First

Session, 48th General Assembly

Elizabeth II, 2016

BILL 49

AN ACT TO AMEND THE

INCOME

TAX ACT, 2000 NO. 6

Received and Read the First Time .................................................................................................

Second Reading .................................................................................................................................

Committee ..........................................................................................................................................

Third Reading .....................................................................................................................................

Royal Assent ......................................................................................................................................

HONOURABLE

CATHY BENNETT

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

require that the adoption

expenses tax credit, child care tax credit and volunteer firefighters' tax

credit be fully utilized before determining the amount to be carried forward

under those sections;

exclude search and rescue

volunteer service hours from the 200 hours of service required to be eligible

to claim the volunteer firefighters' tax credit;

include a reference to the

provincial child care tax credit in the part-time residents, tax payable by

non-residents and credits in year of bankruptcy sections of the Act;

clarify that the small business

income tax rate of 4% only applies to taxation years beginning on or after April

1, 2010 and before July 1, 2014 and prorate the reduction in the small business

corporate income tax rate for taxation years that include July 1, 2014;

deem, for the purpose of the

foreign tax deduction, interest income received by a taxpayer from a

non-resident of Canada

as income from a source in that other country;

reference "eligible

amount" rather than "amount" in the political contribution

deduction

section of the Act and have subsections 248(31), 248(32) and 248(33) of the federal Act apply with respect

to determining the eligible amount;

allow the imposition of a

penalty in cases where a person knowingly provides false statements or

documents to obtain provincial benefits he or she may not be eligible or entitled

to receive;

include by reference new

provisions in

section 164 of the federal Act respecting refunds of instalment

payments, withholding of refunds for outstanding returns and realization of

deceased employees' options; and

include in the definition of

"capital" the amount of any provision for the redemption of preferred

shares when computing shareholder's equity.

A BILL

AN ACT TO AMEND THE INCOME

TAX ACT, 2000 NO. 6

Analysis

1. S.2 Amdt.

Interpretation

2. S.5 Amdt.

Definitions

S.15 Amdt.

Unused tuition and education amounts

S.17.3 R&S

Volunteer firefighters' tax credit

S.18 Amdt.

Tax credit transfer

6. S.22 R&S

Part-year residents

7. Ss.25 & 26 R&S

25. Tax payable by

non-resident

26. Credits in year of

bankruptcy

8. S.33 Amdt.

Foreign tax deduction

S.40 Amdt.

Corporation tax

S.47 Amdt.

Political contribution deduction

S.58 Amdt.

Repeated failures

S.60 Amdt.

Refunds

13. S.66.1 Amdt.

Interpretation

Commencement

Be it enacted by the Lieutenant-Governor and

House of Assembly in Legislative Session convened, as follows:

SNL2000 c.I-1.1

as amended

Section 2 of the Income Tax Act, 2000 is amended by adding immediately after

subsection (7) the following:

(7.1) Subsections 248(31), 248(32) and 248(33) of

the federal Act apply for the purpose of this Act.

Section 5 of the Act is amended by adding

immediately after paragraph (

a) the following:

(a.1) "eligible volunteer firefighting

services" means eligible volunteer firefighting services as defined in

subsection 118.06(1) of the federal Act.

3. (1) Paragraph 15(1)(

b) of the Act is

repealed and the following substituted:

(

b) amount that would be the individuals tax

payable under this Part for the year if no amount were deductible under this

Part, other than an amount deductible under this

section and

section 9, 12, 17,

17.1 or 17.2.

(2) Paragraph 15(1)(

b) of the Act is repealed and

the following substituted:

(

b) amount that would be the individuals tax

payable under this Part for the year if no amount were deductible under this

Part, other than an amount deductible under this

section and

section 9, 12, 17,

17.1, 17.2 or 17.3.

(3) The paragraph referring to the value of C in

subsection 15(2) of the Act is repealed and the following substituted:

C is the lesser of the value of B and the amount

that would be the individuals tax payable under this Part for the year if no

amount were deductible under this Part, other than an amount deductible under

this

section and

section 9, 12, 17, 17.1 or 17.2;

(4) The paragraph referring to the value of C in

subsection 15(2) of the Act is repealed and the following substituted:

C is the lesser of the value of B and the amount

that would be the individuals tax payable under this Part for the year if no

amount were deductible under this Part, other than an amount deductible under

this

section and

section 9, 12, 17, 17.1, 17.2 or 17.3;

Section 17.3 of the Act is repealed and the

following substituted:

Volunteer

firefighters' tax credit

17.3 For

the purpose of computing the tax payable under this Part for a

taxation year by an individual who performs eligible volunteer firefighting

services in the year, there may be deducted the amount determined by

multiplying $3,000 by the appropriate percentage for the year if the individual

(

a) performs in the year not less than 200 hours

of services each of which is an hour of eligible volunteer firefighting service

for a fire department; and

(

b) provides the certificate referred to in

subsection 118.06(3) of the federal Act when requested by the Minister of

National Revenue.

5. (1) Paragraph 18(1)(

a) of the Act is

repealed and the following substituted:

(

a) the amount that would be the spouses or

common law partners tax payable under this Part for the year, or that would be

so payable under this Part for the year if the spouse or common law partner

were liable under

section 6 to pay tax for the year, if no amount were

deductible under this Part, other than an amount deductible under paragraph

9(1)(

c) and sections 15, 17 and 17.2;

(2) Paragraph 18(1)(

a) of the Act is repealed and

the following substituted:

(

a) the amount that would be the spouses or

common law partners tax payable under this Part for the year, or that would be

so payable under this Part for the year if the spouse or common law partner

were liable under

section 6 to pay tax for the year, if no amount were

deductible under this Part, other than an amount deductible under paragraph

9(1)(

c) and sections 15, 17, 17.1, 17.2 and 17.3;

(3) Subparagraph 18(1)(b)(ii) of the Act is

repealed and the following substituted:

(ii) the amount that would be the spouses or

common law partners tax payable under this Part for the year, or that would be

so payable under this Part for the year if the spouse or common law partner

were liable under

section 6 to pay tax for the year, if no amount were

deductible under this Part other than an amount deductible under sections 9,

12, 15, 17 and 17.2.

(4) Subparagraph 18(1)(b)(ii) of the Act is repealed

and the following substituted:

(ii) the amount that would be the spouses or

common law partners tax payable under this Part for the year, or that would be

so payable under this Part for the year if the spouse or common law partner

were liable under

section 6 to pay tax for the year, if no amount were

deductible under this Part other than an amount deductible under sections 9,

12, 15, 17, 17.1, 17.2 and 17.3.

(5) The paragraph referring to the value of B in

subsection 18(3) of the Act is repealed and the following substituted:

B is the amount that would be the persons tax

payable under this Part for the year if no amount were deductible under this

Part other than an amount deductible under sections 9, 12, 15, 17 and 17.2; and

(6) The paragraph referring to the value of B in

subsection 18(3) of the Act is repealed and the following substituted:

B is the amount that would be the persons tax

payable under this Part for the year if no amount were deductible under this

Part other than an amount deductible under sections 9, 12, 15, 17, 17.1, 17.2

and 17.3; and

Section 22 of the Act is repealed and the

following substituted:

Part-year

residents

Section 118.91 of the federal Act

applies for the purpose of this Act and shall be read to include a reference to

section 17.2 of this Act.

7. Sections 25 and 26 of the Act are repealed and

the following substituted:

Tax payable by

non-resident

Section 118.94 of the federal Act

applies for the purpose of this Act and shall be read to include a reference to

section 17.2 of this Act.

Credits in year

of bankruptcy

Section 118.95 of the federal Act

applies for the purpose of this Act and shall be read

to include a reference to sections 16.1 and 17.2 of this Act.

8. Subsection 33(4) of the Act is amended by deleting

the word "and" at the end of paragraph (a), by deleting the period at

the end of paragraph (

b) and substituting a semi-colon and the word

"and", and by adding immediately after that paragraph the following:

(

c) if, in computing a taxpayers income for a

taxation year from a business carried on by the taxpayer in Canada, an amount

is included in respect of interest paid or payable to the taxpayer by a person

resident in a country other than Canada, and the taxpayer has paid to the

government of that other country a non-business income tax for the year with

respect to the amount, the amount is, in applying the definition " qualifying

incomes" in subsection (5) for the purpose of subsection

(1), deemed to be income from a source in that other country.

9. Subsection 40(4) of the Act is repealed and the

following substituted:

(4) Notwithstanding subsections (1) and (3), for

the purpose of a corporation whose taxation year began on or after April 1,

2010 and before July 1, 2014, the rate prescribed in paragraph (3)(

a) shall be

4%.

(5) Notwithstanding subsections (3) and (4), if a

corporation's taxation year includes July 1, 2014, and where in a taxation year

a corporation is eligible for a deduction under

section 125 of the federal Act,

the tax payable by that corporation under this Act for a taxation year is equal

to the total of

(

a) that proportion of 4% that the number of days

in the taxation year that are before July 1, 2014 is of the number of days in

the taxation year of an amount calculated by allocating to the province, on the

same basis as set out in the regulations made for the purpose of the definition

"taxable income earned in the year in a province" in subsection

124(4) of the federal Act, a portion of the amount that is the least of the

amounts calculated under paragraphs 125(1)(a), (

b) and (

c) of the federal Act

and allowed for the purpose of subsection 125(1) of the federal Act in respect

of the corporation for the year; and

(

b) that proportion of 3% that the number of days

in the taxation year that are after June 30, 2014 is of the number of days in

the taxation year of an amount calculated by allocating to the province, on the

same basis as set out in the regulations made for the purpose of the definition

"taxable income earned in the year in a province" in subsection

124(4) of the federal Act, a portion of the amount that is the least of the

amounts calculated under paragraphs 125(1)(a), (

b) and (

c) of the federal Act

and allowed for the purpose of subsection 125(1) of the federal Act in respect

of the corporation for the year.

10. Subsection 47(2) of the Act is repealed and the

following substituted:

(2) There may be deducted from the tax otherwise

payable under this Act by a taxpayer who is an individual or a corporation for

a taxation year in respect of the total of all amounts, each of which is the eligible amount of a contribution of money made

by the taxpayer in a year to a registered political party or a candidate,

(a) 75% of the total if the total does not exceed

$100;

(b) $75 plus 50% of the amount by which the total

exceeds $100 if the total exceeds $100 and does not exceed $550; or

(c) $300 plus 33 1/3% of the amount by which the

total exceeds $550 if the total exceeds $550,

if each contribution that is included in

the total is proven by filing with the minister a receipt signed by the chief

financial officer of the registered political party or candidate.

11. Subsection 58(1) of the Act is repealed and the

following substituted:

Repeated failures

58. (1) Subsections

163(1) and (1.1), paragraphs 163(2)(

a) and (

c) and subsections 163(2.1),

(3) and (4) of the federal Act apply for the purpose of this Act.

12. (1) Subsection 60(1) of the Act is repealed

and the following substituted:

Refunds

60. (1) Subsections

164(1), (1.1), (1.2), (1.3), (1.31), (1.5), (2), (2.01), (2.1), (2.2), (2.3),

(3), (3.1), (3.2), (4), (4.1), (5), (5.1), (6) and (7) of the federal Act apply

for the purpose of this Act.

(2) Subsection 60(1) of the Act is repealed and

the following substituted:

Refunds

60. (1) Subsections

164(1), (1.1), (1.2), (1.3), (1.31), (1.5), (1.51), (1.52), (1.53), (2), (2.01),

(2.1), (2.2), (2.3), (3), (3.1), (3.2), (4), (4.1), (5), (5.1), (6) and (7) of

the federal Act apply for the purpose of this Act.

(3) Subsection 60(1) of the Act is repealed and

the following substituted:

Refunds

60. (1) Subsections

164(1), (1.1), (1.2), (1.3), (1.31), (1.5), (1.51), (1.52), (1.53), (2), (2.01),

(2.1), (2.2), (2.3), (3), (3.1), (3.2), (4), (4.1), (5), (5.1), (6), (6.1) and

(7) of the federal Act apply for the purpose of this Act.

13. Paragraph 66.1(1)(

c) of the Act is repealed and

the following substituted:

(c) "capital" , in the case of a financial institution other

than an authorized foreign bank, means its capital for a taxation year that is

the amount, if any, by which the total at the end of the year of

(

i) the

amount of its long-term debt,

(ii) the

amount of its capital stock or, in the case of an institution incorporated

without share capital, the amount of its members' contributions,

(iii) retained

earnings, contributed surplus and other surpluses, and

(iv) the

amount of its reserves for the year except to the extent that the reserves were

deducted in computing its income under

Part I of the federal Act for the year,

exceeds the total at the end of the year of

(

v) the amount of any deficit deducted in

computing its shareholders' equity, including for this purpose, the amount of

any provision for the redemption of preferred shares, and

(vi) the

amount of its deferred tax debit balance;

Commencement

(1) Sections 1, 8 and 10 of this Act are

considered to have come into force on February 27, 2004.

(2) Subsection

12(1) of this Act is considered to have come into force on April 1, 2007.

(3) Section

13 of this Act is considered to have come into force for taxation years that

began after October 31, 2008.

(4) Section

9 of this Act is considered to have come into force on April 1, 2010.

(5) Subsections

3(1), 3(3), 5(1), 5(3) and 5(5) and sections 6 and 7 of this Act are considered

to have come into force on January 1, 2011.

(6) Subsection

12(2) of this Act is considered to have come into force on June 26, 2013.

(7) Subsections

3(2), 3(4), 5(2), 5(4) and 5(6) of this Act are considered to have come into

force on January 1, 2014.

(8) Sections

2 and 4 and subsection 12(3) of this Act are considered to have come into force

on January 1, 2016.

Queen's Printer