Bill 2 — 2009: Budget Measures Implementation Act, 2009

HONOURABLE COLIN HANSEN
MINISTER OF FINANCE AND MINISTER
RESPONSIBLE FOR THE OLYMPICS

BILL 2 — 2009

BUDGET MEASURES IMPLEMENTATION ACT, 2009

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

SECTION 1: [Balanced Budget and Ministerial Accountability Act, section 1] adds a definition of "revenue minister".

1 Section 1 (1) of the Balanced Budget and Ministerial Accountability Act, S.B.C. 2001, c. 28, is amended by adding the following definition:

"revenue minister" means the member of the Executive Council who is charged by order of the Lieutenant Governor in Council with the administration of the Income Tax Act.

SECTION 2: [Balanced Budget and Ministerial Accountability Act, section 5] repeals and replaces subsection (2) to reflect the disestablishment of the Ministry of Small Business and Revenue, and makes consequential amendments to the repeal.

(a) in subsection (1) by striking out ", other than operating expenses referred to in subsection (2)" and by adding "subsection (2) and" after "subject to", and

(2) Half of the 20% reduction in salary under section 3, for any period in a fiscal year when a member of the Executive Council was the revenue minister, becomes due and payable to that member on the next day after the public accounts for that fiscal year are made public, if

(a) the actual revenue from sources specified by regulation of Treasury Board is not less than an amount specified by regulation of Treasury Board, and

(b) any other conditions under this section applicable to that member during the period are satisfied for the fiscal year.

SECTION 3: [Budget Transparency and Accountability Act, section 4.1] allows the Lieutenant Governor in Council to repeal, by regulation, the section respecting the accounting policy advisory committee rather than having that section repealed at a fixed date.

3 Section 4.1 (9) of the Budget Transparency and Accountability Act, S.B.C. 2000, c. 23, is repealed and the following substituted:

(9) This section may be repealed by regulation of the Lieutenant Governor in Council.

SECTION 4: [Financial Administration Act, section 56.1] replaces a reference to "prepaid capital advance" with "grant" and consequentially repeals a provision respecting the amortization of prepaid capital advances.

4 Section 56.1 of the Financial Administration Act, R.S.B.C. 1996, c. 138, is amended

(a) in subsection (2) by striking out "prepaid capital advance" and substituting "grant", and

SECTION 5: [Financial Administration Act, section 56.1] authorizes the Minister of Finance to make a grant to a government organization for its capital expenditures.

Grant for capital expenditures

56.1 The Minister of Finance may make from the consolidated revenue fund a grant to a government organization, as defined in the Budget Transparency and Accountability Act, for its capital expenditures.

SECTION 6: [Hospital District Act, section 32] removes a reference to "prepaid capital advance".

6 Section 32 (2) (c) of the Hospital District Act, R.S.B.C. 1996, c. 202, is amended by striking out "by a prepaid capital advance under section 56.1 of the Financial Administration Act or".

SECTION 7: [Land Act, section 109.1] exempts the government from paying any fees payable in respect of services provided under the Act by the Surveyor General or persons under the Surveyor General's direction.

SECTION 8: [Land Tax Deferment Act, section 15] amends the provision, as of the date the provision came into force, to allow payments to municipalities without the need for another appropriation.

8 Section 15 (1) of the Land Tax Deferment Act, R.S.B.C. 1996, c. 249, is amended by adding "from the consolidated revenue fund to" after "pay".

SECTION 9: [Land Title Act, section 386] exempts the government from paying any fees payable under this section of the Act.

9 Section 386 of the Land Title Act, R.S.B.C. 1996, c. 250, is amended by adding the following subsection:

SECTION 10: [Land Title Act, section 386.2] provides that this section is subject to sections 386 (7.1) and 386.1 (3) of the Act.

10 Section 386.2 is amended by adding "sections 386 (7.1) and 386.1 (3) and" after "but subject to".

SECTION 11: [Special Accounts Appropriation and Control Act, section 9] provides for the inclusion in the BC150 Cultural Fund Sub-account of money accepted by the minister and money from the disposition of securities or other prescribed property accepted by the minister as contributions to the BC150 Cultural Fund.

11 Section 9 of the Special Accounts Appropriation and Control Act, R.S.B.C. 1996, c. 436, is amended

(c) money accepted by the minister under subsection (6) and money from the disposition of securities or other property accepted by the minister under that subsection. , and

(6) The minister, on behalf of the government, may accept money, securities or other prescribed property as contributions to the BC150 Cultural Fund.

(7) The minister may dispose of securities or other property accepted under subsection (6).

SECTION 12: [Special Accounts Appropriation and Control Act, section 9.4] repeals and replaces subsection (4), as of the date the provision came into force, to authorize any investment losses of the Children's Education Fund special account to be paid for from the account.

(4) Despite section 21 (3) of the Financial Administration Act, the minister responsible for the administration of this section may pay amounts out of the special account

(a) for the purpose of providing financial assistance in accordance with the regulations to students born on or after January 1, 2007 who are

(ii) enrolled in education programs that are eligible in accordance with the regulations, and

SECTION 13: [Special Accounts Appropriation and Control Act, section 10] authorizes the Lieutenant Governor in Council to make regulations prescribing property that may be accepted as contributions to the BC150 Cultural Fund.

Non-Tax Budget Measures — Transitional and Other Provisions

SECTION 14: [Increase in balance of BC Timber Sales Account] increases the balance of the BC Timber Sales Account special account by $300 million.

Increase in balance of BC Timber Sales Account

14 The balance of the BC Timber Sales Account special account is increased by $300 million.

Transition — Balanced Budget and Ministerial Accountability Act

SECTION 15: [Transition — Balanced Budget and Ministerial Accountability Act] provides that operating expenses under section 5 of the Balanced Budget and Ministerial Accountability Act do not include operating expenses of the Ministry of Small Business and Revenue during the 2008-2009 fiscal year.

15 For the purposes of the 2008-2009 fiscal year, operating expenses referred to in section 5 of the Balanced Budget and Ministerial Accountability Act do not include

(a) operating expenses of the Ministry of Small Business and Revenue incurred prior to January 19, 2009, or

(b) operating expenses charged against the unexpended balance of the appropriation for the Ministry of Small Business and Revenue transferred to a member of the Executive Council by Order in Council 17/2009, 28/2009 or 45/2009.

SECTION 16: [Transition — section 56.1 of the Financial Administration Act] conclusively deems prepaid capital advances to have been grants validly made out of the consolidated revenue fund.

Transition — section 56.1 of the Financial Administration Act

16 (1) All prepaid capital advances made out of the consolidated revenue fund under section 56.1 of the Financial Administration Act to an institution for its capital expenditures are conclusively deemed to have been grants validly made out of the consolidated revenue fund under that section to an institution for its capital expenditures.

(2) This section is retroactive to the extent necessary to give full force and effect to its provisions and must not be construed as lacking retroactive effect in relation to any matter by reason that it makes no specific reference to that matter.

SECTION 17: [Corporation Capital Tax Act, section 7] includes accumulated other comprehensive income within the aggregate paid up capital of a financial corporation.

17 Section 7 (1) of the Corporation Capital Tax Act, R.S.B.C. 1996, c. 73, is amended by striking out "and" at the end of paragraph (b), by adding ", and" at the end of paragraph (c) and by adding the following paragraph:

SECTION 18: [Income Tax Act, section 4.69] reduces for the 2010 and subsequent taxation years the percentage applied in determining the dividend tax credit for income taxed at the small business rate.

18 Section 4.69 (a) of the Income Tax Act, R.S.B.C. 1996, c. 215, is amended by striking out "21%" and substituting "17%".

SECTION 19: [Income Tax Act, section 4.721] extends to the end of 2009 the date that an expense can be a BC flow-through mining expenditure for the purposes of calculating the BC mining flow-through share tax credit.

(a) in subsection (1) in paragraph (d) of the definition of "BC flow-through mining expenditure" by striking out "2009" and substituting "2010", and

(b) in subsection (1.1) by striking out "2009" in both places and substituting "2010".

SECTION 20: [Income Tax Act, section 8] excludes amounts received from a registered disability savings plan or repaid under the Canada Disability Savings Act from the computation of adjusted income for the purposes of determining the amount of the sales tax credit.

20 Section 8 is amended in the definition of "adjusted income" by striking out "and" at the end of paragraph (b) and by adding the following paragraphs:

(b.1) were included under section 56 (1) (q.1) [registered disability savings plan payments] of the federal Act,

(b.2) were deductible under section 60 (z) [repayment under the Canada Disability Savings Act] of the federal Act, and .

SECTION 21: [Income Tax Act, sections 14, 16 and 25] effective January 1, 2010,

reduces from 11% to 10.5% the corporate income tax rate established by section 14 (2) of the Act, and
replaces references to the existing corporate income tax rate with references to the reduced corporate income tax rate in provisions relating to the foreign tax credit [section 14 (3.1) (a)] and to the tax to be paid by small businesses [section 16 (1) (b)], credit unions [section 16 (2) (b)] and qualifying environmental trusts [section 25 (2)].

21 Sections 14 (2) and (3.1) (a), 16 (1) (b) and (2) (b) and 25 (2) are amended by striking out "11%" and substituting "10.5%".

SECTION 22: [Income Tax Act, sections 14, 16 and 25] effective January 1, 2011,

reduces from 10.5% to 10% the corporate income tax rate established by section 14 (2) of the Act, and
replaces references to the existing corporate income tax rate with references to the reduced corporate income tax rate in provisions relating to the foreign tax credit [section 14 (3.1) (a)] and to the tax to be paid by small businesses [section 16 (1) (b)], credit unions [section 16 (2) (b)] and qualifying environmental trusts [section 25 (2)].

22 Sections 14 (2) and (3.1) (a), 16 (1) (b) and (2) (b) and 25 (2) are amended by striking out "10.5%" and substituting "10%".

SECTION 23: [Income Tax Act, section 25.1] consequential to the amendment made to section 4.721 of the Act by this Bill, prevents an expense from being claimed under both the mining exploration tax credit and the mining flow-through share tax credit.

23 Section 25.1 (1) is amended in paragraph (f.2) of the definition of "excluded expense"

(a) in subparagraph (i) by striking out "January 1, 2009" and substituting "January 1, 2010", and

(b) in subparagraph (ii) by striking out "after December 31, 2008 and before January 1, 2010" and substituting "after December 31, 2009 and before January 1, 2011".

SECTION 24: [Income Tax Act, section 34] applies a section of the Income Tax Act (Canada) that provides for liability for tax payable in respect of a disability assistance payment that is included in computing income for a taxpayer when a disability savings plan ceases to be a registered disability savings plan.

SECTION 25: [Income Tax Act, section 80] removes the restriction that requires principal photography of a production to begin before a specified date for the production to be eligible for film and television tax credits.

(a) in subsection (1) (a) by adding "and" at the end of subparagraph (i), by striking out "and" at the end of subparagraph (ii) and by repealing subparagraph (iii),

(7) For the purpose of determining the amount of the tax credit under subsection (6), the references to "March 31, 1998" in the definition of "BC labour expenditure" in section 79 (1) must be read as "December 31, 2007".

SECTION 26: [Income Tax Act, section 80] in respect of a production for which principal photography begins on or after January 1, 2009, amends the criteria for a corporation to be eligible for the basic (film and television) tax credits by removing the requirement that the corporation or an eligible production corporation related to the corporation be BC-controlled.

(a) in paragraph (c) by adding "for a production for which principal photography begins before January 1, 2009," before "the corporation is",

(c.1) for a production for which principal photography begins on or after January 1, 2009, the corporation is, throughout the taxation year in respect of which the tax credit is being claimed, an eligible production corporation, ,

(A) in the case of a production for which principal photography begins before January 1, 2009, a BC-controlled eligible production corporation related to the corporation, or in the case of a production for which principal photography begins on or after January 1, 2009, an eligible production corporation related to the corporation, and ,

(d) in paragraph (h) by striking out "treaty co-production," and substituting "treaty co-production and for which principal photography begins before January 1, 2009,",

(h.1) for a production that is an interprovincial co-production or a treaty
co-production and for which principal photography begins on or after January 1, 2009, the corporation, or an eligible production corporation that is related to the corporation, retains a share, acceptable to the certifying authority, of revenues from the exploitation of the production in non-Canadian markets, ,

(f) in paragraph (i) by striking out "interprovincial co-production," and substituting "interprovincial co-production and for which principal photography begins before January 1, 2009," , and

(i.1) for a production that is an interprovincial co-production and for which principal photography begins on or after January 1, 2009, more than 20% of the copyright in the production is owned by the corporation or by an eligible production corporation that is related to the corporation, .

SECTION 27: [Income Tax Act, section 82.1] removes the restriction that requires principal photography of a production to begin before a specified date for the production to be eligible for production services tax credits.

(a) in subsection (1) (a) by adding "and" at the end of subparagraph (i), by striking out "and" at the end of subparagraph (ii) and by repealing subparagraph (iii),

(8) For the purpose of determining the amount of the tax credit under subsection (7), despite paragraph (a) in the definition of "accredited BC labour expenditure" in section 79 (1), the references to "March 31, 1998" in the definition of "BC labour expenditure" in section 79 (1) must be read as "December 31, 2007".

SECTION 28: [International Financial Activity Act, section 1] adds a definition.

28 Section 1 of the International Financial Activity Act, S.B.C. 2004, c. 49, is amended by adding the following definition:

"permanent establishment" has the same meaning as in section 400 (2) of the Income Tax Regulations (Canada); .

SECTION 29: [International Financial Activity Act, section 2] provides that the definition of "non-resident person" does not include a person in respect of a business carried on by the person through a permanent establishment in Canada.

29 Section 2 (1) is amended by repealing the definition of "non-resident person" and substituting the following:

(a) a partnership unless all of the partners of the partnership are non-resident persons, or

(b) a person who carries on a business through a permanent establishment in Canada, but only in respect of that business.

SECTION 30: [International Financial Activity Act, section 9] is consequential to the addition of a definition to section 1 of the Act by this Bill.

SECTION 31: [International Financial Activity Act, section 10] authorizes the Commissioner of Income Tax to extend the 90 day notice requirement after the amalgamation of 2 or more corporations in specified circumstances.

31 Section 10 (2) (a) is amended by adding "or within a later period approved by the commissioner" after "within 90 days of the date of amalgamation".

SECTION 32: [Motor Fuel Tax Act, section 1] is self-explanatory.

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

(a) any gas or liquid for use for generating power by means of an internal combustion engine, or

SECTION 33: [Social Service Tax Act, section 1] adds subsections to clarify that tax is payable on transactions where property, services or rights are acquired for use by one person at another person's expense.

33 Section 1 of the Social Service Tax Act, R.S.B.C. 1996, c. 431, is amended by renumbering the section as section 1 (1) and by adding the following subsections:

(2) For the purposes of this Act, a person who, for the use or consumption of another person, acquires at a sale, leases as lessee, utilizes, brings or sends into British Columbia, or receives delivery of in British Columbia, tangible personal property

(b) if the first person acts on behalf of or as an agent for a principal, is deemed to have done so at the expense of the principal,

unless the other person acquires the tangible personal property at a sale or is given the right to use the tangible personal property under a lease.

(3) For the purposes of this Act, a person who, for the benefit or use of another person, agrees to pay or is otherwise obliged to pay consideration for a service or right referred to in subsection (4)

(b) if the first person acts on behalf of or as an agent for a principal, is deemed to have done so at the expense of the principal,

unless the other person agrees to pay or is otherwise obliged to pay consideration for the service or right.

SECTION 34: [Social Service Tax Act, section 71] adds as exempt from tax certain drugs and vaccines specified under the Drug Schedules Regulation and expands the exemption for medicaments from those sold on the prescription of, or provided as promotional material to, physicians, dentists or veterinarians to those sold on the prescription of, or provided as promotional material to, any person falling within the definition of "practitioner" under the Pharmacists, Pharmacy Operations and Drug Scheduling Act.

(i) sold on the prescription of a practitioner as defined under the Pharmacists, Pharmacy Operations and Drug Scheduling Act, or

(ii) provided as part of a promotional distribution by a pharmaceutical company to a practitioner as defined under the Pharmacists, Pharmacy Operations and Drug Scheduling Act;

(b.1) drugs specified in Schedule I or IA of the Drug Schedules Regulation, B.C. Reg. 9/98;

(b.2) vaccines specified in Schedule II of the Drug Schedules Regulation or Schedule A of the Veterinary Drug and Medicated Feed Regulation, B.C. Reg. 47/82; .

SECTION 35: [Social Service Tax Act, section 138]

adds authority to enact regulations exempting certain materials and classes of materials from taxes imposed under sections 5 to 25 and 112.3 of the Act;
repeals section 138 (3) of the Act, which is spent;
enacts a new provision authorizing regulations under section 138 (1) (q) of the Act retroactive to a date on or after February 22, 2006, if they are made before December 31, 2009.

(a) in subsection (1) (q) (vi) by striking out "parts" wherever it appears and substituting "parts or materials",

(5) If made before December 31, 2009, regulations made under subsection (1) (q) may be made retroactive to a date on or after February 22, 2006, and if made retroactive are deemed to have come into force on the date specified in the regulation.

SECTION 36: [Tobacco Tax Act, section 2] increases the tax on cigarettes and loose tobacco from 17.9 cents to 18.5 cents per cigarette or gram respectively.

36 Section 2 (2) and (3) of the Tobacco Tax Act, R.S.B.C. 1996, c. 452, is amended by striking out "17.9" and substituting "18.5".

Tax-Related Budget Measures — Transitional and Other Provisions

Application — Social Service Tax Act

37 Subject to section 80 of the Social Service Tax Act, no refund is payable under that Act of taxes paid on or after July 31, 2001 and before February 22, 2006, and no exemption may be claimed for that period, for or in respect of machinery or equipment, purchased or leased by a manufacturer, as defined in section 13.1 of the Social Service Tax Act Regulations, B.C. Reg. 84/58, used in the generation of heat, unless the following conditions are met:

(i) fabricating or manufacturing tangible personal property to create a new product that is substantially different from the material or property from which it was made,

(ii) processing tangible personal property by performing a series of operations or a complex operation that results in a substantial change in the form or other physical or chemical characteristics of the tangible personal property, or

(b) the activity described in paragraph (a) (i), (ii) or (iii) took place at one of the following locations:

(i) a manufacturing site as described in section 13.2 (2) of the Social Service Tax Act Regulations, B.C. Reg. 84/58,

(ii) a mine site as described in section 13.2 (3) of the Social Service Tax Act Regulations, or

(iii) a well site, processing plant or refinery as described in section 13.2 (4) of the Social Service Tax Act Regulations.

SECTION 37: [Application — Social Service Tax Act] prohibits refunds of any tax paid or any claims for exemptions under the Social Service Tax Act on or after July 31, 2001 and before February 22, 2006 in respect of machinery and equipment for use in the generation of heat if the generation of heat did not occur as one step in certain activities, as described, that took place at certain locations, also described.

Transition — Corporation Capital Tax Act

38 Section 7 (1) (e) of the Corporation Capital Tax Act, as enacted by this Act, applies to taxation years beginning on or after October 1, 2006.

SECTION 39: [Transition — Motor Fuel Tax Act] authorizes the making of regulations to define alternative motor fuels and prescribe tax rates or exemptions on those fuels retroactive to February 18, 2009, provided they are made before December 31, 2009.

Transition — Motor Fuel Tax Act

39 If made before December 31, 2009, regulations made under section 71 (2) (i), (o.1) and (o.2) of the Motor Fuel Tax Act may be made retroactive to a date on or after February 18, 2009, and if made retroactive are deemed to have come into force on the date specified.

Commencement

40 The provisions of this Act referred to in column 1 of the following table come into force as set out in column 2 of the table:

Explanatory Notes