Fourth Session,

47th General Assembly

64 Elizabeth II,

BILL 12

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 ROSS

WISEMAN

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

implement the increase in the

harmonized sales tax credit announced in Budget 2015; and

provide for a tax credit in

respect of qualifying interactive digital media products.

A BILL

AN ACT TO AMEND THE INCOME TAX ACT, 2000

NO. 2

Analysis

S.34 Amdt.

Harmonized sales tax credit

S.42 Amdt.

Research and development tax credit

S.45 Amdt.

Film or video tax credit

4. S.46.3 Added

Interactive digital media 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. Subsection 34(4) of the Income Tax Act, 2000 is repealed and the following substituted:

(4) The amount referred to in subsection (3) shall

be the total of

(

a) the amount by which the total of

(i) $300,

(ii) $60 for a person who is the qualified relation

of the individual for the year, and

(iii) the product obtained when $60 is multiplied by

the number of qualified dependants of the individual for the year,

exceeds

(iv) 5% of the amount by which the individuals

adjusted income for the year exceeds $30,000; and

(

b) the amount calculated in accordance with the

regulations.

Section 42 of the Act is amended by adding

immediately after subsection (2.1) the following:

(2.2) A taxpayer is not entitled to claim a

deduction under subsection (2) and a credit under

section 46.3 with respect to

the same expenditure.

Section 45 of the Act is amended by adding

immediately after subsection (3) the following:

(3.1) Where an expenditure can be considered to be a

qualifying expenditure with respect to a credit under this

section and

section

46.3, that expenditure shall be allocated proportionately between the two tax

credits in the manner prescribed in the regulations.

4. The Act is amended by adding immediately after

section 46.2 the following:

Interactive digital

media tax credit

46.3

(1) In

this

section

(a) "eligible corporation" means a

corporation which satisfies the conditions prescribed in the regulations;

(b) "eligible product" means an

interactive digital media product developed by an eligible corporation for or

during an eligible project

(

i) which satisfies the conditions prescribed in

the regulations, and

(ii) for which, in the opinion of the minister or

in the opinion of a person so designated by the minister, public financial

support would not be contrary to public policy;

(c) "eligible project" means a project of

an eligible corporation to develop an eligible product which satisfies the

conditions prescribed in the regulations; and

(d) "qualifying expenditure" means the eligible

proportion of salaries and remuneration paid by an eligible corporation for or during

an eligible project as prescribed in the regulations.

(2) An eligible corporation, or a person acting on

behalf of an eligible corporation, may apply to the minister for a tax credit

in respect of a qualifying expenditure.

(3) The minister may give a tax credit to an

eligible corporation which applies under subsection (2) or on whose behalf an

application is made under subsection (2).

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

be calculated in the manner prescribed by the regulations.

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

which is otherwise payable under this Act.

(6) A taxpayer is not entitled to claim a credit

under subsection (5) and a deduction under

section 42 with respect to the same

expenditure.

(7) Where an expenditure can be considered to be a

qualifying expenditure with respect to a credit under this

section and

section

45, that expenditure shall be allocated proportionately between the two tax

credits in the manner prescribed in the regulations.

(8) Where the tax credit calculated in accordance

with this

section exceeds the tax otherwise payable under this Act, the

minister may pay the amount of the excess to the eligible corporation in a

manner prescribed in the regulations.

(9) The Lieutenant-Governor in Council may make

regulations

(

a) respecting the manner of applying for a tax

credit under this section;

(

b) establishing the criteria for determining who

or what is

(

i) an eligible corporation,

(ii) an eligible product,

(iii) an eligible project, and

(iv) a qualifying expenditure;

(

c) respecting the issuance of and the grounds for

revocation of certificates of eligible corporations;

(

d) respecting the issuance of and the grounds for

revocation of tax credit certificates;

(

e) limiting the value of the tax credits which an

eligible corporation may receive under this

section in a taxation year;

(

f) respecting the manner of calculating the

amount of a tax credit that may be paid to an eligible corporation;

(

g) setting limits on the values of qualifying expenditures;

(

h) prescribing penalties for failure to comply

with the regulations;

(

i) prescribing the manner in which a credit under

this

section may be administered, including how a credit under this

section may

operate together with another tax credit allowable under this Act;

(

j) defining or further defining a term used in

this section; and

(

k) generally to give effect to the purpose of

this section.

(10) Regulations under subsection (9) may be made

with retroactive effect.

Commencement

(1) Section 1 of this Act comes into force

on January 1, 2016.

(2) Sections 2, 3 and 4 of this Act are considered

to have come into force on January 1, 2015.

Queen's Printer