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Part II .

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Financial Institutions Capital Tax Regulations

made under

Section 71 of the

Income Tax Act

R.S.N.S. 1989, c. 217

O.I.C. 2021-248 (effective November 1, 2021), N.S. Reg. 135/2021

Table of Contents

Please note: this table of contents is provided for convenience of reference and does not form part of the regulations.

Click here to go to the text of the regulations .

Citation

Definitions

Basic capital deduction

Capital deduction

Allocation of basic capital deduction

Investment in related financial institution

Citation

1 These regulations may be cited as the Financial Institutions Capital Tax Regulations .

Definitions

2 In these regulations,

“basic capital deduction” means the basic capital deduction determined under

Section 3;

“registered office” of a loan or trust company means its registered office as

determined under the Trust and Loan Companies Act .

Basic capital deduction

3 A financial institution’s basic capital deduction for a taxation year is as follows:

(a) $5 million, if the total amount of the capital of the financial institution and

its related financial institutions is $10 million or less;

(b) $30 million, for a financial institution that is a trust company or a loan

company with its registered office in the Province;

(

c) nil, in all circumstances other than in clauses (

a) and (b).

Capital deduction

4 A financial institution’s capital deduction for a taxation year is the amount determined by

the following formula:

BCD + IRF

in which

BCD = the financial institution’s basic capital deduction for the taxation year,

allocated among related financial institutions in accordance with

Section 5;

IRF = the amount of the financial institution’s investment in related financial

institutions for the taxation year, as determined under

Section 6.

Allocation of basic capital deduction

(1) A financial institution that is related to one or more other financial institutions at

the end of a taxation year may file with the Minister of Finance an agreement for

the allocation of the basic capital deduction as set out in the prescribed form on

behalf of the related group of which the financial institution is a member under

which an amount that does not exceed the basic capital deduction at the end of the

taxation year is allocated among the members of the related group for the taxation

year.

(2) The Minister of Finance may request a financial institution that was related to

another financial institution at the end of the year to file an agreement referred to in

subsection (1) and, if the financial institution does not file such an agreement

within 30 days after receiving the request, the Minister of Finance may allocate an

amount among the members of the related group of which the financial institution

is a member for the taxation year not exceeding the basic capital deduction.

(3) For the purposes of these regulations, the least amount allocated for a taxation year

to each member of a related group under an agreement described in subsection

(1) or by the Minister of Finance under subsection (2) is the basic capital deduction for

the taxation year of that member, but if no such allocation is made, the basic

capital deduction of each member of the related group for that year is nil.

(4) Subsections 190.15(5) and (6) of the Federal Act apply for the purposes of

calculating the basic capital deduction for each member of a related group under

these regulations with the necessary changes in detail, including the following:

(a) “capital deduction” in the Federal Act must be read as “basic capital

deduction”;

(b) “corporation” in the Federal Act must be read as “financial institution”.

Investment in related financial institution

(1) A financial institution’s investment for a taxation year in another financial

institution related to it is the following:

(

a) for a financial institution that was resident in Canada at any time in the

taxation year, the total of all amounts, each of which is 1 of the following:

(

i) the carrying value at the end of the taxation year of an eligible

investment of the financial institution in the other financial

institution,

(ii) for contributed surplus, the amount at the end of the taxation year of

an eligible investment of the financial institution in the other

financial institution;

(

b) for a financial institution that is an authorized foreign bank, the total of all

amounts, each of which is 1 of the following:

(

i) the amount at the end of the taxation year, before the application of

risk-weights, that would be required to be reported under the

guidelines if those guidelines applied and required a report at that

time, of an eligible investment of the financial institution in the other

financial institution that was used or held by the financial institution

in the taxation year in the course of carrying on its Canadian banking

business,

(ii) for an eligible investment that, at the end of the taxation year, is

contributed surplus of the other financial institution, the amount of

the surplus contributed by the financial institution in the course of

carrying on that business.

(2) For the purpose of subsection (1),

(

a) an eligible investment of a financial institution in another financial

institution that is related to it must be 1 of the following:

(

i) a share of the capital stock of the other financial institution,

(ii) long-term debt of the other financial institution,

(iii) a surplus of the other financial institution contributed by the financial

institution, other than an amount otherwise included as a share or

debt,

(

b) at the end of the taxation year, the other financial institution referred to in

clause (

a) must meet all of the following criteria:

(

i) it is related to the financial institution,

(ii) it is resident in Canada or can reasonably be regarded as using the

surplus or the proceeds of the share or debt in a business carried on

by the other financial institution through a permanent establishment

in Canada,

(iii) it has a permanent establishment in the Province at any time during

the taxation year.

Legislative History

Reference Tables

Financial Institutions Capital Tax Regulations

N.S. Reg.

135/2021

Income Tax Act

Note: The

information in these tables does not form part of the regulations and is

compiled by the Office of the Registrar of Regulations for reference only.

Source Law

The current consolidation of the Financial Institutions Capital Tax Regulations made

under the Income Tax Act includes all of the following regulations:

N.S.

Regulation

In force

date*

How in force

Royal Gazette

Part II Issue

135/2021

Nov 1, 2021

date specified

Nov 5, 2021

The following regulations are not yet in force and

are not included in the current consolidation:

N.S.

Regulation

In force

date*

How in force

Royal Gazette

Part II Issue

*See subsection 3(6) of the Regulations Act for

rules about in force dates of regulations.

Amendments by Provision

ad. = added

am. = amended

fc. = fee change

ra. = reassigned

rep. = repealed

rs . = repealed and substituted

Provision affected

How affected

..........................................................

Note that changes to headings are not

included in the above table.

Editorial Notes and Corrections

Note

Effective

date

Repealed and Superseded

N.S.

Regulation

Title

In force

date

Repealed

date

Note: Only

regulations that are specifically repealed and replaced appear in this

table. It may not reflect the entire

history of regulations on this subject matter.