of the person, the amount by which the amount that would be determined under paragraph (d) or (e), exceeds the amount determined under paragraph (b) in respect of the person.

4. Section 14 of the Act is repealed and the following substituted:

Education credit

14. (1) For the purpose of computing the tax payable under this Part by an individual who is a qualifying student for a taxation year, there may be deducted an amount determined by the formula

A x B

where

A is the appropriate percentage for the year; and

B is the total of the products obtained when

(a) $200 is multiplied by the number of months in the year during which the individual is enrolled in a qualifying educational program as a full-time student at a designated educational institution; and

(b) $60 is multiplied by the number of months in the year, other than months described in paragraph (a), each of which is a month during which the individual is enrolled at a designated educational institution in a specified educational program that provides that each student in the program spend not less than 12 hours in the month on courses in the program.

(2) Subsections 118.6(1) and (3) of the federal Act apply for the purpose of this Act.

5. Subsection 16.1(2) of the Act is amended by deleting the words "his or her" and substituting the words "the individual's".

6. Section 17.5 of the Act is amended by adding immediately after subsection (8) the following:

(9) For the purposes of this section, an individual who dies during the taxation year and was resident in the province on the day of the individual's death is considered to be an individual who is resident in the province at the end of the taxation year.

(10) This section does not apply to an individual who is exempt from tax under section 149 of the federal Act.

7. Subsection 18(1) of the Act is amended by deleting the words "his or her" and substituting the words "the individual's".

8. Paragraph 21.1(1)(b) of the Act is amended by deleting the words "his or her" and substituting the words "the individual's".

9. Section 29 of the Act is amended by renumbering the section as subsection 29(1) and adding immediately after that subsection the following:

(2) Notwithstanding paragraph 2(9)(i), in this section a reference to "Canada" in the definitions of "source individual" and "specified individual" in subsection 120.4(1) of the federal Act, shall not be read as a reference to Newfoundland and Labrador.

10. (1) Section 31.1 of the Act is amended by repealing the paragraph referring to the value of A and substituting the following:

A is the total of all amounts each of which is deductible under subsection 9(3) and sections 17.1 and 20 by the individual for the taxation year;

(2) Section 31.1 of the Act is amended by repealing the paragraph referring to the value of A and substituting the following:

A is the total of all amounts each of which is deductible under subsection 9(3) and sections 17.1 to 17.4 and 20 by the individual for the taxation year;

11. (1) Subsection 33(1) of the Act is amended by deleting the words "him or her" and substituting the words "the individual".

(2) Clause 33(1)(b)(ii)(C) of the Act is repealed and the following substituted:

(C) the total of all amounts, each of which is an amount deducted under section 110.6 or paragraph 111(1)(b) of the federal Act or deductible under paragraphs 110(1)(d) to (g) of the federal Act for the year, in computing the individual’s taxable income for the year.

12. (1) Subsection 34(3) of the Act is amended by deleting the words "his or her" and substituting the words "the eligible individual's".

(2) Subsection 34(9) of the Act is amended by deleting the words "his or her" and substituting the words "the individual's".

(3) Subsection 34(11) of the Act is amended by deleting the words "his or her" and substituting the words "the eligible individual's".

13. Subsection 35(1) of the Act is amended by deleting the words "his or her" and substituting the words "the individual's".

14. Section 36 of the Act is amended by deleting the words "his or her" and substituting the words "the individual's".

15. The Act is amended by adding immediately after section 41 the following:

Manufacturing and processing investment tax credit

41.1 (1) In this section,

(a) "capital cost" means the capital cost referred to in paragraph (a) of the definition of investment tax credit in subsection 127(9) of the federal Act;

(b) "eligible corporation" means a corporation that

(i) has a permanent establishment in the province, and

(ii) acquired eligible property in a taxation year;

(i) located in the province, and

(ii) acquired for and used in a business operating in the province;

(d) "manufacturing and processing investment tax credit" means the amount that is equal to 10% of an eligible corporation's qualified investment;

(e) "qualified investment" means the portion of the capital cost that relates to eligible property acquired by an eligible corporation in a taxation year;

(f) "qualified property" means qualified property as defined in subsection 127(9) of the federal Act; and

(g) "refundable amount" means an amount equal to 40% of an eligible corporation's manufacturing and processing investment tax credit for a taxation year.

(2) An eligible corporation may deduct from the tax otherwise payable by it under this Act for a taxation year an amount not exceeding the lesser of

(a) its manufacturing and processing investment tax credit for the taxation year; and

(b) the tax otherwise payable by it under this Act for the taxation year.

(3) Where an eligible corporation is a Canadian-controlled private corporation and its manufacturing and processing investment tax credit for a taxation year exceeds the tax otherwise payable by it under this Act for the taxation year, an amount not exceeding the lesser of the amount by which its manufacturing and processing investment tax credit for the taxation year exceeds the tax otherwise payable by it under this Act for the taxation year and the refundable amount may be applied by the minister to pay

(a) a tax, interest or penalty owing by the eligible corporation for that or a prior taxation year under this Act, the income tax statute of an agreeing province or the federal Act;

(b) a contribution, penalty or interest owing by the eligible corporation for that or a prior taxation year as a result of payments required from the eligible corporation under the Canada Pension Plan Act; and

(c) a premium, interest or penalty owing by the eligible corporation for that or a prior taxation year under the Employment Insurance Act (Canada).

(4) Any part of the amount that may be applied under paragraphs (3)(a) to (c) that is not applied shall be refunded to the eligible corporation.

(5) Where an eligible corporation's manufacturing and processing investment tax credit for a taxation year exceeds the total of

(a) the amount deducted from tax under subsection (2);

(b) any amount applied under subsection (3); and

for the taxation year, the eligible corporation may apply the excess manufacturing and processing investment tax credit amount towards tax payable by it under this Act in any of the 3 taxation years immediately preceding or the 20 taxation years immediately following the taxation year but only to the extent that it has not been applied to tax payable for another taxation year.

(6) Notwithstanding subsection (5), the excess manufacturing and processing investment tax credit amount referred to in subsection (5) shall not be applied to tax payable by the eligible corporation for a taxation year that ended before this section comes into force.

(7) This section does not apply to an eligible corporation that is exempt from tax under section 149 of the federal Act.

Green technology tax credit

41.2 (1) In this section,

(a) "capital cost" means the capital cost referred to in the description of item A contained in the definition of undepreciated capital cost in subsection 13(21) of the federal Act;

(b) "eligible corporation" means a Canadian-controlled private corporation that

(i) has a permanent establishment in the province, and

(ii) acquired eligible property in a taxation year;

(c) "eligible property" means property described in Class 43.1 or 43.2 of Schedule II to the Income Tax Regulations (Canada) that is

(i) located in the province, and

(ii) acquired for and used in a business operating in the province;

(d) "green technology tax credit" means the amount that is the lesser of

(i) 20% of an eligible corporation's qualified investment in a taxation year, and

(ii) the eligible corporation's tax credit limit for the taxation year as determined under subsection (2);

(e) "qualified investment" means the portion of the capital cost that relates to eligible property acquired by an eligible corporation in a taxation year; and

(f) "refundable amount" means an amount equal to 40% of an eligible corporation's green technology tax credit for a taxation year.

(2) For the purpose of subparagraph (1)(d)(ii), an eligible corporation's tax credit limit for a taxation year is,

(a) $1 million where the eligible corporation is not associated in the taxation year with any other corporations within the meaning of section 256 of the federal Act;

(b) $1 million multiplied by the percentage assigned to the eligible corporation in the agreement referred to in subparagraph (ii) where

(i) the eligible corporation is associated in the taxation year with one or more other corporations within the meaning of section 256 of the federal Act,

(ii) all corporations that are associated with the eligible corporation in the taxation year file with the minister an agreement, in the form set by the minister, that assigns for the purposes of this section a percentage to one or more eligible corporations, and

(iii) the total of the percentages assigned in the agreement referred to in subparagraph (ii) does not exceed 100%; and

(3) An eligible corporation may deduct from the tax otherwise payable by it under this Act for a taxation year an amount not exceeding the lesser of

(a) its green technology tax credit for the taxation year; and

(b) the tax otherwise payable by it under this Act for the taxation year.

(4) Where an eligible corporation's green technology tax credit for a taxation year exceeds the tax otherwise payable by it under this Act for the taxation year, an amount not exceeding the lesser of the amount by which its green technology tax credit for the taxation year exceeds the tax otherwise payable by it under this Act for the taxation year and the refundable amount may be applied by the minister to pay

(a) a tax, interest or penalty owing by the eligible corporation for that or a prior taxation year under this Act, the income tax statute of an agreeing province or the federal Act;

(c) a premium, interest or penalty owing by the eligible corporation for that or a prior taxation year under the Employment Insurance Act (Canada).

(5) Any part of the amount that may be applied under paragraphs (4)(a) to (c) that is not applied shall be refunded to the eligible corporation.

(6) Where an eligible corporation's green technology tax credit for a taxation year exceeds the total of

(a) the amount deducted from tax under subsection (3);

(b) any amount applied under subsection (4); and

for the taxation year, the eligible corporation may apply the excess green technology tax credit amount towards tax payable by it under this Act in any of the 3 taxation years immediately preceding or the 20 taxation years immediately following the taxation year but only to the extent that it has not been applied to tax payable for another taxation year.

(7) Notwithstanding subsection (6), the excess green technology tax credit amount referred to in subsection (6) shall not be applied to tax payable by the eligible corporation in a taxation year that ended before this section comes into force.

(8) This section does not apply to an eligible corporation that is exempt from tax under section 149 of the federal Act.

16. (1) Subsection 47(4) of the Act is repealed and the following substituted:

(4) An amount may not be deducted under subsection (2) with respect to a contribution to a candidate unless it was made during an election period as defined in the Elections Act, 1991 and after the candidate's chief financial officer was appointed under that Act in the election in which the individual is a candidate.

(2) Subsection 47(6) of the Act is amended by deleting the words "him or her" and substituting the words "the chief financial officer".

17. Section 49 of the Act is repealed and the following substituted:

Returns of income, assessments and withholding

49. Subsection 70(7), except the portion of it that is after paragraph (a), sections 150, 150.1 and 151 and subsections 152(1) to (3.1), (4) to (9), 153(1), (1.01), (1.1) to (3) and 156.1(4) of the federal Act apply for the purpose of this Act.

18. Subsection 50(2) of the Act is amended by deleting the words "his or her" and substituting the words "the individual's".

19. Section 52 of the Act is repealed and the following substituted:

Instalments by other individuals

52. Section 156 and paragraph 156.1(2)(c) of the federal Act apply for the purpose of this Act.

20. Section 54 of the Act is repealed and the following substituted:

Returns, payments and interest

54. Subsections 70(2) and 104(2), sections 158, 159 and 160, subsections 160.1(1), (1.1), (2.1), (3) and (4), sections 160.2 and 160.3 and subsections 161(1), (2), (2.1), (2.2), (4), (4.01), (4.1), (5), (6), (6.1), (7), (9) and (11) of the federal Act apply for the purpose of this Act.

21. Section 56 of the Act is amended by deleting the words "his or her" wherever they appear and substituting the words "the taxpayer's".

22. (1) Paragraph 62(2)(a) of the Act is amended by deleting the words "his or her" wherever they appear and substituting the words "the individual's".

(2) Subsection 62(5) of the Act is amended by deleting the words "he or she" and substituting the words "the appellant".

23. Subsection 63(1) of the Act is amended by deleting the words "he or she" and substituting the words "the minister".

24. Subsection 78(1) of the Act is amended by deleting the words "his or her" and substituting the words "the person's".

25. Section 79 of the Act is repealed and the following substituted:

Inspections, privileges, etc.

79. Sections 231 to 231.8, 232, 233 and 236 of the federal Act apply for the purpose of this Act.

26. Subsection 83(1) of the Act is amended by deleting the words "his or her" and substituting the words "the Minister of National Revenue's".

27. (1) Paragraph 84(1)(c) of the Act is amended by deleting the words "his or her" and substituting the words "the person's".

(2) Subsection 84(2) of the Act is amended by deleting the word "or" at the end of paragraph (a), deleting the period at the end of subparagraph (b)(ii) and substituting a semi-colon and the word "or" and by adding immediately after paragraph (b) the following:

(c) the Minister of National Revenue and the Minister of Finance for Canada, where that information is provided in accordance with subsection (3).

(3) Section 84 of the Act is amended by adding immediately after subsection (2) the following:

(3) The Minister of National Revenue may provide any information obtained by or on behalf of the province for the purposes of this Act to an official of the Minister of Finance for Canada solely for the purposes of the formulation or evaluation of fiscal policy.

28. Section 87 of the Act is repealed and the following substituted:

Information or complaint

87. Subsections 244(1) to (11), (13) to (17) and (20) to (22) of the federal Act apply for the purpose of this Act.

29. Subsection 89(4) of the Act is repealed and the following substituted:

(4) Where a collection agreement is entered into, the Commissioner of Revenue appointed under the Canada Revenue Agency Act may

(a) employ the powers, perform the duties and exercise the discretion that the Minister of National Revenue has under this Act; and

(b) designate officers of the Canada Revenue Agency to carry out those functions, duties and powers that are similar to those that are exercised by them on behalf of the Commissioner of Revenue under the federal Act.

30. Section 92 of the Act is amended by

(a) deleting the words "him or her" wherever they appear and substituting the words "the individual"; and

(b) deleting the words "his or her" and substituting the words "the individual's".

31. Section 93 of the Act is amended by deleting the words "him or her" wherever they appear and substituting the words "the individual".

Commencement

32. (1) Sections 19 and 20 of this Act are considered to have come into force on January 1, 2016.

(2) Sections 3 and 4 and subsection 10(1) of this Act are considered to have come into force on January 1, 2017.

(3) Section 17 of this Act is considered to have come into force on March 25, 2020.

(4) Section 6 and subsection 10(2) of this Act are considered to have come into force on January 1, 2021.

(5) Sections 25 and 28 of this Act are considered to have come into force on June 29, 2021.

(6) Subsection 11(2) of this Act is considered to have come into force on July 1, 2021.

(7) Section 9 of this Act is considered to have come into force on January 1, 2022.

(8) Section 15 of this Act is considered to have come into force on April 7, 2022.