BILL 47

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 Section 3 of the Income Tax Act, chapter I-2 of the Revised Statutes, 1973, is amended by adding after subsection (2.8) the following:

3(2.9) Where a corporation has a taxation year part of which is in 1999 and part of which is in 2000, 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, 1999, and the second beginning on January 1, 2000;

(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, 1999, and

(ii) tax for the second notional taxation year in accordance with this Act as it is deemed to have been on January 1, 2000; and

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

2 Section 4.1 of the Act is amended

(a) in paragraph (a)

(i) in the portion preceding subparagraph (i) by striking out "6 per cent" and substituting "4.5 per cent";

(ii) in subparagraph (i) by striking out "determined in accordance with paragraph 124(4)(a) of the Federal Act" and substituting "determined in accordance with the Federal Regulations made for the purposes of the definition "taxable income earned in the year in a province" in subsection 124(4) of the Federal Act";

(iii) in subparagraph (ii) by striking out "determined in accordance with paragraph 124(4)(a) of the Federal Act" and substituting "determined in accordance with the Federal Regulations made for the purposes of the definition "taxable income earned in the year in a province" in subsection 124(4) of the Federal Act";

(b) in paragraph (b) by striking out "6 per cent" and substituting "4.5 per cent".

3 This Act shall be deemed to have come into force on January 1, 2000.

EXPLANATORY NOTES

Section 1

Transitional provision. The amendment is consequential on the amendment made in section 2 of this amending Act.

Section 2

(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) 6 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 6 per cent rate is applied in paragraph (a).

Section 3

Commencement provision.