Fourth

Session, 45th General Assembly

Elizabeth II, 2007

BILL 3

AN ACT TO AMEND THE

INCOME TAX ACT, 2000

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

8, 2007

Second Reading ............................................................................................................ June 4,

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

Amendment

June 4, 2007

Third Reading ................................................................................................................ June 4,

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

Clause 1 of the Bill would add a

proposed

section 6.1 to the Income Tax Act,

2000 which would index personal income tax to the consumer price index.

Clause 2 of the Bill would repeal and

replace

section 7 of the Act to lower the personal income tax rates for all

taxable income amounts.

Clause 3 of the Bill would amend

section 21.1 of the Act to increase the low income tax reduction thresholds for

individuals and families.

Clause 4 of the Bill would repeal and

replace

section 32 of the Act to eliminate the personal income tax surtax

effective July

1, 2007 . The proposed

section 32 allows the

calculation of the surtax for the period of the 2007 taxation year before July

Clause 5 of the Bill would amend the Act to provide for a non-refundable tax

credit in respect of a qualifying investment in a qualifying resort development

property.

Clause 6 of the Bill would amend

section 68 of the Act to allow the making of regulations respecting

calculations required for the sections proposed at clauses 1 and 3.

A BILL

AN ACT TO AMEND THE INCOME TAX ACT, 2000

Analysis

S.6.1 Added

Indexation

S.7 R&S

Amount of tax payable

S.21.1 Amdt.

Low income reduction

S.32 R&S

Surtax

5. S.46.1 Added

Resort property investment tax credit

S.68 Amdt.

Regulations

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 6 the following:

Indexation

6.1

(1) For

the purpose of calculating the tax payable by an individual for the 2007 taxation

year, an amount expressed in dollars in a relevant section, except as provided

in paragraphs 21.1(2)(

b) and (c), shall be adjusted so that the amount referred

to in the relevant

section is the total of

(

a) the amount that would

be used under the relevant

section for the immediately preceding taxation year;

and

(

b) the product obtained

by multiplying

(

i) the amount referred

to in paragraph (a),

(ii) the consumer price

index amount calculated for the period and by the formula prescribed by regulation.

(2) For the purpose of calculating the tax payable

by an individual for the 2008 taxation year and subsequent taxation years an

amount expressed in dollars in a relevant

section shall be adjusted so that the

amount referred to in the relevant

section is the total of

(

a) the amount that would

be used under the relevant

section for the immediately preceding taxation year

before it had been rounded to a whole dollar; and

(

b) the product obtained

by multiplying

(

i) the amount referred

to in paragraph (a),

(ii) the consumer price

index amount calculated for the period and by the formula, as prescribed by

regulation.

(3) In this

section

(a) " consumer price

index" means the consumer price index for the province published under the

Statistics Act ( Canada );

(b) " relevant

section" means

section 7, 11, 12, 17.1, 32, subsections 9(1) and (2) and

paragraphs 21.1(2)(

b) and (c); and

(

c) where an amount to which subsection (1) or

(2) applies is not a multiple of one dollar when adjusted as provided in the

subsection, it shall be rounded to the nearest dollar or if equidistant, shall

be rounded to the higher dollar.

Section 7 of the Act is repealed and the

following substituted

Amount of tax

payable

(1) The tax payable under this Part for

the 2007 taxation year by an individual on the individual's taxable income or

taxable income earned in Canada, in sections 6 to 33 referred to as the

"taxable income", is

(a) 9.64 % of the taxable income if the taxable income does not exceed $29,590;

(b) $2,852 plus 14.98% of the amount by which the taxable income exceeds

$29,590 if the taxable income exceeds $29,590 and does not exceed $59,180; and

(c) $7,285 plus 17.26% of the amount by which the

taxable income exceeds $59,180.

(2) The tax payable under this Part for a taxation year by an individual on

the individual's taxable income or taxable income earned in Canada , in sections 6 to 33 referred to as

the "taxable income", for the 2008 and subsequent taxation years is

(a) 8.7 % of the taxable income if the taxable income does not exceed $29,590;

(b) $2,574 plus 13.8% of the amount by which the taxable income exceeds

$29,590 if the taxable income exceeds $29,590 and does not exceed $59,180; and

(c) $6,658 plus 16.5% of the amount by which the

taxable income exceeds $59,180.

3. Subsection 21.1(2) of the Act is repealed and

the following substituted:

(2) Where an eligible individual for a taxation

year files a return of income under this Act, the amount, if any, by which A +

B exceeds 16% of the amount, if any, by which

(

a) the eligible

individual's adjusted income for the year;

exceeds

(b) $13,000; or

(

c) where the eligible

individual has a qualified relation for the year or claims an amount under

paragraph 9(1)(

b) for the year, $21,000,

may be deducted from the tax otherwise payable under this Act by the

individual for the taxation year.

(2.1) In subsection (2)

(

a) A is an amount prescribed and calculated in

accordance with the regulations; and

(

b) B is an amount prescribed and calculated in

accordance with the regulations where the eligible individual has a qualified

relation for the year or claims an amount under paragraph 9(1 )(

b) for the year.

Section 32 of the Act is repealed and the

following substituted:

Surtax

32. In addition to the income tax

payable, computed in accordance with sections 6 to 31, by an individual for the

2007 taxation year, every individual shall pay a personal

income surtax equal to 4.5% of the amount by which the tax computed under sections

6 to 31 for that taxation year exceeds $7,032.

5. The Act is amended by adding immediately after

section 46 the following:

Resort property

investment tax credit

46.1

(1) A

qualifying investor, or a person acting on behalf of a qualifying investor, may

apply to the minister for a non-refundable tax credit in respect of a

qualifying investment in a qualifying resort development property.

(2) The minister may give a tax credit to a

qualifying investor who applies under subsection (1) or on whose behalf an

application is made under subsection (1).

(3) A tax credit given under subsection (2) shall

be calculated in the manner prescribed by the regulations.

(4) A tax credit shall be deducted against the tax

which is otherwise payable under this Act.

(5) The Lieutenant-Governor in Council may make

regulations

(

a) establishing the

criteria for determining who is a qualifying investor, what property is a

qualifying resort development property and what investments are qualifying investments;

(

b) respecting the

issuance of and the grounds for revocation of certificates of qualification to

qualifying resort property developments;

(

c) limiting the amounts

which a qualifying resort development property may raise through the use of credits;

(

d) prescribing how funds

raised may be used by a qualifying resort property development;

(

e) respecting the

wind-up and dissolution of a qualifying tourist resort property development;

(

f) respecting the manner

of calculating the amount of a tax credit that may be paid to a qualifying

investor;

(

g) setting limits on the

amounts of qualifying investments;

(

h) respecting the

carrying forward or back of a credit;

(

i) respecting the

holding period for a qualifying investment;

(

j) prescribing penalties

for failure to comply with the regulations; and

(

k) generally to give

effect to the purpose of this section.

6. Subsection 68(1) of the Act is amended by

adding immediately after paragraph (c.1) the following:

(c.2) respecting the amounts to be prescribed and

calculations required for the purpose of subsection 21.1(2.1);

(c.3) respecting amounts, periods and formulae

required for the purposes of the indexation of tax payable under

section 6.1;

Earl G. Tucker, Queen's Printer