Bill C-13

1st Session, 39th Parliament,

55 Elizabeth II, 2006

house of commons of canada

BILL C-13

An Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006

Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

SHORT TITLE

1. This Act may be cited as the Budget Implementation Act, 2006.

PART 1

AMENDMENTS RELATING TO THE GST/HST RATE REDUCTION

Amendments Relating to the GST/HST

Excise Tax Act

2. (1) The description of G in paragraph (a) of the definition “basic tax content” in subsection 123(1) of the Excise Tax Act is replaced by the following:

G      is

(A) 7%, if the amount determined for D is included, or would be included if the tax became payable, in the description of A in subsection 225.2(2) for a reporting period of the selected listed financial institution that ends before July 1, 2006, and

(B) 6%, in any other case,

(2) The description of P in paragraph (b) of the definition “basic tax content” in subsection 123(1) of the Act is replaced by the following:

P      is

(A) 7%, if the amount determined for M is included, or would be included if the tax became payable, in the description of A in subsection 225.2(2) for a reporting period of the selected listed financial institution that ends before July 1, 2006, and

(B) 6%, in any other case,

(3) Subsections (1) and (2) come into force, or are deemed to have come into force, on July 1, 2006.

3. (1) Subsection 165(1) of the Act is replaced by the following:

165. (1) Subject to this Part, every recipient of a taxable supply made in Canada shall pay to Her Majesty in right of Canada tax in respect of the supply calculated at the rate of 6% on the value of the consideration for the supply.

(2) Subsection (1) applies

(a) to any supply (other than a supply deemed under section 191 of the Act to have been made) made on or after July 1, 2006;

(b) for the purposes of calculating tax in respect of any supply (other than a supply by way of sale of real property) made before July 1, 2006, but only in respect of the portion of the tax that

(i) becomes payable on or after July 1, 2006, without having been paid before that day, or

(ii) is paid on or after July 1, 2006, without having become payable;

(c) for the purposes of calculating tax in respect of any supply (other than a supply deemed under Part IX of the Act to have been made) by way of sale of real property made before July 1, 2006, if ownership and possession of the property are transferred on or after July 1, 2006, to the recipient under the agreement for the supply, unless the supply is a supply of a residential complex pursuant to an agreement of purchase and sale, evidenced in writing, entered into on or before May 2, 2006;

(d) to any supply by way of sale of a residential complex, which is a single unit residential complex (as defined in subsection 123(1) of the Act) or a residential condominium unit, deemed under subsection 191(1) of the Act to have been made on or after July 1, 2006, unless the supply is deemed to have been made as a consequence of the builder giving possession of the complex to a person under an agreement, entered into on or before May 2, 2006, for the supply by way of sale of the building or part of it in which the residential unit forming part of the complex is situated;

(e) to any supply by way of sale of a residential condominium unit deemed under subsection 191(2) of the Act to have been made on or after July 1, 2006, unless possession of the unit was given to the particular person referred to in that subsection before July 1, 2006;

(f) to any supply by way of sale of a residential complex deemed under subsection 191(3) of the Act to have been made on or after July 1, 2006, unless the supply is deemed to have been made as a consequence of the builder giving possession of a residential unit in the complex to a person under an agreement for the supply by way of sale of the building or part of it forming part of the complex and

(i) the agreement was entered into on or before May 2, 2006, or

(ii) another agreement was entered into on or before May 2, 2006, by the builder and another person and that other agreement was not terminated before July 1, 2006, and was for the supply by way of sale of the building or part of it forming part of the complex;

(g) to any supply by way of sale of an addition to a residential complex deemed under subsection 191(4) of the Act to have been made on or after July 1, 2006, unless the supply is deemed to have been made as a consequence of the builder giving possession of a residential unit in the addition to a person under an agreement for the supply by way of sale of the building or part of it forming part of the complex and

(i) the agreement was entered into on or before May 2, 2006, or

(ii) another agreement was entered into on or before May 2, 2006, by the builder and another person and that other agreement was not terminated before July 1, 2006, and was for the supply by way of sale of the building or part of it forming part of the addition;

(h) for the purposes of calculating tax on the cost to another person of supplying property or a service to a financial institution under paragraph (c) of the description of A in subsection 225.2(2) of the Act if the reporting period of the financial institution ends on or after July 1, 2006; and

(i) for the purposes of determining or calculating any of the following amounts if none of paragraphs (a) to (h) applies:

(i) tax on or after July 1, 2006,

(ii) tax that is not payable but would have been payable on or after July 1, 2006, in the absence of certain circumstances described in the Act, and

(iii) an amount or a number, at any time on or after July 1, 2006, by or in accordance with an algebraic formula that makes reference to the rate set out in subsection 165(1) of the Act.

4. (1) The description of A in clause 173(1)(d)(vi)(B) of the Act is replaced by the following:

A      is

(I) where

1. the benefit amount is required to be included under paragraph 6(1)(a) or (e) of the Income Tax Act in computing the individual’s income from an office or employment and the last establishment of the employer at which the individual ordinarily worked or to which the individual ordinarily reported in the year in relation to that office or employment is located in a participating prov-ince, or

2. the benefit amount is required under subsection 15(1) of that Act to be included in computing the individual’s income and the individual is resident in a participating prov- ince at the end of the year,

the total of 5% and the tax rate for the participating province, and

(II) in any other case, 5%,

(2) Subsection (1) applies to the 2006 and subsequent taxation years of an individual, except that for the 2006 taxation year, the reference to “5%” in the description of A in clause 173(1)(d)(vi)(B) of the Act shall be read as “5.5%”.

5. (1) Paragraph 174(e) of the French version of the Act is replaced by the following:

(2) Paragraph 174(f) of the English version of the Act is replaced by the following:

(f) the person is deemed to have paid, at the time the allowance is paid, tax in respect of the supply equal to the amount determined by the formula

A × (B/C)

where

A      is the amount of the allowance,

B      is

(i) the total of the rate set out in subsection 165(1) and the tax rate for a participating province if

(A) all or substantially all of the supplies for which the allowance is paid were made in participating provinces, or

(B) the allowance is paid for the use of the motor vehicle in participating provinces, and

(ii) in any other case, the rate set out in subsection 165(1), and

(3) Subsections (1) and (2) apply to any allowance paid by a person on or after July 1, 2006.

6. (1) The description of A in subsection 176(1) of the Act is replaced by the following:

A      is

(a) if the supply is made in a participating province, the total of the rate set out in subsection 165(1) and the tax rate for that province, and

(b) in any other case, the rate set out in subsection 165(1),

(2) Subsection (1) applies to any supply made on or after July 1, 2006.

7. (1) The definition “tax fraction” in subsection 181(1) of the Act is replaced by the following:

“tax fraction” of a coupon value or of the discount or exchange value of a coupon means

(a) where the coupon is accepted in full or partial consideration for a supply made in a participating province, the fraction

A/B

where

A      is the total of the rate set out in subsection 165(1) and the tax rate for that participating province, and

B      is the total of 100% and the percentage determined for A; and

(b) in any other case, the fraction

(2) Subsection (1) applies to any coupon that is accepted on or after July 1, 2006, in full or partial consideration for a supply.

8. (1) The description of A in paragraph 181.1(a) of the French version of the Act is replaced by the following:

(2) The description of A in paragraph 181.1(e) in the English version of the Act is replaced by the following:

A      is

(i) if tax under subsection 165(2) was payable in respect of the supply of the property or service to the particular person, the total of the rate set out in subsection 165(1) and the tax rate of the participating province in which that supply was made, and

(ii) in any other case, the rate set out in subsection 165(1), and

(3) Subsections (1) and (2) apply to any supply of property or a service in respect of which tax became payable on or after July 1, 2006, if the supply is made to a person to whom a registrant pays a rebate in respect of the property or service.

9. (1) The description of B in paragraph 182(1)(a) of the Act is replaced by the following:

B      is

(i) if tax under subsection 165(2) was payable in respect of the supply, the total of 100%, the rate set out in subsection 165(1) and the tax rate for the participating province in which the supply was made, and

(ii) in any other case, the total of 100% and the rate set out in subsection 165(1), and

(2) Subsection (1) applies to an amount that is paid or forfeited on or after July 1, 2006, and to a debt or other obligation that is reduced or extinguished, without payment on account of the debt or obligation, on or after that day.

10. (1) The description of A in paragraph183(4)(a) of the Act is replaced by the following:

A      is

(i) if the supply is made in a participating province, the total of the rate set out in subsection 165(1) and the tax rate for that province, and

(ii) in any other case, the rate set out in subsection 165(1),

(2) The description of A in subparagraph183(5)(b)(i) of the Act is replaced by the following:

A      is

(A) if the property is situated in a participating province at the particular time, the total of the rate set out in subsection 165(1) and the tax rate for that province, and

(B) in any other case, the rate set out in subsection 165(1),

(3) The description of A in subparagraph183(6)(a)(ii) of the Act is replaced by the following:

A      is

(I) the rate set out in subsection 165(1) if

1. the property is situated in a participating province at the partic­ular time, it was seized or repossessed before the day that is three years after the implementation date for that province (as defined in section 348) and tax would not have been payable had the property been purchased in Canada from the person at the time it was seized or repossessed, or

2. the property is situated in a non-participating province at the particular time, and

(II) in any other case, the total of the rate set out in subsection 165(1) and the tax rate for the participating province in which the property is situated at the particular time,

(4) The description of A in paragraph 183(6)(b) of the Act is replaced by the following:

A      is

(i) if the property is situated in a participating province at the particular time, the total of the rate set out in subsection 165(1) and the tax rate for that province, and

(ii) in any other case, the rate set out in subsection 165(1),

(5) Subsections (1) to (4) apply to property that is seized or repossessed by a creditor if the creditor begins, on or after July 1, 2006, to use the property otherwise than in the making of a supply of the property.

11. (1) The description of A in paragraph 184(3)(a) of the Act is replaced by the following:

A      is

(i) if the supply is made in a participating province, the total of the rate set out in subsection 165(1) and the tax rate for that province, and

(ii) in any other case, the rate set out in subsection 165(1),

(2) The description of A in subparagraph 184(4)(b)(i) of the Act is replaced by the following:

A      is

(A) if the property is situated in a participating province at the particular time, the total of the rate set out in subsection 165(1) and the tax rate for that province, and

(B) in any other case, the rate set out in subsection 165(1),

(3) The description of A in subparagraph 184(5)(a)(ii) of the Act is replaced by the following:

A      is

(A) the rate set out in subsection 165(1) if

(I) the property is situated in a participating province at the partic­ular time, it was transferred before the day that is three years after the implementation date for that province (as defined in section 348) and tax would not have been payable had the property been purchased in Canada from the person at the time it was transferred, or

(II) the property is situated in a non-participating province at the particular time, and

(B) in any other case, the total of the rate set out in subsection 165(1) and the tax rate for the participating province in which the property is situated at the particular time,

(4) The description of A in paragraph 184(5)(b) of the Act is replaced by the following:

A      is

(i) if the property is situated in a participating province at the particular time, the total of the rate set out in subsection 165(1) and the tax rate for that province, and

(ii) in any other case, the rate set out in subsection 165(1),

(5) Subsections (1) to (4) apply to property that is transferred to an insurer if the insurer begins, on or after July 1, 2006, to use the property otherwise than in the making of a supply of the property.

12. (1) The description of A in clause 184.1(2)(d)(i)(A) of the Act is replaced by the following:

A      is

(I) if the supply deemed under subparagraph (a)(i) to be made by the surety is made in a participating province, the total of the rate set out in subsection 165(1) and the tax rate for the participating province, and

(II) in any other case, the rate set out in subsection 165(1), and

(2) Subsection (1) applies to a person acting as a surety under a performance bond in respect of a contract for a particular taxable supply of construction services if a contract payment (within the meaning of paragraph 184.1(2)(a) of the Act) becomes due or is paid without having become due to the person on or after July 1, 2006, by reason of the person carrying on the particular construction.

(3) Despite subsection (2) and for the purpose of determining the total amount of all input tax credits in respect of direct inputs (within the meaning of paragraph 184.1(2)(c) of the Act), where a surety is carrying on a particular construction of real property situated in Canada as full or partial satisfaction of the surety’s obligation under a bond, a contract payment (within the meaning of paragraph 184.1(2)(a) of the Act), other than a contract payment that is not in respect of the particular construction, becomes due or is paid without having become due before July 1, 2006, and another contract payment (within the meaning of paragraph 184.1(2)(a) of the Act), other than a contract payment that is not in respect of the particular construction, becomes due on or after that day, without having been paid before that day, or is paid without having become due on or after that day, clause 184.1(2)(d)(i)(A) of the Act shall be read as follows:

(A) the amount determined by the formula

(A × B) + (C × D)

where

A      is

(I) if the supply deemed under subparagraph (a)(i) to be made by the surety is made in a participating province, the total of 7% and the rate of tax for that participating province, and

(II) in any other case, 7%,

B      is the total of all contract payments (other than contract payments that are not in respect of the particular construction) that become due before July 1, 2006, or are paid, without having become due, to the surety before that day,

C      is

(I) if the supply deemed under subparagraph (a)(i) to be made by the surety is made in a participating province, the total of 6% and the rate of tax for the participating province, and

(II) in any other case, 6%, and

D      is the total of all contract payments (other than contract payments that are not in respect of the particular construction) that become due on or after July 1, 2006, without having been paid before that day, or are paid, without having become due, to the surety on or after that day

13. (1) The description of B in paragraph 187(c) of the Act is replaced by the following:

B      is

(i) if that supply is made in a participating province, the total of 100%, the rate set out in subsection 165(1) and the tax rate for that province, and

(ii) in any other case, the total of 100% and the rate set out in subsection 165(1),

(2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2006.

14. (1) Subsection 188(1) of the Act is replaced by the following:

188. (1) If a commercial activity of a registrant (other than a registrant to whom subsection (5) applies) consists of taking bets or conducting games of chance and, in the course of that activity, the registrant pays an amount of money at any time in a reporting period as a prize or winnings to a bettor or a person playing or participating in the games, for the purpose of determining an input tax credit of the registrant, the registrant shall be deemed to have received at that time a taxable supply of a service for use exclusively in the activity and to have paid, at that time, tax in respect of the supply equal to the amount determined by the formula

(2) Subsection (1) is deemed to have come into force on April 1, 1997.

15. (1) The portion of subsection 193(1) of the Act before paragraph (a) is replaced by the following:

193. (1) Subject to subsection (2.1), if at a particular time a registrant makes a particular taxable supply of real property by way of sale, other than

(2) The portion of subsection 193(2) of the Act before paragraph (a) is replaced by the following:

(2) Subject to subsection (2.1), if at a particular time a registrant that is a public sector body (other than a financial institution) makes a particular taxable supply of real property by way of sale (other than a supply that is deemed under subsection 200(2) or 206(5) to have been made) and, immediately before the time tax becomes payable in respect of the particular taxable supply, the property was not used by the registrant primarily in commercial activities of the registrant, except where subsection (1) applies, the registrant may, despite section 170 and Subdivision d, claim an input tax credit for the reporting period in which tax in respect of the particular taxable supply became payable or is deemed to have been collected, as the case may be, equal to the lesser of

(3) Section 193 of the Act is amended by adding the following after subsection (2):

(4) Subsections (1) to (3) apply to any supply in respect of which tax becomes payable or would have become payable, in the absence of section 167 of the Act, on or after July 1, 2006.

16. (1) The description of A in paragraph 194(a) of the Act is replaced by the following:

A      is

(i) if tax under subsection 165(2) was payable in respect of the supply, the total of the rate set out in subsection 165(1) and the tax rate for the participating province in which the supply was made, and

(ii) in any other case, the rate set out in subsection 165(1),

(2) Subsection (1) applies to any supply of real property in respect of which ownership and possession under the agreement for the supply are transferred on or after July 1, 2006.

17. (1) The description of A in paragraph 202(4)(b) of the Act is replaced by the following:

A      is

(i) in the case of an acquisition or importation in respect of which tax is payable only under subsection 165(1) or section 212 or 218, as the case may require, and in the case of an acquisition deemed to have been made under subsection (5) of a vehicle or aircraft in respect of which no tax under subsection 165(2) was payable by the registrant, the amount determined by the formula

(ii) in the case of the bringing into a participating province of the vehicle or aircraft from a non-participating prov­ince and in the case of an acquisition in respect of which tax under section 220.06 is payable, the amount determined by the formula

(iii) in any other case, the amount determined by the formula

(2) Subsection (1) applies to any taxation year of a registrant that ends on or after July 1, 2006, except that, for the taxation year of the registrant that includes that day, the description of A in paragraph 202(4)(b) of the Act, as amended by subsection (1), shall be read as follows:

A      is

(i) in the case of an acquisition or importation in respect of which tax is payable only under subsection 165(1) or section 212 or 218, as the case may require, and in the case of an acquisition deemed to have been made under subsection (5) of a vehicle or aircraft in respect of which no tax under subsection 165(2) was payable by the registrant, 6.5/106.5,

(ii) in the case of the bringing into a participating province of the vehicle or aircraft from a non-participating prov­ince and in the case of an acquisition in respect of which tax under section 220.06 is payable, 8/108, and

(iii) in any other case, 14.5/114.5, and

18. (1) Paragraphs 211(4)(a) and (b) of the Act are replaced by the following:

(a) to have made, immediately before that day, a taxable supply of the property by way of sale and to have collected, on that day, tax in respect of the supply equal to the basic tax content of the property on that day; and

(b) to have received, on that day, a taxable supply of the property by way of sale and to have paid, on that day, tax in respect of the supply equal to the basic tax content of the property on that day.

(2) Subsection (1) applies in respect of an election that is revoked and ceases to have effect on or after May 2, 2006.

19. (1) Section 212 of the Act is replaced by the following:

212. Subject to this Part, every person who is liable under the Customs Act to pay duty on imported goods, or who would be so liable if the goods were subject to duty, shall pay to Her Majesty in right of Canada tax on the goods calculated at the rate of 6% on the value of the goods.

(2) Subsection (1) applies to goods imported into Canada, or released (as defined in the Customs Act), on or after July 1, 2006.

20. (1) Section 218 of the Act is replaced by the following:

218. Subject to this Part, every recipient of an imported taxable supply shall pay to Her Majesty in right of Canada tax calculated at the rate of 6% on the value of the consideration for the imported taxable supply.

(2) Subsection (1) applies

(a) to any imported taxable supply made on or after July 1, 2006;

(b) for the purposes of calculating tax in respect of any imported taxable supply made before July 1, 2006, but only in respect of consideration that becomes due on or after that day without having been paid before that day or that is paid, without having become due, on or after July 1, 2006; and

(c) if neither paragraph (a) nor (b) applies, for the purposes of determining or calculating tax that is not payable but would have been payable on or after July 1, 2006, in the absence of certain circumstances described in the Act.

21. (1) The description of E in subsection 225.2(2) of the Act is replaced by the following:

E      is the rate set out in subsection 165(1);

(2) Subsection (1) applies for the purposes of determining the net tax of a selected listed financial institution for a reporting period of the selected listed financial institution that ends on or after July 1, 2006.

22. (1) The description of A in subparagraph 233(2)(a)(i) of the Act is replaced by the following:

A      is the total of 100%, the rate set out in subsection 165(1) and the tax rate for that province, and

(2) Subparagraph 233(2)(a)(ii) of the Act is replaced by the following:

(ii) the total consideration for all supplies (in this subparagraph referred to as the “non-participating provinces’ supplies”) that are specified supplies to which subsection 165(2) did not apply by the amount determined by the formula

where

A      is the total of 100% and the rate set out in subsection 165(1),

B      is

(A) if the particular person has made an election under this subsection that is in effect for that fiscal year, the part of the dividend that is in respect of the non-participating province’s supplies, and

(B) in any other case, the amount determined by the formula

where

C      is the portion of the total of the values determined, in computing the specified amount in respect of the dividend, for B and D in subsection (1) that is attributable to supplies made in non-participating provinces,

D      is the total referred to in the description of C, and

E      is the specified amount in respect of the dividend; and

(3) Subsections (1) and (2) apply in respect of a patronage dividend that is paid on or after July 1, 2006.

23. (1) The description of A in subsection 253(1) of the Act is replaced by the following:

A      is

(a) where the tax paid by the individual includes only tax imposed under subsection 165(1) or section 212 or 218, the amount determined by the formula

(b) where the tax paid by the individual does not include any tax imposed under any of those provisions, the amount determined by the formula

(c) in any other case, the amount determined by the formula

(2) Subparagraph 253(2)(a)(ii) of the Act is replaced by the following:

(ii) paid tax in respect of the instrument equal to the amount determined by the formula

(3) Subparagraph 253(2)(c)(ii) of the Act is replaced by the following:

(ii) paid, in that reporting period, tax in respect of that acquisition equal to the amount determined by the formula

B      is

(A) in the case of property imported by the individual, the amount (not exceeding the total of the value of the property determined under section 215 and the tax calculated on it) in respect of the acquisition and importation of the property by the individual that was deductible under the Income Tax Act in computing the individual’s income from the partnership for that calendar year, and

(B) in any other case, the amount in respect of the acquisition of the property or service by the individual that was so deductible in computing that income.

(4) Subsection (1) applies to any rebate for a calendar year after 2005, except that for the 2006 calendar year the description of A in subsection 253(1) of the Act, as amended by subsection (1), shall be read as follows:

A      is

(a) where the tax paid by the individual includes only tax imposed under subsection 165(1) or section 212 or 218, 6.5/106.5,

(b) where the tax paid by the individual does not include any tax imposed under any of those provisions, 8/108, and

(c) in any other case, 14.5/114.5,

(5) Subsections (2) and (3) are deemed to have come into force on April 1, 1997, except that for the purpose of determining a rebate under subsection 253(2) of the Act, as amended by subsections (2) and (3), for the 2006 calendar year, the expression “the rate set out in subsection 165(1)” shall be read as “6.5%”.

24. (1) Paragraph 254(2)(h) of the Act is replaced by the following:

(h) where the total consideration is not more than $350,000, an amount equal to the lesser of $7,560 and 36% of the total tax paid by the particular individual, and

(2) The description of A in paragraph 254(2)(i) of the Act is replaced by the following:

A      is the lesser of $7,560 and 36% of the total tax paid by the particular individual, and

(3) Subsections (1) and (2) apply to any rebate in respect of a supply by way of sale of a residential complex in respect of which ownership is transferred on or after July 1, 2006, to the particular individual referred to in section 254 of the Act, unless the tax payable under subsection 165(1) of the Act in respect of the supply of the complex applied at the rate of 7%.

25. (1) Paragraph 254.1(2)(c) of the Act is replaced by the following:

(c) the fair market value of the complex, at the time possession of the complex is given to the particular individual under the agreement, is less than $477,000,

(2) Paragraphs 254.1(2)(h) and (i) of the Act are replaced by the following:

(h) if the fair market value referred to in paragraph (c) is not more than $371,000, an amount equal to the lesser of $7,560 and 2.04% of the total (in this subsection referred to as the “total consideration”) of all amounts, each of which is the consideration payable by the particular individual to the builder for the supply by way of sale to the particular individual of the building or part of a building referred to in paragraph (a) or of any other structure that forms part of the complex, other than consideration that can reasonably be regarded as rent for the supplies of the land attributable to the complex or as consideration for the supply of an option to purchase that land, and

(i) if the fair market value referred to in paragraph (c) is more than $371,000 but less than $477,000, the amount determined by the formula

A × [($477,000 - B)/$106,000]

where

A      is the lesser of $7,560 and 2.04% of the total consideration, and

B      is the fair market value referred to in paragraph (c).

(3) Paragraph 254.1(2.1)(a) of the Act is replaced by the following:

(a) an individual is entitled to a rebate under subsection (2), or to be paid or credited the amount of such a rebate under subsection (4), in respect of a residential complex situated in Nova Scotia or would be so entitled if the fair market value of the complex, at the time possession of the complex is given to the individual under the agreement for the supply of the complex to the individual, were less than $477,000, and

(4) Subsections (1) to (3) apply in respect of a supply, to a particular individual referred to in section 254.1 of the Act, of a building or part of it in which a residential unit forming part of a residential complex is situated if possession of the unit is given to the particular individual on or after July 1, 2006, unless the builder is deemed under section 191 of the Act to have paid tax under subsection 165(1) of the Act calculated at the rate of 7% in respect of the supply referred to in paragraph 254.1(2)(d) of the Act.

26. (1) Paragraph 255(2)(d) of the Act is replaced by the following:

(d) the total (in this subsection referred to as the “total consideration”) of all amounts, each of which is the consideration payable for the supply to the particular individual of the share or an interest in the corporation, complex or unit, is less than $477,000,

(2) Paragraphs 255(2)(g) and (h) of the Act are replaced by the following:

(g) if the total consideration is not more than $371,000, an amount equal to the lesser of $7,560 and 2.04% of the total consideration, and

(h) if the total consideration is more than $371,000 but less than $477,000, the amount determined by the formula

A × [($477,000 - B)/$106,000]

where

A      is the lesser of $7,560 and 2.04% of the total consideration, and

B      is the total consideration.

(3) Paragraph 255(2.1)(c) of the Act is replaced by the following:

(c) the individual is entitled to a rebate under subsection (2) in respect of the share or would be so entitled if the total (in this subsection referred to as the “total consideration”) of all amounts, each of which is the consideration payable for the supply to the individual of the share or an interest in the corporation, complex or unit, were less than $477,000,

(4) Subsections (1) to (3) apply for the purpose of determining a rebate in respect of a supply, by a cooperative housing corporation to an individual, of a share of the capital stock of the corporation if the individual is acquiring the share for the purposes of using a residential unit in a residential complex as the primary place of residence of the individual, or a relation (as defined in subsection 255(1) of the Act) of the individ­ual, and the rebate application is filed on or after July 1, 2006, unless the corporation paid tax under subsection 165(1) of the Act in respect of the supply of the complex to the corporation calculated at the rate of 7%.

27. (1) The portion of subsection 256(2) of the Act after subparagraph (d)(ii) is replaced by the following:

the Minister shall, subject to subsection (3), pay a rebate to the particular individual equal to the amount determined by the formula

where

A       is the lesser of 36% of the total tax paid by the particular individual before an application for the rebate is filed with the Minister in accordance with subsection (3), and

B      is the greater of $350,000 and the fair market value of the complex referred to in paragraph (b).

(2) Subsection (1) applies to any rebate in respect of a residential complex for which an application is filed with the Minister of National Revenue on or after July 1, 2006.

28. (1) The portion of the description of A in subsection 256.2(3) of the Act before the formula is replaced by the following:

A      is the lesser of $7,560 and the amount determined by the formula

(2) The portion of the description of A in subsection 256.2(4) of the Act before the formula is replaced by the following:

A      is the lesser of $7,560 and the amount determined by the formula

(3) The portion of the description of A in subsection 256.2(5) of the Act before the formula is replaced by the following:

A      is the lesser of $7,560 and the amount determined by the formula

(4) Subsection (1) applies to

(a) a taxable supply to a recipient from another person of a residential complex or an interest in a residential complex, in respect of which ownership and possession under the agreement for the supply are transferred on or after July 1, 2006, unless the agreement for the supply is evidenced in writing and was entered into on or before May 2, 2006; and

(b) a deemed purchase (within the meaning of subparagraph 256.2(3)(a)(ii) of the Act) by a builder if the tax in respect of the deemed purchase of a complex or an addition to a complex is deemed to have been paid on or after July 1, 2006.

(5) Subsection (2) applies to a supply of a building or part of it forming part of a residential complex and a supply of land, described in subparagraphs 256.2(4)(a)(i) and (ii) of the Act, that result in a person being deemed under section 191 of the Act to have made and received a taxable supply by way of sale of the complex or of an addition to it on or after July 1, 2006, unless the supply is deemed to have been made as a consequence of the builder giving possession of a residential unit in the complex or the addition to a person under an agreement for the supply by way of sale of the building or part of it forming part of the complex or the addition and

(a) the agreement was entered into on or before May 2, 2006; or

(b) another agreement was entered into on or before May 2, 2006, by the builder and another person and that other agreement was not terminated before July 1, 2006, and was for the supply by way of sale of the building or part of it forming part of

(i) in the case of a deemed supply of a complex, the complex, or

(ii) in the case of a deemed supply of an addition, the addition.

(6) Subsection (3) applies to

(a) a taxable supply by way of sale to a recipient from another person of a residential complex, or an interest in a residential complex, in respect of which ownership and possession under the agreement for the supply are transferred on or after July 1, 2006, unless the agreement is evidenced in writing and was entered into on or before May 2, 2006; and

(b) a deemed purchase (within the meaning of subparagraph 256.2(5)(a)(ii) of the Act) by a builder if the tax in respect of the deemed purchase of a complex or an addition to a complex is deemed to have been paid on or after July 1, 2006.

29. (1) The Act is amended by adding the following after section 256.2:

(2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2006.

30. (1) The portion of subsection 257(1) of the Act before paragraph (a) is replaced by the following:

257. (1) If a person who is not a registrant makes a particular taxable supply of real property by way of sale, the Minister shall, subject to subsections (1.1) and (2), pay a rebate to the person equal to the lesser of

(2) Section 257 of the Act is amended by adding the following after subsection (1):

(3) Subsections (1) and (2) apply to a supply in respect of which tax becomes payable or would have become payable, in the absence of section 167 of the Act, on or after July 1, 2006.

31. (1) Subparagraph (a)(ii) of the definition “non-creditable tax charged” in subsection 259(1) of the Act is replaced by the following:

(ii) tax deemed under subsection 129(6), 129.1(4), 171(3) or 183(4) or section 191 to have been collected during the period by the person in respect of the property or service,

(2) Subsection (1) applies to tax deemed to have been collected on or after May 2, 2006.

32. (1) The Act is amended by adding the following after section 274:

(2) Section 274.1 of the Act, as enacted by subsection (1), applies to any agreement varied, altered, terminated or entered into on or after May 2, 2006.

(3) Section 274.2 of the Act, as enacted by subsection (1), applies to any transaction made on or after May 2, 2006.

Related Amendments

Air Travellers Security Charge Act

33. (1) The portion of paragraph 12(1)(a) of the Air Travellers Security Charge Act before subparagraph (i) is replaced by the following:

(a) $4.67 for each chargeable emplanement included in the service, to a maximum of $9.34, if

(2) The portion of paragraph 12(1)(b) of the Act before subparagraph (i) is replaced by the following:

(b) $4.95 for each chargeable emplanement included in the service, to a maximum of $9.90, if

(3) The portion of paragraph 12(1)(d) of the Act before subparagraph (i) is replaced by the following:

(d) $8.42 for each chargeable emplanement included in the service, to a maximum of $16.84, if

(4) The portion of paragraph 12(2)(b) of the Act before subparagraph (i) is replaced by the following:

(b) $8.42 for each chargeable emplanement by an individual on an aircraft used to transport the individual to a destination outside Canada but within the continental zone, to a maximum of $16.84, if

(5) Subsections (1) to (4) apply in respect of any air transportation service that includes a chargeable emplanement on or after July 1, 2006 and for which any consideration is paid or becomes payable on or after that day.

Amendments Relating to the Taxation of Tobacco Products

Excise Act, 2001

34. (1) The Excise Act, 2001 is amended by adding the following after section 58:

(2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2006.

35. (1) Subparagraphs 216(2)(a)(i) to (iv) of the Act are replaced by the following:

(i) $0.165 multiplied by the number of cigarettes to which the offence relates,

(ii) $0.121 multiplied by the number of tobacco sticks to which the offence relates,

(iii) $0.112 multiplied by the number of grams of manufactured tobacco other than cigarettes or tobacco sticks to which the offence relates, and

(iv) $0.284 multiplied by the number of cigars to which the offence relates, and

(2) Subparagraphs 216(3)(a)(i) to (iv) of the Act are replaced by the following:

(i) $0.246 multiplied by the number of cigarettes to which the offence relates,

(ii) $0.182 multiplied by the number of tobacco sticks to which the offence relates,

(iii) $0.168 multiplied by the number of grams of manufactured tobacco other than cigarettes or tobacco sticks to which the offence relates, and

(iv) $0.66 multiplied by the number of cigars to which the offence relates, and

(3) Subsections (1) and (2) come into force on the later of July 1, 2006 and the day on which this Act is assented to.

36. (1) Paragraphs 240(a) to (c) of the Act are replaced by the following:

(a) $0.355548 per cigarette that was removed in contravention of that subsection,

(b) $0.205 per tobacco stick that was removed in contravention of that subsection, and

(c) $203.804 per kilogram of manufactured tobacco, other than cigarettes and tobacco sticks, that was removed in contravention of that subsection.

(2) Subsection (1) comes into force on the later of July 1, 2006 and the day on which this Act is assented to.

37. (1) Paragraph 1(b) of Schedule 1 to the Act is replaced by the following:

(b) $0.41025 for each five cigarettes or fraction of five cigarettes contained in any package, in any other case.

(2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2006.

38. (1) Paragraph 2(b) of Schedule 1 to the Act is replaced by the following:

(b) $0.0605 per stick, in any other case.

(2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2006.

39. (1) Paragraph 3(b) of Schedule 1 to the Act is replaced by the following:

(b) $55.90 per kilogram, in any other case.

(2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2006.

40. (1) Section 4 of Schedule 1 to the Act is replaced by the following:

4. Cigars: $16.60 per 1,000 cigars.

(2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2006.

41. (1) Paragraph (a) of Schedule 2 to the Act is replaced by the following:

(a) $0.066 per cigar, and

(2) The portion of paragraph (b) of Schedule 2 to the Act before subparagraph (i) is replaced by the following:

(b) 66%, computed on

(3) Subsections (1) and (2) come into force, or are deemed to have come into force, on July 1, 2006.

Application

42. For the purposes of applying the provisions of the Customs Act that provide for the payment of, or the liability to pay, interest in respect of any amount, the amount shall be determined and interest shall be computed on it as though sections 37 to 41 had come into force on July 1, 2006.

Amendments Relating to Alcohol Products

Excise Act

43. (1) Sections 1 and 2 of Part II of the schedule to the Excise Act are replaced by the following:

1. On all beer or malt liquor containing more than 2.5% absolute ethyl alcohol by volume, $31.22 per hectolitre.

2. On all beer or malt liquor containing more than 1.2% absolute ethyl alcohol by volume but not more than 2.5% absolute ethyl alcohol by volume, $15.61 per hectolitre.

(2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2006.

Excise Act, 2001

44. (1) Subparagraphs 217(2)(a)(i) and (ii) of the Excise Act, 2001 are replaced by the following:

(i) $11.696 multiplied by the number of litres of absolute ethyl alcohol in the spirits to which the offence relates,

(ii) $0.62 multiplied by the number of litres of wine to which the offence relates, and

(2) Subparagraphs 217(3)(a)(i) and (ii) of the Act are replaced by the following:

(i) $23.392 multiplied by the number of litres of absolute ethyl alcohol in the spirits to which the offence relates,

(ii) $1.24 multiplied by the number of litres of wine to which the offence relates, and

(3) Subsections (1) and (2) come into force on the later of July 1, 2006 and the day on which this Act is assented to.

45. (1) Subparagraphs 218(2)(a)(i) and (ii) of the Act are replaced by the following:

(i) $23.392 multiplied by the number of litres of absolute ethyl alcohol in the spirits to which the offence relates, and

(ii) $1.24 multiplied by the number of litres of wine to which the offence relates, and

(2) Subparagraphs 218(3)(a)(i) and (ii) of the Act are replaced by the following:

(i) $35.088 multiplied by the number of litres of absolute ethyl alcohol in the spirits to which the offence relates, and

(ii) $1.86 multiplied by the number of litres of wine to which the offence relates, and

(3) Subsections (1) and (2) come into force on the later of July 1, 2006 and the day on which this Act is assented to.

46. (1) Section 242 of the Act is replaced by the following:

242. Every person who contravenes section 72 is liable to a penalty equal to $1.24 per litre of wine to which the contravention relates.

(2) Subsection (1) comes into force on the later of July 1, 2006 and the day on which this Act is assented to.

47. (1) Paragraph 243(b) of the Act is replaced by the following:

(b) if the contravention relates to wine, $0.62 per litre of that wine.

(2) Subsection (1) comes into force on the later of July 1, 2006 and the day on which this Act is assented to.

48. (1) Sections 1 and 2 of Schedule 4 to the Act are replaced by the following:

1. Spirits: $11.696 per litre of absolute ethyl alcohol contained in the spirits.

2. Spirits containing not more than 7% absolute ethyl alcohol by volume: $0.295 per litre of spirits.

(2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2006.

49. (1) Paragraphs (b) and (c) of Schedule 6 to the Act are replaced by the following:

(b) in the case of wine that contains more than 1.2% of absolute ethyl alcohol by volume but not more than 7% of absolute ethyl alcohol by volume, $0.295 per litre; and

(c) in the case of wine that contains more than 7% of absolute ethyl alcohol by volume, $0.62 per litre.

(2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2006.

Application

50. For the purposes of applying the provisions of the Customs Act and the Excise Act that provide for the payment of, or the liability to pay, interest in respect of any amount, the amount shall be determined and interest shall be computed on it as though sections 43, 48 and 49 had come into force on July 1, 2006.

PART 2

AMENDMENTS TO THE INCOME TAX ACT

51. (1) The portion of paragraph 38(a.1) of the Income Tax Act before subparagraph (ii) is replaced by the following:

(a.1) a taxpayer’s taxable capital gain for a taxation year from the disposition of a property is equal to zero if

(i) the disposition is the making of a gift to a qualified donee (other than a private foundation) of a share, debt obligation or right listed on a prescribed stock exchange, a share of the capital stock of a mutual fund corporation, a unit of a mutual fund trust, an interest in a related segregated fund trust (within the meaning assigned by paragraph 138.1(1)(a)) or a prescribed debt obligation, or

(2) The portion of paragraph 38(a.2) of the Act before subparagraph (i) is replaced by the following:

(a.2) a taxpayer’s taxable capital gain for a taxation year from the disposition of a property is equal to zero if

(3) Subsections (1) and (2) apply in respect of gifts of property made after May 1, 2006.

52. (1) Clause 53(1)(e)(i)(A) of the Act is replaced by the following:

(A) paragraphs 38(a.1) and (a.2) and the fractions set out in the formula in paragraph 14(1)(b) and in subsection 14(5), paragraph 38(a) and subsection 41(1),

(2) Subsection (1) applies after May 1, 2006.

53. (1) Clauses (ii)(F) to (H) of the description of A in paragraph 64(a) of the Act are replaced by the following:

(F) where the taxpayer has an impairment in physical or mental functions, for the cost of note-taking services and to a person engaged in the business of providing such services, if the taxpayer has been certified in writing by a medical practitioner to be a person who, because of that impairment, requires such services,

(G) where the taxpayer has an impairment in physical functions, for the cost of voice recognition software, if the taxpayer has been certified in writing by a medical practitioner to be a person who, because of that impairment, requires that software,

(H) where the taxpayer has a learning disability or an impairment in mental functions, for the cost of tutoring services that are rendered to, and supplementary to the primary education of, the taxpayer and to a person ordinarily engaged in the business of providing such services to individuals who are not related to the person, if the taxpayer has been certified in writing by a medical practitioner to be a person who, because of that disability or impairment, requires those services,

(2) Subparagraph (ii) of the description of A in paragraph 64(a) of the Act is amended by striking out the word “and” at the end of clause (I) and by adding the following after clause (J):

(3) Subsections (1) and (2) apply to the 2005 and subsequent taxation years.

54. (1) Subsection 67.1(1) of the Act is replaced by the following:

67.1 (1) For the purposes of this Act, other than sections 62, 63, 118.01 and 118.2, an amount paid or payable in respect of the human consumption of food or beverages or the enjoyment of entertainment is deemed to be 50% of the lesser of

(a) the amount actually paid or payable in respect thereof, and

(b) an amount in respect thereof that would be reasonable in the circumstances.

(2) Subsection (1) applies to the 2005 and subsequent taxation years.

55. (1) Subsection 87(2) of the Act is amended by adding the following before paragraph (t):

(2) Subsection (1) applies after 2005.

56. (1) The portion of paragraph 110(1)(d.01) of the Act before subparagraph (i) is replaced by the following:

(d.01) subject to subsection (2.1), where the taxpayer disposes of a security acquired in the year by the taxpayer under an agreement referred to in subsection 7(1) by making a gift of the security to a qualified donee (other than a private foundation), an amount in respect of the disposition of the security equal to 1/2 of the lesser of the benefit deemed by paragraph 7(1)(a) to have been received by the taxpayer in the year in respect of the acquisition of the security and the amount that would have been that benefit had the value of the security at the time of its acquisition by the taxpayer been equal to the value of the security at the time of the disposition, if

(2) Subsection (1) applies to gifts made after May 1, 2006.

57. (1) Paragraph 111(1)(a) of the Act is replaced by the following:

(a) non-capital losses for the 20 taxation years immediately preceding and the 3 taxation years immediately following the year;

(2) Paragraphs 111(1)(c) and (d) of the Act are replaced by the following:

(c) restricted farm losses for the 20 taxation years immediately preceding and the 3 taxation years immediately following the year, but no amount is deductible for the year in respect of restricted farm losses except to the extent of the taxpayer’s incomes for the year from all farming businesses carried on by the taxpayer;

(d) farm losses for the 20 taxation years immediately preceding and the 3 taxation years immediately following the year; and

(3) The portion of the definition “non-capital loss” in subsection 111(8) of the Act before the description of F is replaced by the following:

“non-capital loss” of a taxpayer for a taxation year means, at any time, the amount determined by the formula

(A + B) - (D + D.1 + D.2)

where

A      is the amount determined by the formula

E - F

where

E      is the total of all amounts each of which is

(a) the taxpayer’s loss for the year from an office, employment, business or property,

(b) an amount deducted under paragraph (1)(b) or section 110.6, or deductible under any of paragraphs 110(1)(d) to (d.3), (f), (g), (j) and (k), section 112 and subsections 113(1) and 138(6), in computing the taxpayer’s taxable income for the year, or

(c) if that time is before the taxpayer’s eleventh following taxation year, the taxpayer’s allowable business investment loss for the year, and

(4) Subsections (1) to (3) apply in respect of losses that arise in the 2006 and subsequent taxation years.

58. (1) Subsection 117(2) of the Act is replaced by the following:

(2) The tax payable under this Part by an individual on the individual’s taxable income or taxable income earned in Canada, as the case may be (in this subdivision referred to as the “amount taxable”) for the 2005 taxation year is

(a) 15% of the amount taxable, if the amount taxable is equal to or less than $35,595;

(b) $5,339 plus 22% of the amount by which the amount taxable exceeds $35,595, if the amount taxable is greater than $35,595 and is equal to or less than $71,190;

(c) $13,170 plus 26% of the amount by which the amount taxable exceeds $71,190, if the amount taxable is greater than $71,190 and is equal to or less than $115,739; and

(d) $24,753 plus 29% of the amount by which the amount taxable exceeds $115,739, if the amount taxable is greater than $115,739.

(2) Subsection 117(2) of the Act, as enacted by subsection (1), is replaced by the following:

(2) The tax payable under this Part by an individual on the individual’s taxable income or taxable income earned in Canada, as the case may be (in this subdivision referred to as the “amount taxable”) for the 2006 taxation year is

(a) 15.25% of the amount taxable, if the amount taxable is equal to or less than $36,378;

(b) $5,548 plus 22% of the amount by which the amount taxable exceeds $36,378, if the amount taxable is greater than $36,378 and is equal to or less than $72,756;

(c) $13,551 plus 26% of the amount by which the amount taxable exceeds $72,756 if the amount taxable is greater than $72,756 and is equal to or less than $118,285; and

(d) $25,388 plus 29% of the amount by which the amount taxable exceeds $118,285, if the amount taxable is greater than $118,285.

(3) Subsection 117(2) of the Act, as enacted by subsection (2), is replaced by the following:

(2) The tax payable under this Part by an individual on the individual’s taxable income or taxable income earned in Canada, as the case may be (in this subdivision referred to as the “amount taxable”) for a taxation year is

(a) 15.5% of the amount taxable, if the amount taxable is equal to or less than the amount determined for the taxation year in respect of $36,378;

(b) if the amount taxable is greater than the amount determined for the year in respect of $36,378 and is equal to or less than the amount determined for the year in respect of $72,756, the amount determined in respect of the taxation year under paragraph (a) plus 22% of the amount by which the amount taxable exceeds the amount determined in respect of $36,378 for the year;

(c) if the amount taxable is greater than the amount determined for the year in respect of $72,756, but is equal to or less than the amount determined for the year in respect of $118,825, the total of the amounts determined in respect of the taxation year under paragraphs (a) and (b) plus 26% of the amount by which the amount taxable exceeds the amount determined in respect of $72,756; and

(d) if the amount taxable is greater than the amount that would be determined for the year in respect of $118,825, the total of the amounts determined in respect of the taxation year under paragraphs (a), (b) and (c) plus 29% of the amount by which the amount taxable exceeds the amount determined in respect of $118,825.

(4) Subsection (1) applies to the 2005 taxation year.

(5) Subsection (2) applies to the 2006 taxation year.

(6) Subsection (3) applies to the 2007 and subsequent taxation years.

59. (1) The portion of subsection 117.1(1) of the Act before paragraph (a) is replaced by the following:

117.1 (1) Each of the amounts expressed in dollars in subsection 117(2), the description of B in subsection 118(1), subsections 118(2) and 118.01(2), the descriptions of C and F in subsection 118.2(1), subsections 118.3(1), 122.5(3) and 122.51(1) and (2) and Part I.2 in relation to tax payable under this Part or Part I.2 for a taxation year shall be adjusted so that the amount to be used under those provisions for the year is the total of

(2) Subsection (1) applies to the 2006 and subsequent taxation years.

60. (1) Subsections 118(3.1) to (3.3) of the Act are replaced by the following:

(3.1) The amount of $7,131 referred to in paragraphs (a) to (c) of the description of B in subsection (1) (in this subsection referred to as the “particular amount”) that is to be used for the purpose of determining the amount of that description is

(a) for the 2005 taxation year, to be replaced by $8,648;

(b) for the 2006 taxation year, to be replaced by $8,839, except that, for the purpose of determining the particular amount for the 2007 taxation year, the particular amount for 2006 is deemed to be $8,639;

(c) for the 2007 taxation year, to be replaced by the amount that is the total of $100 and the amount that would be determined for that description for that taxation year in respect of the particular amount by applying section 117.1 (without reference to subsection 117.1(3)) to the amount of $8,639 as deemed under paragraph (b);

(d) for the 2008 taxation year, to be replaced by the amount that is the total of $200 and the amount that would be determined for that description for that taxation year in respect of the particular amount by applying section 117.1 (without reference to subsection 117.1(3)) to the amount determined under paragraph (c);

(e) for the 2009 taxation year, to be replaced by the amount that is the greater of

(i) the total of $600 and the amount that would be determined for that description for that taxation year in respect of the particular amount by applying section 117.1 (without reference to subsection 117.1(3)) to the amount determined under paragraph (d), and

(ii) $10,000; and

(f) for each of the 2010 and subsequent taxation years, to be replaced by the amount that is the amount that would be determined for that description for those years in respect of the particular amount by applying section 117.1 (without reference to subsection 117.1(3)) to the amount determined under this subsection in respect of the amount for the immediately preceding taxation year.

(3.2) The amount of $6,055 referred to in subparagraphs (a)(ii) and (b)(iv) of the description of B in subsection (1) (in this subsection referred to as the “particular amount”) that is to be used for the purpose of determining the amount of that description is

(b) for the 2006 taxation year, to be replaced by $7,505, except that, for the purpose of determining the particular amount for the 2007 taxation year, the particular amount for 2006 is deemed to be $7,335;

(c) for the 2007 taxation year, to be replaced by the amount that is the total of $85 and the amount that would be determined for that description for that taxation year in respect of the particular amount by applying section 117.1 (without reference to subsection 117.1(3)) to the amount of $7,335 as deemed under paragraph (b);

(d) for the 2008 taxation year, to be replaced by the amount that is the total of $170 and the amount that would be determined for that description for that taxation year in respect of the particular amount by applying section 117.1 (without reference to subsection 117.1(3)) to the amount determined under paragraph (c);

(e) for the 2009 taxation year, to be replaced by the amount that is the greater of

(i) the total of $510 and the amount that would be determined for that description for that taxation year in respect of the particular amount by applying section 117.1 (without reference to subsection 117.1(3)) to the amount determined under paragraph (d), and

(ii) $8,500; and

(f) for each of the 2010 and subsequent taxation years, to be replaced by the amount determined for that description for that taxation year in respect of the particular amount by applying section 117.1 (without reference to subsection 117.1(3)) to the amount determined for that description for the immediately preceding taxation year in respect of the particular amount.

(3.3) The amount of $606 referred to in subparagraphs (a)(ii) and (b)(iv) of the description of B in subsection (1) (in this subsection referred to as the “particular amount”) that is to be used for the purpose of determining the amount of that description is

(b) for the 2006 taxation year, to be replaced by $751, except that, for the purpose of determining the particular amount for the 2007 taxation year, the particular amount for 2006 is deemed to be $734;

(c) for the 2007 taxation year, to be replaced by the amount that is the total of $8.50 and the amount that would be determined for that description for that taxation year in respect of the particular amount by applying section 117.1 (without reference to subsection 117.1(3)) to the amount of $734 as deemed under paragraph (b);

(d) for the 2008 taxation year, to be replaced by the amount that is the total of $17.00 and the amount that would be determined for that description for that taxation year in respect of the particular amount by applying section 117.1 (without reference to subsection 117.1(3)) to the amount determined under paragraph (c);

(e) for the 2009 taxation year, to be replaced by the amount that is the greater of

(i) the total of $51.00 and the amount that would be determined for that description for that taxation year in respect of the particular amount by applying section 117.1 (without reference to subsection 117.1(3)) to the amount determined under paragraph (d); and

(ii) $850; and

(f) for each of the 2010 and subsequent taxation years, to be replaced by the amount determined for that description for that taxation year in respect of the particular amount by applying section 117.1 (without reference to subsection 117.1(3)) to the amount determined for that description for the immediately preceding taxation year in respect of the particular amount.

(2) Section 118 of the Act is amended by adding the following after subsection (8):

(3) Subsections (1) and (2) apply to the 2005 and subsequent taxation years.

61. (1) The Act is amended by adding the following after section 118:

(2) Subsection (1) applies to the 2005 and subsequent taxation years.

62. (1) The portion of the description of D in subsection 118.2(1) of the Act before the formula is replaced by the following:

D      is the total of all amounts each of which is, in respect of a dependant of the individual (within the meaning assigned by subsection 118(6), other than a child of the individual who has not attained the age of 18 years before the end of the taxation year), the lesser of $10,000 and the amount determined by the formula

(2) Paragraph 118.2(2)(i) of the Act is replaced by the following:

(i) for, or in respect of, an artificial limb, an iron lung, a rocking bed for poliomyelitis victims, a wheel chair, crutches, a spinal brace, a brace for a limb, an iliostomy or colostomy pad, a truss for hernia, an artificial eye, a laryngeal speaking aid, an aid to hearing, an artificial kidney machine, phototherapy equipment for the treatment of psoriasis or other skin disorders, or an oxygen concentrator, for the patient;

(3) Paragraphs 118.2(2)(l.2) and (l.21) of the Act are replaced by the following:

(l.2) for reasonable expenses relating to renovations or alterations to a dwelling of the patient who lacks normal physical development or has a severe and prolonged mobility impairment, to enable the patient to gain access to, or to be mobile or functional within, the dwelling, provided that such expenses

(l.21) for reasonable expenses relating to the construction of the principal place of residence of the patient who lacks normal physical development or has a severe and prolonged mobility impairment, that can reasonably be considered to be incremental costs incurred to enable the patient to gain access to, or to be mobile or functional within, the patient’s principal place of residence, provided that such expenses

(4) Subsection 118.2(2) of the Act is amended by adding the following after paragraph (l.42):

(5) Subsection 118.2(2) of the Act is amended by striking out the word “or” at the end of paragraph (q) and by adding the following after paragraph (r):

(6) Subsections (1), (2), (4) and (5) apply to the 2005 and subsequent taxation years.

(7) Subsection (3) applies to expenses incurred after February 22, 2005.

63. (1) Paragraph 118.3(1)(a) of the Act is replaced by the following:

(a) an individual has one or more severe and prolonged impairments in physical or mental functions,

(2) The portion of subsection 118.3(1)(a.1) of the Act before subparagraph (i) is replaced by the following:

(a.1) the effects of the impairment or impairments are such that the individual’s ability to perform more than one basic activity of daily living is significantly restricted where the cumulative effect of those restrictions is equivalent to having a marked restriction in the ability to perform a basic activity of daily living or are such that the individual’s ability to perform a basic activity of daily living is markedly restricted or would be markedly restricted but for therapy that

(3) Paragraph 118.3(1)(a.2) of the Act is replaced by the following:

(a.2) in the case of an impairment in physical or mental functions the effects of which are such that the individual’s ability to perform a single basic activity of daily living is markedly restricted or would be so restricted but for therapy referred to in paragraph (a.1), a medical practitioner has certified in prescribed form that the impairment is a severe and prolonged impairment in physical or mental functions the effects of which are such that the individual’s ability to perform a basic activity of daily living is markedly restricted or would be markedly restricted, but for therapy referred to in paragraph (a.1), where the medical practitioner is a medical doctor or, in the case of

(i) a sight impairment, an optometrist,

(ii) a speech impairment, a speech-language pathologist,

(iii) a hearing impairment, an audiologist,

(iv) an impairment with respect to an individual’s ability in feeding or dressing themself, an occupational therapist,

(v) an impairment with respect to an individual’s ability in walking, an occupational therapist, or after February 22, 2005, a physiotherapist, and

(vi) an impairment with respect to an individual’s ability in mental functions necessary for everyday life, a psychologist,

(4) Section 118.3 of the Act is amended by adding the following after subsection (1):

(5) Subsections (1) to (4) apply to the 2005 and subsequent taxation years.

64. (1) Subsection 118.4(1) of the Act is amended by adding the following after paragraph (b):

(2) Subparagraph 118.4(1)(c)(i) of the Act is replaced by the following:

(i) mental functions necessary for everyday life,

(3) Subsection 118.4(1) of the Act is amended by adding the following after paragraph (c):

(4) The portion of subsection 118.4(2) of the Act before paragraph (a) is replaced by the following:

(2) For the purposes of sections 63, 64, 118.2, 118.3 and 118.6, a reference to an audiologist, dentist, medical doctor, medical practitioner, nurse, occupational therapist, optometrist, pharmacist, physiotherapist, psychologist, or speech-language pathologist is a reference to a person authorized to practise as such,

(5) Subsections (1) to (3) apply to the 2005 and subsequent taxation years.

(6) Subsection (4) applies to the 2004 and subsequent taxation years, except that in its application before February 23, 2005, the portion of subsection 118.4(2) of the Act before paragraph (a), as enacted by subsection (4), is to be read as follows:

(2) For the purposes of sections 63, 64, 118.2, 118.3 and 118.6, a reference to an audiologist, dentist, medical doctor, medical practitioner, nurse, occupational therapist, optometrist, pharmacist, psychologist or speech-language pathologist is a reference to a person authorized to practise as such,

65. (1) The description of C in subsection 118.61(1) of the Act is replaced by the following:

C      is the lesser of the value of B and the amount that would be the individual’s tax payable under this Part for the year if no amount were deductible under this Division (other than an amount deductible under this section and any of sections 118, 118.01, 118.3 and 118.7);

(2) Paragraph 118.61(2)(b) of the Act is replaced by the following:

(b) the amount that would be the individual’s tax payable under this Part for the year if no amount were deductible under this Division (other than an amount deductible under this section and any of sections 118, 118.01, 118.3 and 118.7).

(3) Section 118.61 of the Act is amended by adding the following after subsection (3):

(4) Subsection (1) applies to the 2002 and subsequent taxation years except that, for taxation years that are after 2001 and before 2005, the description of C in subsection 118.61(1) of the Act, as enacted by subsection (1), shall be read as follows:

C      is the lesser of the value of B and the amount that would be the individual’s tax payable under this Part for the year if no amount were deductible under this Division (other than an amount deductible under this section and any of sections 118, 118.3 and 118.7);

(5) Subsection (2) applies to the 2002 and subsequent taxation years except that, for taxation years that are after 2001 and before 2005, paragraph 118.61(2)(b) of the Act, as enacted by subsection (2), shall be read as follows:

(b) the amount that would be the individual’s tax payable under this Part for the year if no amount were deductible under this Division (other than an amount deductible under this section and any of sections 118, 118.3 and 118.7).

(6) Subsection (3) applies to the 2005 and subsequent taxation years.

66. (1) Subparagraph (ii) of the description of A in paragraph 118.81(a) of the Act is replaced by the following:

(ii) the amount determined by the formula

(2) The description of B in paragraph 118.81(a) of the Act is replaced by the following:

B      is the amount that would be the person’s tax payable under this Part for the year if no amount were deductible under this Division (other than an amount deductible under any of sections 118, 118.01, 118.3, 118.61 and 118.7), and

(3) Subsections (1) and (2) apply to the 2005 and subsequent taxation years.

67. (1) Subparagraph 118.91(b)(i) of the Act is replaced by the following:

(i) such of the deductions permitted under subsection 118(3) and sections 118.01, 118.1, 118.2, 118.5, 118.6, 118.62 and 118.7 as can reasonably be considered wholly applicable, and

(2) Subsection (1) applies to the 2005 and subsequent taxation years.

68. (1) Sections 118.92 to 118.94 of the Act are replaced by the following:

118.92 In computing an individual’s tax payable under this Part, the following provisions shall be applied in the following order: subsections 118(1) and (2), section 118.7, subsection 118(3) and sections 118.01, 118.3, 118.61, 118.5, 118.6, 118.9, 118.8, 118.2, 118.1, 118.62 and 121.

118.93 Where a separate return of income with respect to a taxpayer is filed under subsection 70(2), 104(23) or 150(4) for a particular period and another return of income under this Part with respect to the taxpayer is filed for a period ending in the calendar year in which the particular period ends, for the purpose of computing the tax payable under this Part by the taxpayer in those returns, the total of all deductions claimed in all those returns under any of subsection 118(3) and sections 118.01 to 118.7 and 118.9 shall not exceed the total that could be deducted under those provisions for the year with respect to the taxpayer if no separate returns were filed under subsections 70(2), 104(23) and 150(4).

118.94 Sections 118, 118.01 and 118.2, subsections 118.3(2) and (3) and sections 118.6, 118.8 and 118.9 do not apply for the purpose of computing the tax payable under this Part for a taxation year by an individual who at no time in the year is resident in Canada unless all or substantially all of the individual’s income for the year is included in computing the individual’s taxable income earned in Canada for the year.

(2) Subsection (1) applies to the 2005 and subsequent taxation years.

69. (1) Paragraph 118.95(a) of the Act is replaced by the following:

(a) such of the deductions as the individual is entitled to under subsection 118(3) and sections 118.01, 118.1, 118.2, 118.5, 118.6, 118.62 and 118.7 as can reasonably be considered wholly applicable to the taxation year, and

(2) Subsection (1) applies to the 2005 and subsequent taxation years.

70. (1) Paragraph (a) of the description of A in subsection 122.51(2) of the Act is replaced by the following:

(a) $1,000, and

(2) Paragraph (b) of the description of B in subsection 122.51(2) of the Act is replaced by the following:

(b) $21,663.

(3) Subsection (1) applies to the 2006 and subsequent taxation years.

(4) Subsection (2) applies to the 2005 and subsequent taxation years.

71. (1) The portion of the description of N in the description of M in subsection 122.61(1) of the Act before paragraph (a) is replaced by the following:

N      is the product obtained by multiplying $2,300 by the number of qualified dependants in respect of whom both

(2) The description of P in the description of M in subsection 122.61(1) of the Act is replaced by the following:

P      is 4% (or where the person is an eligible individual in respect of only one qualified dependant included in the description of N at the beginning of the month, 2%) of the amount determined for the description of O,

(3) Subsections (1) and (2) apply in respect of overpayments deemed to arise during months that are after June 2006.

72. (1) Subsections 123.2(2) and (3) of the Act are replaced by the following:

(2) The specified percentage of a corporation for a taxation year is that proportion of 4% that the number of days in the taxation year that are before 2008 is of the number of days in the taxation year.

(2) Section 123.2 of the Act is repealed.

(3) Subsection (2) applies to taxation years that begin after 2007.

73. (1) The definition “general rate reduction percentage” in subsection 123.4(1) of the Act is replaced by the following:

“general rate reduction percentage” of a corporation for a taxation year is the total of

(a) that proportion of 7% that the number of days in the taxation year that are before 2008 is of the number of days in the taxation year,

(b) that proportion of 7.5% that the number of days in the taxation year that are in 2008 is of the number of days in the taxation year,

(c) that proportion of 8% that the number of days in the taxation year that are in 2009 is of the number of days in the taxation year, and

(d) that proportion of 9% that the number of days in the taxation year that are after 2009 is of the number of days in the taxation year.

(2) The portion of paragraph (a) of the definition “full rate taxable income” in subsection 123.4(1) of the Act before subparagraph (ii) is replaced by the following:

(a) if the corporation is not a corporation described in paragraph (b) or (c) for the year, the amount by which the corporation’s taxable income for the year (or, for greater certainty, if the corporation is non-resident, its taxable income earned in Canada for the year) exceeds the total of

(i) if an amount is deducted under subsection 125.1(1) from the corporation’s tax otherwise payable under this Part for the year, the amount obtained by dividing the amount so deducted by the corporation’s general rate reduction percentage for the taxation year,

74. (1) The portion of subsection 125.1(1) of the Act before paragraph (a) is replaced by the following:

125.1 (1) There may be deducted from the tax otherwise payable under this Part by a corporation for a taxation year an amount equal to the corporation’s general rate reduction percentage for the taxation year (within the meaning assigned by subsection 123.4(1)) multiplied by the lesser of

(2) The portion of subsection 125.1(2) of the Act before the formula is replaced by the following:

(2) A corporation that generates electrical energy for sale, or produces steam for sale, in a taxation year may deduct from its tax otherwise payable under this Part for the year an amount equal to the corporation’s general rate reduction percentage for the taxation year (within the meaning assigned by subsection 123.4(1)) multiplied by the amount determined by the formula

75. (1) Paragraph (d) of the definition “investment tax credit” in subsection 127(9) of the Act is repealed.

(2) Paragraph (a) of the definition “flow-through mining expenditure” in subsection 127(9) of the Act is replaced by the following:

(a) that is a Canadian exploration expense incurred by a corporation after May 1, 2006 and before 2008 (including, for greater certainty, an expense that is deemed by subsection 66(12.66) to be incurred before 2008) in conducting mining exploration activity from or above the surface of the earth for the purpose of determining the existence, location, extent or quality of a mineral resource described in paragraph (a) or (d) of the definition “mineral resource” in subsection 248(1),

(3) Paragraphs (c) and (d) of the definition “flow-through mining expenditure” in subsection 127(9) of the Act are replaced by the following:

(c) an amount in respect of which is renounced in accordance with subsection 66(12.6) by the corporation to the taxpayer (or a partnership of which the taxpayer is a member) under an agreement described in that subsection and made after May 1, 2006 and before April 1, 2007, and

(d) that is not an expense that was renounced under subsection 66(12.6) to the corporation (or a partnership of which the corporation is a member), unless that renunciation was under an agreement described in that subsection and made after May 1, 2006 and before April 1, 2007;

(4) Section 127 of the Act is amended by adding the following after subsection (9):

(5) Section 127 of the Act is amended by adding the following after subsection (35);

(6) Subsections (1), (4) and (5) apply to the 2006 and subsequent taxation years.

(7) Subsections (2) and (3) apply to expenses renounced under agreements made after May 1, 2006.

75.1 (1) Clause 127.52(1)(h)(ii)(A) of the Act is replaced by the following:

(A) the amount deducted under paragraph 110(1)(d.01), and

(2) Subsection (1) applies to the 2006 and subsequent taxation years except that, for the 2006 taxation year, clause 127.52(1)(h)(ii)(A) of the Act, as enacted by subsection (1), shall be read as follows:

(A) the total of

(I) twice the amount deducted under paragraph 110(1)(d.01) in respect of gifts made before May 2, 2006, and

(II) the amount deducted under paragraph 110(1)(d.01) in respect of gifts made after May 1, 2006, and

76. (1) Section 127.531 of the Act is replaced by the following:

127.531 An individual’s basic minimum tax credit for a taxation year is the total of all amounts each of which is

(2) Subsection (1) applies to the 2002 and subsequent taxation years except that, for taxation years before 2005, paragraph 127.531(a) of the Act, as enacted by subsection (1), shall be read as follows:

(a) an amount deducted under subsection 118(1) or (2) or 118.3(1) or any of sections 118.5 to 118.7 in computing the individual’s tax payable for the year under this Part; or

77. (1) Subparagraph 127.54(2)(b)(ii) of the Act is replaced by the following:

(ii) the amount determined by the formula

B      is the individual’s foreign income for the year.

(2) Subsection (1) applies to the 2005 and subsequent taxation years.

78. (1) Clause 128(2)(e)(iii)(A) of the Act is replaced by the following:

(A) under section 118, 118.01, 118.2, 118.3, 118.5, 118.6, 118.8 or 118.9,

(2) Subsection (1) applies to the 2005 and subsequent taxation years.

79. (1) The portion of subsection 135(1) of the Act before paragraph (a) is replaced by the following:

135. (1) Notwithstanding anything in this Part, other than subsections (1.1) to (2.1) and 135.1(3), there may be deducted, in computing the income of a taxpayer for a taxation year, the total of the payments made, pursuant to allocations in proportion to patronage, by the taxpayer

(2) The portion of subsection 135(3) of the Act before paragraph (a) is replaced by the following:

(3) Subject to subsection 135.1(6), a taxpayer who makes at any particular time in a calendar year a payment pursuant to an allocation in proportion to patronage to a person who is resident in Canada and is not exempt from tax under section 149 shall, notwithstanding any agreement or any law to the contrary, deduct or withhold from the payment an amount equal to 15% of the lesser of the amount of the payment and the amount, if any, by which

(3) The portion of subsection 135(4) of the Act before the definition “allocation in proportion to patronage” is replaced by the following:

(4) For the purposes of this section and section 135.1,

(4) Subsection 135(7) of the Act is replaced by the following:

(7) Where a payment pursuant to an allocation in proportion to patronage (other than an allocation in respect of consumer goods or services) has been received by a taxpayer, the amount of the payment shall, subject to subsection 135.1(2), be included in computing the recipient’s income for the taxation year in which the payment was received and, without restricting the generality of the foregoing, where a certificate of indebtedness or a share was issued to a person pursuant to an allocation in proportion to patronage, the amount of the payment by virtue of that issuance shall be included in computing the recipient’s income for the taxation year in which the certificate or share was received and not in computing the recipient’s income for the year in which the indebtedness was subsequently discharged or the share was redeemed.

(5) Subsections (1) to (4) apply after 2005.

80. (1) The Act is amended by adding the following after section 135:

(2) Subsection (1) applies after 2005, except that paragraph 135.1(4)(b) of the Act, as enacted by subsection (1), does not apply to any indebtedness entered into before 2006.

81. (1) The portion of subsection 136(2) of the Act before paragraph (a) is replaced by the following:

(2) In this section, “cooperative corporation” means a corporation that was incorporated or continued by or under the provisions of a law, of Canada or of a province, that provide for the establishment of the corporation as a cooperative corporation or that provide for the establishment of cooperative corporations, for the purpose of marketing (including processing incident to or connected to the marketing) natural products belonging to or acquired from its members or customers, of purchasing supplies, equipment or household necessaries for or to be sold to its members or customers or of performing services for its members or customers, if

(2) Subsection (1) applies after June 2005.

82. (1) Subsection 181.1(1.1) of the Act is amended by adding the word “and” at the end of paragraph (b) and by repealing paragraphs (d) and (e).

(2) Subsection (1) applies to the 2006 and subsequent taxation years.

83. (1) Subparagraphs 186(1)(d)(i) and (ii) of the Act are replaced by the following:

(i) non-capital loss for any of its 20 taxation years immediately preceding or 3 taxation years immediately following the year, and

(ii) farm loss for any of its 20 taxation years immediately preceding or 3 taxation years immediately following the year

(2) Subsection (1) applies in respect of losses that arise in the 2006 and subsequent taxation years.

84. (1) Subsection 211.1(2) of the Act is replaced by the following:

(2) For the purposes of this Part, the taxable Canadian life investment income of a life insurer for a taxation year is the amount, if any, by which its Canadian life investment income for the year exceeds the total of its Canadian life investment losses for the 20 taxation years immediately preceding the year, to the extent that those losses were not deducted in computing its taxable Canadian life investment income for any preceding taxation year.

(2) Subsection (1) applies in respect of losses that arise in the 2006 and subsequent taxation years.

85. (1) Subsection 225.1(8) of the Act is replaced by the following:

(8) For the purposes of this section and section 235, a corporation (other than a corporation described in subsection 181.1(3)) is a “large corporation” in a particular taxation year if the total of the taxable capital employed in Canada of the corporation, at the end of the particular taxation year, and the taxable capital employed in Canada of any other corporation, at the end of the other corporation’s last taxation year that ends at or before the end of the particular taxation year, if the other corporation is related (within the meaning assigned for the purposes of section 181.5) to the corporation at the end of the particular taxation year, exceeds $10 million, and, for the purpose of this subsection, a corporation formed as a result of the amalgamation or merger of 2 or more predecessor corporations is deemed to be the same corporation as, and a continuation of, each predecessor corporation.

(2) Subsection (1) applies to the 2006 and subsequent taxation years.

86. (1) The portion of subsection 227(5) of the Act before paragraph (a) is replaced by the following:

(5) Where a specified person in relation to a particular person (in this subsection referred to as the “payer”) has any direct or indirect influence over the disbursements, property, business or estate of the payer and the specified person, alone or together with another person, authorizes or otherwise causes a payment referred to in subsection 135(3), 135.1(7) or 153(1), or on or in respect of which tax is payable under Part XII.5 or XIII, to be made by or on behalf of the payer, the specified person

(2) Paragraph 227(5)(a.1) of the Act is replaced by the following:

(a.1) is, for the purposes of subsections 135.1(7) and 211.8(2), deemed to be a person who redeemed, acquired or cancelled a share and made the payment as a consequence of the redemption, acquisition or cancellation;

(3) Subparagraph 227(5)(b)(i) of the Act is replaced by the following:

(i) all amounts payable by the payer because of any of subsections 135(3), 135.1(7), 153(1) and 211.8(2) and section 215 in respect of the payment, and

(4) The portion of subsection 227(8.3) of the Act before paragraph (a) is replaced by the following:

(8.3) A person who fails to deduct or withhold any amount as required by subsection 135(3), 135.1(7), 153(1) or 211.8(2) or section 215 shall pay to the Receiver General interest on the amount at the prescribed rate, computed

(5) Paragraph 227(8.3)(b) of the Act is replaced by the following:

(b) in the case of an amount required by subsection 135(3) or 135.1(7) or section 215 to be deducted or withheld, from the day on which the amount was required to be deducted or withheld to the day of payment of the amount to the Receiver General; and

(6) Subsection 227(8.4) of the Act is replaced by the following:

(8.4) A person who fails to deduct or withhold any amount as required under subsection 135(3) or 135.1(7) in respect of a payment made to another person or under subsection 153(1) in respect of an amount paid to another person who is non-resident or who is resident in Canada solely because of paragraph 250(1)(a) is liable to pay as tax under this Act on behalf of the other person the whole of the amount that should have been so deducted or withheld and is entitled to deduct or withhold from any amount paid or credited by the person to the other person or otherwise to recover from the other person any amount paid by the person as tax under this Part on behalf of the other person.

(7) Subsections (1) to (6) apply after 2005.

87. (1) Subsection 227.1(1) of the Act is replaced by the following:

227.1 (1) Where a corporation has failed to deduct or withhold an amount as required by subsection 135(3) or 135.1(7) or section 153 or 215, has failed to remit such an amount or has failed to pay an amount of tax for a taxation year as required under Part VII or VIII, the directors of the corporation at the time the corporation was required to deduct, withhold, remit or pay the amount are jointly and severally, or solidarily, liable, together with the corporation, to pay that amount and any interest or penalties relating to it.

(2) Subsection (1) applies after 2005.

88. (1) Section 235 of the Act is replaced by the following:

235. Every large corporation (within the meaning assigned by subsection 225.1(8)) that fails to file a return for a taxation year as and when required by section 150 or 190.2 is liable, in addition to any penalty otherwise provided, to a penalty for each such failure equal to the amount determined by the formula

A × B

where

A      is the total of

B      is the number of complete months, not exceeding 40, from the day on or before which the return was required to be filed to the day on which the return is filed.

(2) Subsection (1) applies to the 2006 and subsequent taxation years.

PART 3

AMENDMENTS RELATING TO EXCISE TAX ON JEWELLERY, ETC.

Excise Tax Act

89. (1) Sections 5 to 5.2 of Schedule I to the Excise Tax Act are repealed.

(2) Subsection (1) is deemed to have come into force on May 2, 2006.

Budget Implementation Act, 2005

90. Section 26 of the Budget Implementation Act, 2005 is repealed.

PART 4

AMENDMENTS RELATING TO ABORIGINAL TAX POWERS AND ABORIGINAL TAX TREATMENT

First Nations Goods and Services Tax Act

91. The title of Part 2 of the First Nations Goods and Services Tax Act is replaced by the following:

FIRST NATIONS SALES TAX — SPECIFIED PROVINCES

92. (1) The definitions “parallel Quebec law” and “reserves in Quebec” in section 17 of the Act are repealed.

(2) Section 17 of the Act is amended by adding the following in alphabetical order:

93. Sections 21 and 22 of the Act are replaced by the following:

21. If a law of a specified province provides that one or more laws of the specified province apply as if the tax imposed under a band law were imposed under a particular law of the specified province, all Acts of Parliament, other than this Act, apply as if the tax imposed under the band law were imposed under that particular law of the specified province.

Administration Agreement

22. A council of the band may, on behalf of the band, enter into an administration agreement with the government of the specified province listed opposite the name of that council in Schedule 2 in respect of a band law enacted by that council.

94. (1) Subsections 23(1) and (2) of the Act are replaced by the following:

23. (1) A council of the band that is listed in Schedule 2 may enact a law that imposes a direct sales tax, and any other amount that may be required to be paid in relation to the imposition of that direct sales tax, within its reserves that are situated in the specified province listed opposite the name of that council in that Schedule and that are listed in that Schedule opposite the name of the council.

(2) A law may not be enacted under subsection (1) unless the law has only one parallel provincial law that is expressly identified in that law.

(2) Paragraphs 23(3)(a) to (d) of the Act are replaced by the following:

(a) an administration agreement in respect of the law is in effect;

(b) that administration agreement is between the council of the band and the government of the specified province listed opposite the name of that council in Schedule 2;

(c) the law is administered and enforced, and the direct sales tax imposed under that law is collected, in accordance with that administration agreement;

(d) the name of the band, the name of the council of the band, the name, or description, of the reserves of the band within which the law applies and the name of the specified province in which the reserves are situated are listed opposite one another in Schedule 2; and

(e) its parallel provincial law is in force.

95. Section 24 of the Act is replaced by the following:

24. Subject to subsection 23(3), a band law comes into force on the date specified in the administration agreement entered into under section 22 in respect of that law.

96. Section 29 of the Act is replaced by the following:

29. The Governor in Council may, by order, amend Schedule 2 by adding, deleting or varying the name of a band, the name of a council of the band, the name, or description, of a band’s reserves or the name of a specified province.

97. Schedule 2 to the Act is replaced by the Schedule 2 set out in Schedule 1 to this Act.

Yukon First Nations Self-Government Act

98. (1) The Yukon First Nations Self-Government Act is amended by adding the following after section 22.

(2) Subsection (1) is deemed to have come into force on January 1, 1999.

PART 5

OTHER TAX-RELATED AMENDMENTS

Air Travellers Security Charge Act

99. (1) Subsection 21(2) of the Air Travellers Security Charge Act is replaced by the following:

(2) If, at any time, the total of all amounts payable by the Minister to a designated air carrier under this Act does not exceed $2.00, the Minister may apply those amounts against any amount owing, at that time, by the carrier to Her Majesty. However, if the carrier, at that time, does not owe any amount to Her Majesty, those amounts payable are deemed to be nil.

(2) Subsection (1) comes into force on April 1, 2007.

100. (1) Section 25 of the Act is renumbered as subsection 25(1) and is amended by adding the following:

(2) Subsection (1) applies in respect of any extension of time that expires on or after April 1, 2007.

101. (1) Subsection 27(1) of the Act is replaced by the following:

27. (1) If a person fails to pay an amount to the Receiver General as and when required under this Act, the person shall pay to the Receiver General interest on the amount. The interest shall be compounded daily at the prescribed rate and computed for the period that begins on the first day after the day on or before which the amount was required to be paid and that ends on the day the amount is paid.

(2) Section 27 of the Act is amended by adding the following after subsection (2):

(3) Subsection (1) comes into force on April 1, 2007.

(4) For the purposes of applying subsection 27(1) of the Act, as enacted by subsection (1), any penalty accrued before April 1, 2007 that remains unpaid on April 1, 2007 is deemed to be an amount required to be paid to the Receiver General on March 31, 2007.

(5) Subsection (2) comes into force on April 1, 2007, except that, in respect of any demand served before April 1, 2007 for which a penalty under subsection 53(1) of the Act, as it read on March 31, 2007, is payable, subsection 27(3) of the Act, as enacted by subsection (2), shall be read as follows:

(3) If the Minister has served a demand that a person pay on or before a specified date all amounts payable by the person under this Act on the date of the demand, and the person pays the amount demanded on or before the specified date, the Minister shall waive any penalty and interest that would otherwise apply in respect of the amount demanded for the period beginning on the first day following the date of the demand and ending on the day of payment.

102. (1) Section 30 of the Act is replaced by the following:

30. (1) The Minister may, on or before the day that is ten calendar years after the end of a fiscal month of a person, waive or reduce any interest payable by the person under this Act on an amount that is required to be paid by the person under this Act in respect of the fiscal month.

(2) Subsection (1) comes into force on April 1, 2007.

103. (1) The Act is amended by adding the following after section 30:

(2) Subsection (1) applies in respect of any instrument that is dishonoured on or after April 1, 2007.

104. (1) Subsection 40(4) of the Act is replaced by the following:

(4) A refund shall not be paid until the person has filed with the Minister all returns and other records of which the Minister has knowledge that are required to be filed under this Act, the Excise Act, 2001, the Excise Tax Act and the Income Tax Act.

(2) Subsection (1) comes into force on April 1, 2007.

105. (1) Section 53 of the Act is replaced by the following:

(2) Subsection (1) comes into force on April 1, 2007.

(3) For the purposes of section 53 of the Act, as enacted by subsection (1), a return that is required to be filed before April 1, 2007 and that has not been filed before that day is deemed to be required to be filed on March 31, 2007.

106. (1) Section 54 of the Act is repealed.

(2) Subsection (1) applies in respect of any extension of time that expires on or after April 1, 2007.

107. (1) Section 55 of the Act is replaced by the following:

55. (1) The Minister may, on or before the day that is ten calendar years after the end of a fiscal month of a person, waive or cancel any penalty payable by the person under section 53 in respect of the fiscal month.

(2) Subsection (1) comes into force on or after April 1, 2007.

108. (1) Section 56 of the Act is replaced by the following:

56. Every person who fails to file a return as and when required under a demand issued under section 26 is liable to a penalty of $250.

(2) Subsection (1) applies in respect of any demand served under section 26 of the Act by the Minister of National Revenue on or after April 1, 2007.

109. (1) Subsection 61(2) of the Act is replaced by the following:

(2) A person who is convicted of an offence under subsection (1) for a failure to comply with a provision of this Act is not liable to pay a penalty imposed under section 53, 56 or 57 for the same failure, unless a notice of assessment for the penalty was issued before the information or complaint giving rise to the conviction was laid or made.

(2) Subsection (1) applies in respect of any penalty imposed on or after April 1, 2007.

110. (1) Subsection 62(3) of the Act is replaced by the following:

(3) A person who is convicted of an offence under subsection (1) is not liable to pay a penalty imposed under any of sections 53 and 56 to 58 for the same evasion or attempt unless a notice of assessment for that penalty was issued before the information or complaint giving rise to the conviction was laid or made.

(2) Subsection (1) applies in respect of any penalty imposed on or after April 1, 2007.

111. (1) Subsection 72(3) of the Act is replaced by the following:

(3) The Minister may not take any collection action under sections 74 to 79 in respect of any amount payable by a person that may be assessed under this Act, other than interest under section 27, unless the amount has been assessed.

(2) Subsection (1) comes into force on April 1, 2007.

112. (1) Paragraphs 74(12)(a) and (b) of the Act are replaced by the following:

(a) to set out, as the amount payable by the debtor, the total of amounts payable by the debtor without setting out the separate amounts making up that total;

(b) to refer to the rate of interest to be charged on the separate amounts making up the amount payable in general terms as interest at the prescribed rate under this Act applicable from time to time on amounts payable to the Receiver General, without indicating the specific rates of interest to be charged on each of the separate amounts or to be charged for any period; and

(2) Subsection (1) applies in respect of any certificate made under subsection 74(1) of the Act in respect of amounts that became payable to the Receiver General on or after April 1, 2007.

Excise Act, 2001

113. (1) Subsection 165(2) of the Excise Act, 2001 is replaced by the following:

(2) If, at any time, the total of all amounts payable by the Minister to a person under this Act does not exceed two dollars, the Minister may apply those amounts against any amount owing, at that time, by the person to Her Majesty. However, if the person, at that time, does not owe any amount to Her Majesty, those amounts are deemed to be nil.

(2) Subsection (1) comes into force on April 1, 2007.

114. (1) Subsection 168(2) of the Act is amended by striking out the word “and” at the end of paragraph (b) and by replacing paragraph (c) with the following:

(c) any interest payable under section 170 on any amount payable in respect of the return shall be calculated as though the amount were required to be paid on the day on which the extended time expires; and

(2) Subsection (1) applies in respect of any extension of time that expires on or after April 1, 2007.

115. (1) Subsection 170(4) of the Act is replaced by the following:

(4) If, at any time, a person pays an amount not less than the total of all amounts, other than interest and penalty payable under section 251.1, owing at that time to Her Majesty under this Act for a fiscal month of the person and the total amount of interest and the penalty payable by the person under this Act for that month is not more than $25.00, the Minister may waive the total amount.

(2) Subsection (1) applies in respect of any fiscal month of a person that ends on or after April 1, 2007.

116. (1) Section 173 of the Act is replaced by the following:

173. The Minister may, on or before the day that is ten calendar years after the day an amount was required to be paid by a person under this Act, waive or reduce any interest on the amount payable by the person under section 170.

(2) Subsection (1) comes into force on April 1, 2007.

117. (1) The portion of subsection 188(3) of the French version of the Act before paragraph (a) is replaced by the following:

(2) The portion of subsection 188(3) of the English version of the Act after paragraph (c) is replaced by the following:

the Minister shall apply all or part of the refund against that duty, interest or other amount that is payable as if the person had, on the particular day, paid the amount so applied on account of that duty, interest or other amount.

(3) The portion of subsection 188(4) of the Act before paragraph (a) is replaced by the following:

(4) If, in assessing the duty payable by a person for a fiscal month of the person, the Minister determines that there is an overpayment of duty payable for the month, unless the assessment is made in the circumstances described in paragraph 191(4)(a) or (b) after the time otherwise limited for the assessment under paragraph 191(1)(a), the Minister shall

(4) The portion of subsection 188(5) of the Act before paragraph (a) is replaced by the following:

(5) If, in assessing the duty payable by a person for a fiscal month of the person or an amount (in this subsection referred to as the “overdue amount”) payable by a person under this Act, all or part of a refund is not applied under subsection (3) against that duty payable or overdue amount, except if the assessment is made in the circumstances described in paragraph 191(4)(a) or (b) after the time otherwise limited for the assessment under paragraph 191(1)(a), the Minister shall

(5) Subsection 188(6) of the Act is replaced by the following:

(6) An overpayment of duty payable for a fiscal month of a person and interest on the overpayment shall not be applied under paragraph (4)(b) or refunded under paragraph (4)(c) unless the person has, before the day on which notice of the assessment is sent to the person, filed all returns and other records of which the Minister has knowledge and that the person was required to file with the Minister under this Act, the Air Travellers Security Charge Act, the Customs Act, the Excise Act, the Excise Tax Act and the Income Tax Act.

(6) Subparagraph 188(7)(b)(ii) of the Act is replaced by the following:

(ii) the person has filed all returns and other records of which the Minister has knowledge and that the person was required to file with the Minister under this Act, the Air Travellers Security Charge Act, the Customs Act, the Excise Act, the Excise Tax Act and the Income Tax Act before the day on which notice of the assessment is sent to the person.

(7) Section 188 of the Act is amended by adding the following after subsection (9):

(8) Subsections (1) to (7) come into force on April 1, 2007.

118. (1) Subsection 189(4) of the Act is replaced by the following:

(4) A refund shall not be paid until the person has filed with the Minister all returns and other records of which the Minister has knowledge and that are required to be filed under this Act, the Air Travellers Security Charge Act, the Customs Act, the Excise Act, the Excise Tax Act and the Income Tax Act.

(2) Subsection (1) comes into force on April 1, 2007.

119. (1) Section 251 of the Act is replaced by the following:

251. Every person who does not file a return as and when required under a demand issued under section 169 is liable to a penalty equal to $250.

(2) Section 251 of the Act, as enacted by subsection (1), applies in respect of any demand under section 169 of the Act served by the Minister of National Revenue on or after April 1, 2007.

(3) Section 251.1 of the Act, as enacted by subsection (1), applies

(a) in respect of any return that is required to be filed under the Act on or after April 1, 2007; and

(b) in respect of any return that is required to be filed under the Act before that day if it is not filed on or before March 31, 2007, in which case the day on or before which the return is required to be filed is deemed to be March 31, 2007 for the purposes of calculating any penalty under that section.

(4) Section 251.2 of the Act, as enacted by subsection (1), applies in respect of any instrument that is dishonoured on or after April 1, 2007.

120. (1) Subsection 254(1) of the Act is replaced by the following:

254. (1) A penalty that a person is liable to pay under any of sections 233 to 253, other than section 251.1, may be imposed by the Minister by serving on the person a written notice of the imposed penalty or by sending the notice by registered or certified mail to the person’s last known address.

(2) Subsection (1) comes into force on April 1, 2007.

121. (1) The Act is amended by adding the following after section 255:

(2) Subsection (1) comes into force on April 1, 2007.

122. (1) Paragraph 286(1)(e) of the Act is repealed.

(2) Subsection (1) comes into force on April 1, 2007.

123. (1) Paragraphs 288(12)(a) and (b) of the Act are replaced by the following:

(a) to set out, as the amount payable by the debtor, the total of amounts payable by the debtor without setting out the separate amounts making up that total;

(b) to refer to the rate of interest to be charged on the separate amounts making up the amount payable in general terms as interest at the prescribed rate under this Act applicable from time to time on amounts payable to the Receiver General, without indicating the specific rates of interest to be charged on each of the separate amounts or to be charged for any period; and

(2) Subsection (1) applies in respect of any certificate made under subsection 288(1) of the Act in respect of amounts that became payable to the Receiver General on or after April 1, 2007.

Excise Tax Act

124. (1) Subsection 7(1) of the Excise Tax Act is replaced by the following:

(2) Subsection (1) comes into force on April 1, 2007.

(3) For the purposes of subsections 7(1) and (1.1) of the Act, as enacted by subsection (1), a return that is required to be filed before April 1, 2007 and that has not been filed before that day is deemed to be required to be filed on March 31, 2007.

125. (1) Section 68.5 of the Act is amended by adding the following after subsection (9):

(2) Subsection (1) comes into force on April 1, 2007.

126. (1) The Act is amended by adding the following after section 76:

(2) Subsection (1) comes into force on April 1, 2007.

127. (1) Section 79 of the Act is amended by adding the following after subsection (3):

(2) Subsection (1) comes into force on April 1, 2007.

128. (1) Section 79.01 of the Act is repealed.

(2) Subsection (1) comes into force on April 1, 2007.

129. (1) Subsection 79.02(2) of the Act is replaced by the following:

(2) If, at any time, the total of all amounts payable by the Minister to a person under this Act does not exceed two dollars, the Minister may apply those amounts against any amount owing, at that time, by the person to Her Majesty in right of Canada. However, if the person, at that time, does not owe any amount to Her Majesty in right of Canada, those amounts payable are deemed to be nil.

(2) Subsection (1) comes into force on April 1, 2007.

130. (1) Subsection 79.03(4) of the Act is replaced by the following:

(4) If, at any time, a person pays an amount not less than the total of all amounts, other than interest and penalty under subsection 7(1.1) or 68.5(9.1) or section 95.1, owing at that time to Her Majesty in right of Canada under this Act for a reporting period of the person and the total amount of interest and penalty payable by the person under this Act for that reporting period is not more than $25.00, the Minister may cancel the interest and penalty.

(2) Subsection (1) applies in respect of any reporting period of a person that ends on or after April 1, 2007.

131. (1) Section 79.1 of the Act is repealed.

(2) Subsection (1) applies to fiscal months that begin after March 31, 2007.

132. (1) The Act is amended by adding the following after section 81.39:

(2) Subsection (1) applies in respect of any instrument that is dishonoured on or after April 1, 2007.

133. (1) Subsection 86(4) of the Act is amended by adding the word “or” at the end of paragraph (b), by striking out the word “or” at the end of paragraph (c) and by repealing paragraph (d).

(2) Subsection 86(5) of the Act is replaced by the following:

(5) If a person has served a notice of objection under section 81.15, otherwise than pursuant to section 81.33, the Minister shall not, for the purpose of collecting the sum in controversy, take any of the actions described in paragraphs (4)(a) to (c) before ninety days after the day on which the notice of decision is sent to that person.

(3) The portion of subsection 86(6) of the Act before paragraph (a) is replaced by the following:

(6) If a person has appealed to the Tribunal or the Federal Court under this Part, otherwise than pursuant to section 81.33, in respect of an assessment, the Minister shall not, for the purpose of collecting the sum in controversy, take any of the actions described in paragraphs (4)(a) to (c),

(4) Subsections 86(7) and (8) of the Act are replaced by the following:

(7) If a person is named in a reference under section 81.36, agrees to a reference under section 81.37 or appears as a party at the hearing of any such reference, the Minister shall not, for the purpose of collecting any sum for which that person has been assessed and of which the liability for payment will be affected by the determination of the question, take any of the actions described in paragraphs (4)(a) to (c) before the day on which the question is determined by the Court.

(8) Despite subsections (1) to (7), if a person has served a notice of objection under section 81.15 or has appealed to the Tribunal or the Federal Court under this Part, otherwise than under section 81.33, in respect of an assessment and agrees in writing with the Minister to delay proceedings on the objection or appeal until a decision or judgment is rendered in another action before the Tribunal, the Federal Court, the Federal Court of Appeal or the Supreme Court of Canada in which the issue is the same or substantially the same as that raised in the objection or appeal of that person, the Minister may take any of the actions described in paragraphs (4)(a) to (c) for the purpose of collecting any sum for which that person has been assessed, determined in a manner consistent with the decision or judgment of the Tribunal or Court in the other action, at any time after the Minister notifies the person in writing that the decision or judgment has been rendered.

(5) Subsections (1) to (4) come into force on April 1, 2007.

133.1 (1) Subsection 87(1) of the Act is replaced by the following:

87. (1) Despite section 86, if it may reasonably be considered that the collection of any sum for which a person has been assessed would be jeopardized by a delay under that section and the Minister has, by a notice served personally or by registered or certified mail, so advised that person and directed them to pay that sum or any part of it, the Minister may without delay take any of the actions described in paragraphs 86(4)(a) to (c) with respect to that sum or part.

(2) Subsection (1) comes into force on April 1, 2007.

134. (1) Subsection 88(1) of the Act is replaced by the following:

88. (1) The Minister may, on or before the day that is ten calendar years after the end of a reporting period of a person, waive or cancel any amount otherwise payable to the Receiver General under this Act that is interest or a penalty on an amount that is required to be paid by the person under this Act in respect of the reporting period.

(2) Subsection (1) comes into force on April 1, 2007.

135. (1) The Act is amended by adding the following after section 95:

(2) Subsection (1) comes into force on April 1, 2007.

(3) For the purposes of section 95.1 of the Act, as enacted by subsection (1), a return that is required to be filed before April 1, 2007 and that has not been filed before that day is deemed to be required to be filed on March 31, 2007.

136. (1) The definition “financial service” in subsection 123(1) of the Act is amended by adding the following after paragraph (r.1):

(2) Subsection (1) applies to a debt collection service rendered under an agreement for a supply if

(a) any consideration for the supply becomes due after November 17, 2005, or is paid after that day without having become due; or

(b) all of the consideration for the supply became due or was paid on or before that day unless the supplier did not, on or before that day, charge, collect or remit any amount as or on account of tax under Part IX of the Act in respect of the supply or in respect of any other supply that includes a debt collection service and that is made under the agreement.

137. (1) Subparagraph 225(3)(b)(ii) of the Act is replaced by the following:

(ii) if the person does not report the error to the Minister at least three months before the time limited by subsection 298(1) for assessing the net tax of the person for that preceding period expires, the person pays, at or before the time the return for the particular reporting period is filed, the amount and any applicable interest to the Receiver General.

(2) Subsection (1) applies for the purpose of determining the net tax for a reporting period of a person if the person’s preceding reporting period referred to in subsection 225(3) of the Act ends on or after April 1, 2007.

138. (1) Subparagraph 225.1(4)(b)(ii) of the Act is replaced by the following:

(ii) if the charity does not report the error to the Minister at least three months before the time limited by subsection 298(1) for assessing the net tax of the charity for that preceding period expires, the charity pays, at or before the time the return for the particular reporting period is filed, the amount and any applicable interest to the Receiver General.

(2) Subsection (1) applies for the purpose of determining the net tax for a reporting period of a charity if the charity’s preceding reporting period referred to in subsection 225.1(4) of the Act ends on or after April 1, 2007.

139. (1) Subsection 229(2) of the Act is replaced by the following:

(2) A net tax refund for a reporting period of a person shall not be paid to the person under subsection (1) at any time, unless all returns of which the Minister has knowledge and that are required to be filed at or before that time by the person under this Act, the Air Travellers Security Charge Act, the Excise Act, 2001 and the Income Tax Act have been filed with the Minister.

(2) Subsection 229(3) of the Act is replaced by the following:

(3) If a net tax refund for a reporting period of a person is paid to the person under subsection (1), interest at the prescribed rate shall be paid to the person on the net tax refund for the period beginning on the day that is 30 days after the later of the day the return in which the refund is claimed is filed with the Minister and the day following the last day of the reporting period and ending on the day the refund is paid.

(3) Subsection 229(4) of the Act is repealed.

(4) Subsections (1) and (3) come into force on April 1, 2007.

(5) Subsection (2) applies to any net tax refund for a reporting period of a person that ends on or after April 1, 2007.

140. (1) Subsection 230(2) of the Act is replaced by the following:

(2) An amount paid on account of net tax for a reporting period of a person shall not be refunded to the person under subsection (1) at any time, unless all returns of which the Minister has knowledge and that are required to be filed at or before that time by the person under this Act, the Air Travellers Security Charge Act, the Excise Act, 2001 and the Income Tax Act have been filed with the Minister.

(2) Subsection 230(3) of the Act is replaced by the following:

(3) If a refund of an amount that was paid on account of net tax for a reporting period of a person is paid to the person under subsection (1), interest at the prescribed rate shall be paid to the person on the refund for the period beginning on the day that is 30 days after the later of the day the return for the reporting period is filed with the Minister and the day following the last day of the reporting period and ending on the day the refund is paid.

(3) Subsection 230(4) of the Act is repealed.

(4) Subsections (1) and (3) come into force on April 1, 2007.

(5) Subsection (2) applies to any refund in respect of a reporting period of a person that ends on or after April 1, 2007.

141. (1) Section 236.1 of the Act is replaced by the following:

236.1 If a registrant has received a zero-rated supply of a continuous transmission commodity included in section 15.2 of Part V of Schedule VI and the commodity is neither exported, as described in paragraph (a) of that section, nor supplied, as described in paragraph (b) of that section, by the registrant, the registrant shall, in determining the net tax of the registrant for the reporting period that includes the earliest day on which tax, calculated at the rate set out in subsection 165(1), would, in the absence of that section, have become payable in respect of the supply, add an amount equal to interest, at the prescribed rate, on the total amount of tax that would have been payable in respect of the supply if it were not a zero-rated supply, computed for the period beginning on that earliest day and ending on the day on or before which the return under section 238 for that reporting period is required to be filed.

(2) Subsection (1) applies in respect of any supply of a continuous transmission commodity made to a registrant in respect of which tax would have, in the absence of section 15.2 of Part V of Schedule VI to the Act, first become payable on a particular day that is in a reporting period of the registrant for which the return under section 238 of the Act is required to be filed on or before a day that is after March 31, 2007, except that if the particular day is before April 1, 2007, and the day on or before which the return for the reporting period that includes the particular day is required to be filed is on or after April 1, 2007, section 236.1 of the Act, as enacted by subsection (1), shall be read as follows:

236.1 If a registrant has received a zero-rated supply of a continuous transmission commodity included in section 15.2 of Part V of Schedule VI and the commodity is neither exported, as described in paragraph (a) of that section, nor supplied, as described in paragraph (b) of that section, by the registrant, the registrant shall, in determining the net tax of the registrant for the reporting period that includes the earliest day on which tax would, in the absence of that section, have become payable in respect of the supply, add an amount equal to the total of

(a) interest, at the rate prescribed for the purposes of paragraph 280(1)(b) plus 4% per year compounded daily, on the total amount of tax that would have been payable in respect of the supply if it were not a zero-rated supply, computed for the period beginning on that earliest day and ending on March 31, 2007, and

(b) interest, at the prescribed rate, on the total amount of tax that would have been payable in respect of the supply if it were not a zero-rated supply plus the interest referred to in paragraph (a), computed for the period beginning on April 1, 2007, and ending on the day on or before which the return under section 238 for that reporting period is required to be filed.

142. (1) Subsection 236.2(1) of the Act is replaced by the following:

236.2 (1) If a registrant has received a supply of property (other than a supply that is included in any provision of Schedule VI other than section 1.1 of Part V of that Schedule) from a supplier to whom the registrant has provided an export certificate (within the meaning of section 221.1) for the purpose of that supply and an authorization of the registrant to use the certificate was not in effect at the time the supply was made or the registrant does not export the property in the circumstances described in paragraphs 1(b) to (d) of that Part, the registrant shall, in determining the net tax for the reporting period of the registrant that includes the earliest day on which tax in respect of the supply became payable or would have become payable if the supply were not a zero-rated supply, add an amount equal to interest at the prescribed rate on the total amount of tax in respect of the supply that was payable or would have been payable if the supply were not a zero-rated supply, computed for the period beginning on that earliest day and ending on the day on or before which the return under section 238 for that reporting period is required to be filed.

(2) The description of B in subsection 236.2(2) of the Act is replaced by the following:

B      is the prescribed rate of interest that is in effect on the last day of that first reporting period following the year.

(3) Subsection (1) applies in respect of a supply of property made to a registrant in respect of which tax first became payable, or would have first become payable if the supply were not a zero-rated supply, on a particular day that is in a reporting period of the registrant for which the return under section 238 of the Act is required to be filed on or before a day that is after March 31, 2007, except that if the particular day is before April 1, 2007, and the day on or before which the return for the reporting period that includes the particular day is required to be filed is on or after April 1, 2007, subsection 236.2(1) of the Act, as enacted by subsection (1), shall be read as follows:

236.2 (1) If a registrant has received a supply of property (other than a supply that is included in any provision of Schedule VI other than section 1.1 of Part V of that Schedule) from a supplier to whom the registrant has provided an export certificate (within the meaning of section 221.1) for the purpose of that supply and an authorization of the registrant to use the certificate was not in effect at the time the supply was made or the registrant does not export the property in the circumstances described in paragraphs 1(b) to (d) of that Part, the registrant shall, in determining the net tax for the reporting period of the registrant that includes the earliest day on which tax in respect of the supply became payable, or would have become payable if the supply were not a zero-rated supply, add an amount equal to the total of

(a) interest, at the rate prescribed for the purposes of paragraph 280(1)(b) plus 4% per year compounded daily, on the total amount of tax that was payable or would have been payable if the supply were not a zero-rated supply, computed for the period beginning on that earliest day and ending on March 31, 2007, and

(b) interest, at the prescribed rate, on the total amount of tax that was payable or would have been payable if the supply were not a zero-rated supply, plus the interest referred to in paragraph (a), computed for the period beginning on April 1, 2007, and ending on the day on or before which the return under section 238 for that reporting period is required to be filed.

(4) Subsection (2) applies in respect of any reporting period of a registrant following a fiscal year of the registrant that ends on or after April 1, 2007, except that if the fiscal year of the registrant includes April 1, 2007, subsection 236.2(2) of the Act, as amended by subsection (2), shall be read as follows:

(2) If a registrant’s authorization to use an export certificate (within the meaning of section 221.1) is deemed to have been revoked under subsection 221.1(6) effective immediately after the last day of a fiscal year of the registrant, the registrant shall, in determining the net tax for the first reporting period of the registrant following that year, add the total of all amounts each of which is determined by the formula

A × B/12

where

A      is

(a) the product obtained when the rate set out in subsection 165(1) is multiplied by an amount of consideration that was paid or became payable before April 1, 2007, by the registrant for a supply made in a non-participating province of an item of inventory acquired by the registrant in the year that is a zero-rated supply only because it is included in section 1.1 of Part V of Schedule VI, other than a supply in respect of which the registrant is required under subsection (1) to add an amount in determining net tax for any reporting period,

(b) the product obtained when the total of the rates set out in subsections 165(1) and (2) is multiplied by an amount of consideration that was paid or became payable before April 1, 2007, by the registrant for a supply made in a participating province of an item of inventory acquired by the registrant in the year that is a zero-rated supply only because it is included in section 1.1 of Part V of Schedule VI, other than a supply in respect of which the registrant is required under subsection (1) to add an amount in determining net tax for any reporting period,

(c) the product obtained when the rate set out in subsection 165(1) is multiplied by an amount of consideration not included in paragraph (a) that was paid or became payable on or after April 1, 2007, by the registrant for a supply made in a non-participating province of an item of inventory acquired by the registrant in the year that is a zero-rated supply only because it is included in section 1.1 of Part V of Schedule VI, other than a supply in respect of which the registrant is required under subsection (1) to add an amount in determining net tax for any reporting period, and

(d) the product obtained when the total of the rates set out in subsections 165(1) and (2) is multiplied by an amount of consideration not included in paragraph (b) that was paid or became payable on or after April 1, 2007, by the registrant for a supply made in a participating province of an item of inventory acquired by the registrant in the year that is a zero-rated supply only because it is included in section 1.1 of Part V of Schedule VI, other than a supply in respect of which the registrant is required under subsection (1) to add an amount in determining net tax for any reporting period; and

B      is

(a) in the case where paragraph (a) or (b) of the description of A applies, the total of 4% and the rate of interest prescribed for the purposes of paragraph 280(1)(b) (expressed as a percentage per year) that is in effect on March 31, 2007, and

(b) in any other case, the prescribed rate of interest that is in effect on the last day of that first reporting period following the year.

143. (1) Subsection 236.3(1) of the Act is replaced by the following:

236.3 (1) If a registrant has received a supply of property (other than a supply that is included in any provision of Schedule VI other than section 1.2 of Part V of that Schedule) from a supplier to whom the registrant has provided an export distribution centre certificate (within the meaning of section 273.1) for the purpose of that supply and an authorization of the registrant to use the certificate was not in effect at the time the supply was made or the property was not acquired by the registrant for use or supply as domestic inventory or as added property (as those expressions are defined in subsection 273.1(1)) in the course of commercial activities of the registrant, the registrant shall, in determining the net tax for the reporting period of the registrant that includes the earliest day on which tax in respect of the supply became payable or would have become payable if the supply were not a zero-rated supply, add an amount equal to interest, at the prescribed rate, on the total amount of tax in respect of the supply that was payable or that would have been payable in respect of the supply if the supply were not a zero-rated supply, computed for the period beginning on that earliest day and ending on the day on or before which the return under section 238 for that reporting period is required to be filed.

(2) The description of B in subsection 236.3(2) of the Act is replaced by the following:

B      is the prescribed rate of interest that is in effect on the last day of that first reporting period following the year.

(3) Subsection (1) applies in respect of a supply of property made to a registrant in respect of which tax first became payable, or would have first become payable if the supply were not a zero-rated supply, on a particular day that is in a reporting period of the registrant for which the return under section 238 of the Act is required to be filed on or before a day that is after March 31, 2007, except that if the particular day is before April 1, 2007, and the day on or before which the return for the reporting period that includes the particular day is required to be filed is on or after April 1, 2007, subsection 236.3(1) of the Act, as enacted by subsection (1), shall be read as follows:

236.3 (1) If a registrant has received a supply of property (other than a supply that is included in any provision of Schedule VI other than section 1.2 of Part V of that Schedule) from a supplier to whom the registrant has provided an export distribution centre certificate (within the meaning of section 273.1) for the purpose of that supply and an authorization of the registrant to use the certificate was not in effect at the time the supply was made or the property was not acquired by the registrant for use or supply as domestic inventory or as added property (as those expressions are defined in subsection 273.1(1)) in the course of commercial activities of the registrant, the registrant shall, in determining the net tax for the reporting period of the registrant that includes the earliest day on which tax in respect of the supply became payable or would have become payable if the supply were not a zero-rated supply, add an amount equal to the total of

(a) interest, at the rate prescribed for the purposes of paragraph 280(1)(b) plus 4% per year compounded daily, on the total amount of tax in respect of the supply that was payable or that would have been payable in respect of the supply if it were not a zero-rated supply, computed for the period beginning on that earliest day and ending on March 31, 2007, and

(b) interest, at the prescribed rate, on the total amount of tax in respect of the supply that was payable or that would have been payable in respect of the supply if it were not a zero-rated supply plus the interest referred to in paragraph (a), computed for the period beginning on April 1, 2007, and ending on the day on or before which the return under section 238 for that reporting period is required to be filed.

(4) Subsection (2) applies in respect of any reporting period of a registrant following a fiscal year of the registrant that ends on or after April 1, 2007, except that if the fiscal year of the registrant includes April 1, 2007, subsection 236.3(2) of the Act, as amended by subsection (2), shall be read as follows:

(2) If an authorization granted to a registrant under subsection 273.1(7) is in effect at any time in a fiscal year of the registrant and the export revenue percentage of the registrant (as defined in subsection 273.1(1)) for that year is less than 90% or the circumstances described in paragraph 273.1(11)(a) or (b) exist with respect to the year, the registrant shall, in determining the net tax for the first reporting period of the registrant following the year, add the total of all amounts each of which is determined by the formula

A × B/12

where

A      is

(a) the product obtained when the rate set out in subsection 165(1) is multiplied by an amount of consideration that was paid or became payable before April 1, 2007, by the registrant for a supply made in a non-participating province of property acquired by the registrant in the year that is a zero-rated supply only because it is included in section 1.2 of Part V of Schedule VI, other than a supply in respect of which the registrant is required under subsection (1) to add an amount in determining net tax for any reporting period,

(b) the product obtained when the total of the rates set out in subsections 165(1) and (2) is multiplied by an amount of consideration that was paid or became payable before April 1, 2007, by the registrant for a supply made in a participating province of property acquired by the registrant in the year that is a zero-rated supply only because it is included in section 1.2 of Part V of Schedule VI, other than a supply in respect of which the registrant is required under subsection (1) to add an amount in determining net tax for any reporting period,

(c) the product obtained when the rate set out in subsection 165(1) is multiplied by an amount which is the value that is or would be, but for subsection 215(2), deemed under subsection 215(1) to be the value, for the purposes of Division III, of a good that was imported before April 1, 2007, by the registrant in the year and in respect of which, by reason only of section 11 of Schedule VII, tax under that Division did not apply,

(d) the product obtained when the rate set out in subsection 165(1) is multiplied by an amount of consideration not included in paragraph (a) that was paid or became payable on or after April 1, 2007, by the registrant for a supply made in a non-participating province of property acquired by the registrant in the year that is a zero-rated supply only because it is included in section 1.2 of Part V of Schedule VI, other than a supply in respect of which the registrant is required under subsection (1) to add an amount in determining net tax for any reporting period,

(e) the product obtained when the total of the rates set out in subsections 165(1) and (2) is multiplied by an amount of consideration not included in paragraph (b) that was paid or became payable on or after April 1, 2007, by the registrant for a supply made in a participating province of property acquired by the registrant in the year that is a zero-rated supply only because it is included in section 1.2 of Part V of Schedule VI, other than a supply in respect of which the registrant is required under subsection (1) to add an amount in determining net tax for any reporting period, and

(f) the product obtained when the rate set out in subsection 165(1) is multiplied by an amount which is the value that is or would be, but for subsection 215(2), deemed under subsection 215(1) to be the value, for the purposes of Division III, of a good that was imported on or after April 1, 2007, by the registrant in the year and in respect of which, by reason only of section 11 of Schedule VII, tax under that Division did not apply; and

B      is

(a) in the case where paragraph (a), (b) or (c) of the description of A applies, the total of 4% and the rate of interest prescribed for the purposes of paragraph 280(1)(b) (expressed as a percentage per year) that is in effect on March 31, 2007, and

(b) in any other case, the prescribed rate of interest that is in effect on the last day of that first reporting period following the year.

144. (1) Subsection 256.2(10) of the Act is replaced by the following:

(10) If a person was entitled to claim a rebate under subsection (3) in respect of a qualifying residential unit (other than a unit located in a multiple unit residential complex) and, within one year after the unit is first occupied as a place of residence after the construction or last substantial renovation of the unit was substantially completed, the person makes a supply by way of sale (other than a supply deemed under section 183 or 184 to have been made) of the unit to a purchaser who is not acquiring the unit for use as the primary place of residence of the purchaser or of a relation of the purchaser, the person shall pay to the Receiver General an amount equal to the rebate plus interest at the prescribed rate less 2% per year, calculated on that amount for the period beginning on the day the rebate was paid or applied to a liability of the person and ending on the day the amount of the rebate is paid by the person to the Receiver General.

(2) Subsection (1) applies in respect of any rebate that a person was entitled to claim if the amount of the rebate is paid by the person to the Receiver General on or after April 1, 2007, except that if the rebate was paid to the person before that day, subsection 256.2(10) of the Act, as enacted by subsection (1), shall be read as follows:

(10) If a person was entitled to claim a rebate under subsection (3) in respect of a qualifying residential unit (other than a unit located in a multiple unit residential complex) and, within one year after the unit is first occupied as a place of residence after the construction or last substantial renovation of the unit was substantially completed, the person makes a supply by way of sale (other than a supply deemed under section 183 or 184 to have been made) of the unit to a purchaser who is not acquiring the unit for use as the primary place of residence of the purchaser or of a relation of the purchaser, the person shall pay to the Receiver General an amount equal to the rebate, plus the total of

(a) interest at the rate prescribed for the purposes of paragraph 280(1)(b), calculated on that amount for the period beginning on the day the rebate was paid or applied to a liability of the person and ending on March 31, 2007, and

(b) interest at the prescribed rate less 2% per year, calculated on the total of that amount plus the interest referred to in paragraph (a) for the period beginning on April 1, 2007, and ending on the day the amount of the rebate is paid by the person to the Receiver General.

145. (1) The Act is amended by adding the following after section 263.01:

(2) Subsection (1) comes into force on April 1, 2007.

146. (1) Subsection 280(1) of the Act is replaced by the following:

280. (1) Subject to this section and section 281, if a person fails to remit or pay an amount to the Receiver General when required under this Part, the person shall pay interest at the prescribed rate on the amount, computed for the period beginning on the first day following the day on or before which the amount was required to be remitted or paid and ending on the day the amount is remitted or paid.

(2) Subsection 280(1.1) of the Act is replaced by the following:

(1.1) Despite subsection (1), if a selected listed financial institution that is required to pay an amount under subsection 228(2.1) on account of the financial institution’s net tax for a reporting period fails to pay all of that amount within the time specified in that subsection, the financial institution shall pay, on the amount not paid, interest at the prescribed rate, computed for the period beginning on the first day following that time and ending on the earlier of

(a) the day the total of the amount and interest is paid, and

(b) the day on or before which the financial institution is required under subsection 238(2.1) to file a final return for that reporting period.

(3) Subsection 280(2) of the Act is replaced by the following:

(2) Despite subsection (1), if a person fails to pay all of an instalment payable by the person under subsection 237(1) within the time specified in that subsection, the person shall pay, on the amount of the instalment not paid, interest at the prescribed rate, computed for the period beginning on the first day following that time and ending on the earlier of

(a) the day the total of the amount and interest is paid, and

(b) the day on or before which the tax on account of which the instalment was payable is required to be remitted.

(4) Subsection 280(3) of the Act is replaced by the following:

(3) Despite subsection (2), the total interest payable by a person under that subsection for the period beginning on the first day of a reporting period for which an instalment on account of tax is payable and ending on the day on or before which the tax on account of which the instalment was payable is required to be remitted shall not exceed the amount, if any, by which

(a) the amount of interest that would be payable under subsection (2) for the period by the person if no amount were paid by the person on account of instalments payable in the period

exceeds

(b) the total of all amounts each of which is an amount of interest at the prescribed rate that applies in the case of interest to be paid to the Receiver General, calculated on an instalment of tax paid for the period beginning on the day of that payment and ending on the day on or before which the tax on account of which the instalment was payable is required to be remitted.

(5) Subsection 280(4) of the Act is replaced by the following:

(4) If a person is required to pay interest under subsection (2) in respect of an instalment required under subsection 237(1) to be paid within the time specified in that subsection and the interest has not been paid on or before the day on or before which the tax on account of which the instalment was payable is required to be remitted, the interest is deemed, for the purposes of this Part, to be an amount required to be remitted by the person on or before that day that has not been remitted on or before that day.

(6) Subsection 280(4.01) of the Act is replaced by the following:

(4.01) If a selected listed financial institution is required to pay interest under subsection (1.1) in respect of an amount required under subsection 228(2.1) to be paid within the time specified in that paragraph and the interest has not been paid on or before the day on or before which the financial institution is required under subsection 238(2.1) to file a final return for that reporting period, the interest is deemed, for the purposes of this Part, to be an amount required to be remitted by the financial institution on or before that day that has not been remitted on or before that day.

(7) Subsection 280(4.1) of the Act is replaced by the following:

(4.1) If interest is compounded on a partic­ular day on an amount that a person has failed to pay or remit when required under this Part, the interest so compounded is deemed, for the purposes of this section, to be required to be paid by the person to the Receiver General at the end of the particular day and, if the person has not paid the interest so computed by the end of the next following day, the interest shall be added to the amount at the end of the particular day.

(8) Subsection 280(5) of the Act is repealed.

(9) Subsection 280(6) of the Act is repealed.

(10) Subsection 280(7) of the Act is replaced by the following:

(7) If the Minister has served a demand that a person pay or remit on or before a specified date all tax, net tax, instalments, amounts under section 264, penalties and interest payable by the person under this Part on the date of the demand, and the person pays the total on or before the specified date, the Minister may waive interest for the period beginning on the first day following the date of the demand and ending on the day of payment.

(11) Subsections (1) and (7) come into force on April 1, 2007.

(12) Subsection (2) applies in respect of any reporting period of a selected listed financial institution that ends on or after April 1, 2007, and for the purposes of calculating any penalty and interest in respect of an amount that the selected listed financial institution is required to pay under subsection 228(2.1) of the Act before that day and fails to pay before that day, subsection 280(1.1) of the Act, as enacted by subsection (2), shall be read as follows:

(1.1) Despite subsection (1), if a selected listed financial institution that is required to pay an amount under subsection 228(2.1) on account of the financial institution’s net tax for a reporting period fails to pay all of that amount within the time specified in that subsection, the financial institution shall pay

(a) a penalty of 6% per year and interest at the prescribed rate on the amount not paid, computed for the period beginning on the first day following that time and ending on March 31, 2007; and

(b) interest at the prescribed rate on the total of the amount that remains unpaid on March 31, 2007, plus the interest and penalty referred to in paragraph (a), computed for the period beginning on April 1, 2007, and ending on the earlier of

(i) the day the total of the amount, penalty and interest is paid, and

(ii) the day on or before which the financial institution is required under subsection 238(2.1) to file a final return for that reporting period.

(13) Subsection (3) applies in respect of any instalment payable by a person on or after April 1, 2007, and for the purposes of calculating any penalty and interest in respect of an instalment that the person is required to pay under subsection 237(1) of the Act before that day and fails to pay before that day, subsection 280(2) of the Act, as enacted by subsection (3), shall be read as follows:

(2) Despite subsection (1), if a person fails to pay all of an instalment payable by the person under subsection 237(1) within the time specified in that subsection, the person shall pay

(a) a penalty of 6% per year and interest at the prescribed rate on the amount of the instalment not paid, computed for the period beginning on the first day following that time and ending on March 31, 2007; and

(b) interest at the prescribed rate on the total of the amount of the instalment that remains unpaid on March 31, 2007, plus the interest and penalty referred to in paragraph (a), computed for the period beginning on April 1, 2007, and ending on the earlier of

(i) the day the total of the amount, penalty and interest is paid, and

(ii) the day on or before which the tax on account of which the instalment was payable is required to be remitted.

(14) Subsection (4) applies in respect of any reporting period of a person that begins on or after April 1, 2007. However, if the person is required to pay an instalment under subsection 237(1) of the Act before April 1, 2007, fails to pay the instalment before the time provided under section 237 of the Act and is required to remit the tax on account of which the instalment was payable on or before a day that is on or after that day, for the purposes of calculating any penalty or interest in respect of the instalment, subsection 280(3) of the Act, as enacted by subsection (4), shall be read as follows:

(3) Despite subsection (2), the total interest payable by a person under that subsection for the period beginning on the first day of a reporting period for which an instalment on account of tax is payable and ending on the day on or before which the tax on account of which the instalment was payable is required to be remitted shall not exceed the amount, if any, by which

(a) the total of the interest and penalties that would be payable under subsection (2) for the period by the person if no amount were paid by the person on account of instalments payable in the period

exceeds

(b) the total of all amounts each of which is

(i) an amount of interest at the prescribed rate plus 6% per year, calculated on a particular instalment of tax paid before April 1, 2007, for the period beginning on the day of that payment and ending on March 31, 2007,

(ii) an amount of interest at the prescribed rate that applies in the case of interest to be paid to the Receiver General, calculated on that particular instalment of tax for the period beginning on April 1, 2007, and ending on the day on or before which the tax on account of which the particular instalment was payable is required to be remitted, and

(iii) an amount of interest at the prescribed rate that applies in the case of interest to be paid to the Receiver General, calculated on an instalment of tax paid after March 31, 2007, for the period beginning on the day of that payment and ending on the day on or before which the tax on account of which the instalment was payable is required to be remitted.

(15) Subsection (5) applies in respect of any instalment that a person first fails to pay on or after April 1, 2007.

(16) Subsection (6) applies in respect of any amount that a selected listed financial institution is required to pay under subsection 228(2.1) of the Act and first fails to pay on or after April 1, 2007.

(17) Subsection (8) applies in respect of any amount that a person fails to remit or pay on or after April 1, 2007.

(18) Subsection (9) applies in respect of any reporting period of a person that ends on or after April 1, 2007.

(19) Subsection (10) applies in respect of any demand served on or after April 1, 2007, by the Minister of National Revenue.

147. (1) The Act is amended by adding the following after section 280:

(2) Section 280.1 of the Act, as enacted by subsection (1), applies

(a) in respect of any return that is required to be filed under Part IX of the Act on or after April 1, 2007; and

(b) in respect of any return that is required to be filed under Part IX of the Act before that day if it is not filed on or before March 31, 2007, in which case the day on or before which the return is required to be filed is deemed to be March 31, 2007, for the purposes of calculating any penalty under that section.

(3) Section 280.2 of the Act, as enacted by subsection (1), applies in respect of any reporting period of a person that ends on or after April 1, 2007.

(4) Section 280.3 of the Act, as enacted by subsection (1), applies in respect of any instrument that is dishonoured on or after April 1, 2007.

148. (1) Paragraphs 281(2)(c) and (d) of the Act are replaced by the following:

(c) any interest payable under section 280 on any tax or net tax payable that the person is required to report in the return shall be calculated as though the tax or net tax were required to be paid on or before the day on which the extended time expires; and

(d) any penalty payable under section 280.1 in respect of the return shall be calculated as though the return were required to be filed on or before the day on which the extended time expires.

(2) Subsection (1) applies in respect of any extension of time that expires on or after April 1, 2007.

149. (1) Section 281.1 of the Act is replaced by the following:

281.1 (1) The Minister may, on or before the day that is ten calendar years after the end of a reporting period of a person, waive or cancel interest payable by the person under section 280 on an amount that is required to be remitted or paid by the person under this Part in respect of the reporting period.

(2) The Minister may, on or before the day that is ten calendar years after the end of a reporting period of a person, waive or cancel all or any portion of any

(a) penalty that became payable by the person under section 280 before April 1, 2007, in respect of the reporting period; and

(2) Subsection (1) comes into force on April 1, 2007.

150. (1) Section 283 of the Act is replaced by the following:

283. Every person who fails to file a return when required pursuant to a demand issued under section 282 is liable to a penalty equal to $250.

(2) Subsection (1) applies in respect of any demand under section 282 of the Act served by the Minister of National Revenue on or after April 1, 2007.

151. (1) The portion of subsection 296(2) of the French version of the Act before paragraph (a) is replaced by the following:

(2) The portion of subsection 296(2) of the English version of the Act after paragraph (c) is replaced by the following:

the Minister shall take the allowable credit into account in assessing the net tax for the particular reporting period as if the person had claimed the allowable credit in a return filed for the period.

(3) The portion of subsection 296(2.1) of the French version of the Act before paragraph (a) is replaced by the following:

(4) The portion of subsection 296(2.1) of the English version of the Act after paragraph (c) is replaced by the following:

the Minister shall apply all or part of the allowable rebate against that net tax or overdue amount as if the person had, on the particular day, paid or remitted the amount so applied on account of that net tax or overdue amount.

(5) The portion of subsection 296(3) of the Act before paragraph (a) is replaced by the following:

(3) If, in assessing the net tax of a person for a particular reporting period of the person, the Minister determines that there is an overpayment of net tax for the particular period, except where the assessment is made in the circumstances described in paragraph 298(4)(a) or (b) after the time otherwise limited for the assessment by paragraph 298(1)(a), the Minister shall

(6) The portion of subparagraph 296(3)(b)(i) of the Act before clause (A) is replaced by the following:

(i) all or part of the overpayment that was not applied under paragraph (a) together with interest at the prescribed rate on all or that part of the overpayment, computed for the period beginning on the day that is 30 days after the latest of

(7) The portion of paragraph 296(3)(c) of the Act before subparagraph (i) is replaced by the following:

(c) refund to the person that part of the overpayment that was not applied under paragraphs (a) and (b) together with interest at the prescribed rate on that part of the overpayment, computed for the period beginning on the day that is 30 days after the latest of

(8) The portion of subsection 296(3.1) of the Act before paragraph (a) is replaced by the following:

(3.1) If, in assessing the net tax of a person for a particular reporting period of the person or an amount (in this subsection referred to as the “overdue amount”) that became payable by a person under this Part, all or part of an allowable rebate referred to in subsection (2.1) is not applied under that subsection against that net tax or overdue amount, except where the assessment is made in the circumstances described in paragraph 298(4)(a) or (b) after the time otherwise limited for the assessment by paragraph 298(1)(a), the Minister shall

(9) The portion of subparagraph 296(3.1)(b)(i) of the Act before clause (A) is replaced by the following:

(i) all or part of the allowable rebate that was not applied under subsection (2.1) or paragraph (a) together with interest at the prescribed rate on all or that part of the allowable rebate, computed for the period beginning on the day that is 30 days after the later of

(10) The portion of paragraph 296(3.1)(c) of the Act before subparagraph (i) is replaced by the following:

(c) refund to the person that part of the allowable rebate that was not applied under any of subsection (2.1) and paragraphs (a) and (b) together with interest at the prescribed rate on that part of the allowable rebate, computed for the period beginning on the day that is 30 days after the later of

(11) Paragraph 296(4)(b) of the Act is replaced by the following:

(b) shall not be refunded under paragraph (3)(c) unless the input tax credit or deduction would have been allowed as an input tax credit or deduction, as the case may be, in determining the net tax for another reporting period of the person if the person had claimed the input tax credit or deduction in a return under Division V filed on the day notice of the assessment is sent to the person.

(12) Paragraph 296(4.1)(b) of the Act is replaced by the following:

(b) shall not be refunded under paragraph (3.1)(c) unless the allowable rebate would have been payable to the person as a rebate if the person had claimed it in an application under this Part filed on the day notice of the assessment is sent to the person, and, where the rebate is in respect of an amount that is being assessed, if the person had paid or remitted that amount.

(13) Subsection 296(7) of the Act is replaced by the following:

(14) Subsections (1) to (5), (8) and (11) to (13) come into force on April 1, 2007.

(15) Subsections (6), (7), (9) and (10) apply to any reporting period of a person that ends on or after April 1, 2007.

152. (1) Subsection 297(4) of the Act is replaced by the following:

(4) If a rebate under section 215.1 or Division VI (other than section 253) is paid to a person under subsection (3), the Minister shall pay interest at the prescribed rate to the person on the rebate for the period beginning on the day that is 30 days after the day the application in which the rebate is claimed is filed with the Minister and ending on the day the rebate is paid.

(2) Subsection 297(5) of the Act is repealed.

(3) Subsection (1) applies

(a) to any rebate under section 259, 259.1 or 261.01 of the Act if the claim period for the rebate ends on or after April 1, 2007; and

(b) to any other rebate if the application in which the rebate is claimed is filed with the Minister of National Revenue on or after April 1, 2007.

(4) Subsection (2) applies in respect of interest payable by the Minister of National Revenue under subsection 297(4) of the Act on or after April 1, 2007.

153. (1) The Act is amended by adding the following after section 297:

(2) Subsection (1) comes into force on April 1, 2007.

154. (1) Paragraph 298(1)(e) of the Act is replaced by the following:

(e) in the case of any penalty payable by the person, other than a penalty under section 280.1, 285 or 285.1, more than four years after the person became liable to pay the penalty;

(2) Subsection (1) applies in respect of any penalty that becomes payable on or after April 1, 2007.

155. (1) Subsection 313(3) of the Act is replaced by the following:

(3) If a judgment is obtained for any tax, net tax, penalty, interest or other amount payable or remittable under this Part, including a certificate registered under section 316, the provisions of this Part by which interest is payable for failure to pay or remit the amount apply, with such modifications as the circumstances require, to failure to pay the judgment debt, and the interest is recoverable in like manner as the judgment debt.

(2) Subsection (1) applies in respect of any judgment obtained for amounts that became payable or remittable to the Receiver General on or after April 1, 2007.

156. (1) Subsection 315(1) of the Act is replaced by the following:

315. (1) The Minister may not take any collection action under sections 316 to 321 in respect of any amount payable or remittable by a person that may be assessed under this Part, other than interest, unless the amount has been assessed.

(2) Subsection (1) comes into force on April 1, 2007.

157. (1) Subparagraphs 316(11)(b)(i) and (ii) of the Act are replaced by the following:

(i) in the case of interest, interest at the prescribed rate under this Part applicable from time to time on amounts payable to the Receiver General, without indicating the specific rates of interest to be charged on each of the separate amounts or to be charged for any particular period of time, or

(ii) in the case of a penalty, a penalty under section 280.1 on amounts payable to the Receiver General.

(2) Subsection (1) applies in respect of any certificate made under subsection 316(1) of the Act in respect of amounts that became payable or remittable to the Receiver General on or after April 1, 2007.

158. (1) Paragraph 322.1(3)(f) of the Act is replaced by the following:

(f) sections 280, 280.1 and 284 apply as if the net tax for the assessed period were not required to be remitted, and the return for that period were not required to be filed, until the last day of the period described in subsection (9).

(2) Subsection (1) comes into force on April 1, 2007.

159. (1) Subsection 326(3) of the Act is replaced by the following:

(3) A person who is convicted under this section of failing to comply with a provision of this Part or a regulation made under this Part is not liable to pay a penalty imposed under section 280.1, 283 or 284 for the same failure, unless a notice of assessment for the penalty was issued before the information or complaint giving rise to the conviction was laid or made.

(2) Subsection (1) comes into force on April 1, 2007.

160. (1) Subsection 327(3) of the Act is replaced by the following:

(3) A person who is convicted of an offence under this section is not liable to pay a penalty imposed under any of sections 280.1 and 283 to 285.1 for the same evasion or attempt unless a notice of assessment for that penalty was issued before the information or complaint giving rise to the conviction was laid or made.

(2) Subsection (1) comes into force on April 1, 2007.

Income Tax Act

161. (1) Paragraph 18(1)(t) of the Income Tax Act is replaced by the following:

(t) any amount paid or payable

(i) under this Act (other than tax paid or payable under Part XII.2 or Part XII.6),

(2) Subsection (1) applies to taxation years that begin on or after April 1, 2007.

162. (1) Subsection 161.4(2) of the Act is replaced by the following:

(2) If, at any time, the total of all amounts payable by the Minister to a person under this Act does not exceed two dollars, the Minister may apply those amounts against any amount owing, at that time, by the person to Her Majesty in right of Canada. However, if the person, at that time, does not owe any amount to Her Majesty in right of Canada, those amounts payable are deemed to be nil.

(2) Subsection (1) applies to amounts owing on or after April 1, 2007.

163. (1) Section 164 of the Act is amended by adding the following after subsection (2):

(2) Subsection (1) comes into force on April 1, 2007.

164. (1) Subsection 220(3) of the Act is replaced by the following:

(3) The Minister may at any time extend the time for making a return under this Act.

(2) Section 220 of the Act is amended by adding the following after subsection (3.7):

(3) Subsection (1) applies in respect of extensions granted on or after April 1, 2007.

(4) Subsection (2) applies in respect of any instrument that is dishonoured on or after April 1, 2007.

165. (1) Section 221.2 of the Act is renumbered as subsection 221.2(1) and is amended by adding the following:

(2) Subsection (1) applies in respect of re-appropriation applications made on or after April 1, 2007.

166. (1) Paragraph 225.1(1)(e) of the Act is repealed.

(2) Subsection (1) comes into force on April 1, 2007.

Conditional Amendment

167. If this Act receives royal assent after April 1, 2007,

(a) every reference in this Part to “April 1, 2007” is replaced by the day of that assent; and

(b) every reference in this Part to “March 31, 2007” is replaced by the day before the day of that assent.

PART 6

UNIVERSAL CHILD CARE BENEFIT

Enactment of Act

168. The Universal Child Care Benefit Act is enacted as follows:

An Act to assist families by supporting their child care choices through direct financial support and to make consequential and related amendments to certain Acts

SHORT TITLE

1. This Act may be cited as the Universal Child Care Benefit Act.

INTERPRETATION

2. The following definitions apply in this Act.

“eligible individual” means a person who is an eligible individual for the purpose of Subdivision a.1 of Division E of Part I of the Income Tax Act.

“Minister” means the Minister of Human Resources and Skills Development.

“qualified dependant” means a person who has not attained the age of six years and who is a qualified dependant for the purpose of Subdivision a.1 of Division E of Part I of the Income Tax Act.

PURPOSE

3. The purpose of this Act is to assist families by supporting their child care choices through direct financial support to a maximum of $1,200 per year in respect of each of their children who has not attained the age of six years.

BENEFIT

4. (1) The Minister shall pay to an eligible individual, for each month at the beginning of which he or she is an eligible individual, a benefit of $100 for each child who is a qualified dependant of the individual at the beginning of that month.

(2) The benefit may not be paid in respect of any month before July, 2006.

5. A benefit

(a) is not subject to the operation of any law relating to bankruptcy or insolvency;

(b) cannot be assigned, charged, attached or given as security;

(c) cannot be retained by way of deduction, set-off or, in Quebec, compensation, under any Act of Parliament other than this Act; and

(d) is not garnishable moneys for the purposes of the Family Orders and Agreements Enforcement Assistance Act.

6. (1) A person who has received or obtained a benefit to which the person is not entitled, or a benefit in excess of the amount of the benefit to which the person is entitled, shall, as soon as possible, repay the amount of the benefit or the excess amount, as the case may be.

(2) The amount of the overpayment or erroneous payment constitutes a debt due to Her Majesty, as of the day on which it was paid, that may be recovered by the Minister of National Revenue.

7. (1) Subject to this section, no action or proceedings shall be taken to recover money owing under this Act after the expiry of the six-year limitation period that begins on the day on which the money becomes due and payable.

(2) Money owing by a person under this Act may be recovered at any time by way of deduction from, set-off against or, in Quebec, compensation against, any sum of money, including a benefit under this Act, that may be due or payable by Her Majesty in right of Canada to the person, other than an amount payable under section 122.61 of the Income Tax Act.

(3) If a person’s liability for money owing under this Act is acknowledged in accordance with subsection (5), the time during which the limitation period has run before the acknowledgment does not count in the calculation of that period.

(4) If a person’s liability for money owing under this Act is acknowledged in accordance with subsection (5) after the expiry of the limitation period, an action or proceedings to recover the money may, subject to subsections (3) and (6), be brought within six years after the date of the acknowledgment.

(5) An acknowledgment of liability means

(a) a written promise to pay the money owing, signed by the person or his or her agent or other representative;

(b) a written acknowledgment of the money owing, signed by the person or his or her agent or other representative, whether or not a promise to pay can be implied from it and whether or not it contains a refusal to pay;

(c) a part payment by the person or his or her agent or other representative of any money owing; or

(d) any acknowledgment of the money owing made by the person, his or her agent or other representative or the trustee or administrator in the course of proceedings under the Bankruptcy and Insolvency Act or any other legislation dealing with the payment of debts.

(6) The running of a limitation period in respect of money owing under this Act is suspended during any period in which it is prohibited to commence or continue an action or other proceedings against the person to recover money owing under this Act.

(7) This section does not apply in respect of an action or proceedings relating to the execution, renewal or enforcement of a judgment.

8. No interest is payable on any amount owing to Her Majesty under this Act as a result of an overpayment or an erroneous payment.

9. The Minister may enter into agreements or arrangements with any department, board or agency of the Government of Canada to assist the Minister in carrying out the purposes and provisions of this Act.

10. All amounts payable by the Minister under section 4 shall be paid out of the Consolidated Revenue Fund.

Consequential And Related Amendments

Children’s Special Allowances Act

169. The Children’s Special Allowances Act is amended by adding the following after section 2:

170. The Act is amended by adding the following after section 3:

171. Paragraph 4(4)(d) of the Act is replaced by the following:

(d) reaches eighteen years of age or, in the case of a special allowance supplement paid under section 3.1, reaches six years of age.

Employment Insurance Act

172. The definition “income” in section 144 of the Employment Insurance Act is replaced by the following:

“income” of a person for a period means the amount that would be their income for the period determined under the Income Tax Act if no amount were

(a) deductible under paragraphs 60(v.1), (w) and (y) of that Act,

(b) included in respect of a gain from a disposition of property to which section 79 of that Act applies, or

Income Tax Act

173. (1) Section 56 of the Income Tax Act is amended by adding the following after subsection (5):

(2) Subsection (1) applies to amounts received after June 30, 2006.

174. (1) Section 60 of the Act is amended by striking out the word “and” at the end of paragraph (w), by adding the word “and” at the end of paragraph (x) and by adding the following after paragraph (x):

(2) Subsection (1) applies to repayments made after June 30, 2006.

175. (1) The definition “adjusted income” in subsection 122.5(1) of the Act is replaced by the following:

“adjusted income” of an individual, for a taxation year in relation to a month specified for the taxation year, means the total of the individual’s income for the taxation year and the income for the taxation year of the individual’s qualified relation, if any, in relation to the specified month, both calculated as if no amount were included under subsection 56(6) or in respect of any gain from a disposition of property to which section 79 applies in computing that income and as if no amount were deductible under paragraph 60(y) in computing that income.

(2) Subsection (1) applies to the 2006 and subsequent taxation years.

176. (1) The definition “adjusted income” in section 122.6 of the Act is replaced by the following:

“adjusted income” of an individual for a taxation year means the total of all amounts each of which would be the income for the year of the individual or of the person who was the individual’s cohabiting spouse or common-law partner at the end of the year if no amount were included under subsection 56(6) or in respect of any gain from a disposition of property to which section 79 applies in computing that income and if no amount were deductible under paragraph 60(y) in computing that income;

(2) Subsection (1) applies to the 2006 and subsequent taxation years.

177. (1) The description of A in subsection 122.61(1) of the Act is amended by adding the word “and” at the end of paragraph (a), by striking out the word “and” at the end of paragraph (b) and by repealing paragraph (c).

(2) Subsection (1) applies in respect of overpayments that are deemed to arise during months that are after June 2007, and, for overpayments that are deemed to arise during months that are after June 2006 and before July 2007, the description of D in subsection 122.61(1) of the Act is to be read as follows:

D      is the product obtained by multiplying $249 by the number of qualified dependants who have attained the age of 6 years before the month and have not attained the age of 7 years before the month and in respect of whom the person is an eligible individual at the beginning of the month, and

178. (1) The definition “adjusted income” in subsection 180.2(1) of the Act is replaced by the following:

“adjusted income” of an individual for a taxation year means the amount that would be the individual’s income under Part I for the year if no amount were included under subsection 56(6) or in respect of a gain from a disposition of property to which section 79 applies in computing that income and if no amount were deductible under paragraph 60(w) or (y) in computing that income;

(2) Subsection (1) applies to the 2006 and subsequent taxation years.

179. (1) Paragraph 241(4)(d) of the Act is amended by adding the following after subparagraph (vii.2):

(2) Subparagraph 241(4)(d)(vii.3) of the Act, as enacted by subsection (1), applies after June 2003.

(3) Subparagraph 241(4)(d)(vii.4) of the Act, as enacted by subsection (1), applies after June 2006.

Old Age Security Act

180. The definition “income” in section 2 of the Old Age Security Act is amended by striking out the word “and” at the end of paragraph (c), by adding the word “and” at the end of paragraph (d) and by adding the following after paragraph (d):

Coming Into Force

181. This Part, other than sections 173 to 179, comes into force, or is deemed to have come into force, on July 1, 2006.

PART 7

AMENDMENTS TO THE FEDERAL-PROVINCIAL FISCAL ARRANGEMENTS ACT

182. Section 3 of the Federal-Provincial Fiscal Arrangements Act is replaced by the following:

3. Subject to the provisions of this Act, there may be paid to a province for each fiscal year that begins after March 31, 2004 a fiscal equalization payment not exceeding the amounts set out in this Part.

183. (1) Subsection 4.1(3) of the Act is replaced by the following:

(2) Subsection 4.1(4) of the Act is replaced by the following:

(4) The fiscal equalization payment shall be paid to the province in equal monthly instalments on the first and third working days after the 15th day of each month during the relevant fiscal year. For the purpose of this subsection, “working day” includes any day that is not a Saturday or a holiday.

184. The Act is amended by adding the following after section 4.3:

185. The portion of section 4.4 of the Act before paragraph (a) is replaced by the following:

4.4 Subject to the provisions of this Part, there may be paid to a territory

186. (1) Section 4.92 of the Act is amended by adding the following after subsection (1):

(2) Subsections 4.92(3) and (4) of the Act are replaced by the following:

(4) In April and May of each fiscal year beginning after March 31, 2005, there shall be paid to a territory a monthly instalment of the territorial formula financing payment equal to 16 per cent of the territory’s allocation of the aggregate territorial formula financing payment for that fiscal year. In each of the remaining ten months of the fiscal year, there shall be paid to the territory a monthly instalment of the territorial formula financing payment equal to 6.8 per cent of the territory’s allocation of the aggregate territorial formula financing payment under this section.

187. Section 4.93 of the Act is replaced by the following:

4.93 (1) If it is determined that an underpayment of any amounts payable to a territory under section 4.92 has been made, an amount equal to the underpayment may be paid to the territory at the times and in the manner that the Minister considers appropriate.

(2) If it is determined that an overpayment in respect of any amounts payable to a territory under section 4.92 for a fiscal year has been made, the Minister may recover the amount of that overpayment

(a) from any amount payable to the territory under this Act in the same fiscal year or as soon as possible after the end of that fiscal year; or

(b) from the territory as a debt due to Her Majesty in right of Canada.