BILL NO. 20

(as introduced)

1st Session, 63rd General Assembly
Nova Scotia
66 Elizabeth II, 2017

Private Member's Bill

Small Business Tax Protection Act

The Honourable Jamie Baillie
Cumberland South

First Reading: October 3, 2017

(Explanatory Note)

Second Reading:

Third Reading:

This Bill authorizes the Governor in Council to limit, for the purpose of calculating the tax payable under the Nova Scotia Income Tax Act, the application of anticipated changes to the federal Income Tax Act respecting "income sprinkling", the holding of passive investments inside a private corporation and the conversion of income into capital gains. If so limited, the result would be that taxpayers affected by the anticipated changes would not be subject to the changes in relation to the provincial portion of the taxes payable by them

Be it enacted by the Governor and Assembly as follows:

1 This Act may be cited as the Small Business Tax Protection Act.

2 (1) Section 3 of Chapter 217 of the Revised Statutes, 1989, the Income Tax Act, as enacted by Chapter 4 of the Acts of 2000, is further amended by adding immediately after subsection (2) the following subsections:

(2A) Notwithstanding subsection (2) but subject to subsection (9), where a federal provision or federal amendment respecting

(a) income splitting using a private corporation, whereby income earned by an individual is shifted to a related individual who is subject to a lower effective income tax rate;

(b) the holding of passive investments inside a private corporation; or

(c) the conversion of income into capital gains,

is prescribed by the regulations, the prescribed federal provision or prescribed federal amendment shall not be applied in accordance with the federal application rule.

(2B) Where a federal provision or federal amendment referred to in subsection (2A) is prescribed by the regulations, the Federal Act and the Federal Regulations shall, subject to the regulations, be applied for the purposes of this Act as if the prescribed federal provision or prescribed federal amendment had not been enacted.

(2) Section 3 of Chapter 217, as enacted by Chapter 4 of the Acts of 2000, is further amended by adding immediately after subsection (6) the following subsections:

(7) The Governor in Council may make regulations

(a) prescribing federal provisions or federal amendments for the purpose of subsection (2A);

(b) respecting the application of the Federal Act and the Federal Regulations in instances where a federal provision or federal amendment has been prescribed for the purpose of subsection (2A).

(8) A regulation made pursuant to this Section may be made retroactive to a date not earlier than July 18, 2017.

(9) The money required for the purpose of subsection (2A) must be paid out of money appropriated for that purpose by the Legislature and, for greater certainty, subsection (2A) is of no application until the money is appropriated by the Legislature.