Budget Implementation Act, 2006 (S.C. 2006, c. 4)
Full Document:
Assented to 2006-06-22
Budget Implementation Act, 2006
S.C. 2006, c. 4
Assented to 2006-06-22
An Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006
SUMMARY
Part 1 amends the Excise Tax Act to implement, effective July 1, 2006, the reduction in the Goods and Services Tax (GST) and the federal component of the Harmonized Sales Tax (HST) from 7 to 6 per cent. It also amends the Act to provide transitional rules for determining the GST/HST rate applicable to transactions that straddle the July 1, 2006, implementation date, including transitional rebates in respect of the sale of residential complexes where transfer of ownership and possession both take place on or after July 1, 2006, pursuant to a written agreement entered into on or before May 2, 2006. The Excise Act, 2001 and the Excise Act are amended to increase the excise duties on tobacco and alcohol products to offset the impact of the GST/HST rate reduction. The Air Travellers Security Charge Act is amended to ensure that rates for domestic and transborder air travel reflect the impact of the GST/HST rate reduction. Those amendments generally apply as of July 1, 2006.
Part 2 implements income tax measures proposed or referenced in Budget 2006 to
(a) reduce personal income taxes;
(b) increase the child disability benefit;
(c) increase the refundable medical expense tax credit;
(d) eliminate capital gains tax on charitable donations of publicly-listed securities and ecologically-sensitive land;
(e) reintroduce the mineral exploration tax credit for new flow-through share agreements entered into before April 2007;
(f) expand the eligibility criteria for the disability tax credit;
(g) expand the list of expenses eligible for the disability supports deduction;
(h) expand the list of expenses eligible for the medical expenses tax credit;
(i) clarify the eligibility of home renovation and construction expenses for the medical expenses tax credit;
(j) double the amount of disability-related and medical expenses that can be claimed by a caregiver;
(k) introduce a tax credit in respect of adoption expenses;
(l) introduce a tax deferral for shareholders of agricultural co-ops;
(m) reduce corporate income taxes;
(n) eliminate the federal capital tax; and
(o) extend the carry-over period for non-capital losses and investment tax credits.
Part 3 amends Schedule I to the Excise Tax Act to repeal the excise tax on clocks, items made from semi-precious stones and items commonly known as jewellery, effective May 2, 2006.
Part 4 amends the First Nations Goods and Services Tax Act to facilitate the establishment of taxation arrangements between the government of specified provinces and interested Indian Bands situated in those specified provinces. It also amends the Yukon First Nations Self-Government Act to provide transitional income tax measures consistent with negotiated agreements.
Part 5 amends the Excise Tax Act, the Excise Act, 2001, the Air Travellers Security Charge Act and the Income Tax Act to harmonize various accounting, interest, penalty and related administrative and enforcement provisions. These amendments will apply based on an implementation date that is the later of April 1, 2007, and Royal Assent. It also amends the Excise Tax Act to confirm that debt collection services that are generally provided by collection agents to financial institutions are not financial services for GST/HST purposes and are therefore taxable for GST/HST purposes.
Part 6 enacts the Universal Child Care Benefit Act 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. It also makes consequential and related amendments to the Income Tax Act, the Employment Insurance Act, the Children’s Special Allowances Act and the Old Age Security Act.
Part 7 amends the Federal-Provincial Fiscal Arrangements Act to determine the amount of the fiscal equalization payments to the provinces and the territorial formula financing payments to each of the territories for the fiscal years beginning after March 31, 2006 and to authorize the Minister of Finance to make an additional fiscal equalization payment to British Columbia and Newfoundland and Labrador, and to make an additional territorial formula financing payment to Yukon and Nunavut, for the fiscal year beginning on April 1, 2006.
Part 8 provides for a total payment of $650,000,000 to the provinces and territories for the fiscal year 2006-2007 in respect of early learning and child care. It provides for payments to the territories for the fiscal year 2006-2007.
Part 9 authorizes the Minister of Finance to enter into an agreement to provide protection to mortgagees in respect of mortgage insurance policies that are provided by a mortgage insurer that is approved by the Superintendent of Financial Institutions to sell mortgage insurance in Canada. It also fixes the maximum amount of such protection and determines how that amount can be changed.
Part 10 extends the sunset provisions of financial institutions statutes by six months from October 24, 2006 to April 24, 2007.
Part 11 amends the Canadian Forces Superannuation Act, Public Service Superannuation Act and the Royal Canadian Mounted Police Superannuation Act to change the existing formula by which adjustments are made to a contributor’s annuity.
Part 12 enacts the Mackenzie Gas Project Impacts Act, the purpose of which is to create the Corporation for the Mitigation of Mackenzie Gas Project Impacts. The corporation will provide contributions to regional organizations that will fund projects that mitigate the existing or anticipated socio-economic impacts on communities in the Northwest Territories arising from the Mackenzie gas project. The Part also provides that a payment of $500,000,000 may be made to the corporation and adds the name of the corporation to the schedule of certain federal Acts.
Part 13 amends the European Bank for Reconstruction and Development Agreement Act to permit the European Bank for Reconstruction and Development to carry out its purpose in Mongolia and to allow the Governor in Council to amend, by order, the schedule to that Act. It amends the Freshwater Fish Marketing Act to increase the Freshwater Fish Marketing Corporation’s legislative borrowing limit from thirty million dollars to fifty million dollars. It also amends the Public Sector Pension Investment Board Act to create share capital for the Public Sector Pension Investment Board
Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:
SHORT TITLE
Marginal note:Short title
1. This Act may be cited as the Budget Implementation Act, 2006.
PART 1AMENDMENTS RELATING TO THE GST/HST RATE REDUCTION
Amendments Relating to the GST/HST
R.S., c. E-15Excise Tax Act
Marginal note:1997, c. 10, s. 150(6)
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,
Marginal note:1997, c. 10, s. 150(6)
(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.
Marginal note:1997, c. 10, s. 160(1)
3. (1) Subsection 165(1) of the Act is replaced by the following:
Marginal note:Imposition of goods and services tax
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.
Marginal note:1997, c. 10, s. 165(5)(E)
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%”.
Marginal note:1997, c. 10, s. 166(1)
5. (1) Paragraph 174(e) of the French version of the Act is replaced by the following:
e) la personne est réputée avoir payé, au moment du versement de l’indemnité et relativement à la fourniture, une taxe égale au résultat du calcul suivant :
A × (B/C)
où :
- A
- représente le montant de l’indemnité,
- B
- :
(i) la somme du taux fixé au paragraphe 165(1) et du taux de taxe applicable à une province participante si, selon le cas :
(A) la totalité ou la presque totalité des fournitures relativement auxquelles l’indemnité est versée ont été effectuées dans des provinces participantes,
(B) l’indemnité est versée en vue de l’utilisation du véhicule à moteur dans des provinces participantes,
(ii) dans les autres cas, le taux fixé au paragraphe 165(1),
- C
- la somme de 100 % et du pourcentage déterminé selon l’élément B.
Marginal note:1997, c. 10, s. 166(1)
(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
- C
- is the total of 100% and the percentage determined for B.
(3) Subsections (1) and (2) apply to any allowance paid by a person on or after July 1, 2006.
Marginal note:1997, c. 10, s. 169(3)
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.
- Date modified: