2000 Legislative Session: 4th Session, 36th Parliament
FIRST READING
The following electronic version is for informational
purposes only.
The printed version remains the official version.
HONOURABLE PAUL RAMSEY
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:
Corporation Capital Tax Act
1 The Corporation Capital Tax Act, R.S.B.C. 1996, c. 73, is amended by striking out "a bank, trust company or" and substituting "a bank other than an authorized foreign bank, a trust company or a" in the following provisions:
(a) section 1 (1) paragraph (a) of the definition of "aggregate paid up capital";
(b) section 7 (1).
2 Section 1 (1) is amended
(a) in the definition of "aggregate paid up capital" by adding the following paragraph:
(a.1) in relation to an authorized foreign bank, aggregate paid up capital within the meaning of section 7.1, ,
(b) by adding the following definition:
"authorized foreign bank" has the same meaning as in section 2 of the Bank Act (Canada); , and
(c) in the definition of "bank" by adding "includes an authorized foreign bank but" before "does".
3 The following section is added:
7.1 (1) The aggregate paid up capital of an authorized foreign bank means the aggregate of the following amounts, as those amounts are computed at the end of its taxation year:
(a) 10% of its total risk weighted assets;
(b) its proportionate share, as computed under section 16 (2), of the partnership amounts referred to in section 16 (1) (c), if any, that are applicable to each of the partnerships in which the authorized foreign bank has an interest.
(2) The Lieutenant Governor in Council may, for the purposes of subsection (1) (a), make regulations defining "total risk weighted assets".
(3) A regulation made under subsection (2) may be made retroactive to the date that this Act receives First Reading in the Legislative Assembly or such later date as the Lieutenant Governor in Council may determine, and a regulation made retroactive is deemed to come into force on the date specified in the regulation.
(4) Subsection (3) is repealed on April 1, 2002.
4 Section 8 is amended by adding "that is not a bank, a trust company or a credit union and" after "a corporation".
5 Section 10 is amended
(a) in paragraph (a) by adding "in the case of a corporation other than a corporation referred to in section 7.1," before "the corporation's", and
(b) in paragraph (b) by striking out "section 7," and substituting "section 7 or 7.1,".
6 Section 14 is amended by adding the following subsection:
(5) This section does not apply to an authorized foreign bank.
7 Section 48 is amended by adding the following subsection:
(3) A regulation under this Act may incorporate by reference, with any changes the Lieutenant Governor in Council considers appropriate, all or any part of a code, rule or standard as published by a provincial, national or international body as amended from time to time before or after the making of the regulation.
Financial Administration Act
8 The Financial Administration Act, R.S.B.C. 1996, c. 138, is amended by adding the following section:
4.1 (1) Without limiting any relevant authority under another provision of this or any other Act, Treasury Board may make regulations or issue directives respecting the planning, management and reporting of capital expenditures by government and government bodies.
(2) Without limiting subsection (1), Treasury Board may make regulations or issue directives respecting capital expenditures as follows:
(a) requiring government and government bodies to have approval of Treasury Board or its delegate before making commitments to capital expenditures;
(b) establishing conditions on approval required under paragraph (a);
(c) establishing requirements relating to capital management processes, including procurement, contract provisions, project management, financial controls and accounting practices;
(d) establishing requirements for capital plans, business cases, requests for approval, tendering and other procurement documents, progress reports, completion reports and post-expenditure evaluation reports, including establishing requirements respecting their form, content and frequency.
(3) Regulations and directives under this section may establish different requirements or conditions respecting
(a) different classes of capital expenditure as specified by regulation or directive, and
(b) different government bodies or classes of government body.
(4) In addition to any conditions established by regulation or directive, if approval is required under subsection (2) (a), approval in a specific case may be made on conditions Treasury Board or its delegate considers appropriate.
(5) Requirements under this section are additional to those established by any other enactment.
Financial Information Act
9 Section 3 of the Financial Information Act, R.S.B.C. 1996, c. 140, is repealed and the following substituted:
3 On request of the minister, the Minister of Finance and Corporate Relations or a committee of the Executive Council that is designated by the Executive Council, a corporation must provide to the requesting minister or committee
(a) its strategic plans, business plans, capital and operating budgets, as requested by that minister or committee, and
(b) any other requested information in respect of the corporation in relation to matters covered by this Act or section 4.1 of the Financial Administration Act.
10 Section 4 (1) is repealed and the following substituted:
(1) If a corporation neglects or refuses to comply with this Act, the minister or the Minister of Finance and Corporate Relations may appoint a person to
(a) audit and examine the records, bank accounts and financial information of the corporation, and
(b) prepare and make available to the public, as the applicable minister directs, a statement of financial information required under section 2 for the fiscal year in respect of which the corporation has neglected or refused to prepare it.
Horse Racing Tax Act
11 Section 2 of the Horse Racing Tax Act, R.S.B.C. 1996, c. 199, is amended by repealing subsections (2) to (4) and substituting the following:
(2) Without an appropriation other than this section, the minister must pay to the commission, in accordance with the regulations, amounts equivalent to the net revenue received by the government from the tax imposed under this Act.
(3) Subject to subsection (4) and the regulations, the money paid to the commission under subsection (2) must be used by the commission for the following purposes:
(a) to improve horse racing in British Columbia by means of
(i) supplementing purses awarded to owners of horses bred, born and raised in British Columbia,
(ii) maintaining a breeders' incentive fund, and
(iii) making grants for
(A) the operation of breeder societies in British Columbia,
(B) the establishment or the improvement of horse racing facilities in British Columbia,
(C) the covering of costs of feasibility studies and research, and the assessment of either or both of them, and any other similar costs for purposes of the establishment or improvement of facilities referred to in clause (B),
(D) the operation of race courses and horse racing meets in British Columbia, and
(E) equine health research;
(b) to improve the economic viability of horse racing in British Columbia by means set out in an annual plan approved under subsection (4);
(c) to meet the costs of operation of the commission.
(4) Each year, the commission must submit for approval by the minister responsible for the administration of the Horse Racing Act, an annual plan setting out, in the form and manner specified by that minister,
(a) the means by which the commission proposes to improve the economic viability of horse racing in British Columbia for the following year, and
(b) all proposed spending by the commission under subsection (3) for the following year.
12 Section 7 (2) is amended
(a) in paragraph (c) by striking out "or (4)", and
(b) by adding the following paragraph:
(d) requiring that a prescribed amount or percentage of the money the commission is paid under section 2 (2) be used by the commission for the purpose described in section 2 (3) (b).
Hydro and Power Authority Act
13 Section 32 (7) (k) of the Hydro and Power Authority Act, R.S.B.C. 1996, c. 212, is amended by striking out "sections 52" and substituting "sections 4.1, 52".
Income Tax Act
14 The Income Tax Act, R.S.B.C. 1996, c.215, is amended by adding the following Part:
Part 7 -- British Columbia Manufacturing and Processing Tax Credit
104 (1) In this Part:
"amalgamation" has the same meaning as in section 87 (1) of the federal Act;
"BC qualified property" of a qualifying corporation means property
(a) that
(i) is a prescribed building for the purposes of the definition of "qualified property" in section 127 (9) of the federal Act, to the extent that the building is acquired by the corporation after March 31, 2000, or
(ii) is prescribed machinery or equipment for the purposes of the definition of "qualified property" in section 127 (9) of the federal Act and is acquired by the corporation after March 31, 2000,
(b) that has not been used, or acquired for use or lease, for any purpose whatever before it was acquired by the corporation, and
(c) that is to be
(i) used by the corporation in British Columbia primarily for the purpose of manufacturing or processing goods for sale or lease, or
(ii) leased by the corporation to a lessee that
(A) is a qualifying corporation and is related to the lessor corporation within the meaning of section 251 of the federal Act, and
(B) can reasonably be expected to use the property in British Columbia primarily for the purpose of manufacturing or processing goods for sale or lease;
"government assistance" means assistance from a government, municipality or other public authority whether as a grant, subsidy, forgivable loan, deduction from tax, investment allowance or any other form of assistance other than as a tax credit under this Part;
"manufacturing or processing" does not include any of the activities listed in subparagraphs (i) to (iv) of section 127 (11) (a) of the federal Act or in subparagraphs (i) to (vi) of section 127 (11) (b) of the federal Act;
"non-government assistance" has the same meaning as in section 127 (9) of the federal Act;
"qualifying corporation" means, for a taxation year, a corporation that has a permanent establishment in British Columbia at any time during the taxation year, but does not include a corporation that
(a) is exempt from tax under section 27 of this Act,
(b) is controlled directly or indirectly in any manner whatever by one or more persons all or part of whose taxable income is exempt from tax under section 27 of this Act or under Part 1 of the federal Act,
(c) is an employee venture capital corporation registered under section 8 of the Employee Investment Act,
(d) is a small business venture capital corporation registered under section 3 of the Small Business Venture Capital Act, or
(e) is of a type or class of corporation prescribed by regulation.
(2) For the purposes of sections 105 and 106,
(a) BC qualified property is deemed not to have been acquired by a qualifying corporation before that property is considered to have become available for use by the corporation, and
(b) section 13 (27) and (28) of the federal Act applies for the purposes of paragraph (a) of this subsection except that section of the federal Act is to be read without reference to paragraph (c) of section 13 (27) of that Act and paragraph (d) of section 13 (28) of that Act.
105 (1) Subject to section 109, a qualifying corporation may deduct from its tax otherwise payable under this Act for a taxation year ending after March 31, 1997 an amount not exceeding the smaller of
(a) its BC manufacturing and processing tax credit at the end of the taxation year calculated in accordance with subsection (2) of this section, and
(b) the tax otherwise payable by it under this Act for the taxation year.
(2) The BC manufacturing and processing tax credit of a qualifying corporation at the end of a taxation year is the amount, if any, by which the total of
(a) an amount equal to 3% of the total of all amounts each of which is the capital cost to the corporation of a BC qualified property acquired by that corporation in the taxation year,
(b) an amount equal to 3% of the total of all amounts each of which is the capital cost to the corporation of a BC qualified property acquired by the corporation in any of the 10 taxation years immediately preceding, or the 3 years immediately following, the taxation year,
(c) an amount equal to the total of all amounts each of which is an amount required by section 106 [Partnerships] to be added in computing its BC manufacturing and processing tax credit at the end of the taxation year,
(d) an amount equal to the total of all amounts each of which is an amount required by section 106 [Partnerships] to be added in computing its BC manufacturing and processing tax credit at the end of any of the 10 taxation years immediately preceding, or the 3 years immediately following, the taxation year, and
(e) the total of all amounts each of which is 3% of that part of a repayment made by the corporation in the taxation year or in any of the 10 taxation years immediately preceding, or the 3 years immediately following, the taxation year that can reasonably be considered to be a repayment of government assistance or non-government assistance that under subsection (3) (b) of this section reduced the capital cost to the corporation of a qualified property,
exceeds
(f) the total of all amounts each of which is that portion of the amount deducted under subsection (1) from the tax otherwise payable under this Act by the corporation for a preceding taxation year that is in respect of property acquired by the corporation in the taxation year or in the 10 taxation years immediately preceding, or the 2 years immediately following, the taxation year.
(3) For the purposes of this section, the following rules apply:
(a) the capital cost to a corporation of a property is to be computed as if no amount were added to that cost by virtue of section 21 of the federal Act;
(b) the capital cost to a corporation of a property is deemed to be the capital cost to the corporation of the property determined without applying section 13 (7.1) and (7.4) of the federal Act, less the amount of any government assistance, or non-government assistance,
(i) that can reasonably be considered to be in respect of, or for the acquisition of, the property, and
(ii) that, at the time of the filing of the corporation's return of income for the taxation year in which the property was acquired, the corporation has received, is entitled to receive or can reasonably be expected to receive;
(c) if a corporation has acquired property from a person with whom the corporation was not dealing at arm's length at an amount in excess of the fair market value of the property at the time the corporation so acquired it, the corporation is deemed to have acquired it at that fair market value;
(d) if at a particular time a corporation that is a member of a partnership has received, is entitled to receive or can reasonably be expected to receive government assistance or non-government assistance, the amount of assistance that can reasonably be considered to be in respect of, or for the acquisition of, depreciable property of the partnership is deemed to have been received at that time by the partnership as government assistance or non-government assistance in respect of the property.
106 (1) If, in a particular taxation year of a qualifying corporation that is a member of a partnership, an amount would, if the partnership were a qualifying corporation, be determined in respect of the partnership under section 105 (2) (a), (c) or (e) for a taxation year ending in the particular taxation year, the appropriate portion of that amount must be added in computing the corporation's tax credit under this Part at the end of that particular taxation year.
(2) For the purposes of this section, the appropriate portion of the amount referred to in subsection (1) is that portion that may reasonably be considered to be the corporation's share of the tax credit.
(3) If the corporation is a limited partner in the partnership at the end of the partnership's taxation year, the portion that under subsection (2) may reasonably be considered to be the corporation's share of the tax credit is to be determined by applying section 127 (8.1) to (8.5) of the federal Act, except that, in addition to any other modifications required by the circumstances,
(a) section 127 (8.1) and (8.3) (a) is to be read as though it did not include any reference to paragraph (a.1) of the definition of "investment tax credit" in section 127 (9) of the federal Act,
(b) section 127 (8.2) (b) (i) is to be read without reference to clause (B), and
(c) section 127 (8.2) (b) (i) (A) is to be read as though the reference to "a specified percentage" were to "3%".
107 (1) On or before the date by which a qualifying corporation is required under section 29 to file its return of income for a taxation year, the corporation may renounce all or part of the tax credit with respect to a qualified property acquired by the corporation in the taxation year.
(2) If a qualifying corporation renounces its entitlement to all or part of a tax credit under subsection (1), the corporation is deemed for all purposes never to have been entitled to receive, or have had a reasonable expectation of receiving, that credit or part of it.
108 (1) If a new corporation is formed by the amalgamation of 2 or more corporations, the new corporation is deemed to be the same corporation as, and a continuation of, each of its predecessor corporations for the purposes of applying this Part to the new corporation, except that this provision does not affect the determination of the tax payable by any predecessor corporation.
(2) Despite subsection (1), if a new corporation is formed by the amalgamation of a particular corporation and one or more of its subsidiary wholly owned corporations within the meaning of section 87 (1.4) of the federal Act, the new corporation is deemed to be the same corporation as, and a continuation of, the particular corporation for the purposes of applying this Part to the particular corporation.
(3) If a subsidiary corporation is wound up, within the meaning of section 88 (1) of the federal Act, the parent corporation is deemed to be the same corporation as, and a continuation of, the subsidiary corporation for the purposes of applying this Part to the parent corporation.
109 (1) A qualifying corporation that wishes to claim a tax credit under this Part in respect of a taxation year must file, with the return of income filed by the corporation under section 29 for that taxation year, an application for the tax credit in the form, and containing the information, required by the Commissioner of Income Tax.
(2) In computing its tax credit under section 105 (2), a qualifying corporation is not entitled to include an amount in respect of a BC qualified property unless the corporation files the form containing the information required under subsection (1) of this section in respect of that amount within 18 months after the end of the taxation year in which the corporation acquired the property.
15 (1) Sections 1 to 7, 11 and 12 come into force by regulation of the Lieutenant Governor in Council.
(2) When a provision of sections 1 to 7 of this Act is brought into force by regulation, the provision
(a) is deemed to have come into force on the later of
(i) the date that this Act receives First Reading in the Legislative Assembly, and
(ii) any later date specified in the regulation, and
(b) is retroactive to the extent necessary to give it effect on and after that date.
(3) When brought into force by regulation, sections 11 and 12 are deemed to have come into force on April 1, 2000 and are retroactive to the extent necessary to give them effect on and after that date.
Explanatory Notes
Corporation Capital Tax Act
SECTION 1: [Corporation Capital Tax Act, amends sections 1 (1) and 7 (1)] provides that the aggregate paid up capital of an authorized foreign bank is not to be calculated under section 7 of the Corporation Capital Tax Act.
SECTION 2: [Corporation Capital Tax Act, amends section 1 (1)] includes the concept of authorized foreign bank within the applicable definitions of the Corporation Capital Tax Act.
SECTION 3: [Corporation Capital Tax Act, enacts section 7.1] establishes the method by which the aggregate paid up capital of an authorized foreign bank is to be calculated for the purposes of the Corporation Capital Tax Act.
SECTION 4: [Corporation Capital Tax Act, amends section 8] clarifies that section 8 of the Corporation Capital Tax Act does not apply to banks, trust companies and credit unions.
SECTION 5: [Corporation Capital Tax Act, amends section 10] provides that authorized foreign banks are not entitled to claim the deductions contemplated under section 10 of the Corporation Capital Tax Act.
SECTION 6: [Corporation Capital Tax Act, adds section 14 (5)] provides that section 14 of the Corporation Capital Tax Act does not apply to authorized foreign banks.
SECTION 7: [Corporation Capital Tax Act, adds section 48 (3)] provides that the Lieutenant Governor in Council may, in a regulation under the Corporation Capital Tax Act, incorporate a code, rule or standard published by a provincial, national or international body.
Financial Administration Act
SECTION 8: [Financial Administration Act, enacts section 4.1] implements the capital management authority proposed by Deloitte Consulting in its Capital Management Process Review for the Government of British Columbia.
Financial Information Act
SECTION 9: [Financial Information Act, re-enacts section 3] adds authority to require additional information for the purposes of this Act and the proposed section 4.1 of the Financial Administration Act.
SECTION 10: [Financial Information Act, repeals and replaces section 4 (1)] adds authority for the Minister of Finance and Corporate Relations to appoint auditors under this section.
Horse Racing Tax Act
SECTION 11: [Horse Racing Tax Act, repeals and replaces section 2 (2) to (4)]
SECTION 12: [Horse Racing Tax Act, amends section 7 (2)]
Hydro and Power Authority Act
SECTION 13: [Hydro and Power Authority Act, amends section 32 (7) (k)] makes the proposed section 4.1 of the Financial Administration Act apply to the B.C. Hydro and Power Authority.
Income Tax Act
SECTION 14: [Income Tax Act, enacts Part 7] adds a new Part which
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