BILL 2 – 2005
REVENUE STATUTES AMENDMENT ACT, 2005
HER MAJESTY, by and with the advice and consent of the Legislative Assembly
of the Province of British Columbia, enacts as follows:
Income Tax Act
1 Sections 14 (2) and (3) (a), 16 (1) (b) and (2) (b) and 25 (2) of the
Income Tax Act, R.S.B.C. 1996, c. 215, are amended by striking out
"13.5%" and substituting "12%".
2 Section 14 (3.1) (a), as enacted by section 16 (b) of the Income
Tax Amendment Act, 2005, S.B.C. 2005, c. 5, is amended by striking out
"13.5%" and substituting "12%".
Income Tax Amendment Act, 2005
3 Section 30 (2) of the Income Tax Amendment Act, 2005, S.B.C. 2005, c.
5, is amended by striking out "sections 1 and 2" and substituting
"sections 8 and 16".
International Financial Activity Act
4 Section 2 (2) of the International Financial Activity Act,
S.B.C. 2004, c. 49, is amended by adding the following paragraphs:
(q.1) selling, assigning or licensing to a non-resident
person a patent within a prescribed class of patents;
(q.2) selling, to a non-resident person, a good or service
in respect of which the sales revenue is principally derived from an invention
for which a patent within a prescribed class of patents is owned by the
corporation; .
5 Sections 13 (1) (a) and (b) and 21 (d) are amended by striking out
"section 2 (2) (r) and (s)" and substituting "section 2
(2) (q.1), (q.2), (r) and (s)".
6 Section 17 is amended
(a) by striking out "in the amount" and substituting
"not exceeding the amount", and
(b) by striking out the description of "net tax payable" and
substituting the following:
net tax payable = the corporation's net tax payable for
the taxation year.
7 The following section is added:
Tax refund -- patent activities
17.1 (1) A corporation may claim a tax refund for a
taxation year not exceeding the corporation's eligible refund for the taxation
year, if all of the following apply to the corporation:
(a) the corporation was a registered corporation at any
time in the taxation year;
(b) while the corporation was a registered corporation in
the taxation year, the corporation carried on an international financial
business whose activities included international financial activities referred
to in section 2 (2) (q.1) or (q.2);
(c) the corporation does not claim a tax refund under
section 17 for the taxation year.
(2) A corporation's eligible refund for a taxation year is
the least of the following:
(a) $8 million;
(b) the amount calculated by the following formula:
| amount = $8 million x |
( |
days registered |
) |
|
| 365 |
where
| |
days registered |
= |
the following as applicable: |
| |
|
|
(i) |
subject to subparagraph (ii), the number of days in the
taxation year that the corporation was a registered corporation; |
| |
|
|
(ii) |
if the taxation year began before January 1, 2006, the
number of days in the taxation year after December 31, 2005 that the
corporation was a registered corporation; |
(c) the amount calculated by the following formula:
amount = eligible proportion x net tax payable x 75%
where
| |
eligible proportion |
= |
the corporation's eligible proportion of income for the
taxation year; |
| |
net tax payable |
= |
the corporation's net tax payable for the taxation
year; |
(d) if the corporation is associated at any time in the
taxation year, ending in a particular calendar year, with at least one other
registered corporation that may claim a tax refund under this section for a
taxation year that ends in the same calendar year,
(i) the amount calculated by the following formula, if an
agreement is filed in accordance with this section:
amount = amount otherwise eligible x percentage assigned
where
| |
amount otherwise eligible |
= |
the lesser of |
| |
|
|
(A) |
the amount referred to in paragraph (a), and |
| |
|
|
(B) |
the amount calculated under paragraph (b) for the corporation for the
taxation year; |
| |
percentage assigned |
= |
the percentage assigned to the corporation in the agreement
for the taxation year, or |
(ii) zero, in any other case.
(3) For the purposes of subsection (2) (d), all registered
corporations referred to in that subsection that are associated with each other
must file with the commissioner an agreement that assigns, in accordance with
prescribed rules, a percentage to one or more of the corporations for their
respective taxation years.
(4) The agreement must
(a) be in the form and contain the information required by
the commissioner, and
(b) be filed with the corporation's return for the
taxation year or within a later period approved by the commissioner.
(5) Section 256 [associated corporations] of the
federal Act applies for the purposes of this section.
8 Section 19 is amended
(a) in subsection (1) by striking out "A corporation's"
and substituting "For the purpose of section 17, a
corporation's",
(b) in subsection (1) in the description of "IFB income" by
striking out "international financial business" and substituting
"international financial business as if the business's income for the
taxation year was only from international financial activities, other than those
activities referred to in section 2 (2) (q.1) or (q.2),", and
(c) by adding the following subsection:
(1.1) For the purpose of section 17.1, a corporation's
total adjusted IFB income for a taxation year is the total of all amounts, each
of which is the corporation's adjusted IFB income, as calculated by the
following formula, for the taxation year from a particular source that is an
international financial business carried on by the corporation:
adjusted IFB income = IFB income –
inducements
where
| |
IFB income |
= |
the income or loss, as determined under Subdivision b of
Division B of Part I of the federal Act, of the international financial
business as if the business's income for the taxation year was only from
international financial activities referred to in section 2 (2) (q.1) or
(q.2) for that part of the taxation year that the corporation was a
registered corporation; |
| |
inducements |
= |
the amount included under section 12 (1) (x) of the federal
Act in computing the IFB income of the international financial business
for the taxation year. |
9 The following section is added:
Net tax payable
19.1 A corporation's net tax payable for a taxation
year is the greater of
(a) zero, and
(b) the total of
(i) the corporation's tax payable under sections 14 to 16
[corporation income tax; corporate straddle provision; small business
rate] of the Income Tax Act for the taxation year, and
(ii) any amount added to the corporation's tax payable
under section 19 (3) [royalty and deemed income rebate] of that Act for
the taxation year
less
(iii) any deductions made by the corporation under the
sections referred to in section 18.1 [order of making deductions from tax
payable] of that Act for the taxation year, and
(iv) any amounts deemed to have been paid by the
corporation under the following sections of that Act for the taxation year:
(A) section 25.1 [mining exploration tax
credit];
(B) section 84 [film and television tax
credit];
(C) section 98 [scientific research and experimental
development tax credit];
(D) section 113 [book publishing tax credit].
Commencement
10 The provisions of this Act referred to in column
1 of the following table come into force as set out in column 2 of the
table:
| Item |
Column 1
Provisions of Act |
Column 2
Commencement |
| 1 |
Anything not elsewhere covered by this table |
The date of Royal Assent |
| 2 |
Section 1 |
July 1, 2005 |
| 3 |
Sections 4 to 9 |
January 1, 2006 |