1996 Legislative Session: 5th Session, 35th Parliament
FIRST READING
The following electronic version is for informational purposes only.
The printed version remains the official version.
HONOURABLE ELIZABETH CULL
MINISTER OF FINANCE AND
CORPORATE RELATIONS
HER MAJESTY, by and with the advice and consent of the Legislative Assembly of the Province of British Columbia, enacts as follows:
1 Section 3 (5) (h) of the Income Tax Act, R.S.B.C. 1979, c. 190, is repealed and the following substituted:
(h) 52.5% for the 1993 to 1995 taxation years;
(i) 52% for the 1996 taxation year;
(j) 51% for the 1997 taxation year;
(k) 50.5% for the 1998 and subsequent taxation years.
2 Section 3.4 (1) (c) is repealed and the following substituted:
(c) for the 1994 and 1995 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;
(d) for the 1996 taxation year,
(i) 30% of the amount by which that tax exceeds $5 300, and
(ii) 21.5% of the amount by which that tax exceeds $8 915 before the tax payable under subparagraph (i) is added;
(e) for the 1997 taxation year,
(i) 30% of the amount by which that tax exceeds $5 300, and
(ii) 24.5% of the amount by which that tax exceeds $8 745 before the tax payable under subparagraph (i) is added;
(f) for the 1998 and subsequent taxation years,
(i) 30% of the amount by which that tax exceeds $5 300, and
(ii) 26% of the amount by which that tax exceeds $8 660 before the tax payable under subparagraph (i) is added.
3 The following sections are added:
4.4 (1) In section 4.5, "adjusted income", "base taxation year", "cohabiting spouse", "eligible individual", "qualified dependant" and "return of income" have the same meanings as in section 122.6 of the federal Act.
(2) Section 1 (7) (h) of this Act does not change a reference to Canada in the definition of "eligible individual" or in section 122.61 (3) (a) of the federal Act, as those provisions apply for the purposes of section 4.5 of this Act, to a reference to British Columbia.
4.5 (1) Despite section 2, an overpayment on account of a person's liability under this Act for a taxation year is deemed to have arisen during a month in relation to which the year is the base taxation year where
(a) the person and, if the Provincial minister so demands, the person's cohabiting spouse at the end of the taxation year have filed a return of income for that year, and
(b) the person was resident in British Columbia for a period that commenced before the first day of the month and that includes that day.
(2) Where a person who was resident in British Columbia during the period referred to in subsection (1) (b) was also resident outside British Columbia during that period, an overpayment that would otherwise be deemed to have arisen during the month referred to in that subsection is deemed to arise only if
(a) the person was present in British Columbia for a period of at least 14 days during that month, or
(b) the person comes within a class of persons exempted by regulation from the requirement to be present in British Columbia for the period referred to in paragraph (a).
(3) The overpayment deemed to have arisen during a month under subsection (1) in respect of the person's liability under this Act for a taxation year is equal to,
(a) if the person's adjusted income for that year does not exceed $18 000, the amount determined by multiplying $103 by the number of qualified dependants in respect of whom the person was an eligible individual at the beginning of that month, and
(b) if the person's adjusted income for that year exceeds $18 000, the amount determined by the formula
($103 x N) - (P / 12)
where
N is the number of qualified dependants in respect of whom the person was an eligible individual at the beginning of that month, and
P is
(i) 8% of the amount by which the person's adjusted income for that year exceeds $18 000, if the person was at the beginning of that month an eligible individual in respect of only one qualified dependant, or
(ii) 16% of the amount by which the person's adjusted income for that year exceeds $18 000, if the person was at the beginning of that month an eligible individual in respect of more than one qualified dependant.
(4) Despite subsections (1) to (3) of this section, section 122.61 (2) of the federal Act applies for the purposes of this section and section 122.61 (3) (a) of that Act applies for the same purposes.
4.6 (1) Section 122.62 (1), (2), (4) and (5) of the federal Act applies for the purposes of section 4.5 of this Act.
(2) For the purpose of determining the amount deemed under section 4.5 to be an overpayment on account of a person's liability under this Act,
(a) section 122.62 (6) of the federal Act applies in the circumstances set out in that subsection, and
(b) section 122.62 (7) of the federal Act applies in the circumstances set out in that subsection.
4.7 A refund of an amount deemed by section 4.5 to be an overpayment on account of a person's liability under this Act for a taxation year
(a) cannot be charged or given as security,
(b) cannot be assigned except under a prescribed Act,
(c) cannot be garnished or attached,
(d) is exempt from execution or seizure, and
(e) cannot be retained by way of deduction or set-off under the Financial Administration Act.
4.8 (1) The Lieutenant Governor in Council may make regulations for the purposes of sections 4.5 to 4.7, including regulations
(a) specifying additional provisions of the federal Act that apply for the purposes of those sections,
(b) exempting, for the purposes of section 4.5 (2) (b), classes of persons from the requirement to be present in British Columbia, and
(c) prescribing enactments for the purposes of sections 4.7 (b).
(2) Subsection (1) (a) is repealed 2 years after it comes into force.
(3) The Provincial minister may specify forms that are to be used for the purposes of sections 4.5 to 4.7.
4 Section 7 is amended by striking out "10%" wherever it appears and substituting "9%".
5 The following sections are added:
7.3 (1) If eligible under this section, a corporation for which taxes are payable under section 7 (1) or (2) may deduct from the tax otherwise payable under that section for a taxation year an amount equal, as applicable, to
(a) the tax payable by the corporation under section 7 (1) (a) for that taxation year, or
(b) the tax payable by the corporation under section 7 (2) (a) for that taxation year in relation to the applicable amount used for the purposes of subparagraph (i) of that section.
(2) Interest or penalties on tax payable under section 7 (1) (a) or (2) (a) is not to be considered tax payable under that section for the purpose of determining the amount of a deduction under this section.
(3) In order to be eligible for a deduction under this section, a corporation must meet all the following requirements:
(a) the corporation must be incorporated after the day on which the Act by which this section was enacted was given First Reading in the Legislative Assembly and before April 1, 2001, and must be carrying on business in British Columbia for some period between those dates;
(b) the taxation year for which the deduction is claimed must be the first or second taxation year of the corporation;
(c) for the taxation year in which the deduction is claimed, the corporation must
(i) be carrying on an active business within the meaning of section 125 (7) of the federal Act, and
(ii) be allowed a deduction from federal tax under the provisions of section 125 (1) of the federal Act;
(d) the corporation must minimize its tax liability for that taxation year by claiming all allowable deductions from tax otherwise payable under section 7 (1) (a) or (2) (a), as applicable;
(e) at least 25% of the amount of the wages and salaries paid by the corporation in the taxation year for which the deduction is claimed must be paid to employees who are resident in British Columbia;
(f) the corporation must apply for a certificate of eligibility under subsection (7) within 3 years after the end of the taxation year for which the certificate would be issued;
(g) a certificate of eligibility issued under subsection (7) for the applicable taxation year must be filed with the federal minister;
(h) the corporation must not be ineligible under subsection (4).
(4) A corporation is not eligible for a deduction under this section if one or more of the following circumstances apply:
(a) subject to subsection (6), the business activity carried on by the corporation after incorporation is the same or mainly the same business activity as that carried on before incorporation as all or part of the business activity of a sole proprietorship, partnership, joint venture or corporation, whether registered as such or not;
(b) the corporation results from an amalgamation or merger of corporations;
(c) at any time since its incorporation, the corporation was associated with another corporation within the meaning of section 256 of the federal Act;
(d) at any time since its incorporation, the corporation was a beneficiary of a trust;
(e) at any time since its incorporation, the corporation carried on the active business referred to in subsection (3) (c) (i) by reason of being a member of a partnership, if any member of the partnership was not eligible for a deduction under this section for the taxation year;
(f) at any time since its incorporation, the corporation carried on the active business referred to in subsection (3) (c) (i) by reason of being a co-venturer in a joint venture, if any other co-venturer in the joint venture was not eligible for a deduction under this section for the taxation year;
(g) at any time since its incorporation, the corporation carried on the active business referred to in subsection (3) (c) (i) by reason of having acquired property from a sole proprietorship, partnership or joint venture in respect of which
(i) the corporation,
(ii) any of its shareholders, or
(iii) any person related within the meaning of section 251 of the federal Act to the corporation or its shareholders
had at any time, directly or indirectly, an interest in the proprietorship, partnership or joint venture;
(h) at any time since its incorporation, the corporation carried on the active business referred to in subsection (3) (c) (i) by reason of having acquired property from another corporation in respect of which
(i) the corporation claiming the deduction,
(ii) any of the shareholders of the corporation claiming the deduction, or
(iii) any person related within the meaning of section 251 of the federal Act to the corporation claiming the deduction or its shareholders
owned at any time, directly or indirectly, more than 10% of the issued shares of any class of the capital stock of the other corporation;
(i) as a result of a transaction or an event, or a series of transactions or events, property of a business has been transferred or has been deemed to have been transferred, either directly or indirectly, to the corporation and it is reasonable for the Commissioner of Income Tax to believe that one of the principal purposes of the transfer or deemed transfer is to enable the corporation to claim a deduction under this section that it could not otherwise claim;
(j) as a result of a disposition or deemed disposition of shares of any corporation, it is reasonable for the Commissioner of Income Tax to believe that one of the principal purposes of the disposition or deemed disposition is to enable the corporation to claim a deduction under this section that it could not otherwise claim;
(k) the certificate of eligibility of the corporation for the taxation year has been rescinded;
(l) the corporation is within a class prescribed by regulation under subsection (5).
(5) The Lieutenant Governor in Council may, by regulation, prescribe classes of corporations as ineligible for a deduction under this section.
(6) A corporation that would be eligible but for subsection (4) (a) is eligible for a deduction under this section if
(a) the same or mainly the same business activity was carried on as all or part of the business activity of a sole proprietorship or partnership for a period of 90 days or less before the date of incorporation, and
(b) the period referred to in paragraph (a) did not begin until after the day on which the Act by which this section was enacted was given First Reading in the Legislative Assembly.
(7) The Commissioner of Income Tax may issue a certificate of eligibility for a corporation for a taxation year if
(a) after the end of the taxation year for which the certificate would be issued, the corporation applies and provides information in accordance with the requirements established by the Commissioner, and
(b) the Commissioner is satisfied that the corporation is eligible for a deduction under this section for the taxation year.
(8) A separate certificate of eligibility must be obtained for each taxation year for which a deduction under this section is claimed.
(9) For the purpose of determining whether a corporation is eligible under this section, the Commissioner of Income Tax has powers equivalent to the federal minister under sections 230 (3), 231, 231.1, 233 and 236 of the federal Act, and for this purpose those sections apply.
(10) If the Commissioner of Income Tax refuses to issue a certificate of eligibility for a corporation, the Commissioner must give notice of this refusal to the corporation together with reasons for the refusal.
(11) If, after issuing a certificate of eligibility and before the end of the period allowed for reassessment, the Commissioner of Income Tax determines on the basis of further information that a corporation was not in fact eligible for a deduction under this section, the Commissioner may rescind the certificate.
(12) If the Commissioner of Income Tax rescinds a certificate of eligibility, the Commissioner must notify the corporation of this rescission, together with reasons for the rescission.
(13) If a certificate of eligibility has been rescinded and the corporation has claimed and received a deduction under this section, the amount of the deduction, together with interest from the time referred to in section 157 (1) (b) of the federal Act, is a debt of the corporation due to the Provincial government.
(14) For the purpose of recovering a debt under subsection (13), the Commissioner of Income Tax may
(a) issue a certificate stating that the amount is due, the amount remaining unpaid, including interest, and the name of the corporation required to pay it, and
(b) file the certificate with the Supreme Court.
(15) A certificate filed under subsection (14) with the Supreme Court is of the same effect, and proceedings may be taken on it, as if it were a judgment of the Supreme Court for the recovery of a debt in the amount stated against the person named in it.
(16) A corporation that knowingly applies for a certificate of eligibility for a taxation year for which it is not eligible under this section commits an offence and is liable on conviction to a fine of up to double the amount of the deduction claimed.
7.4 (1) If the Commissioner of Income Tax refuses to issue a certificate of eligibility under section 7.3 (7) or rescinds a certificate of eligibility under section 7.3 (11), the corporation may appeal the Commissioner's decision to the Provincial minister.
(2) An appeal under subsection (1)
(a) must be made within 120 days after the date appearing on the notice under section 7.3 (10) or (12), as applicable, and
(b) must be made by serving a notice of appeal on the Provincial minister by mailing it by registered mail addressed to that minister at the Parliament Buildings at Victoria, British Columbia.
(3) The notice of appeal must set out clearly and fully the reasons for the appeal and the facts on which it is based.
(4) On receipt of the notice of appeal, the Provincial minister must
(a) consider the notice and the information and documents on file in the office of the Commissioner of Income Tax regarding the matter,
(b) affirm the Commissioner's decision, direct the Commissioner to reconsider the matter, or direct the Commissioner to issue a certificate of eligibility, and
(c) notify the appellant of the decision.
(5) A decision of the Provincial minister under subsection (4) may be appealed to the Supreme Court by way of an originating application and, for these purposes, section 20 of the International Financial Business (Tax Refund) Act applies.
(6) If directed by the Provincial minister or a court under this section, the Commissioner must issue a certificate of eligibility under section 7.3 (7) for the applicable taxation year.
6 Section 12 is amended by adding ", (1.2)" after "Sections 150, 151, 152 (1)".
7 Section 13 is amended by adding the following subsection:
(1.1) Notwithstanding that the normal reassessment period for a taxpayer in respect of a taxation year has elapsed, the Provincial minister may redetermine the amount, if any, deemed under section 4.5 to be an overpayment on account of the taxpayer's liability for tax for that year.
8 Section 19 is amended by striking out "160.1 (1)," and substituting "160.1 (1), (2.1) and (3),".
9 Section 26 (2) (a) is amended:
(a) by repealing subparagraph (i) and substituting the following:
(i) the individual's residency for the purposes of section 2, section 4.5 or any other provision of this Act; , and
(b) by adding the following subparagraphs:
(i.1) the individual's presence in British Columbia for the purposes of section 4.5 (2);
(i.2) the amount that, by section 122.62 (6) or (7) of the federal Act as it applies for the purposes of section 4.5 of this Act, is deemed to be the individual's adjusted income; .
10 Section 50 is amended by adding the following subsection:
(3) Subsection (1) does not apply to information
(a) disclosed in accordance with an information-sharing agreement under section 50.1 or with section 50.1 (3), or
(b) deemed under section 50.1 (4) to have been disclosed in accordance with section 33 of the Freedom of Information and Protection of Privacy Act.
11 The following section is added:
50.1 (1) With the prior approval of the Lieutenant Governor in Council, the Provincial minister may enter into an information-sharing agreement with any of the following:
(a) the government of Canada or an official or agency of that government;
(b) the government of a province or another jurisdiction in Canada or an official or agency of such a province or jurisdiction;
(c) the government of a state of the United States or an official or agency of such a state;
(d) a public body as defined in the Freedom of Information and Protection of Privacy Act.
(2) For the purposes of subsection (1), "information-sharing agreement" includes a data-matching or other agreement for the exchange of personal or other information necessary for the administration or enforcement of
(a) this Act,
(b) a prescribed enactment of British Columbia, or
(c) a prescribed enactment of Canada, a province or other jurisdiction of Canada or a state of the United States.
(3) For the purpose of giving effect to sections 4.4 to 4.7 of this Act (the BC Family Bonus) on July 1, 1996,
(a) the Minister of Social Services may disclose to the Provincial minister information obtained under the Guaranteed Available Income for Need Act relating to applicants or recipients under that Act who are eligible individuals or qualified dependants as defined in section 4.4 of this Act, and
(b) the Provincial minister may disclose to the Minister of Social Services information obtained under this Act relating to applicants or recipients under the Guaranteed Available Income For Need Act who are eligible individuals or qualified dependants as defined in section 4.4 of this Act,
even though an information-sharing agreement about that information is not in effect when the information is disclosed.
(4) Information that was disclosed after January 1, 1996 that would have been validly disclosed had subsection (3) been in force when the information was disclosed is deemed for the purposes of the Freedom of Information and Protection of Privacy Act to have been disclosed in accordance with section 33 of that Act.
(5) Subsection (3) is repealed on November 30, 1996.
12 (1) A regulation under section 7.3 (5) of the Income Tax Act that is made before the end of one year after the day on which this Act was given First Reading in the Legislative Assembly may be made retroactive to any date after that day and, if made retroactive, is deemed to have come into force on the date specified.
(2) A regulation under section 4.8 (1) of the Income Tax Act that is made before July 1, 1997, may be made retroactive to any date after June 30, 1996 and, if made retroactive, is deemed to have come into force on the date specified.
13 (1) Sections 1 and 2 are deemed to have come into force on January 1, 1996.
(2) That part of section 3 that enacts sections 4.4 to 4.7 of the Income Tax Act comes into force on July 1, 1996 and is retroactive to the extent necessary to give it effect on and after that date with respect to overpayments deemed to arise under section 4.5 of the Income Tax Act during any month after June 1996 on account of the liability under the Income Tax Act of persons who have filed returns of income for the 1995 taxation year.
(3) Section 4 comes into force on July 1, 1996.
(4) Section 5 is deemed to have come into force on the day after the day on which this Act was given First Reading in the Legislative Assembly and is retroactive to the extent necessary to give it force and effect on and after that date.
SECTION 1: [Income Tax Act, amends section 3]reduces the basic rate of personal income tax, calculated as a percent of basic federal tax, by 2%.
SECTION 2: [Income Tax Act, amends section 3.4] in relation to the reduction in the basic personal income tax rate, limits the benefit of the reduction in Provincial tax for taxpayers paying the highest personal income surtax.
SECTION 3: [Income Tax Act, adds sections 4.4 to 4.8]
SECTION 4: [Income Tax Act, amends section 7] reduces the small business tax rate from 10% to 9%, effective July 1, 1996.
SECTION 5: [Income Tax Act, adds sections 7.3 and 7.4] establishes a tax deduction program to give new small businesses a 2 year "holiday" from taxes otherwise payable at the special small business tax rate.
SECTION 6: [Income Tax Act, amends section 12] is consequential to the amendments made by sections 3 and 7 of this Bill. The consequential amendment permits legal expenses and disbursements resulting from a redetermination of a family bonus to be taken into account in calculating income.
SECTION 7: [Income Tax Act, amends section 13] adds a provision authorizing the Minister of Finance and Corporate Relations to redetermine the amount of a family bonus.
SECTION 8: [Income Tax Act, amends section 19] is consequential to the amendments made by section 3 of this Bill. The consequential amendment makes spouses jointly and separately liable to repay any overpayments of the family bonus and allows the Minister of Finance and Corporate Relations to assess overpayments.
SECTION 9: [Income Tax Act, amends section 26 (2) (a)] is consequential to the amendments made by section 3 of this Bill. The consequential amendment specifies the grounds on which an individual may appeal to court from a decision relating to the family bonus.
SECTION 10: [Income Tax Act, amends section 50] is consequential to the amendments made by section 11 of this Bill.
SECTION 11: [Income Tax Act, adds section 50.1] adds provisions authorizing the Minister of Finance and Corporate Relations to enter into information-sharing agreements. Other provisions permit that minister and the Minister of Social Services to exchange, before a formal agreement is entered into, information necessary for establishing the family bonus program and for administering the program during the first few months of its operation.
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