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1998 Legislative Session: 3rd Session, 36th Parliament

FIRST READING

The following electronic version is for informational purposes only.

The printed version remains the official version.

HONOURABLE JOY K. MacPHAIL

MINISTER OF FINANCE AND

CORPORATE RELATIONS

BILL 3 – 1998

INCOME TAX AMENDMENT ACT, 1998

HER MAJESTY, by and with the advice and consent of the Legislative Assembly of the Province

of British Columbia, enacts as follows:

Section 4 (5) (

f) of the Income Tax Act, R.S.B.C. 1996, c. 215, is repealed and the

following substituted:

(f) 50.5% for the 1998 taxation year;

(g) 49.5% for the 1999 and subsequent taxation years.

Section 6 (1) (

f) is repealed and the following substituted:

(

f) for the 1998 taxation year,

(i) 30% of the amount by which that tax exceeds $5 300, and

(ii) 26% of the amount by which that tax exceeds $8 660 before the tax

payable under subparagraph (

i) is added;

(

g) for the 1999 and subsequent taxation years,

(i) 30% of the amount by which that tax exceeds $5 300, and

(ii) 19% of the amount by which that tax exceeds $8 660 before the tax

payable under subparagraph (

i) is added.

Section 16 is amended by striking out "9%" wherever it appears and substituting "8.5%" .

Section 16 is amended by striking out "8.5%" wherever it appears and substituting "8%" .

Section 42 (2) (

b) is amended by striking out "or" at the end of subparagraph (i), by

striking out "and" at the end of subparagraph (ii) and substituting "or" and by adding the

following:

(iii) the amount of the tax credit for a taxation year that, under

section 84,

the corporation is deemed to have paid on account of its tax payable

for that year under this Act, and .

6 The following

section is added to

Part 2:

Anti-avoidance rule

68.1

(1) In this section:

"avoidance transaction" means a transaction

(

a) that, but for this section, would result, directly or indirectly, in a tax benefit,

(

b) that is part of a series of transactions, which series, but for this section,

would result, directly or indirectly, in a tax benefit,

but does not include a transaction that may reasonably be considered

(

c) to have been undertaken or arranged primarily for bona fide purposes other

than for one or more of the following:

(

i) to obtain a tax benefit;

(ii) to reduce, avoid or defer a tax, or another amount payable as or in

respect of tax, under any other federal or provincial Act;

(iii) to increase a refund of tax, or of another amount in respect of tax,

under any other federal or provincial Act, or

(

d) to be a transaction that would not result, directly or indirectly, in a misuse

of the provisions of this Act or an abuse having regard to the provisions of

this Act, other than this section, read as a whole;

"tax benefit" means

(

a) a reduction, avoidance or deferral of tax, or of another amount, payable

under this Act, or

(

b) an increase in a refund of tax, or of another amount, under this Act;

"tax consequences" to a person means

(

a) the amount of the person's

(

i) income for the year, within the meaning of

section 4 (1),

(ii) loss,

(iii) taxable income,

(iv) income earned in the taxation year in British Columbia, within the

meaning of

section 4 (1),

(

v) income earned in the taxation year outside British Columbia, within

the meaning of

section 4 (1), or

(vi) taxable income earned in the year in British Columbia, within the

meaning of

section 14 (1), or

(

b) any amount, other than an amount referred to in paragraph (a), that is

payable or refundable to the person under this Act or that is relevant for the

purposes of determining any other amount referred to in this section;

"transaction" includes an arrangement or event.

(2) If a transaction is an avoidance transaction, the tax consequences to a person must

be determined in a manner that is reasonable in the circumstances in order to deny

a tax benefit that, but for this section, would result, directly or indirectly, from

that transaction or from a series of transactions that includes that transaction.

(3) Without limiting subsection (2),

(

a) any amount deducted in computing an amount referred to in paragraph (

a) or (

b) of the definition of "tax consequences" in subsection (1) may be

allowed or disallowed in whole or in part,

(

b) any deduction referred to in paragraph (

a) of this subsection or any other

amount used in determining an amount payable or refundable under this Act

may be allocated to any person,

(

c) the nature of any payment or other amount may be recharacterized, and

(

d) the tax effects that would otherwise result from the application of other

provisions of this Act may be ignored,

in determining the tax consequences to a person in a manner that is reasonable in

the circumstances in order to deny a tax benefit that would, but for this section,

result, directly or indirectly, from an avoidance transaction.

(4) If a notice of assessment, reassessment or additional assessment reflecting the

application of subsection (2) to a transaction has been sent to a person, or a notice

of determination under

section 29 or 30 has been sent to the person, any other

person is entitled, within 180 days after the date of the mailing of that notice, to

request in writing that the minister make an assessment, reassessment or

additional assessment applying subsection (2) of this

section or make a determination

applying

section 29 or 30 with respect to the transaction.

(5) On receipt of a request by a person under subsection (4), the minister must

consider the request and make an assessment, reassessment or additional

assessment, or a determination under

section 29 or 30, with respect to the person,

despite the expiry of any time limit under

section 29 or 30, except that an

assessment, reassessment or additional assessment or determination may be

made under this subsection only to the extent that it may be reasonably regarded

as relating to a transaction referred to in subsection (4) of this section.

(6) The tax consequences to any person, after the application of this section, must

only be determined through

(

a) a notice of assessment, reassessment or additional assessment under

section 29 or 30, or

(

b) a notice of determination under

section 29 or 30.

7 The following

Part is added:

Part 5 – Film and Television Tax Credit

Definitions and

interpretation

(1) In this Part:

"assistance" means an amount, other than an amount deemed to have been paid

under

section 84 or under

section 125.4 (3) of the federal Act, that would be

included under

section 12 (1) (

x) of the federal Act in computing the income of

a taxpayer for any taxation year if that

section were read without reference to

subparagraphs (

v) to (vii) of that

section 12 (1) (x);

"BC-based corporation" means a corporation that has a permanent establishment

in British Columbia;

"BC-based individual" , in relation to an eligible production, means an individual

who, by reason of being an individual described in

section 2 (1) (a), is subject to

tax under

section 2 for the year preceding the year in which principal

photography of the production begins;

"BC labour expenditure" of a corporation for a taxation year means, in relation to

a film or video production, the total of the following amounts, to the extent that

they are reasonable in the circumstances, that did not and do not form part of the

BC labour expenditure of any other corporation:

(

a) the salary or wages that

(

i) are directly attributable to the production,

(ii) are incurred by the corporation

(

A) after March 31, 1998,

(

B) in that taxation year, or in the preceding taxation year, and

(

C) for the stages of production of the production, from the final

script stage to the end of the post-production stage, and

(iii) are amounts that

(

A) were paid to BC-based individuals by the corporation in the

taxation year, or within 60 days after the end of the taxation

year, and

(

B) did not form part of the corporation's BC labour expenditure for

the preceding taxation year;

(

b) remuneration, other than salary or wages, that

(

i) is directly attributable to the production,

(ii) relates to services rendered to the corporation

(

A) after March 31, 1998,

(

B) in that taxation year, or in the preceding taxation year, and

(

C) for the stages of production of the production, from the final

script stage to the end of the post-production stage,

(iii) did not form part of the corporation's BC labour expenditure for the

preceding taxation year, and

(iv) is paid, for the services referred to in subparagraph (ii), by the

corporation in the taxation year, or within 60 days after the end of the

taxation year, to

(

A) a BC-based individual, to the extent that the amount paid

(

I) is attributable to services personally rendered by the

individual for the production, or

(II) is attributable to and does not exceed the salary or wages

of the individual's employees who are BC-based

individuals for personally rendering services for the

production,

(

B) another corporation that is a taxable Canadian corporation, if all

of the issued and outstanding shares of the capital stock of the

corporation, except directors' qualifying shares, if any, belong

to a BC-based individual and the activities of the corporation

consist principally of the provision of that individual's services,

to the extent that the amount paid is attributable to services

rendered personally by the individual for the production,

(

C) another corporation that is a taxable Canadian corporation, to

the extent that the amount paid is attributable to and does not

exceed the salary or wages of that corporation's employees who

are BC-based individuals for personally rendering services for

the production, or

(

D) a partnership that is carrying on business in Canada, to the

extent that the amount paid

(

I) is attributable to services personally rendered for the

production by a BC-based individual who is a member

of the partnership, or

(II) is attributable to and does not exceed the salary or wages

of the partnership's employees who are BC-based

individuals for personally rendering services for the

production;

(

c) a reimbursement, other than a reimbursement that constitutes remuneration

within the meaning of paragraph (b), made by the corporation to a second

corporation (in this paragraph the "parent") of an expenditure that was made

by the parent in respect of the production in a particular taxation year of the

parent if

(

i) the corporation is a wholly-owned subsidiary of the parent,

(ii) the parent is a taxable Canadian corporation,

(iii) the corporation and the parent have agreed that this paragraph applies

in respect of the production,

(iv) the reimbursement is made by the corporation in the corporation's

taxation year, or within 60 days after the end of that taxation year, and

(

v) the expenditure would have qualified for inclusion in the BC labour

expenditure of the corporation in respect of the production for the

taxation year under paragraph (

a) or (

b) if

(

A) the taxation year for the corporation were the same as the

taxation year for the parent, and

(

B) the expenditure had been incurred by the corporation for the

same purpose, and had been paid by the corporation at the same

time and to the same person or partnership, as it was by the

parent

but does not include

(

d) an amount to which

section 37 of the federal Act applies,

(

e) an amount that is not a cost of producing the production,

(

f) without limiting paragraph (e), an amount in respect of advertising,

marketing, promotion or market research, or

(

g) an amount related in any way to another film or video production;

"certifying authority" means the Minister of Small Business, Tourism and Culture;

"eligible production" means a film or video production made by an eligible

production corporation that meets the following criteria:

(

a) the production is not an excluded production;

(

b) if the production is for television broadcast and is not directed primarily to

children, the production, or, if the production comprises 2 or more episodes,

each episode in the production, is suitable for initial broadcast in a standard

television time slot of at least 30 minutes;

(

c) no investor, and no partnership in which an investor has a direct or indirect

interest, is entitled to deduct an amount in respect of the production in

computing income for any taxation year for the purposes of the federal Act;

(

d) at least 75% of the cost of producing the production, other than costs

determined by reference to the amount of income from the production, or,

in the case of an interprovincial co-production or a treaty co-production, at

least 75% of the cost of producing the British Columbia portion of the

production, other than costs determined by reference to the amount of

income from the production, is payable to BC-based individuals or BC-based

corporations in respect of goods or services provided in British

Columbia by

(

i) BC-based individuals who are employees, or

(ii) BC-based individuals, or BC-based corporations, in the course of

carrying on business through a permanent establishment in British

Columbia;

(

e) there is a written agreement with a Canadian-controlled corporation that is

a distributor of film or video productions, or with a Canadian broadcaster

that is not associated, within the meaning of

section 256 of the federal Act,

with the eligible production corporation, for consideration at fair market

value, to have the production shown in Canada within 24 months after the

completion of the production;

(

f) the following additional conditions are satisfied:

(

i) if the production is neither an interprovincial co-production nor a

treaty co-production,

(

A) the certifying authority has allotted at least 6 Canadian content

points in respect of the production in accordance with the

regulations, or the production is a documentary and all of the

creative positions applicable to the production are occupied by

Canadians,

(

B) at least 75% of the cost of post-production work for the

production, other than costs determined by reference to the

amount of income from the production, is for post-production

work carried out in British Columbia, and

(

C) in the case of a production that is not a documentary, principal

photography of the production is done in British Columbia

during at least 75% of the total number of days during which

principal photography of the production is done;

(ii) if the production is an interprovincial co-production,

(

A) the certifying authority has allotted at least 6 Canadian content

points in respect of the production in accordance with the

regulations, or the production is a documentary and all of the

creative positions applicable to the production are occupied by

Canadians,

(

B) at least 20% of the cost of producing the production, other than

costs determined by reference to the amount of income from the

production, is in respect of the British Columbia portion of the

production, and

(

C) at least 50% of the cost of post-production work for the

production, other than costs determined by reference to the

amount of income from the production, is for post-production

work carried out in British Columbia;

(iii) if the production is a treaty co-production, at least 20% of the cost of

producing the Canadian portion of the production, other than costs

determined by reference to the amount of income from the

production, is in respect of the British Columbia portion of the

production;

"eligible production corporation" , for a taxation year, means a BC-based

corporation that is throughout the taxation year a Canadian-controlled taxable

Canadian corporation the activities of which in the taxation year are primarily

the carrying on of a film or video production business through a permanent

establishment in Canada, but does not include a corporation that

(

a) is exempt from tax under

section 27,

(

b) is controlled directly or indirectly in any manner whatever by one or more

persons all or part of whose taxable income is exempt from tax under

section 27 of this Act or under

Part 1 of the federal Act,

(

c) is prescribed, under the federal Act, to be a labour-sponsored venture capital

corporation for the purpose of

section 127.4 of that Act,

(

d) has registered an employee share ownership plan under

section 2 of the

Employee Investment Act ,

(

e) is an employee venture capital corporation registered under

section 8 of the

Employee Investment Act, or

(

f) is a small business venture capital corporation registered under

section 3 of

the Small Business Venture Capital Act ;

"qualified BC labour expenditure" of a corporation for a taxation year in respect

of a film or video production means the lesser of

(

a) the positive amount, if any, determined by the formula

LE + DL - RE

where

LE means the BC labour expenditure of the corporation for the taxation

year in respect of the production,

DL means, if the production is not complete before the beginning of the

previous taxation year and the corporation had, for the previous

taxation year, a qualified BC labour expenditure that was determined

in respect of the production under paragraph (

b) of this definition, the

difference between the previous year's qualified BC labour

expenditure and the amount that would have been the previous year's

qualified BC labour expenditure had that amount been calculated

under paragraph (

a) of this definition, and

RE means the total of those expenditures made in respect of the

production

(

i) that are included in LE, and

(ii) for which reimbursement is to be or has been provided to the

corporation under an agreement referred to in paragraph (

c) of

the definition of "BC labour expenditure", and

(

b) the positive amount, if any, determined by the formula

48% (TPC - TA) - LC

where

TPC means the total, determined at the end of the taxation year, of the

costs incurred by the corporation in producing the production,

TA means the total of all amounts of assistance in respect of TPC that, at

the time of the filing of the corporation's return of income for the

year,

(

a) the corporation or any other person or partnership has received,

is entitled to receive or can reasonably be expected to receive,

(

b) has not been repaid under a legal obligation to do so, and

(

c) does not otherwise reduce TPC, and

LC means the total of the corporation's qualified BC labour expenditures

(

a) in respect of the production, and

(

b) for each of the preceding taxation years before the end of which

principal photography of the production began;

"related" has the same meaning as in

section 251 of the federal Act;

"remuneration" does not include an amount determined by reference to profits or

revenues;

"salary or wages" has the same meaning as in

section 248 of the federal Act as

modified by

section 125.4 (1) of that Act;

"taxable Canadian corporation" has the same meaning as in the federal Act.

(2) If a film or video production is intended for television broadcast as a series, the

production comprises all of the episodes constituting a cycle of that production.

Basic tax credit

(1) A corporation is eligible for a basic tax credit for a taxation year in respect of an

eligible production if

(

a) principal photography of the production begins

(

i) before the end of the taxation year,

(ii) after March 31, 1998, and

(iii) before April 1, 2003,

(

b) the production is completed within 24 months after the end of the corporation's

taxation year in which the principal photography of the production

began,

(

c) the corporation is, throughout the taxation year in respect of which the tax

credit is being claimed, an eligible production corporation that is BC-controlled,

(

d) the producer of the production, or, in the case of an interprovincial co-

production or a treaty co-production, the producer of the British Columbia

portion of the production, is at all times during the production of the

production, a BC-based individual who is a Canadian,

(

e) no distribution of the production is made in Canada, within 24 months after

the completion of the production, by a person who is not a Canadian,

(

f) for a production that is neither an interprovincial co-production nor a treaty

co-production,

(

i) more than 50% of the copyright in the production is owned by the

corporation or by a BC-controlled eligible production corporation

that is related to the corporation, and

(ii) the balance, if any, of the copyright is owned by one or more of the

following:

(

A) an eligible production corporation;

(

B) a corporation that would be an eligible production corporation

if it had a permanent establishment in British Columbia;

(

C) a recognized person,

(

g) for a production that is neither an interprovincial co-production nor a treaty

co-production, the initial licensing of the commercial exploitation of the

production is controlled by one of the corporations referred to in

paragraph (f) (i),

(

h) for a production that is an interprovincial co-production or a treaty co-

production, the corporation, or a BC-controlled eligible production

corporation that is related to the corporation, retains a share, acceptable to

the certifying authority, of revenues from the exploitation of the production

in non-Canadian markets,

(

i) for a production that is an interprovincial co-production, more than 20% of

the copyright in the production is owned by the corporation or by a BC-controlled

eligible production corporation that is related to the corporation,

(

j) the corporation has obtained a valid eligibility certificate issued to it under

section 86 in respect of the production and the claimed tax credit, and

(

k) the corporation makes application for the basic tax credit in accordance with

section 85.

(2) The amount of the tax credit that may be claimed by a qualifying corporation

under this

section is,

(

a) in the case of a production that is an interprovincial co-production, 20% of

the corporation's qualified BC labour expenditure for the taxation year in

respect of the production multiplied by the percentage of the copyright in

the production that is beneficially owned by the corporation, or

(

b) in any other case, 20% of the corporation's qualified BC labour expenditure

for the taxation year in respect of the production.

Regional tax credit

(1) A corporation is eligible for a regional tax credit for a taxation year in respect of

an eligible production if

(

a) principal photography of the production begins

(

i) before the end of the taxation year,

(ii) after March 31, 1998, and

(iii) before April 1, 2003,

(

b) the production is completed within 24 months after the end of the corporation's

taxation year in which the principal photography of the production

began,

(

c) the corporation is, throughout the taxation year in respect of which the tax

credit is claimed, an eligible production corporation that is Canadian-controlled,

(

d) principal photography of the production, or, in the case of a production that

is intended for television broadcast as a series and that comprises a cycle of

at least 3 episodes, principal photography of at least 3 of those episodes (the

"qualifying episodes"), is done in British Columbia outside of the

designated Vancouver area during at least 85% of the total number of days

during which principal photography of the production or the qualifying

episodes, as the case may be, is done,

(

e) throughout the period during which principal photography of the

production or of the qualifying episodes, as the case may be, is done in

British Columbia outside of the designated Vancouver area, the corporation

has a production office that is located in British Columbia outside of the

designated Vancouver area,

(

f) the corporation has obtained a valid eligibility certificate issued to it under

section 86 in respect of the production and the claimed tax credit, and

(

g) the corporation makes application for the regional tax credit in accordance

with

section 85.

(2) The amount of the tax credit that may be claimed by a qualifying corporation

under this

section is

(

a) subject to paragraph (b), 12.5% of the corporation's qualified BC labour

expenditure for the taxation year in respect of the production, or

(

b) for a film or video production referred to in subsection (1) (

d) that is

intended for television broadcast as a series, 12.5% of the corporation's

qualified BC labour expenditure for the taxation year in respect of the

qualifying episodes referred to in that provision.

Training tax credit

(1) A corporation is eligible for a training tax credit for a taxation year in respect of

an eligible production if

(

a) the corporation is eligible for, and has made or is making an application in

accordance with

section 85 for, a tax credit in relation to the production

under one or both of sections 80 and 81,

(

b) one or more BC-based individuals are participating as trainees in an

approved training program in relation to the production,

(

c) the corporation has obtained a valid eligibility certificate issued to it under

section 86 in respect of the production and the claimed tax credit, and

(

d) the corporation makes application for the training tax credit in accordance

with

section 85.

(2) The amount of the tax credit that may be claimed by a qualifying corporation

under this

section is the lesser of

(a) 3% of the qualified BC labour expenditure of the corporation for the

taxation year in respect of the production, and

(b) 30% of the amount by which the payments attributable to training exceed

the amount of assistance that the corporation has received, is entitled to

receive or can reasonably be expected to receive for that taxation year in

relation to

(

i) the approved training program, or

(ii) the trainees referred to in subsection (1) (b).

(3) For the purposes of subsection (2) (b), "payments attributable to training"

means the salary or wages and remuneration paid

(

a) by the corporation,

(

b) to the trainees referred to in subsection (1) (b),

(

c) in the taxation year, and

(

d) in respect of the period during which the trainees to whom the salary or

wages or remuneration was paid were participating as trainees in the

approved training program in relation to the production.

No credit available if

section 17 deduction made

83 A corporation that has made a deduction in accordance with

section 17 for a taxation

year must not claim a tax credit under this Part for the same taxation year.

Deemed payment

84 A corporation that has claimed and is eligible for a tax credit under this Part for a

taxation year is deemed to have paid, at the time referred to in

section 157 (1) (

b) of

the federal Act, as that

section relates to that taxation year, the amount of that credit

on account of its tax payable under this Act.

Application for tax credit

(1) A corporation that wishes to claim a tax credit under this

Part in respect of a

taxation year must file, with the return of income filed by the corporation under

section 29 for that taxation year,

(

a) the eligibility certificate issued to the corporation under

section 86 that is

appropriate to

(

i) the tax credit, and

(ii) the film or video production in respect of which the claim is made,

(

b) if the tax credit is claimed in respect of the taxation year in which the

production is completed, the completion certificate issued to the

corporation in respect of the production under

section 87, and

(

c) an application for the tax credit in the form, and containing the information

and records, required by the Commissioner of Income Tax.

(2) A corporation is not entitled to a tax credit in respect of a taxation year under this

Part unless, within 36 months after the end of the taxation year, the corporation

files the information and records required under subsection (1) for that tax credit.

Eligibility certificate

(1) A corporation that wishes to claim one or more of the tax credits referred to in

sections 80 to 82 in respect of a film or video production must apply to the

certifying authority for an eligibility certificate.

(2) A corporation referred to in subsection (1) must, with its application,

(

a) pay an application fee to a person prescribed by the Lieutenant Governor in

Council, and

(

b) provide the information and records that the certifying authority requires in

respect of the corporation and the production.

(3) On receiving an application under this section, the certifying authority must issue

to the applicant corporation an eligibility certificate if the certifying authority is

satisfied, on the basis of the information provided by the corporation and any

other information available to the certifying authority, that the corporation will,

on completion of the production, be entitled to receive a completion certificate

under

section 87 in respect of the production and the specified tax credits.

Completion certificate

(1) A corporation that has claimed or intends to claim a tax credit under this

Part in

respect of a film or video production must apply to the certifying authority for a

completion certificate promptly after the completion of the production.

(2) A corporation referred to in subsection (1) must, with its application,

(

a) pay an application fee to a person prescribed by the Lieutenant Governor in

Council, and

(

b) provide the information and records that the certifying authority requires in

respect of the corporation and the production.

(3) On receiving an application under this section, the certifying authority must issue

to the applicant corporation a completion certificate if the certifying authority is

satisfied, on the basis of the information provided by the corporation and any

other information available to the certifying authority, that the corporation is

eligible for the specified tax credits that have been and are being claimed by the

corporation in respect of the production.

Revocation of certificates

(1) A certificate may be revoked by the certifying authority or by the Provincial

minister if,

(

a) in the case of a certificate issued under

section 86 or 87,

(

i) an omission or incorrect statement was made for the purpose of

obtaining the certificate,

(ii) the corporation to which the certificate was issued does not meet the

eligibility requirements for one or more of the tax credits to which the

certificate relates, or

(iii) the production in respect of which the certificate was issued does not

meet the eligibility requirements for one or more of the tax credits to

which the certificate relates, or

(

b) in the case of an eligibility certificate issued to a corporation under

section 86 in respect of a production,

(

i) a completion certificate is not issued under

section 87 in respect of

the production

(

A) within 30 months after the end of the corporation's taxation

year in which the principal photography of the production

began, or

(

B) within any later period that the certifying authority or the

Provincial minister may, in writing, provide in relation to a

reconsideration being undertaken under

section 92 (1) or that

the court may order on an appeal brought in accordance with

section 92 (2) and (3), or

(ii) a completion certificate issued to the corporation under

section 87 in

respect of the production is revoked.

(2) A certificate that is revoked by the certifying authority or by the Provincial

minister is deemed never to have been issued.

Notice of refusal or revocation

(1) If the certifying authority refuses to issue a certificate for which application is

made under

section 86 or 87, the certifying authority must promptly give notice

of that refusal, together with reasons for the refusal, to the corporation.

(2) If the certifying authority revokes a certificate issued under

section 86 or 87, the

certifying authority must promptly give notice of that revocation, together with

reasons for the revocation, to the corporation and the Provincial minister or, if the

revocation is effected by the Provincial minister, that minister must promptly give

notice of that revocation, together with reasons for the revocation, to the

corporation and the certifying authority.

Tax credit must be reimbursed

90 Without limiting any provision of this Act or the federal Act, if a corporation has

claimed a tax credit under this

Part in respect of a film or video production and is,

under

section 84 of this Act, deemed for a taxation year to have paid the amount of the

tax credit on account of its tax payable under this Act, the amount of the tax credit

must be repaid, and is, together with interest from the time referred to in

section 157

(1) (

b) of the federal Act, as that

section relates to that taxation year, a debt of the

corporation due to the Provincial government, if

(

a) the eligibility certificate issued to the corporation under

section 86 in

respect of that tax credit has been revoked without another eligibility

certificate having been issued in replacement,

(

b) a completion certificate is not issued to the corporation under

section 87 in

respect of that tax credit

(

i) within 30 months after the end of the corporation's taxation year in

which the principal photography of the production began, or

(ii) within any later period that the certifying authority or the Provincial

minister may, in writing, provide in relation to a reconsideration

being undertaken under

section 92 (1) or that the court may order on

an appeal brought in accordance with

section 92 (2) and (3),

(

c) a completion certificate issued to the corporation under

section 87 in respect

of the production is revoked without another completion certificate having

been issued in replacement, or

(

d) the corporation is not otherwise entitled to the tax credit.

Recovery of debt

(1) Without limiting any provision of this Act or the federal Act, for the purpose of

recovering a debt due to the Provincial government under this Part, the Commissioner

of Income Tax may

(

a) issue a certificate stating

(

i) that the amount is due,

(ii) the amount remaining unpaid, including interest, and

(iii) the name of the person required to pay it, and

(

b) file the certificate with the Supreme Court.

(2) A certificate filed under subsection (1) with the Supreme Court is of the same

effect, and proceedings may be taken on it, as if it were a judgment of the

Supreme Court for the recovery of a debt in the amount stated against the person

named in it.

Reconsiderations and certification appeals

(1) Any decision made under this Part by or on behalf of the certifying authority or

the Provincial minister may be reconsidered and confirmed, reversed or varied by

or on behalf of that person.

(2) Without limiting any provision of this Act or the federal Act, a corporation may

appeal, in accordance with subsection (3), any of the following:

(

a) a decision of the certifying authority to issue or to refuse to issue a

certificate under this Part;

(

b) a decision of the certifying authority or the Provincial minister to revoke a

certificate issued under this Part;

(

c) the failure of the certifying authority to issue or to refuse to issue a

completion certificate under this Part within 30 months after the end of the

corporation's taxation year in which the principal photography of the

production began, if the application for the certificate was made as soon as

was reasonably practicable in the circumstances.

(3) An appeal must be brought in the Supreme Court, by way of originating application,

(

a) in the case of an appeal brought under subsection (2) (

a) or (b), within 120

days after the date of any notice of the decision provided by the certifying

authority or the Provincial minister, or

(

b) in the case of an appeal brought under subsection (2) (c), within 120 days

after the date that is 30 months after the end of the corporation's taxation

year in which the principal photography of the production began.

Powers of audit

93 Without limiting any provision of this Act or the federal Act, for the purpose of

determining whether a corporation is eligible for a tax credit under this Part, the

Commissioner of Income Tax has powers equivalent to the federal minister under

sections 230 (3), 231, 231.1, 233 and 236 of the federal Act, and for that purpose those

sections apply.

Minister may require information regarding certificates

94 The Provincial minister is entitled to obtain from the certifying authority any

information required by the Provincial minister respecting certificates issued, refused

or revoked by the certifying authority.

Collection and sharing of information

(1) The certifying authority or the Provincial minister may designate any person or

body as an advisory body for the purposes of this Part.

(2) Without limiting any provision of this or any other enactment, the certifying

authority, the Provincial minister and any advisory body designated under

subsection (1) may

(

a) collect any information that is relevant to an applicant's eligibility for a tax

credit being claimed or already claimed under this Part, and

(

b) share with each other, in accordance with an information-sharing agreement

entered into in accordance with

section 65, any information respecting an

application, an applicant or any other person if the information is relevant

to a tax credit being claimed or already claimed under this Part.

Power to make regulations

(1) The Lieutenant Governor in Council may make regulations referred to in

section 41 of the

Interpretation Act .

(2) Without limiting subsection (1), the Lieutenant Governor in Council may make

regulations as follows:

(

a) defining any word or expression used in this Part or in any regulations made

under this Part;

(

b) determining and allocating Canadian content points for the purposes of the

definition of "eligible production";

(

c) prescribing one or more persons to whom fees payable under or by virtue of

this Part, including fees for certificates issued under this Part, must be paid;

(

d) prescribing the boundaries for the designated Vancouver area.

(3) Regulations that may be made under this Part may be made retroactive to

April 1, 1998 or a later date that the Lieutenant Governor in Council may

determine, and a regulation made retroactive is deemed to come into force on the

date specified in the regulation.

Section 79 (1) is amended in the definition of "assistance" by adding "or 125.5 (3)" after

"section 125.4 (3)" .

Commencement

(1) Section 8 comes into force by regulation of the Lieutenant Governor in Council.

(2) When brought into force by regulation,

section 8

(

a) is deemed to have come into force on the later of

(

i) April 1, 1998, and

(ii) the date on which

section 125.5 (3) of the Income Tax Act (Canada)

comes into force, and

(

b) is retroactive to the extent necessary to give it effect on and after that date.

(3) Sections 1, 2 and 6 are deemed to have come into force on March 31, 1998 and

are retroactive to the extent necessary to give them effect on and after that date.

(4) Sections 5 and 7 are deemed to have come into force on April 1, 1998 and are

retroactive to the extent necessary to give them effect on and after that date.

(5) Section 3 comes into force on January 1, 1999.

(6) Section 4 comes into force on January 1, 2000.

Explanatory Notes

SECTION 1: [Income Tax Act, amends

section 4 (5)] for 1999 and subsequent years,

reduces individual income tax from 50.5% of federal tax to 49.5% of federal

tax.

SECTION 2: [Income Tax Act, amends

section 6 (1)] for 1999 and subsequent years,

reduces individual surtax from 26% of tax amounts in excess of $8 660 to 19%

of those tax amounts.

SECTION 3: [Income Tax Act, amends

section 16] reduces the small business rate of tax

from 9% to 8.5%, which reduction becomes effective January 1, 1999.

SECTION 4: [Income Tax Act, amends

section 16] reduces the small business rate of tax

from 8.5% to 8%, which reduction becomes effective January 1, 2000.

SECTION 5: [Income Tax Act, adds

section 42 (2) (b) (iii)] provides for appeals respecting

the amount of the film and television tax credits determined under the Income

Tax Act as amended by this Bill.

SECTION 6: [Income Tax Act, enacts

section 68.1] provides a rule to adjust the tax effects

of a transaction if the transaction's primary purpose is to avoid tax.

SECTION 7: [Income Tax Act, enacts

Part 5] introduces, in a proposed

Part 5 to the Income Tax Act , the Film Incentive BC program to

provide refundable corporate income tax credits for qualifying film and television

productions with principal photography commencing after March 31, 1998. The

program offers a basic tax credit for BC-controlled corporations and regional

and training tax credits for any Canadian-controlled corporations that do film

production work outside of the Vancouver area and that provide training in the

film industry, respectively. The proposed

Part 5

establishes, in sections 80 to 82, the criteria on which the tax credits

contemplated by this program may be issued,

provides, in

section 83, that corporations claiming the film and television

tax credits cannot also claim the deduction available under the small

business tax holiday provided by

section 17 of the Income Tax Act ,

section 84, deems the amount of the tax credits issued under the proposed

Part 5 to have been paid against the claimant's tax otherwise payable under

the Income Tax Act ,

sets out, in

section 85, the requirements to be complied with in an income

tax filing by a corporation claiming a tax credit under the proposed

Part 5,

establishes and explains, in sections 86 and 87, the requirements for

claimants to obtain eligibility and completion certificates before making the

applications contemplated by

section 85,

in sections 88 to 91, provides for refusals and revocations of the certificates

contemplated under sections 86 and 87, requires reimbursement of the

amount of any tax credits issued under revoked certificates and provides

collection remedies for the required reimbursement amounts,

provides, in

section 92, for reconsiderations and appeals of decisions made

in relation to the program, and

provides, in sections 93 to 95, for the collection and sharing of information

relevant to the tax credits.

SECTION 8: [Income Tax Act, amends

section 79 (1)] excludes from the definition of

"assistance" as enacted by this Bill the film or video production services tax

credit proposed by the federal government.

Copyright © 1999: Queen's Printer, Victoria, British Columbia, Canada