Federal-Provincial Fiscal Arrangements Regulations, 2007

5 In respect of a revenue source for a province for a fiscal year, the definition revenue base in subsection 3.5(1) of the Act is more particularly defined to mean

• (a) in the case of revenues relating to personal income, described in paragraph 4(1)(a), the aggregate of

  • (i) a fraction, expressed as a percentage for the province,

    • (A) whose numerator is the simulated yield of the average provincial personal income tax in the province in the taxation year that ends in the fiscal year determined in accordance with subsection 10(1), and

    • (B) whose denominator is the aggregate, over the 10 provinces, of the amount referred to in clause (A), and

  • (ii) the difference obtained by subtracting

    • (A) a fraction, expressed as a percentage for the province,

      • (I) whose numerator is the aggregate, over all individuals in the province – other than trusts – of the simulated federal income tax for the taxation year that ends in the fiscal year as determined by the micro-simulation model, and

      • (II) whose denominator is the aggregate, over the 10 provinces, of the amount referred to in subclause (I),

    from

    • (B) a fraction, expressed as a percentage for the province,

      • (I) whose numerator is the aggregate, over all individuals in the province – including trusts – of the federal income tax payable for the taxation year that ends in the fiscal year as determined for each individual, and

      • (II) whose denominator is the aggregate, over the 10 provinces, of the amount referred to in subclause (I);

• (b) in the case of the revenues relating to business income, described in paragraph 4(1)(b), the aggregate of

  • (i) the product of the portion of the aggregate of corporate profits in Canada, before the payment of income taxes and without any deduction of the aggregate of corporate losses in Canada, that is attributable to any of the 10 provinces for the calendar year that ends in the fiscal year, as determined by Statistics Canada for the purpose of its System of National Accounts and a fraction

    • (A) whose numerator is the allocated corporation taxable income attributable to the province for the fiscal year, and

    • (B) whose denominator is the aggregate, over the 10 provinces, of the amount referred to in clause (A), and

  • (ii) the product, as determined on the basis of data prepared by Statistics Canada for the purpose of the Financial Management System, of

    • (A) the aggregate, over the 10 provinces, of the total profits that are attributable to the province for the calendar year that ends in the fiscal year from business enterprises that have a profit in that calendar year and are owned 90% or more by that province, or by that province and one or more other provinces, excluding the profits for that calendar year

      • (I) of a liquor board, commission or authority,

      • (II) of an enterprise engaged, entirely or primarily, in the marketing of oil or natural gas,

      • (III) of an enterprise carrying on a provincial lottery, and

      • (IV) of an electricity enterprise, and

    • (B) a fraction whose numerator is the amount of the total profits referred to in clause (A) for the province less the amount by which any losses that were accumulated in the seven calendar years before that calendar year by a business enterprise referred to in that clause exceed the portion of those losses excluded under this clause for that business enterprise in relation to a previous calendar year, but only to the extent that the amount is not more than the total profits for that calendar year of that business enterprise, and whose denominator is the aggregate of the numerators for each of the 10 provinces;

• (c) in the case of revenues relating to consumption, described in paragraph 4(1)(c), the amount determined, based on data provided by Statistics Canada, for the calendar year that ends in the fiscal year by the formula

  A + B + C + D + E + F + G + H

  where

  A

  is the aggregate, over each personal expenditure category, of the product of total personal expenditures for that category in the province and the ratio of total personal expenditures for that category in Canada from which provinces derive net provincial sales tax revenues to total personal expenditures for that category in Canada,

  B

  is the aggregate, over each housing expenditure category, of the product of total housing expenditures for that category in the province and the ratio of total housing expenditures for that category in Canada from which provinces derive net provincial sales tax revenues to total housing expenditures for that category in Canada,

  C

  is the aggregate, over each business sector industry, of the product of total capital expenditures for machinery and equipment by that business sector industry in the province and the ratio of the total of those capital expenditures by that business sector industry in Canada from which provinces derive net provincial sales tax revenues to the total of those capital expenditures by that business sector industry in Canada,

  D

  is the aggregate, over each business sector industry, of the product of total capital expenditures for non-residential construction by that business sector industry in the province and the ratio of the total of those capital expenditures by that business sector industry in Canada from which provinces derive net provincial sales tax revenues to the total of those capital expenditures by that business sector industry in Canada,

  E

  is the aggregate, over each non-business sector industry, of the product of total capital expenditures for machinery and equipment by that non-business sector industry in the province and the ratio of the total of those capital expenditures by that non-business sector industry in Canada from which provinces derive net provincial sales tax revenues to the total of those capital expenditures by that non-business sector industry in Canada,

  F

  is the aggregate, over each non-business sector industry, of the product of total capital expenditures for non-residential construction by that non-business sector industry in the province and the ratio of the total of those capital expenditures by that non-business sector industry in Canada from which provinces derive net provincial sales tax revenues to the total of those capital expenditures by that non-business sector industry in Canada,

  G

  is the aggregate, over each non-business sector industry, of the aggregate, over each intermediate input commodity, of the product of total intermediate input expenditures for that intermediate input commodity by that non-business sector industry in the province and the ratio of the total of those intermediate input expenditures for that intermediate input commodity by that non-business sector industry in Canada from which provinces derive net provincial sales tax revenues to the total of those intermediate input expenditures for that intermediate input commodity by that non-business sector industry in Canada, and

  H

  is the aggregate, over each business sector industry, of the aggregate, over each intermediate input commodity, of the product of total intermediate input expenditures for that intermediate input commodity by that business sector industry in the province and the ratio of the total of those intermediate input expenditures for that intermediate input commodity by that business sector industry in Canada from which provinces derive net provincial sales tax revenues to the total of those intermediate input expenditures for that intermediate input commodity by that business sector industry in Canada;

• (d) in the case of revenues derived from property taxes and miscellaneous revenues, described in paragraph 4(1)(d), the weighted sum of three sub-bases, determined by the formula

  (B1 × W1) + (B2 × W2) + (B3 × W3)

  where

  B1

  is equal to the market value residential sub-base, determined by the formula

  {[(V × 1/V1) × Q] + [(P × 1/P1) × (1 - Q)]} × 1/R

  where

  V

  is equal to the assessed market value of residential property in the province for the calendar year that ends in the preceding fiscal year,

  V1

  is equal to the aggregate, over the 10 provinces, of the amount determined for V for each province,

  Q

  is equal to

  • (i) for the purpose of calculating a fiscal equalization payment referred to in section 3.2 of the Act, 0.7 for all provinces, and

  • (ii) for the purpose of determining the revenue base referred to in paragraph 3.3(a) of the Act, in relation to calculating a transitional fiscal equalization payment, 0.5 for British Columbia and 0.7 for all other provinces,

  P

  is equal to the population of the province for the preceding fiscal year, as determined in accordance with section 11,

  P1

  is equal to the aggregate, over the 10 provinces, of the amount determined for P for each province, and

  R

  is the aggregate, over the 10 provinces, of the amount determined for each province by the formula

  [(V × 1/V1) × Q] + [(P × 1/P1) × (1 - Q)]

  where

  V, V1, Q, P and P1

  have the meanings as set out above,

  B2

  is equal to the commercial-industrial sub-base as determined by the formula

  {[(F + G) × H] + I } × 1/N2

  where

  F

  is equal to the difference between the aggregate current dollar gross domestic product at factor cost in the province for the calendar year that ends in the preceding fiscal year and the current dollar gross domestic product at factor cost attributable to the crop and animal production industry, the government elementary and secondary schools industry, the universities industry, the government community colleges and C.E.G.E.P.s industry, the other government education services industry, the hospitals and government nursing and residential care facilities industry, the other provincial and territorial government services industry and the other municipal government services industry, in the province for the calendar year that ends in the preceding fiscal year, as determined by Statistics Canada based on data from the Interprovincial Input-Output Accounts,

  G

  is equal to the product of

  • (i) the product of the population of the province for the preceding fiscal year and

    • (A) 1.694990, in the case of Ontario,

    • (B) 1.726083, in the case of Quebec,

    • (C) 0.704058, in the case of Nova Scotia,

    • (D) 0.533864, in the case of New Brunswick,

    • (E) 0.943687, in the case of Manitoba,

    • (F) 1.800304, in the case of British Columbia,

    • (G) 0.490192, in the case of Prince Edward Island,

    • (H) 0.698474, in the case of Saskatchewan,

    • (I) 1.015645, in the case of Alberta, and

    • (J) 0.623713, in the case of Newfoundland and Labrador, and

  • (ii) a fraction whose numerator is the aggregate, over the 10 provinces, of one third of the amount determined for F and whose denominator is the aggregate, over the 10 provinces, of the product referred to in subparagraph (i),

  H

  is equal to a fraction whose numerator is the aggregate, over the 10 provinces, of the value determined for I multiplied by the fraction 20.945/79.055 and whose denominator is the aggregate, over the 10 provinces, of the sum of the amounts determined for F and G,

  I

  is equal to the value, measured in current dollars as of the end of the calendar year that ends in the preceding fiscal year, as determined by Statistics Canada for the purpose of its Fixed Capital Flows and Stocks data series, of the portion of the non–residential net capital stock in the province that consists of building construction in all industries, other than in the agriculture, forestry, fishing and hunting industry, the local, municipal and regional public administration industry, the provincial and territorial public administration industry, the primary and secondary education industry, the community colleges and C.E.G.E.P.s industry, the universities industry, the business schools and computer management training industry, the technical and trade schools industry, the other schools and instruction industry, the educational support services industry, the hospital services industry, the nursing and residential care facilities industry, the religious, grant-making, civic, and professional and similar organizations industry, and

  N2

  is equal to the aggregate, over the 10 provinces, of the amount determined for each province by the formula

  [(F + G) × H] + I

  where

  F, G, H and I

  have the meanings as set out above,

  B3

  is equal to the farm sub-base as determined by the formula

  [(K × L) + M] × 1/N3

  where

  K

  is equal to the value of farm land in the province, measured in current dollars as of the end of the calendar year that ends in the preceding fiscal year, as determined by Statistics Canada for the purpose of its publication entitled National Balance Sheet Accounts,

  L

  is equal to a fraction whose numerator is the aggregate, over the 10 provinces, of the amount determined for M multiplied by the fraction 84.078/15.922 and whose denominator is the aggregate, over the 10 provinces, of the value determined for K,

  M

  is equal to the value of farm net capital stock in the province that consists of building construction in the agricultural industry, measured in current dollars as of the end of the calendar year that ends in the preceding fiscal year, as determined by Statistics Canada for the purpose of its Fixed Capital Flows and Stocks data series, and

  N3

  is equal to the aggregate, over the 10 provinces, of the amount determined for each province by the formula

  (K × L) +M

  where

  K, L and M

  have the meanings as set out above,

  W1

  is equal to 0.576, being the weight for the market value residential sub-base,

  W2

  is equal to 0.406, being the weight for the commercial-industrial sub-base, and

  W3

  is equal to 0.018, being the weight for the farm sub-base.