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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 2 – 1998

BUDGET MEASURES IMPLEMENTATION ACT, 1998

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

of British Columbia, enacts as follows:

Corporation Capital Tax Act

Section 1 of the Corporation Capital Tax Act, R.S.B.C. 1996, c. 73, is amended

(

a) in subsection (1) by adding the following definition:

"threshold amount" for a taxation year means the applicable amount indicated

opposite the taxation year as follows:

Ending after December 31, 1998 and on or before December 31, 1999

$2.5 million

Ending after December 31, 1999 and on or before December 31, 2000

$3.5 million

Ending after December 31, 2000

$5 million; ,

(

b) in subsection (1) by repealing the definition of "adjusted paid up capital" ,

(

c) in subsection (1), in paragraph (

g) of the definition of "loans

and advances to corporations" , by striking out "adjusted

paid up capital" and substituting "net B.C. paid up capital" ,

and

(

d) in subsection (5) by striking out "adjusted paid up capital" and substituting "net B.C.

paid up capital" .

Section 3 (1) and (2) is amended by striking out "$750 million" and substituting

"$1 billion" .

Section 3 is repealed and the following substituted:

Liability for tax and general tax rates

(1) A corporation must, for each taxation year that the corporation has or had a

permanent establishment in British Columbia, pay to the government a tax

calculated in accordance with this Act if the corporation has, at the end of that

taxation year,

(

a) in the case of a corporation that is not associated with one or more other

corporations, net paid up capital that is equal to or greater than the threshold

amount, or

(

b) in the case of a corporation that is one of 2 or more associated corporations,

net paid up capital that, when added to the net paid up capital of every

corporation with which it is associated, is in total equal to or greater than

the threshold amount.

(2) In the case of a corporation that is a bank, trust company or credit union,

(

a) if the corporation has, at the end of the applicable taxation year, net paid up

capital of more than $1 billion, the tax imposed on and payable by the

corporation under subsection (1) for the taxation year is an amount equal

to 3% of the net B.C. paid up capital of the corporation for that taxation

year, or

(

b) if the corporation has, at the end of the applicable taxation year, net paid up

capital of $1 billion or less, the tax imposed on and payable by the

corporation under subsection (1) for the taxation year is, subject to

sections 3.1 and 3.2, an amount equal to 1% of the net B.C. paid up capital

of the corporation for that taxation year.

(3) In the case of a corporation that is not a bank, trust company or credit union, the

tax imposed on and payable by the corporation under subsection (1) for a taxation

year is, subject to sections 3.1 and 3.2, an amount equal to 0.3% of the net B.C.

paid up capital of the corporation for the taxation year.

(4) If a corporation is one of 2 or more associated corporations, the amounts of net

paid up capital of the associated corporations that are to be added together for the

purposes of subsection (1) (

b) must be computed by using the taxation year for

each associated corporation that ends in the same calendar year as the taxation

year of the corporation for which the tax payable is being determined.

(5) For the purposes of determining whether a corporation referred to in

section 14 (2) is subject to tax under this section, the corporation must compute

its net paid up capital on the same basis as if it were resident in Canada.

Reduced tax for smaller corporations that

are not associated with other corporations

3.1

(1) For a corporation that

(

a) is referred to in

section 3 (2) (

b) or (3),

(

b) is not one of 2 or more associated corporations, and

(

c) has, at the end of the applicable taxation year, net B.C. paid up capital that

is less than the total of the threshold amount plus $250 000,

in the circumstances described in this section, the tax imposed on and payable

under this Act by the corporation for that taxation year is the amount determined

under this

section rather than the amount of tax that would otherwise be payable

by the corporation under

section 3.

(2) If, at the end of a taxation year, the corporation has net B.C. paid up capital that is

(

a) equal to or greater than the threshold amount, and

(

b) less than the total of the threshold amount plus $250 000,

the amount of tax imposed on and payable by the corporation for the taxation year

is to be determined in accordance with the following formula:

Amount = tax otherwise payable - [(notch -

capital) x 1.6%]

where

tax otherwise payable

the amount of tax otherwise payable under

section 3 for the taxation year by the corporation, if this

section did not apply;

notch

the total of the threshold amount plus $250 000;

capital

the corporation's net B.C. paid up capital for the taxation year.

(3) If, at the end of a taxation year, the corporation has net B.C. paid up capital that is

(

a) equal to or greater than $1.5 million, and

(

b) less than the threshold amount,

the amount of tax imposed on and payable by the corporation for the taxation year

is to be determined in accordance with the following formula:

Amount = [(capital - $1.5 million) x rate]

+ $500

where

capital

the corporation's net B.C. paid up capital for

the taxation year;

rate

(a)

1%, for a corporation otherwise subject to tax calculated

under

section 3 (2) (b), and

(b)

0.3%, for a corporation otherwise subject to tax calculated

under

section 3 (3).

(4) If, at the end of a taxation year, the corporation has net B.C. paid up capital that is

(

a) equal to or greater than $250 000, and

(

b) less than $1.5 million,

the amount of tax imposed on and payable by the corporation for the taxation year

is $500.

(5) If, at the end of a taxation year, the corporation has net B.C. paid up capital that

is less than $250 000, the amount of tax imposed on and payable by the

corporation for the taxation year is the lesser of

(

a) the amount of tax that would be payable under

section 3 for the taxation year

by the corporation, if this

section did not apply, and

(b) $250.

Reduced tax for smaller corporations that are

associated with one or more other corporations

3.2

(1) For a corporation that

(

a) is referred to in

section 3 (2) (

b) or (3),

(

b) is one of 2 or more associated corporations, and

(

c) has, at the end of the applicable taxation year, net B.C. paid up capital that,

when added to the net B.C. paid up capital of every corporation with which

it is associated, is in total not more than the total of the threshold amount

plus $250 000,

in the circumstances described in this section, the tax imposed on and payable

under this Act by the corporation for that taxation year is the amount determined

under this

section rather than the amount of tax that would otherwise be payable

by the corporation under

section 3.

(2) If, at the end of a taxation year, the corporation has net B.C. paid up capital that,

when added to the net B.C. paid up capital of every corporation with which it is

associated, is in total

(

a) equal to or greater than the threshold amount, and

(

b) less than the total of the threshold amount plus $250 000,

the amount of tax imposed on and payable by the corporation for the taxation year

is its proportionate share of the amount determined in accordance with the

following formula:

Amount = total tax otherwise payable

- [(notch - total capital) x 1.6%]

where

total tax otherwise payable

the total amounts of tax that would be payable under

section 3 for the taxation year by the corporation and every corporation with which it is associated, if this

section did not apply;

notch

the total of the threshold amount plus $250 000;

total capital

the total of the net B.C. paid up capital for the taxation year for the corporation and every corporation with which it is associated.

(3) If, at the end of a taxation year, the corporation has net B.C. paid up capital that,

when added to the net B.C. paid up capital of every corporation with which it is

associated, is in total

(

a) equal to or greater than $1.5 million, and

(

b) less than the threshold amount,

the amount of tax imposed on and payable by the corporation for the taxation year

is its proportionate share of the amount determined in accordance with the

following formula:

Amount = [(total capital - $1.5 million) x

rate] + $500

where

total capital

the total of the net B.C. paid up capital for the taxation year for the corporation and every corporation with which it is associated;

rate

(a)

1%, for a corporation otherwise subject to tax calculated under

section 3 (2) (b), and

(b)

0.3%, for a corporation otherwise subject to tax calculated under

section 3 (3).

(4) If, at the end of a taxation year, the corporation has net B.C. paid up capital that,

when added to the net B.C. paid up capital of every corporation with which it is

associated, is in total

(

a) equal to or greater than $250 000, and

(

b) less than $1.5 million,

the amount of tax imposed on and payable by the corporation for the taxation year

is its proportionate share of $500.

(5) If, at the end of a taxation year, the corporation has net B.C. paid up capital that,

when added to the net B.C. paid up capital of every corporation with which it is

associated, is in total less than $250 000, the amount of tax imposed on and

payable by the corporation for the taxation year is its proportionate share of the

lesser of

(

a) the total amount of tax that would be payable under

section 3 for the

taxation year by the corporation and every corporation with which it is

associated, if this

section did not apply, and

(b) $250.

(6) For the purposes of this section, the proportionate share of an amount that is

payable by a corporation under this

section is the proportion that

(

a) its net B.C. paid up capital

bears to

(

b) the total of the net B.C. paid up capital of the corporation and every

corporation with which it is associated that has a positive net B.C. paid up

capital.

(7) For the purpose of determining the tax payable by a corporation under this

section, the amounts of net B.C. paid up capital of the associated corporations and

the amounts of tax otherwise payable under

section 3 that are to be added together

for the purposes of this

section must be computed by using the taxation year for

each associated corporation that ends in the same calendar year as the taxation

year of the corporation for which the tax payable is being determined.

Section 15 is repealed.

Section 16 (1) and (3) (

a) is amended by striking out "adjusted paid up capital" and substituting

"net B.C. paid up capital" .

Section 17 is amended by striking out "adjusted paid up capital" wherever it appears and

substituting "net B.C. paid up capital" .

Section 21 (

b) is amended by striking out "adjusted paid up capital" and substituting "net

B.C. paid up capital" .

Financial Administration Act

Part 6 of the Financial Administration Act, R.S.B.C. 1996, c. 138, is repealed.

Financial Information Act

Schedule 1 of the Financial Information Act, R.S.B.C. 1996, c. 140,

is amended by striking out " System Act " .

Fire Services Act

10 The definition of ' "taxable insurer" and "taxpayer"

' in

section 1 of the Fire Services Act, R.S.B.C. 1996, c. 144, is repealed.

11 Sections 37, 38 and 39 are repealed.

Freedom of Information and Protection of Privacy Act

Schedule 2 of the Freedom of Information and Protection of Privacy Act, R.S.B.C. 1996,

c. 165, is amended by striking out the following:

Public Body:

British Columbia Systems Corporation

Head:

Chair of the Board of Directors .

Insurance Premium Tax Act

Section 1 of the Insurance Premium Tax Act, R.S.B.C. 1996, c. 232, is amended

(

a) by repealing the

definitions of "class of insurance" ,

"life insurance" , "marine insurance" , "personal accident insurance" ,

"personal property insurance" and "sickness insurance",

(

b) by adding the following

definitions:

"BC premium" means the premium payable under a contract of insurance in respect

of a person resident or property situated in British Columbia at the time the

premium becomes payable;

"net taxable premiums" of an insurer for a taxation year means the amount, if any,

by which the insurer's total taxable premiums for the taxation year exceeds the

total of

(

a) taxable premiums returned to policy holders by the insurer in the taxation

year, and

(

b) the cash value of dividends paid or credited in the taxation year by the

insurer to policy holders under contracts of insurance in respect of persons

resident or property situated in British Columbia;

"premium" includes any payment made as consideration for a contract of insurance,

including premium deposits, assessments, registration fees, contributions by

members and any other compensation given in consideration for a contract of

insurance, including a contract of reciprocal insurance;

"tax" includes all penalties and interest that are or may be added to the tax under this

Act;

"taxable premium" of a taxable insurer for a taxation year means a BC premium

that is received or became receivable by the insurer in the taxation year, other

than a premium received

(

a) as consideration for an annuity contract,

(

b) from another taxable insurer under a contract of reinsurance,

(

c) under a contract of marine insurance that is not pleasure craft insurance, or

(

d) for medical services or hospitalization under a medical services or hospitalization

plan approved by regulation;

"taxation year" means a calendar year and, when a taxation year is referred to by

reference to a calendar year, the reference is to the taxation year coinciding with

that year; ,

(

c) by repealing the definition of "taxpayer" and substituting the following:

"taxpayer" means

(

a) a taxable insurer,

(

b) a person resident in British Columbia who enters into an insurance contract

with an insurer other than a taxable insurer, or

(

c) a trustee in bankruptcy, assignee, liquidator, receiver, administrator or

similar person administering, managing, winding up or otherwise dealing

with the property or business of a taxable insurer. , and

(

d) by renumbering the

section as

section 1 (1) and by adding the following:

(2) The terms "accident and sickness insurance" , "life insurance", "personal

property insurance" and "marine insurance" have the meanings prescribed for

those classes of insurance in the Insurance Classes Regulation under the

Insurance Act .

Section 3 is repealed and the following substituted:

Tax provision

3 Every taxable insurer must pay to the government a tax for each taxation year equal to

the total of

(a) 2% of the taxable insurer's net taxable premiums for the year received or

receivable under contracts of life insurance, accident and sickness insurance

and insurance that indemnifies or compensates for loss of salary or wages,

and

(b) 4% of the taxable insurer's net taxable premiums for the year received or

receivable under contracts of insurance not referred to in paragraph (a).

15 Sections 6 (1) and 11 (2) are amended by striking out "March 15" and substituting

"March 31" .

International Financial Business (Tax Refund) Act

Section 1 (1) of the International Financial Business (Tax Refund) Act, R.S.B.C. 1996,

c. 235, is amended

(

a) by adding the following definition:

"captive insurance company" means an insurance

company registered under the Insurance (Captive Company) Act ; ,

(

b) in the definition of "eligible employee" by striking out ";" at the end of paragraph (

c) and substituting "," and by adding the following after paragraph (c):

but does not include an employee of a captive insurance company or of an export

financing company; ,

(

c) by adding the following definition:

"export financing company" means a company whose only business is making

loans to non-resident buyers of Canadian exports of goods or services, or both; ,

(

d) in the definition of "financial institution" by repealing paragraph (

a) and substituting

the following:

(

a) a bank, trust company, investment dealer, insurer or export financing

company, , and

(

e) by repealing the definition of "insurer" and substituting the following:

"insurer" means an insurance company or a captive insurance company; .

Section 2 (1) is amended by adding the following paragraph:

(b.1) the financial institution must be a member of the International Financial

Centre Society of Vancouver; .

18 The following

section is added:

Society membership

3.1

(1) It is a requirement for the renewal, reinstatement or amendment of the registration

under this Act of a financial institution that the financial institution be a member

of the International Financial Centre Society of Vancouver.

(2) A registration under the Act of a financial institution whose registration is in

effect on April 1, 1998 expires at the end of the current taxation year of the

financial institution, unless the financial institution is a member of the International

Financial Centre Society of Vancouver.

Section 6 is amended by adding the following subsection:

(4) Subsection (1) does not apply to a captive insurance company.

Motor Fuel Tax Act

Section 5 of the Motor Fuel Tax Act, R.S.B.C. 1996, c. 317, is amended by adding the

following subsection:

(3) A person who qualifies as a bona fide farmer under the Social Service Tax Act

may, if authorized by the regulations to do so, claim an exemption from tax

imposed under this section, or a refund of tax paid under this section.

Section 71 (2) is amended by adding the following paragraph:

(i.1) authorizing exemptions and refunds under

section 5 (3) and respecting any

matter or thing that the Lieutenant Governor in Council considers necessary

for the implementation and administration of those exemptions and

refunds; .

Pension (Public Service) Act

Section 2 (1) of the Pension (Public Service) Act, R.S.B.C. 1996, c. 356, is amended by

repealing paragraph (k).

Property Transfer Tax Act

Section 8 (1) (

c) of the Property Transfer Tax Act, R.S.B.C. 1996, c. 378, is repealed and

the following substituted:

(

c) ensure that, in the first 12 months after the registration date, the indebtedness

secured by eligible securities registered against the property is not

reduced by more than,

(

i) for a property referred to in paragraph (

a) of the definition of

"qualifying value", the greater of

(a) $11 000, and

(

b) the amount that would reduce that indebtedness to 70% of the

fair market value of the property as at the date on which the

application for registration of the eligible transaction was made

at a land title office, or

(ii) for a property referred to in paragraph (

b) of the definition of

"qualifying value", the greater of

(a) $9 000, and

(

b) the amount that would reduce that indebtedness to 70% of the

fair market value of the property as at the date on which the

application for registration of the eligible transaction was made

at a land title office.

Section 14 is amended

(

a) in subsection (1) by repealing the definition of "recreational residence" and substituting

the following:

"recreational residence" means an interest in a parcel of land if the parcel is one

(

a) on which, before the transfer,

(

i) an individual transferor resided on a seasonal basis for recreational

purposes, or

(ii) if an exemption is claimed under subsection (3) (

c) or (d), the settlor

or the deceased usually resided on a seasonal basis for recreational

purposes,

(

b) that has been classified as residential land under the Assessment Act ,

(

c) that is not larger than 5 ha in area, and

(

d) that has a fair market value, determined under paragraph (

a) of the

definition of "fair market value", of no more than $275 000; ,

(

b) in subsection (1) by adding the following definition:

"settlor" means, in relation to land held in trust, the person who

(

a) contributed the land to the trust estate, or

(

b) contributed to the trust estate the assets used to acquire the land,

whether or not that person is the creator of the trust. ,

(

c) by repealing subsection (3) (

a) and (

b) and substituting the following:

(

a) a transfer from a transferor who is not a trustee referred to in paragraph (

c) or (d), to a transferee who is a related individual, if the land transferred is a

family farm or a recreational residence;

(

b) a transfer from a transferor who is not a trustee referred to in paragraph (c),

(

d) or (e), to a transferee who is a related individual, if the land transferred

has been the principal residence of either the transferor for a continuous

period of at least 6 months immediately before the date of transfer or of the

transferee for that period; , and

(

d) by repealing subsection (4) (

p) and substituting the following:

(

p) a transfer from a settlor to the Public Trustee or a trustee that is a trust

company under the Financial Institutions Act authorized to carry on trust

business by a business authorization issued under that Act, if

(

i) the settlor is a natural person,

(ii) the settlor was the registered owner of the fee simple interest in the

land immediately before the transfer to the trustee,

(iii) the administration of the trust estate is for the sole benefit of the

settlor, and

(iv) on the termination of the trust the land reverts to the settlor or to the

executor or administrator of the settlor's estate;

(p.1) a transfer from a trustee of a trust referred to in paragraph (

p) to the settlor

of the land being transferred; .

Securities Act

Payment by Securities Commission

(1) Despite

section 15 of the Securities Act , at the request of the Minister of Finance

and Corporate Relations, the British Columbia Securities Commission must pay

to the government an amount not exceeding $12 million specified by the minister.

(2) The request and payment under subsection (1) must be made during the fiscal

year of the government ending on March 31, 1999.

(3) This

section is repealed on April 1, 1999.

Social Service Tax Act

Section 1 of the Social Service Tax Act, R.S.B.C. 1996, c. 431, is amended in the definition

of "purchase price" by striking out "and" at the end of paragraph (a) (ii), by adding "and"

at the end of paragraph (a) (iii) and by adding the following:

(iv) any charge, including a royalty or licence fee, relating to the use of

the tangible personal property, or to the use of knowledge required to

use the tangible personal property, whether incurred before or after

the time that title to the tangible personal property covered by the sale

passes under that sale, .

Section 5 is amended by adding the following subsection:

(3) Despite subsection (1), if part of the purchase price consists of charges described

in paragraph (a) (iv) of the definition of "purchase price" that cannot be

determined at the time of making the purchase, tax must be calculated separately

for each charge and must be paid by the earlier of

(

a) the time each charge is paid, and

(

b) the time each charge becomes payable.

Section 9 is amended

(

a) by adding the following subsection:

(1.1) Subject to

section 11 (3), a person who

(

a) acquired, inside or outside British Columbia, tangible personal property

that is exempt under this Act or the regulations, and

(

b) subsequently uses that property or allows that property to be used for a

purpose other than that which allowed the person to acquire or use the

property exempt from tax under the Act or the regulations

must, at the time the property is so used, pay tax on the purchase price of that

property at the rate under this Act. , and

(

b) in subsections (3) and (4) by adding "or copy of that prototype" after "prototype"

wherever it appears.

Section 19 (1) is amended by adding ", (1.1)" after "section 9 (1)" .

Section 20 (1) is amended by striking out "section 21 (3)" and substituting "sections 20.1

and 21 (3)" .

31 The following

section is added:

Tax on motor vehicle leased outside British Columbia

20.1

(1) A lessee of a motor vehicle, other than a multijurisdictional vehicle, must, at the

time of registering the vehicle for use, pay tax at the applicable rate under

section 6, if the vehicle is leased for a period of more than 28 days from an out of

Province lessor who is not a registered lessor under the Act, or who is a registered

lessor but has not confirmed collection of the tax.

(2) For the purpose of subsection (1), the reference to "purchase price" in

section 6

is to be read as the price at which the legal and beneficial interest in the motor

vehicle would, if unencumbered, be conveyed by a willing seller acting in good

faith to a willing buyer acting in good faith in an arm's length retail sale in the

open market on the date the motor vehicle is registered.

(3) On termination or expiration of the lease agreement for a motor vehicle referred

to in subsection (1), or removal of the motor vehicle from British Columbia for

registration outside of British Columbia, the lessee may claim a refund of the

difference between the tax paid at the time of registering the vehicle less the sum

of all taxes that would have otherwise been payable under

section 20 or 21.

(4) A person who pays tax under this

section is not required to pay tax under

section 20 (1) or 21 (2) with respect to the same lease agreement.

Section 21 (2) is amended by striking out "A person" and substituting "Subject to

section 20.1, a person" .

Section 26 (3) is repealed and the following substituted:

(3) The tax imposed under this

section must be paid by the earlier of

(

a) the time that the lease price is paid, and

(

b) the date on which the lease price is payable.

Section 73 is amended

(

a) by renumbering the

section as

section 73 (1),

(

b) in subsection (1) by repealing paragraph (

a) and substituting the following:

(

a) grain, mill and other agricultural feeds and seeds;

(a.1) subject to subsection (2), fertilizers; , and

(

c) by adding the following subsection:

(2) The exemption in subsection (1) (a.1) does not apply to fertilizers purchased for

a non-agricultural purpose by a person other than an individual unless the

fertilizer is otherwise exempted by this Act or the regulations.

Section 74 (

e) is repealed and the following substituted:

(

e) prescribed tangible personal property used for the conservation of energy.

Section 76 (1) is amended

(

a) by adding the following paragraph:

(b.1) chemicals used to make chlorine dioxide or sodium hydrosulfite, if the

purchaser of the chemicals

(

i) uses the chlorine dioxide or sodium hydrosulfite for pulp production,

and

(ii) would have been entitled to the exemption under paragraph (b), if he

or she had been a purchaser of the chlorine dioxide or sodium

hydrosulfite; ,

(

b) in paragraph (

d) by striking out "into a prototype," and substituting "into a prototype,

or copies of the prototype made for a prescribed purpose," , and

(

c) by adding the following paragraph:

(

g) software source code in non-executable form.

37 The following

section is added to

Part 3:

Limit on exemptions

79.1 An exemption provided under this Act or the regulations for tangible personal

property does not apply to tangible personal property used to make that property.

Section 84 is renumbered as

section 84 (1) and the following is added:

(2) Despite subsection (1), if a motor vehicle is returned to the manufacturer or

vendor more than one year after the property was delivered to the purchaser, and

the return to the manufacturer or vendor results from an independent, impartial

third party dispute resolution process, the purchaser is eligible for a refund of the

amount of tax paid by the purchaser that is attributable to the amount of the refund

or credit received from the manufacturer or vendor.

Section 115 (3) is repealed and the following substituted:

(3) The commissioner must not make an assessment under this

section in respect of

a tax liability or an obligation to collect or remit tax that arose, or an excess

refund that was paid, more than 6 years before the date of the first notice of

assessment.

Limitation – Social Service Tax Act

(1) No refund may be paid under

section 2 (1.7) (

b) of the Social Service Tax Act ,

R.S.B.C. 1979, c. 388, unless the purchaser was required by the contract referred

to in that

section to take delivery of a specific quantity of tangible personal

property before a specific time.

(2) The refund payable under

section 2 (1.7) (

b) of the Social Service Tax Act ,

R.S.B.C. 1979, c. 388, is only payable in respect of a quantity of tangible personal

property that does not exceed the quantity specified in the contract.

(3) No refund may be paid under

section 2 (1.7) (

b) of the Social Service Tax Act,

R.S.B.C. 1979, c. 388, in respect of taxes paid after March 30, 1999.

(4) This

section applies

(

a) to all applications for refunds made after March 31, 1993, and

(

b) despite any decision of a court to the contrary made after that date.

System Act

41 The System Act, R.S.B.C. 1996, c. 446, is repealed.

Dissolution of British Columbia Systems Corporation

(1) On the repeal of the System Act ,

(

a) the British Columbia Systems Corporation is dissolved,

(

b) the appointment of each director of the corporation is terminated,

(

c) all of the rights, property and assets of the corporation are transferred to and

vested in the government, and

(

d) the government assumes all obligations and liabilities of the corporation.

(2) On and after the date on which the System Act is repealed, a reference to the

British Columbia Systems Corporation in any commercial paper, contract, lease,

licence, permit or other instrument or document is deemed to be a reference to

the government.

Transfer of specified indebtedness

(1) In this section, "specified indebtedness" means the indebtedness of the British

Columbia Systems Corporation evidenced by

(

a) Debenture number 00001, Series-S dated June 10, 1981, and

(

b) Debenture number CP S-2 dated March 10, 1982.

(2) On March 10, 1998 the specified indebtedness is transferred to and assumed by

the government, becomes its indebtedness and becomes enforceable against the

government as if it had incurred the indebtedness.

(3) The consideration payable by the British Columbia Systems Corporation to the

government for the transfer of indebtedness under subsection (2) must be

determined by the Minister of Finance and Corporate Relations.

(4) On and after March 10, 1998, the sinking funds established for payment of the

specified indebtedness are deemed to be held for the benefit of the government.

(5) On and after March 10, 1998, the British Columbia Systems Corporation is

discharged from all obligations under the specified indebtedness.

(6) The Minister of Finance and Corporate Relations may pay the specified indebtedness

out of the consolidated revenue fund, without an appropriation other than

this section.

Tobacco Tax Act

Section 2 (1) of the Tobacco Tax Act, R.S.B.C. 1996, c. 452, is repealed and the following

substituted:

(1) In this section:

"cigarette" includes a tobacco stick;

"tobacco stick" means a roll or tubular construction of tobacco intended for

smoking, other than a cigar, that requires further preparation to be consumed.

(1.1) A consumer must, at the time of making a purchase of tobacco in the form of

cigars, pay to the government a tax at the rate of 77% of the retail price of any

cigar purchased by the consumer to a maximum tax of $5 per cigar.

Transitional

Transitional --

Provincial Treasury Operations Special Account --

Financial Administration Act

45 Money may be paid out of the general fund of the consolidated revenue fund after the

end of March, 1998 in satisfaction of liabilities incurred on the basis of an appropriation

under the Provincial Treasury Operations Special Account discontinued by the

operation of

section 8.

Transitional – Fire Services Act

46 Despite the repeal of

section 37 of the Fire Services Act , that

section continues to apply

to premiums and assessments that became receivable on or before March 31, 1998.

Transitional – Insurance Premium Tax Act

47 Despite

section 14

section 3 of the Insurance Premium Tax Act as it read immediately

before the commencement of

section 14 of this Act continues to apply to premiums

that became receivable on or before March 31, 1998.

Transitional – Motor Fuel Tax Act

48 Regulations that may be made under the Motor Fuel Tax Act as a result of the

enactment of this Act may, if made before June 1, 1999, be made retroactive to

June 1, 1998 and a regulation made retroactive is deemed to have come into force on

the date specified in the regulation.

Commencement

(1) Sections 9, 12, 22, 41 and 42 come into force by regulation of the Lieutenant

Governor in Council.

(2) Section 40 is deemed to have come into force on March 31, 1993 and is

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

(3) Section 23 is deemed to have come into force on March 31, 1997 and is

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

(4) Section 43 is deemed to have come into force on March 10, 1998 and is

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

(5) Sections 8, 24, 26 to 39, 44 and 45 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.

(6) Sections 16, 18 and 19 are deemed to have come into

force on April 1, 1998 and are retroactive to the extent necessary to give them

effect for the purposes of the taxation year of a financial institution, as

defined in

section 1 of the International Financial Business (Tax Refund)

Act , commencing on or after that date.

(7) Sections 2, 10, 11, 13 to 15, 46 and 47 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.

(8) Sections 20, 21 and 48 come into force on June 1, 1998.

(9) Sections 1 and 3 to 7 come into force on January 1, 1999.

Explanatory Notes

Corporation Capital Tax Act

SECTION 1: [Corporation Capital Tax Act, amends

section 1]

adds a definition for the purposes of establishing the increasing exemption

thresholds below which corporations are exempt from tax;

repeals the definition of "adjusted paid up capital", as the adjustment of

a corporation's net B.C. paid up capital under

section 15 is no longer needed,

since its effect of reducing tax otherwise payable is being moved to the

proposed sections 3.1 and 3.2 of the Corporation Capital Tax Act ;

is consequential to the repeal of

section 15 of the Corporation Capital

Tax Act .

SECTION 2: [Corporation Capital Tax Act, amends

section 3] raises the high-rate tax

threshold for financial institutions, effective April 1, 1998.

SECTION 3: [Corporation Capital Tax Act, re-enacts

section 3 and enacts sections 3.1 and

3.2]

by the proposed

section 3, uses the defined "threshold amount" as the reference

for establishing the exemption threshold for paying tax under the Corporation

Capital Tax Act ;

by the proposed

section 3.1, provides reduced tax amounts for unassociated

corporations with net B.C. paid up capital that is below or near the threshold

amount;

by the proposed

section 3.2, provides reduced tax amounts for associated

corporations whose net B.C. paid up capital, when combined with that of its

associated corporations, is below or near the threshold amount.

SECTION 4: [Corporation Capital Tax Act, repeals

section 15] repeals this provision as its

effect of reducing tax otherwise payable is being moved to the proposed

sections 3.1 and 3.2 of the Corporation Capital Tax Act.

SECTION 5: [Corporation Capital Tax Act, amends

section 16] is

consequential to the repeal of

section 15 of the Corporation Capital Tax

Act

SECTION 6: [Corporation Capital Tax Act, amends

section 17] is

consequential to the repeal of

section 15 of the Corporation Capital Tax

Act .

SECTION 7: [Corporation Capital Tax Act, amends

section 21 (b)]

is consequential to the repeal of

section 15 of the Corporation Capital Tax

Act .

Financial Administration Act

SECTION 8: [Financial Administration Act, repeals

Part 6] dissolves the Provincial

Treasury Operations Special Account.

Financial Information Act

SECTION 9: [Financial Information Act, amends

Schedule 1] is consequential to the

repeal of the System Act .

Fire Services Act

SECTION 10: [Fire Services Act, amends

section 1] repeals

definitions

made redundant by the repeal of sections 37 to 39 of the Fire Services Act .

SECTION 11: [Fire Services Act, repeals sections 37 to 39] repeals the insurance tax

charging provisions of the Fire Services Act so that all insurance premium taxes

will be dealt with by the Insurance Premium Tax Act .

Freedom of Information and Protection of Privacy Act

SECTION 12: [Freedom of Information and Protection of Privacy Act, amends

Schedule 2] is consequential to the repeal of the System Act .

Insurance Premium Tax Act

SECTION 13: [Insurance Premium Tax Act, amends

section 1] adds new

definitions and

repeals and replaces existing

definitions.

SECTION 14: [Insurance Premium Tax Act, re-enacts

section 3] repeals and replaces the tax

provisions for taxable insurers.

SECTION 15: [Insurance Premium Tax Act, amends sections 6 (1) and 11 (2)] changes the

due dates for final tax payment and annual tax returns.

International Financial Business (Tax Refund) Act

SECTION 16: [International Financial Business (Tax Refund) Act, amends

section 1 (1)]

defines "captive insurance company", formerly referred to in the definition of

"insurer", adds the definition of "export financing company" and excludes the

employees of each type of company from the definition of "eligible employee".

The definition of "financial institution" is expanded to include institutions

engaged in "export financing", thereby extending to that type of company eligibility

for corporate income tax refunds.

SECTION 17: [International Financial Business (Tax Refund) Act, amends

section 2 (1)]

requires, for the registration under the Act of a branch or office of a financial

institution as an international financial office, that the financial institution be a

member of the International Financial Centre Society of Vancouver.

SECTION 18: [International Financial Business (Tax Refund) Act, enacts

section 3.1]

adds as a condition of the renewal, reinstatement or amendment of the registration

of a financial institution that it be a member of the International

Financial Centre Society of Vancouver, and

provides for the expiration of existing registrations at the end of the current

taxation year, unless the registrant is or becomes a member of that society

by then.

SECTION 19: [International Financial Business (Tax Refund) Act, adds

section 6 (4)]

excludes the requirement for a captive insurance company's activities to be

carried out at "arm's length". This means captive insurance companies may

qualify under the Act for corporate income tax refunds, although, by definition,

they do not deal at arm's length with the entities they insure.

Motor Fuel Tax Act

SECTION 20: [Motor Fuel Tax Act, adds

section 5 (3)] provides farmers with an exemption

or a refund from tax on fuel used for the purposes for which they are authorized

to use coloured fuel.

SECTION 21: [Motor Fuel Tax Act, amends

section 71 (2)] allows regulations to be made

with respect to the exemption or refund added by this Bill in the amendment to

section 5 of the Motor Fuel Tax Act .

Pension (Public Service) Act

SECTION 22: [Pension (Public Service) Act, repeals

section 2 (1) (k)] is consequential to the

repeal of the System Act .

Property Transfer Tax Act

SECTION 23: [Property Transfer Tax Act, repeals and replaces

section 8 (1) (c)] allows first

time homebuyers to reduce their mortgages during the first year to 70% of the

original property value without being required to pay the exempted tax under

the Act.

SECTION 24: [Property Transfer Tax Act, amends

section 14]

increases the value limit for exempt recreational residences and clarifies

that this limit applies to the entire property;

clarifies the meaning of the term "settlor" for the purposes of exemptions

for trust transfers;

clarifies that exemptions for persons related to the transferor do not apply in

the case of transfers from a trust estate;

clarifies the exemptions for transfers to and from trust estates.

Securities Act

SECTION 25: [Securities Act, Payment by Securities Commission] allows for the transfer of

an amount not exceeding $12 million from the British Columbia Securities

Commission.

Social Service Tax Act

SECTION 26: [Social Service Tax Act, amends

section 1] clarifies that the purchase price of

tangible personal property includes any royalty payments, licence fees or other

charges related to the use of the tangible personal property purchased.

SECTION 27: [Social Service Tax Act, adds

section 5 (3)] adds subsection (3) to establish

that where the charges described in the definition of "purchase price", as

amended by this Bill, cannot be determined at the time of purchase, the tax is

calculated on each separate charge and is due at the time the charge is paid or

becomes payable, whichever is earlier.

SECTION 28: [Social Service Tax Act, amends

section 9]

adds subsection (1.1) to establish that tax is payable on tangible personal

property originally acquired exempt under the Act or regulations if the

property is subsequently transferred to a non-exempt use, and

amends subsections (3) and (4) consequential to exempting copies of prototypes

under

section 76 (1) (

d) of the Social Service Tax Act , as amended by

this Bill.

SECTION 29: [Social Service Tax Act, amends

section 19 (1)] is consequential to the

amendment to

section 9 of the Social Service Tax Act and amends

subsection (1) to allow payment of tax on the depreciated value of tangible

personal property transferred from an exempt to a taxable use.

SECTION 30: [Social Service Tax Act, amends

section 20 (1)] amends subsection (1) consequential

to the enactment of the new

section 20.1 of the Social Service Tax Act

made by this Bill, clarifying the application of tax to motor vehicles leased

from out of Province lessors.

SECTION 31: [Social Service Tax Act, enacts

section 20.1] enacts

section 20.1 clarifying

that motor vehicles leased from out of Province lessors for a period of more

than 28 days are subject to tax on the full value at the time of registering the

vehicle for use in British Columbia, and establishes a refund provision for the

difference between the tax paid under this

section and the tax that would

otherwise have been payable on lease payments if the vehicle has been leased

from an in-Province lessor registered to collect and remit tax under the Social

Service Tax Act .

SECTION 32: [Social Service Tax Act, amends

section 21 (2)] clarifies that the provision is

subject to

section 20.1 of the Social Service Tax Act .

SECTION 33: [Social Service Tax Act, repeals and replaces

section 26 (3)] amends the

timing for payment of the $1.50 passenger rental tax to bring it in line with

other lease provisions under the Social Service Tax Act .

SECTION 34: [Social Service Tax Act, amends

section 73] amends

section 73 to exclude

from exemption fertilizers purchased for non-agricultural purposes by persons

other than individuals.

SECTION 35: [Social Service Tax Act, repeals and replaces

section 74 (e)] clarifies that the

exemption for tangible personal property used to conserve energy is limited to

property specifically prescribed by the Lieutenant Governor in Council.

SECTION 36: [Social Service Tax Act, amends

section 76 (1)]

adds a new paragraph (b.1) to exempt chemicals used to make chlorine

dioxide and sodium hydrosulfite if the resultant compounds are used as

direct agents in pulp production;

amends paragraph (

d) to expand the exemption for prototypes to include

copies of prototypes made for prescribed purposes;

adds a new paragraph (

g) to exempt non-executable source code.

SECTION 37: [Social Service Tax Act, enacts

section 79.1] adds a new

section to establish

that tax applies to tangible personal property used to make exempt tangible

personal property.

SECTION 38: [Social Service Tax Act, amends

section 84] adds a new subsection (2) to

extend the period for a proportional refund of tax paid on a motor vehicle that

has been returned to the manufacturer or seller under the terms of a dispute

resolution process.

SECTION 39: [Social Service Tax Act, repeals and replaces

section 115 (3)] amends subsection

(3) consequential to the amendments to sections 1 and 5 of the Social

Service Tax Act made by this Bill to clarify that the commissioner may make

assessments for tax due on royalty and licence fees related to a purchase of

tangible personal property even if the transfer of title to that property occurred

more than 6 years from the date of the assessment.

SECTION 40: [Limitation – Social Service Tax Act] clarifies that the transitional refund

provision resulting from the 1993 tax rate change applies only to purchasers

who were obligated to purchase a specific quantity of goods within a specific

time, and establishes that the refund provision expires on March 30, 1999.

System Act

SECTION 41: [System Act, repeals Act] repeals the System Act .

SECTION 42: [Dissolution of British Columbia Systems Corporation] dissolves the British

Columbia Systems Corporation and transfers its assets and liabilities to the

government.

SECTION 43: [Transfer of specified indebtedness] transfers to the government, effective

March 10, 1998, the indebtedness owed to the Canada Pension Plan Investment

Fund by the British Columbia Systems Corporation.

Tobacco Tax Act

SECTION 44: [Tobacco Tax Act, amends

section 2] defines "tobacco sticks" as "cigarettes"

so that the tax for tobacco sticks will be equivalent to the tax for cigarettes,

provides for one rate of tax for cigars and increases the maximum tax to $5 per

cigar.

SECTION 45: [Financial Administration Act, transitional – Provincial Treasury Operations

Special Account] provides authority to pay liabilities of the Provincial

Treasury Operations Special Account out of the general fund of the consolidated

revenue fund.

SECTION 46: [Fire Services Act, transitional] provides that former

section 37 of the Fire

Services Act continues to apply to premiums and assessments that become

receivable before the commencement of this Act.

SECTION 47: [Insurance Premium Tax Act, transitional] provides that the former

section 3

of the Insurance Premium Tax Act continues to apply to premiums that were

receivable before the commencement of this Act.

SECTION 48: [Motor Fuel Tax Act, transitional] allows regulations made under the Motor

Fuel Tax Act as a result of this Act to be retroactive to June 1, 1998.

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