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An Act to Amend the New Brunswick Income Tax Act

Legislature :
54
Session :
4
Bill No. :
60
Member :
Hon. Mesheau
First Reading :
2002-5-31
Second Reading :
2002-6-4
Committee of the Whole :
2002-6-4
Amended :
Third Reading :
2002-6-5
Royal Assent :
2002-6-7

Text of Bill :
         

   Her Majesty, by and with the advice and consent of the Legislative Assembly of New Brunswick, enacts as follows:

1               Section 27 of the New Brunswick Income Tax Act, chapter N-6.001 of the Acts of New Brunswick, 2000, is amended by adding after subsection (1) the following:

27(1.1)   For the purpose of computing the tax payable under this Part for a taxation year by an individual who is entitled to a deduction under subsection 118.3(2) of the Federal
Act for the taxation year in respect of a person referred to in that subsection, there may be deducted the amount, if any, by which

   (a)    the amount deductible under subsection (1) in computing that person’s tax payable under this Part for the taxation year, or that would be so deductible if the person were
   liable under section 11 to pay tax for the taxation year,
   
exceeds
   
   (b)    the amount of that person’s tax payable under this Part for the taxation year if the person were liable under section 11 to pay tax for the taxation year, computed before any
   deductions under this Division, other than deductions referred to in sections 17 to 24 and 32.

2               Section 29 of the Act is repealed and the following is substituted:

29            Section 118.6 of the Federal Act applies for the purposes of this Act, except that any reference to “appropriate percentage” in that section is to be read as a reference to
“appropriate percentage” as defined in section 13.

3               Section 30 of the Act is repealed and the following is substituted:

30            Where an individual is entitled to deduct an amount under subsection 118.61(2) of the Federal Act for the purpose of computing the individual’s tax payable for a taxation
year under Part I of the Federal Act, for the purpose of computing the tax payable for a taxation year under this Part by the individual for the taxation year, there may be deducted
an amount determined by the formula

                                                                                    A
                                                                                     ´
                                                                                             B
                                                                                    
                                                                                       
                                                                                           C



where

A             is the appropriate percentage for the taxation year as defined in section 13;

B             is the amount deducted by the individual for the taxation year under subsection 118.61(2) of the Federal Act; and

C             is the appropriate percentage for the taxation year as defined in the Federal Act.

4               Section 33 of the Act is amended

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

33(3)      Notwithstanding subsections (1) and (2), for the purpose of section 118.81 of the Federal Act, as that section applies for the purposes of this Act, where a person did not
reside in New Brunswick on the last day of the taxation year, the tuition and education tax credits transferred for the taxation year by the person to an individual shall be deemed
to equal the amount determined by the formula

                                                                                    A
                                                                                     ´
                                                                                             B
                                                                                    
                                                                                       
                                                                                           C



where

A             is the appropriate percentage for the taxation year as defined in section 13;

B             is the amount determined by the individual for the taxation year under section 118.81 of the Federal Act; and

C             is the appropriate percentage for the taxation year as defined in the Federal Act.

   (b)      by repealing subsection (4) and substituting the following:

33(4)      Notwithstanding subsections (1) and (2), for the purpose of section 118.8 of the Federal Act, as that section applies for the purposes of this Act, where in a taxation year
an individual’s spouse or common-law partner did not reside in New Brunswick on the last day of the taxation year,

   (a)    the amount for B in the formula in section 118.8 of the Federal Act, as that section applies for the purposes of this Act, for the individual for the taxation year shall be
   equal to the amount determined by the formula

                                                                                    A
                                                                                     ´
                                                                                             B
                                                                                    
                                                                                       
                                                                                           C



   where
   
   A       is the appropriate percentage for the taxation year as defined in section 13;
   
   B         is the amount determined by the individual for the taxation year for B in the formula in section 118.8 of the Federal Act for the purpose of computing the individual’s tax
   payable under Part I of the Federal Act for the taxation year; and
   
   C         is the appropriate percentage for the taxation year as defined under the Federal Act; and
   
   (b)    the amount for C in the formula in section 118.8 of the Federal Act, as that section applies for the purposes of this Act, for the individual for the taxation year shall be
   equal to the amount, if any, by which

      (i) the amount that would be the spouse’s or common-law partner’s tax payable under this Part for the taxation year if no amount were deductible under this Division, other
      than an amount deductible under section 19, 30 or 32,

   exceeds

      (ii)                  the lesser of

         (A)          the total of all amounts that may be deducted under section 28 or 29 in computing the spouse’s or common-law partner’s tax payable under this Part for the
         taxation year, and
         
         (B)          the amount that would be the spouse’s or common-law partner’s tax payable under this Part for the taxation year if no amount were deductible under this Division,
         other than an amount deductible under sections 17 to 24, 27, 30 or 32.

5               Section 46 of the Act is repealed and the following is substituted:

46            If tax is payable by an individual under section 127.5 of the Federal Act for a taxation year, there must be added in computing the individual’s tax payable under this Act for
the taxation year the amount determined by the formula

                                                                                    A
                                                                                       
                                                                                             B



where

A             is the specific percentage for the year; and

B             is the amount that would be determined under subsection 120.2(3) of the Federal Act if that subsection were read without reference to paragraph (c) of that subsection.

6               Section 49.1 of the Act is amended

   (a)      in subsection (1) by repealing the definition “eligible individual” and substituting the following:

   “eligible individual”, for a taxation year, means an individual, other than a trust, who is resident in New Brunswick on December 31 of the taxation year and includes an
individual who died in the taxation year and was a resident of New Brunswick on the day of death; («particulier admissible»)

   (b)      by repealing subsection (2) and substituting the following:

49.1(2)   Where an eligible individual applies on a prescribed form for a deduction under this section in respect of a taxation year and files the application with the individual's
return of income for the taxation year, there may be deducted from the tax otherwise payable for the taxation year by the eligible individual the amount, if any, by which the total of

   (a)    the amount, rounded up to the next dollar, determined by the formula
   
                                                                                 A ´ ($11,000 – B)

   where
   
   A       is the appropriate percentage for the taxation year, and
   
   B         is the amount prescribed for B in section 19,
   
   (b)    the amount determined under paragraph (a) for a person who is the qualified relation of the eligible individual for the taxation year, and
   
   (c)      the amount determined under paragraph (a), where the eligible individual has no qualified relation for the taxation year and is entitled to deduct an amount for the taxation
   year under paragraph 118(1)(b) of the Federal Act in respect of a qualified dependant of the eligible individual for the taxation year,

exceeds

   (d)    5% of the amount, if any, by which

      (i) the eligible individual's adjusted income for the taxation year,

   exceeds

      (ii)                  $11,000.

   (c)      by adding after subsection (2) the following:

49.1(2.1)                Effective January 1, 2003, the reference to “$11,000” in subsection (2) shall be read as a reference to “$12,500”.

7               Section 55 of the Act is repealed and the following is substituted:

55(1)      Effective July 1, 2002, the tax payable by a corporation under this Part for a taxation year is 14.5% of the corporation's taxable income earned in the year in New Brunswick.

55(2)      Effective January 1, 2003, the tax payable by a corporation under this Part for a taxation year is 13% of the corporation's taxable income earned in the year in New
Brunswick.

8               The Act is amended by adding after section 55 the following:

Corporate straddle provision
55.1(1)   In this section

   “tax calculation change” means

   (a)    in relation to a corporation to which section 57 applies,
   
      (i) the enactment of subsection 57(1.1),
      
      (ii)                  any amendment to this Act that effects a change to any amount expressed in dollars that is referred to in subsection 57(1.1), or
      
      (iii)                any amendment to this Act that effects a change to any rate referred to in section 57, or
   
   (b)    in relation to any other corporation, any amendment to this Act that effects a change to any rate referred to in section 55.

55.1(2)   If, during the taxation year of a corporation, there are one or more tax calculation changes, the corporation must compute its tax payable for that taxation year in
accordance with the following:

   (a)    the corporation must divide its taxation year into notional taxation years as follows:
   
      (i) the first of those notional taxation years begins on the first day of the corporation's taxation year and ends on the day before the day on which the first tax calculation
      change that occurs in its taxation year takes effect;
      
      (ii)                  subject to subparagraph (iii), a notional taxation year will begin on each day in the corporation's taxation year on which a tax calculation change takes effect and
      will end on the day before the day in its taxation year on which the next tax calculation change takes effect; and
      
      (iii)                the last notional taxation year begins on the day on which the last tax calculation change that occurs in the corporation's taxation year takes effect and ends on the
      last day of its taxation year;
   
   (b)    the corporation must, for each notional taxation year within the corporation's taxation year, calculate, in accordance with section 55 or 57, as the case may be, as that
   section read on the first day of that notional taxation year, the tax the corporation would be obliged to pay under section 55 or 57, as the case may be, if that tax were calculated

      (i) on the corporation's taxable income for the whole of its taxation year, and
      
      (ii)                  as if that wording of section 55 or 57 applied throughout the whole of its taxation year;

   (c)      the corporation must, for each notional taxation year within the corporation's taxation year, multiply the amount determined for that notional taxation year under paragraph
   (b) by the fraction obtained by dividing the number of days in that notional taxation year by the number of days in the corporation's taxation year;
   
   (d)    the corporation must add to the amount determined under paragraph (c) for the first notional taxation year within the corporation's taxation year the amounts determined
   under paragraph (c) for each of the other notional taxation years within its taxation year; and
   
   (e)      the total amount determined under paragraph (d) is the tax payable by the corporation in respect of the corporation's taxation year.

9               Section 56 of the Act is amended

   (a)      in paragraph (1)(a) by repealing the portion preceding subparagraph (i) and substituting the following:

   (a)    14.5% of the product of

   (b)      by adding after subsection (3) the following:

56(4)      Effective January 1, 2003, the reference to “14.5%” in subsection (1) shall be read as a reference to “13%”.

10            Section 57 of the Act is amended

   (a)      in subsection (1)

      (i) in paragraph (a) in the portion preceding subparagraph (i) by striking out “4%” and substituting “3.5%”;

      (ii)                in paragraph (b)

         (A)          by striking out “16%” and substituting “14.5%”;

         (B)          by striking out “4%” and substituting “3.5%”;

   (b)      by adding after subsection (1) the following:

57(1.1)   For the purposes of subsection (1), where a corporation is a member of a partnership, the amount determined pursuant to paragraph 125(1)(a) of the Federal Act, in
relation to a corporation for each taxation year, shall be the amount that would be the corporation’s specified partnership income within the meaning of subsection 125(7) of the
Federal Act if the amounts expressed in dollars in the description of “M” in the definition of “specified partnership income” in that subsection were read as

   (a)    for the first amount, “$300,000” and, for the second amount, “$822” for the period commencing on January 1, 2001, and ending on June 30, 2002,
   
   (b)    for the first amount, “$350,000” and, for the second amount, “$959” for the period commencing on July 1, 2002, and ending on December 31, 2002, and
   
   (c)      for the first amount, “$400,000” and, for the second amount, “$1,096” for the period commencing on January 1, 2003.

   (c)      in subsection (2) by striking out “150%” and substituting “175%”;

   (d)      by adding after subsection (2) the following:

57(3)      Effective January 1, 2003, the references to “3.5%” and “14.5%” in subsection (1) shall be read as references to “3%” and “13%”, respectively.

57(4)      Effective January 1, 2003, the reference to “175%” in subsection (2) shall be read as a reference to “200%”.

11(1)      Sections 1, 2, 3 and 4 of this Act shall be deemed to have come into force on January 1, 2000.

11(2)      Sections 5 and 8 and paragraphs 6(a) and 10(b) of this Act shall be deemed to have come into force on January 1, 2001.

11(3)      Paragraph 6(b) of this Act shall be deemed to have come into force on January 1, 2002.

11(4)      Sections 7 and 9 and paragraphs 10(a), (c) and (d) of this Act come into force on July 1, 2002.


 

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