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Bill C-28

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	Health Reform Transfer
Purposes	24.6 (1) For the purpose of giving effect to the 2003 First Ministers' Accord on Health Care Renewal and accelerating health care reform in the priority areas of primary health care, home care and catastrophic drug coverage, the Minister may make direct payments to the provinces to
	(a) increase, in the case of primary health care, the number of residents of a province routinely receiving needed care from multi-disciplinary primary health care organizations or teams;
	(b) provide, in the case of home care, first dollar coverage for a basket of services in the home and community for short-term acute home care, including acute community mental health and end-of-life care; and
	(c) ensure, in the case of catastrophic drug coverage, that persons who are residents under provincial law do not suffer undue financial hardship as a result of needed drug therapy.
Payments	(2) The amounts that may be paid under this section are
	(a) $1 billion for the fiscal year beginning on April 1, 2003;
	(b) $1.5 billion for the fiscal year beginning on April 1, 2004;
	(c) $3.5 billion for the fiscal year beginning on April 1, 2005;
	(d) $4.5 billion for the fiscal year beginning on April 1, 2006; and
	(e) $5.5 billion for the fiscal year beginning on April 1, 2007.
Provincial share	(3) The amount that may be paid to a province for each of the fiscal years mentioned in subsection (2) is the amount determined by multiplying the amount set out for that fiscal year by the quotient obtained by dividing
	(a) the population of the province for the fiscal year
	by
	(b) the total of the population of all provinces for the fiscal year.
	Total Equalized Tax Transfer
Total equalized tax transfer	24.7 (1) The total equalized tax transfer applicable to a province for a fiscal year is the aggregate of
	(a) the total amount, as determined by the Minister, for the fiscal year represented by the federal income tax reduction in the province in respect of the Canada Health Transfer and the Canada Social Transfer for the fiscal year, and
	(b) the amount equal to the lesser of
	(i) the equalization payment that would be payable to the province for the fiscal year under Part I, and
	(ii) the amount of equalization that would be paid to the province in respect of the federal income tax reduction in all the provinces in respect of the Canada Health Transfer and the Canada Social Transfer for the fiscal year, if the method of calculation of fiscal equalization payments as set out in Part I, excluding subsection 4(6), were to be applied to the value of the income tax reduction in all the provinces in respect of the Canada Health Transfer and the Canada Social Transfer for the fiscal year, except that
	(A) for the purposes of the calculation under this subparagraph, the relevant revenue bases are to be determined in the prescribed manner, and
	(B) where subsection 4(6) applies in the determination of the fiscal equalization payment to the province for the fiscal year, the amount determined under this subparagraph is to be adjusted in the prescribed manner.
Federal income tax reduction	(2) For the purposes of subsection (1), the amount represented by the federal income tax reduction in a province in respect of the Canada Health Transfer and the Canada Social Transfer for a fiscal year is an amount equal to the aggregate of
	(a) seventy-five per cent of the amount, as determined by the Minister, that would be derived from a tax, computed in accordance with the Income Tax Act,
	(i) on the incomes, other than incomes from businesses, of individuals resident in the province on the last day of the taxation year ending in the fiscal year, within the meaning of the Income Tax Act,
	(ii) on the incomes, other than incomes from businesses, earned in the province in the taxation year ending in the fiscal year by individuals not resident in Canada at any time during the taxation year, within the meaning of the Income Tax Act, and
	(iii) on the incomes from businesses earned in the province in the taxation year ending in the fiscal year by individuals, within the meaning of the Income Tax Act,
	equal to the product obtained by multiplying 13.5/(100-9.143) by the ``tax otherwise payable under this Part'', within the meaning assigned by subsection 120(4) of the Income Tax Act, on those incomes,
	(b) twenty-five per cent of the amount, as determined by the Minister, that would be derived from a tax, computed in accordance with the Income Tax Act,
	(i) on the incomes, other than incomes from businesses, of individuals resident in the province on the last day of the taxation year beginning in the fiscal year, within the meaning of the Income Tax Act,
	(ii) on the incomes, other than incomes from businesses, earned in the province in the taxation year beginning in the fiscal year by individuals not resident in Canada at any time during the taxation year, within the meaning of the Income Tax Act, and
	(iii) on the incomes from businesses earned in the province in the taxation year beginning in the fiscal year by individuals, within the meaning of the Income Tax Act,
	equal to the product obtained by multiplying 13.5/(100-9.143) by the ``tax otherwise payable under this Part'', within the meaning assigned by subsection 120(4) of the Income Tax Act, on those incomes,
	(c) seventy-five per cent of the amount, as determined by the Minister, that would be derived from a tax, computed in accordance with the Income Tax Act, on the income earned in the province by each corporation, other than a non-resident-owned investment corporation within the meaning of that Act or a corporation named in Schedule III to the Financial Administration Act, or a wholly-owned subsidiary within the meaning of that Act of a corporation so named, that is an agent of Her Majesty in right of Canada, that maintained a permanent establishment in the province at any time during its taxation year ending in the calendar year that ends in the fiscal year, at the rate of one per cent of its taxable income earned in the province in that taxation year, and
	(d) twenty-five per cent of the amount, as determined by the Minister, that would be derived from a tax, computed in accordance with the Income Tax Act, on the income earned in the province by each corporation, other than a non-resident-owned investment corporation within the meaning of that Act or a corporation named in Schedule III to the Financial Administration Act, or a wholly-owned subsidiary within the meaning of that Act of a corporation so named, that is an agent of Her Majesty in right of Canada, that maintained a permanent establishment in the province at any time during its taxation year ending in the calendar year that begins in the fiscal year, at the rate of one per cent of its taxable income earned in the province in that taxation year.
	Payments
Payments out of C.R.F.	24.8 Any amount payable under this Part may be paid by the Minister out of the Consolidated Revenue Fund at the times and in the manner that may be prescribed.
	Reduction or Withholding
Definitions	24.9 The following definitions apply in sections 25 to 25.5.
``Minister'' « ministre »	``Minister'' means the Minister of Human Resources Development.
``social assistance'' « assistance sociale »	``social assistance'' means aid in any form to or in respect of a person in need.
Reduction or withholding - Canada Health Transfer and Canada Social Transfer	25. The cash contribution that may be provided to a province under section 24.2 or 24.5 or subsection 24.6(3) is to be reduced or withheld for the purposes of giving effect to
	(a) any order made by the Governor in Council in respect of the province under section 15 or 16 of the Canada Health Act or, in the case of a cash contribution under section 24.5, section 25.3 or 25.4 of this Act; or
	(b) any deduction from the cash contribution under section 20 of the Canada Health Act.
Criteria for eligibility	25.1 (1) In order that a province may qualify for a full cash contribution under sections 24.2 and 24.5 and subsection 24.6(3) for a fiscal year, the laws of the province must not
	(a) require or allow a period of residence in the province or Canada to be set as a condition of eligibility for social assistance or for the receipt or continued receipt of social assistance; or
	(b) make or allow the amount, form or manner of social assistance to be contingent on a period of such residence.
Exception	(2) The criteria in subsection (1) are not contravened by a requirement of a health insurance plan of a province of a minimum period of residence in the province or waiting period that does not contravene paragraph 11(1)(a) of the Canada Health Act.
Referral to Governor in Council	25.2 (1) Subject to subsection (3), if the Minister, after consultation in accordance with subsection (2) with the minister responsible for social assistance in a province, is of the opinion that the province does not or has ceased to comply with section 25.1 and the province has not given an undertaking satisfactory to the Minister to remedy the non-compliance within a period that the Minister considers reasonable, the Minister must refer the matter to the Governor in Council.
Consultation process	(2) Before referring a matter to the Governor in Council under subsection (1) in respect of a province, the Minister must
	(a) send by registered mail to the minister responsible for social assistance in the province a notice of concern with respect to any problem foreseen;
	(b) seek any additional information available from the province with respect to the problem through bilateral discussions, and make a report to the province within ninety days after sending the notice of concern; and
	(c) if requested by the province, meet within a reasonable time to discuss the report.
Exception	(3) The Minister may act under subsection (1) without consultation if he or she is of the opinion that a sufficient time has expired after reasonable efforts to achieve consultation were made and that consultation will not be achieved.
Order reducing or withholding contribution	25.3 (1) If the Governor in Council, on the referral of a matter under section 25.2, is of the opinion that the province does not or has ceased to comply with section 25.1, the Governor in Council may, by order,
	(a) direct that any cash contribution under section 24.2 or 24.5 or subsection 24.6(3) to that province for a fiscal year be reduced, in respect of each non-compliance, by an amount that the Governor in Council considers to be appropriate, having regard to the gravity of the non-compliance; or
	(b) if the Governor in Council considers it appropriate, direct that the whole of any cash contribution under section 24.2 or 24.5 or subsection 24.6(3) to that province for a fiscal year be withheld.
Amending orders	(2) The Governor in Council may, by order, repeal or amend any order made under subsection (1) if the Governor in Council is of the opinion that the repeal or amendment is warranted in the circumstances.
Copy of order	(3) A copy of each order made under this section together with a statement of any findings on which the order was based must be sent without delay by registered mail to the government of the province concerned, and the Minister must have the order and statement laid before each House of Parliament on any of the first fifteen days on which that House is sitting after the order is made.
Commenceme nt of order	(4) An order made under subsection (1) does not come into force earlier than thirty days after a copy of the order has been sent to the government of the province concerned under subsection (3).
Reimposition of reductions or withholdings	25.4 In the case of a continuing failure to comply with section 25.1, any reduction or withholding under section 25.3 of a cash contribution to a province for a fiscal year must be reimposed for each succeeding fiscal year as long as the Minister is satisfied, after consultation with the minister responsible for social assistance in the province, that the non-compliance is continuing.
When reduction or withholding imposed	25.5 Any reduction or withholding under section 25.3 or 25.4 of a cash contribution may be imposed in the fiscal year in which the non-compliance that gave rise to the reduction or withholding occurred or in the following fiscal year.
	Additional Withholding and Deduction
Definition of ``federal payment''	25.6 (1) In this section, ``federal payment'', in respect of a province, means a payment by Canada to the province under this or any other Act of Parliament or any fiscal arrangement or agreement between Canada and the province, whether enacted or entered into before or after the coming into force of this section.
Additional withholding or reduction	(2) If the Governor in Council makes an order under subsection 15(1) of the Canada Health Act or subsection 25.3(1) of this Act directing, in respect of a fiscal year, the withholding of an amount that, but for this section, would exceed the amount that could be withheld under that subsection, the Governor in Council may, in that order, deem any federal payment to the province to be, despite any provision of the Act, arrangement or agreement under which the federal payment is made, a cash contribution to that province for that fiscal year for the purpose of a reduction by, or a withholding of, the excess amount under either of those subsections, under section 16 or 17 of the Canada Health Act or under section 25.4 or 25.5 of this Act.
Additional deduction	(3) If the amount to be deducted under subsection 20(1) or (2) of the Canada Health Act for a fiscal year exceeds the amount from which it is to be deducted, the Governor in Council may, by order, deem any federal payment to the province to be, despite any provision in the Act, arrangement or agreement under which the federal payment is made, a cash contribution to that province for that fiscal year for the purpose of deducting the excess amount under that subsection or section 21 of that Act.

Bill C-28

Health Reform Transfer

Total Equalized Tax Transfer

Payments

Reduction or Withholding

Additional Withholding and Deduction