Shipbuilding Temporary Assistance Program Regulations (C.R.C., c. 349)

Short Title

1 These Regulations may be cited as the Shipbuilding Temporary Assistance Program Regulations.

Interpretation

2 In these Regulations,

approved cost

approved cost of an eligible ship, means the cost of the eligible ship determined by the Minister pursuant to subsection 6(3); (coût approuvé)

completed

completed, in relation to an eligible ship, means that a certificate of registry has been issued for the ship; (terminé)

contract

contract means an agreement in writing between a shipbuilder and a shipowner for the construction of one or more vessels that provides for the deposit of at least five per cent of the contract price or at least five per cent of the price of the first vessel in the case where more than one vessel is included in the contract; (contrat)

contract date

contract date means the later of

• (a) the date on which a contract is signed by both parties, and

• (b) the date on which a deposit is paid by a shipowner to a shipbuilder; (date du contrat)

contract price

contract price means the amount payable by a shipowner to a shipbuilder under the terms of a contract; (prix contractuel)

eligible ship

eligible ship means a vessel that is declared by the Minister, pursuant to subsection 4(3) to be an eligible ship for the purposes of these Regulations; (navire admissible)

gross tonnage

gross tonnage has the same meaning as in the Canada Shipping Act; (jauge brute)

maximum approved cost

maximum approved cost of an eligible ship means the maximum amount determined by the Minister pursuant to subsection 6(5); (coût maximum approuvé)

Minister

Minister means the Minister of Industry, Trade and Commerce; (ministre)

proceeds of disposition

proceeds of disposition has the meaning assigned to that phrase in paragraph 13(21)(d) of the Income Tax Act; (produit d'une disposition)

shipbuilder

shipbuilder means a citizen of Canada or a company incorporated in Canada that is engaged in Canada in the business of building ships in Canada; (constructeur de navires)

shipbuilding grant

shipbuilding grant means the amount payable to a shipbuilder in respect of an eligible ship pursuant to these Regulations; (aide à la construction de navires)

vessel

vessel means any commercial or scientific vessel that is

• (a) of at least

  • (i) 100 tons gross tonnage if self-propelled,

  • (ii) 200 tons gross tonnage if not self-propelled,

  • (iii) 50 tons gross tonnage if a tug,

  • (iv) two tons gross tonnage if a submersible capable of operating at depths of at least 1,000 feet, or

• (b) over 75 feet in overall length if a fishing vessel. (navire)

Payment of Shipbuilding Grant

• 3 (1) Where money is voted by Parliament for the purpose of shipbuilding grants for the construction of vessels, a shipbuilding grant may be paid in respect of an eligible ship

  • (a) the construction of which did not commence before November 27, 1970; and

  • (b) the contract date applicable to which is not later than March 31, 1975.

  • (c) [Revoked, SOR/78-842, s. 1]

• (2) [Revoked, SOR/78-842, s. 1]

• (3) The amount of a shipbuilding grant shall be determined in accordance with section 6 and may, subject to these Regulations, be paid in accordance with an agreement entered into pursuant to section 4.

• 4 (1) Where an application for a shipbuilding grant is made in respect of a vessel, the Minister may, subject to any terms or conditions established by the Treasury Board and subject to subsection (2), enter into an agreement with the shipbuilder thereof, providing for the payment of a shipbuilding grant.

• (2) No agreement shall be entered into pursuant to subsection (1) until the Minister has

  • (a) declared the vessel referred to in the application for a shipbuilding grant to be an eligible ship; and

  • (b) determined the maximum amount of the approved cost of that eligible ship, pursuant to subsection 6(5).

• (3) Subject to subsection (4), where the Minister is satisfied that the vessel referred to in the application for a shipbuilding grant is to be constructed in Canada by a shipbuilder and is to be registered in a country other than Canada, the Minister may declare the vessel to be an eligible ship.

• (4) Before declaring a vessel to be an eligible ship the Minister shall consider

  • (a) the benefits to Canada through the use of Canadian materials and components;

  • (b) the ability of the shipbuilder to carry out the terms of the contract without having to over-expand his facilities in relation to anticipated long-term demand;

  • (c) the continuing availability of facilities to meet domestic requirements for ship construction and repair;

  • (d) the positive effects of the contract on the long-term competitive status of the shipbuilder and of the Canadian shipbuilding industry; and

  • (e) the market development implications of the contract.

5 An application for a shipbuilding grant shall be in the form prescribed by the Minister and shall be made within 60 days of the contract date or within such longer time as the Minister may allow.

Amount of Shipbuilding Grant

• 6 (1) The shipbuilding grant for an eligible ship of not more than 25,000 tons gross tonnage shall be an amount not exceeding

  • (a) 17 per cent of the approved cost when the contract date applicable to the eligible ship is not later than September 30, 1971;

  • (b) 16 1/2 per cent of the approved cost when the contract date applicable to the eligible ship is within the period commencing October 1, 1971 and ending December 31, 1971;

  • (c) 16 per cent of the approved cost when the contract date applicable to the eligible ship is within the period commencing January 1, 1972 and ending March 31, 1972;

  • (d) 15 1/2 per cent of the approved cost when the contract date applicable to the eligible ship is within the period commencing April 1, 1972 and ending March 31, 1973; and

  • (e) 17 per cent of the approved cost when the contract date applicable to the eligible ship is within the period commencing April 1, 1973 and ending March 31, 1975.

• (2) The shipbuilding grant for an eligible ship of more than 25,000 tons gross tonnage shall be an amount not exceeding

  • (a) 14 per cent of the approved cost when the contract date applicable to the eligible ship is not later than September 30, 1971;

  • (b) 13 1/2 per cent of the approved cost when the contract date applicable to the eligible ship is within the period commencing October 1, 1971 and ending December 31, l971;

  • (c) 13 per cent of the approved cost when the contract date applicable to the eligible ship is within the period commencing January 1, 1972 and ending March 31, 1972;

  • (d) 12 1/2 per cent of the approved cost when the contract date applicable to the eligible ship is within the period commencing April 1, 1972 and ending March 31, 1973; and

  • (e) 17 per cent of the approved cost when the contract date applicable to the eligible ship is within the period commencing April 1, 1973 and ending March 31, 1975.

• (3) Subject to subsection (5), the Minister shall, before paying the balance of a shipbuilding grant, pursuant to an agreement entered into under section 4, determine the cost of the eligible ship in respect of which the payment is to be made for the purpose of calculating the balance of the grant, which cost shall be the lower of

  • (a) the maximum approved cost; and

  • (b) the amount obtained by an audit of costs pursuant to paragraph 7(b).

• (4) Where,

  • (a) an amount equal to the whole or any part of the proceeds of disposition of any vessel described in subsection 13(15) of the Income Tax Act is used by a person for replacement in accordance with subparagraph (a)(i) of that subsection, the approved cost of the replacement shall, if the replacement is an eligible ship in respect of which a shipbuilding grant is to be paid under these Regulations, be reduced by an amount equal to the amount used for replacement; or

  • (b) a vessel is acquired as a replacement under such circumstances that the Minister may pay out all or any part of a deposit under subsection 13(19) of the Income Tax Act, the approved cost of such replacement shall, if the replacement is an eligible ship in respect of which a shipbuilding grant is to be paid under these Regulations, be reduced by the amount that bears the same relationship to the proceeds of disposition of the vessel disposed of as the amount that may be paid out by the Minister under subsection 13(19) of the Income Tax Act bears to the amount of the deposit described in that subsection.

• (5) The Minister shall, before entering into any agreement under these Regulations, determine the maximum amount of the approved cost, which maximum amount shall not exceed the amount obtained by dividing the contract price of the eligible ship by

  • (a) 0.830 when the shipbuilding grant is to be paid under paragraphs (1)(a) and (e) and paragraph (2)(e);

  • (b) 0.835 when the shipbuilding grant is to be paid under paragraph (1)(b);

  • (c) 0.840 when the shipbuilding grant is to be paid under paragraph (1)(c);

  • (d) 0.845 when the shipbuilding grant is to be paid under paragraph (1)(d);

  • (e) 0.860 when the shipbuilding grant is to be paid under paragraph (2)(a);

  • (f) 0.865 when the shipbuilding grant is to be paid under paragraph (2)(b);

  • (g) 0.870 when the shipbuilding grant is to be paid under paragraph (2)(c); and

  • (h) 0.875 when the shipbuilding grant is to be paid under paragraph (2)(d).

Agreements

7 Every agreement entered into pursuant to these Regulations shall provide for

• (a) payment of a shipbuilding grant

  • (i) by progress payments not exceeding in the aggregate 80 per cent of the shipbuilding grant, calculated on the basis of the maximum approved cost, before any eligible ship, the construction of which is referred to in the agreement, is completed,

  • (ii) where the agreement refers to the construction of more than one eligible ship, by a further progress payment after completion of each eligible ship not exceeding such amount as would, in the opinion of the Minister based on an interim audit made by the Audit Services Bureau, Department of Supply and Services, afford adequate protection to the interests of Her Majesty, and

  • (iii) by the payment of the balance of the shipbuilding grant after all eligible ships, the construction of which is referred to in the agreement, are completed and an audit has been made as provided in the agreement;

• (b) the making of an audit and, where the agreement refers to the construction of more than one eligible ship, interim audits by the Audit Services Bureau, Department of Supply and Services, which audits shall exclude profit from the determination of approved cost;

• (c) an undertaking by the shipbuilder to use in the construction of the eligible vessel Canadian materials, components and equipment when they are available and internationally competitive; and

• (d) such other matters as the Minister considers necessary or appropriate to protect the interests of Her Majesty or to carry out the purposes and provisions of these Regulations.

Powers of Minister

8 The Minister may, for the purposes of these Regulations,

• (a) authorize persons to sign agreements for him;

• (b) investigate the financial responsibility of a shipowner or shipbuilder and such other matters as he considers necessary to determine questions relating to eligibility or approved cost; and

• (c) prescribe forms and make rules relating to an application for the payment of shipbuilding grants.