2001 Legislative Session: 2nd Session, 37th Parliament
THIRD READING


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


Certified correct as passed Third Reading on the 9th day of August, 2001
Ian D. Izard, Law Clerk


HONOURABLE GARY COLLINS
MINISTER OF FINANCE

BILL 2 -- 2001

TAXATION STATUTES AMENDMENT ACT, 2001

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1 Section 3 (3) of the Corporation Capital Tax Act, R.S.B.C. 1996, c. 73, is repealed and the following substituted:

(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 3.3 and 3.4, an amount equal to the sum of

(a) the net B.C. paid up capital of the corporation at the end of the taxation year multiplied by the proportion of 0.3% that the number of days in the taxation year occurring before September 1, 2001 bears to the total number of days in the taxation year, and

(b) the net B.C. paid up capital of the corporation at the end of the taxation year multiplied by the proportion of 0.15% that the number of days in the taxation year occurring after August 31, 2001 and before September 1, 2002 bears to the total number of days in the taxation year.

(3.1) In the case of a corporation that is not a bank, trust company or credit union, this Act does not apply to a taxation year that commences after August 31, 2002.

2 Section 3.1 is amended

(a) in subsection (1) (a) by striking out "or (3)", and

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

(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 1%] + $500

where

capital

 = 

the corporation's net B.C. paid up capital for the taxation year.

3 Section 3.2 is amended

(a) in subsection (1) (a) by striking out "or (3)", and

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

(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 1%] + $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.

4 The following sections are added:

Reduced tax for smaller, non-financial corporations not associated with other corporations

3.3 (1) For a corporation that

(a) is referred to in section 3 (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 factor]

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;

factor

 = 

the sum of

(a) the proportion of 1.6% that the number of days in the taxation year occurring before September 1, 2001 bears to the total number of days in the taxation year, and

(b) the proportion of 0.8% that the number of days in the taxation year occurring after August 31, 2001 and before September 1, 2002 bears to the total number of days in 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] + flat fee

where

capital

 = 

the corporation's net B.C. paid up capital for the taxation year;

rate

 = 

the sum of

(a) the proportion of 0.3% that the number of days in the taxation year occurring before September 1, 2001 bears to the total number of days in the taxation year, and

(b) the proportion of 0.15% that the number of days in the taxation year occurring after August 31, 2001 and before September 1, 2002 bears to the total number of days in the taxation year;

flat fee

 = 

the sum of

(a) the proportion of $500 that the number of days in the taxation year occurring before September 1, 2001 bears to the total number of days in the taxation year, and

(b) the proportion of $250 that the number of days in the taxation year occurring after August 31, 2001 and before September 1, 2002 bears to the total number of days in the taxation year.

(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 the sum of

(c) the proportion of $500 that the number of days in the taxation year occurring before September 1, 2001 bears to the total number of days in the taxation year, and

(d) the proportion of $250 that the number of days in the taxation year occurring after August 31, 2001 and before September 1, 2002 bears to the total number of days in the taxation year.

(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) the sum of

(i) the proportion of $250 that the number of days in the taxation year occurring before September 1, 2001 bears to the total number of days in the taxation year, and

(ii) the proportion of $125 that the number of days in the taxation year occurring after August 31, 2001 and before September 1, 2002 bears to the total number of days in the taxation year.

Reduced tax for smaller, non-financial corporations associated with other corporations

3.4 (1) For a corporation that

(a) is referred to in section 3 (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 factor]

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;

factor

 =

the sum of

(a) the proportion of 1.6% that the number of days in the taxation year occurring before September 1, 2001 bears to the total number of days in the taxation year, and

(b) the proportion of 0.8% that the number of days in the taxation year occurring after August 31, 2001 and before September 1, 2002 bears to the total number of days in the taxation year.

(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] + flat fee

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

 = 

the sum of

(a) the proportion of 0.3% that the number of days in the taxation year occurring before September 1, 2001 bears to the total number of days in the taxation year, and

(b) the proportion of 0.15% that the number of days in the taxation year occurring after August 31, 2001 and before September 1, 2002 bears to the total number of days in the taxation year;

flat fee

the sum of

(a) the proportion of $500 that the number of days in the taxation year occurring before September 1, 2001 bears to the total number of days in the taxation year, and

(b) the proportion of $250 that the number of days in the taxation year occurring after August 31, 2001 and before September 1, 2002 bears to the total number of days in the taxation year.

(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 the sum of

(c) the proportion of $500 that the number of days in the taxation year occurring before September 1, 2001 bears to the total number of days in the taxation year, and

(d) the proportion of $250 that the number of days in the taxation year occurring after August 31, 2001 and before September 1, 2002 bears to the total number of days in the taxation year.

(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) the sum of

(i) the proportion of $250 that the number of days in the taxation year occurring before September 1, 2001 bears to the total number of days in the taxation year, and

(ii) the proportion of $125 that the number of days in the taxation year occurring after August 31, 2001 and before September 1, 2002 bears to the total number of days in the taxation year.

(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.

Negative amounts

3.5 If an amount calculated in accordance with section 3.3 (2) or 3.4 (2) would, but for this section, be a negative amount, the amount is deemed to be nil.


Income Tax Act

5 Section 1 (8) of the Income Tax Act, R.S.B.C. 1996, c. 215, is amended by adding the following paragraph:

(b.1) the definition of "Canadian exploration expense" in section 66.1 (6) of the federal Act as that definition applies for the purposes of section 4.721 of this Act by virtue of paragraph (a) of the definition of "BC flow-through mining expenditure" in section 4.721 (1) of this Act; .

6 Section 4.1 (1) is amended

(a) in paragraph (a) by striking out "8.4%" and substituting "7.3%",

(b) in paragraph (b) (ii) by striking out "11.9%" and substituting "10.5%",

(c) in paragraph (c) (ii) by striking out "16.7%" and substituting "13.7%",

(d) in paragraph (d) (ii) by striking out "18.7%" and substituting "15.7%", and

(e) in paragraph (e) (ii) by striking out "19.7%" and substituting "16.7%".

7 Section 4.2 (3) is amended by striking out "sections 4.72, 13.1," and substituting "sections 4.72, 4.721, 13.1,".

8 Section 4.62 is amended

(a) in subsection (2) by striking out "Subject to subsections (3) and (4)," and substituting "Subject to subsections (3) to (5),",

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

(3) For the purpose of determining the amount that may be deducted under subsection (1) in computing the tax payable for the 2001 taxation year by an individual who was not resident in British Columbia on the last day of the preceding taxation year, the individual's unused tuition and education tax credits at the end of the 2000 taxation year are deemed to equal the amount determined by the formula

A 7.3

16

where

is the amount deemed under section 118.61 (3) of the federal Act to be the individual's unused tuition and education tax credits at the end of the 2000 taxation year. , and

(c) by adding the following subsection:

(5) For the purpose of determining the amount that may be deducted under subsection (1) in computing the tax payable for the 2001 taxation year by an individual who was resident in British Columbia on the last day of the preceding taxation year, the individual's unused tuition and education tax credits at the end of the 2000 taxation year are deemed to be 7.3/8.4 of the amount that would be the individual's unused tuition and education tax credits at the end of the 2000 taxation year if this section were read without reference to this subsection.

9 Section 4.66 (a) is amended by repealing subparagraph (ii) of the description of A and substituting the following:

(ii) the amount obtained by multiplying $5 000 by the appropriate percentage, and .

10 Section 4.69 is amended by striking out "33%" and substituting "29.5%".

11 The following section is added:

BC mining flow-through share tax credit

4.721 (1) In this section:

"BC flow-through mining expenditure" of an individual for a taxation year means an expense that

(a) would be a flow-through mining expenditure of an individual as defined in section 127 (9) of the federal Act if a reference in that definition to "October 17, 2000" were read as a reference to "July 30, 2001", and

(b) is incurred in respect of mining exploration activity all or substantially all of which is conducted in British Columbia for the purpose of determining the existence, location, extent or quality of a mineral resource in British Columbia;

"individual" has the same meaning as in section 1 (1) but does not include a trust or estate;

"mineral resource" means a mineral resource referred to in paragraph (a) of the definition of "flow-through mining expenditure" in section 127 (9) of the federal Act.

(2) Subject to subsections (4) and (5), an individual may deduct from tax otherwise payable under this Act for a taxation year ending after 1997 an amount not exceeding the smaller of

(a) the BC mining flow-through share tax credit of the individual at the end of the taxation year calculated in accordance with subsection (3), and

(b) the tax otherwise payable by the individual under this Act for the taxation year.

(3) The BC mining flow-through share tax credit of an individual at the end of a taxation year is the amount, if any, by which the total of

(a) an amount equal to 20% of the total of all amounts each of which is a BC flow-through mining expenditure of the individual for the year, and

(b) an amount equal to 20% of the total of all amounts each of which is a BC flow-through mining expenditure of the individual for the 10 taxation years immediately preceding, or the 3 taxation years immediately following, the taxation year,

exceeds

(c) the total of all amounts each of which is an amount deducted under subsection (2) from the tax otherwise payable under this Act by the individual for a preceding taxation year that is in respect of BC flow-through mining expenditures of the individual for the taxation year or any of the 10 taxation years immediately preceding, or the 2 years immediately following, the taxation year.

(4) An individual who wishes to claim a tax credit under this section for a taxation year must file, with the return of income filed by the individual under section 29 for the taxation year, an application for the tax credit in the form, and containing the information, required by the Commissioner of Income Tax.

(5) In computing a tax credit under this section, an individual is not entitled to include an amount in respect of a BC mining flow-through expenditure of the individual for a taxation year unless the individual files the form containing the information required by subsection (4) in respect of that amount on or before the day that is one year after the individual's filing due-date for the taxation year that includes the effective date of a renunciation made in accordance with section 66 (12.6) of the federal Act in respect of that expenditure.

12 Section 4.79 (3) is amended by adding the following paragraph:

(f.1) section 4.721 (2) [mining flow-through share tax credit]; .

13 Sections 14 (2) and (3) (a), 16 (1) (b) and (2) (b) and 25 (2) are amended by striking out "16.5%" and substituting "13.5%".

14 Section 25.1 (1) is amended in the definition of "excluded expense" by adding the following paragraph:

(f.2) an amount that, under an agreement described in section 66 (12.6) of the federal Act and made after July 30, 2001, is renounced in accordance with that section, in respect of an expense incurred after July 30, 2001 and before January 1, 2004, .

15 Section 29 is amended by renumbering the section as section 29 (1) and by adding the following subsection:

(2) In applying section 152 (6) of the federal Act for the purposes of this Act, the reference in paragraph (d) of that section to "subsection 127 (5)" must be read as a reference to section 4.721 (2) of this Act.

16 Section 104 (1) is amended in paragraph (a) (i) and (ii) of the definition of "BC qualified property" by striking out "after March 31, 2000," and substituting "after March 31, 2000 and before July 31, 2001,".


Related Amendments

17 Section 4.1 (1) of the Income Tax Act, as amended by section 6 of this Act, is amended

(a) in paragraph (a) by striking out "7.3%" and substituting "6.05%",

(b) in paragraph (b) (ii) by striking out "10.5%" and substituting "9.15%",

(c) in paragraph (c) (ii) by striking out "13.7%" and substituting "11.7%",

(d) in paragraph (d) (ii) by striking out "15.7%" and substituting "13.7%", and

(e) in paragraph (e) (ii) by striking out "16.7%" and substituting "14.7%".

18 Section 4.62 of the Income Tax Act, as amended by section 8 of this Act, is amended

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

(3) For the purpose of determining the amount that may be deducted under subsection (1) in computing the tax payable for a taxation year that begins after 2001 by an individual who was not resident in British Columbia on the last day of the preceding taxation year, the individual's unused tuition and education tax credits at the end of that year are deemed to equal the amount that would be the individual's unused tuition and education tax credits at the end of that year under section 118.61 of the federal Act if the percentage applied under sections 118.5 and 118.6 of that Act in computing the individual's tuition and education tax credits had, at all material times, been 6.05% instead of the appropriate percentage as defined in that Act. , and

(b) by repealing subsection (5) and substituting the following:

(5) For the purpose of determining the amount that may be deducted under subsection (1) in computing the tax payable for the 2002 taxation year by an individual who was resident in British Columbia on the last day of the preceding taxation year, the individual's unused tuition and education tax credits at the end of the 2001 taxation year are deemed to be 6.05/7.3 of the amount that would be the individual's unused tuition and education tax credits at the end of the 2001 taxation year if this section were read without reference to this subsection.

19 Section 4.69 of the Income Tax Act, as amended by section 10 of this Act, is amended by striking out "29.5%" and substituting "25.5%".


Motor Fuel Tax Act

20 Section 1 of the Motor Fuel Tax Act, R.S.B.C. 1996, c. 317, is amended by repealing the definition of "collector" and substituting the following:

"collector" means a person who has been appointed under section 28 (1), 29 (2) or 32 (2); .

21 Section 7 (1) is repealed and the following substituted:

(1) A purchaser of jet fuel must pay to the government, at the time of purchase, tax on the fuel at the rate of 2¢ per litre.

22 Section 8 (1) is amended by striking out "3¢" and substituting "2¢".

23 Section 11 is repealed and the following substituted:

Marine bunker fuel exemption

11 Marine bunker fuel is exempt from tax payable under this Act.

24 Section 71 (2) (j) is repealed.


Social Service Tax Act

25 Sections 6 (3), 10 (1) (b), 20 (1) (b) and 37 (2) (b) of the Social Service Tax Act, R.S.B.C. 1996, c. 431, are amended

(a) by striking out "$32 000" wherever it appears and substituting "$47 000",

(b) by striking out "$33 000" wherever it appears and substituting "$48 000", and

(c) by striking out "$34 000" wherever it appears and substituting "$49 000".

26 Sections 13 (8) and 29 (6) and (7) are amended by striking out "89," and substituting "88,".

27 Section 76 is amended

(a) in subsection (1) (f) by striking out "drill bits and prescribed explosive supplies," and substituting "prescribed explosive supplies",

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

(k) prescribed machinery or equipment purchased or leased by a prescribed manufacturer or other prescribed person for a prescribed use. , and

(c) by adding the following subsection:

(6) The exemption under subsection (1) (k) does not apply to machinery or equipment used in the provision of a taxable service, legal service, telecommunications service or parking right.

28 Section 84 is amended by adding the following subsections:

(3) If a refund to a purchaser is made under the Act or regulations in respect of tangible personal property that is returned or resold to the vendor who sold it to the purchaser and that tangible personal property is subsequently purchased or leased by

(a) the purchaser,

(b) a related individual of the purchaser, or

(c) an associated corporation of the purchaser,

the person referred to in paragraph (a), (b) or (c), as the case may be, must pay to the government, in lieu of the tax payable, if any, under Division 1 or 2 of Part 2 of this Act in respect of that tangible personal property, a tax equal to the tax that was refunded to the purchaser.

(4) In subsection (3), "related individual" and "associated corporation" have the same meanings as in section 103 (1) but "related individual" includes a sibling.

(5) For the purposes of applying the other provisions of this Act in relation to a tax imposed by subsection (3),

(a) the tax is deemed to be a tax imposed by section 5,

(b) if the tangible personal property is leased, the time of entering into the lease is deemed to be the time of purchase, and

(c) section 6 and Part 3 of this Act do not apply.

29 Section 89 is repealed.

30 Section 138 is amended

(a) in subsection (1) by repealing paragraph (i),

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

(q) for the purposes of section 76 (1) (k),

(i) prescribing what constitutes a manufacturer,

(ii) prescribing manufacturers or classes of manufacturers, or persons or classes of persons, who may or may not purchase or lease machinery or equipment that is exempt from tax,

(iii) prescribing machinery or equipment or classes of machinery or equipment that qualify for a tax exemption or do not qualify for a tax exemption, with power to prescribe different machinery or equipment or classes of machinery or equipment in relation to different manufacturers or classes of manufacturers or persons or classes of persons,

(iv) prescribing how machinery or equipment or classes of machinery or equipment must or must not be used to qualify for a tax exemption, with power to prescribe different uses in relation to

(A) different machinery or equipment or classes of machinery or equipment, and

(B) different manufacturers or classes of manufacturers or persons or classes of persons, and

(v) prescribing any matter or other thing, or amending any provision of the regulations, that may be required to carry out the intent of the exemption. , and

(c) by adding the following subsection:

(3) A regulation made under subsection (1) (q) may be made retroactive to July 31, 2001 if made before August 1, 2003.

Transitional -- Motor Fuel Tax Act

31 Regulations made under the Motor Fuel Tax Act may be made retroactive to a date on or after August 1, 2001 if

(a) authorized by section 71 (1) or (2) (a), (g), (o.1) or (o.3) of the Motor Fuel Tax Act, and

(b) made before August 1, 2002

and if made retroactively are deemed to have come into force on the dates specified in the regulations.

Commencement

32 (1) Sections 1 to 5, 7, 11, 12, 14 to 16 and 25 to 30 are deemed to have come into force on July 31, 2001 and are retroactive to the extent necessary to give them effect on and after that date.

(2) Sections 6 and 8 to 10 are deemed to have come into force on January 1, 2001 and are retroactive to the extent necessary to give them effect on and after that date.

(3) Sections 13 and 17 to 19 come into force on January 1, 2002.

(4) Sections 20 to 24 are deemed to have come into force on August 1, 2001 and are retroactive to the extent necessary to give them effect on and after that date.


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