1998 Legislative Session: 3rd Session, 36th Parliament
FIRST READING


The following electronic version is for informational purposes only.
The printed version remains the official version.


HONOURABLE JOY K. MacPHAIL
MINISTER OF FINANCE AND
CORPORATE RELATIONS

BILL 2 -- 1998

BUDGET MEASURES IMPLEMENTATION ACT, 1998

HER MAJESTY, by and with the advice and consent of the Legislative Assembly of the Province of British Columbia, enacts as follows:

 
Corporation Capital Tax Act

1 Section 1 of the Corporation Capital Tax Act, R.S.B.C. 1996, c. 73, is amended

(a) in subsection (1) by adding the following definition:

"threshold amount" for a taxation year means the applicable amount indicated opposite the taxation year as follows:

  Ending after December 31, 1998 and on or before December 31, 1999 $2.5 million
  Ending after December 31, 1999 and on or before December 31, 2000 $3.5 million
  Ending after December 31, 2000 $5 million; ,

(b) in subsection (1) by repealing the definition of "adjusted paid up capital",

(c) in subsection (1), in paragraph (g) of the definition of "loans and advances to corporations" , by striking out "adjusted paid up capital" and substituting "net B.C. paid up capital", and

(d) in subsection (5) by striking out "adjusted paid up capital" and substituting "net B.C. paid up capital".

2 Section 3 (1) and (2) is amended by striking out "$750 million" and substituting "$1 billion".

3 Section 3 is repealed and the following substituted:

Liability for tax and general tax rates

3 (1) A corporation must, for each taxation year that the corporation has or had a permanent establishment in British Columbia, pay to the government a tax calculated in accordance with this Act if the corporation has, at the end of that taxation year,

(a) in the case of a corporation that is not associated with one or more other corporations, net paid up capital that is equal to or greater than the threshold amount, or

(b) in the case of a corporation that is one of 2 or more associated corporations, net paid up capital that, when added to the net paid up capital of every corporation with which it is associated, is in total equal to or greater than the threshold amount.

(2) In the case of a corporation that is a bank, trust company or credit union,

(a) if the corporation has, at the end of the applicable taxation year, net paid up capital of more than $1 billion, the tax imposed on and payable by the corporation under subsection (1) for the taxation year is an amount equal to 3% of the net B.C. paid up capital of the corporation for that taxation year, or

(b) if the corporation has, at the end of the applicable taxation year, net paid up capital of $1 billion or less, the tax imposed on and payable by the corporation under subsection (1) for the taxation year is, subject to sections 3.1 and 3.2, an amount equal to 1% of the net B.C. paid up capital of the corporation for that taxation year.

(3) In the case of a corporation that is not a bank, trust company or credit union, the tax imposed on and payable by the corporation under subsection (1) for a taxation year is, subject to sections 3.1 and 3.2, an amount equal to 0.3% of the net B.C. paid up capital of the corporation for the taxation year.

(4) If a corporation is one of 2 or more associated corporations, the amounts of net paid up capital of the associated corporations that are to be added together for the purposes of subsection (1) (b) must be computed by using the taxation year for each associated corporation that ends in the same calendar year as the taxation year of the corporation for which the tax payable is being determined.

(5) For the purposes of determining whether a corporation referred to in section 14 (2) is subject to tax under this section, the corporation must compute its net paid up capital on the same basis as if it were resident in Canada.

Reduced tax for smaller corporations that
are not associated with other corporations

3.1 (1) For a corporation that

(a) is referred to in section 3 (2) (b) or (3),

(b) is not one of 2 or more associated corporations, and

(c) has, at the end of the applicable taxation year, net B.C. paid up capital that is less than the total of the threshold amount plus $250 000,

in the circumstances described in this section, the tax imposed on and payable under this Act by the corporation for that taxation year is the amount determined under this section rather than the amount of tax that would otherwise be payable by the corporation under section 3.

(2) If, at the end of a taxation year, the corporation has net B.C. paid up capital that is

(a) equal to or greater than the threshold amount, and

(b) less than the total of the threshold amount plus $250 000,

the amount of tax imposed on and payable by the corporation for the taxation year is to be determined in accordance with the following formula:

  Amount = tax otherwise payable - [(notch - capital) x 1.6%]
  where
  tax otherwise payable = the amount of tax otherwise payable under section 3 for the taxation year by the corporation, if this section did not apply;
  notch = the total of the threshold amount plus $250 000;
  capital = the corporation's net B.C. paid up capital for the taxation year.

(3) If, at the end of a taxation year, the corporation has net B.C. paid up capital that is

(a) equal to or greater than $1.5 million, and

(b) less than the threshold amount,

the amount of tax imposed on and payable by the corporation for the taxation year is to be determined in accordance with the following formula:

  Amount = [(capital - $1.5 million) x rate] + $500
  where
  capital = the corporation's net B.C. paid up capital for the taxation year;
  rate = (a) 1%, for a corporation otherwise subject to tax calculated under section 3 (2) (b), and
      (b) 0.3%, for a corporation otherwise subject to tax calculated under section 3 (3).

(4) If, at the end of a taxation year, the corporation has net B.C. paid up capital that is

(a) equal to or greater than $250 000, and

(b) less than $1.5 million,

the amount of tax imposed on and payable by the corporation for the taxation year is $500.

(5) If, at the end of a taxation year, the corporation has net B.C. paid up capital that is less than $250 000, the amount of tax imposed on and payable by the corporation for the taxation year is the lesser of

(a) the amount of tax that would be payable under section 3 for the taxation year by the corporation, if this section did not apply, and

(b) $250.

Reduced tax for smaller corporations that are
associated with one or more other corporations

3.2 (1) For a corporation that

(a) is referred to in section 3 (2) (b) or (3),

(b) is one of 2 or more associated corporations, and

(c) has, at the end of the applicable taxation year, net B.C. paid up capital that, when added to the net B.C. paid up capital of every corporation with which it is associated, is in total not more than the total of the threshold amount plus $250 000,

in the circumstances described in this section, the tax imposed on and payable under this Act by the corporation for that taxation year is the amount determined under this section rather than the amount of tax that would otherwise be payable by the corporation under section 3.

(2) If, at the end of a taxation year, the corporation has net B.C. paid up capital that, when added to the net B.C. paid up capital of every corporation with which it is associated, is in total

(a) equal to or greater than the threshold amount, and

(b) less than the total of the threshold amount plus $250 000,

the amount of tax imposed on and payable by the corporation for the taxation year is its proportionate share of the amount determined in accordance with the following formula:

  Amount = total tax otherwise payable - [(notch - total capital) x 1.6%]
  where
  total tax otherwise payable = the total amounts of tax that would be payable under section 3 for the taxation year by the corporation and every corporation with which it is associated, if this section did not apply;
  notch = the total of the threshold amount plus $250 000;
  total capital = the total of the net B.C. paid up capital for the taxation year for the corporation and every corporation with which it is associated.

(3) If, at the end of a taxation year, the corporation has net B.C. paid up capital that, when added to the net B.C. paid up capital of every corporation with which it is associated, is in total

(a) equal to or greater than $1.5 million, and

(b) less than the threshold amount,

the amount of tax imposed on and payable by the corporation for the taxation year is its proportionate share of the amount determined in accordance with the following formula:

  Amount = [(total capital - $1.5 million) x rate] + $500
  where
  total capital = the total of the net B.C. paid up capital for the taxation year for the corporation and every corporation with which it is associated;
  rate = (a) 1%, for a corporation otherwise subject to tax calculated under section 3 (2) (b), and
      (b) 0.3%, for a corporation otherwise subject to tax calculated under section 3 (3).

(4) If, at the end of a taxation year, the corporation has net B.C. paid up capital that, when added to the net B.C. paid up capital of every corporation with which it is associated, is in total

(a) equal to or greater than $250 000, and

(b) less than $1.5 million,

the amount of tax imposed on and payable by the corporation for the taxation year is its proportionate share of $500.

(5) If, at the end of a taxation year, the corporation has net B.C. paid up capital that, when added to the net B.C. paid up capital of every corporation with which it is associated, is in total less than $250 000, the amount of tax imposed on and payable by the corporation for the taxation year is its proportionate share of the lesser of

(a) the total amount of tax that would be payable under section 3 for the taxation year by the corporation and every corporation with which it is associated, if this section did not apply, and

(b) $250.

(6) For the purposes of this section, the proportionate share of an amount that is payable by a corporation under this section is the proportion that

(a) its net B.C. paid up capital

bears to

(b) the total of the net B.C. paid up capital of the corporation and every corporation with which it is associated that has a positive net B.C. paid up capital.

(7) For the purpose of determining the tax payable by a corporation under this section, the amounts of net B.C. paid up capital of the associated corporations and the amounts of tax otherwise payable under section 3 that are to be added together for the purposes of this section must be computed by using the taxation year for each associated corporation that ends in the same calendar year as the taxation year of the corporation for which the tax payable is being determined.

4 Section 15 is repealed.

5 Section 16 (1) and (3) (a) is amended by striking out "adjusted paid up capital" and substituting "net B.C. paid up capital".

6 Section 17 is amended by striking out "adjusted paid up capital" wherever it appears and substituting "net B.C. paid up capital".

7 Section 21 (b) is amended by striking out "adjusted paid up capital" and substituting "net B.C. paid up capital".

 
Financial Administration Act

8 Part 6 of the Financial Administration Act, R.S.B.C. 1996, c. 138, is repealed.

 
Financial Information Act

9 Schedule 1 of the Financial Information Act, R.S.B.C. 1996, c. 140, is amended by striking out "System Act".

 
Fire Services Act

10 The definition of ' "taxable insurer" and "taxpayer" ' in section 1 of the Fire Services Act, R.S.B.C. 1996, c. 144, is repealed.

11 Sections 37, 38 and 39 are repealed.

 
Freedom of Information and Protection of Privacy Act

12 Schedule 2 of the Freedom of Information and Protection of Privacy Act, R.S.B.C. 1996, c. 165, is amended by striking out the following:

  Public Body:  British Columbia Systems Corporation
  Head: Chair of the Board of Directors .

 
Insurance Premium Tax Act

13 Section 1 of the Insurance Premium Tax Act, R.S.B.C. 1996, c. 232, is amended

(a) by repealing the definitions of "class of insurance", "life insurance", "marine insurance", "personal accident insurance", "personal property insurance" and "sickness insurance",

(b) by adding the following definitions:

"BC premium" means the premium payable under a contract of insurance in respect of a person resident or property situated in British Columbia at the time the premium becomes payable;

"net taxable premiums" of an insurer for a taxation year means the amount, if any, by which the insurer's total taxable premiums for the taxation year exceeds the total of

(a) taxable premiums returned to policy holders by the insurer in the taxation year, and

(b) the cash value of dividends paid or credited in the taxation year by the insurer to policy holders under contracts of insurance in respect of persons resident or property situated in British Columbia;

"premium" includes any payment made as consideration for a contract of insurance, including premium deposits, assessments, registration fees, contributions by members and any other compensation given in consideration for a contract of insurance, including a contract of reciprocal insurance;

"tax" includes all penalties and interest that are or may be added to the tax under this Act;

"taxable premium" of a taxable insurer for a taxation year means a BC premium that is received or became receivable by the insurer in the taxation year, other than a premium received

(a) as consideration for an annuity contract,

(b) from another taxable insurer under a contract of reinsurance,

(c) under a contract of marine insurance that is not pleasure craft insurance, or

(d) for medical services or hospitalization under a medical services or hospitalization plan approved by regulation;

"taxation year" means a calendar year and, when a taxation year is referred to by reference to a calendar year, the reference is to the taxation year coinciding with that year; ,

(c) by repealing the definition of "taxpayer" and substituting the following:

"taxpayer" means

(a) a taxable insurer,

(b) a person resident in British Columbia who enters into an insurance contract with an insurer other than a taxable insurer, or

(c) a trustee in bankruptcy, assignee, liquidator, receiver, administrator or similar person administering, managing, winding up or otherwise dealing with the property or business of a taxable insurer. , and

(d) by renumbering the section as section 1 (1) and by adding the following:

(2) The terms "accident and sickness insurance", "life insurance", "personal property insurance" and "marine insurance" have the meanings prescribed for those classes of insurance in the Insurance Classes Regulation under the Insurance Act.

14 Section 3 is repealed and the following substituted:

Tax provision

3 Every taxable insurer must pay to the government a tax for each taxation year equal to the total of

(a) 2% of the taxable insurer's net taxable premiums for the year received or receivable under contracts of life insurance, accident and sickness insurance and insurance that indemnifies or compensates for loss of salary or wages, and

(b) 4% of the taxable insurer's net taxable premiums for the year received or receivable under contracts of insurance not referred to in paragraph (a).

15 Sections 6 (1) and 11 (2) are amended by striking out "March 15" and substituting "March 31".

 
International Financial Business (Tax Refund) Act

16 Section 1 (1) of the International Financial Business (Tax Refund) Act, R.S.B.C. 1996, c. 235, is amended

(a) by adding the following definition:

"captive insurance company" means an insurance company registered under the Insurance (Captive Company) Act; ,

(b) in the definition of "eligible employee" by striking out ";" at the end of paragraph (c) and substituting "," and by adding the following after paragraph (c):

but does not include an employee of a captive insurance company or of an export financing company; ,

(c) by adding the following definition:

"export financing company" means a company whose only business is making loans to non-resident buyers of Canadian exports of goods or services, or both; ,

(d) in the definition of "financial institution" by repealing paragraph (a) and substituting the following:

(a) a bank, trust company, investment dealer, insurer or export financing company, , and

(e) by repealing the definition of "insurer" and substituting the following:

"insurer" means an insurance company or a captive insurance company; .

17 Section 2 (1) is amended by adding the following paragraph:

(b.1) the financial institution must be a member of the International Financial Centre Society of Vancouver; .

18 The following section is added:

Society membership

3.1 (1) It is a requirement for the renewal, reinstatement or amendment of the registration under this Act of a financial institution that the financial institution be a member of the International Financial Centre Society of Vancouver.

(2) A registration under the Act of a financial institution whose registration is in effect on April 1, 1998 expires at the end of the current taxation year of the financial institution, unless the financial institution is a member of the International Financial Centre Society of Vancouver.

19 Section 6 is amended by adding the following subsection:

(4) Subsection (1) does not apply to a captive insurance company.

 
Motor Fuel Tax Act

20 Section 5 of the Motor Fuel Tax Act, R.S.B.C. 1996, c. 317, is amended by adding the following subsection:

(3) A person who qualifies as a bona fide farmer under the Social Service Tax Act may, if authorized by the regulations to do so, claim an exemption from tax imposed under this section, or a refund of tax paid under this section.

21 Section 71 (2) is amended by adding the following paragraph:

(i.1) authorizing exemptions and refunds under section 5 (3) and respecting any matter or thing that the Lieutenant Governor in Council considers necessary for the implementation and administration of those exemptions and refunds; .

 
Pension (Public Service) Act

22 Section 2 (1) of the Pension (Public Service) Act, R.S.B.C. 1996, c. 356, is amended by repealing paragraph (k).

 
Property Transfer Tax Act

23 Section 8 (1) (c) of the Property Transfer Tax Act, R.S.B.C. 1996, c. 378, is repealed and the following substituted:

(c) ensure that, in the first 12 months after the registration date, the indebtedness secured by eligible securities registered against the property is not reduced by more than,

(i) for a property referred to in paragraph (a) of the definition of "qualifying value", the greater of

(a) $11 000, and

(b) the amount that would reduce that indebtedness to 70% of the fair market value of the property as at the date on which the application for registration of the eligible transaction was made at a land title office, or

(ii) for a property referred to in paragraph (b) of the definition of "qualifying value", the greater of

(a) $9 000, and

(b) the amount that would reduce that indebtedness to 70% of the fair market value of the property as at the date on which the application for registration of the eligible transaction was made at a land title office.

24 Section 14 is amended

(a) in subsection (1) by repealing the definition of "recreational residence" and substituting the following:

"recreational residence" means an interest in a parcel of land if the parcel is one

(a) on which, before the transfer,

(i) an individual transferor resided on a seasonal basis for recreational purposes, or

(ii) if an exemption is claimed under subsection (3) (c) or (d), the settlor or the deceased usually resided on a seasonal basis for recreational purposes,

(b) that has been classified as residential land under the Assessment Act,

(c) that is not larger than 5 ha in area, and

(d) that has a fair market value, determined under paragraph (a) of the definition of "fair market value", of no more than $275 000; ,

(b) in subsection (1) by adding the following definition:

"settlor" means, in relation to land held in trust, the person who

(a) contributed the land to the trust estate, or

(b) contributed to the trust estate the assets used to acquire the land,

whether or not that person is the creator of the trust. ,

(c) by repealing subsection (3) (a) and (b) and substituting the following:

(a) a transfer from a transferor who is not a trustee referred to in paragraph (c) or (d), to a transferee who is a related individual, if the land transferred is a family farm or a recreational residence;

(b) a transfer from a transferor who is not a trustee referred to in paragraph (c), (d) or (e), to a transferee who is a related individual, if the land transferred has been the principal residence of either the transferor for a continuous period of at least 6 months immediately before the date of transfer or of the transferee for that period; , and

(d) by repealing subsection (4) (p) and substituting the following:

(p) a transfer from a settlor to the Public Trustee or a trustee that is a trust company under the Financial Institutions Act authorized to carry on trust business by a business authorization issued under that Act, if

(i) the settlor is a natural person,

(ii) the settlor was the registered owner of the fee simple interest in the land immediately before the transfer to the trustee,

(iii) the administration of the trust estate is for the sole benefit of the settlor, and

(iv) on the termination of the trust the land reverts to the settlor or to the executor or administrator of the settlor's estate;

(p.1) a transfer from a trustee of a trust referred to in paragraph (p) to the settlor of the land being transferred; .

 
Securities Act

Payment by Securities Commission

25 (1) Despite section 15 of the Securities Act, at the request of the Minister of Finance and Corporate Relations, the British Columbia Securities Commission must pay to the government an amount not exceeding $12 million specified by the minister.

(2) The request and payment under subsection (1) must be made during the fiscal year of the government ending on March 31, 1999.

(3) This section is repealed on April 1, 1999.

 
Social Service Tax Act

26 Section 1 of the Social Service Tax Act, R.S.B.C. 1996, c. 431, is amended in the definition of "purchase price" by striking out "and" at the end of paragraph (a) (ii), by adding "and" at the end of paragraph (a) (iii) and by adding the following:

(iv) any charge, including a royalty or licence fee, relating to the use of the tangible personal property, or to the use of knowledge required to use the tangible personal property, whether incurred before or after the time that title to the tangible personal property covered by the sale passes under that sale, .

27 Section 5 is amended by adding the following subsection:

(3) Despite subsection (1), if part of the purchase price consists of charges described in paragraph (a) (iv) of the definition of "purchase price" that cannot be determined at the time of making the purchase, tax must be calculated separately for each charge and must be paid by the earlier of

(a) the time each charge is paid, and

(b) the time each charge becomes payable.

28 Section 9 is amended

(a) by adding the following subsection:

(1.1) Subject to section 11 (3), a person who

(a) acquired, inside or outside British Columbia, tangible personal property that is exempt under this Act or the regulations, and

(b) subsequently uses that property or allows that property to be used for a purpose other than that which allowed the person to acquire or use the property exempt from tax under the Act or the regulations

must, at the time the property is so used, pay tax on the purchase price of that property at the rate under this Act. , and

(b) in subsections (3) and (4) by adding "or copy of that prototype" after "prototype" wherever it appears.

29 Section 19 (1) is amended by adding ", (1.1)" after "section 9 (1)" .

30 Section 20 (1) is amended by striking out "section 21 (3)" and substituting "sections 20.1 and 21 (3)" .

31 The following section is added:

Tax on motor vehicle leased outside British Columbia

20.1 (1) A lessee of a motor vehicle, other than a multijurisdictional vehicle, must, at the time of registering the vehicle for use, pay tax at the applicable rate under section 6, if the vehicle is leased for a period of more than 28 days from an out of Province lessor who is not a registered lessor under the Act, or who is a registered lessor but has not confirmed collection of the tax.

(2) For the purpose of subsection (1), the reference to "purchase price" in section 6 is to be read as the price at which the legal and beneficial interest in the motor vehicle would, if unencumbered, be conveyed by a willing seller acting in good faith to a willing buyer acting in good faith in an arm's length retail sale in the open market on the date the motor vehicle is registered.

(3) On termination or expiration of the lease agreement for a motor vehicle referred to in subsection (1), or removal of the motor vehicle from British Columbia for registration outside of British Columbia, the lessee may claim a refund of the difference between the tax paid at the time of registering the vehicle less the sum of all taxes that would have otherwise been payable under section 20 or 21.

(4) A person who pays tax under this section is not required to pay tax under section 20 (1) or 21 (2) with respect to the same lease agreement.

32 Section 21 (2) is amended by striking out "A person" and substituting "Subject to section 20.1, a person" .

33 Section 26 (3) is repealed and the following substituted:

(3) The tax imposed under this section must be paid by the earlier of

(a) the time that the lease price is paid, and

(b) the date on which the lease price is payable.

34 Section 73 is amended

(a) by renumbering the section as section 73 (1),

(b) in subsection (1) by repealing paragraph (a) and substituting the following:

(a) grain, mill and other agricultural feeds and seeds;

(a.1) subject to subsection (2), fertilizers; , and

(c) by adding the following subsection:

(2) The exemption in subsection (1) (a.1) does not apply to fertilizers purchased for a non-agricultural purpose by a person other than an individual unless the fertilizer is otherwise exempted by this Act or the regulations.

35 Section 74 (e) is repealed and the following substituted:

(e) prescribed tangible personal property used for the conservation of energy.

36 Section 76 (1) is amended

(a) by adding the following paragraph:

(b.1) chemicals used to make chlorine dioxide or sodium hydrosulfite, if the purchaser of the chemicals

(i) uses the chlorine dioxide or sodium hydrosulfite for pulp production, and

(ii) would have been entitled to the exemption under paragraph (b), if he or she had been a purchaser of the chlorine dioxide or sodium hydrosulfite; ,

(b) in paragraph (d) by striking out "into a prototype," and substituting "into a prototype, or copies of the prototype made for a prescribed purpose,", and

(c) by adding the following paragraph:

(g) software source code in non-executable form.

37 The following section is added to Part 3:

Limit on exemptions

79.1 An exemption provided under this Act or the regulations for tangible personal property does not apply to tangible personal property used to make that property.

38 Section 84 is renumbered as section 84 (1) and the following is added:

(2) Despite subsection (1), if a motor vehicle is returned to the manufacturer or vendor more than one year after the property was delivered to the purchaser, and the return to the manufacturer or vendor results from an independent, impartial third party dispute resolution process, the purchaser is eligible for a refund of the amount of tax paid by the purchaser that is attributable to the amount of the refund or credit received from the manufacturer or vendor.

39 Section 115 (3) is repealed and the following substituted:

(3) The commissioner must not make an assessment under this section in respect of a tax liability or an obligation to collect or remit tax that arose, or an excess refund that was paid, more than 6 years before the date of the first notice of assessment.

Limitation -- Social Service Tax Act

40 (1) No refund may be paid under section 2 (1.7) (b) of the Social Service Tax Act, R.S.B.C. 1979, c. 388, unless the purchaser was required by the contract referred to in that section to take delivery of a specific quantity of tangible personal property before a specific time.

(2) The refund payable under section 2 (1.7) (b) of the Social Service Tax Act, R.S.B.C. 1979, c. 388, is only payable in respect of a quantity of tangible personal property that does not exceed the quantity specified in the contract.

(3) No refund may be paid under section 2 (1.7) (b) of the Social Service Tax Act, R.S.B.C. 1979, c. 388, in respect of taxes paid after March 30, 1999.

(4) This section applies

(a) to all applications for refunds made after March 31, 1993, and

(b) despite any decision of a court to the contrary made after that date.

 
System Act

41 The System Act, R.S.B.C. 1996, c. 446, is repealed.

Dissolution of British Columbia Systems Corporation

42 (1) On the repeal of the System Act,

(a) the British Columbia Systems Corporation is dissolved,

(b) the appointment of each director of the corporation is terminated,

(c) all of the rights, property and assets of the corporation are transferred to and vested in the government, and

(d) the government assumes all obligations and liabilities of the corporation.

(2) On and after the date on which the System Act is repealed, a reference to the British Columbia Systems Corporation in any commercial paper, contract, lease, licence, permit or other instrument or document is deemed to be a reference to the government.

Transfer of specified indebtedness

43 (1) In this section, "specified indebtedness" means the indebtedness of the British Columbia Systems Corporation evidenced by

(a) Debenture number 00001, Series-S dated June 10, 1981, and

(b) Debenture number CP S-2 dated March 10, 1982.

(2) On March 10, 1998 the specified indebtedness is transferred to and assumed by the government, becomes its indebtedness and becomes enforceable against the government as if it had incurred the indebtedness.

(3) The consideration payable by the British Columbia Systems Corporation to the government for the transfer of indebtedness under subsection (2) must be determined by the Minister of Finance and Corporate Relations.

(4) On and after March 10, 1998, the sinking funds established for payment of the specified indebtedness are deemed to be held for the benefit of the government.

(5) On and after March 10, 1998, the British Columbia Systems Corporation is discharged from all obligations under the specified indebtedness.

(6) The Minister of Finance and Corporate Relations may pay the specified indebtedness out of the consolidated revenue fund, without an appropriation other than this section.

 
Tobacco Tax Act

44 Section 2 (1) of the Tobacco Tax Act, R.S.B.C. 1996, c. 452, is repealed and the following substituted:

(1) In this section:

"cigarette" includes a tobacco stick;

"tobacco stick" means a roll or tubular construction of tobacco intended for smoking, other than a cigar, that requires further preparation to be consumed.

(1.1) A consumer must, at the time of making a purchase of tobacco in the form of cigars, pay to the government a tax at the rate of 77% of the retail price of any cigar purchased by the consumer to a maximum tax of $5 per cigar.

 
Transitional

Transitional --
Provincial Treasury Operations Special Account --
Financial Administration Act

45 Money may be paid out of the general fund of the consolidated revenue fund after the end of March, 1998 in satisfaction of liabilities incurred on the basis of an appropriation under the Provincial Treasury Operations Special Account discontinued by the operation of section 8.

Transitional -- Fire Services Act

46 Despite the repeal of section 37 of the Fire Services Act, that section continues to apply to premiums and assessments that became receivable on or before March 31, 1998.

Transitional -- Insurance Premium Tax Act

47 Despite section 14 section 3 of the Insurance Premium Tax Act as it read immediately before the commencement of section 14 of this Act continues to apply to premiums that became receivable on or before March 31, 1998.

Transitional -- Motor Fuel Tax Act

48 Regulations that may be made under the Motor Fuel Tax Act as a result of the enactment of this Act may, if made before June 1, 1999, be made retroactive to June 1, 1998 and a regulation made retroactive is deemed to have come into force on the date specified in the regulation.

Commencement

49 (1) Sections 9, 12, 22, 41 and 42 come into force by regulation of the Lieutenant Governor in Council.

(2) Section 40 is deemed to have come into force on March 31, 1993 and is retroactive to the extent necessary to give it effect on and after that date.

(3) Section 23 is deemed to have come into force on March 31, 1997 and is retroactive to the extent necessary to give it effect on and after that date.

(4) Section 43 is deemed to have come into force on March 10, 1998 and is retroactive to the extent necessary to give it effect on and after that date.

(5) Sections 8, 24, 26 to 39, 44 and 45 are deemed to have come into force on March 31, 1998 and are retroactive to the extent necessary to give them effect on and after that date.

(6) Sections 16, 18 and 19 are deemed to have come into force on April 1, 1998 and are retroactive to the extent necessary to give them effect for the purposes of the taxation year of a financial institution, as defined in section 1 of the International Financial Business (Tax Refund) Act, commencing on or after that date.

(7) Sections 2, 10, 11, 13 to 15, 46 and 47 are deemed to have come into force on April 1, 1998 and are retroactive to the extent necessary to give them effect on and after that date.

(8) Sections 20, 21 and 48 come into force on June 1, 1998.

(9) Sections 1 and 3 to 7 come into force on January 1, 1999.

 

Explanatory Notes

 
Corporation Capital Tax Act

SECTION 1: [Corporation Capital Tax Act, amends section 1]

SECTION 2: [Corporation Capital Tax Act, amends section 3] raises the high-rate tax threshold for financial institutions, effective April 1, 1998.

SECTION 3: [Corporation Capital Tax Act, re-enacts section 3 and enacts sections 3.1 and 3.2]

SECTION 4: [Corporation Capital Tax Act, repeals section 15] repeals this provision as its effect of reducing tax otherwise payable is being moved to the proposed sections 3.1 and 3.2 of the Corporation Capital Tax Act.

SECTION 5: [Corporation Capital Tax Act, amends section 16] is consequential to the repeal of section 15 of the Corporation Capital Tax Act.

SECTION 6: [Corporation Capital Tax Act, amends section 17] is consequential to the repeal of section 15 of the Corporation Capital Tax Act.

SECTION 7: [Corporation Capital Tax Act, amends section 21 (b)] is consequential to the repeal of section 15 of the Corporation Capital Tax Act.

 
Financial Administration Act

SECTION 8: [Financial Administration Act, repeals Part 6] dissolves the Provincial Treasury Operations Special Account.

 
Financial Information Act

SECTION 9: [Financial Information Act, amends Schedule 1] is consequential to the repeal of the System Act.

 
Fire Services Act

SECTION 10: [Fire Services Act, amends section 1] repeals definitions made redundant by the repeal of sections 37 to 39 of the Fire Services Act.

SECTION 11: [Fire Services Act, repeals sections 37 to 39] repeals the insurance tax charging provisions of the Fire Services Act so that all insurance premium taxes will be dealt with by the Insurance Premium Tax Act.

 
Freedom of Information and Protection of Privacy Act

SECTION 12: [Freedom of Information and Protection of Privacy Act, amends Schedule 2] is consequential to the repeal of the System Act.

 
Insurance Premium Tax Act

SECTION 13: [Insurance Premium Tax Act, amends section 1] adds new definitions and repeals and replaces existing definitions.

SECTION 14: [Insurance Premium Tax Act, re-enacts section 3] repeals and replaces the tax provisions for taxable insurers.

SECTION 15: [Insurance Premium Tax Act, amends sections 6 (1) and 11 (2)] changes the due dates for final tax payment and annual tax returns.

 
International Financial Business (Tax Refund) Act

SECTION 16: [International Financial Business (Tax Refund) Act, amends section 1 (1)] defines "captive insurance company", formerly referred to in the definition of "insurer", adds the definition of "export financing company" and excludes the employees of each type of company from the definition of "eligible employee". The definition of "financial institution" is expanded to include institutions engaged in "export financing", thereby extending to that type of company eligibility for corporate income tax refunds.

SECTION 17: [International Financial Business (Tax Refund) Act, amends section 2 (1)] requires, for the registration under the Act of a branch or office of a financial institution as an international financial office, that the financial institution be a member of the International Financial Centre Society of Vancouver.

SECTION 18: [International Financial Business (Tax Refund) Act, enacts section 3.1]

SECTION 19: [International Financial Business (Tax Refund) Act, adds section 6 (4)] excludes the requirement for a captive insurance company's activities to be carried out at "arm's length". This means captive insurance companies may qualify under the Act for corporate income tax refunds, although, by definition, they do not deal at arm's length with the entities they insure.

 
Motor Fuel Tax Act

SECTION 20: [Motor Fuel Tax Act, adds section 5 (3)] provides farmers with an exemption or a refund from tax on fuel used for the purposes for which they are authorized to use coloured fuel.

SECTION 21: [Motor Fuel Tax Act, amends section 71 (2)] allows regulations to be made with respect to the exemption or refund added by this Bill in the amendment to section 5 of the Motor Fuel Tax Act.

 
Pension (Public Service) Act

SECTION 22: [Pension (Public Service) Act, repeals section 2 (1) (k)] is consequential to the repeal of the System Act.

 
Property Transfer Tax Act

SECTION 23: [Property Transfer Tax Act, repeals and replaces section 8 (1) (c)] allows first time homebuyers to reduce their mortgages during the first year to 70% of the original property value without being required to pay the exempted tax under the Act.

SECTION 24: [Property Transfer Tax Act, amends section 14]

 
Securities Act

SECTION 25: [Securities Act, Payment by Securities Commission] allows for the transfer of an amount not exceeding $12 million from the British Columbia Securities Commission.

 
Social Service Tax Act

SECTION 26: [Social Service Tax Act, amends section 1] clarifies that the purchase price of tangible personal property includes any royalty payments, licence fees or other charges related to the use of the tangible personal property purchased.

SECTION 27: [Social Service Tax Act, adds section 5 (3)] adds subsection (3) to establish that where the charges described in the definition of "purchase price", as amended by this Bill, cannot be determined at the time of purchase, the tax is calculated on each separate charge and is due at the time the charge is paid or becomes payable, whichever is earlier.

SECTION 28: [Social Service Tax Act, amends section 9]

SECTION 29: [Social Service Tax Act, amends section 19 (1)] is consequential to the amendment to section 9 of the Social Service Tax Act and amends subsection (1) to allow payment of tax on the depreciated value of tangible personal property transferred from an exempt to a taxable use.

SECTION 30: [Social Service Tax Act, amends section 20 (1)] amends subsection (1) consequential to the enactment of the new section 20.1 of the Social Service Tax Act made by this Bill, clarifying the application of tax to motor vehicles leased from out of Province lessors.

SECTION 31: [Social Service Tax Act, enacts section 20.1] enacts section 20.1 clarifying that motor vehicles leased from out of Province lessors for a period of more than 28 days are subject to tax on the full value at the time of registering the vehicle for use in British Columbia, and establishes a refund provision for the difference between the tax paid under this section and the tax that would otherwise have been payable on lease payments if the vehicle has been leased from an in-Province lessor registered to collect and remit tax under the Social Service Tax Act.

SECTION 32: [Social Service Tax Act, amends section 21 (2)] clarifies that the provision is subject to section 20.1 of the Social Service Tax Act.

SECTION 33: [Social Service Tax Act, repeals and replaces section 26 (3)] amends the timing for payment of the $1.50 passenger rental tax to bring it in line with other lease provisions under the Social Service Tax Act.

SECTION 34: [Social Service Tax Act, amends section 73] amends section 73 to exclude from exemption fertilizers purchased for non-agricultural purposes by persons other than individuals.

SECTION 35: [Social Service Tax Act, repeals and replaces section 74 (e)] clarifies that the exemption for tangible personal property used to conserve energy is limited to property specifically prescribed by the Lieutenant Governor in Council.

SECTION 36: [Social Service Tax Act, amends section 76 (1)]

SECTION 37: [Social Service Tax Act, enacts section 79.1] adds a new section to establish that tax applies to tangible personal property used to make exempt tangible personal property.

SECTION 38: [Social Service Tax Act, amends section 84] adds a new subsection (2) to extend the period for a proportional refund of tax paid on a motor vehicle that has been returned to the manufacturer or seller under the terms of a dispute resolution process.

SECTION 39: [Social Service Tax Act, repeals and replaces section 115 (3)] amends subsection (3) consequential to the amendments to sections 1 and 5 of the Social Service Tax Act made by this Bill to clarify that the commissioner may make assessments for tax due on royalty and licence fees related to a purchase of tangible personal property even if the transfer of title to that property occurred more than 6 years from the date of the assessment.

SECTION 40: [Limitation -- Social Service Tax Act] clarifies that the transitional refund provision resulting from the 1993 tax rate change applies only to purchasers who were obligated to purchase a specific quantity of goods within a specific time, and establishes that the refund provision expires on March 30, 1999.

 
System Act

SECTION 41: [System Act, repeals Act] repeals the System Act.

SECTION 42: [Dissolution of British Columbia Systems Corporation] dissolves the British Columbia Systems Corporation and transfers its assets and liabilities to the government.

SECTION 43: [Transfer of specified indebtedness] transfers to the government, effective March 10, 1998, the indebtedness owed to the Canada Pension Plan Investment Fund by the British Columbia Systems Corporation.

 
Tobacco Tax Act

SECTION 44: [Tobacco Tax Act, amends section 2] defines "tobacco sticks" as "cigarettes" so that the tax for tobacco sticks will be equivalent to the tax for cigarettes, provides for one rate of tax for cigars and increases the maximum tax to $5 per cigar.

SECTION 45: [Financial Administration Act, transitional -- Provincial Treasury Operations Special Account] provides authority to pay liabilities of the Provincial Treasury Operations Special Account out of the general fund of the consolidated revenue fund.

SECTION 46: [Fire Services Act, transitional] provides that former section 37 of the Fire Services Act continues to apply to premiums and assessments that become receivable before the commencement of this Act.

SECTION 47: [Insurance Premium Tax Act, transitional] provides that the former section 3 of the Insurance Premium Tax Act continues to apply to premiums that were receivable before the commencement of this Act.

SECTION 48: [Motor Fuel Tax Act, transitional] allows regulations made under the Motor Fuel Tax Act as a result of this Act to be retroactive to June 1, 1998.


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