BILL 58 An Act to Amend the Income Tax Act

BILL 58

 

An Act to Amend the Income Tax Act

 

 

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

1 Paragraph 2(3)(q) of the Income Tax Act, chapter I-2 of the Revised Statutes, 1973, is repealed and the following is substituted:

(q) 60 per cent in respect of the 1999 taxation year and subsequent taxation years.

2 Section 2.3 of the Act is amended by adding after subsection (2.2) the following:

2.3(2.3) Notwithstanding subsection (2.1), where approved shares are acquired or irrevocably subscribed and paid for after December 31, 1997, there may be deducted from the tax otherwise payable under this Act for a taxation year by an individual an amount equal to the lesser of

 

(a) seven hundred and fifty dollars, and

(b) fifteen per cent of the total of all amounts each of which is the net cost to the individual of an approved share of a prescribed registered labour-sponsored venture capital corporation

(i) that was acquired or irrevocably subscribed and paid for by the individual in the taxation year or within sixty days after the end of the taxation year,

 

(ii) in respect of which the individual has filed with the individual’s return of income for the taxation year the information return described in paragraph 204.81(6)(c) of the Federal Act, and

(iii) for which no portion of the net cost was deducted under this section for the immediately preceding taxation year.

3 Paragraph 2.5(2)(b) of the Act is repealed and the following is substituted:

(b) was in receipt of the spouse’s allowance for widows and widowers or guaranteed income supplement under the Old Age Security Act (Canada) in the preceding taxation year, and

 

4 Section 3 of the Act is amended by adding after subsection (2.7) the following:

3(2.8) Where a corporation has a taxation year part of which is in 1998 and part of which is in 1999, tax payable for the taxation year shall be calculated as follows:

(a) by dividing the taxation year into two notional taxation years, the first ending on December 31, 1998, and the second beginning on January 1, 1999;

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

(c) by calculating

(i) tax for the first notional taxation year in accordance with this Act as it was on December 31, 1998, and

(ii) tax for the second notional taxation year in accordance with this Act as it is deemed to have been on January 1, 1999; and

 

(d) by adding together the amounts determined under paragraph (c), and the total is the tax payable in respect of that taxation year.

5 Section 4.1 of the Act is amended

(a) in paragraph (a) in the portion preceding subparagraph (i) by striking out "7 per cent" and substituting "6 per cent";

(b) in paragraph (b) by striking out "7 per cent" and substituting "6 per cent".

6(1) Sections 1, 4 and 5 of this Act shall be deemed to have come into force on January 1, 1999.

6(2) Sections 2 and 3 of this Act shall be deemed to have come into force on January 1, 1998.

EXPLANATORY NOTES

Section 1

The existing provision is as follows:

2(3) For the purposes of this section the percentage of the tax payable under the Federal Act to be used for computing the tax payable under this section is as follows:….

(q) 57.5 per cent in respect of the 1999 taxation year and subsequent taxation years.

Section 2

The deduction respecting registered labour-sponsored venture capital corporations is increased for shares acquired or irrevocably subscribed and paid for after December 31, 1997, in accordance with the new subsection 2.3(2.3).

 

Section 3

Widows and widowers receiving the spouse’s allowance under the Old Age Security Act (Canada) are eligible for the seniors’ tax benefit under the Income Tax Act.

 

Section 4

Transitional provision. The amendment is consequential on the amendments made in section 5 of this amending Act.

Section 5

(a) and (b) The existing provision is as follows:

4.1 Notwithstanding subsection 3(1), for a year when a corporation has been allowed a deduction from the tax payable under the provisions of subsection 125(1) of the Federal Act, the corporation shall pay tax equal to the aggregate of

(a) 7 per cent of the amount that is the proportion of the least of the amounts calculated under paragraphs 125(1)(a), (b) and (c) of the Federal Act in respect of the corporation for the taxation year that

 

(i) the amount of that portion of its taxable income earned in the year in New Brunswick, determined in accordance with paragraph 124(4)(a) of the Federal Act, bears to

(ii) the total amount of the portions of its taxable income earned in the year in all provinces, determined in accordance with paragraph 124(4)(a) of the Federal Act, and

 

(b) 17 per cent on an amount calculated by deducting from the total taxable income earned in the year in New Brunswick the amount on which the 7 per cent rate is applied in paragraph (a).

Section 6

Commencement provision.