First

Session, 50th General Assembly

Elizabeth II, 2021

BILL 15

AN ACT TO AMEND THE

INCOME TAX ACT, 2000 NO. 2

Received

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

Second

Reading ............................................................................................

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

Third

Reading ...............................................................................................

Royal

Assent .................................................................................................

HONOURABLE SIOBHAN

COADY

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

introduce a physical activity

tax credit; and

amend the dividend tax credit.

A BILL

AN ACT TO AMEND THE INCOME TAX ACT, 2000

NO. 2

Analysis

S.17.5 Added

Physical activity tax credit

S.20 R&S

Dividend

tax credit

Commencement

Be it enacted by the Lieutenant-Governor and

House of Assembly in Legislative Session convened, as follows:

SNL2000 cI-1.1

as amended

1. The Income

Tax Act, 2000 is amended by adding immediately after

section 17.4 the

following:

Physical activity

tax credit

17.5

(1) In

this

section

(a) "eligible fitness expense" means the

amount of a fee paid to a qualifying entity to the extent that the fee is

attributable to the cost of registration of the individual in an eligible

program of physical activity or membership in an eligible organization and, for

the purposes of this section, that cost includes

(

i) the cost to the qualifying entity of the

program in respect of its administration, instruction, rental of required

facilities and uniforms and equipment, if any, that are not available to be

acquired by a participant in the program for an amount less than their fair

market value at the time they are acquired,

but does not include

(ii) the cost of accommodation, travel, food or

beverages, or

(iii) any amount deductible under

section 63 of the

federal Act in computing any person's income for any taxation year;

(b) "eligible program of physical

activity" means

(

i) a program of physical activity in which all or

substantially all of the activities include a significant amount of physical

activity, or

(ii) a program offered by an organization in circumstances

where a participant may select from a variety of activities offered as a part

of the program and

(

A) at least 50% of those activities include a

significant amount of physical activity, or

(

B) at least 50% of the time scheduled for those

activities offered is for activities that include a significant amount of

physical activity;

(c) "membership in an eligible

organization" means membership in an organization where a member may

select from a variety of activities offered as a part of the membership and

(

i) at least 50% of those activities include a

significant amount of physical activity, or

(ii) at least 50% of the time scheduled for those

activities offered is for activities that include a significant amount of

physical activity;

(d) "physical activity" means an

activity, other than an activity where an individual rides on or in a motorized

vehicle as an essential component of that activity, that contributes to

cardio-respiratory endurance and to one or more of the following:

(

i) muscular strength,

(ii) muscular endurance,

(iii) flexibility, and

(iv) balance;

(e) "qualifying entity" means a person

or partnership that offers one or more programs of physical activity; and

(f) "return of income" means in respect

of an individual who is resident in the province at the end of the taxation

year, the individual's return of income, other than a return of income under

subsection 70(2) or 104(23), paragraph 128(2)(

e) or subsection 150(4) of the

federal Act, that is required to be filed for the taxation year or that would

be required to be filed if the individual had tax payable under that Act for

the taxation year.

(2) An individual who

(

a) is resident in the province at the end of the

taxation year;

(

b) files a return of income for a taxation year;

and

(

c) makes a claim under this

section

is considered to have paid, at the end of

the year, on account of tax payable under this

section for the year, an amount

equal to the amount determined by the formula

A x B

where

A is the appropriate percentage for the year;

B is the total of all amounts each of which is,

in respect of an individual for the year, the lesser of $2,000 and the amount

determined by the formula

C - D

where

C is the total of all amounts each of which is

an amount paid in the taxation year by the individual or by the individual's

spouse or common-law partner, that is an eligible fitness expense in respect of

(

i) the individual or the individual's spouse or

common-law partner, or

(ii) a child of the individual or child of the

individual's spouse or common-law partner, if the child was less than 18 years

of age at the end of the taxation year; and

D is the total of all amounts that any individual

is or was entitled to receive, each of which relates to an amount included in computing

the value of C in respect of the individual that is the amount of a

reimbursement, allowance or any other form of assistance, other than an amount

that is included in computing the income for any taxation year of that individual

and that is not deductible in computing the taxable income of that individual.

(3) Where more than one individual is entitled to

make a claim under this

section for a taxation year for an amount paid in the

taxation year by the individual or by the individual's spouse or common-law

partner in respect of

(

a) the individual or the individual's spouse or

common law partner; or

(

b) a child of the individual or child of the

individual's spouse or common-law partner, if the child was less than 18 years

of age at the end of the taxation year,

the total of all amounts considered to

have been paid shall not exceed the maximum amount that could be considered to

have been paid for the year by any one of those individuals if that individual

were the only individual entitled to claim an amount for the year under this

section.

(4) Where the individuals referred to in

subsection (3) cannot agree as to what portion of the maximum amount each can

claim, the minister may fix the portions.

(5) An individual who becomes bankrupt in a calendar

year is entitled to claim, for each taxation year that ends in the calendar

year, only the amounts that the individual is entitled to claim for the

taxation year, except that the sum of all amounts that may be claimed under

this

section for all taxation years of the individual ending in the calendar

year shall not exceed the total amount that the individual would have been

entitled to claim in respect of the calendar year if the individual had not

become bankrupt.

(6) An individual who is resident in Canada for

only part of a taxation year is entitled to claim for the year only the amount

the individual would be entitled to claim for the year under this

section that

can reasonably be considered wholly applicable to any period in the year

throughout which the individual was resident in Canada, computed as though that

period were the whole taxation year, except that the amount that may be claimed

under this

section shall not exceed the amount that the individual would have

been entitled to claim under this

section if the individual had been resident

in Canada throughout the year.

(7) For

the purposes of paragraph (1)(a), an amount paid to an individual who is, at

the time the amount is paid, the individuals parent, spouse or common-law

partner or an individual who is under 18 years of age is not considered an

eligible fitness expense.

(8) For the purposes of paragraph (1)(d),

horseback riding is considered to be an activity that contributes to

cardio-respiratory endurance and to one or more of muscular strength, muscular

endurance, flexibility and balance.

Section 20 of the Act is repealed and the

following substituted:

Dividend tax

credit

20. For

the purpose of computing the tax payable under this

Part for a taxation year by an individual who was resident in the province on

the last day of the taxation year, there may be deducted an amount equal to the

total of

(a) 3.2% of the total of

the amount required under paragraph 82(1)(

a) and subparagraph 82(1)(b)(

i) of

the federal Act to be included in computing the individual's income for the

year; and

(b) 6.3% of the total of

the amount required under paragraph 82(1)(a.1) and subparagraph 82(1)(b)(ii) of

the federal Act to be included in computing the individual's income for the

year.

Commencement

(1) Section 1 is considered to have come into

force on January 1, 2021.

(2) Section 2 comes into force on January 1, 2022.

Queen's Printer