1993 Legislative Session: 2nd Session, 35th Parliament
FIRST READING


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


HONOURABLE GLEN CLARK
MINISTER OF FINANCE AND
CORPORATE RELATIONS

BILL 5 -- 1993

INCOME TAX AMENDMENT ACT, 1993

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

1 Section 2.1 of the Income Tax Act, R.S.B.C. 1979, c. 190, is repealed and the following substituted:

Order of making deductions

2.1 In computing the tax payable under this Part for a taxation year, the deductions provided for in this Act must be applied in the following order: sections 3 (8), 6, 8, 4.3, 8.1, 8.8, 8.3, 8.2 and 7.2.

2 Section 3.4 is repealed and the following substituted:

Surtax on high income taxpayers

3.4 (1) The tax otherwise payable after applying sections 3 and 8 for a taxation year by an individual to whom section 3 (1) or (2) applies shall be increased by an amount equal to the following:

(a) for the 1992 taxation year,

(i) 10% of the amount by which that tax exceeds $5 300, and

(ii) 10% of the amount by which that tax exceeds $9 000 before the tax payable under subparagraph (i) is added;

(b) for the 1993 taxation year,

(i) 20% of the amount by which that tax exceeds $5 300, and

(ii) 10% of the amount by which that tax exceeds $9 000 before the tax payable under subparagraph (i) is added;

(c) for the 1994 and subsequent taxation years,

(i) 30% of the amount by which that tax exceeds $5 300, and

(ii) 20% of the amount by which that tax exceeds $9 000 before the tax payable under subparagraph (i) is added.

(2) For the 1992 taxation year, an individual who claims an amount with respect to a dependent spouse or other dependant under section 118 (1) (a), (b) or (d) (i) or (ii) of the federal Act may deduct from the amount of the increase in tax referred to in subsection (1) the lesser of 

(a) the amount of the increase referred to in subsection (1), and

(b) an amount equal to $50 for each dependant in respect of whom a claim was made.

(3) For the 1993 and subsequent taxation years, an individual who

(a) claims an amount with respect to a dependent spouse or other dependant under section 118 (1) (a), (b) or (d) of the federal Act,

(b) is on the last day of the taxation year an eligible individual within the meaning of section 122.6 of the federal Act in relation to a qualified dependant within the meaning of that section who is not a person referred to in paragraph (a), or

(c) is on the last day of the taxation year the cohabiting spouse, within the meaning of section 122.6 of the federal Act, of an individual who comes within the meaning of paragraph (b),

may deduct from the amount of the increase in tax referred to in subsection (1) the lesser of

(d) the amount of the increase referred to in subsection (1), and

(e) an amount equal to $50 for each dependant referred to in paragraph (a) in respect of whom a claim was made and for each qualified dependant referred to in paragraph (b).

(4) For any taxation year, only one deduction may be made under this section in respect of a person, either as a dependant referred to in subsection (3) (a) or as a qualified dependant referred to in subsection (3) (b).

3 Section 4.2 is repealed.

4 The following section is added:

Refundable sales tax credit

4.3 (1) In this section, "adjusted income", "eligible individual", "qualified dependant" and "qualified relation" have the same meanings as in section 122.5 of the federal Act.

(2) An eligible individual is entitled to a sales tax credit for a taxation year if

(a) the individual files, with the individual's return of income under section 12 for the taxation year, a form provided by the minister that contains the information necessary to establish the individual's claim for the sales tax credit, and

(b) the return of income referred to in paragraph (a) is filed under section 12 within 3 years after the end of the taxation year.

(3) The sales tax credit amount for the 1993 and subsequent taxation years is the total of the following, less the excess income reduction under subsection (4):

(a) $50 in respect of the eligible individual;

(b) $50 in respect of the qualified relation of the eligible individual for that taxation year, if any;

(c) $50 in respect of each qualified dependant of the eligible individual for that taxation year, if any.

(4) The amount determined under subsection (3) is reduced by 2% of the amount by which the adjusted income of the eligible individual claiming the sales tax credit exceeds the total of the following:

(a) $15 000 in respect of the eligible individual;

(b) $3 000 in respect of the qualified relation of the eligible individual for that taxation year, if any;

(c) $3 000 in respect of each qualified dependant of the eligible individual for that taxation year, if any.

(5) For the purpose of claiming the sales tax credit, an eligible individual who is entitled to a sales tax credit for a taxation year shall be deemed to have paid, at the end of the taxation year on account of the individual's tax under this Act for that taxation year, an amount equal to the sales tax credit.

(6) If an individual is a qualified relation of another individual for a taxation year, only one of them may file a form under subsection (2) for the taxation year.

5 Section 5 is amended

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

(1) The tax payable by a corporation under this Act is the following applicable percentage of the corporation's taxable income earned in the year in British Columbia:

(a) for the 1988, 1989 and 1990 taxation years, 14%;

(b) for the 1991 taxation year, 15%;

(c) for the 1992 taxation year, 16%;

(d) for the 1993 and 1994 taxation years, for that part of the taxation year that is on or before June 30, 1993, 16%, and for that part of the taxation year that is on or after July 1, 1993, 16.5%;

(e) for the 1995 and subsequent taxation years, 16.5%. ,

(b) in subsection (3) (a) by striking out "16%" and substituting "16.5%", and

(c) by repealing subsection (3.1) and substituting the following:

(3.1) The reference to 16.5% in subsection (3) (a) shall be deemed to be

(a) 14% for the 1988, 1989 and 1990 taxation years,

(b) 15% for the 1991 taxation year,

(c) 16% for the 1992 taxation year, and

(d) for the 1993 and 1994 taxation years, for that part of the taxation year that is on or before June 30, 1993, 16%, and for that part of the taxation year that is on or after July 1, 1993, 16.5%.

6 Section 7 is amended

(a) in subsection (1) (b) by striking out "16%" and substituting "16.5%",

(b) in subsection (2) (b) by striking out "16%" and substituting "16.5%", and

(c) by repealing subsection (2.1) and substituting the following:

(2.1) The reference to 16.5% in subsections (1) (b) and (2) (b) shall be deemed to be

(a) 14% for the 1988, 1989 and 1990 taxation years,

(b) 15% for the 1991 taxation year,

(c) 16% for the 1992 taxation year, and

(d) for the 1993 and 1994 taxation years, for that part of the taxation year that is on or before June 30, 1993, 16%, and for that part of the taxation year that is on or after July 1, 1993, 16.5%.

7 Sections 8.4 to 8.72 are repealed and the following substituted:

Corporate straddle provision

8.4 (1) If during the taxation year of a corporation there is a change in the rate of tax payable under this Act by the corporation, the corporation shall calculate its tax payable for that taxation year in accordance with the following:

(a) by treating the taxation year as 2 notional taxation years, the first ending on the last day before the change applied and the second beginning on the first day that the change applied;

(b) by apportioning the amount taxable between the 2 notional taxation years proportionally according to the number of days in each;

(c) by calculating

(i) tax on the first notional taxation year in accordance with the tax applicable before the change applied, and

(ii) tax on the second notional taxation year in accordance with the tax applicable after the change applied;

(d) by adding the amounts determined under paragraph (c) (i) and (ii).

(2) The total amount determined under subsection (1) (d) is the tax payable by the corporation in respect of the taxation year.

Commencement

8 (1) Section 8.4 of the Income Tax Act, as enacted by section 7 of this Act, applies in respect of the 1987 and subsequent taxation years and is retroactive to the extent necessary to give it that effect.

(2) Sections 1 to 6 shall be deemed to have come into force on January 1, 1993 and are retroactive to the extent necessary to give them effect on and after that date.

 
Explanatory Notes

SECTION 1: removes the reference to the renter's tax reduction under section 4.2 and adds the reference to the new refundable sales tax credit under section 4.3.

SECTION 2: increases the surtax payable by high income taxpayers for the 1994 and following taxation years and changes the deduction references as a consequence of the new federal child tax benefit.

SECTION 3: repeals the renter's tax reduction provision.

SECTION 4: establishes a refundable sales tax credit.

The federal Income Tax Act definitions (from the GST Credit provision) referred to are:

122.5 (1) Definitions. - In this section,

"adjusted income" of an individual for a taxation year means the aggregate of all amounts each of which is the income of the year of

(a) the individual,

(b) the individual's qualified relation for the year, or

(c) a person (other than the individual or the individual's qualified relation for the year) who deducts for the year an amount under section 118 in respect of a qualified dependant of the individual for the year;

"eligible individual" for a taxation year means an individual (other than a trust) who, at the end of December of that year, is resident in Canada and is

(a) married,

(b) a parent of a child, or

(c) 19 years of age or over;

"qualified dependant" of an individual for a taxation year means a person who is

(a) a person in respect of whom the individual or the individual's qualified relation for the year is the only person who deducts an amount under section 118 for the year, or

(b) a child of the individual residing with the individual at the end of the year, and who is not

(c) an eligible individual for the year,

(d) the qualified relation of an individual for the year, or

(e) a person in respect of whom an amount is deemed under this section to be paid by any other individual for the year;

"qualified relation" of an individual for a taxation year means the person, if any, who is either

(a) the individual's spouse, or

(b) the other parent of a child of the individual, if the child is a qualified dependant of the individual, who is of the opposite sex to the individual and who, at the end of the year, is not living separate and apart from the individual by reason of the breakdown of their marriage or other conjugal relationship.

(2) Persons not eligible individuals, qualified relations or qualified dependants. - Notwithstanding subsection (1), a person shall be deemed not to be an eligible individual for a taxation year or a qualified relation or a qualified dependant of an individual for a taxation year where the person

(a) dies before the end of the year;

(b) is, at the end of the year, a person described in paragraph 149 (1) (a) or (b); or

(c) is, at the end of the year, confined to a prison or similar institution and has been so confined for a period of, or periods the aggregate of which in the year was more than, 6 months.

SECTION 5: increases the corporate tax rate from 16% to 16.5%, effective July 1, 1993.

SECTION 6: increases the corporate tax rate from 16% to 16.5%, effective July 1, 1993.

SECTION 7: establishes a method for calculating the tax payable by corporations where the tax rate changes during a taxation year.


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