First

Session, 50th General Assembly

Elizabeth II, 2022

BILL 54

AN ACT TO AMEND THE

INCOME TAX ACT, 2000

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

reinstate limitations respecting

an individual's ability to claim the equivalent to spouse amount, the caregiver

credit and the infirm dependent credit;

ensure continued availability

of the education credit;

allow the physical activity tax

credit to be claimed for a deceased individual who had eligible fitness

expenses in the year of death;

clarify that the physical

activity tax credit may not be claimed by a person who is exempt from paying tax

in the province;

require income earned by a

taxpayer in the province and in other provinces and territories of Canada to be

included in the calculation of tax on split income;

remove the overseas employment

tax credit that was eliminated in 2016 from the calculation of the tax credits

available where income is earned

outside of the province;

include the child care tax

credit, volunteer firefighters' tax credit and search and rescue volunteer tax

credit in the calculation of the tax credits available where income is earned outside of the province;

include the deduction for

employee stock options in the calculation of an individual's foreign tax

deduction to align with the calculation of taxable income under the federal Act

and remove a reference to a provision of the federal Act that has been repealed;

introduce a manufacturing and

processing investment tax credit;

introduce a green technology

tax credit;

exclude amounts calculated for the

federal temporary wage subsidy program from amounts to be remitted for income

tax withholdings and remove references to provisions of the federal Act that have

been repealed;

clarify that instalment

payments are not required for graduated rate estates;

remove a reference in

section

54 to a provision of the federal Act that has been repealed;

include by reference provisions

of the federal Act to suspend statutory notice periods and time periods for a

reassessment when a requirement to provide foreign-based information is

contested;

allow the Canada Revenue Agency

to provide provincial specific taxpayer information to the federal Minister of Finance

for the purposes of formulation or evaluation of fiscal policy;

include by reference provisions

of the federal Act to allow the Canada Revenue Agency to send requirements for

information electronically to banks and credit unions and allow an affidavit of

an official of the Canada Revenue Agency to serve as proof of personal service

delivery;

replace references to

"Canada Customs and Revenue Agency" with "Canada Revenue

Agency";

replace references to "Commissioner

of Customs and Revenue" with "Commissioner of Revenue";

replace references to the

" Canada Customs and Revenue Agency Act "

with " Canada Revenue Agency Act ";

and

incorporate gender-neutral

language.

A BILL

AN ACT TO AMEND THE INCOME TAX ACT, 2000

Analysis

S.2 Amdt.

Interpretation

S.7.1 Amdt.

Temporary deficit reduction levy

S.9 Amdt.

Personal credits

S.14 R&S

Education credit

S.16.1 Amdt.

Student loan tax credit

S.17.5 Amdt.

Physical activity tax credit

S.18 Amdt.

Tax credit transfer

S.21.1 Amdt.

Low income reduction

S.29 Amdt.

Tax on split income

S.31.1 Amdt.

Pro-rating where income earned outside province

S.33 Amdt.

Foreign tax deduction

S.34 Amdt.

Income supplement

S.35 Amdt.

No set off

S.36 Amdt.

Date on which amount applied

Ss.41.1 and 41.2 Added

41.1 Manufacturing and

processing

investment

tax

credit

41.2 Green technology tax

credit

S.47 Amdt.

Political contribution deduction

S.49 R&S

Returns of income, assessments and withholding

S.50 Amdt.

Reassessment

S.52 R&S

Instalments by other individuals

S.54 R&S

Returns, payments and interest

S.56 Amdt.

Amount on which instalment computed

S.62 Amdt.

Appeals

S.63 Amdt.

Reply to appeal

S.78 Amdt.

Books and records

S.79 R&S

Inspections, privileges, etc.

S.83 Amdt.

Actions or suits

S.84 Amdt.

Revealing confidential information

S.87 R&S

Information or complaint

S.89 Amdt.

Collection agreement

S.92 Amdt.

Deduction at source

S.93 Amdt.

Non-agreeing provinces

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. (1) Subsection 2(1) of the Income Tax Act, 2000 is amended by adding immediately after

paragraph (

a) the following:

(a.1) "Canadian-controlled private

corporation" means Canadian-controlled private corporation as defined in

subsection 125(7) of the federal Act;

(2) Clause 2(1)(d)(ii)(

B) of the Act is amended by

deleting the words "Canada Customs and Revenue Agency" and

substituting the words "Canada Revenue Agency".

(3) Subparagraph 2(1)(e)(iii) of the Act is

repealed and the following substituted:

(iii) where a collection agreement is in effect, the

Commissioner of Revenue appointed under

section 25 of the Canada Revenue Agency Act ;

(4) Subsection 2(2) of the Act is amended by

deleting the words "he or she" and substituting the words "the

individual".

(5) Subsection 2(3) of the Act is amended by

deleting the words "him or her" and substituting the words "the

taxpayer".

(6) The Table in paragraph 2(9)(

i) of the Act is

amended by deleting the words "Commissioner of Customs and Revenue

appointed under

section 25 of the Canada

Customs and Revenue Agency Act (Canada)" and substituting the words

"Commissioner of Revenue appointed under

section 25 of the Canada Revenue Agency Act ".

2. Paragraph

7.1(4)(

a) of the Act is amended by deleting the words "his or her"

and substituting the words "the individual's".

3. Paragraph 9(1)(

f) of the Act is repealed and

the following substituted:

(

f) in the case of an individual entitled to a deduction in respect of a

person because of paragraph (

b) and who would also be entitled, but for

paragraph 118(4)(

c) of the federal Act, as that provision existed for the 2016 taxation

year and as it applies to this Act, to a deduction because of paragraph (

d) or

(

e) in respect of the person, the amount by which the amount that would be

determined under paragraph (

d) or (e), exceeds the amount determined under

paragraph (

b) in respect of the person.

Section 14 of the Act is repealed and the

following substituted:

Education credit

(1) For the purpose of

computing the tax payable under this Part by an individual who is a qualifying

student for a taxation year, there may be deducted an amount determined by the

formula

A x B

where

A is

the appropriate percentage for the year; and

B is

the total of the products obtained when

(a)

$200 is multiplied by the number of months in the year during which the

individual is enrolled in a qualifying educational program as a full-time

student at a designated educational institution; and

(b) $60

is multiplied by the number of months in the year, other than months described

in paragraph (a), each of which is a month during which the individual is

enrolled at a designated educational institution in a specified educational

program that provides that each student in the program spend not less than 12

hours in the month on courses in the program.

(2) Subsections

118.6(1) and (3) of the federal Act apply for the purpose of this Act.

5. Subsection

16.1(2) of the Act is amended by deleting the words "his or her" and

substituting the words "the individual's".

Section 17.5 of the Act is amended by adding

immediately after subsection (8) the following:

(9) For the purposes of this section, an

individual who dies during the taxation year and was resident in the province

on the day of the individual's death is considered to be an individual who is

resident in the province at the end of the taxation year.

(10) This

section does not apply to an individual

who is exempt from tax under

section 149 of the federal Act.

7. Subsection

18(1) of the Act is amended by deleting the words "his or her" and

substituting the words "the individual's".

8. Paragraph

21.1(1)(

b) of the Act is amended by deleting the words "his or her"

and substituting the words "the individual's".

Section 29 of the Act is amended by renumbering

the

section as subsection 29(1) and adding immediately after that subsection

the following:

(2) Notwithstanding paragraph 2 (9)(i), in this

section

a reference to "Canada" in the

definitions of "source

individual" and "specified individual" in subsection 120.4(1) of

the federal Act, shall not be read as a reference to Newfoundland and Labrador.

(1) Section 31.1 of the Act is amended by

repealing the paragraph referring to the value of A and substituting the

following:

A is

the total of all amounts each of which is deductible under subsection 9(3) and

sections 17.1 and 20 by the individual for the taxation year;

(2) Section 31.1 of the Act is amended by

repealing the paragraph referring to the value of A and substituting the

following:

A is

the total of all amounts each of which is deductible under subsection 9(3) and

sections 17.1 to 17.4 and 20 by the individual for the taxation year;

11. (1) Subsection 33(1) of the Act is amended by

deleting the words "him or her" and substituting the words "the individual".

(2) Clause 33(1)(b)(ii)(

C) of the Act is repealed

and the following substituted:

(

C) the total of all amounts, each of which is an

amount deducted under

section 110.6 or paragraph 111(1)(

b) of the federal Act

or deductible under paragraphs 110(1)(

d) to (

g) of the federal Act for the

year, in computing the individuals taxable income for the year.

12. (1) Subsection

34(3) of the Act is amended by deleting the words "his or her" and

substituting the words "the eligible individual's".

(2) Subsection

34(9) of the Act is amended by deleting the words "his or her" and

substituting the words "the individual's".

(3) Subsection

34(11) of the Act is amended by deleting the words "his or her" and

substituting the words "the eligible individual's".

13. Subsection

35(1) of the Act is amended by deleting the words "his or her" and

substituting the words "the individual's".

Section

36 of the Act is amended by deleting the words "his or her" and

substituting the words "the individual's".

15. The Act is amended by adding immediately after

section 41 the following:

Manufacturing and

processing investment tax credit

41.1

(1) In

this section,

(a) "capital cost" means the capital

cost referred to in paragraph (

a) of the definition of investment tax credit in

subsection 127(9) of the federal Act;

(b) "eligible corporation" means a corporation

that

(

i) has a permanent establishment in the province,

and

(ii) acquired eligible property in a taxation year;

(c) "eligible property" means qualified

property that is

(

i) located in the province, and

(ii) acquired for and used in a business operating

in the province;

(d) "manufacturing and processing investment

tax credit" means the amount that is equal to 10% of an eligible

corporation's qualified investment;

(e) "qualified investment" means the

portion of the capital cost that relates to eligible property acquired by an

eligible corporation in a taxation year;

(f) "qualified property" means qualified

property as defined in subsection 127(9) of the federal Act; and

(g) "refundable amount" means an amount

equal to 40% of an eligible corporation's manufacturing and processing

investment tax credit for a taxation year.

(2) An eligible corporation may deduct from the tax

otherwise payable by it under this Act for a taxation year an amount not

exceeding the lesser of

(

a) its manufacturing and processing investment

tax credit for the taxation year; and

(

b) the tax otherwise payable by it under this Act

for the taxation year.

(3) Where an eligible corporation is a

Canadian-controlled private corporation and its manufacturing and processing

investment tax credit for a taxation year exceeds the tax otherwise payable by

it under this Act for the taxation year, an amount not exceeding the lesser of the

amount by which its manufacturing and processing investment tax credit for the

taxation year exceeds the tax otherwise payable by it under this Act for the

taxation year and the refundable amount may be applied by the minister to pay

(

a) a tax, interest or penalty owing by the eligible

corporation for that or a prior taxation year under this Act, the income tax statute

of an agreeing province or the federal Act;

(

b) a contribution, penalty or interest owing by

the eligible corporation for that or a prior taxation year as a result of

payments required from the eligible corporation under the Canada Pension Plan Act ; and

(

c) a premium, interest or penalty owing by the eligible

corporation for that or a prior taxation year under the Employment Insurance Act (Canada).

(4) Any part of the amount that may be applied

under paragraphs (3)(

a) to (

c) that is not applied shall be refunded to the

eligible corporation.

(5) Where an eligible corporation's manufacturing

and processing investment tax credit for a taxation year exceeds the total of

(

a) the amount deducted from tax under subsection

(2);

(

b) any amount applied under subsection (3); and

(

c) any amount refunded under subsection (4)

for the

taxation year, the eligible corporation may apply the excess manufacturing and

processing investment tax credit amount towards tax payable by it under this

Act in any of the 3 taxation years immediately preceding or the 20 taxation

years immediately following the taxation year but only to the extent that it

has not been applied to tax payable for another taxation year.

(6) Notwithstanding subsection (5), the excess manufacturing

and processing investment tax credit amount referred to in subsection (5) shall

not be applied to tax payable by the eligible corporation for a taxation year

that ended before this

section comes into force.

(7) This

section does not apply to an eligible corporation

that is exempt from tax under

section 149 of the federal Act.

Green technology

tax credit

41.2

(1) In

this section,

(a) "capital cost" means the capital

cost referred to in the description of item A contained in the definition of

undepreciated capital cost in subsection 13(21) of the federal Act;

(b) "eligible corporation" means a Canadian-controlled

private corporation that

(

i) has a permanent establishment in the province,

and

(ii) acquired eligible property in a taxation year;

(c) "eligible property" means property

described in Class 43.1 or 43.2 of

Schedule II to the Income Tax Regulations (Canada) that is

(

i) located in the province, and

(ii) acquired for and used in a business operating

in the province;

(d) "green technology tax credit" means

the amount that is the lesser of

(i) 20% of an eligible corporation's qualified

investment in a taxation year, and

(ii) the eligible corporation's tax credit limit

for the taxation year as determined under subsection (2);

(e) "qualified investment" means the

portion of the capital cost that relates to eligible property acquired by an

eligible corporation in a taxation year; and

(f) "refundable amount" means an amount

equal to 40% of an eligible corporation's green technology tax credit for a

taxation year.

(2) For the purpose of subparagraph (1)(d)(ii), an

eligible corporation's tax credit limit for a taxation year is,

(a) $1 million where the eligible corporation is

not associated in the taxation year with any other corporations within the

meaning of

section 256 of the federal Act;

(b) $1 million multiplied by the percentage

assigned to the eligible corporation in the agreement

referred to in subparagraph (ii) where

(

i) the eligible corporation is associated in the

taxation year with one or more other corporations within the meaning of

section

256 of the federal Act,

(ii) all

corporations that are associated with the eligible corporation in the taxation year file with the minister an

agreement, in the form set by the minister, that assigns for the purposes of

this

section a percentage to one or more eligible corporations, and

(iii) the total of the percentages assigned in the

agreement referred to in subparagraph (ii) does not exceed 100%; and

(

c) nil in any other case.

(3) An eligible corporation may deduct from the

tax otherwise payable by it under this Act for a taxation year an amount not

exceeding the lesser of

(

a) its green technology tax credit for the

taxation year; and

(

b) the tax otherwise payable by it under this Act

for the taxation year.

(4) Where an eligible corporation's green

technology tax credit for a taxation year exceeds the tax otherwise payable by

it under this Act for the taxation year, an amount not exceeding the lesser of

the amount by which its green technology tax credit for the taxation year exceeds

the tax otherwise payable by it under this Act for the taxation year and the

refundable amount may be applied by the minister to pay

(

a) a tax, interest or penalty owing by the eligible

corporation for that or a prior taxation year under this Act, the income tax statute

of an agreeing province or the federal Act;

(

b) a contribution, penalty or interest owing by

the eligible corporation for that or a prior taxation year as a result of

payments required from the eligible corporation under the Canada Pension Plan Act ; and

(

c) a premium, interest or penalty owing by the eligible

corporation for that or a prior taxation year under the Employment Insurance Act (Canada).

(5) Any part of the amount that may be applied

under paragraphs (4)(

a) to (

c) that is not applied shall be refunded to the

eligible corporation.

(6) Where an eligible corporation's green

technology tax credit for a taxation year exceeds the total of

(

a) the amount deducted from tax under subsection

(3);

(

b) any amount applied under subsection (4); and

(

c) any amount refunded under subsection (5)

for the

taxation year, the eligible corporation may apply the excess green technology

tax credit amount towards tax payable by it under this Act in any of the 3

taxation years immediately preceding or the 20 taxation years immediately

following the taxation year but only to the extent that it has not been applied

to tax payable for another taxation year.

(7) Notwithstanding subsection (6), the excess green

technology tax credit amount referred to in subsection (6) shall not be applied

to tax payable by the eligible corporation in a taxation year that ended before

this

section comes into force.

(8) This

section does not apply to an eligible corporation

that is exempt from tax under

section 149 of the federal Act.

16. (1) Subsection

47(4) of the Act is repealed and the following substituted:

(4) An amount may not be deducted under subsection

(2) with respect to a contribution to a candidate unless it was made during an

election period as defined in the Elections

Act, 1991 and after the candidate's chief financial officer was appointed under

that Act in the election in which the individual is a candidate.

(2) Subsection

47(6) of the Act is amended by deleting the words "him or her" and

substituting the words "the chief financial officer".

Section 49 of the Act is repealed and the

following substituted:

Returns of

income, assessments and withholding

49. Subsection

70(7), except the portion of it that is after paragraph (a), sections 150,

150.1 and 151 and subsections 152(1) to (3.1), (4) to (9), 153(1), (1.01),

(1.1) to (3) and 156.1(4) of the federal Act apply for the purpose of this Act.

18. Subsection

50(2) of the Act is amended by deleting the words "his or her" and

substituting the words "the individual's".

Section 52 of the Act is repealed and the

following substituted:

Instalments by

other individuals

Section

156 and paragraph 156.1(2)(

c) of the federal Act apply for the purpose of this

Act.

Section 54 of the Act is repealed and the

following substituted:

Returns, payments

and interest

54. Subsections

70(2) and 104(2), sections 158, 159 and 160, subsections 160.1(1), (1.1),

(2.1), (3) and (4), sections 160.2 and 160.3 and subsections 161(1), (2),

(2.1), (2.2), (4), (4.01), (4.1), (5), (6), (6.1), (7), (9) and (11) of the

federal Act apply for the purpose of this Act.

Section

56 of the Act is amended by deleting the words "his or her" wherever they

appear and substituting the words "the taxpayer's".

22. (1) Paragraph

62(2)(

a) of the Act is amended by deleting the words "his or her"

wherever they appear and substituting the words "the individual's".

(2) Subsection

62(5) of the Act is amended by deleting the words "he or she" and

substituting the words "the appellant".

23. Subsection

63(1) of the Act is amended by deleting the words "he or she" and

substituting the words "the minister".

24. Subsection

78(1) of the Act is amended by deleting the words "his or her" and

substituting the words "the person's".

Section 79 of the Act is repealed and the

following substituted:

Inspections,

privileges, etc.

79. Sections

231 to 231.8, 232, 233 and 236 of the federal Act apply for the purpose of this

Act.

26. Subsection

83(1) of the Act is amended by deleting the words "his or her" and

substituting the words "the Minister of National Revenue's".

27. (1) Paragraph

84(1)(

c) of the Act is amended by deleting the words "his or her" and

substituting the words "the person's".

(2) Subsection 84(2) of the Act is amended by

deleting the word "or" at the end of paragraph (a), deleting the

period at the end of subparagraph (b)(ii) and substituting a semi-colon and the

word "or" and by adding immediately after paragraph (

b) the

following:

(

c) the Minister of National Revenue and the

Minister of Finance for Canada, where that information is provided in

accordance with subsection (3).

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

immediately after subsection (2) the following:

(3) The Minister of National Revenue may provide

any information obtained by or on behalf of the province for the purposes of

this Act to an official of the Minister of Finance for Canada solely for the

purposes of the formulation or evaluation of fiscal policy.

Section 87 of the Act is repealed and the

following substituted:

Information or

complaint

87. Subsections

244(1) to (11), (13) to (17) and (20) to (22) of the federal Act apply for the

purpose of this Act.

29. Subsection

89(4) of the Act is repealed and the following substituted:

(4) Where a collection agreement is entered into,

the Commissioner of Revenue appointed under the Canada Revenue Agency Act may

(

a) employ the powers, perform the duties and

exercise the discretion that the Minister of National Revenue has under this

Act; and

(

b) designate

officers of the Canada Revenue Agency to carry out those functions, duties and

powers that are similar to those that are exercised by them on behalf of the Commissioner

of Revenue under the federal Act.

Section

92 of the Act is amended by

(

a) deleting

the words "him or her" wherever they appear and substituting the

words "the individual"; and

(

b) deleting

the words "his or her" and substituting the words "the

individual's".

Section

93 of the Act is amended by deleting the words "him or her" wherever

they appear and substituting the words "the individual".

Commencement

(1) Sections 19 and 20 of this Act are

considered to have come into force on January 1, 2016.

(2) Sections 3 and 4 and subsection 10(1) of this

Act are considered to have come into force on January 1, 2017.

(3) Section 17 of this Act is considered to have

come into force on March 25, 2020.

(4) Section 6 and subsection 10(2) of this Act are

considered to have come into force on January 1, 2021.

(5) Sections 25 and 28 of this Act are considered

to have come into force on June 29, 2021.

(6) Subsection 11(2) of this Act is considered to

have come into force on July 1, 2021.

(7) Section 9 of this Act is considered to have

come into force on January 1, 2022.

(8) Section 15 of this Act is considered to have

come into force on April 7, 2022.

Queen's Printer