BILL NO. 113

1st Session, 57th General Assembly
Nova Scotia
47-48 Elizabeth II, 1998-99

Government Bill

Financial Measures (1999) Act

The Honourable Donald R. Downe
Minister of Finance

First Reading: June 4, 1999

(Explanatory Notes)

Second Reading:

Third Reading:

Clause 1 sets out the short title of the Bill.

Clauses 2 and 3

(a) require that every prothonotary, clerk of the Crown, sheriff, registrar of deeds and registrar of probate pay over monthly to the Province all fees collected by them, rather than only one third of such fees, which is now the case;

(b) remove a provision that states that registrars of probate are not required to pay over to the Province fees from estates of less than $400; and

(c) remove provisions that enable the Governor in Council to fix fees payable on grants of probate and on the closing of estates.

Clauses 4 to 7 extend the equity tax credit from 2001 to 2005 and increase the tax credit from thirty to thirty-five per cent for investments in prescribed areas of the Province.

Clause 8 clarifies that the accumulated costs of non-designated organizations and regional health boards are not included expenditures for the purpose of the Expenditure Control Act.

Clause 9 removes a reference to a date that results in the manufacturing and processing investment tax credit being ineffective until after 1997. The intent was to make the amended renunciation clause effective from the date of the inception of the tax credit.

Clause 10 makes changes to the Income Tax Act requested by Revenue Canada to harmonize the Act with changes to the Income Tax Act (Canada).

Clause 11 implements the harmonized sales tax credit.

Clause 12 extends the new small business tax deduction from three years to five years for businesses located in prescribed areas of the Province.

Clause 13 increases the maximum credit allowed under the Equity Tax Credit Act to ten thousand five hundred dollars to reflect the rate increase from thirty to thirty-five per cent in Clause 6.

Clause 14 increases the film tax credit from thirty-two and a half per cent to thirty-seven and a half per cent of eligible labour for production activity undertaken in a prescribed area of the Province.

Clause 15 makes changes in the manufacturing and processing investment tax credit necessary for consistency with Federal legislation.

Clause 16 implements an interactive digital-media tax credit comprised of a refundable tax credit of fifteen per cent of eligible labour expenditures.

Clause 17 makes changes to the Income Tax Act requested by Revenue Canada to harmonize the Act with changes to the Income Tax Act (Canada).

Clause 18 makes amendments to the Probate Act that directly impose taxes on grants of probate and on the closing of estates.

Clause 19 establishes the Health Investment Fund.

Subclause 20(1) makes the amendments made by Clauses 2, 3 and 18 retroactive to the coming into force of the existing legislation that authorizes the Governor in Council to fix probate fees that are payable on grants of probate and administration and on the closing of estates.

Subclause 20(2) provides that Clauses 8 and 19 are effective on June 1, 1999.

Subclause 20(3) provides that Clause 16 is effective on April 1, 1999.

Be it enacted by the Governor and Assembly as follows:

1 This Act may be cited as the Financial Measures (1999) Act.

PART I

COSTS AND FEES ACT

2 Section 6 of Chapter 104 of the Revised Statutes, 1989, the Costs and Fees Act, is amended by

(a) striking out "one-third of" in the fourth line; and

(b) striking out clause (c).

3 Items (1), (2) and (13) under the heading "COURTS OF PROBATE" in the Schedule to Part I of Chapter 104 are repealed.

PART II

EQUITY TAX CREDIT ACT

4 Section 2 of Chapter 3 of the Acts of 1993, the Equity Tax Credit Act, as amended by Chapter 2 of the Acts of 1995 and Chapter 3 of the Acts of 1997, is further amended by

(a) striking out "2001" in the fifth line of subclause (h)(i) and substituting "2005";

(b) striking out "2001" in the third line of subclause (h)(ii) and substituting "2005"; and

(c) striking out "2001" in the fourth line of clause (j) and substituting "2005".

5 Clause 6(1)(a) of Chapter 3, as amended by Chapter 3 of the Acts of 1997, is further amended by striking out "2001" in the fifth line and substituting "2005".

6 Subsection 8(1) of Chapter 3 is repealed and the following subsection substituted:

(1) Where an eligible business has made a specified issue, the eligible business shall apply to the Minister within the time specified by regulation in a form acceptable to the Minister for a tax-credit certificate entitling each eligible investor to a tax credit pursuant to Section 13A of the Income Tax Act equal to

(a) thirty per cent of the amount received by the eligible business; or

(b) thirty-five per cent of the amount received, on or after June 1, 1999, by the eligible business where the eligible business is located in an eligible geographic area as prescribed by regulation,

in that calendar year or within sixty days of the end of the calendar year, for shares issued to those eligible investors as part of the specified issue by the eligible business.

7 Subsection 13A(2) of Chapter 3, as enacted by Chapter 5 of the Acts of 1996, is amended by striking out "determining the" in the third line and substituting "prescribing eligible geographic".

PART III

EXPENDITURE CONTROL ACT

8 Chapter 4 of the Acts of 1993, the Expenditure Control Act, is amended by adding immediately after Section 13 the following Section:

14 (1) In this Section,"accumulated costs" means the accumulated deficit and accumulated debt as at March 31, 1999, of the Izaak Walton Killam-Grace Health Centre for Children, Women and Families, the Queen Elizabeth II Health Sciences Centre, the Nova Scotia Hospital and the Cape Breton Healthcare Complex and of the regional health boards established pursuant to the Regional Health Boards Act.

(2) Notwithstanding Sections 12 and 13, in this Part, net program expenditures shall not include expenditures or provisions made by the Province in assuming or making payments with respect to accumulated costs.

PART IV

FINANCIAL MEASURES (1998) ACT

9 (1) Subsection 6(3) of Chapter 13 of the Acts of 1998, the Financial Measures (1998) Act, is repealed.

(2) Subsection (1) has effect on and after December 3, 1998.

PART V

INCOME TAX ACT

10 Clause 2(8)(g) of Chapter 217 of the Revised Statutes, 1989, the Income Tax Act, is repealed and the following clauses substituted:

(g) subject to clause (ga), any reference in that section to the Federal Regulations shall be read as including a reference to this Act or a regulation made under this Act;

(ga) a reference in that section to the words "under this Act or under an Act of a province with which the Minister of Finance has entered into an agreement for the collection of taxes payable to the province under that Act" shall be read as a reference to this Act;

11 Chapter 217 is further amended by adding immediately after Section 4B the following Sections:

4C (1) In this Section,

(a) "adjusted income", "qualified dependant" and "qualified relation" have the meanings assigned to them under subsection 122.5(1) of the Federal Act;

(b) "eligible individual" for a taxation year means an individual, other than a trust, who at the end of December 31st of that year is resident in the Province and is

(i) married,

(ii) a parent of a child, or

(iii) nineteen years of age or over.

(2) Notwithstanding subsection (1), a person is deemed not to be an eligible individual or a qualified relation or qualified dependant of an individual for a taxation year where that person

(a) dies before the end of the year;

(b) at the end of the year is a person described in paragraph 149(1)(a) or (b) of the Federal Act; or

(c) at the end of the year is confined to a prison or similar institution and has been so confined for a period of or periods, the total of which in the year was more than six months.

(3) Where a return of income is filed under Part I of the Federal Act for a taxation year in respect of an eligible individual and that individual has applied under subsection 122.5(3) of the Federal Act, the amount by which the total of

(a) ninety dollars;

(b) thirty-five dollars for a person who is the qualified relation of the individual for the year; and

(c) thirty-five dollars, where the individual has no qualified relation for the year and is entitled to deduct an amount for the year under subsection 118(1) of the Federal Act because of paragraph (b) of that Act in respect of a qualified dependant of the individual for the year,

exceeds

(d) where an individual is entitled to clause (a) and neither clause (b) nor (c) applies, ten per cent of the amount by which the individual's adjusted income for the year exceeds nine thousand five hundred dollars; or

(e) where an individual is entitled to clause (a) and either of clause (b) or (c) applies, ten per cent of the amount by which the individual's adjusted income for the year exceeds sixteen thousand five hundred dollars,

is deemed to be an amount paid by the individual on account of the individual's tax payable under this Act for that year during the month of July of the immediately following taxation year.

(4) Subsection (3) does not apply to a return of income filed by an individual under subsection 70(2), paragraph 104(23)(d) or 128(2)(e) or subsection 150(4) of the Federal Act.

(5) Notwithstanding subsection (3),

(a) where an individual is a qualified relation of another individual for a taxation year, only the individual who applied under subsection 122.5(3) of the Federal Act and received an amount deemed under that subsection to be an amount paid by the individual on account of that individual's tax payable under that Act for that year is eligible to be paid the amount deemed under subsection (3) to be an amount paid by the individual on account of tax payable under this Act for that year; and

(b) an amount is deemed not to be paid under that subsection by an individual for a taxation year during the month of July of the immediately following taxation year where the individual

(i) died before that month,

(ii) was not resident in Canada at the beginning of that month, or

(iii) was not resident in the Province at the beginning of the month of June of the immediately following taxation year.

(6) Notwithstanding clause (5)(b), upon written application made under subsection 122.5(6) of the Federal Act by an individual who

(a) is the deceased individual's qualified relation for the taxation year in respect of which a payment under this Section would, but for that clause, be made; and

(b) is not an individual to whom that clause applies,

each amount that, but for that clause, would be deemed to be an amount paid under subsection (3) by the deceased individual on account of the individual's tax payable under this Act for that year is deemed to be paid under that subsection on account of that individual's tax payable under this Act for that year.

(7) For the purpose of this Section, where, in a taxation year, an individual becomes bankrupt, the individual's income for the year shall include that individual's income for the taxation year that begins on the first day of January of the calendar year that includes the date of the bankruptcy.

4D (1) Notwithstanding Section 26 of this Act, subsection 164(2) of the Federal Act does not apply to an amount deemed under subsection (3) of Section 4C of this Act to be an amount paid by an individual on account of the individual's tax payable under this Act for a taxation year.

(2) Subsection (1) does not apply where the taxpayer's liability referred to in subsection 164(2) of the Federal Act arose from the operation of paragraph 160.1(1)(a) of the Federal Act with respect to an amount refunded to the taxpayer in excess of the amount to which the taxpayer was entitled under subsection (3) of Section 4C of this Act.

4E Where a taxpayer has requested that an amount, deemed under subsection (3) of Section 4C of this Act to be an amount paid by an individual on account of the individual's tax payable under this Act for a taxation year, be applied to a liability of the taxpayer and the taxpayer's return of income for the year is filed on or before the day it was required by section 150 of the Federal Act to be filed, the amount is deemed to have been applied on the day on which it would have been refunded if the taxpayer were not liable to make a payment to Her Majesty in right of Canada.

4F (1) For greater certainty, for the purpose of applying clause (c) of subsection (8) of Section 2 of this Act, section 122.5 of the Federal Act is deemed to be the same as or similar to Section 4C of this Act.

(2) Section 4C of this Act applies with respect to amounts deemed to be amounts paid by individuals on account of their tax payable under this Act for taxation years after 1998.

12 Subsection 7(4) of Chapter 217, as enacted by Chapter 15 of the Acts of 1992 and amended by Chapter 26 of the Acts of 1993 and Chapter 2 of the Acts of 1995, is further amended by

(a) striking out "or" immediately after clause (a);

(b) striking out the comma at the end of clause (b) and substituting "; or"; and

(c) adding the following clause:

(c) for the first, second, third, fourth and fifth taxation years of a corporation or an association as defined in the Co-operative Associations Act that was incorporated after the first day of June 1995, and that employs at least ninety per cent of its employees at a permanent establishment that is located in an eligible geographic area as prescribed pursuant to the Equity Tax Credit Act,

13 Clause 13A(2)(b) of Chapter 217 is repealed and the following clause substituted:

(b) ten thousand five hundred dollars.

14 Subsection 13E(2) of Chapter 217 is repealed and the following subsection substituted:

(2) Where the corporation meets the prescribed criteria, there may be deducted from tax otherwise payable by the corporation an amount equal to the lesser of

(a) the sum of

(i) for eligible salaries paid in an eligible geographic area as prescribed pursuant to the Equity Tax Credit Act, thirty-seven and one half per cent of the eligible salaries paid after the first day of April, 1999, and before 2001 to residents of the Province, and

(ii) for eligible salaries otherwise paid, thirty-two and one half per cent of the eligible salaries paid after 1994 and before 2001 to residents of the Province;

(b) eighteen and three quarters per cent of the total production costs of the eligible film in the case of subclause (a)(i) or sixteen and one quarter per cent in the case of subclause (a)(ii); or

(c) one and one-half million dollars.

15 (1) Subsection 13G(1) of Chapter 217, as enacted by Chapter 3 of the Acts of 1997 and amended by Chapter 13 of the Acts of 1998, is further amended by

(a) relettering clause (a) as (aa) and adding immediately preceding clause (a) the following clause:

(a) "capital cost" to the corporation has the meaning assigned by paragraph 127(11.1)(b) and (d) of the Federal Act, and for greater certainty, for the purpose of subsection 13G(1), "government assistance" as described in paragraph 127(11.1)(b) and (d) of the Federal Act shall not include the investment tax credit determined under this Section;

and

(b) striking out "127(9), (11) and (11.1)" in the sixth and seventh lines of clause (c) and substituting "127(9) and (11)".

(2) Subsection 13G(8) of Chapter 217 is repealed and the following subsection substituted:

(8) Subsections 127(9.1) and (9.2) and paragraph (m) of the definition of "investment tax credit" of subsection 127(9) of the Federal Act apply for the purpose of this Section.

16 Chapter 217 is further amended by adding immediately after Section 13G the following heading and Section:

DIVISION FG - INTERACTIVE

DIGITAL-MEDIA TAX CREDIT

13H (1) A corporation producing an eligible interactive digital-media product in the Province may apply in the manner prescribed by the Minister of Finance for an interactive digital-media tax credit.

(2) Where the corporation meets the prescribed criteria, there may be deducted from tax otherwise payable by the corporation an amount equal to fifteen per cent of eligible salaries paid after 1998 and before 2004 to residents of the Province.

(3) The amount by which the tax credit referred to in subsection (2) exceeds the corporation's tax payable for the taxation year calculated without reference to this Section may be applied by the Minister of Finance to pay

(a) any tax, interest or penalty owing by the corporation for that or any prior taxation year pursuant to this Act, the income statute of any agreeing province or the Federal Act;

(b) any contribution, penalty or interest by the corporation for that or any prior taxation year as a result of payments required from the corporation pursuant to the Canada Pension Plan Act (Canada);

(c) any premium, interest or penalty owing by the corporation for that or any prior taxation year pursuant to the Unemployment Insurance Act (Canada),

and the part of the amount not so applied shall be paid to the corporation.

(4) The Governor in Council may make regulations

(a) prescribing forms for the purpose of this Section;

(b) governing any matter that may be prescribed pursuant to this Section;

(c) requiring a corporation to supply information or documents respecting any matter required in assessing compliance with this Section;

(d) respecting those corporations that are eligible for the tax credit pursuant to this Section;

(e) defining any word or expression used but not defined in this Section;

(f) deemed necessary or advisable to carry out effectively the intent and purpose of this Section.

17 (1) Section 16 of Chapter 217 is repealed and the following Section substituted:

16 Where a collection agreement is in effect and, notwithstanding that the normal reassessment period for a taxpayer in respect of a taxation year has elapsed, where the tax payable under Part I of the Federal Act by the taxpayer for the year is reassessed, the Minister shall reassess or make additional assessments or assess tax, interest or penalties, as the circumstances require.

(2) Section 16 of Chapter 217, as enacted by subsection (1), is applicable after April 27, 1989, other than in respect to a taxation year of a taxpayer for which a notice of an original assessment under Chapter 217 in respect of the taxpayer for the year, or a notification that no tax is payable by the taxpayer for the year, was mailed on or before April 27, 1986.

PART VI

PROBATE ACT

18 Chapter 359 of the Revised Statutes, 1989, the Probate Act, is amended by adding immediately after Section 9 the following Section:

9A (1) Upon the granting of any letters of probate or administration of the estate of a deceased person, including letters of administration with the will annexed, letters of probate or administration de bonis non, temporary letters, letters of administration pendente lite or ad collingenda bona, ancillary letters and resealing, the following tax is payable by the estate to the registrar of the court that makes the grant:

(a) in estates not exceeding $10,000, $75;

(b) in estates exceeding $10,000 but not exceeding $25,000, $150;

(c) in estates exceeding $25,000 but not exceeding $50,000, $250;

(d) in estates exceeding $50,000 but not exceeding $100,000, $500;

(e) in estates exceeding $100,000 but not exceeding $150,000, $600;

(f) in estates exceeding $150,000 but not exceeding $200,000, $800; or

(g) in estates exceeding $200,000, $800 plus an additional $5 for every $1,000 or fraction thereof in excess of $200,000.

(2) Where the estate pays the tax imposed by subsection (1), the registrar of the court may provide the following services or documents:

(a) every necessary act or step up to and including the issuing of the original grant, including proof of the will in common form upon the affidavit or affidavits of subscribing witnesses, taking oaths, filing papers and oaths, but not including the issuing of a dedimus and the fees on a preliminary hearing to take evidence in proof of a will or to determine the persons to whom the grant shall be made;

(b) the order for and issuing of a warrant of appraisement, taking of appraisers and subscribing the affidavit verifying the inventory and all filing fees in connection therewith; and

(c) one of each of the following upon request:

(i) certified copy of the letters testamentary or of administration,

(ii) certificate of probate or administration,

(iii) certified copy of the will.

(3) Upon the examination by a court of probate of a final account of the estate of a deceased person, together with the receipts and vouchers in support thereof and including the taking of any evidence of the executors or administrators in support of any items in the account, the subscribing of the affidavit in verification of the account and the filing of the account with the court, of the affidavits of service and publication of the citation and all other necessary papers and documents, issuing decrees, passing final accounts and allowing distribution upon settlement and taxation of costs, the following tax is payable by the estate to the registrar of the court:

(a) in estates not exceeding $10,000, $50;

(b) in estates exceeding $10,000 but not exceeding $25,000, $75;

(c) in estates exceeding $25,000 but not exceeding $50,000, $125;

(d) in estates exceeding $50,000 but not exceeding $100,000, $200;

(e) in estates exceeding $100,000 but not exceeding $150,000, $250;

(f) in estates exceeding $150,000 but not exceeding $200,000, $350; or

(g) in estates exceeding $200,000, $350 plus an additional $3 for every $1,000 or fraction thereof in excess of $200,000.

(4) Upon an application and grant of an order for adjournment respecting an estate of a deceased person, a tax of $10 is payable by the estate to the registrar of the court that grants the order.

(5) The taxes collected pursuant to this Section shall be paid over to the Minister of Justice and Attorney General for the use of the Province.

PART VII

PROVINCIAL FINANCE ACT

19 Chapter 365 of the Revised Statutes, 1989, the Provincial Finance Act, is amended by adding immediately after Section 34 the following heading and Sections:

PART IIIA

HEALTH INVESTMENT FUND

34A In this Part,

(a) "Fund" means the Health Investment Fund established pursuant to this Part;

(b) "non-designated organization" means the Queen Elizabeth II Health Sciences Centre, the Izaak Walton Killam-Grace Health Centre for Children, Women and Families, the Nova Scotia Hospital and the Cape Breton Healthcare Complex;

(c) "regional health boards" means those Regional Health Boards created pursuant to the Regional Health Boards Act.

34B There is hereby established the Health Investment Fund for a term of three years commencing April 1, 1999.

34C The Minister may deposit to the credit of the Fund

(a) an amount not exceeding two hundred and fifty million dollars in the fiscal year 1999-2000;

(b) an amount not exceeding two hundred and fifty million dollars in the fiscal year 2000-2001; and

(c) an amount not exceeding one hundred million dollars in the fiscal year 2001-2002.

34D Subject to this Act, the Minister of Health has the general supervision and management of this Part.

34E (1) The Minister may authorize expenditures from the Fund on the advice and recommendation of the Minister of Health.

(2) The Minister of Health, in determining whether or not to recommend an expenditure to the Minister, shall make an assessment of

(a) the importance to the health care system of the initiative to be funded by the proposed expenditure;

(b) the budget and plan of implementation supporting the request for expenditure from the Fund;

(c) the impact on human resources in the health-care system;

(d) the impact on information technology in the health-care system;

(e) the impact on other programs and services in the health-care system;

(f) whether the initiative

(i) promotes better appreciation for an effective and appropriate use of the full continuum of health care by Nova Scotians,

(ii) ensures appropriate and cost effective health-care services and programs are accessible and utilized by Nova Scotians,

(iii) enhances the capacity of Nova Scotians and their communities to promote health and prevent illness,

(iv) enhances the capacity of the Department of Health to set direction and measure performance,

(v) enables health-care providers to more cost-effectively provide appropriate care,

(vi) is supported by the best available information;

(g) such other matters as the Minister of Health considers relevant, on a case by case basis, in determining whether or not to recommend an expenditure from the Fund.

34F (1) The Minister of Health shall, within three months of the close of the fiscal year, submit to the Executive Council an annual report on the affairs of the Fund.

(2) The annual report referred to in subsection (1) shall be tabled in the House of Assembly if the House is sitting and, if the House is not sitting, the report shall be tabled with the Clerk of the House.

(3) The annual report referred to in subsection (1) shall include

(a) the financial statements of the Fund;

(b) a description of each initiative funded;

(c) documentation supporting the acceptance of each initiative in relation to the criteria set out in Section 34E, including details of any consultations;

(d) a statement on each initiative describing the extent to which the expected achievements and efficiencies, measurable outcomes and timeliness have been realized;

(e) a statement of controls implemented to monitor each initiative's compliance with the stated objective and anticipated outcome;

(f) a statement of anticipated issues associated with an initiative and measures taken to address the issues; and

(g) such other matters as determined by the Minister of Health.

34G The Fund shall be audited by the Auditor General who shall provide a report to the Minister and the Minister of Health.

34H Notwithstanding any enactment, a regional health board or a non-designated organization shall not incur any money indebtedness, directly or indirectly, with respect to

(a) the purchase of a capital asset in excess of two hundred and fifty thousand dollars; and

(b) the incurring of operating expenditures in excess of four per cent of the annual operating budget of the regional health board or non-designated organization,

without first obtaining the written authorization of the Minister of Finance.

34I (1) The Minister shall establish a schedule of payments to ensure the total debt of the Province is reduced by the sum of six hundred million dollars on or before the end of the fiscal year 2012-2013.

(2) The payments referred to in subsection (1) shall commence on or before fiscal year 2003-2004 and shall be made from the following sources of funds:

(a) notwithstanding Section 12 of the Expenditure Control Act, any surplus determined in accordance with that Act;

(b) notwithstanding subsection (2) of Section 60B, one hundred per cent of the net gas royalties received in a fiscal year;

(c) taking into account any amounts applied to the debt as a result of clauses (a) and (b), such amounts as approved under the Appropriations Act that will be sufficient to repay the debt over a period not exceeding ten years commencing in the fiscal year 2003-2004.

34J The Minister may make payments from the Consolidated Fund of the Province for the purpose of paying any portion of the accumulated costs, as defined in the Expenditure Control Act, of a regional health board or a non-designated organization and may assume any portion of the accumulated costs that are owed to the Province.

34K Payments made into or out of the Fund shall not be considered expenditures for the purpose of determining a surplus or deficit under the Expenditure Control Act.

34L (1) The Governor in Council may make regulations

(a) respecting the terms and conditions upon which the Minister may make payments out of the Fund;

(b) respecting the use of payments made out of the Fund by the recipients of those payments;

(c) defining any word or expression used but not defined in this Part;

(d) deemed necessary or advisable to carry out effectively the intent and purpose of this Part.

(2) A regulation made pursuant to subsection (1) may be retroactive to the extent necessary to implement the intent and purpose of this Part.

(3) The exercise by the Governor in Council of the authority contained in subsection (1) is regulations within the meaning of the Regulations Act.

PART VIII

EFFECTIVE DATE

20 (1) Sections 2, 3 and 18 have effect on and after June 28, 1982.

(2) Sections 8 and 19 have effect on and after June 1, 1999.

(3) Section 16 has effect on and after April 1, 1999.