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The purpose of this enactment is to promote shipbuilding in Canada
and make Canadian shipyards more competitive
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(a) through the establishment of a program whereby a maximum of
87.5% of the money borrowed by a company from financial
institutions to purchase a commercial ship that will be built in a
shipyard located in Canada
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(i) is guaranteed by the federal government in the event of default
in the repayment of the loan,
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(ii) bears a rate of interest comparable to that available for loans
from financial institutions to large and financially strong corpora
tions, and
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(iii) is repayable on terms comparable to those usually granted by
financial institutions to large and financially strong corporations
for the repayment of their loans;
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(b) by amending the provisions of the Income Tax Act and the Income
Tax Regulations to improve the tax treatment of lease financing for
the purchase of a ship built in a Canadian shipyard; and
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(c) by amending the provisions of the Income Tax Act and the Income
Tax Regulations to allow a refundable tax credit for a portion of the
costs relating to the construction or refit of a commercial ship in a
shipyard located in Canada or the conversion of a ship in such a
shipyard
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(i) to the shipowner for the construction of a Canadian ship, or
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(ii) to the shipyard owner for the construction of a foreign ship.
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