Bill S-226

2nd Session, 39th Parliament,

56 Elizabeth II, 2007-2008

senate of canada

BILL S-226

An Act to amend the Business Development Bank of Canada Act (municipal infrastructure bonds) and to make a consequential amendment to another Act

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

1. Section 1 of the Business Development Bank of Canada Act is replaced by the following:

1. This Act may be cited as the Urban Modernization and Business Development Bank Act.

2. The Act is amended by adding the following after section 4:

4.1 An additional purpose of the Bank is to deal with applications, under section 33.1, for income tax exemptions for municipal bonds to finance infrastructure projects.

3. The Act is amended by adding the following after section 33:

MUNICIPAL INFRASTRUCTURE BONDS — INCOME TAX EXEMPTIONS

33.1 (1) A municipality in Canada may apply to the Bank for an income tax exemption for bonds to be issued by the municipality to finance an infrastructure project.

(2) A municipality may apply for an income tax exemption only if the municipality has received provincial approval to make the application.

(3) For the purposes of subsection (2), “provincial approval” is approval by the person or body specified, for that purpose, under the legislation of the province or, if no such person or body is specified, by the government of the province.

(4) The Bank shall grant an income tax exemption if it is satisfied that

(a) the proceeds of the issue of the bonds will be used for an infrastructure project; and

(b) any other requirements prescribed by the regulations are satisfied.

(5) The Bank shall publish a notice of any income tax exemption granted under this section in the Canada Gazette.

(6) Interest paid on a bond in respect of which an income tax exemption has been granted is exempt from income tax under the Income Tax Act.

33.2 The Governor in Council may make regulations

(a) prescribing what qualifies as an infrastructure project for the purposes of section 33.1;

(b) prescribing requirements for the purposes of paragraph 33.1(4)(b).

4. Schedule II to the Access to Information Act is amended by striking out the reference to:

Business Development Bank of Canada Act

5. Schedule II to the Act is amended by adding, in alphabetical order, a reference to:

Urban Modernization and Business Development Bank Act

6. The provisions of this Act come into force on a day to be fixed by order of the Governor in Council.