Fourth

Session, 46th General Assembly

Elizabeth II, 2011

BILL 21

AN ACT TO AMEND THE

REVENUE ADMINISTRATION ACT

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

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

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

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

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

HONOURABLE

THOMAS W. MARSHALL, Q.C.

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 Revenue Administration Act to clarify

various technical matters respecting mining tax. The Bill would

require contemporaneous

documentation where an operator receives revenue from or incurs an expenditure

payable to a person with whom he or she does not deal at arms length;

clarify that a tax imposed

under

Part VII is not deductible for the purpose of calculating net income;

add a provision to the Act

specifying that costs incurred for research and development are not deductible

for the purpose of calculating net income; and

clarify the method of

calculating the corporate income tax credit under

Part VII of the Act.

A BILL

AN ACT TO AMEND THE REVENUE ADMINISTRATION

ACT

Analysis

S.2 Amdt.

Definitions

S.11.1 Added

Contemporaneous documentation

S.82 Amdt.

Net income

S.84 Amdt.

Corporate income tax credit

Commencement

Be it enacted by the Lieutenant-Governor and

House of Assembly in Legislative Session convened, as follows:

SNL2009 cR-15.01

as amended

1. Subparagraph 2(xx)(ii) of the Revenue Administration Act is repealed

and the following substituted:

(ii) for the purpose of

Part VII, means a person

who carries out mining operations on or under lands within the province,

whether or not that person holds a mining lease to extract minerals;

2. The Act is amended by adding immediately after

section 11 the following:

Contemporaneous

documentation

11.1

(1) For

the purpose of

Part VII, where an operator receives revenue from or incurs an

expenditure payable to a person with whom he or she does not deal at arms

length, the operator shall, in addition to the other records required under

this Act and the regulations, before the records for that year are required,

make or obtain records or documents that provide a description that is complete

and accurate in all material aspects of

(

a) the property or services to which the

transaction relates;

into between the participants to the transaction;

(

c) the identity of the participants to the

transaction and their relationship to each other at the time the transaction

was entered into;

(

d) the functions performed, the property used or

contributed and the risks assumed, with respect to the transaction, by the

participants in the transaction;

(

e) the data and methods considered and the

analysis performed to determine the transfer prices or the allocations of

profits or losses or contributions to costs, with respect to the transaction;

and

(

f) the assumptions, strategies and policies that

influenced the determination of transfer prices or the allocations of profits

or losses or contributions to costs, with respect to the transaction.

(2) For each subsequent year in which the

transaction continues, the operator shall make or obtain records that

completely and accurately describe each material change in the year with

respect to matters referred to in subsection (1).

(3) An operator shall provide records or

documentation required under this

section to the minister within 3 months of a

request by the minister for those records.

(4) Notwithstanding subsection (2) or (3), where,

before the coming into force of this

section an operator did not keep records required

to be submitted to the minister under this section, that operator shall make or

obtain those records with respect to the current year to the satisfaction of

the minister and shall submit those records to the minister within 6 months of

the coming into force of this section.

(5) Where an operator fails to comply

substantially with the requirements of this section, a court hearing a matter

relating to the administration or enforcement of this Act shall, on motion of

the minister, prohibit the introduction of a record or document required under

this section.

3. (1) Paragraph 82(9)(

a) of the Act is

repealed and the following substituted:

(

a) a tax imposed under this Part;

(2) Subsection 82(9) of the Act is amended by

adding immediately after paragraph (

e) the following:

(e.1) costs incurred for research and development;

4. (1) Subsection 84(1) of the Act is repealed

and the following substituted:

Corporate income

tax credit

(1) For

the purpose of paragraph 80(a), an operator may, in respect of the current tax

year, credit against the tax otherwise payable, an amount in respect of

corporate income tax paid to the province in the preceding year as determined

under this section.

(2) Section 84 of the Act is amended by adding

immediately after subsection (2) the following:

(2.1) Notwithstanding that the corporate income tax

from a preceding year is used in calculating a credit under this section, a

credit under this

section

(

a) shall be applicable only for the 10 year

period referred to in subsection (2); and

(

b) shall not exceed the amount referred to in

subsection (2).

(2.2) Where, in a calculation of the corporate

income tax credit under this

section the corporate income tax from a preceding

year is used but 10 consecutive years beginning in the year in which commercial

production was achieved have expired, that method of calculation shall not revive

an entitlement to a credit under this section.

(2.3) Notwithstanding another provision of this

section, where an operator achieves commercial production after the coming into

force of this subsection, the period of 10 consecutive years referred to in subsection

(2) shall begin to run one year after the operator achieved commercial

production.

(3) Section 84 of the Act is amended by adding

immediately after subsection (4) the following:

(5) Where a corporate income tax credit has been

claimed with respect to the corporate income tax paid for a particular tax year

and an operator has subsequently been subject to a reassessment with respect to

that tax year, the operator shall inform the minister of that reassessment and

the mining tax payable under this Part shall be reassessed as appropriate.

Commencement

5. Subsection 3(1) of this Act is considered to

have come into force on May 28, 2009.

William E. Parsons, Queen's Printer