Federal-Provincial Fiscal Arrangements Act
Marginal note:Computation of payments
4 (1) Subject to the other provisions of this Part, the fiscal equalization payment that may be paid to a province for a fiscal year is the amount determined by the Minister by the formula
1.10 (A + B + C)/3
where
- A
- is the greater of
(a) the product obtained by multiplying
(i) the aggregate of the amounts obtained by subtracting, for each revenue source, the per capita yield in that province for the revenue source for the immediately preceding fiscal year from the average per capita yield of the provinces of Ontario, Quebec, British Columbia, Manitoba and Saskatchewan for the revenue source for the immediately preceding fiscal year
by
(ii) the population of the province for the immediately preceding fiscal year, and
(b) zero;
- B
- is the greater of
(a) the product obtained by multiplying
(i) the aggregate of the amounts obtained by subtracting, for each revenue source, the per capita yield in that province for the revenue source for the fiscal year two years prior to that fiscal year from the average per capita yield of the provinces of Ontario, Quebec, British Columbia, Manitoba and Saskatchewan for the revenue source for the fiscal year two years prior to that fiscal year
by
(ii) the population of the province for the fiscal year two years prior to that fiscal year, and
(b) zero; and
- C
- is the greater of
(a) the product obtained by multiplying
(i) the aggregate of the amounts obtained by subtracting, for each revenue source, the per capita yield in that province for the revenue source for the fiscal year three years prior to that fiscal year from the average per capita yield of the provinces of Ontario, Quebec, British Columbia, Manitoba and Saskatchewan for the revenue source for the fiscal year three years prior to that fiscal year
by
(ii) the population of the province for the fiscal year three years prior to that fiscal year, and
(b) zero.
Marginal note:Payment for fiscal year 2004–2005
(1.1) The fiscal equalization payment that may be paid to a province for the fiscal year beginning on April 1, 2004 is the amount calculated in accordance with the former legislation. Subsections (6) and (7), as they read immediately before the coming into force of this subsection, apply to that payment as if those subsections expressly provided that they apply to it.
Marginal note:Payment for fiscal year 2005–2006
(1.2) The fiscal equalization payment that may be paid to a province for the fiscal year beginning on April 1, 2005 is the amount determined by the Minister by the formula
2D + E
where
- D
- is one third of the amount calculated in accordance with the former legislation; and
- E
- is 1.10 x A/3, where A has the same description as in subsection (1).
Marginal note:Payment for fiscal year 2006–2007
(1.3) The fiscal equalization payment that may be paid to a province for the fiscal year beginning on April 1, 2006 is the amount determined by the Minister by the formula
F + G + H
where
- F
- is one third of the amount calculated in accordance with the former legislation;
- G
- is 1.10 x A/3, where A has the same description as in subsection (1); and
- H
- is 1.10 x B/3, where B has the same description as in subsection (1).
(1.4) [Repealed, 2004, c. 22, s. 3]
Marginal note:Definitions
(2) In this section and in section 4.1,
former legislation
législation antérieure
former legislation means subsection 4(1) of this Act and section 6 of the Federal-Provincial Fiscal Arrangements Regulations, 1999, as this Act and those Regulations read on March 31, 2004; (législation antérieure)
national average rate of tax
taux national moyen de l’impôt
national average rate of tax in respect of a revenue source is the quotient obtained by dividing the aggregate of the revenues to be equalized for a revenue source for all provinces for a fiscal year by the revenue base for that revenue source for all provinces for that fiscal year; (taux national moyen de l’impôt)
per capita yield
rendement par tête
per capita yield in respect of a province for a revenue source for a fiscal year is the quotient obtained by dividing the product of the national average rate of tax for that revenue source and the province’s revenue base for that revenue source for the fiscal year by the population of the province for that fiscal year; (rendement par tête)
revenue base
assiette
revenue base for a revenue source for a province for a fiscal year relates to the measure of the relative capacity of the province to derive revenue from that revenue source for that fiscal year and has the meaning given to that expression by the regulations; (assiette)
revenue source
source de revenu
revenue source means any of the following sources from which provincial revenues are or may be derived:
(a) personal income taxes,
(b) corporation income taxes, and revenues derived from government business enterprises that are not included in any other paragraph of this definition,
(c) taxes on capital of corporations,
(d) general and miscellaneous sales taxes, harmonized sales taxes, and amusement taxes,
(e) tobacco taxes,
(f) motive fuel taxes derived from the sale of gasoline,
(g) motive fuel taxes derived from the sale of diesel fuel,
(h) non-commercial motor vehicle licensing revenues,
(i) commercial motor vehicle licensing revenues,
(j) alcoholic beverage revenues,
(k) hospital and medical care insurance premiums,
(l) forestry revenues,
(m) conventional new oil revenues,
(n) conventional old oil revenues,
(o) heavy oil revenues,
(p) mined oil revenues,
(q) light and medium third tier oil,
(r) heavy third tier oil,
(s) revenues from domestically sold natural gas and exported natural gas,
(t) sales of Crown leases and reservations on oil and natural gas lands,
(u) oil and gas revenues other than those described in paragraphs (m) to (t),
(v) mining revenues,
(w) water power rentals,
(x) insurance premium taxes,
(y) payroll taxes,
(z) provincial and local government property taxes,
(z.1) race track taxes,
(z.2) revenues from lottery ticket sales,
(z.3) revenues, other than those described in paragraphs (z.1) and (z.2), from games of chance,
(z.4) miscellaneous provincial taxes and revenues, provincial revenues from sales of goods and services, local government revenues from sales of goods and services, and miscellaneous local government taxes and revenues, and
(z.5) revenues of the Government of Canada from any of the sources referred to in this definition that are shared by Canada with the provinces; (source de revenu)
revenue to be equalized
revenu sujet à péréquation
revenue to be equalized from a revenue source for a province for a fiscal year means the revenue, as determined by the Minister, derived by the province for the fiscal year from that revenue source. (revenu sujet à péréquation)
Marginal note:Variation of definition revenue source
(3) A description of a revenue source as set out in the definition revenue source in subsection (2) may, by regulation, be revised or altered in one or more of the following ways:
(a) so as to constitute two or more separate revenue sources;
(b) in a manner that results in the inclusion of all or any part of it in another description of a revenue source set out in that definition; and
(c) in a manner that results in the exclusion of any part of it from that definition.
Marginal note:Deduction in computing revenue to be equalized from personal income taxes
(4) In computing the revenue to be equalized from personal income taxes for all the provinces for a fiscal year, the Minister may deduct from the amount that, but for this subsection, would be the revenue to be equalized from that source for all the provinces for the fiscal year, the amount, as estimated by him, by which the revenues derived by Canada under the Income Tax Act from personal income taxes for the taxation year ending in the fiscal year are less than the revenues that would have been derived by Canada thereunder from those taxes if no special abatement of those taxes had been provided under subsection 120(2) of the Income Tax Act or Part VI of this Act.
Marginal note:Municipal property taxes and miscellaneous revenues and taxes
(5) For the purpose of determining the revenue to be equalized derived by a province for a fiscal year,
(a) in the case of the part of the revenue source described in paragraph (z) of the definition revenue source in subsection (2) that consists of local government property taxes, the aggregate of the revenue derived from that part of the revenue source by each municipality, board, commission or other local authority in the province that has power to levy property taxes, for the financial year of each such local authority ending in the fiscal year, and
(b) in the case of the part of the revenue source described in paragraph (z.4) of the definition revenue source in subsection (2) that consists of local government revenues from sales of goods and services and miscellaneous local government taxes and revenues, the aggregate of the revenue derived from that part of the revenue source by each municipality, board, commission or other local authority in the province that has power to derive those revenues for the financial year of each such local authority ending in the fiscal year
is deemed to be revenue derived by the province from those revenue sources for that fiscal year.
Marginal note:Minimum payment to province in certain cases
(6) Notwithstanding subsections (1) and (1.2) to (5) but subject to subsection (9), the fiscal equalization payment that may be paid to a province for a fiscal year beginning on or after April 1, 2005, if the province received a fiscal equalization payment for the immediately preceding fiscal year, shall not be less than the greater of
(a) an amount equal to what the fiscal equalization payment in respect of the immediately preceding fiscal year would be if this subsection were disregarded, minus the threshold amount for the current fiscal year, and
(b) zero.
Marginal note:Definition of national per capita equalization standard
(7) For the purposes of this section, national per capita equalization standard means the average per capita yield of the provinces of Ontario, Quebec, British Columbia, Manitoba and Saskatchewan for all revenue sources.
Marginal note:Definition of threshold amount
(8) For the purposes of subsection (6), the threshold amount
(a) for a fiscal year, except as otherwise provided by paragraphs (b) and (c), is the amount determined by the formula
0.016x 1.10 x X x Y
where
- X
- is one third of the sum of the national per capita equalization standard for the immediately preceding fiscal year, the national per capita equalization standard for the fiscal year two years prior to that fiscal year and the national per capita equalization standard for the fiscal year three years prior to that fiscal year, and
- Y
- is the least of the population of the province for the immediately preceding fiscal year, the population for the fiscal year two years prior to that fiscal year and the population for the fiscal year three years prior to that fiscal year;
(b) for the fiscal year 2005–2006, is the amount determined by the formula
0.016 x X1 x Y1
where
- X1
- is the sum of two thirds of the national per capita equalization standard for the fiscal year 2005–2006 calculated taking into account section 6 of the Federal-Provincial Fiscal Arrangements Regulations, 1999, as those Regulations read on March 31, 2004, and one third of the national per capita equalization standard for the fiscal year 2004–2005 plus 10 per cent, and
- Y1
- is the lesser of the population of the province for the fiscal year 2004–2005 and the population for the fiscal year 2005–2006; and
(c) for the fiscal year 2006–2007, the amount determined by the formula
0.016 x X2 x Y2
where
- X2
- is the sum of one third of the national per capita equalization standard for the fiscal year 2006–2007 calculated taking into account section 6 of the Federal-Provincial Fiscal Arrangements Regulations, 1999, as those Regulations read on March 31, 2004, one third of the national per capita equalization standard for the fiscal year 2005–2006 plus 10 per cent, and one third of the national per capita equalization standard for 2004–2005 plus 10 per cent, and
- Y2
- is the least of the population of the province for the fiscal year 2004–2005, the population for the fiscal year 2005–2006 and the population for the fiscal year 2006–2007.
Marginal note:Maximum payment
(9) Notwithstanding anything in this Part, where
(a) the total amount of the fiscal equalization payments to all provinces as determined under this Part for any fiscal year in the period beginning on April 1, 2000 and ending on March 31, 2002
exceeds
(b) the amount that would result if the amount of ten billion dollars were changed by the percentage change in Canada’s gross domestic product, as determined by the Chief Statistician of Canada in the prescribed manner, from the calendar year ending on December 31, 1999 to the calendar year ending in the fiscal year,
the fiscal equalization payment to each province for the fiscal year shall be reduced by an amount equal to the product obtained by multiplying
(c) the total population of the province as of June 1 of the fiscal year
by
(d) the quotient obtained by dividing the amount by which the amount referred to in paragraph (a) exceeds the amount referred to in paragraph (b) by the total population of all the provinces to which a fiscal equalization payment is made for that fiscal year.
Marginal note:Adjustment of revenue to be equalized
(10) Subject to subsection (11), for a fiscal year in the period beginning on April 1, 1993 and ending on March 31, 2005, where a province that qualifies for a fiscal equalization payment under this Part for the fiscal year has 70 per cent or more of the revenue base for all of the provinces in the fiscal year in respect of a revenue source described in the definition revenue source in subsection (2) as revised or altered in accordance with subsection (3), the revenue to be equalized from that revenue source for all of the provinces for the fiscal year is an amount equal to 70 per cent of the revenue as determined before the adjustment from that revenue source for all of the provinces in respect of the fiscal year.
Marginal note:Adjustment of revenue to be equalized
(10.1) Subject to subsections (11) and (11.1), for a fiscal year beginning on or after April 1, 2005, the revenue to be equalized from a revenue source described in the definition revenue source in subsection (2) as revised or altered in accordance with subsection (3), for all of the provinces, derived in any of the fiscal years taken into account in the calculation of the fiscal equalization payment for that fiscal year, is an amount equal to 70 per cent of the revenue as determined before the adjustment from that revenue source for all of the provinces for any of those fiscal years taken into account, if in any of those fiscal years taken into account
(a) a province has 70 per cent or more of the revenue base for all of the provinces in that fiscal year in respect of a revenue source; and
(b) the aggregate of that province’s per capita yields for all revenue sources is less than the aggregate of the averages of the per capita yields for all revenue sources for the provinces of Ontario, Quebec, British Columbia, Manitoba and Saskatchewan.
Marginal note:Election
(11) In order for subsections (10) and (10.1), as the case may be, to apply in respect of the offshore minerals revenue included in the description set out in paragraph (z.5) of the definition revenue source in subsection (2) as revised or altered in accordance with subsection (3), a province that is eligible for a fiscal equalization offset payment under the Canada — Newfoundland Atlantic Accord Implementation Act, in respect of a fiscal year in the period beginning on April 1, 2004 and ending on March 31, 2007, shall make an election, in the prescribed manner, within 15 days after the Chief Statistician of Canada submits to the Minister a certificate in respect of the fiscal year for which the election is made in accordance with subsection 9(2) of the Federal-Provincial Fiscal Arrangements Regulations, 1999.
Marginal note:Election
(11.1) In order for subsection (10.1) to apply in respect of the offshore minerals revenue included in the description set out in paragraph (z. 5) of the definition revenue source in subsection (2) as revised or altered in accordance with subsection (3), a province that is eligible for a fiscal equalization offset payment under the Canada-Newfoundland Atlantic Accord Implementation Act, in respect of a fiscal year beginning on or after April 1, 2007, shall make an election, in the prescribed manner, within 15 days after the Chief Statistician of Canada submits to the Minister a certificate in respect of the fiscal year immediately preceding the fiscal year for which the election is made, in accordance with subsection 9(2) of the Federal-Provincial Fiscal Arrangements Regulations, 1999.
Marginal note:Effect of election under subsection (11)
(12) Notwithstanding any provision of the Canada — Nova Scotia Offshore Petroleum Resources Accord Implementation Act or the Canada — Newfoundland Atlantic Accord Implementation Act, as the case may be, where a province makes the election described in subsection (11) for a fiscal year, the fiscal equalization offset payment that may otherwise be payable to the province under that Act, in respect of that fiscal year, is zero.
(13) [Repealed, 1999, c. 11, s. 2]
- R.S., 1985, c. F-8, s. 4
- R.S., 1985, c. 11 (3rd Supp.), s. 3
- 1992, c. 10, s. 3
- 1994, c. 2, s. 2
- 1999, c. 11, s. 2
- 2001, c. 19, s. 1
- 2003, c. 15, s. 3
- 2004, c. 4, s. 2, c. 22, s. 3
- Date modified: