Bill 164, Tax Credits to Create Jobs Act, 1997

Versions

Bill 164 1997

An Act to implement job creation measures and other measures contained in the 1997 Budget and to make other amendments to statutes administered by the Ministry of Finance or relating to taxation matters

Her Majesty, by and with the advice and consent of the Legislative Assembly of the Province of Ontario, enacts as follows: Enactment of Schedules

1. (1) Schedules A, B, C, D, E and F are hereby enacted. Same

(2) The Ontario Property Assessment Corporation Act, 1997, as set out in Schedule G, is hereby enacted. Commencement

2. (1) Subject to subsection (2), this Act comes into force on the day it receives Royal Assent. Same

(2) The Schedules to this Act come into force as provided in the commencement section at or near the end of each Schedule. Short title

3. The short title of this Act is the Tax Credits to Create Jobs Act, 1997.

SCHEDULE A

AMENDMENTS TO THE CORPORATIONS TAX ACT

1. (1) The definition of "tax payable" in clause 1 (1) (d) of the Corporations Tax Act is repealed and the following substituted:

"tax payable", by a corporation or other person under any Part of this Act by or under which provision is made for the assessment of tax, means the tax payable by the corporation or other person as fixed by assessment or reassessment, subject to variation on objection or appeal, if any, in accordance with sections 84 to 92. ("impt payable")

(2) The definition of "taxation year" in clause 1 (1) (d) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 1, Schedule B, section 1, is repealed.

(3) Subsection 1 (2) of the Act, as amended by the Statutes of Ontario, 1994, chapter 14, section 1, is further amended by adding the following definition:

"province" means a province as defined in subsection 35 (1) of the Interpretation Act (Canada). ("province")

(4) The definition of "return" in subsection 1(2) of the Act, as enacted by the Statutes of Ontario, 1994, chapter 14, section 1, is amended by inserting after "corporation" in the first line "or other person".

(5) Subsection 1 (2) of the Act is amended by adding the following definition:

"taxation year", of a person, means,

(a) a calendar year, if the person is an administrator of a benefit plan under section 74.2 and is not a corporation,

(b) a taxation year of the person for the purposes of the Income Tax Act (Canada), if the person is an insurance broker within the meaning of section 74.3 and is not a corporation, and

(c) a fiscal period for which the person's statement of the condition of affairs is prepared for the purposes of reporting to the Superintendent of Insurance, if the person is an insurance exchange within the meaning of section 74.4. ("anne d'imposition")

(6) Clause 1 (5) (a) of the Act is repealed and the following substituted:

(a) except as otherwise required by section 29.1 or 31.1 or subsection 34 (10), where an amount elected or designated would be different from the amount determined in accordance with this Act, the amount determined in accordance with this Act applies; and

. . . . .

(7) Clause 1 (5) (a) of the Act, as re-enacted by subsection (6), applies to amounts elected in respect of dispositions occurring on or after May 6, 1997 and to amounts designated for taxation years ending on or after May 6, 1997.

(8) Subsection 1 (11) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 1, Schedule B, section 1, is amended by adding at the end "an insurance broker within the meaning of section 74.3 and an insurance exchange within the meaning of section 74.4".

2. Section 2 of the Act, as amended by the Statutes of Ontario, 1996, chapter 1, Schedule B, section 2, is further amended by adding the following subsections: Tax in respect of insurance contract with unlicensed insurer

(2.2) Every insured person within the meaning of section 74.3 who enters into an insurance contract, as defined in that section, with an insurer that is not licensed under the Insurance Act is liable to a tax in the amount determined under that section, payable at the time and in the manner provided in that section to Her Majesty in right of Ontario. Tax on insurance exchange

(2.3) Every insurance exchange within the meaning of section 74.4 is liable to a tax in the amount determined under that section, payable at the time and in the manner provided in that section to Her Majesty in right of Ontario.

3. Section 3 of the Act, as amended by the Statutes of Ontario, 1996, chapter 1, Schedule B, section 3, is further amended by adding the following subsections: Same

(4) The tax imposed by subsection 2 (2.2) shall be calculated by reference to the amount of premiums paid on insurance contracts, as defined in section 74.3, with insurers who do not hold licences under the Insurance Act. Same

(5) The tax imposed by subsection 2 (2.3) shall be calculated by reference to premiums and deposits collected by an insurance exchange, as defined in section 74.4.

4. (1) The Act is amended by adding the following section: Definitions

5.1 (1) In this section,

"taxpayer" means a corporation or a partnership whose members include one or more corporations; ("contribuable")

"transferee" means, in respect of a taxation year,

(a) a corporation that has a permanent establishment in one or more provinces other than Ontario, or

(b) a partnership, one or more of whose members is a corporation described in clause (a); ("bnficiaire du transfert")

"transferor" means, in respect of a taxation year,

(a) a corporation that has a permanent establishment in one or more provinces other than Ontario,

(b) an individual who is ordinarily resident in a province other than Ontario on the last day of the taxation year, including a trust that is deemed under subsection 104 (2) of the Income Tax Act (Canada) to be an individual in respect of the trust property, or

(c) a partnership, one or more of whose members is a corporation described in clause (a) or an individual described in clause (b). ("auteur du transfert") Inter-provincial anti-avoidance, disposition of property

(2) Despite any other provision of this Act except subsections (4) and (8), if a taxpayer disposes of property to a transferee, and clauses (3) (a) to (d) apply in respect of the disposition, the amount of the taxpayer's deemed proceeds of disposition of the property for the purposes of this Act is the total of,

(a) the amount that is deemed to be the taxpayer's proceeds of disposition of the property as determined under this Act without reference to this section; and

(b) the total of all amounts, each of which is in respect of a province in which the transferee has a permanent establishment, determined by multiplying,

(i) the amount by which the cost amount of the property to the transferee under the laws of a province other than Ontario exceeds the amount referred to in clause (a),

by,

(ii) the percentage of the transferee's taxable income, for the taxation year in which the transferee disposed of the property,

(A) if the transferee is a corporation, that is deemed to be earned in that other province under regulations made under the Income Tax Act (Canada), or that would be deemed to be earned in that other province if the transferee had had taxable income for that year, or

(B) if the transferee is a partnership, that the partnership would be deemed to have earned in that other province under regulations made under the Income Tax Act (Canada) if the partnership were a corporation, its taxation year were its fiscal period, it had had income for the fiscal period and its taxable income for the year were its income for that fiscal period. Application of subs. (2)

(3) Subsection (2) applies in respect of a disposition of property if,

(a) the transferee does not deal at arm's length with the taxpayer at or immediately after the time of the disposition;

(b) the amount of the taxpayer's proceeds of disposition of the property, as determined under this Act without reference to this section, would be deemed to be an amount that is less than the transferee's cost amount of the property immediately after the disposition, as determined under the laws of a province other than Ontario in which the transferee or, if the transferee is a partnership, one or more of its members, has a permanent establishment;

(c) the property, or other property the fair market value of which is derived primarily from the property or other property acquired by any person other than the taxpayer in substitution for the property, is subsequently disposed of to another person or partnership; and

(d) it is reasonable to believe that a purpose of the disposition of the property to the transferee prior to the subsequent disposition of the property by the transferee to another person was to reduce the total amount of income tax payable to one or more provinces in respect of the two dispositions to an amount that would be less than the amount of provincial income tax that would have been payable if the taxpayer's proceeds of disposition of the property had equalled the transferee's proceeds of disposition of the property on the subsequent disposition. Exceptions

(4) Subsection (2) does not apply in respect of a disposition if,

(a) the cost amount of the property to the transferee is greater than the taxpayer's proceeds of disposition of the property, as otherwise determined, by reason only of the operation of paragraph 88 (1) (c) or 98 (3) (b) of the Income Tax Act (Canada) or a comparable provision of the laws of another province in which the transferee, or if the transferee is a partnership, one or more of its members, has a permanent establishment;

(b) in the case where the taxpayer is a corporation, the percentage of the taxpayer's taxable income, for the taxation year in which the taxpayer disposes of the property, that is not deemed, or would not be deemed if the taxpayer had had taxable income for that year, to be earned outside Ontario for the purposes of section 39, is less than or equal to,

(i) if the transferee is a corporation, the percentage of the transferee's taxable income for the taxation year in which the transferee disposed of the property, that is not deemed, or would not be deemed if the transferee had had taxable income for that year, to be earned outside Ontario for the purposes of section 39, or

(ii) if the transferee is a partnership, the percentage of the transferee's income, for the fiscal period in which the transferee disposed of the property, that would not be deemed to be earned outside Ontario for the purposes of section 39, if the partnership were a corporation, the fiscal period were its taxation year and it had had income for the fiscal period; or

(c) in the case where the taxpayer is a partnership, the percentage of the taxpayer's income, for the fiscal period in which the taxpayer disposed of the property, that would not be deemed to be earned outside Ontario for the purposes of section 39, if the partnership were a corporation, the fiscal period were its taxation year and it had had income for the fiscal period, is less than or equal to the percentage of the transferee's taxable income, for the taxation year in which the transferee disposed of the property, that is not deemed, or would not be deemed if the transferee had had taxable income for that year, to be earned outside Ontario for the purposes of section 39. Inter-provincial anti-avoidance, acquisition of property

(5) Despite any other provision of this Act except subsections (7) and (8), if a taxpayer acquires property from a transferor and clauses (6) (a) to (d) apply, the taxpayer's cost amount of the property for the purposes of this Act shall be the amount by which,

(a) the taxpayer's cost amount of the property as otherwise determined under this Act without reference to this section,

exceeds,

(b) the total of all amounts, each of which is in respect of a province in which the transferor has a permanent establishment, determined by multiplying,

(i) the amount by which the amount determined under clause (a) exceeds the proceeds of disposition of the property to the transferor as determined under the laws of a province other than Ontario,

by,

(ii) the percentage of the transferor's taxable income for the taxation year in which the disposition occurred that is deemed to be earned in that other province under regulations made under the Income Tax Act (Canada), or that would be deemed to be earned in that other province if the transferor had had taxable income for that year. Application of subs. (5)

(6) Subsection (5) applies in respect of an acquisition of property if,

(a) the transferor does not deal at arm's length with the taxpayer at or immediately after the time of the acquisition;

(b) the cost amount of the property to the taxpayer, as otherwise determined under this Act, is greater than the amount of the transferor's deemed proceeds of disposition of the property as determined under the laws of a province other than Ontario in which the transferor or, if the transferor is a partnership, one or more of its members, has a permanent establishment;

(d) it is reasonable to believe that a purpose of the disposition of the property to the taxpayer prior to the disposition of the property by the taxpayer to another person was to reduce the total amount of income tax payable to one or more provinces in respect of the two dispositions to an amount that would be less than the amount of provincial income tax that would have been payable if the taxpayer's cost amount of the property for the purposes of this Act had equalled the greater of,

(i) the transferor's cost amount of the property under the Income Tax Act (Canada) immediately before the disposition to the taxpayer, and

(ii) the transferor's cost amount of the property under the laws of another province immediately before the disposition to the taxpayer. Exceptions

(7) Subsection (5) does not apply in respect of an acquisition of a property if,

(a) the cost amount of the property to the taxpayer is greater than the transferor's proceeds of disposition of the property, as otherwise determined, by reason only of the operation of paragraph 88 (1) (c) or 98 (3) (b) of the Income Tax Act (Canada), as applicable for the purposes of this Act;

(b) in the case where the taxpayer is a corporation, the percentage of the taxpayer's taxable income, for the taxation year in which the taxpayer acquires the property, that is not deemed, or would not be deemed if the taxpayer had had taxable income for that year, to be earned outside Ontario for the purposes of section 39, is less than or equal to,

(i) if the transferor is a corporation, the percentage of the transferor's taxable income, for the taxation year in which the transferor disposed of the property, that is not deemed, or would not be deemed if the transferor had had income for that year, to be earned outside Ontario for the purposes of section 39, or

(ii) if the transferor is a partnership, the percentage of the transferor's income, for the fiscal period in which the transferor disposed of the property, that would not be deemed to be earned outside Ontario under the rules prescribed for the purposes of section 39, if the partnership were a corporation, the fiscal period were its taxation year and it had had income for the fiscal period; or

(c) in the case where the taxpayer is a partnership, the percentage of the taxpayer's income, for the fiscal period in which the taxpayer acquired the property, that would not be deemed to be earned outside Ontario under the rules prescribed for the purposes of section 39 if the partnership were a corporation, the fiscal period were its taxation year and it had had income for the fiscal period, is less than or equal to the percentage of the transferor's taxable income, for the taxation year in which the transferor disposed of the property, that is not deemed, or would not be deemed if the transferor had had taxable income for that year, to be earned outside Ontario for the purposes of section 39 or, if the transferor is an individual, is deemed, or would be deemed if the transferor had had taxable income for that year, to be earned in Ontario under rules prescribed in the regulations made under the Income Tax Act (Canada). Section not applicable

(8) This section does not apply to a disposition or an acquisition of property if,

(a) the property is,

(i) depreciable property that was included in Class 3 of Schedule II to the regulations made under the Income Tax Act (Canada) and was acquired after November 12, 1981 and before October 25, 1985 by the transferor,

(ii) depreciable property referred to in subclause (i) that was acquired from a related corporation, and the difference between the cost amount of the property for the purposes of this Act and the cost amount of the property for the purposes of the Income Tax Act (Canada) can be primarily attributed to the fact that subsection 1100 (2) of the regulations made under that Act that applied for the purposes of that Act after November 12, 1981 did not apply for the purposes of this Act before October 25, 1985, or

(iii) a foreign resource property;

(b) the rules or conditions prescribed by the regulations have been satisfied; or

(c) an election is made under subsection 29.1 (4) or 31.1 (4) in respect of the disposition, or could have been made if those subsections had been enacted and in force.

(2) Section 5.1 of the Act, as enacted by subsection (1), applies in respect of dispositions and acquisitions of property that are part of a series of transactions or events if the series is completed after December 19, 1996.

5. (1) Subsection 11 (5) of the Act is repealed and the following substituted: Inclusion in income of certain amounts paid to non-residents

(5) Every corporation shall include in its income from a business or property for a taxation year an amount equal to 5/15.5 of all payments deducted in computing the corporation's income for the taxation year, that are paid or payable to a non-resident person with whom the corporation was not dealing at arm's length in respect of,

(a) a management or administration fee or charge, except any such payment that is not included in the amount determined under subsection 212 (4) of the Income Tax Act (Canada);

(b) a rent, royalty or similar payment, except any such payment,

(i) that is not included in the amount determined under paragraph 212 (1) (d) of the Income Tax Act (Canada), or

(ii) that is for the use of, or the right to use, in Canada, computer software or a patent or information concerning industrial, commercial or scientific experience, or a design or model, plan, secret formula or process, if the payment is exempt from tax under Part XIII of the Income Tax Act (Canada) by virtue of a tax treaty or convention between Canada and another country; or

(i) a motion picture film,

(ii) a film or video tape for use in connection with television, other than solely in connection with and as part of a news program produced in Canada, or

(iii) any other means of reproduction for use in connection with television, other than solely in connection with and as part of a news program produced in Canada.

(2) Subsection 11 (5) of the Act, as re-enacted by subsection (1), applies in respect of amounts paid or payable after December 31, 1997 that are deducted in computing taxable income for a taxation year ending after that day.

(3) Section 11 of the Act, as amended by the Statutes of Ontario, 1992, chapter 3, section 2, 1994, chapter 14, section 4 and 1996, chapter 29, section 37, is further amended by adding the following subsection: Deduction not allowed

(10.1) If a corporation is entitled to claim a deduction under section 13.1 for a taxation year, no deduction may be claimed under paragraph 20 (1) (b) of the Income Tax Act (Canada), as it applies for the purposes of this Act, in respect of the same property or expenditure.

(4) Section 11 of the Act is amended by adding the following subsection: Fuel tax rebates

(26) The amount required to be included in the income of a corporation for a taxation year under paragraph 12 (1) (x.1) of the Income Tax Act (Canada) for the purposes of this Act shall be deemed to be the total of all amounts each of which is a fuel tax rebate received in the taxation year by the corporation under section 68.4 of the Excise Tax Act (Canada).

(5) Subsection 11 (26) of the Act, as enacted by subsection (4), applies in respect of taxation years of corporations ending after December 31, 1996.

6. The Act is amended by adding the following section: Ontario new technology tax incentive gross-up recapture

11.1 (1) A corporation shall include in its income for a taxation year the total of all amounts, if any, each of which is the amount determined under subsection (2) of the corporation's Ontario new technology tax incentive gross-up recapture in respect of a depreciable property of a prescribed class if an amount in respect of the depreciable property is required, under section 13 of the Income Tax Act (Canada), as made applicable by section 11, to be included in computing the corporation's income for the taxation year or the income of a partnership, of which the corporation is a member at the end of the taxation year, for a fiscal period ending in the taxation year. Amount of recapture

(2) The amount of a corporation's Ontario new technology tax incentive gross-up recapture in respect of a depreciable property of a prescribed class is the amount determined in accordance with the following formula:

where,

"A" is the amount of the corporation's Ontario new technology tax incentive gross-up recapture in respect of the depreciable property;

"B" is the amount,

(a) included under section 13 of the Income Tax Act (Canada), as made applicable by section 11, in computing the corporation's income for the taxation year in respect of the depreciable property; or

(b) included under section 13 of the Income Tax Act (Canada), as made applicable by section 11, in the income of the partnership for the fiscal period ending in the corporation's taxation year, multiplied by the percentage of the partnership's income or loss for the fiscal period to which the corporation is entitled or would be entitled if the partnership had had an income or loss for the fiscal period; and

"C" is the fraction that is the corporation's allocation factor for the taxation year that would be determined for the purposes of subsection 13.1 (1). Non-arm's length transfer

(3) For the purposes of subsection (1), a corporation is deemed to have deducted under section 13.1 in computing its income for a taxation year prior to the taxation year in which it disposed of the depreciable property the total of all amounts, if any, each of which is the amount by which the amount deducted under section 13.1 by another corporation in respect of the depreciable property exceeds the amount that was included in "B" in the formula in subsection (2) in determining an amount that was included under this section in the income of the other corporation if,

(a) the property was capital property of the other corporation immediately before its disposition by the other corporation; and

(b) paragraph 87 (2) (d), 88 (1) (f), 98 (3) (e) or 98 (5) (e), subsection 13 (7), 85 (5) or 97 (4) or section 115.1 of the Income Tax Act (Canada), as made applicable for the purposes of this Act, applied in respect of the disposition of the depreciable property by the other corporation and by all other corporations that disposed of the depreciable property prior to the acquisition of the property by the corporation.

7.(1) The definition of "expenditure base" in subsection 12 (1) of the Act, as amended by the Statutes of Ontario, 1996, chapter 29, section 38, is further amended by,

(a) striking out "after the 20th day of April, 1988" in the fourth line;

(b) repealing clause (a) of the definition and substituting the following:

(a) the total of,

(i) all qualified expenditures made by the corporation during taxation years commencing before January 1, 1996 that are in the base period, and

(ii) the aggregate of the corporation's SR & ED qualified expenditure pool at the end of each taxation year commencing after December 31, 1995 that is in the base period; and

. . . . .

(c) repealing subclause (c) (i) of the definition and substituting the following:

(i) the amount deducted is reasonably attributable to,

(A) a qualified expenditure made by the corporation during a taxation year commencing before January 1, 1996 that is in or before the base period, or

(B) an amount included in the corporation's SR & ED qualified expenditure pool at the end of a taxation year commencing after December 31, 1995 that is in or before the base period, and

. . . . .

(2) The definition of "net eligible qualifying expenditures" in subsection 12 (1) of the Act is repealed and the following substituted:

"net qualified expenditures", of a corporation for a taxation year, means the amount, if any, by which,

(a) the total of the corporation's SR & ED qualified expenditure pool at the end of the taxation year and the amount determined under subsection 43.3 (9) that would be the amount of the corporation's eligible repayments for the taxation year for the purposes of section 43.3,

exceeds,

(b) the total of,

(i) all amounts deducted by the corporation under subsection 127 (5) of the Income Tax Act (Canada) in computing tax payable under that Act for the previous taxation year, to the extent that the amounts deducted may reasonably be attributable to the corporation's eligible qualified expenditures for taxation years commencing before January 1, 1996 or to amounts included in the corporation's SR & ED qualified expenditure pool at the end of a taxation year commencing after December 31, 1995, and

(ii) any amount by which the aggregate determined under this clause in respect of the immediately preceding taxation year exceeds the aggregate determined under clause (a) for the immediately preceding taxation year. ("dpenses admissibles nettes")

(3) Subsection 12 (1) of the Act is amended by adding the following definition:

"SR & ED qualified expenditure pool", of a corporation at the end of a taxation year, has the meaning given to that expression in subsection 127 (9) of the Income Tax Act (Canada), except that the expression "qualified expenditure" shall have the meaning given to that expression by this section. ("compte de dpenses admissibles de recherche et de dveloppement")

(4) Subsections 12 (2) and (5) of the Act are amended by striking out "net eligible qualifying expenditures" wherever it appears and substituting in each case "net qualified expenditures".

(5) Subsection 12 (10) of the Act is repealed.

(6) Subsection 12 (13) of the Act is amended by,

(a) repealing paragraph 1 and substituting the following:

1. If the partnership makes, during a fiscal period of the partnership, an expenditure that, if it were made by a corporation, would be a qualified expenditure or an eligible repayment for the purposes of section 43.3, an amount equal to the proportion of the expenditure that the corporation's share of the income or loss of the partnership for the fiscal period bears to the total income or loss of the partnership for the fiscal period shall be deemed to be a qualified expenditure or eligible repayment made by the corporation for the purposes of section 43.3 in the taxation year of the corporation in which that fiscal period ends.

(b) adding the following paragraph:

3. Subsection 127 (13) of the Income Tax Act (Canada) does not apply to a corporation that is a member of a partnership in respect of expenditures incurred by the partnership or by the corporation on behalf of the partnership.

(7) Subsection 12 (14) of the Act, as amended by the Statutes of Ontario, 1992, chapter 3, section 3, is further amended by striking out "that is an eligible qualified expenditure" in the fourth and fifth lines and substituting "or eligible repayment for the purposes of section 43.3".

(8) Paragraph 1 of subsection 12 (14) of the Act is amended by striking out the portion before subparagraph i and substituting the following:

1. The maximum amount deductible under subsection (2) by the corporation in the taxation year in respect of the corporation's share of the qualified expenditure or eligible repayment shall not exceed the aggregate of,

. . . . .

(9) Section 12 of the Act, as amended by subsections (1) to (8), applies to taxation years commencing after December 31, 1995.

8.The Act is amended by adding the following section: Ontario new technology tax incentive gross-up

13.1 (1) A corporation may deduct in computing its income from a business for a taxation year the amount determined in respect of the corporation for the year according to the following formula:

where,

"A" is the corporation's Ontario new technology tax incentive gross-up for the taxation year;

"B" is the total of all amounts for the taxation year, each of which is,

(a) an amount deducted by the corporation under clause 11 (10) (a), in computing its income from a business for the taxation year, as an Ontario new technology tax incentive in respect of a prescribed depreciable property, or

(b) an amount equal to the product of,

(i) the amount deducted under clause 11 (10) (a), as an Ontario new technology tax incentive in respect of a prescribed depreciable property, by a partnership of which the corporation is a member, in computing the partnership's income from a business for a fiscal period ending in the corporation's taxation year, and

(ii) the percentage of the partnership's income or loss for the fiscal period to which the corporation is entitled; and

"C" is the corporation's Ontario allocation factor for the taxation year. Ontario allocation factor

(2) For the purposes of subsection (1), a corporation's Ontario allocation factor for a taxation year is the fraction that would be determined under the definition of that term in subsection 12 (1).

9.(1) Section 14 of the Act is amended by adding the following subsection: Limit on capital gains reserve

(3.1) Despite subparagraph 40 (1) (a) (iii) of the Income Tax Act (Canada), the amount a corporation may claim as a deduction under that subparagraph for the purposes of this Act in determining its gain for a taxation year from the disposition of a property shall not exceed the amount claimed for the taxation year for the purposes of the Income Tax Act (Canada) under that subparagraph in respect of the disposition.

(2) Subsection 14 (3.1) of the Act, as enacted by subsection (1), applies to amounts claimed as a deduction under subparagraph 40 (1) (a) (iii) of the Income Tax Act (Canada) for the purposes of this Act for taxation years ending after November 25, 1997.

10.Section 29 of the Act is amended by adding the following subsection: Time of election

(6) In applying subsection 85 (6) of the Income Tax Act (Canada), the reference to "the earliest of the days" shall be read as "the latest of the days" in the situation where clause 29.1 (4) (a) or (b) or subsection 29.1 (5) applies to the corporations making the election under section 85 of that Act.

11.(1) Subdivision G of Division B of Part II of the Act is amended by adding the following section: Ontario corporations and partnerships

29.1(1) In this section,

(a) a corporation is an Ontario corporation for a taxation year if not more than 10 per cent of its taxable income for the year or for the previous taxation year is deemed, or would be deemed if it had had income for that year, to have been earned outside Ontario for the purposes of section 39; and

(b) a partnership is an Ontario partnership for a fiscal period of the partnership if not more than 10 per cent of its income for the fiscal period or for the previous fiscal period would be deemed to have been earned outside Ontario for the purposes of section 39 if the partnership were a corporation, its fiscal period were its taxation year and it had had income for the fiscal period. Elections

(2) The following rules apply in respect of elections under provisions of the Income Tax Act (Canada) that apply for the purposes of this Subdivision:

1. No election may be made by a corporation or the members of a partnership for the purposes of this Act unless the election has been properly made by the corporation or members of the partnership for the purposes of the Income Tax Act (Canada).

2. If the amount elected or deemed to have been elected for the purposes of the Income Tax Act (Canada) is different from the amount that would be elected or deemed to have been elected for the purposes of this Act, without reference to section 5.1, the amount determined for the purposes of the Income Tax Act (Canada) shall apply for the purposes of this Act. Exception to subs. (2)

(3) Paragraph 2 of subsection (2) does not apply if,

(a) the property in respect of which an election is made is property described in subclause 5.1 (8) (a) (iii) or prescribed by the regulations; or

(b) the rules or conditions prescribed by the regulations have been satisfied. Elected amounts

(4) If all of the corporations required to make an election referred to in subsection (2) are Ontario corporations for the taxation year to which the election relates, and any partnership whose partners are required to make the election is an Ontario partnership for the fiscal period to which the election relates and all of its partners are corporations at the end of that fiscal period, or the rules or conditions prescribed by the regulations are satisfied, the corporations making an election under the Income Tax Act (Canada) may, upon delivering a joint election in a form approved by the Minister within the time specified in subsection 85 (6) of the Income Tax Act (Canada) as it reads for the purposes of this section,

(a) elect an amount determined under this Act, without reference to subsection (2), in respect of depreciable property and eligible capital property; and

(b) elect an amount in respect of any other property that is,

(i) not greater than the fair market value of the property, and

(ii) not less than the lesser of,

(A) the fair market value of the property, and

(B) the amount elected or deemed to have been elected in respect of the property under the Income Tax Act (Canada), less the cost amount of the property for the purposes of that Act, plus the cost amount of the property for the purposes of this Act, calculated immediately before the transfer to which the election relates. Same

(5) If the property in respect of which an election is made under the Income Tax Act (Canada) is property referred to in subclause 5.1 (8) (a) (i) or (ii), the corporations making the election may, upon delivering a joint election in a form approved by the Minister within the time specified in subsection 85 (6) of the Income Tax Act (Canada) as it reads for the purposes of this section, elect an amount that is,

(a) not greater than the fair market value of the property; and

(b) not less than the amount elected or deemed to have been elected in respect of the property under the Income Tax Act (Canada), less the cost amount of the property for the purposes of that Act, plus the cost amount of the property for the purposes of this Act, calculated immediately before the transfer to which the election relates. Anti-avoidance

(6) Subsection (4) does not apply to the election if,

(a) the corporation that held the property immediately after the election,

(i) ceases to be an Ontario corporation within 36 months after the taxation year to which the election relates and still holds the property immediately after it ceases to be an Ontario corporation, or

(ii) disposes of the property within 36 months after the taxation year to which the election relates and is not an Ontario corporation at the time of the disposition; or

(b) it is reasonable to believe that one of the reasons the corporation or any other person conducted its business and affairs in a manner that resulted in the corporation being an Ontario corporation for the taxation year to which the election relates was to reduce an amount elected for the purposes of this Act.

(2) Section 29.1 of the Act, as enacted by subsection (1), applies to elections in respect of dispositions occurring on or after May 6, 1997.

12.Section 31 of the Act, as amended by the Statutes of Ontario, 1991, chapter 3, section 7, is further amended by adding the following subsection: Time of election

(8) In applying subsection 96 (4) of the Income Tax Act (Canada), the reference to "the earliest of the days" shall be read as "the latest of the days" in the situation where clause 31.1 (4) (a) or (b) or subsection 31.1 (5) applies to the corporations and members of the partnership making the election under section 97 of that Act.

13.(1) Subdivision I of Division B of Part II of the Act is amended by adding the following section: Definitions

31.1(1) In this section,

"Ontario corporation" has the same meaning as in subsection 29.1 (1); ("corporation ontarienne")

"Ontario partnership" has the same meaning as in subsection 29.1 (1). ("socit ontarienne") Elections

(2) The following rules apply in respect of elections under provisions of the Income Tax Act (Canada) that apply for the purposes of this Subdivision:

1. No election may be made by a corporation and the members of a partnership for the purposes of this Act unless the election has been properly made by the corporation and the members of the partnership for the purposes of the Income Tax Act (Canada).

(3) Paragraph 2 of subsection (2) does not apply if,

(a) the property in respect of which an election is made is property described in subclause 5.1 (8) (a) (iii) or prescribed in the regulations; or

(b) the rules or conditions prescribed by the regulations have been satisfied. Elected amounts

(4) If every corporation required to make an election referred to in subsection (2) is an Ontario corporation for the taxation year to which the election relates, and the partnership whose partners are required to make the election is an Ontario partnership for the fiscal period to which the election relates, or the conditions or rules prescribed by the regulations are satisfied, the corporation and members of the partnership making an election under the Income Tax Act (Canada) may, upon delivering a joint election in a form approved by the Minister within the time specified in subsection 96 (4) of the Income Tax Act (Canada) as it reads for the purposes of this section,

(a) elect an amount determined under this Act, without reference to subsection (2), in respect of depreciable property and eligible capital property; and

(b) elect an amount in respect of any other property, that is,

(i) not greater than the fair market value of the property, and

(ii) not less than the lesser of,

(A) the fair market value of the property, and

(5) If the property in respect of which an election is made under the Income Tax Act (Canada) is property referred to in subclause 5.1 (8) (a) (i) or (ii), the corporations and members of the partnership making the election may, upon delivering a joint election in a form approved by the Minister within the time specified in subsection 96 (4) of the Income Tax Act (Canada) as it reads for the purposes of this section, elect an amount that is,

(a) not greater than the fair market value of the property; and

(6) Subsection (4) does not apply to the election if,

(a) the partnership that held the property immediately after the election,

(i) ceases to be an Ontario partnership within 36 months after the fiscal period to which the election relates and still holds the property immediately after it ceases to be an Ontario partnership, or

(ii) disposes of the property within 36 months after the fiscal period to which the election relates and is not an Ontario partnership at the time of the disposition; or

(b) it is reasonable to believe that one of the reasons the partnership, a member of the partnership or any other person conducted their business and affairs in a manner that resulted in the partnership being an Ontario partnership for the fiscal period to which the election relates was to reduce an amount elected for the purposes of this Act.

(2) Section 31.1 of the Act, as enacted by subsection (1), applies to elections in respect of dispositions occurring on or after May 6, 1997.

14.(1) Section 32 of the Act is amended by adding the following subsection: Anti-avoidance of provincial tax

(3) If a trust, other than a mutual fund trust, is resident in a province other than Ontario and designates or elects an amount under the Income Tax Act (Canada) in respect of a beneficiary under the trust that is a corporation that has a permanent establishment in Ontario, the trust shall be deemed not to have designated or elected an amount under that Act for the purposes of this Act unless the designated or elected amount in each province in which the trust is resident is the same as the amount designated or elected for the purposes of the Income Tax Act (Canada).

(2) Subsection 32 (3) of the Act, as enacted by subsection (1), applies to designations and elections made after November 25, 1997.

15.(1) Subsection 34 (10) of the Act is repealed and the following substituted: Application of s. 111 (4) (e) of Income Tax Act (Canada)

(10) The following rules apply in the application of paragraph 111 (4) (e) of the Income Tax Act (Canada) for the purposes of this Act:

1. The reference to the Minister shall be read as a reference to the Minister of National Revenue.

2. The paragraph shall be read without reference to the words "under this Part".

3. If the corporation designates an amount under that paragraph for the purposes of determining the amount of the proceeds of disposition of a capital property for the purposes of the Income Tax Act (Canada), the corporation shall be deemed to have designated under that paragraph for the purposes of this Act the amount designated in respect of the property for the purposes of the Income Tax Act (Canada).

4. No amount may be designated by the corporation under that paragraph for the purposes of determining the amount of the proceeds of disposition of a capital property for the purposes of this Act unless the corporation designates an amount under that paragraph for the purposes of the Income Tax Act (Canada). Exception

(10.1) Paragraph 3 of subsection (10) does not apply if,

(a) the property in respect of which a designation is made is property described in clause 5.1 (8) (a) or prescribed by the regulations; or

(b) the rules or conditions prescribed by the regulations have been satisfied. Designated amounts

(10.2) Despite paragraph 3 of subsection (10), if the corporation making a designation under paragraph 111 (4) (e) of the Income Tax Act (Canada) is an Ontario corporation for the taxation year to which the designation relates, or the rules or conditions prescribed in the regulations have been met, the corporation may, upon filing a designation in a form approved by the Minister with the return required under section 75 for the taxation year,

(a) designate an amount determined under this Act, without reference to subsection (10), in respect of its depreciable property; and

(b) designate an amount in respect of any other property that,

(i) is not less than the amount designated in respect of the property under the Income Tax Act (Canada), less the cost amount of the property for the purposes of that Act plus the cost amount of the property for the purposes of this Act, calculated immediately before making the designation, and

(ii) is not greater than the lesser of the fair market value of the property and the total of,

(A) the amount referred to in subclause (i),

(B) the amount of the excess, if any, by which the corporation's non-capital loss balance at the end of the preceding taxation year, as determined under this Act, exceeds its non-capital loss balance at the end of that year, as determined for the purposes of the Income Tax Act (Canada), to the extent the excess has not been included in an amount designated under this subsection in respect of another property, and

(C) the amount of the excess, if any, by which 4/3 of the corporation's net capital loss balance at the end of the preceding taxation year, as determined under this Act, exceeds 4/3 of its net capital loss balance at the end of that year as determined for the purposes of the Income Tax Act (Canada), to the extent the excess has not been included in an amount designated under this subsection in respect of another property. Anti-avoidance

(10.3) Subsection (10.2) does not apply in respect of a designation if,

(a) the corporation that made the designation,

(i) ceases to be an Ontario corporation within 36 months after the taxation year to which the designation relates and still holds the property immediately after it ceases to be an Ontario corporation, or

(ii) disposes of the property within 36 months after the taxation year to which the designation relates and is not an Ontario corporation at the time of the disposition; or

(b) it is reasonable to believe that one of the reasons the corporation or any other person conducted its business and affairs in a manner that resulted in the corporation being an Ontario corporation for the taxation year to which the designation relates was to reduce an amount designated for the purposes of this Act under paragraph 111 (4) (e) of the Income Tax Act (Canada). Definition

(10.4) In this section,

"Ontario corporation" has the same meaning as in subsection 29.1 (1).

(2) Subsections 34 (10) to (10.4) of the Act, as enacted or re-enacted by subsection (1), apply to amounts designated for taxation years ending on or after May 6, 1997.

(3) Section 34 of the Act, as amended by the Statutes of Ontario, 1992, chapter 3, section 8, 1994, chapter 14, section 11, and 1996, chapter 29, section 45, is further amended by adding the following subsection: Application of Income Tax Act (Canada), subss. 111 (10), (11)

(13) Subsections 111 (10) and (11) of the Income Tax Act (Canada) do not apply for the purposes of this Act.

(4) Subsection 34 (13) of the Act, as enacted by subsection (3), applies to taxation years ending after December 31, 1996.

16.Clause 35 (1) (a) of the Act is amended by striking out "section 12 or 13, or both," in the second line and substituting "any of sections 12, 13 and 13.1".

17. (1) Subsection 43.3 (3) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 1, Schedule B, section 7, is repealed and the following substituted: Amount of tax credit

(3) The amount of a qualifying corporation's Ontario innovation tax credit for a taxation year is 10 per cent of the lesser of,

(a) the total of the amount of the corporation's SR & ED qualified expenditure pool at the end of the year and the amount of its eligible repayments, if any, for the taxation year; and

(b) the amount of the corporation's expenditure limit for the taxation year, as determined for the purposes of subsection 127 (10.1) of the Income Tax Act (Canada).

(2) Subsection 43.3 (6) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 1, Schedule B, section 7, is repealed and the following substituted: SR & ED qualified expenditure pool

(6) The amount of a corporation's SR & ED qualified expenditure pool at the end of a taxation year for the purposes of this section is the amount that would be determined to be the corporation's SR & ED qualified expenditure pool at the end of the year under the definition of that expression in subsection 127 (9) of the Income Tax Act (Canada), if the following rules applied in determining that amount:

1. The expression "qualified expenditure" in the definition of "SR & ED qualified expenditure pool" in subsection 127 (9) means an expenditure that is a qualified expenditure for the purposes of this section.

2. Only 40 per cent of qualified expenditures of a capital nature for the taxation year may be included in determining the amount of qualified expenditures in the year.

3. Any tax credit available to the corporation under this section in respect of qualified expenditures is deemed not to be government assistance for the purposes of that section.

4. No amount is required to be deducted in respect of a specified contract payment received, receivable or reasonably expected to be received by the corporation.

5. No amount is included in respect of any expenditure incurred by a partnership of which the corporation is a member.

6. In determining the amount that is "C" in the formula in the definition of "SR & ED qualified expenditure pool" in subsection 127 (9) of the Income Tax Act (Canada), no amount needs to be included in respect of an amount transferred by the corporation under subsection 127 (13) of that Act to a person not dealing at arm's length with the corporation, if that person is not eligible to claim, under this Act or under an Act of another province, a tax credit or incentive, other than a deduction under section 37 of the Income Tax Act (Canada) as it applies for income tax purposes under this Act and in other provinces, in respect of the amount transferred by the corporation.

(3) Paragraph 3 of subsection 43.3 (6) of the Act, as enacted by subsection (2), is amended by inserting after "this section" in the first and second lines "or section 43.9".

(4) Subsection 43.3 (8) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 1, Schedule B, section 7, is repealed.

(5) Subsection 43.3 (9) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 1, Schedule B, section 7, is amended by striking out "paragraph 127 (11.1) (e)" in the descriptions of the amounts determined to be "D" and "E" in the formula in that subsection and substituting in each case "paragraph 127 (11.5) (b)".

(6) Clause 43.3 (10) (d) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 1, Schedule B, section 7, is amended by striking out "subsection 127 (11.1)" in the first and second lines and substituting "subsections 127 (11.5) and (18) to (21)".

(7) Paragraph 1 of subsection 43.3 (16) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 1, Schedule B, section 7, is amended by inserting after "this section" in the sixth line "or section 43.9".

(8) Section 43.3 of the Act, as amended by subsections (1), (2), (4), (5) and (6), applies to taxation years commencing after December 31, 1995.

18.(1) Subsection 43.4 (3) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 24, section 27, and amended by 1996, chapter 29, section 49, is repealed and the following substituted: Amount of tax credit

(3) The amount of a corporation's co-operative education tax credit for a taxation year is the sum of,

(a) all amounts each of which is in respect of a qualifying work placement that ends in the taxation year, equal to the lesser of the corporation's eligible amount for the taxation year in respect of the qualifying work placement determined under subsection (3.1) and $1,000; and

(b) the total of all amounts, each of which is an amount determined by multiplying the eligible percentage by the amount of a repayment, if any, made by the corporation during the taxation year, of government assistance in respect of a qualifying work placement to the extent the repayment does not exceed the amount of the assistance in respect of the qualifying work placement that,

(i) has not been repaid in a prior taxation year, and

(ii) can reasonably be considered to have reduced the amount of a co-operative education tax credit that would otherwise have been allowed to the corporation under this Act in respect of the qualifying work placement. Eligible amount

(3.1) A corporation's eligible amount for a taxation year in respect of a qualifying work placement is the amount determined under the following rules:

1. If the total of all salaries or wages paid by the corporation in the previous taxation year is equal to or greater than $600,000, the amount is 10 per cent of the total of all eligible expenditures made by the corporation in respect of the qualifying work placement.

2. If the total of all salaries or wages paid by the corporation in the previous taxation year is not greater than $400,000, the amount is 15 per cent of the total of all eligible expenditures made by the corporation in respect of the qualifying work placement.

3. If the total of all salaries or wages paid by the corporation in the previous taxation year is greater than $400,000 but less than $600,000, the amount is the amount determined in accordance with the following formula:

where,

"A" is the corporation's eligible amount for the taxation year in respect of the qualifying work placement;

"B" is the amount of all eligible expenditures made by the corporation in respect of the qualifying work placement; and

"C" is the amount by which the total of all salaries or wages paid by the corporation in the previous taxation year exceeds $400,000.

(2) Subsection 43.4 (4) of the Act, as re-enacted by the Statutes of Ontario, 1996, chapter 29, section 49, is repealed and the following substituted: Certification of qualifying work placement

(4) Every eligible educational institution in Ontario that has a qualified educational program that has qualifying work placements shall certify in a manner or form approved by the Minister to every corporation providing a qualifying work placement that the placement is a qualifying work placement for the purposes of this section, and the certification shall contain the name of the student in the placement and any additional information required by the Minister.

(3) Subsection 43.4 (5) of the Act, as re-enacted by the Statutes of Ontario, 1996, chapter 29, section 49, is amended by striking out "qualifying co-op work placement" in the fourth line and in the eighth and ninth lines and substituting in each case "qualifying work placement".

(4) Subsection 43.4 (5.1) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 29, section 49, is amended by,

(a) striking out "qualifying co-op work placement" in the fourth and fifth lines and substituting "qualifying work placement"\; and

(b) striking out "qualifying co-op work placements" in the ninth and tenth lines and substituting "qualifying work placements".

(5) Subsection 43.4 (5.2) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 29, section 49, is amended by striking out "qualifying co-op work placements" in the tenth line and in the thirteenth and fourteenth lines and substituting in each case "qualifying work placements".

(6) The definition of "qualifying co-op work placement" in subsection 43.4 (10) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 24, section 27, is repealed.

(7) Subsection 43.4 (10) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 24, section 27, is amended by adding the following definitions:

"eligible percentage" means, in respect of a repayment of government assistance, the percentage used in determining the amount of the tax credit, if the receipt of the government assistance reduced the amount of a tax credit available under this section; ("pourcentage autoris")

"qualifying work placement" has the meaning prescribed by the regulations. ("stage admissible")

(8) Section 43.4 of the Act, as enacted by the Statutes of Ontario, 1996, chapter 24, section 27, and amended by 1996, chapter 29, section 49, is further amended by adding the following subsection: Regulations

(11) The Lieutenant Governor in Council may make regulations prescribing the method of calculating the amount of salaries or wages that will be deemed to be paid by a corporation in a previous taxation year for the purposes of subsection (3.1).

(9) Subsections 43.4 (3) and (3.1) of the Act, as re-enacted or enacted by subsection (1), apply in respect of qualifying work placements as defined under section 43.4 of the Act that commence after December 31, 1997.

(10) Subsection 43.4 (4) of the Act, as re-enacted by subsection (2), applies in respect of qualifying work placements as defined under section 43.4 of the Act that commence after December 31, 1997.

(11) Subsections 43.4 (5), (5.1) and (5.2) of the Act, as amended by subsections (3), (4) and (5), apply in respect of qualifying work placements as defined under section 43.4 of the Act that commence after December 31, 1997.

19.(1) Subclause 43.5 (4) (a) (ii) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 24, section 27, is repealed and the following substituted:

(ii) the sum of,

(A) 15 per cent of the amount by which the company's qualifying labour expenditure for the taxation year in respect of the production exceeds the lesser of the amounts determined under sub-subclauses (i) (A) and (B), multiplied by the ratio of the company's pre-May 7, 1997 Ontario labour expenditure for the taxation year in respect of the production to the company's Ontario labour expenditure for the taxation year in respect of the production, and

(B) 20 per cent of the amount by which the company's qualifying labour expenditure for the taxation year in respect of the production exceeds the lesser of the amounts determined under sub-subclauses (i) (A) and (B), multiplied by the ratio of the company's post-May 6, 1997 Ontario labour expenditure for the taxation year in respect of the production to the company's Ontario labour expenditure for the taxation year in respect of the production; and

. . . . .

(2) Subsection 43.5 (5) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 24, section 27, is repealed and the following substituted: Exception, first-time production

(5) If the total amount of the qualifying labour expenditures for a first-time production is $50,000 or less, the total amount of all eligible credits in respect of the production is the lesser of the total amount of the qualifying labour expenditures and $15,000.

(3) Clause 43.5 (6) (a) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 24, section 27, is repealed and the following substituted:

(a) the sum of,

(i) 15 per cent of the amount determined by multiplying the company's qualifying labour expenditure for the taxation year in respect of the production by the ratio of the company's pre-May 7, 1997 Ontario labour expenditure for the taxation year in respect of the production to the company's total Ontario labour expenditure for the taxation year in respect of the production, and

(ii) 20 per cent of the amount determined by multiplying the company's qualifying labour expenditure for the taxation year in respect of the production by the ratio of the company's post-May 6, 1997 Ontario labour expenditure for the taxation year in respect of the production to the company's total Ontario labour expenditure for the taxation year in respect of the production.

(4) Subsection 43.5 (11) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 24, section 27, is repealed and the following substituted: Tax credit limit

(11) The Ontario film and television tax credit limit of a qualifying production company and all corporations associated with the company in respect of eligible productions commenced in a production year is the amount determined under the following rules:

1. The Ontario film and television tax credit limit in respect of all eligible Ontario productions that are commenced in the 1996 production year by the company or by a corporation associated with the company is $2,000,000.

2. The Ontario film and television tax credit limit in respect of all eligible productions that are commenced in the 1997 production year by the company or by a corporation associated with the company is $2,666,667.

3. The Ontario film and television tax credit limit in respect of all eligible Ontario productions that are commenced in the 1998 or a subsequent production year by the company or by a corporation associated with the company is $3,000,000.

(5) Subsection 43.5 (12) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 24, section 27, is amended by striking out "$2,000,000" in the eighth line and substituting "the amount of the Ontario film and television tax credit limit applicable to that production year".

(6) Subclause 43.5 (13) (a) (ii) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 24, section 27, is repealed and the following substituted:

(ii) the amount by which the Ontario film and television tax credit limit applicable to the production year in which the production commenced exceeds the sum of all amounts previously certified under subsection (9) in respect of eligible Ontario productions commenced in the same production year by the qualifying production company or a corporation associated with the company; or

. . . . .

(7) Subclause 43.5 (13) (b) (ii) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 24, section 27, is repealed and the following substituted:

(8) Subsection 43.5 (19) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 24, section 27, is amended by adding the following definition:

"Ontario labour expenditure" means the amount determined under the rules prescribed by the regulations in respect of labour expenditures incurred after June 30, 1996 in respect of a production for which principal photography or key animation commenced after May 7, 1996. ("dpense de main-d'oeuvre en Ontario")

(9) Section 43.5 of the Act, as enacted by the Statutes of Ontario, 1996, chapter 24, section 27, and amended by 1996, chapter 29, section 50, is further amended by adding the following subsections: Pre-May 7, 1997 Ontario labour expenditure

(20) The pre-May 7, 1997 Ontario labour expenditure of a qualifying production company for a taxation year in respect of an eligible Ontario production is the total of all expenditures incurred in the taxation year and before May 7, 1997 in respect of the production that are included in the amount of the company's Ontario labour expenditure for the taxation year in respect of the production. Post-May 6, 1997 Ontario labour expenditure

(21) The post-May 6, 1997 Ontario labour expenditure of a qualifying production company for a taxation year in respect of an eligible Ontario production is the total of all expenditures incurred in the taxation year and after May 6, 1997 in respect of the production that are included in the amount of the company's Ontario labour expenditure for the taxation year in respect of the production.

20.The Act is amended by adding the following section: Graduate transitions tax credit

43.6(1) A corporation that complies with the requirements of this section may deduct from its tax otherwise payable under this Part for a taxation year, after making all the deductions for the taxation year claimed under sections 39, 40, 41, 43 and 43.2 to 43.5, an amount not exceeding the amount of its graduate transitions tax credit for the taxation year. Same

(2) A corporation that complies with the requirements of this section may deduct from its tax otherwise payable for the year under Parts III and IV an amount not exceeding the amount by which its graduate transitions tax credit for the taxation year exceeds the maximum amount, if any, deductible by the corporation for the year under subsection (1). Amount of tax credit

(3) The amount of a corporation's graduate transitions tax credit for a taxation year is the sum of,

(a) all amounts each of which is in respect of a qualifying employment that commenced not less than 12 months before the end of the taxation year or terminated before the end of the taxation year, equal to the lesser of the corporation's eligible amount for the taxation year in respect of the qualifying employment determined under subsection (4) and $4,000; and

(b) the total of all amounts, each of which is an amount determined by multiplying the eligible percentage by the amount of a repayment, if any, made by the corporation during the taxation year, of government assistance in respect of the qualifying employment of an employee, to the extent the repayment does not exceed the amount of the assistance in respect of the qualifying employment that,

(i) has not been repaid in a prior taxation year, and

(ii) can reasonably be considered to have reduced the amount of a graduate transitions tax credit that would otherwise have been allowed to the corporation under this Act in respect of the qualifying employment. Eligible amount

(4) A corporation's eligible amount for a taxation year in respect of a qualifying employment is the amount determined under the following rules:

1. If the qualifying employment commenced before January 1, 1998, the amount is 10 per cent of the total of all eligible expenditures made by the corporation in respect of the qualifying employment.

2. If the qualifying employment commenced after December 31, 1997 and the total of all salaries or wages paid by the corporation in the previous taxation year is equal to or greater than $600,000, the amount is 10 per cent of the total of all eligible expenditures made by the corporation in respect of the qualifying employment.

3. If the qualifying employment commenced after December 31, 1997 and the total of all salaries or wages paid by the corporation in the previous taxation year is not greater than $400,000, the amount is 15 per cent of the total of all eligible expenditures made by the corporation in respect of the qualifying employment.

4. If the qualifying employment commenced after December 31, 1997 and the total of all salaries or wages paid by the corporation in the previous taxation year is greater than $400,000 but less than $600,000, the amount is the amount determined in accordance with the following formula:

where,

"A" is the corporation's eligible amount for the taxation year in respect of the qualifying employment;

"B" is the amount of all eligible expenditures made by the corporation in respect of the qualifying employment; and

"C" is the amount by which the total of all salaries or wages paid by the corporation in the previous taxation year exceeds $400,000. Number of tax credits

(5) Except for a tax credit in respect of the repayment of government assistance, a tax credit under this section may be claimed only once in respect of each qualifying employment. Deemed employment by one corporation

(6) Consecutive periods of employment by two or more associated corporations shall be deemed to be one continuous period of employment by only one of the corporations, as designated by the corporations. Same

(7) If consecutive periods of employment are deemed under subsection (6) to be one period of employment by only one of two or more associated corporations and that period of employment would otherwise be a qualifying employment under this section,

(a) all amounts referred to in subsection (11) that were paid by any of the associated corporations shall be deemed to have been paid by the corporation designated under subsection (6) and not by any other corporation; and

(b) government assistance received by any of the associated corporations in respect of the qualifying employment shall be deemed to have been received by the corporation designated under subsection (6) and not by any other corporation. Corporate partner

(8) If a corporation is a member of a partnership and the partnership would qualify in a particular taxation year of the corporation for a graduate transitions tax credit if the partnership were a corporation whose fiscal period was its taxation year, the portion of that graduate transitions tax credit that may reasonably be considered to be the corporation's share of the tax credit may be included in determining the amount of the corporation's graduate transitions tax credit for the corporation's taxation year. Limited partner

(9) Despite subsection (8), a limited partner's share of a partnership's tax credit referred to in subsection (8) shall be deemed to be nil. Qualifying employment

(10) The employment of an employee by a corporation is a qualifying employment if,

(a) the employment commenced after May 6, 1997 and continued for at least six consecutive months, and during those six months the employee was required to work an average of more than 24 hours a week; and

(b) the employee,

(i) was not related to the corporation at the time the employment commenced,

(ii) had not been employed by any person more than 15 hours per week during 16 of the 32 weeks immediately before the first day of the employment,

(iii) had not had a source of income from a business for at least 16 of the 32 weeks immediately preceding the first day of the employment,

(iv) completed all requirements to qualify for graduation from a prescribed program of study within three years before the first day of the employment, and

(v) carried out his or her employment duties at or through a permanent establishment of the corporation in Ontario. Eligible expenditures

(11) A corporation's eligible expenditures in respect of a qualifying employment are the amounts paid or payable to the employee as salary or wages during the 12-month period commencing on the first day of the qualifying employment that,

(a) would be considered for the purposes of Part III of Regulation 183 of the Revised Regulations of Ontario, 1990 to be included in the amount of salary or wages paid to employees of a permanent establishment of the corporation in Ontario; and

(b) are required by Subdivision a of Division B of Part I of the Income Tax Act (Canada) to be included in the income from employment of the employee in respect of the qualifying employment. Same

(12) The total of all eligible expenditures made by a corporation in respect of a qualifying employment shall be the amount otherwise determined less the amount of all government assistance, if any, in respect of the eligible expenditures that, at the time the corporation is required to deliver a return under subsection 75 (1) for the taxation year for which the tax credit is claimed, the corporation has received, is entitled to receive or can reasonably be expected to be entitled to receive. Exception

(13) Despite subsections (11) and (12), an expenditure made by a corporation in respect of a qualifying employment is not an eligible expenditure in respect of the employment,

(a) to the extent that the amount of the expenditure would not be considered to be reasonable in the circumstances by persons dealing with each other at arm's length; or

(b) if the qualifying employment is with a person other than the corporation. Definitions

(14) In this section,

1. An Ontario innovation tax credit under section 43.3.

2. An Ontario film and television tax credit under section 43.5.

3. A graduate transitions tax credit under this section.

4. An Ontario book publishing tax credit under section 43.7.

5. An Ontario computer animation and special effects tax credit under section 43.8.

6. An Ontario business-research institute tax credit under section 43.9.

7. A Canadian film or video production tax credit under section 125.4 of the Income Tax Act (Canada).

8. An investment tax credit under section 127 of the Income Tax Act (Canada); ("aide gouvernementale")

"prescribed program of study" means a program of study that satisfies the rules prescribed by the regulations. ("programme d'tudes prescrit") Deemed tax payment

(15) A corporation shall be deemed to pay on account of its tax payable under this Act for a taxation year an amount claimed by the corporation, not exceeding the amount, if any, by which,

(a) the corporation's graduate transitions tax credit for the taxation year,

exceeds,

(b) the maximum amount, if any, deductible by the corporation under subsections (1) and (2) in determining its tax payable under this Act for the taxation year. Time of deemed payment

(16) A corporation shall be deemed to make the payment referred to in subsection (15) and the Minister shall be deemed to apply the deemed payment on the day on or before which the corporation would be required under clause 78 (2) (b) to pay any balance of tax payable for the taxation year. Regulations

(17) The Lieutenant Governor in Council may make regulations prescribing the method of calculating the amount of salaries or wages that will be deemed to be paid by a corporation in a taxation year for the purposes of subsection (4).

21.The Act is amended by adding the following section: Ontario book publishing tax credit

43.7(1) A corporation that is an Ontario book publishing company for a taxation year and complies with the requirements of this section may deduct from its tax otherwise payable under this Part for a taxation year, after making all the deductions for the taxation year claimed under sections 39, 40, 41, 43 and 43.3 to 43.6, an amount not exceeding the amount of its Ontario book publishing tax credit for the taxation year. Same

(2) A corporation referred to in subsection (1) that complies with the requirements of this section may deduct from its tax otherwise payable for the year under Parts III and IV an amount not exceeding the amount by which its Ontario book publishing tax credit for the taxation year exceeds the maximum amount, if any, deductible by the corporation for the year under subsection (1). Amount of tax credit

(3) The amount of a corporation's Ontario book publishing tax credit for a taxation year is the sum of all amounts each of which is the amount of the available credit for the taxation year in respect of the publishing of an eligible literary work which is equal to the lesser of,

(a) 30 per cent of the qualifying expenditures made by the corporation in the taxation year and after May 6, 1997 in respect of the publishing of the literary work; and

(b) $10,000 less the total of all amounts, if any, each of which is the available credit relating to the publishing of the same literary work that was included in an Ontario book publishing tax credit claimed by the corporation for a prior taxation year. Same

(4) The amount of a corporation's Ontario book publishing tax credit for a taxation year otherwise available in respect of a book that contains more than one literary work may not exceed $10,000 less the total of all amounts, if any, each of which is the available credit relating to the book that was included in an Ontario book publishing tax credit claimed by the corporation for a prior taxation year. Corporate partner

(5) If a corporation is a member of a partnership and the partnership would qualify in a particular taxation year of the corporation for an Ontario book publishing tax credit if the partnership were a corporation whose fiscal period was its taxation year, the portion of the Ontario book publishing tax credit to which the partnership would be entitled if it were a corporation that may reasonably be considered to be the corporation's share may be included in determining the amount of the corporation's Ontario book publishing tax credit for the corporation's taxation year. Limited partner

(6) Despite subsection (5), a limited partner's share of an Ontario book publishing tax credit to which a partnership would be entitled if it were a corporation shall be deemed to be nil. Ontario book publishing company

(7) A corporation is an Ontario book publishing company for a taxation year if it is a Canadian-controlled corporation throughout the taxation year and is a book publishing company that carries out its business primarily through a permanent establishment of the corporation in Ontario. Application for certificate

(8) In order to be eligible to deduct or claim an amount in respect of an Ontario book publishing tax credit under this section with respect to a particular literary work, an Ontario book publishing company shall apply to a person designated by the Minister of Citizenship, Culture and Recreation for certification that the work is an eligible literary work for the purposes of this section. Same

(9) An Ontario book publishing company that applies for certification shall provide to the designated person the information he or she specifies for the purposes of this section. Certificate

(10) If the particular literary work is an eligible literary work for the purposes of this section, the designated person shall issue to the Ontario book publishing company a certificate certifying that the work is an eligible literary work for the purposes of this section. Same

(11) In order to deduct or claim an amount under this section for a taxation year in respect of a particular literary work, an Ontario book publishing company must deliver to the Minister with its return for the taxation year the certificate issued in respect of the work, or a certified copy of the certificate. Eligible literary work

(12) A literary work is an eligible literary work if it satisfies the following conditions:

1. The literary work is written by a first-time Canadian author, or if the literary work is written by more than one author, all or substantially all of the literary work is the work of first-time Canadian authors.

2. The literary work belongs to an eligible category of writing.

3. At least 90 per cent of the literary work is new material that has not been previously published.

4. If the literary work contains pictures and is not a children's book, the ratio of the amount of text to pictures in the literary work is at least 65 per cent.

5. The literary work is suitable for publication as a bound book having not less than 48 printed pages, unless the literary work is a children's book.

6. The literary work is not an ineligible publication. Exception

(13) No tax credit may be claimed by a corporation under this section with respect to the publishing of a literary work if,

(a) the publication date is before May 7, 1997;

(b) the corporation publishes the literary work on consignment or at the expense of another person;

(c) the author of the literary work, a person related to the author or a person who is, or is related to, the subject of the literary work directly or indirectly funds, or guarantees the payment of, any part of the cost of publishing or marketing the literary work;

(d) the corporation is controlled by the author of the literary work, or by a person not dealing at arm's length with the author;

(e) the corporation publishes the literary work other than as a bound hardback, a paperback or a trade paperback book;

(f) the corporation publishes the literary work in an edition of less than 500 copies;

(g) the published literary work is not assigned an International Standard Book Number;

(h) the corporation does not offer the literary work for sale through an established distributor;

(i) the corporation published fewer than two books in the immediately preceding taxation year; or

(j) the literary work is published in a book that also contains one or more other literary works and less than all or substantially all of the literary works contained in the book are by first-time Canadian authors. Qualifying expenditures

(14) The following amounts in respect of the publishing of an eligible literary work by an Ontario book publishing company are qualifying expenditures of the company for a taxation year:

1. Expenditures incurred by the company in the taxation year in respect of pre-press costs, including,

i. non-refundable monetary advances to the first-time Canadian author of the literary work, and

ii. amounts in respect of activities that reasonably relate to the publishing of the literary work, if the activities are carried out primarily in Ontario, including,

A. salaries and wages paid to employees involved in editing, design and project management,

B. amounts in respect of fees for freelance editing, design and research, and

C. amounts in respect of the cost of art work, developing prototypes, set-up and typesetting.

2. One-half of the expenditures incurred by the company in the taxation year for the printing, assembling and binding of the literary work, if those activities are carried out primarily in Ontario.

3. Expenditures incurred by the company in the taxation year that reasonably relate to the marketing of copies of the published literary work and are incurred by the company within 12 months after the date of publication of the literary work, including,

i. expenditures in respect of promotional tours by the first-time Canadian author of the literary work, except that only 50 per cent of expenditures for meals and entertainment are qualifying expenditures,

ii. salaries and wages paid to employees of the company engaged in marketing the published literary work, and

iii. amounts expended in respect of promoting and marketing copies of the published literary work. Same

(15) The total of all qualifying expenditures made by a corporation in respect of the publishing of an eligible literary work shall be the amount otherwise determined less the amount of all government assistance, if any, in respect of the qualifying expenditures that, at the time the corporation's return is required to be delivered under subsection 75 (1) for the taxation year for which the tax credit is claimed, the corporation has received, is entitled to receive or may reasonably be expected to be entitled to receive. Definitions

(16) In this section,

"author" includes, in respect of a literary work that is a children's book, the illustrator of the literary work; ("auteur")

"book publishing company" means a corporation whose principal business is selecting, editing and publishing books and that,

(a) enters into contractual agreements with authors and copyright holders for the production of literary works in print form,

(b) offers for sale into the retail market the literary works that it publishes,

(c) owns its own inventory or is related to a Canadian-controlled corporation that owns the inventory, or has a contractual arrangement for inventory repurchase or acceptance of book returns, and

(d) bears the financial risks associated with carrying on the business of publishing, or is related to a Canadian-controlled corporation that bears the financial risks associated with carrying on the business; ("maison d'dition")

"Canadian-controlled corporation" means a corporation that is determined to be Canadian-controlled under sections 26 to 28 of the Investment Canada Act (Canada) for the purposes of that Act and, in the application of those sections for the purposes of this definition, a reference to the Minister shall be read as a reference to the Minister of Finance; ("corporation sous contrle canadien")

"eligible category of writing" means fiction, nonfiction, poetry, biography or children's books; ("genre littraire admissible")

"established distributor" means a person or partnership that has engaged in the business of selling or distributing books to retail stores and educational institutions for more than one year and does not sell directly by retail to an ultimate consumer; ("distributeur tabli")

"first-time Canadian author" means, in respect of a literary work, an individual who, at the time the individual and the first publisher of the literary work enter into a contract for the publishing of the literary work,

(a) is ordinarily resident in Canada and is either a Canadian citizen under the Citizenship Act (Canada) or a permanent resident under the Immigration Act (Canada), and

(b) has not authored a previously published literary work of the same eligible category of writing as the literary work; ("nouvel auteur canadien")

"government assistance" means assistance from a government, municipality or other public authority in any form, including a grant, subsidy, forgivable loan, deduction from tax and investment allowance, but not including an Ontario book publishing tax credit under this section; ("aide gouvernementale")

"ineligible publication" means a literary work that is an ineligible publication under the rules prescribed by the regulations. ("publication non admissible") Deemed tax payment

(17) A corporation shall be deemed to pay on account of its tax payable under this Act for a taxation year an amount claimed by the corporation, not exceeding the amount, if any, by which,

(a) the corporation's Ontario book publishing tax credit for the taxation year,

exceeds,

(b) the maximum amount, if any, deductible by the corporation under subsections (1) and (2) in determining its tax payable under this Act for the taxation year. Time of deemed payment

(18) A corporation shall be deemed to make the payment referred to in subsection (17) and the Minister shall be deemed to apply the deemed payment on the day on or before which the corporation would be required under clause 78 (2) (b) to pay any balance of tax payable for the taxation year.

22.The Act is amended by adding the following section: Ontario computer animation and special effects tax credit

43.8(1) A corporation that is a qualifying corporation for a taxation year and complies with the requirements of this section may deduct from its tax otherwise payable under this Part for the taxation year, after making all deductions claimed under sections 39, 40, 41, 43, 43.3, 43.4, 43.5, 43.6 and 43.7 for the taxation year, an amount not exceeding the amount of its Ontario computer animation and special effects tax credit for the taxation year. Same

(2) A corporation that is a qualifying corporation for a taxation year and complies with the requirements of this section may deduct from its tax otherwise payable for the year under Parts III and IV an amount not exceeding the amount by which its Ontario computer animation and special effects tax credit for the taxation year exceeds the maximum amount, if any, deductible by the corporation for the year under subsection (1). Amount of tax credit

(3) The amount of a qualifying corporation's Ontario computer animation and special effects tax credit for a taxation year is the lesser of,

(a) 20 per cent of the corporation's qualifying labour expenditure for the taxation year in respect of eligible computer animation and special effects activities; and

(b) the amount of the corporation's Ontario computer animation and special effects tax credit limit allocated to eligible computer animation and special effects activities in respect of eligible productions for the taxation year, as certified under subsection (6). Application for certificate

(4) In order to be eligible to deduct or claim an amount in respect of an Ontario computer animation and special effects tax credit under this section, a qualifying corporation shall apply to the Ontario Film Development Corporation for a certificate for the purposes of this section. Same

(5) A qualifying corporation that applies for a certificate shall provide to the Ontario Film Development Corporation the information specified by the Ontario Film Development Corporation for the purposes of this section. Certificate

(6) If a qualifying corporation provides the information in accordance with subsection (5) in respect of its eligible computer animation and special effects activities for a taxation year, the Ontario Film Development Corporation shall issue to the qualifying corporation a certificate and any amended certificates it considers to be appropriate, certifying the amount of the qualifying corporation's Ontario computer animation and special effects tax credit limit to be allocated to eligible computer animation and special effects activities in respect of each eligible production for the taxation year for the purposes of this section. Certificate to be delivered with return

(7) In order to deduct or claim an amount under this section for a taxation year, a qualifying corporation must deliver to the Minister with its return for the taxation year the certificate most recently issued for the taxation year in respect of its eligible computer animation and special effects activities, or a certified copy of it. Tax credit limit

(8) The amount of the Ontario computer animation and special effects tax credit limit of a qualifying corporation and all corporations associated with the qualifying corporation in respect of all eligible Ontario computer animation and special effects activities carried out in the same calendar year by the qualifying corporation or a corporation associated with the qualifying corporation is,

(a) $333,000 for the 1997 calendar year; and

(b) $500,000 for each following calendar year. Same

(9) No person shall issue certificates under subsection (6) in which the total of the amounts certified in respect of eligible computer animation and special effects activities carried on in the same calendar year by the qualifying corporation and all corporations associated with the qualifying corporation in the year would exceed the amount of the tax credit limit for that year. Deemed tax payment

(10) A qualifying corporation shall be deemed to pay on account of its tax payable under this Act for a taxation year an amount claimed by the corporation not exceeding the amount, if any, by which,

(a) its Ontario computer animation and special effects tax credit for the taxation year,

exceeds,

(b) the maximum amount, if any, deductible by the corporation under subsections (1) and (2) in determining its tax payable under this Act for the taxation year. Time of deemed tax payment

(11) A qualifying corporation shall be deemed to make the payment referred to in subsection (10) and the Minister shall be deemed to apply the deemed payment on the day on or before which the corporation would be required under clause 78 (2) (b) to pay any balance of tax payable for the taxation year. Revocation of certificate

(12) A certificate or amended certificate issued under subsection (6) may be revoked if an omission or incorrect statement was made for the purpose of obtaining the certificate, if the corporation is not a qualifying corporation or if the activities are not eligible computer animation and special effects activities for the purposes of this section. Same

(13) A certificate that is revoked shall be deemed never to have been issued. Amount of last certificate

(14) If the last issued certificate in respect of eligible computer animation and special effects activities for a taxation year certifies an amount less than the amount certified in a previously issued certificate in respect of eligible computer animation and special effects activities for that taxation year, every amount that may be deducted or claimed under this section for that taxation year by a qualifying corporation in respect of eligible computer animation and special effects activities for that taxation year shall be deemed to be the amount that would have been determined if the last certificate issued had been the only certificate issued. Qualifying labour expenditure for a taxation year

(15) The qualifying labour expenditure of a qualifying corporation for a taxation year is the total of all amounts each of which is the eligible labour expenditure of the corporation in respect of an eligible production for the taxation year. Eligible labour expenditure

(16) The eligible labour expenditure of a qualifying corporation in respect of an eligible production for a taxation year is the amount equal to the lesser of,

(a) the amount of the corporation's Ontario labour expenditure for the taxation year for eligible computer animation and special effects activities in respect of the eligible production; and

(b) the amount by which 48 per cent of the prescribed cost of eligible computer animation and special effects activities incurred by the corporation in the taxation year in respect of the eligible production exceeds the amount of all government assistance, if any, in respect of the eligible production that, at the time the corporation's return is required to be delivered under subsection 75 (1) for the taxation year for which the tax credit is claimed, the corporation has received, is entitled to receive or may reasonably be expected to be entitled to receive. Definitions

(17) In this section,

"eligible computer animation and special effects activities" means activities prescribed by the regulations that are carried out in Ontario directly in support of digital animation or digital visual effects for use in an eligible production; ("activits admissibles lies aux effets spciaux et l'animation informatiques")

"eligible production" means a film or television production that is,

(a) an eligible Ontario production for the purposes of section 43.5, or a television production that would be an eligible Ontario production for the purposes of that section if it had its initial broadcast during prime time, and

(b) produced for commercial exploitation; ("production admissible")

(a) an Ontario film and television tax credit under section 43.5,

(b) a tax credit under this section, or

(c) a Canadian film or video production tax credit under section 125.4 of the Income Tax Act (Canada); ("aide gouvernementale")

"Ontario Film Development Corporation" includes any person designated by the Minister of Citizenship, Culture and Recreation to carry out the functions of the Ontario Film Development Corporation referred to in this section; ("Socit de dveloppement de l'industrie cinmatographique ontarienne")

"Ontario labour expenditure" of a qualifying corporation in respect of an eligible production for a taxation year means all salaries or wages that,

(a) are directly attributable to eligible computer animation and special effects activities carried out by the corporation in respect of the eligible production,

(b) are incurred by the qualifying corporation after June 30, 1997 and in the taxation year, and

(c) are paid by the qualifying corporation in the taxation year, or within 60 days after the end of the taxation year, to individuals,

(i) who report to a permanent establishment of the qualifying corporation in Ontario at which the eligible computer animation and special effects activities are carried out, and

(ii) who by reason of being individuals described in clause 2 (a) of the Income Tax Act were subject to tax under section 2 of that Act for the calendar year last ending before the end of the qualifying corporation's taxation year; ("dpense de main-d'oeuvre en Ontario")

"prescribed cost" means, in respect of an eligible production, the amount determined under the rules prescribed by the regulations, in respect of costs incurred after June 30, 1997 to the extent that the costs are reasonable in the circumstances and are,

(a) included in the cost, or, in the case of a depreciable property, the capital cost, of the eligible production that incorporates the results of the eligible computer animation and special effects activities, or

(b) incurred by the corporation in performing its functions under a contract entered into with the producer of the eligible production; ("cot prescrit")

"producer" means, in respect of an eligible production, the individual who would be considered to be the producer of the production for the purposes of determining if the production were an eligible Ontario production for the purposes of section 43.5; ("producteur")

"qualifying corporation" means a Canadian corporation that,

(a) performs, at a permanent establishment in Ontario operated by it, eligible computer animation and special effects activities,

(i) for an eligible production that it undertakes, or

(ii) for an eligible production under contract with the producer of the production,

(b) is not controlled directly or indirectly in any manner by one or more corporations all or part of whose taxable income is exempt from tax under this Part or Part I of the Income Tax Act (Canada), and

(c) is not a corporation that is a prescribed labour-sponsored venture capital corporation under the regulations made under the Income Tax Act (Canada). ("corporation admissible")

23.The Act is amended by adding the following section: Ontario business-research institute tax credit

43.9(1) A corporation that is a qualifying corporation in respect of one or more eligible contracts for a taxation year and complies with the requirements of this section may deduct from its tax otherwise payable under this Part for the taxation year, after making all deductions claimed under sections 39, 40, 41, 43 and 43.2 to 43.8 for the taxation year, an amount not exceeding the amount of its Ontario business-research institute tax credit for the taxation year in respect of the contracts. Same

(2) A corporation referred to in subsection (1) that complies with the requirements of this section may deduct from its tax otherwise payable for the year under Parts III and IV an amount not exceeding the amount by which its Ontario business-research institute tax credit for the taxation year exceeds the maximum amount, if any, deductible by the corporation for the year under subsection (1). Amount of tax credit

(3) Subject to subsection (20), the amount of a qualifying corporation's Ontario business-research institute tax credit for a taxation year is the sum of all amounts each of which is in respect of an eligible contract equal to 20 per cent of the total of all qualified expenditures incurred during the taxation year and after May 6, 1997 under the contract by the corporation, to the extent that no tax credit has been claimed under this section for a prior taxation year in respect of the expenditures. Qualifying corporation

(4) A corporation is a qualifying corporation for a taxation year in respect of an eligible contract with an eligible research institute if,

(a) the corporation carries on business in Ontario in the taxation year through a permanent establishment in Ontario;

(b) the corporation or a partnership of which it is a member, but not a specified member, entered into the contract with the eligible research institute;

(c) the corporation is not connected in the taxation year to the eligible research institute that entered into the eligible contract or to any other eligible research institute that carries out the scientific research and experimental development that is to be performed under the eligible contract; and

(d) the corporation, during the 24-month period prior to the date on which it or the partnership entered into the eligible contract, was not controlled directly or indirectly in any manner whatever,

(i) by a trust, if any of the capital or income beneficiaries of the trust is an eligible research institute referred to in clause (c), or

(ii) by a corporation carrying on a personal services business. Corporation connected to an eligible research institute

(5) For the purposes of this section, a corporation is connected to an eligible research institute in a taxation year if, at any time during the term of the eligible contract with the eligible research institute, or during the 24 months before the contract was entered into,

(a) the eligible research institute owned, directly or indirectly in any manner whatever, shares of the capital stock of the corporation that,

(i) carry more than 10 per cent of the voting rights attached to voting securities, within the meaning of the Securities Act, of the corporation, or

(ii) have a fair market value of more than 10 per cent of the fair market value of all of the issued shares of the capital stock of the corporation;

(b) the eligible research institute and the corporation were members of the same partnership or did not deal at arm's length;

(c) a partnership of which the eligible research institute is a member owned, directly or indirectly in any manner whatever, any of the shares of the corporation; or

(d) the corporation and the eligible research institute are connected under rules prescribed by the regulations. Corporate partners

(6) If a corporation is a member, other than a specified member, of a partnership at the end of a fiscal period of the partnership in which the partnership would qualify for an Ontario business-research institute tax credit if the partnership were a corporation whose fiscal period was its taxation year, and if the corporation would be a qualifying corporation in respect of the eligible contract if it instead of the partnership had entered into the contract,

(a) the portion of the qualified expenditures in respect of which the partnership would calculate the tax credit for the taxation year that may reasonably be considered to be the corporation's share of the qualified expenditures,

(i) shall be deemed to have been incurred by the corporation and shall be included in determining the total amount of the corporation's qualified expenditures in respect of the eligible contract for the taxation year in which the partnership's fiscal period ends, and

(ii) may be included in the determination of the amount of the corporation's Ontario business-research institute tax credit for the taxation year in which the partnership's fiscal period ends; and

(b) the corporation's share of the qualified expenditures shall be the portion of the qualified expenditures that corresponds to the corporation's share of the income or loss of the partnership for the fiscal period of the partnership ending in the taxation year and, for the purpose of determining the corporation's share of the tax credit if the partnership has no income or loss for that fiscal period, the partnership's income for the fiscal period shall be deemed to be $1,000,000. Eligible contract

(7) For the purposes of this section, a contract entered into by a corporation or a partnership with an eligible research institute is an eligible contract if,

(a) under the terms of the contract, the eligible research institute agrees to directly perform in Ontario scientific research and experimental development related to a business carried on in Canada by the corporation or partnership, as the case may be, and the corporation or partnership is entitled to exploit the results of the research and development carried out under the agreement; and

(b) the contract is entered into after May 6, 1997 or, if the contract was entered into before May 7, 1997, the terms of the contract as they read on May 7, 1997 provide that the eligible research institute will continue to carry out scientific research and experimental development under the contract until a date after May 6, 1999. Exception, substituted contract

(8) Despite subsection (7), a contract entered into after May 6, 1997 that, but for this subsection, would be an eligible contract shall not be an eligible contract for the purposes of this section if the contract may reasonably be considered to require expenditures for scientific research and experimental development that were to be performed under a contract entered into before May 7, 1997 by the corporation or the partnership or by a person related to the corporation or partnership, as the case may be. Qualified expenditure

(9) Except as otherwise provided in this section, an expenditure incurred under an eligible contract with an eligible research institute by a corporation that is a qualifying corporation in respect of the contract is a qualified expenditure under the contract to the extent that,

(a) the expenditure, when it is made, is a payment of money made by the corporation to the eligible research institute under the terms of the contract;

(b) the expenditure is incurred by the corporation in respect of scientific research and experimental development carried on in Ontario directly by the eligible research institute; and

(c) it is an expenditure referred to in subparagraph 37 (1) (a) (i), (i.1) or (ii) of the Income Tax Act, (Canada) that would be a qualified expenditure within the meaning of subsection 127 (9) of that Act, other than an expenditure,

(i) that can reasonably be considered to fund the payment of salary or wages to an employee of the eligible research institute who is connected to the corporation making the expenditure, or

(ii) that is prescribed under the rules prescribed by the regulations. Advance ruling required

(10) Despite subsection (9), an expenditure that would otherwise be a qualified expenditure of a corporation under this section shall be deemed not to be a qualified expenditure for the purposes of this section unless, before the corporation or partnership incurs the expenditure,

(a) it has applied to the Minister in the manner and form approved by the Minister for a ruling with respect to the contract under which the expenditure is to be made, the proposed expenditures to be made under the contract and the arrangements between the parties to the contract and other persons;

(b) it has provided all information specified by the Minister and any other relevant information and documentation that may be reasonably required by the Minister in connection with the application for the ruling; and

(c) the Minister has given a ruling with respect to the contract, the proposed expenditures and whether the parties to the contract and other persons connected directly or indirectly to the arrangements in respect of the contract are considered to be conducting their business and affairs within the spirit and intent of this section at the time the ruling is given. Expenditure under more than one contract

(11) If an expenditure will be applied under more than one contract, a ruling under subsection (10) must be obtained with respect to each of the contracts. Expenditure before ruling obtained

(12) If a corporation or partnership incurs an expenditure under a contract before the Minister gives a ruling under subsection (10), and the Minister subsequently gives a favourable ruling, the expenditure shall be deemed, for the purposes of subsection (10) but not subsection (3), to have been made after the ruling was given if the corporation or partnership applies to the Minister for the ruling,

(a) within 90 days after the later of,

(i) the day on which the contract was entered into, and

(ii) the day on which the Tax Credits to Create Jobs Act, 1997 receives Royal Assent; or

(b) no later than three years after the day on which the contract was entered into, and the Minister is satisfied that the corporation or partnership was unable to apply for the ruling at an earlier time through no fault of its own for reasons that were beyond its control. Minister may dispense with requirement for ruling

(13) At any time after May 6, 2000, the Minister may give a direction that rulings no longer need to be obtained under this section in respect of contracts entered into after the date of the Minister's direction, if the Minister is satisfied that corporations, their officers, directors and shareholders, partnerships and their members and eligible research institutes are conducting their business and affairs in a manner that meets the spirit and intent of this section, and, subject to subsection (14), subsections (10) to (12) will not apply to qualified expenditures made under contracts entered into after the date of the Minister's direction. Minister may reinstate ruling requirement

(14) The Minister may, at any time after giving a direction under subsection (13), revoke the direction and give a new direction that subsections (10) to (12) shall apply to qualified expenditures made under contracts entered into after the date of the new direction. Publication

(15) The Minister shall publicize directions given under subsections (13) and (14), by bulletin or by any other means of communication that, in the opinion of the Minister, will bring the directions to the attention of those affected. Reduction in amount of qualified expenditures

(16) The total of all qualified expenditures incurred by a corporation under an eligible contract shall be reduced by any contribution that the corporation, any shareholder of the corporation, any partnership of which the corporation is a member, any partner in that partnership or any person not dealing at arm's length with the corporation or a shareholder of the corporation has received, is entitled to receive or can reasonably be expected to receive from the eligible research institute that entered into the eligible contract, a person who performs scientific research and experimental development that is to be carried out under the contract or a person who does not deal at arm's length with either of them. Exception

(17) Despite subsection (16), if under the terms of an eligible contract between an eligible research institute and a corporation or partnership, the eligible research institute directly funds part of the cost of performing the scientific research and experimental development that is to be carried out under the contract, the expenditures made by the institute in performing the scientific research and experimental development shall not be considered to be a contribution if,

(a) the financial obligations of the corporation or partnership under the contract are not reduced by the amount of any expenditures made by the eligible research institute;

(b) the expenditures made by the eligible research institute are not payments made to or at the direction of the corporation or partnership; and

(c) there is an agreement in writing between the eligible research institute and all other persons who are parties to the eligible contract that provides the terms and conditions under which the eligible research institute would be entitled to recover the amount of its expenditures. Same, transactions in the ordinary course of business

(18) Subsection (16) does not apply in respect of the provision of goods and services in the ordinary course of a business carried on by the corporation or partnership if,

(a) in the case where the corporation or partnership, or another person who does not deal at arm's length with the corporation or partnership, acquires the goods or services, the price paid by the corporation, partnership or person for the goods or services is not less than their fair market value; and

(b) in the case where the corporation or partnership, or another person who does not deal at arm's length with the corporation or partnership, is providing the goods or services,

(i) the price for the goods or services is not greater than their fair market value, and

(ii) the expenditures made to acquire the goods or services do not form part of the expenditures made by the eligible research institute for scientific research and experimental development under the eligible contract. Repayment of government assistance

(19) The total of all qualified expenditures made by a corporation for a taxation year under an eligible contract may include an amount that may reasonably be considered to be a repayment of government assistance made by the corporation during the taxation year, to the extent that the amount,

(a) has not been repaid in a prior taxation year; and

(b) can reasonably be considered to have reduced the amount of a Ontario business-research institute tax credit that would otherwise have been allowed to the corporation under this section in respect of the eligible contract. Limit on amount of qualified expenditures

(20) The amount of qualified expenditures under an eligible contract with respect to which a corporation may claim a tax credit under this section shall not exceed the amount that may reasonably be considered to be the amount that would have been expended by the corporation if the corporation had carried out the scientific research and experimental development directly in the same circumstances and under the same conditions as the eligible research institute under the eligible contract. Annual qualified expenditure limit

(21) No tax credit may be claimed by a corporation under this section for a taxation year in respect of qualified expenditures that exceed the corporation's qualified expenditure limit for the year as determined under the rules prescribed by the regulations. Wholly owned and controlled non-profit subsidiaries of eligible research institutes

(22) An eligible research institute is deemed for the purposes of this section to carry out scientific research and experimental development that is carried out by a corporation that is a wholly-owned and controlled non-profit subsidiary of the eligible research institute, if the scientific research and experimental development activities are required to be carried out under an eligible contract entered into by the eligible research institute. Subcontracts

(23) If an eligible research institute that has entered into an eligible contract with a corporation enters into a contract with another institute that is an eligible research institute or a specified person and under that second contract the other institute performs part of the scientific research and experimental development that is to be carried out under the eligible contract or the specified person carries out part of the work required to be carried out under the contract, the scientific research and experimental development carried out directly by the other institute or the work carried out by the specified person is deemed to be carried out directly by the eligible research institute under the eligible contract. Deemed tax payment

(24) A corporation shall be deemed to pay on account of its tax payable under this Act for a taxation year an amount claimed by the corporation, not exceeding the amount, if any, by which,

(a) the corporation's business research-institute tax credit for the taxation year,

exceeds,

(b) the maximum amount, if any, deductible by the corporation under subsections (1) and (2) in determining its tax payable under this Act for the taxation year. Time of deemed tax payment

(25) A corporation shall be deemed to make the payment referred to in subsection (24) and the Minister shall be deemed to apply the deemed payment on the day on or before which the corporation would be required under clause 78 (2) (b) to pay any balance of tax payable for the taxation year. When employee connected to corporation

(26) For the purposes of this section, if an eligible research institute and a corporation have entered into an eligible contract, an employee of the eligible research institute is connected to the corporation in a taxation year of the corporation if, at any time during the term of the eligible contract or during the 24 months before the corporation entered into the eligible contract,

(a) the employee or a person who does not deal at arm's length with the employee owned, directly or indirectly in any manner whatever, shares of the capital stock of the corporation that,

(i) carry more than 10 per cent of the voting rights attached to voting securities, within the meaning of the Securities Act, of the corporation, or

(ii) have a fair market value of more than 10 per cent of the fair market value of all of the issued shares of the capital stock of the corporation; or

(b) the employee and the corporation are connected under rules prescribed by the regulations. Same

(27) For the purposes of subsections (5) and (26), subsection 256 (1.4) of the Income Tax Act (Canada) applies with necessary modifications to determine the shares of the capital stock of a corporation that are deemed to be issued and outstanding and owned by a person and the person's relation to control of the corporation. Interpretation

(28) For the purposes of determining if an expenditure would be a qualified expenditure within the meaning of subsection 127 (9) of the Income Tax Act (Canada) for the purposes of this section,

(a) a tax credit under this section or under section 43.3 shall be deemed not to be government assistance; and

(b) the reference to "contract payment" in subsection 127 (18) of the Income Tax Act (Canada) shall be deemed for the purposes of paragraph (h) of the definition of "qualified expenditure" in subsection 127 (9) of that Act to exclude payments prescribed by the regulations. Definitions

(29) In this section,

"contribution" means, in respect of an eligible contract, an amount that is not excluded by the rules prescribed by the regulations and that is,

(a) a payment in money, a transfer of ownership of a property, an assignment of the use of property or of a right to use a property or any other benefit or advantage in any other form or manner, other than a property resulting from scientific research and experimental development undertaken under the eligible contract,

(b) a former, present or future right in the proceeds of disposition of part or all of the intellectual property arising from the scientific research and experimental development undertaken under the eligible contract,

(d) a loan or loan guarantee, or

(e) an amount that is of a type prescribed in the regulations; ("contribution")

"eligible research institute" means,

(a) a university or college of applied arts and technology in Ontario, whose enrolment is counted for the purposes of calculating annual operating grants entitlements from the Government of Ontario,

(b) an Ontario Centre of Excellence or a network of Centres of Excellence,

(c) a non-profit organization that is prescribed by the regulations, is a member of a class of organizations that is prescribed by the regulations or meets the conditions prescribed by the regulations, or

(d) a hospital research institute that meets the conditions prescribed by regulation; ("institut de recherche admissible")

"government assistance" has the same meaning as in section 127 of the Income Tax Act (Canada), except that a tax credit under this section or section 43.3 shall be deemed not to be government assistance; ("aide gouvernementale")

"specified person" means, in respect of a contract, a person who is a specified person under the rules prescribed by the regulations. ("personne dtermine")

24.(1) Subsection 44.1 (3) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 24, section 27, is amended by striking out "other than a mining reclamation trust tax credit under section 43.2" in the sixth, seventh and eighth lines.

(2) Subsection 44.1 (4) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 24, section 27 and amended by 1996, chapter 29, section 51, is further amended by adding the following paragraphs:

5. A graduate transitions tax credit under section 43.6.

6. An Ontario book publishing tax credit under section 43.7.

7. An Ontario computer animation and special effects tax credit under section 43.8.

8. An Ontario business-research institute tax credit under section 43.9.

(3) Subsection 44.1 (5) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 24, section 27, is repealed and the following substituted: When assistance received

(5) For the purposes of this Act, other than sections 43.3 to 43.9, the following amounts are assistance deemed to be received by a corporation from a government immediately before the end of a taxation year:

1. All amounts that the corporation deducts under sections 43.3 to 43.9 in determining the amount of its tax payable under this Act for the taxation year.

2. All amounts that the corporation is deemed under those sections to have paid on account of its tax payable under this Act for the taxation year.

25.The French version of subsection 51 (4) of the Act, as amended by the Statutes of Ontario, 1992, chapter 3, section 11, is further amended by striking out "caisse de crdit" in the first and second lines and substituting "caisse populaire".

26.(1) Subclause 57.4 (1) (b) (v) of the Act, as enacted by the Statutes of Ontario, 1994, chapter 14, section 21, is amended by adding the following sub-subclause:

(D) the amount, if any, of the corporation's income for the taxation year described in paragraph 81 (1) (c) of the Income Tax Act (Canada).

(2) Clause 57.4 (1) (b) of the Act, as enacted by the Statutes of Ontario 1994, chapter 14, section 21, is amended by adding the following subclause:

(vii.1) an amount equal to 9/4 of the tax payable by the corporation for the taxation year under subsection 191.1 (1) of the Income Tax Act (Canada).

(3) Section 57.4 of the Act, as enacted by the Statutes of Ontario, 1994, chapter 14, section 21, is amended by adding the following subsection: Dividends

(1.1) Despite subsection 57.1 (2), no dividend paid or payable by a corporation in a taxation year, other than an amount referred to in subsection 137 (4.1) of the Income Tax Act (Canada), shall be deducted in determining whether the corporation has a net income of nil or more for the taxation year for the purposes of subclause (1) (a) (i) or a net loss for the taxation year for the purposes of subclause (1) (b) (i).

(4) Subclause 57.4 (1) (b) (vii.1) of the Act, as enacted by subsection (2), applies to tax payable under subsection 191.1 (1) of the Income Tax Act (Canada) in respect of dividends paid after May 5, 1997.

(5) Subsection 57.4 (1.1) of the Act, as enacted by subsection (3), applies to dividends declared and paid after May 5, 1997.

27.Subsection 57.10 (1) of the Act, as enacted by the Statutes of Ontario, 1994, chapter 14, section 21, is amended by inserting after "subsection 13 (4)" in the fifth line "or 14 (6)".

28.(1) Section 58 of the Act, as amended by the Statutes of Ontario, 1994, chapter 14, section 22, is repealed and the following substituted: Liability for capital tax

58.(1) Except as otherwise provided in this Part, every corporation referred to in subsection 2 (1) or (2) is liable to pay to the Crown in right of Ontario a tax in respect of its capital for each taxation year as determined under this Part,

(a) in the case of a corporation to which subsection 2 (1) applies, other than a financial institution, calculated by reference to its taxable paid-up capital for each taxation year, determined in accordance with Division B of this Part;

(b) in the case of a corporation to which subsection 2 (1) applies that is a financial institution for a taxation year, calculated by reference to its adjusted taxable paid-up capital for each taxation year that it is a financial institution, determined in accordance with Division B.1 of this Part; and

(c) in the case of a corporation to which clause 2 (2) (a) or (b) applies, calculated by reference to its taxable paid-up capital employed in Canada for each taxation year, determined in accordance with Division C of this Part. Financial institution

(2) A corporation is a financial institution for a taxation year for the purposes of this Part if at any time during the taxation year,

(a) it is a bank;

(b) it is authorized under the laws of Canada or a province to carry on the business of offering its services as a trustee to the public;

(c) it is authorized under the laws of Canada or a province to accept deposits from the public, and carries on the business of lending money on the security of real estate or investing in mortgages on real estate;

(d) it is a registered securities dealer;

(e) it is a mortgage investment corporation;

(f) it is a credit union, other than a central credit union or league prescribed by the regulations; or

(g) it is a corporation prescribed by the regulations.

(2) Section 58 of the Act, as amended by subsection (1), applies to corporations for taxation years ending after May 6, 1997, except as provided in the following rules: 1. Where the corporation is a financial institution other than a credit union or a large financial institution, the tax payable by the corporation for a taxation year ending after May 6, 1997 that commenced before May 7, 1997 shall be calculated by reference to its taxable paid-up capital that would be determined for the year under Division B of Part III of the Act. 2. Where the corporation is a large financial institution, the tax payable by the corporation for a taxation year ending after May 6, 1997 that commenced before May 7, 1997 is the total of:

i. the amount of tax that would be calculated by reference to the amount that would be its taxable paid-up capital for the taxation year as determined under Division B of Part III of the Act, multiplied by the ratio of the number of days in the taxation year before May 7, 1997 to the total number of days in the taxation year; and

ii. the amount of tax that would be calculated by reference to the amount that would be its adjusted taxable paid-up capital for the taxation year as determined under Division B.1 of Part III of the Act, multiplied by the ratio of the number of days in the taxation year after May 6, 1997 to the total number of days in the taxation year. Large financial institution

(3) For the purposes of this Act, "large financial institution" means, in respect of a taxation year, a corporation that is a financial institution for the taxation year for the purposes of Part III of the Act, other than a credit union, if$10,000,000 is less than,

(a) the amount that would be the taxable capital employed in Canada of the financial institution for the taxation year for the purposes of Part I.3 of the Income Tax Act (Canada); or

(b) if the financial institution is related in the taxation year to a corporation that,

(i) is a financial institution for the purposes of Part III of the Act or an insurance corporation for the purposes of the Act,

(ii) is resident in or has a permanent establishment in Canada, and

(iii) is not exempt by virtue of subsection 71 (1) of the Act from tax under Part III of the Act,

the total of all amounts each of which is the amount that would be determined under clause (a) in respect of the financial institution for the taxation year, or in respect of each such related financial institution or insurance corporation for its last taxation year ending before the end of the financial institution's taxation year.

29.Section 59 of the Act, as amended by the Statutes of Ontario, 1994, chapter 14, section 23, is further amended by inserting after "Division B" in the sixth line "or B.1".

30.Subsection 60.1 (1) of the Act, as enacted by the Statutes of Ontario, 1994, chapter 14, section 24, is further amended by inserting "its adjusted taxable paid-up capital," after "the Minister may require the corporation to measure" in the thirteenth and fourteenth lines.

31.Clause 61 (1) (c) of the Act is amended by striking out the portion preceding subclause (i) and substituting the following:

(c) the amount of its reserves for the year, whether created from income or otherwise, except to the extent that they were deducted in computing the corporation's income for the taxation year under any provision of Part II other than,

. . . . .

32.(1) Clause 62 (1) (c) of the Act, as amended by the Statutes of Ontario, 1994, chapter 14, section 26 and 1997, chapter 19, section 4, is further amended by striking out "Subject to subsection (6)" in the first line and substituting "Subject to subsections (5.1) and (6)".

(2) Clause 62 (1) (c) of the Act, as amended by subsection (1), is amended by striking out the portion preceding subclause (i) and substituting the following:

(c) subject to subsections (5.1) and (6), the amount that equals that proportion of the paid-up capital remaining after the deduction of the amounts provided by clauses (b), (d) and (e) which the cost of the investments made by the corporation in the shares, bonds and lien notes of other corporations and in loans and advances to other corporations bears to the total assets of the corporation remaining after the deductions of the amounts provided by clauses (b), (d) and (e), but,

. . . . .

(3) Subclause 62 (1) (c) (ii) of the Act is repealed and the following substituted:

(ii) amounts of cash on deposit with any corporation authorized to accept deposits from the public are deemed not to be loans and advances to other corporations.

(4) Subclause 62 (1) (c) (iv) of the Act is repealed and the following substituted:

(iv) loans and advances that have been issued for a term of less than 120 days or that have been held by the corporation for a period of less than 120 days before the end of the taxation year are deemed not to be loans and advances to other corporations if the loans and advances are to a corporation, whether or not incorporated in Canada, that is a financial institution, or a corporation that would be considered to be a financial institution if it carried on business in Canada.

(5) Subclause 62 (1) (c) (iv) of the Act, as re-enacted by subsection (4), is repealed and the following substituted:

(A) a financial institution, or a corporation that would be considered to be a financial institution if it carried on business in Canada, or

(B) a corporation not dealing at arm's length with a corporation described in sub-subclause (A), if that corporation guarantees the amount of the loan or advance to the corporation, or provides security, directly or indirectly, for the repayment of the loan or advance.

(6) Subclause 62 (1) (c) (vi) of the Act is amended by striking out "shares and bonds" in the first line and in the fourth line and substituting in each case "shares, bonds and lien notes".

(7) Subclause 62 (1) (c) (vii) of the Act is repealed.

(8) Subsection 62 (1) of the Act, as amended by the Statutes of Ontario, 1994, chapter 14, section 26, and 1997, chapter 19, section 4, is further amended by adding the following clause:

(f) all amounts, except to the extent that they have been deducted by the corporation in computing its income under Part II for the taxation year or any prior taxation year, that are deductible by the corporation,

(i) under subsection 37 (1) of the Income Tax Act (Canada), as made applicable for the purposes of this Act by subsection 11 (1), in respect of scientific research and experimental development, or

(ii) under clause 11 (10) (a) on account of the Ontario New Technology Tax Incentive, as determined under the regulations.

(9) Section 62 of the Act, as amended by the Statutes of Ontario, 1994, chapter 14, section 26 and 1997, chapter 19, section 4, is further amended by adding the following subsections: Loans or advances to related corporation

(5.1) No amount shall be included in determining the amount, if any, deductible by a corporation under clause (1) (c) in computing the amount of its taxable paid-up capital for a taxation year in respect of a loan or advance that was made by the corporation to a related corporation if,

(a) the loan or advance was made less than 120 days before the end of the corporation's taxation year;

(b) the loan or advance was made after the end of the last taxation year of the related corporation ending before the end of the corporation's taxation year; and

(5.2) A loan or advance referred to in clause (5.1) (a) or (b) will be considered to be part of a series of loans or advances and repayments if,

(a) the loan or advance is repaid by the related corporation prior to the end of the first taxation year of the related corporation ending after the end of the taxation year referred to in subsection (5.1) of the corporation that made the loan or advance; and

(b) the Minister is not satisfied that the amount of the loan or advance has been replaced by new debt or equity capital.

(10) Subsection 62 (6) of the Act is repealed.

(11) Clause 62 (1) (c) of the Act, as amended by subsection (2), applies to corporations for taxation years ending after December 31, 1997.

(12) Subclause 62 (1) (c) (iv) of the Act, as amended by subsection (5), applies to corporations for taxation years ending after October 30, 1997.

(13) Clause 62 (1) (f) of the Act, as enacted by subsection (8), applies to corporations for taxation years ending after May 6, 1997.

(14) Subsections 62 (5.1) and (5.2) of the Act, as enacted by subsection (9), apply to corporations for taxation years ending after October 30, 1997.

33.Part III of the Act is amended by adding the following Division: DIVISION B.1-ADJUSTED TAXABLE PAID-UP CAPITAL OF FINANCIAL INSTITUTIONS Definitions

62.1(1) In this Division,

"long-term debt" has the meaning assigned by subsection 181 (1) of the Income Tax Act (Canada); ("passif long terme")

"related financial institution" means, in respect of a corporation that is a financial institution, a financial institution that is related to the corporation; ("institution financire lie")

"related insurance corporation" means, in respect of a corporation that is a financial institution, an insurance corporation that is related to the corporation; ("corporation d'assurance lie")

"reserves" means, in respect of a financial institution for a taxation year, the amount, as it stood at the end of the day on which the paid-up capital of the financial institution is required to be measured under this Part, of all of the corporation's reserves, provisions and allowances, including any provision in respect of deferred taxes, but excluding allowances in respect of depreciation or depletion. ("rserves") Paid-up capital

(2) The paid-up capital of a financial institution for a taxation year is its paid-up capital as it stood at the end of the day on which it is required to be measured under this Part and is the amount, if any, by which the total of,

(a) the amount of its long-term debt;

(b) the amount of its capital stock or, in the case of a financial institution incorporated without share capital, the amount of its members' contributions;

(d) the amount of its contributed surplus and the amount of any other surpluses, subject to subsection (3); and

(e) the amount of its reserves for the taxation year, except to the extent that they were deducted in computing its income under Part II for the taxation year,

exceeds the total of,

(f) the amount of its deferred tax debit balance;

(g) the amount of any deficit deducted in computing its shareholders' equity;

(h) any amount deducted under subsection 130.1 (1) or 137 (2) of the Income Tax Act (Canada), as made applicable by sections 47 and 51 of this Act, in computing its income under Part II for the year, to the extent that the amount can reasonably be regarded as being included in an amount determined in respect of the financial institution for the taxation year under any of clauses (a) to (e); and

(i) any amount, except to the extent that it has been deducted by the financial institution in computing its income under Part II for the taxation year or any prior taxation year, deductible by the financial institution,

(i) under subsection 37 (1) of the Income Tax Act (Canada), as made applicable for the purposes of this Act by subsection 11 (1), in respect of scientific research and experimental development, or

(ii) under clause 11 (10) (a) on account of the Ontario New Technology Tax Incentive, as determined under the regulations. Interpretation

(3) Subsections 62 (4), (5) and (7) do not apply for the purposes of clause (2) (d). Taxable paid-up capital

(4) The taxable paid-up capital of a financial institution for a taxation year is the amount, if any, by which its paid-up capital for the year exceeds its investment allowance for the year in respect of all investments, each of which is an investment in a share of the capital stock or long-term debt of,

(a) a related financial institution that has a permanent establishment in Ontario and is not exempt from tax under this Part; or

(b) a related insurance corporation that has a permanent establishment in Ontario. Investment allowance

(5) The investment allowance of a financial institution for a taxation year in respect of an investment in a share of the capital stock or long-term debt of a related financial institution or related insurance corporation that has a permanent establishment in Ontario is the amount determined in accordance with the following formula:

where,

"A" is the investment allowance of the financial institution for the year in respect of the investment;

"B" is the carrying value of the investment to the financial institution as at the end of the day on which the adjusted taxable paid-up capital of the financial institution is required to be measured under this Part;

"C" is the percentage of the related financial institution's taxable paid-up capital that is not deemed under the rules prescribed by the regulations to be used by it in its last taxation year ending in the financial institution's taxation year in a jurisdiction other than Ontario, or the percentage of the related insurance corporation's taxable income that is not deemed under the rules prescribed by the regulations to have been earned by it in its last taxation year ending in the financial institution's taxation year in a jurisdiction other than Ontario; and

"D" is the percentage of the financial institution's taxable paid-up capital that is not deemed under the rules prescribed by the regulations to be used by it in the taxation year in a jurisdiction other than Ontario. Adjusted taxable paid-up capital

(6) The adjusted taxable paid-up capital of a financial institution for a taxation year is the amount determined in accordance with the following formula:

where,

"A" is the financial institution's adjusted taxable paid-up capital for the taxation year;

"C" is the financial institution's taxable paid-up capital for the taxation year;

"P" is the amount determined by multiplying the specified percentage by the amount of the financial institution's Canadian tangible property for the taxation year; and

"D" is the financial institution's capital deduction for the taxation year. Canadian tangible property

(7) The Canadian tangible property of a financial institution for a taxation year is one-third of the total of all amounts determined under paragraphs 181.3 (1) (a) and (b) of the Income Tax Act (Canada) in respect of the institution for the taxation year, measured at the end of the day on which the institution's adjusted taxable paid-up capital is required to be measured for the taxation year. Specified percentage

(8) The specified percentage, in respect of a corporation's Canadian tangible property for a taxation year, means the fraction, expressed as a percentage, where the numerator is 100 per cent and the denominator is the percentage of the financial institution's taxable paid-up capital that is not deemed under the rules prescribed by the regulations to be used by it in the taxation year in a jurisdiction other than Canada. Determining values and amounts

(9) The carrying value of an asset as of a particular date or any other amount for the purposes of this Division shall be determined in the same manner as it would be required to be determined for the purposes of Part I.3 of the Income Tax Act (Canada). Capital deduction

(10) The capital deduction of a financial institution for a taxation year is the amount determined under the following rules:

1. If the financial institution is related at any time in the taxation year to another corporation that,

i. is a financial institution or an insurance corporation,

ii. has a permanent establishment in Canada, and

iii. is not exempt by virtue of subsection 71 (1) from tax under this Part,

the financial institution's capital deduction for the taxation year is the amount determined in accordance with the following formula:

where,

"A" is the amount of the financial institution's capital deduction for the taxation year;

"B" is the amount that is the financial institution's taxable capital employed in Canada for the taxation year for the purposes of Part I.3 of the Income Tax Act (Canada); and

"C" is the total of the amount determined to be "B" in this formula for the taxation year and all amounts, each of which is the amount that is the taxable capital employed in Canada for the purposes of Part I.3 of the Income Tax Act (Canada) of a related financial institution or related insurance corporation for its last taxation year ending before the end of the financial institution's taxation year, if the related institution or corporation,

1. has a permanent establishment in Canada, and

2. is not exempt by virtue of subsection 71 (1) from tax under this Part.

2. In any other case, the financial institution's capital deduction for the taxation year is $2,000,000. Limitation

(11) Subsection 181 (4) of the Income Tax Act (Canada) applies with necessary modifications for the purposes of this Division in determining any amount required to determine a financial institution's adjusted taxable paid-up capital for a taxation year.

34.Subsection 63 (2) of the Act is amended by inserting "or B.1" after "Division B" in the sixth line.

35.(1) Section 66 of the Act, as amended by the Statutes of Ontario, 1992, chapter 3, section 13 and 1994, chapter 14, section 28, is repealed and the following substituted: Tax on corporations subject to Division B or C

66.(1) Except as otherwise provided in this section, the tax payable under this Part by a corporation for a taxation year for which its taxable paid-up capital or its taxable paid-up capital employed in Canada, as the case may be, is determined under Division B or C is three-tenths of 1 per cent of that amount. Tax on bank subject to Division B

(2) The tax payable under this Part by a bank for a taxation year for which its taxable paid-up capital is determined under Division B is 1.12 per cent of its taxable paid-up capital plus the amount, if any, payable by the bank for the taxation year under section 66.1. Tax on certain corporations subject to Division B

(3) The tax payable under this Part by a corporation referred to in subsection 61 (4) for a taxation year for which its taxable paid-up capital is determined under Division B is 1 per cent of its taxable paid-up capital. Tax payable by financial institutions

(4) The tax payable under this Part for a taxation year by a financial institution, other than a credit union, is the aggregate of,

(a) the amount determined by multiplying the percentage of the financial institution's taxable paid-up capital that is not deemed under the rules prescribed by the regulations to be used by it in the taxation year in a jurisdiction other than Ontario by the total of,

(i) 0.6 per cent of the lesser of,

(A) its adjusted taxable paid-up capital for the taxation year, as determined under Division B.1, and

(B) its basic capital amount for the taxation year, and

(ii) 0.9 per cent, or, if the financial institution is not a deposit-taking institution in the taxation year and is not related in the year to a deposit-taking institution as defined in subsection 66.1 (14), 0.72 per cent, of the amount, if any, by which its adjusted taxable paid-up capital for the year exceeds its basic capital amount for the taxation year; and

(b) the amount of tax, if any, payable for the taxation year under section 66.1. Basic capital amount

(5) A financial institution's basic capital amount for a taxation year is the amount determined in accordance with the following rules:

1. If the financial institution is not related in the taxation year to another corporation that,

i. is a financial institution or an insurance corporation, and

ii. has a permanent establishment in Canada,

its basic capital amount for the year is$400,000,000.

2. If the financial institution is related in the taxation year to another corporation that,

i. is a financial institution or an insurance corporation,

ii. has a permanent establishment in Canada, and

iii. is not exempt by virtue of subsection 71 (1) from tax under this Part,

its basic capital amount for the year is the amount determined by multiplying $400,000,000 by the ratio of the institution's taxable capital employed in Canada for the taxation year for the purposes of Part I.3 of the Income Tax Act (Canada) to the total of the taxable capital employed in Canada for the purposes of Part I.3 of the Income Tax Act (Canada) of,

iv. the institution for the taxation year, and

v. each such related financial institution or related insurance corporation for its last taxation year ending before the end of the institution's taxation year. Tax payable by credit union

(6) The amount of tax payable under this Part by a credit union for a taxation year that ends after December 31, 1997 is the total of,

(a) 0.05 per cent of the credit union's taxable paid-up capital employed in Ontario for the taxation year, as determined under this Division, multiplied by the ratio of the number of days in the taxation year that are after December 31, 1997 and before January 1, 1999 to the total number of days in the taxation year;

(b) 0.1 per cent of the credit union's taxable paid-up capital employed in Ontario for the taxation year, as determined under this Division, multiplied by the ratio of the number of days in the taxation year that are after December 31, 1998 and before January 1, 2000 to the total number of days in the taxation year;

(c) 0.2 per cent of the credit union's taxable paid-up capital employed in Ontario for the taxation year, as determined under this Division, multiplied by the ratio of the number of days in the taxation year that are after December 31, 1999 and before January 1, 2001 to the total number of days in the taxation year;

(d) 0.4 per cent of the credit union's taxable paid-up capital employed in Ontario for the taxation year, as determined under this Division, multiplied by the ratio of the number of days in the taxation year that are after December 31, 2000 and before January 1, 2002 to the total number of days in the taxation year; and

(e) 0.6 per cent of the credit union's taxable paid-up capital employed in Ontario for the taxation year, as determined under this Division, multiplied by the ratio of the number of days in the taxation year that are after December 31, 2001 to the total number of days in the taxation year. Taxable paid-up capital employed in Ontario

(7) The taxable paid-up capital employed in Ontario for a taxation year of a financial institution that is a credit union is the amount determined by multiplying its adjusted taxable paid-up capital for the taxation year as determined under Division B.1 by the percentage of its taxable paid-up capital that is not deemed under the rules prescribed by the regulations to be used by it in the taxation year in a jurisdiction other than Ontario.

(2) Subsection 66 (4) of the Act, as enacted by subsection (1), applies to financial institutions only in respect of taxation years commencing after May 6, 1997, except as provided in the following rules: 1. The amount of tax payable under Part III of the Act by a large financial institution, other than a credit union or mortgage investment corporation, for a taxation year commencing before May 7, 1997 and ending after May 6, 1997 shall be determined in accordance with the following formula:

where, "T" is the amount of tax payable for the taxation year; "A" is the total amount of tax that would be payable by the financial institution under subsection 66 (1), (2) or (3) of the Act for the taxation year if its taxable paid-up capital for the taxation year was determined only under Division B of Part III of the Act; "B" is the ratio of the number of days in the taxation year before May 7, 1997 to the total number of days in the taxation year; "C" is the percentage of the financial institution's taxable paid-up capital for the taxation year that is not deemed under rules prescribed by the regulations to be used by the financial institution in the taxation year in a jurisdiction other than Ontario; "D" is the total amount of tax that would be payable by the financial institution under subsection 66 (4) of the Act for the taxation year if its adjusted taxable paid-up capital for the taxation year was determined under Division B.1 of Part III of the Act; "E" is the ratio of the number of days in the taxation year after May 6, 1997 to the total number of days in the taxation year; and "F" is the amount of tax that would be payable by the financial institution under section 66.1 of the Act for the taxation year if its tax under section 66.1 of the Act, if any, was determined under that section as it read on May 6, 1997. 2. The amount of tax payable under Part III of the Act by a mortgage investment corporation that is a large financial institution for a taxation year commencing before May 7, 1997 and ending after May 6, 1997 is the total of,

i. $100 multiplied by the ratio of the number of days, if any, in the taxation year that are before May 7, 1997 to the total number of days in the taxation year, and

ii. the amount of tax that would be determined under subsection 66 (4) of the Act for the taxation year multiplied by the ratio of the number of days in the taxation year after May 6, 1997 to the total number of days in the taxation year. 3. The amount of tax payable under Part III of the Act by a mortgage investment corporation that is not a large financial institution for the taxation year is $100 if the taxation year commences before May 7, 1997.

(3) Subsection 66 (6) of the Act, as enacted by subsection (1), applies to credit unions that are financial institutions for taxation years ending after December 31, 1997, except that if the taxation year ends before January 1, 1999, the amount of tax payable under Part III of the Act for that taxation year is the total of,

(a) $100 multiplied by the ratio of the number of days in the taxation year before January 1, 1998 to the total number of days in the taxation year; and

(b) 0.05 per cent of the amount that would be the credit union's taxable paid-up capital employed in Ontario for the taxation year under Division D of Part III of the Act, multiplied by the ratio of the number of days in the taxation year that are after December 31, 1997 to the total number of days in the taxation year.

36.(1) Subsection 66.1 (1) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 18, section 20, is repealed and the following substituted: Surcharge on banks

(1) Every bank shall pay a tax under this section for a taxation year equal to the amount, if any, determined according to the following formula:

where,

"T" is the amount of tax payable by the bank under this section for the taxation year;

"A" is the amount of the bank's taxable paid-up capital for the taxation year determined under Division B;

"B" is the number of days in the taxation year that are after May 7, 1996 and before May 7, 1997;

"C" is the number of days in the taxation year; and

"D" is the portion of the bank's taxable paid-up capital for the taxation year determined under Division B that would not be deemed under rules prescribed by the regulations to be used by the bank in the taxation year in a jurisdiction other than Ontario. Surcharge on deposit-taking institutions

(1.1) Every corporation, other than a credit union, that is a deposit-taking institution for a taxation year shall pay a tax under this section for the taxation year equal to the amount, if any, determined according to the following formula:

where,

"T" is the amount of tax payable by the corporation under this section for the taxation year;

"A" is the amount of the corporation's adjusted taxable paid-up capital for the taxation year as determined under Division B.1;

"B" is the corporation's exempt amount for the taxation year;

"C" is the number of days in the taxation year that are after May 6, 1997 and before November 1, 1998;

"D" is the number of days in the taxation year;

"E" is the amount of the corporation's adjusted taxable paid-up capital for the taxation year as determined under Division B.1, multiplied by the percentage of the corporation's taxable paid-up capital for the taxation year that would not be deemed by rules prescribed by the regulations to be used by the corporation in the taxation year in a jurisdiction other than Ontario. Deposit-taking institution, exempt amount

(1.2) For the purposes of this section,

(a) a corporation is a deposit-taking institution for a taxation year if at any time in the taxation year it is,

(i) a corporation referred to in clause (a), (b), (c) or (f) of subsection 58 (2), or

(ii) a corporation all or substantially all of the assets of which are shares or indebtedness of corporations referred to in subclause (i) or this subclause to which the corporation is related;

(b) if the corporation is not related in a taxation year to another corporation that,

(i) is a financial institution or an insurance corporation,

(ii) has a permanent establishment in Canada, and

(iii) is not exempt by virtue of subsection 71 (1) from tax under this Part,

the corporation's exempt amount for the taxation year is$400,000,000; and

(i) is a financial institution or an insurance corporation,

(ii) has a permanent establishment in Canada, and

(iii) is not exempt by virtue of subsection 71 (1) from tax under this Part,

the corporation's exempt amount for the taxation year is the amount determined by multiplying$400,000,000 by the ratio of the corporation's taxable capital employed in Canada for the taxation year for the purposes of Part I.3 of the Income Tax Act (Canada) to the total of the taxable capital employed in Canada for the purposes of Part I.3 of the Income Tax Act (Canada) of,

(iv) the corporation for the taxation year, and

(v) each such related financial institution or related insurance corporation for its last taxation year ending before the end of the corporation's taxation year.

(2) Subsections 66.1 (2), (3) and (4) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 18, section 20, are repealed and the following substituted: Small business investment tax credit

(2) A financial institution may deduct from its tax otherwise payable for a taxation year under this Part a small business investment tax credit in an amount not exceeding the least of,

(a) the amount of its tax earn-back account for the year;

(b) the amount of its small business investment tax credit account for the year or nil, if the amount of its small business investment tax credit account is not greater than zero; and

(3) The amount of a financial institution's tax earn-back account for a taxation year is the amount, if any, by which,

(a) the total of its eligible tax for the taxation year and, subject to subsection (3.1), the three prior taxation years, plus the total of all small business investment tax credit repayments, if any, required to be paid under subsection (12) for the three prior taxation years,

exceeds,

(b) the total of all small business investment tax credits that were deductible and deducted by the institution under subsection (2) in the three prior taxation years from amounts included by the institution under clause (a) in computing its tax earn-back account for the taxation year. Computation of amount

(3.1) In computing the amount described in clause (3) (a) for a taxation year, a financial institution may only include an amount in respect of its eligible tax for the third taxation year immediately preceding the taxation year to the extent that,

(a) the institution has included tax credit amounts under clause (4) (a) in computing its small business investment tax credit account for the year in respect of eligible investments made before December 31 of the calendar year ending in the taxation year; and

(b) the tax credit amounts referred to in clause (a) exceed the amount of all small business investment tax credits that were deductible and deducted by the institution under subsection (2) for a preceding taxation year. Eligible tax

(3.2) The amount of the eligible tax for a taxation year of a financial institution other than a credit union is the total of,

(a) the amount of tax, if any, payable by the institution under this section for the taxation year; and

(b) the amount determined for the taxation year in accordance with the following formula:

where,

"T" is the amount determined under this clause for the taxation year;

"A" is the amount of the institution's adjusted taxable paid-up capital for the taxation year as determined under Division B.1;

"B" is the institution's exempt amount for the taxation year as determined under clauses (1.2) (b) and (c);

"C" is the number of days in the taxation year that are after May 6, 1997;

"D" is the number of days in the taxation year; and

"E" is the product obtained by multiplying the institution's adjusted taxable paid-up capital for the taxation year, as determined under Division B.1, by the percentage of the institution's taxable paid-up capital for the taxation year that would not be deemed by rules prescribed by the regulations to be used by the institution in the taxation year in a jurisdiction other than Ontario. Same

(3.3) The amount of a credit union's eligible tax for a taxation year is the total amount of tax payable by the credit union under this Part for the taxation year, if the taxation year commences after December 31, 1997 and, if the taxation year commences before January 1, 1998, the amount, if any, of the tax payable for the year that applies to the portion of the taxation year that is after December 31, 1997. Small business investment tax credit account

(4) The amount of a financial institution's small business investment tax credit account for a taxation year is the amount by which the total of,

(a) all amounts each of which is a tax credit amount in respect of an eligible investment made before the end of the taxation year in a qualifying small business corporation or qualifying small business by,

(i) the financial institution, if it is a deposit-taking institution,

(ii) a specified corporation related to the financial institution at the time the investment was made, or

(iii) a deposit-taking institution or an insurance corporation related to the financial institution at the time the investment was made; and

(b) the total of all small business investment tax credit repayments required to be paid by the institution under subsection (12) for prior taxation years,

exceeds the total of,

(c) all amounts each of which is an amount, if any, determined under rules prescribed by the regulations in respect of the disposition after May 7, 1996 and before the end of the taxation year of an investment prescribed by the regulations; and

(d) all small business investment tax credits that were deductible and deducted by the institution under subsection (2) for prior taxation years. Eligible investments made by related financial institution or specified corporation

(4.1) Where a financial institution includes a tax credit amount under clause (4) (a) in computing its small business investment tax credit account for a taxation year in respect of an eligible investment made by a related deposit-taking institution, a related insurance corporation, or a specified corporation, no tax credit amount in respect of the eligible investment may be included in computing the small business investment tax credit account of any other financial institution for any taxation year. Same

(4.2) A tax credit amount in respect of an eligible investment made by a specified corporation that is not a financial institution may be included by a financial institution in computing its small business investment tax credit account only in the proportion that the fair market value of the shares of the specified corporation not held by a person unrelated to the financial institution is of the total fair market value of the shares of the specified corporation issued and outstanding at the time that the investment is made. Tax credit amount - Below-prime loan

(4.3) A tax credit amount in respect of an eligible investment that is a below-prime loan is included in computing a financial institution's small business investment tax credit account for each year in which the loan is outstanding, each tax credit amount being equal to 4 per cent of the average outstanding balance of the loan during the taxation year. Same

(4.4) No tax credit amount in respect of a below-prime loan may be included by a financial institution in computing its small business investment tax credit account for a taxation year if, as a result of including a tax credit amount in respect of that below-prime loan, the total of all tax credit amounts calculated for the year and included in computing the institution's small business investment tax credit account for the year in respect of below-prime loans outstanding in the year would exceed 75 per cent of the amount of the institution's tax earn-back account for the year. Tax credit amount - Investment in a community small business investment fund corporation

(4.5) A tax credit amount in respect of an eligible investment that is an investment made before January 1, 1999 in a community small business investment fund corporation in accordance with the Community Small Business Investment Funds Act is the amount equal to 30 per cent of the amount of equity capital paid by the financial institution, specified corporation or insurance corporation to the corporation on the issuance of Class A shares to the financial institution, specified corporation or insurance corporation. Same

(4.6) Subsection (4.5) applies only if the financial institution claiming a tax credit in respect of the investment has applied for the tax credit, in a form approved by the Minister, and the Minister has allowed the application. Same

(4.7) If subsection (4.5) applies, the financial institution may include under clause (4) (a), in computing its small business investment tax credit account for a taxation year, an additional tax credit amount equal to 30 per cent of the amount of equity capital paid by the financial institution, specified corporation or insurance corporation to the corporation on the issuance of Class A shares to the financial institution, specified corporation or insurance corporation, to the extent that the corporation has reinvested the capital in eligible investments under the Community Small Business Investment Funds Act in the taxation year. Tax credit amount - Patient capital investment

(4.8) A tax credit amount in respect of an eligible investment that is a patient capital investment in a qualifying small business or qualifying small business corporation is the amount determined in accordance with the following rules:

1. In the formulas described in paragraphs 2, 3, 4 and 5 of this subsection, the values represented by "A", "B", "C", "D", "E" and "F" have the following meanings:

"A" is the tax credit amount in respect of the investment;

"B" is the consideration for which the investment was issued;

"C" is the amount, not exceeding $250,000, by which the amount of the total assets or the amount of the gross revenue, measured immediately before the investment is made, whichever is greater, of the associated group of which the qualifying small business corporation or qualifying small business is a member, is greater than $500,000;

"D" is the amount, not exceeding $4,000,000, by which the amount of the total assets or the amount of the gross revenue, measured immediately before the investment is made, whichever is greater, of the associated group of which the qualifying small business corporation or qualifying small business is a member, is greater than $1,000,000;

"E" is the amount, not exceeding $50,000, of the consideration in excess of $50,000 for which the investment was issued; and

"F" is the amount, not exceeding $750,000, of the consideration in excess of $250,000 for which the investment was issued.

2. Where the investment was issued for consideration not exceeding $100,000, the tax credit amount in respect of the investment is the amount determined in accordance with the following formula:

3. Where the investment was issued for consideration greater than $100,000 but not exceeding $1,000,000, the tax credit amount in respect of the investment is the amount determined in accordance with the following formula:

4. Where the investment was issued for consideration greater than $1,000,000, the tax credit amount in respect of the investment is the amount determined in accordance with the following formula:

5. Paragraph 2 shall not apply to determine the tax credit amount in respect of a patient capital investment made by a financial institution in a qualifying small business or qualifying small business corporation for consideration not exceeding $100,000 if the total consideration of all eligible investments issued by the corporation or business to the institution exceeds $100,000.Where this is the case, the tax credit amount in respect of the eligible investment is determined in accordance with the following formula: Eligible investment

(4.9) An eligible investment is an investment that is a below-prime loan, a patient capital investment, or a Class A share issued by a corporation registered as a community small business investment fund corporation under the Community Small Business Investment Funds Act. Below-prime loans

(4.10) A below-prime loan is a loan for an aggregate amount not exceeding $50,000 made to a qualifying small business corporation or qualifying small business after May 6, 1997, if the following conditions are satisfied:

1. Where the loan is made at a fixed rate of interest, the rate of interest payable in respect of the loan does not exceed the average bank prime rate at the time the loan is made.

2. Where the loan is made at a floating rate of interest, the agreement in respect of the loan provides that the rate of interest payable in respect of the loan at any time may not exceed the average bank prime rate at that time.

3. The loan is not made to a person carrying on a business prescribed by the regulations.

4. The amount of the total assets or the amount of the gross revenue, measured immediately before the investment is made, whichever is greater, of the associated group of which the qualifying small business corporation or qualifying small business is a member, does not exceed $500,000 at the time the loan is made.

5. The loan is not used for a purpose or in a manner prescribed by the regulations. Deeming provision

(4.11) Where a qualifying small business corporation or qualifying small business to which a below-prime loan is made certifies to the financial institution, specified corporation or insurance corporation making the loan that the corporation or business is a qualifying small business corporation or qualifying small business for the purposes of the Act and that the conditions described in paragraphs 3, 4 and 5 of subsection (4.10) are or will be satisfied, the corporation or business will be deemed to be a qualifying small business corporation or qualifying small business for the purposes of the Act and the conditions described in paragraphs 3, 4 and 5 of subsection (4.10) will be deemed to be satisfied. Penalty

(4.12) Where a qualifying small business corporation or qualifying small business provides a certification to a financial institution, specified corporation or insurance corporation in accordance with subsection (4.11), the facts stated in the certification are false, and the Minister considers that the individual stating them should reasonably have known that they were false, the corporation or business shall, subject to subsection (4.13), pay a penalty equal to the lesser of,

(a) $2,000; or

(b) the tax credit amount claimed by a financial institution in respect of the below-prime loan to which the certification relates. Exception

(4.13) Subsection (4.12) does not apply if the corporation or business provides evidence that satisfies the Minister that the individual stating the facts believed them to be true. Patient capital investments

(4.14) A patient capital investment is an investment that is made after May 6, 1997 in a qualifying small business corporation or a qualifying small business if,

(a) the investment is in accordance with the rules prescribed by the regulations; and

(b) the investment is not used by the corporation or business for a purpose or in a manner prescribed by the regulations.

(3) Subsection 66.1 (7) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 18, section 20, is repealed.

(4) Subsection 66.1 (9) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 18, section 20, is repealed.

(5) Subsection 66.1 (10) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 18, section 20, is repealed.

(6) Subsection 66.1 (11) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 18, section 20, is repealed and the following substituted: Determination of total assets and gross revenue

(11) For the purposes of this section, the amount of the total assets and the amount of the gross revenue of the associated group of which a qualifying small business or qualifying small business corporation is a member shall be determined in accordance with the following rules:

1. The total assets of the associated group shall include the total assets of all businesses and corporations in the group.

2. The gross revenue of the associated group shall include the gross revenue of all businesses and corporations in the group.

3. The total assets of a business or corporation in the associated group shall include, if the business or corporation is a member of a partnership that is not a member of the associated group, the same proportion of the total assets of the partnership, as recorded in the books and records of the partnership, as the proportion of the balance of the business's or corporation's capital account in the partnership to the total of the capital account balances of all partners of the partnership.

4. The gross revenue of a business or corporation in the associated group shall include, if the business or corporation is a member of a partnership that is not a member of the associated group, the same proportion of the gross revenue of the partnership, as recorded in the books and records of the partnership, as the proportion of the profits of the partnership to which the business or corporation is entitled as a partner of the partnership.

5. Except as otherwise provided in this subsection and the regulations, the total assets and the gross revenue of a business or corporation in the associated group shall be determined in accordance with generally accepted accounting principles on an unconsolidated basis.

(7) Subsection 66.1 (12) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 18, section 20, is repealed and the following substituted: Small business investment tax credit repayment

(12) If the amount described in clause (a) in respect of a financial institution for a taxation year is greater than zero, the financial institution shall pay to the Minister for the taxation year a small business investment tax credit repayment equal to the lesser of,

(a) the amount by which the sum of the amounts determined under clauses (4) (c) and (d) for the taxation year exceeds the sum of the amounts determined under clauses (4) (a) and (b) for the taxation year; and

(b) the amount by which the total of all small business investment tax credits deductible and deducted by the financial institution under subsection (2) for prior taxation years exceeds the total of all small business investment tax credit repayments required to be paid by the financial institution under this subsection for prior taxation years.

(8) Subsection 66.1 (13) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 18, section 20, is repealed and the following substituted: Deemed tax

(13) A small business investment tax credit repayment required to be paid by a financial institution for a taxation year shall be deemed to be tax payable by the financial institution under this Part for the taxation year.

(9) Subsection 66.1 (14) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 18, section 20, is amended by striking out the definition of "corporate group".

(10) Subsection 66.1 (14) of the Act is amended by adding the following definitions:

"associated group", in respect of a corporation or qualifying small business, has the meaning prescribed by the regulations; ("groupe")

"average bank prime rate", on a particular date, has the meaning prescribed by the regulations; ("taux prfrentiel bancaire moyen")

"deposit-taking institution" means a corporation described in clause (1.2) (a); ("institution de dpt")

"qualifying small business" means a business that satisfies the conditions prescribed by the regulations. ("petite entreprise autorise")

(11) Subsection 66.1 (15) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 18, section 20 and amended by 1996, chapter 29, section 57, is repealed and the following substituted: Regulations

(15) The Lieutenant Governor in Council may make regulations,

(a) prescribing investments that will be eligible investments for the purposes of determining the amount of a financial institution's small business investment tax credit under subsection (2) if they satisfy prescribed conditions, and prescribing those conditions;

(b) prescribing rules for determining the tax credit amount for a taxation year in respect of an eligible investment that satisfies the conditions prescribed under clause (a);

(d) prescribing rules for determining whether an investment has been made in or issued by a person other than a corporation.

37.(1) Section 67 of the Act, as amended by the Statutes of Ontario, 1992, chapter 3, section 14 and 1996, chapter 18, section 21, is repealed and the following substituted: Tax credit

67.Every corporation, other than a financial institution, whose tax under this Part for a taxation year is determined under section 66, and not under section 69 or 71, may deduct from the tax otherwise payable by it under section 66 an amount determined in accordance with the following formula:

where,

"D" is the amount deductible by the corporation under this section for the taxation year;

"T" is the amount of tax otherwise payable by the corporation for the year under section 66;

"A" is,

(a) the portion of the corporation's taxable paid-up capital for the taxation year that is deemed under rules prescribed by the regulations to be used by the corporation in the taxation year in a jurisdiction other than Ontario, if the corporation is a corporation referred to in subsection 2 (1), or

(b) the portion of the corporation's taxable paid-up capital employed in Canada for the taxation year that is deemed under rules prescribed by the regulations to be used by the corporation in the taxation year in a jurisdiction other than Ontario, if the corporation is a corporation referred to in subsection 2 (2); and

"B" is the corporation's taxable paid-up capital for the taxation year, if the corporation is a corporation referred to in subsection 2 (1), or the corporation's taxable paid-up capital employed in Canada for the taxation year, if the corporation is a corporation referred to in subsection 2 (2).

(2) Section 67 of the Act, as re-enacted by subsection (1), applies to corporations in respect of taxation years ending after May 6, 1997.

38.Section 68 of the Act is repealed and the following substituted: Where no tax payable

68.Despite sections 66 and 67, no tax is payable under this Part for a taxation year by a corporation that is not a financial institution if neither the corporation's total assets at the end of the taxation year nor its gross revenue for the taxation year, as recorded in its books and records, exceeds$1,000,000.

39.Subsection 69 (2) of the Act, as amended by the Statutes of Ontario, 1994, chapter 14, section 30, and 1996, chapter 29, section 58, is further amended by striking out the portion preceding clause (a) and substituting the following: Flat tax

(2) Despite sections 66 and 67, and except as provided in section 71, the tax payable under this Part for a taxation year by a corporation other than a financial institution is,

. . . . .

40.Subsection 71 (2) of the Act is repealed and the following substituted: Annual flat tax

(2) Except as provided in section 68 and subsection (3), a credit union that is not a financial institution, a family farm corporation, a family fishing corporation and every corporation referred to in paragraph 149 (1) (m) of the Income Tax Act (Canada) shall, in lieu of any tax otherwise payable under this Part, pay a tax of $100.

41.Clause 72 (c) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 18, section 22, is repealed and the following substituted:

42.(1) Part IV of the Act is amended by adding the following sections: Definitions

74.3(1) In this section,

"insurance broker" means an insurance broker within the meaning of the Registered Insurance Brokers Act\; ("courtier d'assurances")

"insurance contract" means a contract within the meaning of the Registered Insurance Brokers Act that is in respect of property situate in Ontario or a person resident in Ontario; ("contrat d'assurance")

"insured person" means,

(a) an individual who is resident in Ontario and, through an insurance broker, enters into an insurance contract with an unlicensed insurer or pays a premium under the insurance contract,

(b) a corporation that has a permanent establishment in Ontario and enters into an insurance contract with an unlicensed insurer or pays a premium under the insurance contract, or

(c) any other person who, through an insurance broker, enters into an insurance contract with an unlicensed insurer or pays a premium under the insurance contract; ("assur")

"net premiums" means, in respect of an insurance contract, the total amount of premiums paid less the amount of any premiums returned; ("primes nettes")

"unlicensed insurer" means a person who is an insurer within the meaning of the Insurance Act, but who does not hold a licence under that Act. ("assureur non titulaire d'un permis") Amount of tax, insurance contracts with unlicensed insurers

(2) The amount of tax payable under subsection 2 (2.2) by an insured person in respect of an insurance contract with an unlicensed insurer is the total of,

(a) two per cent of the net premiums payable under the insurance contract, if the contract is for accident insurance or sickness insurance, or three per cent of the net premiums payable under the insurance contract, if the contract is for any other insurance; and

(b) one-half of one per cent of the amount of net premiums payable under the insurance contract, if the contract is for property insurance. Tax payment and collection of tax

(3) If the insurance contract with the unlicensed insurer is entered into through an insurance broker, the tax payable under subsection 2 (2.2),

(a) is payable at the time of payment of each premium under the insurance contract; and

(b) shall be paid at that time to the insurance broker to whom the premium is paid, who shall act as agent of the Minister to collect the tax and pay it over to the Minister. Payment to the Minister

(4) The amount of tax payable under subsection 2 (2.2) that an insurance broker is required to collect under this section shall be accounted for and paid over to the Minister by the insurance broker in the following manner:

1. The amount of tax collected by the insurance broker during a taxation year of the insurance broker shall be a debt due by the insurance broker to her Majesty in right of Ontario.

2. Instalments of tax payable under this Act by the insurance broker shall be calculated on the basis that the amount of tax the insurance broker is or will be required to collect during a taxation year is tax payable under Part IV by the insurance broker for that taxation year.

3. For the purposes of Parts V and VI, the tax required to be collected by the insurance broker during a taxation year shall be deemed to be tax payable under Part IV by the insurance broker for that taxation year and may be enforced and collected from the insurance broker by the Minister in the same way as any other tax that may be payable by the insurance broker under this Act. Same

(5) If tax is payable by an insured person under subsection 2 (2.2) in respect of premiums paid on an insurance contract that was not entered into through an insurance broker, the tax,

(a) shall be calculated on an annual basis in respect of all net premiums paid during a taxation year of the insured person; and

(b) shall be paid to the Minister in the same manner as any other tax that may be imposed on the insured person under this Act for the taxation year. Definitions

74.4(1) In this section,

"insurance contract" means a reciprocal contract of indemnity or inter-insurance that by reason of section 378 of the Insurance Act may be exchanged with a person in Ontario or elsewhere; ("contrat d'assurance")

"insurance exchange" means a reciprocal or inter-insurance exchange within the meaning of the Insurance Act\; ("bourse d'assurance")

"net premiums" means, in respect of an insurance exchange for a taxation year, the total amount of premiums and deposits paid on account of premiums that are collected by the exchange during the taxation year, less the amount of any premiums and deposits returned in the taxation year. ("primes nettes") Amount of tax, insurance exchange

(2) The amount of tax payable under subsection 2 (2.3) for a taxation year by an insurance exchange is an amount equal to the total of,

(a) three per cent of the net premiums collected by the insurance exchange during the taxation year in respect of insurance contracts with respect to individuals resident in Ontario or property situate in Ontario; and

(b) one-half of one per cent of the amount of net premiums collected by the insurance exchange during the taxation year in respect of insurance contracts with respect to property situate in Ontario.

(2) Section 74.3 of the Act, as enacted by subsection (1), applies in respect of premiums paid,

(a) to insurance brokers during taxation years of insurance brokers commencing after December 31, 1997, in respect of insurance contracts entered into through insurance brokers; and

(b) by corporations after December 31, 1997 in respect of insurance contracts that were not entered into through insurance brokers.

(3) Section 74.4 of the Act, as enacted by subsection (1), applies to insurance exchanges for taxation years commencing after December 31, 1997.

43.(1) Section 75 of the Act, as amended by the Statutes of Ontario, 1994, chapter 14, section 33, is further amended by adding the following subsection: Exception, insurance exchange

(1.1) Despite subsection (1), an insurance exchange within the meaning of section 74.4 shall deliver a return for each taxation year to the Minister in accordance with subsection (1).

(2) Subsection 75 (6.1) of the Act, as enacted by the Statutes of Ontario, 1994, chapter 14, section 33, is repealed and the following substituted: Certificate

(6.1) The certificate required by subsection (6) shall be signed,

(a) in the case of an extra-provincial corporation, by the manager or chief agent of the corporation in Ontario, or by another person or persons connected with the extra-provincial corporation as the Minister may require;

(b) in the case of an insurance exchange within the meaning of section 74.4, by the attorney of the insurance exchange as defined in section 377 of the Insurance Act\; or

(c) in any other case, by the president of the corporation or another officer of the corporation who has personal knowledge of the affairs of the corporation.

(3) Subsection 75 (1.1) of the Act, as enacted by subsection (1), and subsection 75 (6.1) of the Act, as re-enacted by subsection (2), apply to taxation years commencing after December 31, 1997.

44.Subsection 76 (6) of the Act, as re-enacted and amended by the Statutes of Ontario, 1996, chapter 1, Schedule B, section 10 and amended by 1996, chapter 24, section 28, is further amended by adding the following clauses:

(f) the amount, if any, by which,

(i) the amount that would be deemed by section 43.6 to be paid for the year by the corporation if that amount were calculated by reference to the amount of the tax credit claimed by the corporation for the year under that section as a payment made on account of its tax for the year,

exceeds,

(ii) the maximum amount that the corporation is entitled to claim for the year under section 43.6 as a deemed payment on account of its tax payable for the year;

(g) the amount, if any, by which,

(i) the amount that would be deemed by section 43.7 to be paid for the year by the corporation if that amount were calculated by reference to the amount of the tax credit claimed by the corporation for the year under that section as a payment made on account of its tax for the year,

exceeds,

(ii) the maximum amount that the corporation is entitled to claim for the year under section 43.7 as a deemed payment on account of its tax payable for the year;

(h) the amount, if any, by which,

(i) the amount that would be deemed by section 43.8 to be paid for the year by the corporation if that amount were calculated by reference to the amount of the tax credit claimed by the corporation for the year under that section as a payment made on account of its tax for the year,

exceeds,

(ii) the maximum amount that the corporation is entitled to claim for the year under section 43.8 as a deemed payment on account of its tax payable for the year;

(i) the amount, if any, by which,

(i) the amount that would be deemed by section 43.9 to be paid for the year by the corporation if that amount were calculated by reference to the amount of the tax credit claimed by the corporation for the year under that section as a payment made on account of its tax for the year,

exceeds,

(ii) the maximum amount that the corporation is entitled to claim for the year under section 43.9 as a deemed payment on account of its tax payable for the year.

45.(1) Clause 78 (5) (b) of the Act, as re-enacted by the Statutes of Ontario, 1996, chapter 24, section 29, is amended by striking out "section 43.2, 43.3, 43.4 or 43.5" in the second and third lines and substituting "any of sections 43.2 to 43.9".

(2) Clause 78 (6) (a) of the Act, as re-enacted and amended by the Statutes of Ontario, 1996, chapter 29, section 59, is repealed and the following substituted:

(a) the tax payable by the corporation for the taxation year is less than $2,000 after deducting all amounts, if any, deemed under any of sections 43.2 to 43.9 to be tax paid by the corporation for the taxation year and the amount, if any, of its capital gains refund as determined under section 48 for the taxation year.

(3) Section 78 of the Act, as amended by the Statutes of Ontario, 1994, chapter 14, section 36, 1996, chapter 1, Schedule B, section 11, 1996, chapter 24, section 29 and 1996, chapter 29, section 59, is further amended by adding the following subsection: Exception, insurance exchange

(11) The following rules apply to an insurance exchange within the meaning of section 74.4:

1. Subsections (1), (2), (3), (4), (4.1), (5), (6), (8), (9) and (10) do not apply to the insurance exchange in respect of tax payable by it under section 74.4.

2. The tax payable for a taxation year by the insurance exchange under section 74.4 shall be paid to the Minister on or before the last day of the second month following the taxation year.

(4) Subsection 78 (11) of the Act, as enacted by subsection (3), applies to insurance exchanges in respect of taxation years commencing after December 31, 1997.

46.(1) Clause 80 (1) (b.1) of the Act, as re-enacted by the Statutes of Ontario, 1996, chapter 24, section 30, is amended by striking out "43.4 or 43.5" in the second line and substituting "43.4, 43.5, 43.6, 43.7, 43.8 or 43.9".

(2) Clause 80 (11) (b) of the Act is amended by striking out "or" at the end of subclause (ii), by striking out "and" at the end of subclause (iii) and by adding the following subclauses:

(iv) subsection 5.1 (2) or (5), 29.1 (6) or 31.1 (6) applies to the corporation, or to a partnership of which the corporation is a member, in respect of a disposition or acquisition of property in the taxation year, or

(v) subsection 34 (10.3) applies to the corporation for the taxation year; and

. . . . .

47.(1) Subsection 84 (1) of the Act, as amended by the Statutes of Ontario, 1997, chapter 19, section 4, is repealed and the following substituted: Notice of objection

(1) Subject to subsection 92 (3), a corporation that objects to an assessment may, within 180 days from the day of mailing of the notice of assessment, serve on the Minister a notice of objection in the form approved by the Minister. Facts and reasons to be given

(1.1) The notice of objection shall,

(a) clearly describe each issue raised by way of objection; and

(b) fully set out the facts and reasons relied on by the corporation in respect of each issue. Same

(1.2) If a notice of objection does not fully set out the facts and reasons relied on by the corporation in respect of an issue, the Minister may in writing request the corporation to provide the information, and the corporation shall be deemed to have complied with clause (1.1) (b) in respect of the issue if the corporation provides the information to the Minister in writing within 60 days after the day the request is made by the Minister. Limitation

(1.3) A corporation shall not raise, by way of objection under this section to a reassessment or variation of assessment under subsection (5), any issue that the corporation is not entitled to raise by way of appeal under section 85 in respect of the reassessment or variation of assessment.

(2) Subsection 84 (3) of the Act is amended by adding at the end "or by such other method of service as the Minister prescribes".

(3) Subsection 84 (4) of the Act is repealed and the following substituted: Computation of time

(4) For the purpose of calculating the number of days mentioned in subsection (1), (1.2) or 85 (1), the day on which a notice of assessment is mailed under subsection (1), a request is made under subsection (1.2) or a notification is given under subsection (5) is the date stated in the notice of assessment, request or notification.

(4) Subsection 84 (5) of the Act is amended by striking out "by registered letter" at the end and substituting "in writing".

(5) Section 84 of the Act, as amended by the Statutes of Ontario, 1997, chapter 19, section 4, is further amended by adding the following subsection: Regulations

(8) The Minister may make regulations prescribing methods of service for the purpose of subsection (3).

48.Subsection 85 (2) of the Act, as amended by the Statutes of Ontario, 1997, chapter 19, section 4, is repealed and the following substituted: Appeal, how instituted

(2) An appeal to the Ontario Court (General Division) shall be instituted by,

(a) filing a notice of appeal with the court in the form approved by the Minister;

(b) paying a fee to the court in the same amount and manner as the fee payable under regulations made under the Administration of Justice Act on the issue of a statement of claim; and

(2.1) A corporation is entitled to raise by way of appeal only those issues raised by it in a notice of objection to the assessment being appealed and in respect of which it complied or was deemed to have complied with subsection 84 (1.1). Exception

(2.2) Despite subsection (2.1), a corporation may raise by way of appeal an issue forming the basis of a reassessment or variation of assessment under subsection 84 (5) if the issue was not part of the assessment with respect to which the corporation served the notice of objection. Application, subs. (2.1) and (2.2)

(2.3) Subsections (2.1) and (2.2) apply only in respect of appeals in respect of which the period of 90 days referred to in subsection (1) begins after December 31, 1997. Waived right of objection or appeal

(2.4) Despite subsection (1), no corporation shall institute an appeal under this section to have an assessment vacated or varied in respect of an issue for which the right of objection or appeal has been waived in writing by or on behalf of the corporation.

49.Subsection 87 (2) of the Act is repealed.

50.The French version of clause 100 (2) (a) of the Act is amended by striking out "caisse de crdit" in the first line and substituting "caisse populaire".

51.Subsection 112 (1) of the Act, as amended by the Statutes of Ontario, 1994, chapter 14, section 52, 1996, chapter 18, section 23 and 1996, chapter 24, section 31, is further amended by adding the following clauses:

(j) prescribing the rules and when they apply for determining the amount of a tax credit under this Act, and the taxation year in which it is deducted, in respect of an amount of government assistance that was deducted in determining the amount of the tax credit for a prior taxation year and that is repaid in a subsequent taxation year;

(k) prescribing the rules for the calculation of some or all of the refundable tax credits, how the tax credits are claimed and who claims the tax credits in the event that a corporation becomes insolvent or bankrupt. Commencement

52.(1) Subject to subsections (2) to (12), this Schedule comes into force on the day the Tax Credits to Create Jobs Act, 1997 receives Royal Assent. Same

(2) Subsection 26 (1) and section 27 shall be deemed to have come into force on January 1, 1994. Same

(3) Section 7 and subsections 17 (1), (2), (4) to (6) and (8) shall be deemed to have come into force on January 1, 1996. Same

(4) Subsections 19 (2) and 24 (1) shall be deemed to have come into force on May 8, 1996. Same

(5) Subsection 1 (3), section 4 and subsection 46 (2) shall be deemed to have come into force on December 20, 1996. Same

(6) Subsections 5 (4) and (5) and subsections 15 (3) and (4) shall be deemed to have come into force on January 1, 1997. Same

(7) Subsections 1 (6) and (7), sections 10 to 13, subsections 15 (1) and (2) and subsections 26 (2) to (5) shall be deemed to have come into force on May 6, 1997. Same

(8) Subsection 5 (3), sections 6, 8 and 16, subsections 17 (3) and (7), subsections 19 (1) and (3) to (9), sections 20 to 23, subsections 24 (2) and (3), sections 28 to 31, subsections 32 (3), (4), (6), (8) and (13), sections 33 to 41, section 44, subsections 45 (1) and (2), subsection 46 (1) and section 51 shall be deemed to have come into force on May 7, 1997. Same

(9) Subsections 32 (1), (5), (9), (12) and (14) shall be deemed to have come into force on October 31, 1997. Same

(10) Sections 9 and 14 shall be deemed to have come into force on November 25, 1997. Same

(11) Subsections 1 (1), (2), (4), (5) and (8), sections 2 and 3, subsections 5 (1) and (2), section 18, subsections 32 (2), (7) and (11), sections 42 and 43 and subsections 45 (3) and (4) come into force on January 1, 1998. Same

(12) Subsection 32 (10) comes into force on May 8, 1998.

SCHEDULE B

AMENDMENTS TO THE INCOME TAX ACT

1.(1) The Income Tax Act is amended by adding the following section: Determination of income

4.2Despite any other provision of this Act, if section 5.1 applies to an individual for a taxation year, the amount of tax payable by the individual under this Act for the year shall be determined on the basis that,

(a) the individual's income for the taxation year is the amount determined after the application of section 5.1; and

(b) the individual's tax payable under the Federal Act is the amount that would be determined under the Federal Act if the individual's income for the year as determined under clause (a) were the individual's income for the year for the purposes of the Federal Act.

(2) Section 4.2 of the Act, as enacted by subsection (1), applies to taxation years ending after December 19, 1996.

(3) Section 4.2 of the Act, as enacted by subsection (1), is amended by,

(a) striking out "section 5.1" in the portion before clause (a) and substituting "section 5.1 or 5.2"\; and

(b) striking out "section 5.1" in clause (a) and substituting "section 5.1 or 5.2, as the case may be".

(4) Section 4.2 of the Act, as amended by subsection (3), applies to taxation years ending on or after the day subsection (3) comes into force.

2.(1) The Act is amended by adding the following section: Definitions

5.1(1) In this section,

"taxpayer" means an individual or a partnership whose members include one or more individuals; ("contribuable")

"transferee" means, in respect of a taxation year,

(a) a corporation that has a permanent establishment in one or more provinces other than Ontario, or

(b) a partnership, one or more of whose members is a corporation described in clause (a). ("bnficiaire du transfert") Inter-provincial anti-avoidance

(2) Despite any other provision of this Act except subsection (4), if a taxpayer disposes of property to a transferee, and clauses (3) (a) to (d) apply in respect of the disposition, the amount of the taxpayer's deemed proceeds of disposition of the property is the total of,

(a) the amount that is deemed to be the taxpayer's proceeds of disposition of the property as determined under the Federal Act; and

(b) the total of all amounts, each of which is in respect of a province in which the transferee has a permanent establishment, determined by multiplying,

(i) the amount by which the cost amount of the property to the transferee under the laws of a province other than Ontario exceeds the amount referred to in clause (a),

by,

(ii) the percentage of the transferee's taxable income, for the taxation year in which the transferee disposed of the property,

(A) if the transferee is a corporation, that is deemed to be earned in that other province under regulations made under the Federal Act, or that would be deemed to be earned in that other province if the transferee had had taxable income for that year, or

(B) if the transferee is a partnership, that the partnership would be deemed to have earned in that other province under regulations made under the Federal Act if the partnership were a corporation, its taxation year were its fiscal period, it had had income for the fiscal period and its taxable income for the year were its income for that fiscal period. Application of subs. (2)

(3) Subsection (2) applies in respect of a disposition of property if,

(a) the transferee does not deal at arm's length with the taxpayer at or immediately after the time of the disposition;

(b) the amount of the taxpayer's proceeds of disposition of the property, as determined without reference to this section, would be deemed to be an amount that is less than the transferee's cost amount of the property immediately after the disposition, as determined under the laws of a province other than Ontario in which the transferee or, if the transferee is a partnership, one or more of its members, has a permanent establishment;

(4) Subsection (2) does not apply in respect of a disposition if,

(a) the cost amount of the property to the transferee is greater than the taxpayer's proceeds of disposition of the property, as otherwise determined, by reason only of the operation of paragraph 98 (3) (b) of the Federal Act or a comparable provision of the laws of another province in which the transferee, or if the transferee is a partnership, one or more of its members, has a permanent establishment; or

(b) the property is prescribed property or the prescribed rules or conditions have been satisfied.

(2) Subsections 5.1 (1) to (4) of the Act, as enacted by subsection (1), apply in respect of transactions or events, or a series of transactions or events within the meaning of subsection 248 (10) of the Federal Act, that are completed after December 19, 1996.

(3) Section 5.1 of the Act, as enacted by subsection (1), is amended by adding the following subsection: Anti-avoidance of provincial tax

(5) If a trust, other than a mutual fund trust, is resident in a province other than Ontario and designates or elects an amount under the Federal Act in respect of a beneficiary under the trust who is an individual resident in Ontario, the trust shall be deemed not to have designated or elected an amount under that Act for the purposes of this Act unless the designated or elected amount in each province in which the trust is resident is the same as the amount designated or elected for the purposes of the Federal Act.

(4) Subsection 5.1 (5) of the Act, as enacted by subsection (3), applies to designations and elections made after November 25, 1997.

3.(1) The Act is amended by adding the following section: Anti-avoidance

5.2For the purposes of this Act, sections 245 and 246 of the Federal Act apply, with necessary modifications, to individuals.

(2) Section 5.2 of the Act, as enacted by subsection (1), applies in respect of transactions or events, or a series of transactions or events, that are commenced on or after the day subsection (1) comes into force.

4.(1) Subsection 8 (1) of the Act, as amended by the Statutes of Ontario, 1992, chapter 18, section 55, 1992, chapter 25, section 3, 1993, chapter 29, section 6, 1996, chapter 1, Schedule C, section 8, 1996, chapter 29, section 9 and 1997, chapter 19, section 9, is further amended by adding the following definition:

"eligible child" means, in respect of a taxation year, a child in respect of whom an amount is claimed and allowed for the taxation year under section 63 of the Federal Act and who is under six years of age at any time in the year or attains six years of age on January 1 of that year. ("enfant admissible")

(2) Clause (c) of the definition of "individual" in subsection 8 (1) of the Act, as amended by the Statutes of Ontario, 1992, chapter 18, section 55, 1993, chapter 29, section 6, 1996, chapter 1, Schedule C, section 8 and 1996, chapter 29, section 9, is further amended by striking out the portion before subclause (i) and substituting the following:

(c) except for the purposes of subsections (8.1), (8.3), (8.4), (9), (15), (15.1) and (15.2) , a person who died in the taxation year or a person who is, on December 31 in the taxation year,

. . . . .

(3) Subsection 8 (7) of the Act, as re-enacted by the Statutes of Ontario, 1993, chapter 29, section 6, is repealed and the following substituted: Who claims tax credits

(7) If an individual has a cohabiting spouse with whom the individual resides on December 31 in a taxation year, any deduction from tax for the taxation year of an amount that would have been permitted but for this subsection by either of them under any of subsections (3), (3.1), (4) and (15.2) shall be made by only one of them and shall include all amounts that would otherwise have been deductible from tax by either of them under those subsections.

(4) Subsection 8 (8.1) of the Act, as enacted by the Statutes of Ontario, 1992, chapter 18, section 55 and amended by 1994, chapter 17, section 99, 1996, chapter 24, section 13 and 1996, chapter 29, section 9, is further amended by striking out "(9) or (15)" in the amendment of 1996, chapter 29, section 9 and substituting "(9), (15), (15.1) or (15.2)".

(5) Subsection 8 (8.1) of the Act, as amended by subsection (4), is amended by striking out "Labour Sponsored Venture Capital Corporations Act, 1992" wherever that expression appears and substituting in each case "Community Small Business Investment Funds Act".

(6) Subsection 8 (8.1.1) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 24, section 13, is amended by striking out "Labour Sponsored Venture Capital Corporations Act, 1992" in the fourth and fifth lines and substituting "Community Small Business Investment Funds Act".

(7) Section 8 of the Act, as amended by the Statutes of Ontario, 1992, chapter 18, section 55, 1992, chapter 25, section 3, 1993, chapter 29, section 6, 1994, chapter 17, section 99, 1996, chapter 1, Schedule C, section 8, 1996, chapter 24, section 13, 1996, chapter 29, section 9, 1997, chapter 10, section 3 and 1997, chapter 19, section 9, is further amended by adding the following subsections: No tax credit

(8.1.2) If, after December 31, 1996, an individual redeems a Class A share of a corporation registered under Part III of the Labour Sponsored Venture Capital Corporations Act, 1992, no tax credit may be deducted by or allowed to the individual under subsection (8.1) for the taxation year in which the redemption occurs or for either of the two following taxation years. Exceptions

(8.1.3) Subsection (8.1.2) does not apply to an individual for a taxation year if,

(a) the original purchaser of the share was neither the individual nor a qualifying trust for the individual as defined in subsection 127.4 (1) of the Federal Act;

(b) the individual, in the year the share is redeemed, becomes disabled and permanently unfit for work, becomes terminally ill or dies;

(c) the original purchaser redeems the share within 60 days of its original issue and the tax credit certificate referred to in subsection 25 (5) of the Labour Sponsored Venture Capital Corporations Act, 1992 is returned to the corporation; or

(d) the total amount of any tax credit allowed under subsection (8.1) in respect of the share has been repaid to the Minister.

(8) Subsections 8 (8.1.2) and (8.1.3) of the Act, as enacted by subsection (7), are amended by striking out "Labour Sponsored Venture Capital Corporations Act, 1992" wherever that expression appears and substituting in each case "Community Small Business Investment Funds Act".

(9) Subsection 8 (10) of the Act, as amended by the Statutes of Ontario, 1996, chapter 24, section 13 and 1997, chapter 10, section 3, is repealed and the following substituted: Refund

(10) Subject to subsections (10.1), (10.2) and (10.3), the Provincial Minister shall pay to an individual the amount, if any, by which the deduction to which the individual is entitled under this section for a taxation year exceeds the individual's tax payable under this Act for the taxation year calculated without reference to this section. Use of refund to pay liabilities

(10.1) Subject to subsection (10.2), if an individual is liable or about to become liable to make a payment to Her Majesty in right of Canada or Her Majesty in right of Ontario or another province, the Provincial Minister may apply all or part of the amount referred to in subsection (10) to pay that liability. Restriction on subs. (10.1)

(10.2) An amount in respect of an individual's child care tax credit under subsection (15.2) may be applied under subsection (10.1) to pay only the following liabilities:

1. Any tax, interest or penalty owing by the individual for the same or a prior taxation year under this Act, the income tax law of an agreeing province or the Federal Act.

2. Any contribution, penalty or interest owing by the individual for the same or a prior taxation year in respect of payments required to be made by the individual under the Canada Pension Plan.

3. Any premium, interest or penalty owing by the individual for the same or a prior taxation year under the Employment Insurance Act (Canada). Donation of refund

(10.3) If an individual indicates in the individual's return of income tax for a taxation year that the individual wishes to make a gift to Her Majesty in right of Ontario of the amount referred to in subsection (10), or any portion of that amount, the Provincial Minister may apply the amount or the portion, as the case may be, or any lesser amount, for that purpose. Effect of donation

(10.4) An amount applied by the Provincial Minister for the purpose referred to in subsection (10.3) shall be deemed to have been paid to the individual at the time notice of an original assessment of tax payable for the year or a notification that no tax is payable by the individual for the year is sent to the individual.

(10) Subsection 8 (10.2) of the Act, as enacted by subsection (9), is repealed and the following substituted: Restriction on subs. (10.1)

(10.2) No amount in respect of an individual's child care tax credit under subsection (15.2) may be applied under subsection (10.1) to pay a liability.

(11) Subsection 8 (15) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 24, section 13 and amended by 1996, chapter 29, section 9, is repealed and the following substituted: Co-operative education tax credit

(15) An individual who is an eligible employer for a taxation year may deduct from tax otherwise payable under this Act for the taxation year an amount not exceeding the employer's co-operative education tax credit determined under section 8.2 for the taxation year.

(12) Subsection 8 (15) of the Act, as re-enacted by subsection (11), applies in respect of qualifying work placements as defined under section 8.2 of the Act that commence after December 31, 1997.

(13) Section 8 of the Act is amended by adding the following subsections: Graduate transitions tax credit

(15.1) An individual who is an eligible employer for a taxation year may deduct from tax otherwise payable under this Act for the taxation year an amount not exceeding the employer's graduate transitions tax credit determined under section 8.1 for the taxation year. Child care tax credit

(15.2) Subject to subsection 8 (7), an individual who is resident in Ontario on December 31 in a taxation year or who died in a taxation year and resided in Ontario on the date of death may deduct from tax otherwise payable under this Act for the taxation year a child care tax credit equal to the amount, if any, by which the lesser of,

(a) 25 per cent of the total of all amounts claimed as deductions from income for the taxation year by the individual, or by a person who is the individual's cohabiting spouse on December 31 in the taxation year, and allowed as deductions under section 63 of the Federal Act; and

(b) $400 multiplied by the number of eligible children of the individual or of any person who is the individual's cohabiting spouse on December 31 in the taxation year,

exceeds,

(14) Subsection 8 (16) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 24, section 13, is repealed.

(15) Subsection 8 (17) of the Act, as amended by the Statutes of Ontario, 1992, chapter 25, section 3, is repealed and the following substituted: More than one taxation year in the calendar year

(17) If an individual or someone on his or her behalf files returns under the Federal Act in respect of the individual's income for more than one taxation year ending in the same calendar year, the following rules apply for the purposes of this section:

1. No deduction may be claimed or allowed under this section in a return filed pursuant to an election made under subsection 70 (2), 104 (23) or 150 (4) of the Federal Act.

2. No deduction may be claimed or allowed under this section in a return filed on behalf of the individual by a trustee in bankruptcy under paragraph 128 (2) (e) or (h) of the Federal Act.

3. Any deduction to which the individual may be entitled under this section shall be claimed only for the last taxation year ending in or coinciding with the calendar year.

4. The individual may determine his or her occupancy cost for the last taxation year ending in or coinciding with the calendar year as the amount that would be his or her occupancy cost for the whole calendar year, excluding any portion of the occupancy cost that has been taken into account by the individual's spouse in computing the amount of a tax credit described in clause (3) (a) or (3.1) (a) for the calendar year.

5. The individual may calculate the deduction to which he or she is entitled under subsection (9) as though the expression "calendar year" were substituted for "taxation year" where it first appears in that subsection.

6. The individual shall determine his or her adjusted income for the taxation year for the purposes of subsection (15.2) and any amount deducted under section 63 of the Federal Act as if the taxation year were a full calendar year.

(16) Subsection 8 (17) of the Act, as re-enacted by subsection (15), applies to taxation years ending after December 31, 1996 and before January 1, 1998.

(17) Paragraphs 2 and 3 of subsection 8 (17) of the Act, as enacted by subsection (15), are repealed and the following substituted:

2. No deduction, other than a deduction claimed under subsection (15) or (15.1), may be claimed or allowed under this section in a return filed on behalf of the individual by a trustee in bankruptcy under paragraph 128 (2) (e) or (h) of the Federal Act.

3. Any deduction to which the individual may be entitled under this section, other than a deduction claimed under subsection (15) or (15.1), shall be claimed only for the last taxation year ending in or coinciding with the calendar year.

(18) Paragraph 6 of subsection 8 (17) of the Act, as enacted by subsection (15), is repealed and the following substituted:

6. The individual shall determine his or her adjusted income for the taxation year for the purposes of this section and any amount deducted under section 63 of the Federal Act as if the taxation year were the full calendar year.

7. A deduction under subsection (15) or (15.1) may be claimed for the taxation year in which the individual becomes eligible for the deduction and may be claimed in a return filed on behalf of the individual by a trustee in bankruptcy under paragraph 128 (2) (e) or (h) of the Federal Act if the individual becomes eligible for the deduction during the period when the trustee is deemed to be acting as agent for the individual for the purposes of the Federal Act.

8. If a deduction under subsection (15) or (15.1) is claimed in a return filed by a trustee in bankruptcy under paragraph 128 (2) (e) or (h) of the Federal Act, no deduction under that subsection in respect of the same expenditures may be claimed in any other return filed in respect of the individual's income.

(19) Subsection 8 (17) of the Act, as amended by subsections (17) and (18), applies to taxation years ending after December 31, 1997.

5.The Act is amended by adding the following section: Graduate transitions tax credit

8.1(1) The amount of an eligible employer's graduate transitions tax credit for a taxation year is the sum of,

(a) all amounts each of which is in respect of a qualifying employment that commenced not less than 12 months before the end of the taxation year or terminated before the end of the taxation year, equal to the lesser of the employer's eligible amount for the taxation year in respect of the qualifying employment determined under subsection (2) and $4,000; and

(b) the total of all amounts, each of which is an amount determined by multiplying the eligible percentage by the amount of a repayment, if any, made by the employer during the taxation year, of government assistance in respect of the qualifying employment of an employee, to the extent the repayment does not exceed the amount of the assistance in respect of the qualifying employment that,

(i) has not been repaid in a prior taxation year, and

(ii) can reasonably be considered to have reduced the amount of a graduate transitions tax credit that would otherwise have been allowed to the employer under this Act in respect of the qualifying employment. Eligible amount

(2) An eligible employer's eligible amount for a taxation year in respect of a qualifying employment is the amount determined under the following rules:

1. If the qualifying employment commenced before January 1, 1998, the amount is 10 per cent of the total of all eligible expenditures made by the employer in respect of the qualifying employment.

2. If the qualifying employment commenced after December 31, 1997 and the total of all salaries or wages paid by the employer in the previous taxation year is equal to or greater than $600,000, the amount is 10 per cent of the total of all eligible expenditures made by the employer in respect of the qualifying employment.

3. If the qualifying employment commenced after December 31, 1997 and the total of all salaries or wages paid by the employer in the previous taxation year is not greater than $400,000, the amount is 15 per cent of the total of all eligible expenditures made by the employer in respect of the qualifying employment.

4. If the qualifying employment commenced after December 31, 1997 and the total of all salaries or wages paid by the employer in the previous taxation year is greater than $400,000 but less than $600,000, the amount is the amount determined in accordance with the following formula:

where,

"A" is the amount of the employer's eligible amount for the taxation year in respect of the qualifying employment;

"B" is the amount of all eligible expenditures made by the employer in respect of the qualifying employment; and

"C" is the amount by which the total of all salaries or wages paid by the employer in the previous taxation year exceeds $400,000. Number of tax credits

(3) Except for a tax credit in respect of the repayment of government assistance, a tax credit under this section may be claimed only once in respect of each qualifying employment. Partnership

(4) If an eligible employer is a member of a partnership and the partnership would qualify for a graduate transitions tax credit for a taxation year if the partnership were an eligible employer, the portion of the tax credit that may reasonably be considered to be the member's share of the tax credit may be included in determining the amount of the member's graduate transitions tax credit for that taxation year. Limited partner

(5) Despite subsection (4), a limited partner's share of a partnership's graduate transitions tax credit referred to in subsection (4) shall be deemed to be nil. Eligible employer

(6) For the purposes of this section and subsection 8 (15.1), an individual is an eligible employer for a taxation year if the individual,

(a) carries on business during the taxation year, either alone or as a member of a partnership, through a permanent establishment in Ontario; and

(b) is not exempt from tax under the Act for the taxation year by reason of section 6. Qualifying employment

(7) The employment of an employee by an eligible employer is a qualifying employment if,

(b) the employee,

(i) was not related to the eligible employer at the time the employment commenced,

(ii) had not been employed by any person more than 15 hours per week during 16 of the 32 weeks immediately before the first day of the employment,

(iii) had not had a source of income from a business for at least 16 of the 32 weeks immediately preceding the first day of the employment,

(iv) completed all requirements to qualify for graduation from a prescribed program of study within three years before the first day of the employment, and

(v) carried out his or her employment duties at or through a permanent establishment of the eligible employer in Ontario. Eligible expenditures

(8) An eligible employer's eligible expenditures in respect of a qualifying employment are the amounts paid or payable to the employee as salary or wages during the 12-month period commencing on the first day of the qualifying employment that,

(a) would be considered for the purposes of Part XXVI of the Federal Regulations to be included in the amount of salary or wages paid to employees of a permanent establishment of the employer in Ontario; and

(b) are required by Subdivision a of Division B of Part I of the Federal Act to be included in the income from employment of the employee in respect of the qualifying employment. Same

(9) The total of all eligible expenditures made by an eligible employer in respect of a qualifying employment shall be the amount otherwise determined less the amount of all government assistance, if any, in respect of the eligible expenditures that, at the time the eligible employer is required to deliver a return under this Act for the taxation year for which the tax credit is claimed, the eligible employer has received, is entitled to receive or can reasonably be expected to be entitled to receive. Exception

(10) Despite subsections (8) and (9), an expenditure made by an eligible employer in respect of a qualifying employment is not an eligible expenditure in respect of the employment,

(a) to the extent that the amount of the expenditure would not be considered to be reasonable in the circumstances by persons dealing with each other at arm's length; or

(b) if the qualifying employment is with a person other than the eligible employer. Definitions

(11) In this section,

"government assistance" means assistance from a government, municipality or other public authority in any form, including a grant, subsidy, forgivable loan, deduction from tax and investment allowance, but not including a graduate transitions tax credit under subsection 8 (15.1) or an investment tax credit under section 127 of the Federal Act; ("aide gouvernementale")

"individual" means a person who is an individual for the purposes of subsection 8 (15.1); ("particulier")

"prescribed program of study" means a program of study that satisfies the rules prescribed by the regulations; ("programme d'tudes prescrit")

"salary or wages" has the meaning assigned to that term by subsection 248 (1) of the Federal Act. ("traitement ou salaire") Regulations

(12) The Lieutenant Governor in Council may make regulations prescribing the method of calculating the amount of salaries or wages that will be deemed to be paid by an eligible employer in a previous taxation year for the purposes of subsection (2).

6.(1) The Act is amended by adding the following section: Co-operative education tax credit

8.2(1) The amount of an eligible employer's co-operative education tax credit for a taxation year is the sum of,

(a) all amounts each of which is in respect of a qualifying work placement that ends in the taxation year and is equal to the lesser of the employer's eligible amount determined under subsection (2) and $1,000; and

(b) the total of all amounts, each of which is an amount determined by multiplying the eligible percentage by the amount of a repayment, if any, made by the eligible employer during the taxation year, of government assistance in respect of the qualifying work placement of an employee, to the extent the repayment does not exceed the amount of the assistance in respect of the qualifying work placement that,

(i) has not been repaid in a prior taxation year, and

(ii) can reasonably be considered to have reduced the amount of a co-operative education tax credit that would otherwise have been allowed to the eligible employer under this Act in respect of the qualifying work placement. Eligible amount

(2) An eligible employer's eligible amount for a taxation year in respect of a qualifying work placement is the amount determined under the following rules:

1. If the total of all salaries or wages paid to employees by the eligible employer in the previous taxation year is equal to or greater than $600,000, the amount is 10 per cent of the total of all eligible expenditures made by the employer in respect of the qualifying work placement.

2. If the total of all salaries or wages paid to employees by the eligible employer in the previous taxation year is not greater than $400,000, the amount is 15 per cent of the total of all eligible expenditures made by the employer in respect of the qualifying work placement.

3. If the total of all salaries or wages paid to employees by the eligible employer in the previous taxation year is greater than $400,000 but less than $600,000, the amount is the amount determined in accordance with the following formula:

where,

"A" is the amount of the employer's eligible amount for the taxation year in respect of the qualifying work placement;

"B" is the amount of all eligible expenditures made by the employer in respect of the qualifying work placement; and

"C" is the amount by which the total of all salaries or wages paid by the employer in the previous taxation year exceeds $400,000. Definitions

(3) In this section,

"government assistance" means assistance from a government, municipality or other public authority in any form, including a grant, subsidy, forgivable loan, deduction from tax and investment allowance, but not including a co-operative education tax credit under subsection 8 (15) or an investment tax credit under section 127 of the Federal Act. ("aide gouvernementale") Regulations

(4) The Lieutenant Governor in Council may make regulations respecting the following matters relating to the co-operative education tax credit:

1. Defining "eligible employer" and prescribing the conditions that must be satisfied for a person to be an eligible employer in respect of a qualifying work placement.

2. Defining "eligible expenditure" and prescribing the rules for determining the amount of eligible expenditures in respect of a qualifying work placement.

3. Defining "qualifying work placement" and prescribing the conditions that must be satisfied for a work placement to be a qualifying work placement.

4. Prescribing the procedure for claiming a co-operative education tax credit, the restrictions on claiming the tax credit and the manner in which an eligible employer is to receive the benefit of the tax credit.

5. Prescribing the method of claiming a co-operative education tax credit where the employer is a partnership.

6. Prescribing the method of calculating the amount of salaries or wages that will be deemed to be paid by an eligible employer in a previous taxation year for the purposes of subsection (2).

(2) Section 8.2 of the Act, as enacted by subsection (1), applies in respect of qualifying work placements as defined under that section that commence after December 31, 1997.

7.Section 21 of the Act, as amended by the Statutes of Ontario, 1992, chapter 25, section 9 and 1993, chapter 29, section 12, is further amended by adding the following subsections: Refund

(3) Subject to subsections (4) and (5), the Provincial Minister shall pay to a taxpayer the amount, if any, of any overpayment under this Act that would otherwise be refunded to the taxpayer in respect of a taxation year. Use of refund to pay liabilities

(4) If a taxpayer is liable or about to become liable to make a payment to Her Majesty in right of Canada or Her Majesty in right of Ontario or another province, the Provincial Minister may apply all or part of the amount referred to in subsection (3) to pay that liability. Donation of refund

(5) If a taxpayer indicates in the taxpayer's return of income tax for a taxation year that the taxpayer wishes to make a gift to Her Majesty in right of Ontario of the amount referred to in subsection (3), or any portion of that amount, the Provincial Minister may apply the amount or the portion, as the case may be, or any lesser amount, for that purpose. Effect of donation

(6) An amount applied by the Provincial Minister for the purpose referred to in subsection (5) shall be deemed to have been paid to the taxpayer at the time notice of an original assessment of tax payable for the year or a notification that no tax is payable by the individual for the year is sent to the individual.

8.Clause 29 (1) (e) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 24, section 19, is amended by striking out "Labour Sponsored Venture Capital Corporations Act, 1992" in the sixth, seventh and eighth lines and substituting "Community Small Business Investment Funds Act". Commencement

9.(1) Subject to subsections (2) to (8), this Schedule comes into force on the day the Tax Credits to Create Jobs Act, 1997 receives Royal Assent. Same

(2) Subsections 1 (1) and (2) and 2 (1) and (2) shall be deemed to have come into force on December 20, 1996. Same

(3) Subsections 4 (1), (2), (3), (4), (7), (13), (15) and (16) and section 5 shall be deemed to have come into force on January 1, 1997. Same

(4) Subsections 4 (5), (6) and (8) and section 8 shall be deemed to have come into force on May 7, 1997. Same

(5) Subsections 2 (3) and (4) shall be deemed to have come into force on November 26, 1997. Same

(6) Subsections 4 (11), (12), (14), (17), (18) and (19) and section 6 come into force on January 1, 1998. Same

(7) Subsection 4 (10) comes into force on a day to be named by proclamation of the Lieutenant Governor. Same

(8) A proclamation under subsection (7) may retroactively name a day that is not earlier than the day the Tax Credits to Create Jobs Act, 1997 receives Royal Assent.

SCHEDULE C

AMENDMENTS TO THE LABOUR SPONSORED VENTURE CAPITAL CORPORATIONS ACT, 1992

1.The title of the Labour Sponsored Venture Capital Corporations Act, 1992 is repealed and the following substituted:

COMMUNITY SMALL BUSINESS INVESTMENT FUNDS ACT

2.(1) Clause (c) of the definition of "Class B share" in subsection 1 (1) of the Act is repealed and the following substituted:

(c) in the case of a corporation registered under Part II or III, vote as a class to elect a majority of the board of directors of the corporation.

(2) Subsection 1 (1) of the Act, as amended by the Statutes of Ontario, 1994, chapter 17, section 76, is further amended by adding the following definition:

"community small business investment fund corporation" means a corporation registered under Part III.1. ("fonds communautaire d'investissement dans les petites entreprises")

(3) Clause (a) of the definition of "eligible business activity" in subsection 1 (1) of the Act, as re-enacted by the Statutes of Ontario, 1994, chapter 17, section 76, is repealed and the following substituted:

(a) except for the purposes of Part III.1, a business that would be an active business carried on by a corporation for the purposes of subsection 125 (7) of the Income Tax Act (Canada) if carried on by a corporation, or

. . . . .

(4) The definition of "eligible investment" in subsection 1 (1) of the Act is amended by striking out "and" at the end of clause (a), by adding "and" at the end of clause (b) and by adding the following clause:

(c) in respect of a community small business investment fund corporation, an investment in an eligible business that is an eligible investment under Part III.1.

(5) The definition of "eligible investor" in subsection 1 (1) of the Act is amended by striking out "Part II or III" in the second line and substituting "Part II, III or III.1".

(6) The definitions of "Employee Ownership Advisory Board" and "labour sponsored venture capital corporation" in subsection 1 (1) of the Act are repealed.

(7) Subsection 1 (1) of the Act is amended by adding the following definition:

"investment corporation" means a corporation registered under Part II, III or III.1. ("corporation d'investissement")

(8) The definition of "registered retirement income fund" in subsection 1 (1) of the Act, as enacted by the Statutes of Ontario 1994, chapter 17, section 76, is amended by striking out "paragraph 146.3 (1) (e) of the Income Tax Act (Canada)" in the last three lines and substituting "subsection 146.3 (1) of the Income Tax Act (Canada)".

(9) The definition of "related group" in subsection 1 (1) of the Act is repealed and the following substituted:

"related group" has the meaning assigned by subsection 251 (4) of the Income Tax Act (Canada). ("groupe li")

(10) Clause 1 (2) (a) of the Act is repealed and the following substituted:

(a) they are related for the purposes of the Income Tax Act (Canada).

3.(1) Clause 4 (4) (a) of the Act, as amended by the Statutes of Ontario, 1994, chapter 17, section 78, is repealed and the following substituted:

(a) that, subject to subsection 6 (4), the proposed investment has been reviewed by the Minister of Economic Development, Trade and Tourism.

(2) Paragraphs 1 and 2 of subsection 4 (5) of the Act are amended by striking out "Labour Sponsored Venture Capital Corporations Act, 1992" at the end and substituting in each case "Community Small Business Investment Funds Act".

4.(1) Clause 6 (1) (i) of the Act, as re-enacted by the Statutes of Ontario, 1994, chapter 17, section 80, is repealed and the following substituted:

(i) if the eligible business in which the applicant corporation intends to invest is an eligible business described in subsection 6 (4), the Lieutenant Governor in Council has approved the proposed investment.

(2) Subsection 6 (4) of the Act, as amended by the Statutes of Ontario, 1994, chapter 17, section 80, is repealed and the following substituted: Authority of the Lieutenant Governor in Council

(4) The Lieutenant Governor in Council, upon the recommendation of the Minister of Economic Development, Trade and Tourism, may approve business plans, human resource plans and proposed investments to be made by employee ownership labour sponsored venture capital corporations if the eligible business in which the applicant corporation intends to invest, at the time the investment is made, has total gross assets exceeding $50,000,000, calculated in the prescribed manner, and has more than 500 employees, calculated in the prescribed manner.

(3) Subsection 6 (6) of the Act, as amended by the Statutes of Ontario, 1994, chapter 17, section 80, is repealed and the following substituted: Consideration

(6) A recommendation by the Minister of Economic Development, Trade and Tourism under subsection (4) shall be made after consideration of,

(a) whether the proposal submitted under this Act is equitable and reasonably commercially viable over the period covered by the proposal;

(b) whether an investment to be made by employees is equitable in the circumstances and in light of the objectives of the proposal;

(d) the past and projected performance of the eligible business; and

(e) the competitive position of the eligible business.

5.(1) Clause (c) of the definition of "eligible business" in section 12 of the Act, as re-enacted by the Statutes of Ontario, 1994, chapter 17, section 82, is amended by striking out "total assets" in the first line and in the second line and substituting in each case "total gross assets".

(2) Clause (d) of the definition of "eligible business" in section 12 of the Act, as re-enacted by the Statutes of Ontario, 1994, chapter 17, section 82, is repealed and the following substituted:

(d) that together with all related corporations and partnerships does not have more than 500 employees, or if another number of employees has been prescribed for the purposes of this definition, the prescribed number of employees, at the time the labour sponsored investment fund corporation makes the investment in the eligible business, and

. . . . .

(3) Section 12 of the Act, as amended by the Statutes of Ontario, 1994, chapter 17, section 82, is further amended by adding the following subsection: Same

(2) For the purpose of determining the number of employees under clause (d) of the definition of "eligible business", an employee who normally works at least 20 hours per week shall be counted as one employee and an employee who normally works less than 20 hours per week shall be counted as half an employee.

6.Clause 14 (1) (g) of the Act is repealed.

7.The Act is amended by adding the following section: Amendment to articles of corporation

14.1(1) Despite clause 14 (1) (e), a corporation registered under this Part before May 7, 1996 may amend its articles to provide that instead of the requirements under clause 14 (1) (e), the articles of the corporation shall provide that,

(a) the corporation may redeem a Class A share in respect of which a tax credit certificate has been issued under this Act, but only if the corporation is requested in writing by the holder of the share to redeem it, the holder of the share has satisfied all other prescribed conditions and,

(i) subject to clause (b), if the share was issued before May 7, 1996 and is held by the original purchaser, the corporation is notified in writing that,

(A) the original purchaser has retired from the workforce or has attained 65 years of age,

(B) the original purchaser has become disabled and permanently unfit for work since acquiring the share, or is terminally ill,

(C) the original purchaser wishes the corporation to redeem the share within 60 days after the day on which the share was issued to the original purchaser, and the tax credit certificate referred to in subsection 25 (5) has been returned to the corporation, or

(D) the original purchaser has ceased to be resident in Canada,

(ii) if the share was issued after May 6, 1996 and is held by the original purchaser, the corporation is notified in writing that,

(A) the original purchaser has become disabled and permanently unfit for work since acquiring the share, or is terminally ill, or

(B) the original purchaser wishes the corporation to redeem the share within 60 days after the day on which the share was issued to the original purchaser, and the tax credit certificate referred to in subsection 25 (5) has been returned to the corporation,

(iii) the share is held by an individual who notifies the corporation in writing that the share has devolved on the individual as a consequence of the death of a shareholder of the corporation or the death of the annuitant under a trust governing a registered retirement savings plan or registered retirement income fund that was a holder of the share,

(iv) the share is held as an investment by a registered retirement savings plan or a registered retirement income fund under which the original purchaser or the original purchaser's spouse is the annuitant and the original purchaser has died or, where the original purchaser is living, the corporation is notified in writing that the original purchaser meets,

(A) the condition in sub-subclause (i) (A) or (B), if the share was issued before May 7, 1996, or

(B) the condition in sub-subclause (ii) (A), if the share was issued after May 6, 1996,

(v) if the share was issued before May 7, 1996, the redemption occurs more than five years after the date on which the share was issued, or the redemption occurs within five years after the date on which the share was issued in circumstances other than those described in subclause (i), (iii) or (iv) and,

(A) the holder of the share receives an amount on the redemption that does not exceed the amount that would otherwise be payable on the redemption less an amount equal to 20 per cent or, if a percentage has been prescribed, the prescribed percentage of the lesser of,

1. the amount of equity capital received by the corporation on the original issue of the share, and

2. the amount that would otherwise have been payable on the redemption, and

(B) the corporation remits to the Minister an amount equal to the amount required to be deducted under sub-subclause (A) in the calculation of the amount receivable by the holder of the share on the redemption, or

(vi) if the share was issued after May 6, 1996, the redemption occurs more than eight years after the date on which the share was issued, or the redemption occurs within eight years after the date on which the share was issued in circumstances other than those described in subclause (ii), (iii) or (iv) and,

(A) the holder of the share receives an amount on the redemption that does not exceed the amount that would otherwise have been payable on the redemption less an amount equal to 15 per cent or, if a percentage has been prescribed the prescribed percentage, of the lesser of,

1. the amount of equity capital received by the corporation on the original issue of the share, or

2. the amount that would otherwise have been payable on the redemption, and

(b) the corporation shall not redeem a Class A share issued before May 7, 1996 until it has been issued and outstanding for at least two years, even if the original purchaser has retired from the workforce, has attained 65 years of age or has ceased to be a resident of Canada; and

(c) the corporation shall not register a transfer by the original purchaser, or by a registered retirement savings plan or a registered retirement income fund under which the original purchaser or the original purchaser's spouse is the annuitant, of a Class A share in respect of which an investment certificate has been issued under this Act unless,

(i) the share was acquired before May 7, 1996 and the transfer occurs more than five years after the date when the share was issued, or

(ii) the corporation is notified in writing that the share is being transferred,

(A) to be held as an investment of a registered retirement savings plan or a registered retirement income fund under which the original purchaser or the original purchaser's spouse is the annuitant,

(B) as a consequence of the death of the original purchaser,

(C) at a time when the original purchaser has retired from the workforce, or has attained 65 years of age, if the share was issued before May 7, 1996 and has been issued and outstanding for at least two years,

(D) at a time when the original purchaser meets a condition in sub-subclause (a) (i) (B), if the share was issued before May 7, 1996, or sub-subclause (a) (ii) (A), if the share was issued after May 6, 1996,

(E) to the original purchaser or the spouse of the original purchaser, or

(F) in accordance with other prescribed conditions. Clause 14 (1) (e) not applicable

(2) Clause 14 (1) (e) does not apply to a corporation applying for registration under this Part after May 6, 1996. Articles of corporation registered after May 6, 1996

(3) No corporation shall be registered under this Part after May 6, 1996 unless the articles of the corporation are in accordance with,

(a) the provisions set out in clauses (1) (a) to (c); or

(b) if the corporation issued no Class A shares before May 7, 1996, the provisions set out in clauses (1) (a) and (c) that apply in respect of shares issued after May 6, 1996.

8.Subsection 17 (2) of the Act, as re-enacted by the Statutes of Ontario, 1996, chapter 29, section 10, is repealed and the following substituted: Requirement to maintain eligible investments

(2) A labour sponsored investment fund corporation shall maintain in eligible investments at all times an amount equal to the amount determined in accordance with the following formula:

where,

"A" is the amount of equity capital received by the corporation on the issue of its Class A shares;

"B" is the aggregate amount paid on the return of capital of Class A shares of the corporation;

"C" is the aggregate amount of realized losses of the corporation on its eligible investments; and

"D" is the aggregate amount of realized gains of the corporation on its eligible investments, not exceeding the amount denoted as "C".

9.(1) Subsection 18.1 (3) of the Act, as re-enacted by the Statutes of Ontario, 1996, chapter 24, section 6, is repealed and the following substituted: Minimum investment level

(3) A labour sponsored investment fund corporation shall invest in eligible businesses that are small businesses at the time the investment is made at least,

(a) 10 per cent of the equity capital received before May 7, 1996 and required by subsection 17 (1.1) to be invested in eligible investments but not invested in eligible investments before May 7, 1996;

(b) 10 per cent of the equity capital received in the investment period ending in 1997 and required by subsection 17 (1) to be invested in eligible investments;

(c) 15 per cent or the prescribed percentage of the equity capital received in the investment period ending in 1998 and required by subsection 17 (1) to be invested in eligible investments;

(d) 15 per cent or the prescribed percentage of the equity capital received in the investment period ending in 1999 and required by subsection 17 (1) to be invested in eligible investments; and

(e) 20 per cent or the prescribed percentage of the equity capital received in each investment period ending after 1999 and required by subsection 17 (1) to be invested in eligible investments. Investment period

(3.1) Subsection 17 (1.2) applies in determining the beginning and ending dates of each investment period referred to in subsection (3).

(2) Subsection 18.1 (4.1) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 29, section 12, is repealed and the following substituted: Restriction

(4.1) A labour sponsored investment fund corporation shall maintain in eligible small business investments at all times an amount equal to the lesser of the amounts determined in accordance with the following two formulae:

where,

"X" is the percentage of the equity capital received by the corporation on the issue of its Class A shares required to be invested as set out in each clause of subsection (3);

"Y" is the amount of equity capital received by the corporation on the issue of its Class A shares required to be maintained in eligible investments by subsection 17 (2);

"A" is the amount of equity capital received by the corporation on the issue of its Class A shares;

"B" is the aggregate amount paid on the return of capital of Class A shares of the corporation;

"C" is the aggregate amount of realized losses of the corporation on its eligible investments in small businesses; and

"D" is the aggregate amount of realized gains of the corporation on its eligible investments in small businesses, not exceeding the amount denoted as "C". Same

(4.2) A labour sponsored investment fund corporation shall not hold in eligible investments that are reporting issuer investments at any time an amount exceeding the lesser of the amounts determined in accordance with the following two formulae:

where,

"X" is the maximum percentage of the equity capital received by the corporation on the issue of its Class A shares permitted to be invested in eligible businesses that are reporting issuers under subsection (2.1);

"Y" is the amount of equity capital received by the corporation on the issue of its Class A shares required to be maintained in eligible investments by subsection 17 (2);

"A" is the amount of equity capital received by the corporation on the issue of its Class A shares;

"B" is the aggregate amount paid on the return of capital of Class A shares of the corporation;

"C" is the aggregate amount of realized losses of the corporation on its eligible investments in reporting issuers; and

"D" is the aggregate amount of realized gains of the corporation on its eligible investments in reporting issuers, not exceeding the amount denoted as "C". Exception

(4.3) Subsection (4.2) does not apply where a labour sponsored investment fund corporation has made an investment in a reporting issuer as permitted under subsection (2), until such time as the corporation has disposed of the investment.

(3) Clause 18.1 (5) (b) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 24, section 6, is amended by striking out "total assets" in the first line and substituting "total gross assets".

(4) Section 18.1 of the Act, as re-enacted by the Statutes of Ontario, 1996, chapter 24, section 6 and amended by 1996, chapter 29, section 12, is further amended by adding the following subsection: Interpretation

(6) For the purpose of clause (5) (c), an employee who normally works at least 20 hours per week shall be counted as one employee and an employee who normally works less than 20 hours per week shall be counted as half an employee.

10.The Act is amended by adding the following Part:

PART III.1

COMMUNITY SMALL BUSINESS INVESTMENT FUND CORPORATIONS Definitions

18.2(1) In this Part,

"community sponsor" means an entity that may apply for registration of a community small business investment fund corporation under section 18.3; ("commanditaire communautaire")

"eligible aboriginal community" means,

(a) a First Nation; or

(b) an aboriginal community, other than a First Nation, that is designated for the purposes of this Act as an eligible aboriginal community by an order given by the Minister under subsection 18.3 (6); ("collectivit autochtone admissible")

"eligible business" means a taxable Canadian corporation or Canadian partnership,

(a) that pays all or substantially all of its wages and salaries to employees whose ordinary place of employment is a permanent establishment of the corporation or partnership within the community,

(b) that has all or substantially all of its full-time employees employed in respect of eligible business activities carried on by the corporation or partnership within the community, and

(c) whose total gross assets, together with the total gross assets of all related corporations and partnerships, does not exceed $1,000,000 calculated in the prescribed manner or, if another amount has been prescribed, that other amount, at the time the community small business investment fund corporation makes the investment in the corporation or partnership; ("entreprise admissible")

"eligible business activity" means a business that would be an active business carried on by a corporation for the purposes of section 125 of the Income Tax Act (Canada) if carried on by a corporation, but does not include,

(a) a business the principal purpose of which is to derive income from real property,

(b) a business the principal purpose of which is to derive income from property, including interest, dividends, rents or royalties, and

(c) a business that would be a personal services business as defined in subsection 125 (7) of the Income Tax Act (Canada) if that definition were read without reference to paragraphs (c) and (d) of the definition; ("activit commerciale admissible")

"eligible investor" means,

(a) a corporation registered under Part III as a labour sponsored investment fund corporation,

(b) a qualifying financial institution or a specified corporation or insurance corporation related to the qualifying financial institution for the purposes of section 66.1 of the Corporations Tax Act, or

"First Nation" means a band as defined in the Indian Act (Canada); ("premire nation")

"intellectual property" means a patent, licence, permit, know-how, commercial secret or other similar property constituting knowledge, including a trade mark, industrial design, copyright or other similar property constituting the expression of knowledge; ("proprit intellectuelle")

"qualifying debt obligation" means a debt obligation that,

(a) if secured, is secured solely by a floating charge on the assets of the entity,

(b) is a debt obligation in respect of which a guarantee has been given,

(c) does not restrict the entity by the terms of the debt obligation or by the terms of any agreement related to that obligation from incurring other debts, and

(d) by its terms or by any agreement relating to that obligation is subordinate to all other debt obligations of the entity, other than debt obligations, if the entity is a corporation, that are prescribed to be small business securities for the purposes of paragraph (a) of the definition of "small business property" in subsection 206 (1) of the Income Tax Act (Canada); ("titre de crance admissible")

"qualifying financial institution" means a corporation that is a deposit-taking financial institution for the purposes of section 66.1 of the Corporations Tax Act\; ("institution financire autorise")

"within the community" means, with respect to a community small business investment fund corporation or its community sponsor,

(a) within the geographical limits of the municipality if the community sponsor is a municipality,

(b) within the geographic limits of the reserve of the First Nation if the community sponsor is the council of a First Nation,

(c) within the geographic limits of the territory designated by the Minister for an eligible aboriginal community, if the community sponsor has been designated a community sponsor for the eligible aboriginal community by an order given by the Minister under subsection 18.3 (6),

(d) within the geographic limits of the territory designated by the Minister, if the community sponsor has been designated a community sponsor for territory without municipal organization by an order given by the Minister under subsection 18.3 (5), or

(e) if the community sponsor is a university, college or research institute affiliated with a university or hospital,

(i) within a facility of the community sponsor, or

(ii) within a place of business in Ontario where intellectual property developed by the community sponsor, or its faculty, staff or graduates, is used in eligible business activities. ("dans la collectivit") Investment Period

(2) Subject to subsection (3), the investment period for investing in a corporation registered under this Part ends on December 31, 1998. Same

(3) The investment period for investing in a corporation registered under this Part ends on,

(a) the day that is six months after the day the Tax Credits to Create Jobs Act, 1997 receives Royal Assent, if the investment is to be made in a community small business investment fund corporation with funds that a labour sponsored investment fund corporation sets aside in 1997 under subsection 24.1 (1) for the purpose of making an investment in a corporation registered under this Part; and

(b) December 31, 1998, if the investment is to be made in a community small business investment fund corporation with funds that a labour sponsored investment fund corporation sets aside in 1998 under subsection 24.1 (1) for the purpose of making an investment in a corporation registered under this Part. Application for registration

18.3(1) The following persons and organizations may apply under this Part as a community sponsor or sponsors for registration of a corporation as a community small business investment fund corporation to make investments in eligible businesses:

1. An upper-tier municipality, one or more lower-tier municipalities within an upper-tier municipality or a local municipality as defined in the Municipal Act.

2. The council of a First Nation.

3. An organization designated under subsection (6) as a community sponsor for an aboriginal community, other than a First Nation, that is designated under that subsection as an eligible aboriginal community for the purposes of this Act.

4. One or more universities or colleges of applied arts and technology in Ontario, whose enrolment is counted for the purposes of calculating annual operating grants entitlements from the Government of Ontario.

5. One or more research institutes affiliated with an Ontario university referred to in paragraph 4 or a hospital approved as a public hospital under the Public Hospitals Act.

6. A person or organization designated as a community sponsor for all or part of territory without municipal organization in an order given by the Minister under subsection (5). Proposal

(2) An application for registration under this Part may be made by filing with the Minister a proposal in duplicate setting out the following information:

1. The name of the corporation and the community sponsor or sponsors.

2. The location of the registered office and all permanent establishments in Ontario of the corporation and the community sponsor or sponsors.

3. An investment plan for the corporation specifying,

i. the rights and privileges attached to each class or series of shares of the corporation, the amount of the stated capital account of each class or series of shares issued and to be issued and the total amount of equity capital for which the shares were or will be issued,

ii. the amounts and kinds of debt obligations, if any, issued by the corporation,

iii. any restrictions on ownership and voting rights of the shares of the corporation,

iv. the proposed number of shareholders of the corporation,

v. details of the corporation's proposed investment policies, and

vi. any other matter prescribed to be set out in the investment plan.

4. The number of directors of the corporation and the name in full and the residence address of each of them.

5. The names in full of the officers of the corporation and the residence address of each of them.

6. Any other matter required by the regulations to be set out in the proposal. Additional information

(3) A proposal shall be accompanied by,

(a) a certified copy of the articles of the corporation;

(b) a true copy of all shareholders' agreements, partnership agreements and proposed agreements relating to the corporation to which the corporation is a party or of which an officer or director of the corporation or a community sponsor, after making reasonable inquiry, has knowledge; and

(4) The proposal shall be signed by two officers or one director and one officer of the corporation and shall contain a certificate in writing signed by one of them certifying that the information contained in the proposal is complete and accurate. Territory without municipal organization

(5) Upon application by a person or organization to the Minister, the Minister may designate the person or organization to be a community sponsor for all or part of territory without municipal organization and may impose terms and conditions considered to be appropriate by the Minister in connection with the designation. Aboriginal community other than a First Nation

(6) Upon application by an organization to the Minister, the Minister may,

(a) designate an aboriginal community other than a First Nation as an eligible aboriginal community for the purposes of this Act;

(b) designate the geographic limits of the territory of the community;

(d) impose terms and conditions considered to be appropriate by the Minister in connection with the designations. Corporation qualifications

18.4(1) No corporation may be registered under this Part unless,

(a) the corporation was incorporated under the Business Corporations Act or the Canada Business Corporations Act and is in compliance with that Act and the Securities Act\;

(b) the corporation has never previously carried on business other than the business related to obtaining registration under this Act;

(c) the articles of the corporation provide that the capital of the corporation shall consist of Class A shares issuable only to eligible investors under this Part and such other shares as may be authorized, if the rights, privileges, restrictions and conditions attached to the shares are approved by the board of directors of the corporation and the Minister;

(d) the articles of the corporation restrict the investment in Class A shares by any one eligible investor, alone or together with all persons related to the investor, to $5,000,000 and by more than one eligible investor to $10,000,000;

(e) the articles of the corporation prohibit the payment of any fee or remuneration to a shareholder of the corporation or to any person related to a shareholder;

(f) the articles of the corporation restrict the business of the corporation to,

(i) assisting the development of eligible businesses, creating, maintaining and protecting jobs by providing financial and managerial advice to eligible businesses and providing capital to eligible businesses through the acquisition and holding of shares and qualifying debt obligations issued by eligible businesses that are corporations, and ownership interests in and qualifying debt obligations issued by eligible businesses that are Canadian partnerships, as permitted under this Act, and

(ii) incorporating and controlling other corporations as the corporation may consider advisable to provide financial, investment or managerial advice and expertise;

(g) the articles of the corporation provide that at least one member of the board of directors of the corporation shall be appointed by a community sponsor of the corporation; and

(h) the corporation meets all other prescribed conditions. Exception

(2) The fees and remuneration referred to in clause (1) (e) and any amounts paid on the purchase of goods and services are deemed not to include,

(a) banking fees and other amounts normally charged by a bank to its customers for providing services in the ordinary course of the bank's business; and

(b) reasonable salaries and wages paid to employees. Entitlement to registration

18.5(1) A community sponsor is entitled to registration of a corporation by the Minister unless,

(a) the requirements of this Part have not been satisfied; or

(b) the community sponsor fails to apply for registration under section 18.3 and file all material required by this Act or the regulations in connection with the application on or before December 31, 1998. Refusal to register

(2) Subject to section 31, the Minister may refuse to register a corporation if, in the Minister's opinion, the corporation is not entitled to be registered. Same

(3) Subject to section 31, the Minister may refuse to register a corporation if, in the Minister's opinion, the proposed investments or the actions of the corporation, its officers, directors or shareholders, or of a community sponsor, do not comply with the spirit and intent of this Act and the regulations. Issuance of certificate of registration

18.6On registration of a corporation under this Part, the Minister shall,

(a) endorse on each duplicate of the proposal "Registered/Inscrit" and the day, month and year of registration;

(b) file one of the duplicate proposals in the Minister's office;

(c) place the name of the corporation in the register of investment corporations as a registered community small business investment fund corporation; and

(d) issue to the corporation a certificate of registration to which the Minister shall affix the other duplicate proposal. Required investment levels

18.7A community small business investment fund corporation shall invest in eligible investments,

(a) by the end of the 30th month following the end of its investment period, an amount equal to at least 35 per cent of the amount of equity capital it received on the issue of its Class A shares; and

(b) by the end of the 72nd month following the end of its investment period, an amount equal to at least 70 per cent of the amount of equity capital it received on the issue of its Class A shares. Interpretation, eligible investment

18.8(1) An investment made by a community small business investment fund corporation is an eligible investment if,

(a) the investment is made in an eligible business that is within the community and primarily engaged in one or more eligible business activities carried on within the community;

(b) the investment is,

(i) if the eligible business is a taxable Canadian corporation, the purchase from the eligible business by the community small business investment fund corporation of Class A shares or a qualifying debt obligation issued by the eligible business in exchange for a consideration paid in money,

(ii) if the eligible business is a Canadian partnership, the purchase of an ownership interest in the eligible business or a qualifying debt obligation issued by the eligible business in exchange for a consideration paid in money,

(iii) the purchase of a guarantee provided by the community small business investment fund corporation in respect of a debt obligation that would, if the debt obligation had been issued to the community small business investment fund corporation at the time the guarantee was provided, have been a qualifying debt obligation issued by the eligible business, or

(iv) the purchase of an option or right granted by an eligible business that is a corporation, in conjunction with the issue of a share or a debt obligation that is an eligible investment, to acquire a share of an eligible business that would be an eligible investment if that share were issued at the time that the option or right was granted; and

(i) relending,

(ii) investment in land, except land that is incidental and ancillary to the eligible business activity or activities in which the eligible business is primarily engaged,

(iii) reinvestment or the acquisition of any securities of any person,

(iv) financing the purchase or sale of goods or services provided to the eligible business by or through a shareholder of the community small business investment fund corporation or a person related to a shareholder,

(v) the payment of dividends,

(vi) the payment of drawings to partners of the eligible business,

(vii) the return of capital to a shareholder or partner of the eligible business,

(viii) the payment of the principal amount of outstanding liabilities owing to shareholders of the community small business investment fund corporation or to persons related to such shareholders,

(ix) carrying on a business outside Ontario, or

(x) any prescribed purpose or use. Amounts of guarantee included in investments

(2) For the purposes of section 18.7, subsections 20 (5) and (6) and section 28.1, 25 per cent of the amount of all guarantees provided by a community small business investment fund corporation in respect of debt obligations of an eligible business shall be included in calculating the amount of the investment made by a community small business investment fund in that particular eligible business. Dividends and return of capital

18.9A community small business investment fund corporation shall not pay dividends or authorize any return of capital to an eligible investor within six years after the end of the investment period of the corporation and until at least 70 per cent of the equity capital received by the corporation on the issue of its Class A shares has been invested in eligible investments. Actions requiring approval

18.10 (1) A corporation that is or was registered under this Part and that has issued Class A shares shall not liquidate its assets or wind-up within 10 years after the date of its registration under this Part without the prior consent of the Minister. Same

(2) The Minister may give his consent subject to terms and conditions that the Minister considers reasonable in the circumstances.

11.Clause 19 (2) (a) of the Act is repealed and the following substituted:

(a) property described in any of paragraphs (a), (b), (c), (f) and (h) of the definition of "qualified investment" in section 204 of the Income Tax Act (Canada).

12.(1) Subsection 20 (1), as amended by the Statutes of Ontario, 1994, chapter 17, section 87, and subsection 20 (2) of the Act, are repealed and the following substituted: Investment restriction

(1) An investment corporation shall not invest or maintain an investment in a business that is or was at any time an eligible business if the eligible business does not deal at arm's length from the corporation or any of the directors of the corporation unless,

(a) the eligible business would deal at arm's length with the corporation but for the corporation's interest as the holder of investments in the eligible business; or

(b) the investment was approved by special resolution of the shareholders of the corporation before the investment was made. Exception

(1.1) Clause (1) (b) does not apply to an investment corporation registered under Part III.1 Same

(1.2) Subsection (1) does not apply to a community small business investment fund corporation operating within an eligible aboriginal community as defined in subsection 18.2 (1). Definition

(1.3) In subsection (1),

"arm's length" has the meaning set out in subsection 251 (1) of the Income Tax Act (Canada). Labour sponsored investment fund corporation

(2) A labour sponsored investment fund corporation shall not invest or maintain an investment in a business that is or was at any time an eligible business for the purposes of Part III if,

(a) the labour sponsored investment fund corporation controls the business; or

(b) as a result of the investment, the labour sponsored investment fund corporation would have invested more than $15,000,000 in the business.

(2) Section 20 of the Act, as amended by the Statutes of Ontario, 1994, chapter 17, section 87, is further amended by adding the following subsections: Investment restriction

(5) A community small business investment fund corporation shall not invest more than $250,000 in a business that is an eligible business for the purposes of Part III.1. Exception

(6) Despite subsection (5), a community small business investment fund corporation may make an additional investment in an eligible business, even though the total amount then invested in the business would exceed $250,000, as long as the total of all investments made in the eligible business by the corporation and all related community small business investment fund corporations having the same community sponsor does not exceed an amount equal to 20 per cent of the equity capital received by the corporation on the issue of its Class A shares.

13.(1) Subsection 24 (1) of the Act is amended by inserting after "Income Tax Act" in the second line "or the Corporations Tax Act or an investment credit".

(2) Subsection 24 (2) of the Act is repealed and the following substituted: Refusal of tax credit

(2) Subject to section 31, if the Minister is of the opinion that the investment corporation or its officers, directors or shareholders are conducting their business and affairs in a manner that is contrary to the spirit and intent of this Act or for the purpose of enabling a person to obtain a tax credit or investment credit to which they would not otherwise be entitled, the Minister may refuse to allow a tax credit under the Income Tax Act or the Corporations Tax Act or to allow an investment credit under this Act.

14.The Act is amended by adding the following section: Small business investment credit, labour sponsored investment fund

24.1(1) A labour sponsored investment fund corporation may set aside funds after June 30, 1997 and before January 1, 1999 for the purpose of making an investment in a community small business investment fund corporation and may make the investment after registration of the community small business investment fund corporation under Part III.1. Investment credit

(2) If a labour sponsored investment fund corporation sets aside funds under subsection (1), the Minister may allow a credit equal to twice the amount set aside against,

(a) the small business investment requirements of the corporation under subsection 18.1 (3); or

(b) the investment level tax of the corporation under section 28. Cancellation of tax credit

(3) If an amount set aside under subsection (1) during 1997, including interest earned on the amount, is not invested in a community small business investment fund corporation within six months of the day the Tax Credits to Create Jobs Act, 1997 receives Royal Assent, or an amount set aside in 1998 is not invested in a community small business investment fund corporation on or before December 31, 1998,

(a) the credit allowed under subsection (2) is cancelled on that date, and any resulting investment shortfalls of the labour sponsored investment fund corporation under subsection 18.1 (3) shall be made up by the corporation making appropriate investments before the end of the calendar year; and

(b) the amount set aside under subsection (1), including interest earned on that amount, shall be invested as required under subsection 18.1 (3). Additional credit

(4) If a community small business investment fund corporation makes one or more eligible investments under this Part in a particular year, the Minister may, at the end of the calendar year in which the investment is made, allow the labour sponsored investment fund corporation a credit against the investment requirements of that corporation under subsection 17 (1) and a credit against the small business investment requirements of that corporation under subsection 18.1 (3), equal to the percentage of the Class A shares of the community small business investment fund corporation held by the labour sponsored investment fund corporation multiplied by the amount invested by the community small business investment fund corporation. Carry forward of credit

(5) Where a labour sponsored investment fund corporation has been allowed an investment credit under this section exceeding the amount required to be invested by the corporation under subsection 18.1 (3) in a particular year, the amount of any excess may be carried forward and applied against the investment requirements of the corporation under subsection 17 (1) and the small business investment requirements of the corporation under subsection 18.1 (3) in a subsequent year.

15.Section 25 of the Act, as amended by the Statutes of Ontario 1994, chapter 17, section 88 and 1996, chapter 24, section 7, is further amended by adding the following subsections: Tax credit, qualifying financial institution

(4.1) Where a qualifying financial institution, or a specified corporation or insurance corporation related to a qualifying financial institution for the purposes of section 66.1 of the Corporations Tax Act, is the beneficial and registered owner of Class A shares of a community small business investment fund corporation purchased directly from the community small business investment fund corporation on or before December 31, 1998, the qualifying financial institution may, subject to the approval of the Minister, make an application in a form approved by the Minister for a tax credit under the Corporations Tax Act, and the Minister may allow a tax credit to the financial institution equal to 30 per cent of the amount of equity capital paid to the community small business investment fund corporation on the issue of Class A shares. Additional credit

(4.2) If a community small business investment fund corporation makes one or more eligible investments under this Part in a particular year, the Minister may allow a tax credit under the Corporations Tax Act to the qualifying financial institution equal to 30 per cent of the amount invested in Class A shares of the community small business investment fund corporation by the qualifying financial institution or a specified corporation or insurance corporation related to the qualifying financial institution for the purposes of section 66.1 of the Corporations Tax Act that is re-invested by the community small business investment fund corporation in eligible investments in the year.

16.(1) Clause 26 (1) (a) of the Act is repealed and the following substituted:

(a) the investment corporation is registered under Part II or III and fails to maintain the required level of eligible investments.

(2) Subclause 26 (1) (c) (ii) of the Act is repealed and the following substituted:

(ii) the action has been approved in advance by the Minister of Economic Development, Trade and Tourism.

(3) Clause 26 (1) (e) of the Act is repealed and the following substituted:

(e) the Minister is of the opinion that the investment corporation, its officers, directors or shareholders, or the employee organization or a community sponsor connected with it, are conducting their business or affairs in a manner that is contrary to the spirit and intent of this Act or for the purpose of enabling a person to obtain a tax credit or investment credit to which the person would not otherwise be entitled; or

. . . . .

17.(1) Subsection 27 (1) of the Act is amended by striking out "A labour sponsored venture capital corporation" in the first and second lines and substituting "An employee ownership labour sponsored venture capital corporation".

(2) Section 27 of the Act, as amended by the Statutes of Ontario, 1994, chapter 17, section 90, is further amended by adding the following subsection: Repayment of tax credits

(2) A labour sponsored investment fund corporation whose registration is revoked by the Minister or that makes a request under section 26 to surrender its registration under this Act or proposes to wind up or dissolve shall immediately pay to the Minister an amount of money equal to the lesser of,

(a) the total amount of all tax credits for which tax credit certificates were issued or may be issued under this Act in respect of,

(i) all Class A shares of the corporation then outstanding that were issued and paid for before May 7, 1996 and within the five years immediately preceding the date of revocation, surrender of registration, winding up or dissolution, and

(ii) all Class A shares of the corporation then outstanding that were issued and paid for after May 6, 1996 and within eight years immediately preceding the date of the revocation, surrender of registration, winding up or dissolution; or

(b) the total amount that would be determined for the purposes of clause (a) as the total amount of all tax credits in respect of the Class A shares referred to in clause (a) if the equity capital received by the labour sponsored investment fund corporation on the issue of each of the shares had been an amount equal to the fair market value of the share at the date of the revocation, surrender of registration, winding up or dissolution, and not the amount of equity capital actually received by the corporation.

(3) Subsections 27 (4), (5) and (6) of the Act are repealed and the following substituted: Liability of holder

(4) If a person as the holder of a Class A share issued by an employee ownership labour sponsored venture capital corporation within the immediately preceding five years receives an amount in respect of the reduction of the stated capital account attributable to the Class A shares, other than by way of a redemption of the Class A shares, the person shall immediately pay to the Minister an amount of money equal to the tax credit percentage applied to the amount so received. Same

(4.1) If a person as the holder of a Class A share issued by a labour sponsored investment fund corporation receives an amount in respect of the reduction of the stated capital account attributable to the Class A shares, the person shall immediately pay to the Minister an amount of money equal to the sum of,

(a) 20 per cent of the amount received in respect of Class A shares issued within the immediately preceding five years and before May 7, 1996; and

(b) 15 per cent of the amount received in respect of Class A shares issued within the immediately preceding eight years and after May 6, 1996. Liability of corporation

(5) The investment corporation is jointly and severally liable with its shareholder for all amounts payable by the shareholder under this section and is entitled to deduct or withhold from any amount paid or payable to the shareholder or to otherwise recover from the shareholder all amounts paid by it under this section. Reduction of liability

(6) An amount required by the articles of an investment corporation to be deducted and remitted to the Minister on the redemption of a Class A share of the corporation may be reduced by amounts paid under this section that may reasonably be considered to relate to the share being redeemed.

18.The Act is amended by adding the following section: Investment level tax, community small business investment corporation shareholder

28.1(1) A shareholder of a community small business investment fund corporation that fails to meet the level of eligible investments required by section 18.7 to be held by the corporation at the end of a particular year shall pay a tax for the year equal to the amount determined in accordance with the following formula:

where,

"T" is the tax payable by the shareholder under this subsection;

"P" is,

(a) 15 per cent if the shareholder is a labour sponsored investment fund corporation, or

(b) 30 per cent if the shareholder is a qualifying financial institution or a specified corporation or insurance corporation related to the qualifying financial institution for the purposes of section 66.1 of the Corporations Tax Act\;

"A" is the amount by which,

(a) the amount of the community small business investment fund corporation's equity capital received on the issue of its Class A shares that is required by this Act to be invested in eligible investments at the end of the year,

exceeds,

(b) the total of all amounts, each of which is the cost to the corporation of an eligible investment held by the corporation at the end of the year;

"B" is the amount of any tax paid by the shareholder under this subsection in respect of any prior year that has not been rebated to the shareholder under subsection (2);

"C" is percentage of the equity capital received by the corporation on the issue of its Class A shares that are held by the shareholder; and

"D" is the percentage of the equity capital received by the corporation on the issue of all Class A shares that are held by eligible investors. Tax rebate

(2) Upon receipt of an application from a shareholder of a community small business investment fund corporation who has paid a tax under subsection (1) with respect to a year, the Minister may rebate the tax without interest to the shareholder if the corporation meets the investment requirements for the year within the year following the year in respect of which the tax was imposed.

19.Clause 31 (1) (e) of the Act is repealed and the following substituted:

(e) to refuse to issue a tax credit certificate or allow an investment credit under this Act.

20.Section 44 of the Act is amended by striking out "labour sponsored venture capital corporation" wherever it appears and substituting in each case "employee ownership labour sponsored venture capital corporation".

21.Clause 45 (1) (j) of the Act is amended by striking out "labour sponsored venture capital corporations" in the sixth and seventh lines and substituting "employee ownership labour sponsored venture capital corporations".

22.Part V of the Act, as amended by the Statutes of Ontario 1994, chapter 17, sections 96, 97 and 98, is repealed.

23.(1) Subject to subsection (3), the Act is amended by striking out "labour sponsored venture capital corporation" wherever it appears in the singular form or the plural form and substituting in each case in the appropriate form "investment corporation".

(2) The Act is amended by striking out "labour sponsored venture capital corporation tax credit" wherever it appears in the singular form or the plural form and substituting in each case in the appropriate form "investment corporation tax credit".

(3) Subsection (1) does not apply to amend references in the Act to employee ownership labour sponsored venture capital corporations. Commencement

24.(1) Subject to subsection (2), this Schedule shall be deemed to have come into force on May 7, 1997. Same

(2) Section 7 and subsections 17 (2) and (3) shall be deemed to have come into force on May 6, 1996.

SCHEDULE D

AMENDMENTS TO THE RETAIL SALES TAX ACT

1.Subsection 1 (1) of the Retail Sales Tax Act, as amended by the Statutes of Ontario, 1993, chapter 12, section 1, 1994, chapter 13, section 1, 1994, chapter 17, section 135, 1996, chapter 29, section 23 and 1997, chapter 10, section 30, is further amended by adding the following definitions:

"full fair value" means, in respect of a promotional distribution of tangible personal property or a taxable service, the price paid by the promotional distributor for the tangible personal property or taxable service or, if the tangible personal property was manufactured or produced by the promotional distributor or the taxable service was provided by the promotional distributor, the cost incurred by the promotional distributor to manufacture or produce the property or to provide the service, as the case may be; ("juste valeur intgrale")

"full price of admission" means, in respect of a promotional distribution of an admission, the price paid by the promotional distributor for the admission or, if the place of amusement to which the admission is supplied is owned or operated by the promotional distributor, the normal and usual price charged for the admission. ("prix d'entre intgral")

2.Section 2 of the Act, as amended by the Statutes of Ontario, 1992, chapter 13, section 1, 1993, chapter 12, section 2, 1994, chapter 13, section 2 and 1996, chapter 29, section 24, is further amended by adding the following subsection: Tax on promotional distributions

(22) The tax payable under this section in respect of tangible personal property, a taxable service or an admission that is supplied on a promotional distribution,

(a) is payable by the person to whom the promotional distribution is made in the amount determined by applying the appropriate tax rate to the amount, if any, paid or payable by the person for the tangible personal property, taxable service or admission, as the case may be; and

(b) is payable by the promotional distributor in the amount determined by applying the appropriate tax rate to the amount by which the full fair value of the tangible personal property or taxable service, or the full price of admission, exceeds the amount, if any, paid or payable to the promotional distributor by the person to whom the promotional distribution is made.

3.Subsection 5 (4) of the Act, as amended by the Statutes of Ontario, 1997, chapter 19, section 22, is repealed and the following substituted: Information

(4) A vendor shall apply for a permit in such form and in such manner as the Minister may provide.

4.Subsection 7 (5) of the Act is repealed.

5.(1) Section 9 of the Act, as amended by the Statutes of Ontario, 1992, chapter 13, section 5 and 1996, chapter 29, section 27, is further amended by adding the following subsection: Exemption from tax for hospital restructuring, etc.

(3) The tax imposed by subsection 2 (1) or section 4.2 is not payable by a hospital approved as a public hospital under the Public Hospitals Act or a hospital established or approved as a community psychiatric hospital under the Community Psychiatric Hospitals Act on the acquisition of tangible personal property from another hospital as a result of an amalgamation or closure of hospital programs or on a transfer of a hospital program to the hospital.

(2) Section 9 of the Act is amended by adding the following subsections: Exemption from tax for municipal restructuring, etc.

(4) The tax imposed by subsection 2 (1) or section 4.2 is not payable by a municipality, a public commission or a local board as defined in the Municipal Affairs Act on the acquisition of tangible personal property from another municipality, public commission or local board as a result of,

(a) a statutory or legally required amalgamation of two or more of them; or

(b) a restructuring or realignment of responsibilities ordered pursuant to sections 25.2 or 25.3 of the Municipal Act. Definition

(5) In subsection (4),

"municipality" means an incorporated city, town, village, township, county, regional or district municipality or the County of Oxford.

6.Section 22 of the Act, as amended by the Statutes of Ontario, 1994, chapter 13, section 8, is repealed and the following substituted: Trust for money collected

22.(1) Any amount collected or collectable as or on account of tax under this Act by a vendor shall be deemed, despite any security interest in the amount so collected or collectable, to be held in trust for Her Majesty in right of Ontario and separate and apart from the vendor's property and from property held by any secured creditor that but for the security interest would be the vendor's property and shall be paid over by the vendor in the manner and at the time provided under this Act and the regulations. Extension of trust

(2) Despite any provision of this or any other Act, where at any time an amount deemed by subsection (1) to be held in trust is not paid as required under this Act, property of the vendor and property held by any secured creditor of the vendor that but for a security interest would be property of the vendor, equal in value to the amount so deemed to be held in trust shall be deemed,

(a) to be held, from the time the amount was collected or collectable by the vendor, separate and apart from the property of the vendor in trust for Her Majesty in right of Ontario whether or not the property is subject to a security interest; and

(b) to form no part of the estate or property of the vendor from the time the amount was so collected or collectable whether or not the property has in fact been kept separate and apart from the estate or property of the vendor and whether or not the property is subject to such security interest. Same

(3) The property described in subsection (2) shall be deemed to be beneficially owned by Her Majesty in right of Ontario despite any security interest in such property or in the proceeds of such property, and the proceeds of such property shall be paid to the Minister in priority to all such security interests. Exception

(4) This section and subsection 36 (2.1) do not apply in proceedings to which the Bankruptcy and Insolvency Act (Canada) or the Companies' Creditors Arrangement Act (Canada) apply. Minister's certificate

(5) Every person who, as assignee, liquidator, administrator, receiver, receiver-manager, secured or unsecured creditor or agent of the creditor, trustee or other like person, other than a trustee appointed under the Bankruptcy and Insolvency Act (Canada), takes control or possession of the property of any vendor shall, before distributing such property or the proceeds from the realization thereof under that person's control, obtain from the Minister a certificate that the amount deemed by subsection (1) to be held in trust, including any interest and penalties payable by the vendor, has been paid or that security acceptable to the Minister has been given. No distribution without Minister's certificate

(6) Any person described in subsection (5) who distributes any property described in that subsection or the proceeds of the realization thereof without having obtained the certificate required by that subsection is personally liable to Her Majesty in right of Ontario for an amount equal to the amount deemed by subsection (1) to be held in trust, including any interest and penalties payable by the vendor. Notice to be given

(7) The person described in subsection (5) shall, within 30 days from the date of that person's assumption of possession or control, give written notice thereof to the Minister. Minister to advise of indebtedness

(8) As soon as practicable after receiving such notice, the Minister shall advise the person described in subsection (5) of the amount deemed by subsection (1) to be held in trust, including any interest and penalties thereon. Definitions

(9) In this section and in subsection 36 (2.1),

"secured creditor" means a person who has a security interest in the property of another person or who acts for or on behalf of that person with respect to the security interest, and includes a trustee appointed under a trust deed relating to a security interest, a receiver or receiver-manager appointed by a secured creditor or by a court on the application of a secured creditor and any other person performing a similar function; ("crancier garanti")

"security interest" means any interest in property that secures payment or performance of an obligation, and includes an interest created by or arising out of a debenture, mortgage, lien, pledge, charge, deemed or actual trust, assignment or encumbrance of any kind whatsoever or whenever arising, created or deemed to arise or otherwise provided for, but does not include a security interest prescribed by the Minister as one to which this section does not apply. ("sret") Application

(10) This section and clause 43 (2) (b) apply in respect of any tax collected or collectable by a vendor on or after January 1, 1998, whether or not the security interest was acquired before that date.

7.Section 23 of the Act, as re-enacted by the Statutes of Ontario, 1994, chapter 13, section 17, is amended by adding the following subsection: Effect of deemed trust

(11.1) The registration of a notice of lien and charge under this section does not affect the operation of section 22 and shall apply to secure any liability of a taxpayer in addition to any deemed trust under that section.

8.(1) Subsection 24 (1) of the Act, as amended by the Statutes of Ontario, 1997, chapter 19, section 22, is repealed and the following substituted: Notice of objection

(1) A person who objects to an assessment made against the person under section 18, subsection 19 (1) or section 20 or to a statement under section 20 that is served on the person may, within 180 days from the day of mailing of the statement or notice of assessment, serve on the Minister a notice of objection in the form approved by the Minister. Facts and reasons to be given

(1.1) The notice of objection shall,

(a) clearly describe each issue raised by way of objection; and

(b) fully set out the facts and reasons relied on by the person in respect of each issue. Same

(1.2) If a notice of objection does not fully set out the facts and reasons relied on by the person in respect of an issue, the Minister may in writing request the person to provide the information, and the person shall be deemed to have complied with clause (1.1) (b) in respect of the issue if the person provides the information to the Minister in writing within 60 days after the day the request is made by the Minister. Limitation

(1.3) A person shall not raise, by way of objection under this section to a fresh statement or reassessment or to a variation of an assessment or statement under subsection (4), any issue that the person is not entitled to raise by way of appeal under section 25 in respect of the fresh statement or reassessment or of a variation of the assessment or statement.

(2) Subsection 24 (2) of the Act is amended by adding at the end "or by such other method of service as the Minister prescribes".

(3) Subsection 24 (3) of the Act is repealed and the following substituted: Computation of time

(3) For the purpose of calculating the number of days mentioned in subsection (1), (1.2) or 25 (1), the day on which a notice of assessment or statement is mailed under subsection (1), a request is made under subsection (1.2) or a notification is given under subsection (4) is the date stated in the notice of assessment, statement, request or notification.

(4) Subsection 24 (4) of the Act is amended by striking out "by registered letter" at the end and substituting "in writing".

9.(1) Subsection 25 (2) of the Act, as amended by the Statutes of Ontario, 1997, chapter 19, section 22, is repealed and the following substituted: Appeal, how instituted

(2) An appeal to the Ontario Court (General Division) shall be instituted by,

(a) filing a notice of appeal with the court in the form approved by the Minister;

(b) paying a fee to the court in the same amount and manner as the fee payable under regulations made under the Administration of Justice Act on the issue of a statement of claim; and

(2.1) A person is entitled to raise by way of appeal only those issues raised by the person in a notice of objection to the assessment being appealed and in respect of which the person has complied or was deemed to have complied with subsection 24 (1.1). Exception

(2.2) Despite subsection (2.1), a person may raise by way of appeal an issue forming the basis of a fresh statement or reassessment or of a variation of an assessment or statement under subsection 24 (4) if the issue was not part of the assessment or statement with respect to which the person served the notice of objection. Application, subss. (2.1) and (2.2)

(2.4) Despite subsection (1), no person shall institute an appeal under this section to have an assessment or statement vacated or varied in respect of an issue for which the right of objection or appeal has been waived in writing by or on behalf of the person.

10.Subsection 31 (3) of the Act, as re-enacted by the Statutes of Ontario, 1994, chapter 13, section 18, is amended by inserting "or any information previously submitted in any form by a vendor" after "Act" in the sixth line.

11.(1) The French version of clause 36 (2) (a) of the Act is amended by striking out "caisse de crdit" in the first line and substituting "caisse populaire".

(2) Section 36 of the Act, as amended by the Statutes of Ontario, 1994, chapter 13, section 8, is further amended by adding the following subsections: Same

(2.1) Despite any provision of this or any other Act, where the Minister has knowledge or suspects that within 90 days a person is, or is about to become indebted or liable to make any payment to,

(a) a person whose property is subject to the deemed trust created by subsection 22 (1); or

(b) a secured creditor who has a right to receive the payment that, but for a security interest in favour of the secured creditor, would be payable to the person referred to in clause (a),

the Minister may by ordinary mail or by demand served personally, require the first-named person to pay forthwith to the Minister on account of the liability of the person referred to in clause (a) all or part of the money that would otherwise be paid, and any such payment shall become the property of Her Majesty in right of Ontario despite any security interest in it and shall be paid to the Minister in priority to any such security interest. Application

(2.2) Subsection (2.1) applies to amounts that become subject to a deemed trust under subsection 22 (1) on or after January 1, 1998, whether or not the security interest was acquired before that date.

12.(1) Clause 43 (2) (b) of the Act is repealed and the following substituted:

(b) the corporation becomes subject to a proceeding to which section 22 applies and a claim has been made under that section at any time from the date that the Minister should have been advised of the commencement of those proceedings to the date that is six months after the remaining property of the vendor has been finally disposed of.

(2) Clause 43 (2) (c) of the Act, as re-enacted by the Statutes of Ontario, 1994, chapter 13, section 24, is amended by inserting "either a notice of intention to file or" after "filed" in the third line.

13.Subsection 47 (1) of the Act, as re-enacted by the Statutes of Ontario, 1993, chapter 12, section 13, is repealed and the following substituted: Evidence in prosecution

(1) In a prosecution against a vendor under this Act, a copy of the application filed by a vendor for a permit under section 5, including an application made electronically and reproduced from data stored electronically, purporting to be certified by an official of the Ministry of Finance having access to the records of the vendor maintained by the Ministry, is proof, in the absence of evidence to the contrary, that the person charged is a vendor under this Act and a copy of a return filed by the vendor, similarly certified, is proof, in the absence of evidence to the contrary, that the vendor collected the tax specified in the return.

14.(1) Clause 48 (2) (b) of the Act is repealed.

(2) Clause 48 (3) (f) of the Act is repealed and the following substituted:

(f) attaching additional conditions to the use of a permit issued under section 5. Commencement

15.(1) Subject to subsections (2) and (3), this Schedule comes into force on the day the Tax Credits to Create Jobs Act, 1997 receives Royal Assent. Same

(2) Subsection 5 (1) shall be deemed to have come into force on May 7, 1997. Same

(3) Subsection 5 (2) comes into force on January 1, 1998.

SCHEDULE E

AMENDMENTS TO THE TOBACCO TAX ACT

1.(1) Subsection 21 (1) of the Tobacco Tax Act, as amended by the Statutes of Ontario, 1997, chapter 19, section 25, is repealed and the following substituted: Notice of objection

(1) A person that objects to an assessment of tax or interest, or the assessment or payment of a penalty or the disallowance of a refund under section 19, may, within 180 days from the day of mailing or delivery by personal service of the notice of assessment or statement of disallowance, serve on the Minister a notice of objection in the form approved by the Minister. Facts and reasons to be given

(1.1) The notice of objection shall,

(a) clearly describe each issue raised by way of objection; and

(b) fully set out the facts and reasons relied on by the person in respect of each issue. Same

(1.3) For the purpose of calculating the number of days mentioned in subsection (1), (1.2) or 22 (1), the day on which a notice of assessment or statement is mailed under subsection (1), a request is made under subsection (1.2) or a notification is given under subsection (3) is the date stated in the notice of assessment, statement, request or notification. Limitation

(1.4) A person shall not raise, by way of objection under this section to a fresh statement or reassessment or to a variation of an assessment or statement under subsection (3), any issue that the person is not entitled to raise by way of appeal under section 22 in respect of the fresh statement or reassessment or of a variation of the assessment or statement.

(2) Subsection 21 (2) of the Act is amended by adding at the end "or by such other method of service as the Minister prescribes".

(3) Subsection 21 (3) of the Act is amended by striking out "by registered mail" at the end and substituting "in writing".

2.Subsection 22 (2) of the Act, as amended by the Statutes of Ontario, 1997, chapter 19, section 25, is repealed and the following substituted: Appeal, how instituted

(2) An appeal to the Ontario Court (General Division) shall be instituted by,

(a) filing a notice of appeal with the court in the form approved by the Minister;

(b) paying a fee to the court in the same amount and manner as the fee payable under regulations made under the Administration of Justice Act on the issue of a statement of claim; and

(2.1) A person is entitled to raise by way of appeal only those issues raised by the person in a notice of objection to the assessment or statement being appealed and in respect of which the person has complied or was deemed to have complied with subsection 21 (1.1). Exception

(2.2) Despite subsection (2.1), a person may raise by way of appeal an issue forming the basis of a fresh statement or reassessment or of a variation of an assessment or statement under subsection 21 (3) if the issue was not part of the assessment or statement with respect to which the person served the notice of objection. Application, subss. (2.1) and (2.2)

3.The Act is amended by adding the following section: Trust for money collected

24.1(1) Any amount collected or collectable as or on account of tax under this Act by a collector or registered importer shall be deemed, despite any security interest in the amount so collected or collectable, to be held in trust for Her Majesty in right of Ontario and separate and apart from the person's property and from property held by any secured creditor that but for the security interest would be the person's property and shall be paid over by the person in the manner and at the time provided under this Act and the regulations. Extension of trust

(2) Despite any provision of this or any other Act, where at any time an amount deemed by subsection (1) to be held in trust is not paid as required under this Act, property of the collector or registered importer and property held by any secured creditor of the person that but for a security interest would be property of the person, equal in value to the amount so deemed to be held in trust shall be deemed,

(a) to be held, from the time the amount was collected or collectable by the person, separate and apart from the property of the person in trust for Her Majesty in right of Ontario whether or not the property is subject to a security interest; and

(b) to form no part of the estate or property of the person from the time the amount was so collected or collectable whether or not the property has in fact been kept separate and apart from the estate or property of the person and whether or not the property is subject to such security interest. Same

(4) This section and subsection 26 (2.1) do not apply in proceedings to which the Bankruptcy and Insolvency Act (Canada) or the Companies' Creditors Arrangement Act (Canada) apply. Minister's certificate

(5) Every person who, as assignee, liquidator, administrator, receiver, receiver-manager, secured or unsecured creditor or agent of the creditor, trustee or other like person, other than a trustee appointed under the Bankruptcy and Insolvency Act (Canada), takes control or possession of the property of any collector or registered importer shall, before distributing such property or the proceeds from the realization thereof under that person's control, obtain from the Minister a certificate that the amount deemed by subsection (1) to be held in trust, including any interest and penalties payable by the collector or registered importer, has been paid or that security acceptable to the Minister has been given. No distribution without Minister's certificate

(9) In this section and in subsection 26 (2.1),

(10) This section, subsection 25.1 (11.1) and clauses 30.1 (2) (b) and (c) apply in respect of any tax collected or collectable by a collector or registered importer on or after January 1, 1998, whether or not the security interest was acquired before that date.

4.Section 25.1 of the Act, as enacted by the Statutes of Ontario, 1994, chapter 18, section 8, is amended by adding the following subsection: Effect of deemed trust

(11.1) The registration of a notice of lien and charge under this section does not affect the operation of section 24.1 and shall apply to secure any liability of a taxpayer in addition to any deemed trust under that section.

5.Section 26 of the Act, as amended by the Statutes of Ontario, 1994, chapter 18, section 8, is further amended by adding the following subsections: Same

(2.1) Despite any provision of this or any other Act, where the Minister has knowledge or suspects that within 90 days a person is, or is about to become indebted or liable to make any payment to,

(a) a person whose property is subject to the deemed trust created by subsection 24.1 (1); or

(b) a secured creditor who has a right to receive the payment that, but for a security interest in favour of the secured creditor, would be payable to the person referred to in clause (a),

(2.2) Subsection (2.1) applies to amounts that become subject to a deemed trust under subsection 24.1 (1) on or after January 1, 1998, whether or not the security interest was acquired before that date.

6.Subsection 30.1 (2) of the Act, as enacted by the Statutes of Ontario, 1991, chapter 48, section 5, is amended by striking out "or" at the end of clause (a) and by striking out clause (b) and substituting the following:

(b) the corporation has become bankrupt due to an assignment or receiving order or it has filed a notice of intention to file or a proposal under the Bankruptcy and Insolvency Act (Canada), and a claim for the amount of the corporation's liability referred to in subsection (1) has been proved within six months after the date of the assignment, receiving order or filing of the proposal; or

(c) the corporation becomes subject to a proceeding to which section 24.1 applies and a claim has been made under that section at any time from the date that the Minister should have been advised of the commencement of those proceedings to the date that is six months after the remaining property of the collector or registered importer has been finally disposed of.

7.Subsection 38 (2) of the Act is amended by striking out "three years" in the third line and substituting "four years".

8.Subsection 39 (2) of the Act is amended by striking out "three years" in the third line and substituting "four years". Commencement

9.This Schedule comes into force on the day the Tax Credits to Create Jobs Act, 1997 receives Royal Assent.

SCHEDULE F

AMENDMENTS TO OTHER ACTS Assessment Act

1.(1) If paragraph 26 of subsection 3 (1) of the Assessment Act is enacted by the Fair Municipal Finance Act, 1997 (No. 2), being Bill 149 of the 1st Session of the 36th Legislature, that paragraph is repealed and the following substituted:,

26. Land used as a theatre that contains fewer than 1,000 seats and that, when it is used in the taxation year, is used predominately to present live performances of drama, comedy, music or dance.This paragraph does not apply to land used as a dinner theatre, nightclub, tavern, cocktail lounge, bar, striptease club or similar establishment.This paragraph does not apply to a building that was converted to a theatre unless the conversion involved modifications to the building.

(2) Subsection (1) is repealed on January 1, 1998 if the Fair Municipal Finance Act, 1997 (No. 2) does not receive Royal Assent before that date. Employer Health Tax Act

2.(1) Subsection 9 (1) of the Employer Health Tax Act, as re-enacted by the Statutes of Ontario, 1994, chapter 8, section 10, is repealed and the following substituted: Notice of objection

(1) A taxpayer who objects to an assessment or to a disallowance of a rebate or refund claim may, within 180 days after the day the notice of assessment or statement of disallowance was sent, serve on the Minister a notice of objection in the form approved by the Minister. Facts and reasons to be given

(1.1) The notice of objection shall,

(a) clearly describe each issue raised by way of objection; and

(b) fully set out the facts and reasons relied on by the taxpayer in respect of each issue. Same

(1.2) If a notice of objection does not fully set out the facts and reasons relied on by the taxpayer in respect of an issue, the Minister may in writing request the taxpayer to provide the information, and the taxpayer shall be deemed to have complied with clause (1.1) (b) in respect of the issue if the taxpayer provides the information to the Minister in writing within 60 days after the day the request is made by the Minister. Computation of time

(1.3) For the purpose of calculating the number of days mentioned in subsection (1), (1.2) or 10 (2), the day on which a notice of assessment or statement is sent under subsection (1), a request is made under subsection (1.2) or a notification is given under subsection (6) is the date stated in the notice of assessment, statement, request or notification. Limitation

(1.4) A taxpayer shall not raise, by way of objection under this section to a fresh statement or reassessment or to a variation of an assessment or statement under subsection (5), any issue that the taxpayer is not entitled to raise by way of appeal under section 10 in respect of the fresh statement or reassessment or of a variation of the assessment or statement.

(2) Subsection 9 (6) of the Act, as amended by the Statutes of Ontario, 1994, chapter 8, section 10, is further amended by striking out "by registered mail or in the prescribed manner" in the second line and substituting "in writing".

(3) Subsection 10 (3) of the Act is repealed and the following substituted: Appeal, how instituted

(3) An appeal to the Ontario Court (General Division) shall be instituted by,

(a) filing a notice of appeal with the court in the form approved by the Minister;

(b) paying a fee to the court in the same amount and manner as the fee payable under regulations made under the Administration of Justice Act on the issue of a statement of claim; and

(3.1) A taxpayer is entitled to raise by way of appeal only those issues raised by the taxpayer in a notice of objection to the assessment being appealed and in respect of which the taxpayer complied or was deemed to have complied with subsection 9 (1.1). Exception

(3.2) Despite subsection (3.1), a taxpayer may raise by way of appeal an issue forming the basis of a fresh statement or reassessment or of a variation of an assessment or statement under subsection 9 (5) if the issue was not part of the assessment or statement with respect to which the taxpayer served the notice of objection. Application, subss. (3.1) and (3.2)

(3.3) Subsections (3.1) and (3.2) apply only in respect of appeals in respect of which the period of 90 days referred to in subsection (2) begins after December 31, 1997. Waived right of objection or appeal

(3.4) Despite subsection (1), no taxpayer shall institute an appeal under this section to have an assessment or statement vacated or varied in respect of an issue for which the right of objection or appeal has been waived in writing by or on behalf of the taxpayer. Fair Municipal Finance Act, 1997 (No. 2)

3.On the later of the day this section comes into force and the day the Fair Municipal Finance Act, 1997 (No. 2), being Bill 149 of the 1st Session of the 36th Legislature, receives Royal Assent, section 71 of that Act, as numbered in the version of Bill 149 reprinted as amended by the Finance and Economic Affairs Committee, is repealed and the following substituted: Tax exemptions under the Assessment Act

71.A paragraph of section 3 of the Assessment Act that is amended or repealed by this Act continues to apply with respect to the following land, as though the paragraph had not been amended or repealed, until there is a change in who owns or occupies the land or in the use of the land: 1. Land to which the paragraph applied for the entire 1997 taxation year. 2. Land to which the paragraph first became applicable after January 1, 1997 and before November 25, 1997, if the paragraph applies to the land on December 31, 1997. Financial Administration Act

4.(1) The Financial Administration Act is amended by adding the following section: Collection, etc., of information

10.1(1) This section applies to institutions to which the Freedom of Information and Protection of Privacy Act applies and it applies with respect to information to which that Act applies but not personal information relating to an individual's medical, psychiatric or psychological history. Same

(2) An institution may,

(a) collect information in any manner from another institution, person or entity for a purpose described in subsection (4);

(b) use, for a purpose described in subsection (4), information that is in its custody or under its control;

(c) disclose information that is in its custody or under its control to another institution, person or entity for a purpose described in paragraph 1 or 2 of subsection (4);

(d) disclose, for a purpose described in paragraph 3 or 4 of subsection (4), information that is in its custody or under its control to another institution or to the person with whom the Crown has entered into the arrangement described in the applicable paragraph. Exception for cl. (2) (d)

(3) Clause (2) (d) does not permit the disclosure of information to an institution or person unless a written agreement or undertaking has been entered into or made that, in the opinion of the Minister of Finance, will protect the information from further disclosure by that institution or person. Authorized purposes

(4) The following are the purposes referred to in subsection (2):

1. To collect a fine or a debt owed to the Crown or to an assignee of the Crown.

2. To collect a debt owed to a person or an entity if, under a cost-sharing arrangement between the Crown and the person or entity, the Crown has a financial interest in the collection of the debt.

3. To carry out a written arrangement under which the Crown proposes or agrees to transfer or dispose of assets or liabilities.

4. To carry out a written arrangement under which an activity or a function of the Crown is to be performed by another person or entity. Purpose for which information obtained

(5) For the purposes of the Freedom of Information and Protection of Privacy Act, personal information used by an institution for a purpose described in subsection (4) shall be deemed to have been obtained or compiled for that purpose or for a consistent purpose. Purpose for which information disclosed

(6) For the purposes of the Freedom of Information and Protection of Privacy Act, personal information disclosed by an institution for a purpose described in subsection (4) shall be deemed to have been disclosed for the purpose of complying with this section. Notice re collection

(7) Subsection 39 (2) of the Freedom of Information and Protection of Privacy Act does not apply with respect to the collection of personal information authorized by subsection (2). Disclosure, tax information

(8) Subsection 17 (2) of the Freedom of Information and Protection of Privacy Act does not apply with respect to the disclosure of information authorized by clause (2) (c). Conflict

(9) This section prevails over,

(a) a provision of another Act or a regulation, unless the other Act specifically states that it prevails over this section; and

(b) a provision in an agreement, whether the agreement was entered into before or after this section comes into force. Exception, third party information

(10) Despite subsection (9), this section does not prevail over subsection 17 (1) of the Freedom of Information and Protection of Privacy Act (restriction on disclosing third party information). Definitions

(11) In this section,

"Crown" includes a Crown agency; ("Couronne")

"entity" includes,

(a) a local board as defined in section 1 of the Municipal Affairs Act\; and

(b) the Government of Canada or a department, ministry or agency of the Government. ("entit")

(2) Section 24 of the Act, as re-enacted by the Statutes of Ontario, 1991, chapter 55, section 11, is amended by adding the following subsection: Official Notices Publication Act

(2) Clause 2 (c) of the Official Notices Publication Act does not apply with respect to an advertisement, notice or publication that is required by a security issued and sold under this Act, by a loan made to Ontario under this Act or by an agreement entered into, or a document or instrument issued, by or for the Minister of Finance in connection with such a security or loan. Insurance Act

5.(1) Section 391 of the Insurance Act is repealed.

(2) Despite subsection (1), section 391 of the Insurance Act continues to apply in respect of premiums and deposits collected by an exchange that are not taken into consideration in calculating the amount of tax payable by the exchange under section 74.4 of the Corporations Tax Act. Land Transfer Tax Act

6.(1) Subsection 8 (1) of the Land Transfer Tax Act, as amended by the Statutes of Ontario, 1994, chapter 18, section 4, is repealed and the following substituted: Refund

(1) Where a person has paid an amount under this Act as tax that is not payable as tax under this Act, the Minister may, upon receipt of satisfactory evidence that the amount was wrongly paid, refund such amount or any part thereof, but no refund shall be made unless it is applied for within four years after the date of the payment of any amount that is alleged not to have been payable as tax under this Act.

(2) Subsection 8 (2) of the Act, as amended by the Statutes of Ontario, 1994, chapter 18, section 4, is further amended by striking out "three years" in the third-last line and substituting "four years".

(3) Subsection 8 (6) of the Act, as amended by the Statutes of Ontario, 1996, chapter 18, section 11, is further amended by striking out "three years" in the third-last line and substituting "four years".

(4) Subsection 13 (1) of the Act, as amended by the Statutes of Ontario, 1997, chapter 19, section 12, is repealed and the following substituted: Notice of objection

(1) A person that objects to an assessment made under section 12 or a statement of disallowance made under subsection 8 (7) may, within 180 days from the day of mailing or delivery by personal service of the notice of assessment or statement of disallowance, serve on the Minister a notice of objection in the form approved by the Minister. Facts and reasons to be given

(1.1) The notice of objection shall,

(a) clearly describe each issue raised by way of objection; and

(b) fully set out the facts and reasons relied on by the person in respect of each issue. Same

(1.3) For the purpose of calculating the number of days mentioned in subsection (1), (1.2) or 14 (1), the day on which a notice of assessment or statement is mailed under subsection (1), a request is made under subsection (1.2) or a notification is given under subsection (3) is the date stated in the notice of assessment, statement, request or notification. Limitation

(1.4) A person shall not raise, by way of objection under this section to a fresh statement or reassessment or to a variation of an assessment or statement under subsection (3), any issue that the person is not entitled to raise by way of appeal under section 14 in respect of the fresh statement or reassessment or of a variation of the assessment or statement.

(5) Subsection 13 (2) of the Act is amended by adding at the end "or by such other method of service as the Minister prescribes".

(6) Subsection 13 (3) of the Act is amended by striking out "by registered mail" at the end and substituting "in writing".

(7) Section 13 of the Act, as amended by the Statutes of Ontario, 1997, chapter 19, section 12, is further amended by adding the following subsection: Regulations

(4) The Minister may make regulations prescribing methods of service for the purpose of subsection (2).

(8) Subsection 14 (2) of the Act, as amended by the Statutes of Ontario, 1997, chapter 19, section 12, is repealed and the following substituted: Appeal, how instituted

(2) An appeal to the Ontario Court (General Division) shall be instituted by,

(a) filing a notice of appeal with the court in the form approved by the Minister;

(b) paying a fee to the court in the same amount and manner as the fee payable under regulations made under the Administration of Justice Act on the issue of a statement of claim; and

(2.2) Despite subsection (2.1), a person may raise by way of appeal an issue forming the basis of a fresh statement or reassessment or of a variation of an assessment or statement under subsection 13 (3) if the issue was not part of the assessment or statement with respect to which the person served the notice of objection. Application, subss. (2.1) and (2.2)

7.Section 21 of the Local Roads Boards Act is amended by adding the following subsections: Farmland and managed forest land, 1998

(3) For the 1998 taxation year, the amount levied on farmland and managed forest land is 25 per cent of the amount levied on residential land. Regulations

(4) The Minister of Finance may make regulations,

(a) defining "farmland" and "managed forest land" for the purposes of subsection (4); and

(b) providing for a procedure to determine whether land is farmland or managed forest land for the purposes of subsection (4) and, without limiting the generality of the foregoing, the regulations may,

(i) provide for the determination of any matter to be made by a person or body identified in the regulations, and

(ii) provide for a process of appealing such determinations. Local Services Boards Act

8.Section 23 of the Local Services Boards Act is amended by adding the following subsections: Farmland and managed forest land, 1998

(6) For the 1998 taxation year, the rate referred to in clause (3) (c) that is to be levied on farmland and managed forest land is 25 per cent of the rate to be levied on residential land. Regulations

(7) The Minister of Finance may make regulations,

(a) defining "farmland" and "managed forest land" for the purposes of subsection (6); and

(b) providing for a procedure to determine whether land is farmland or managed forest land for the purposes of subsection (6) and, without limiting the generality of the foregoing, the regulations may,

(i) provide for the determination of any matter to be made by a person or body identified in the regulations, and

(ii) provide for a process of appealing such determinations. Municipal Act

9.(1) Section 363 of the Municipal Act, as re-enacted by the Statutes of Ontario, 1997, chapter 5, section 55, and as it may be amended by the Fair Municipal Finance Act, 1997 (No. 2), being Bill 149 of the 1st Session of the 36th Legislature, is further amended by adding the following subsections: Replacement transition ratios

(18) The Minister of Finance may, by regulation, prescribe new transition ratios for a municipality if, as a result of an error or of an event that occurs after the original transition ratios are prescribed, the application of the original transition ratios would result, in the opinion of the Minister, in a significant shift in taxation among classes of real property in the municipality. Effect

(19) If new transition ratios for a municipality are prescribed under subsection (18), paragraph 1 of subsection (7) applies, with necessary modifications, for the year with respect to which the new transition ratios apply.

(2) If subsection 370 (9) of the Act is re-enacted by the Fair Municipal Finance Act, 1997 (No. 2), being Bill 149 of the 1st Session of the 36th Legislature, that subsection is amended by adding the following paragraph:

1.1 Despite paragraph 1, taxes on residential and farm assessment for prescribed types of property shall be set by levying a mill rate that does not exceed the prescribed percentage (which must be less than 50 per cent) of the residential mill rate levied in 1997.

(3) If clause 371 (1) (c) of the Act is re-enacted by the Fair Municipal Finance Act, 1997 (No. 2), being Bill 149 of the 1st Session of the 36th Legislature, that clause is repealed and the following substituted:

(d) prescribing types of property for the purposes of paragraph 1.1 of subsection 370 (9).

(4) Subsections (2) and (3) are repealed on January 1, 1998 if the Fair Municipal Finance Act, 1997 (No. 2) does not receive Royal Assent before that date.

(5) Section 392 of the Act is amended by adding the following subsections: Form of notice

(4) The Minister may require that the notice be in a form approved by the Minister.A municipality shall not vary the form unless the variation is expressly authorized by the Minister. Contents of notice

(5) The Minister may, by regulation, prescribe the information that must or that may be included on the notice.A municipality shall not include other information on the notice unless expressly authorized to do so by the Minister. Province of Ontario Savings Office Act

10.The Province of Ontario Savings Office Act is amended by adding the following section: Transfer of deposits

4.1The Minister of Finance may pay from the Consolidated Revenue Fund such amounts as he or she considers necessary to transfer deposits of any kind, and accrued interest thereon, to a financial institution that agrees, in writing,

(a) to assume some or all of the liability to repay the deposits that are transferred to it; and

(b) to indemnify the Crown, on terms acceptable to the Minister, in respect of any losses incurred by the Crown as a result of the assumption by the financial institution of any liability to repay the deposits. Provincial Land Tax Act

11.(1) Subsection 3 (1) of the Provincial Land Tax Act, as amended by the Statutes of Ontario, 1994, chapter 25, section 84, is amended by adding the following paragraph:

20. Land that is conservation land as defined in the regulations under the Assessment Act for the purposes of paragraph 25 of section 3 of that Act.

(2) Section 21 of the Act is amended by adding the following subsection: Farmland and managed forest land, 1998

(5) For the 1998 taxation year, the tax under section 3 payable on farmland and managed forest land is 25 percent of the tax under that section that would be payable but for this subsection.

(3) Subsection 38 (2) of the Act is amended by adding the following clauses:

(a.1) defining "farmland" and "managed forest land" for the purposes of subsection 21 (5);

(a.2) providing for a procedure to determine whether land is farmland or managed forest land for the purposes of subsection 21 (5) and, without limiting the generality of the foregoing, the regulations may,

(i) provide for the determination of any matter to be made by a person or body identified in the regulations,

(ii) provide for a process of appealing such determinations. Race Tracks Tax Act

12.(1) Subsection 8 (4) of the Race Tracks Tax Act is amended by striking out "three years" in the second line and substituting "four years".

(2) Subsection 8 (5) of the Act is amended by striking out "three years" in the second line and substituting "four years".

(3) Subsection 12 (4) of the Act is amended by striking out "three years" in the eighth line and substituting "four years". Securities Act

13.Paragraph 37 of subsection 143 (1) of the Securities Act, as re-enacted by the Statutes of Ontario, 1994, chapter 33, section 8, is amended by striking out "Labour Sponsored Venture Capital Corporations Act, 1992" in the fifth and sixth lines and substituting "Community Small Business Investment Funds Act". Commencement Commencement

14. (1) Subject to subsections (2) and (3), this Schedule comes into force on the day the Tax Credits to Create Jobs Act, 1997 receives Royal Assent. Same

(2) Sections 1, 3, 5, 7, 8, 9 and 11 come into force on January 1, 1998. Same

(3) Section 13 shall be deemed to have come into force on May 7, 1997.

SCHEDULE G

ONTARIO PROPERTY ASSESSMENT CORPORATION ACT, 1997 Interpretation Definitions

1.In this Act,

"Minister" means Minister of Finance; ("ministre")

"municipality" means an incorporated city, town, village, township, county, regional or district municipality or the County of Oxford. ("municipalit") Establishment and Administration of the Corporation Corporation established

2.(1) A corporation to be known as the Ontario Property Assessment Corporation in English and Socit ontarienne d'valuation foncire in French is hereby established as a corporation without share capital. Members

(2) The Corporation is composed of its members.Every municipality in Ontario is a member of the Corporation. Crown agency

(3) The Corporation is not a Crown agent. Board of directors

3.(1) The affairs of the Corporation shall be managed by its board of directors. Composition

(2) The board of directors is composed of the following persons:

1. Six persons who are elected officials of municipalities, to be elected in accordance with the by-laws.

2. Six persons who are officers or employees of municipalities, to be elected in accordance with the by-laws.

3. Two persons appointed by the Minister. Same

(3) The composition of the board may be changed by a by-law approved by two-thirds of the directors.However, if the by-law does not provide for at least two directors to be appointed by the Minister, it shall be deemed to provide for two such directors. Term of office

(4) A director's term of office is three years and a director may hold office for two terms. Same

(5) A director described in paragraph 1 of subsection (2) ceases to hold office if he or she ceases to be an elected official of a municipality; a director described in paragraph 2 of subsection (2) ceases to hold office if he or she ceases to be an officer or employee of a municipality. Vacancy

(6) If a director ceases to hold office before his or her term expires or if he or she is unable to perform his or her duties for a period of three months, the board may appoint a person to hold office for the remainder of the unexpired term. Same

(7) If there are at least a majority of directors in office, the board shall be deemed to be properly constituted for a period not exceeding 90 days after the deficiency in the number of directors first occurs. Chair, vice-chair

(8) The board shall elect a chair and a vice-chair from among the directors. Same

(9) The term of office for the chair and the vice-chair is one year and they may hold office for more than one term. Executive committee

(10) The board may appoint an executive committee to be composed of directors. Delegation

(11) The board may delegate to the executive committee any of its powers and duties. Quorum

(12) A majority of directors constitutes a quorum for the transaction of business by the board. Decisions

(13) The board may make decisions otherwise than at a meeting.The signature of a majority of directors on a document setting out the decision is evidence of the board's decision. Same

(14) Subsection (13) applies with necessary modifications with respect to a decision by a committee of the board. Remuneration

(15) A director who is not a municipal officer or employee or a public servant (within the meaning of the Public Service Act) shall be paid such remuneration as the by-laws may provide. Expenses

(16) Directors are entitled to be reimbursed for reasonable expenses incurred in the course of performing their duties. Initial directors

(17) The Minister shall appoint the members of the first board of directors. Same

(18) For the purpose of subsection (17), the Association of Municipalities of Ontario may give the Minister a list of persons recommended by the Association who reflect the diversity of municipalities in Ontario.The list must include the names of 12 persons who are elected officials of municipalities and 12 persons who are municipal officers or employees. Same

(19) If the Association of Municipalities of Ontario gives the Minister the list within 30 days after the Tax Credits to Create Jobs Act, 1997 receives Royal Assent, the Minister shall appoint 12 directors from the list, six of whom must be elected officials of municipalities and six of whom must be municipal officers or employees. Term of office of initial directors

(20) The Minister shall fix the term of office of each member of the first board of directors as follows:

1. Two elected officials and two municipal officers or employees must have a one-year term of office.

2. Two elected officials, two municipal officers or employees and one of the directors described in paragraph 3 of subsection (2) must have a two-year term of office.

3. The remaining directors have a three-year term of office. Repeal

(21) Subsections (17) to (20) are repealed three years after they come into force. Chief administrative officer

4.(1) The board of directors shall appoint a chief administrative officer for the Corporation. Duties

(2) The chief administrative officer is responsible for the operation of the Corporation and shall implement the priorities and procedures established by the board and perform such other duties as may be assigned. Secretary

(3) The chief administrative officer is the secretary of the board of directors. Annual report

5.(1) The Corporation shall prepare an annual report within 120 days after the end of each fiscal year on the affairs of the Corporation. Contents

(2) The annual report shall include the audited financial statements and a statement concerning the Corporation's compliance with the policies, procedures and standards established by the Minister under section 10. Approval

(3) The annual report must be signed by the chair and at least one other director. Distribution

(4) The Corporation shall give a copy of the annual report to the Minister, to each of its members and to the Association of Municipalities of Ontario. Protection from liability

6.(1) No action or other proceeding shall be commenced against a director, officer or employee of the Corporation (or a former director, officer or employee) for any act that is in good faith done or omitted in the performance or intended performance of his or her duties. Liability of the Corporation

(2) Subsection (1) does not relieve the Corporation of any liability to which it would otherwise be subject. Application of certain Acts

7.(1) The Corporation shall be deemed to be an institution for the purposes of the Municipal Freedom of Information and Protection of Privacy Act and that Act applies with necessary modifications with respect to the Corporation. Conflict of interest rules

(2) Section 132 (conflict of interest) of the Business Corporations Act applies with necessary modifications with respect to directors and officers of the Corporation. Indemnification

(3) Section 136 (indemnification) of the Business Corporations Act applies with necessary modifications with respect to directors and officers of the Corporation. Employee pensions

(4) The Corporation shall be deemed to be an employer within the meaning of and for the purposes of the Ontario Municipal Employees Retirement System Act but section 9 of that Act does not apply with respect to the Corporation and its employees. Corporate statutes

(5) The Corporations Act and the Corporations Information Act do not apply with respect to the Corporation. Powers and Duties of the Corporation Powers of the Corporation

8.(1) The Corporation has the capacity and the rights, powers and privileges of a natural person. Use of income

(2) The Corporation shall use its income solely in furtherance of the duties and activities authorized under this Act. Same

(3) The Corporation shall apply any surplus in its income to reduce the charges levied under subsection 12 (1).However, the Corporation may retain sufficient reserves to meet its future needs. Duties of the Corporation

9.(1) The Corporation shall perform the duties assigned to it and assigned to assessors under the Assessment Act, the Provincial Land Tax Act and under any other Act. Same

(2) The Corporation may engage in any activity consistent with its duties that its board of directors considers to be advantageous to the Corporation. Continuing proceedings

(3) If an assessment commissioner under the Assessment Act is a party to a proceeding that has not been finally determined when this section comes into force, the Corporation replaces the assessment commissioner as the party to the proceeding when this section comes into force. Continuing rights of action

(4) If a person has a right of action against an assessment commissioner under the Assessment Act immediately before this section comes into force, the Corporation (instead of the assessment commissioner) shall be deemed to be the person against whom the right of action exists when this section comes into force. Policies, procedures and standards

10.(1) The Minister may establish policies, procedures and standards for the provision of assessment services by the Corporation in Ontario and shall publish them in The Ontario Gazette. Compliance

(2) The Corporation shall perform its duties in accordance with the published policies, procedures and standards. Failure to comply

(3) If, in the opinion of the Minister, the Corporation has not performed its duties in accordance with a published policy, procedure or standard, the Minister may direct the Corporation to do so within the period specified by the Minister. Penalty

(4) If, in the opinion of the Minister, the Corporation has not complied with the Minister's direction, the Minister may impose a penalty on the Corporation of $1,000 per day for each day that the non-compliance continues. Objections, etc.

(5) The provisions of the Retail Sales Tax Act respecting objections and appeals apply, with necessary modifications, with respect to the imposition of a penalty under this section. Collection

(6) The penalty may be collected as if it were a tax imposed under the Retail Sales Tax Act. Regulations Act

(7) The Regulations Act does not apply with respect to policies, procedures and standards established by the Minister under this section. Memorandum of understanding

11.(1) The Corporation shall enter into a memorandum of understanding with the Minister concerning the transfer of responsibility for the delivery of assessment services from the Ministry to the Corporation. Same

(2) The Corporation shall comply with the requirements of the memorandum of understanding. Payments for services

12.(1) The Corporation shall require each municipality, other than a lower-tier municipality, to pay the amount required by this section in respect of each taxation year, beginning with the 1998 taxation year. Amount

(2) Subject to subsection (3), the amount to be paid for a taxation year is calculated using the formula,

in which

"A" is the proportion that the total assessment on all property in the municipality bears to the total assessment of all property in Ontario,

"B" is the proportion that the total number of properties set out in assessment rolls returned in the municipality bears to the total number of properties set out in all assessment rolls returned to all municipalities in Ontario plus the total number of properties in the provincial land tax register or the provincial land tax roll, and

"C" is the amount that the Corporation considers necessary to pay for its operations during the taxation year. By-law

(3) The Corporation may, by a by-law approved by two-thirds of the directors, establish a different method for calculating the amount to be paid for a taxation year. Same

(4) The Corporation is not authorized to make a by-law under subsection (3) before 2001 and no such by-law is effective with respect to a taxation year before 2002. Charges to other persons

(5) The Corporation may levy a charge to be paid by other persons for whom it performs duties under this or any other Act. Payment schedule

(6) The Corporation may require amounts to be paid in instalments at such times as the Corporation specifies. Payment

(7) Every person required to make payments under this section shall promptly do so. Interest and penalties

(8) The Corporation may charge interest and impose penalties for the non-payment or late payment of amounts payable under this section. Definition

(9) For the purposes of this section,

"lower-tier municipality" has the same meaning as in section 361.1 of the Municipal Act. Payment by Province, interim period

13.(1) Until subsection 9 (1) comes into force, the Province of Ontario shall continue to pay all costs associated with the provision of assessment services under the Assessment Act and under any other Act. Reimbursement

(2) The Corporation shall reimburse the Province for all costs associated with the provision of the assessment services to municipalities. Same

(3) The Minister shall determine the amount of the costs to be paid by the Corporation.The Minister's determination is final. Payment schedule

(4) The Minister may require the amount to be paid in instalments at such times as he or she specifies, and the Corporation shall do so. Same

(5) Any amount due to the Province under this section is a debt owing to the Crown and may be recovered by any remedy or procedure available to the Crown by law. Payment to Province, 1998 taxation year

14.(1) This section applies only if fewer than eight directors are in office on March 1, 1998. Interim payments

(2) The Minister may require municipalities and others to make payments under section 12 to the Province of Ontario, instead of to the Corporation, in respect of the 1998 taxation year. Amount

(3) Payments authorized by subsection 12 (1) must be calculated using the formula set out in subsection 12 (2) and, for that purpose, the Minister may determine the amount of "C" in the formula. Payment schedule, etc.

(4) Subsections 12 (6) to (8) apply, with necessary modifications, with respect to payments under this section. Collection

(5) Any amount due to the Province under this section is a debt owing to the Crown and may be recovered by any remedy or procedure available to the Crown by law. Decisions final

(6) The Minister's decisions under this section are final. Reimbursement

(7) The Corporation is not required to reimburse the Province under subsection 13 (2) to the extent of the payments made to the Minister under this section. Same

(8) If the amount that the Minister receives under this section is greater than the amount the Corporation is required to pay to the Province under section 13, the Minister shall pay the excess amount to the Corporation. Disclosure of information

15.(1) The Corporation shall give to an employee of the Government of Ontario who is designated by the Minister such information and documents as the Minister may request and shall do so without charge. Same

(2) Information and documents provided under subsection (1) are for use by the Government of Ontario and are not for resale. Disclosure to an organization

(3) If, when subsection (1) comes into force, there is a written arrangement in effect between the Ministry of Finance and any other ministry or organization concerning the provision of information and documents by the Ministry of Finance to the other ministry or organization, the Corporation shall give the other ministry or organization such information and documents as the arrangement may require or permit on such terms and at the costs specified under the arrangement. No offence

(4) Section 53 of the Assessment Act does not apply to the Corporation with respect to information and documents provided by it under this section. Disclosure to the Corporation

(5) A minister of the Crown may give to the Corporation any information and documents that the minister considers necessary to enable the Corporation to perform its duties under this or any other Act; the minister may impose such conditions as he or she considers appropriate when doing so. Transfer of Duties to Municipalities Transfer of duties

16.(1) The Minister may make regulations,

(a) authorizing a municipality to perform on its own behalf all or some of the duties of the Corporation under this or any other Act and authorizing the Corporation to cease to perform those duties for that municipality;

(b) establishing conditions that apply with respect to an authorization described in clause (a). Restriction

(2) The first duty that a municipality may be authorized to perform under subsection (1) is the preparation of the assessment roll for the 2004 taxation year. Effect of regulation

(3) When a regulation is made under subsection (1), the Corporation ceases to be required to perform the duties specified in the regulation despite a provision in an Act that imposes such a duty on the Corporation and the municipality assumes the obligation to perform the duty. Transfer by agreement

17.(1) The Corporation and a municipality may agree that the municipality is authorized to perform duties under any Act on behalf of the Corporation with respect to the municipality, upon such terms as the agreement may provide. Same

(2) The agreement may provide that the Corporation shall cease to perform those duties with respect to the municipality. Same

(3) The Corporation shall not enter into an agreement authorized by this section before January 1, 2001. Same

(4) An agreement authorized by this section is not effective with respect to a taxation year before 2002.

COMPLEMENTARY AMENDMENTS Assessment Act

18.(1) The definition of "assessment commissioner" in section 1 of the Assessment Act is repealed.

(2) Section 1 of the Act, as amended by the Statutes of Ontario, 1997, chapter 5, section 1, is further amended by adding the following definition:

"assessment corporation" means the Ontario Property Assessment Corporation. ("socit d'valuation foncire")

(3) The definition of "assessor" in section 1 of the Act is repealed and the following substituted:

"assessor" means a person acting as assessor as authorized by the assessment corporation. ("valuateur")

(4) Subclause 2 (2) (d.3) (i) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 5, section 2, is amended by striking out "assessment commissioner" in the second line and substituting "assessment corporation".

(5) Subsections 2 (4), (5), (6) and (7) of the Act are repealed and the following substituted: Administration of oaths

(4) An employee of the assessment corporation who is authorized by the corporation to do so may administer oaths and take and receive affidavits, declarations and affirmations for the purposes of, or incidental to, the administration of this Act.When doing so, the employee has all the powers of a commissioner for taking affidavits.

(6) Paragraph 22 of section 3 of the Act is amended by striking out "Minister" wherever it occurs and substituting in each case "assessment corporation".

(7) If subsection 8 (5) of the Act is enacted by the Fair Municipal Finance Act, 1997 (No. 2), being Bill 149 of the 1st Session of the 36th Legislature, that subsection is amended by striking out "assessment commissioner" wherever it occurs and substituting in each case "assessment corporation".

(8) Subsection 14 (1) of the Act, as amended by the Statutes of Ontario, 1992, chapter 17, section 4 and 1997, chapter 5, section 9, is further amended by striking out the portion before paragraph 1 and substituting the following: Assessment roll content

(1) The assessment corporation shall prepare an assessment roll for each municipality and the roll shall contain the following particulars:

. . . . .

(9) Subsection 14 (4) of the Act, as it may be re-enacted by the Education Quality Improvement Act, 1997, being Bill 160 of the 1st Session of the 36th Legislature, is amended by striking out "assessment commissioner" wherever it occurs and substituting in each case "assessment corporation".

(10) Subsection 14 (5) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 5, section 9, is amended by striking out "assessment commissioner" in the second and third lines and substituting "assessment corporation".

(11) Section 15 of the Act, as re-enacted by the Statutes of Ontario, 1996, chapter 32, section 60, is repealed and the following substituted: Enumeration

15.For the purposes of the Municipal Elections Act, 1996, the assessment corporation shall conduct an enumeration of the inhabitants of a municipality and locality at the times and in the manner directed by the Minister.

(12) Subsection 16 (1) of the Act, as it may be re-enacted by the Education Quality Improvement Act, 1997, being Bill 160 of the 1st Session of the 36th Legislature, is repealed and the following substituted: Annual school support list

(1) Every year, the assessment corporation shall prepare a list showing, for each municipality or locality, name of every person who is entitled to support a school board and the type of school board that the person supports.The corporation shall deliver the list to the secretary of each school board in the municipality or locality on or before September 30 in the year.

(13) Subsection 16 (3) of the Act, as amended by the Statutes of Ontario, 1997, chapter 5, section 10, is further amended by striking out "assessment commissioner" in the first and second lines and in the sixth line and substituting in each case "assessment corporation".If subsection 16 (3) is re-enacted by the Education Quality Improvement Act, 1997, being Bill 160 of the 1st Session of the 36th Legislature, it is amended by striking out "assessment commissioner" wherever it occurs and substituting in each case "assessment corporation".

(14) Subsection 16 (4) of the Act, as it may be re-enacted by the Education Quality Improvement Act, 1997, being Bill 160 of the 1st Session of the 36th Legislature, is amended by striking out "assessment commissioner" wherever it occurs and substituting in each case "assessment corporation".

(15) Subsection 16 (5) of the Act is amended by striking out "assessment commissioner" in the second line and substituting "assessment corporation".

(16) Subsection 16 (6) of the Act, as re-enacted by the Statutes of Ontario, 1997, chapter 5, section 10, is amended by striking out "assessment commissioner" in the third and fourth lines and substituting "assessment corporation".

(17) Subsection 16 (7) of the Act is repealed and the following substituted: Approval of application

(7) If the assessment corporation is satisfied that the inclusion or alteration requested in an application under subsection (3) should be made, the corporation shall approve the application; its approval is indicated by the signature of its agent or employee.

(18) Subsection 16 (8) of the Act, as it may be re-enacted by the Education Quality Improvement Act, 1997, being Bill 160 of the 1st Session of the 36th Legislature, is amended by striking out "assessment commissioner" wherever it occurs and substituting in each case "assessment corporation".

(19) Subsections 16 (9) and (10) of the Act are amended by,

(a) striking out "assessment commissioner" wherever it occurs and substituting in each case "assessment corporation"\; and

(b) striking out "he or she" wherever it occurs in the English version and substituting in each case "the corporation".

(20) Subsection 16.1 (1) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 5, section 11, is amended by striking out "assessment commissioner for the assessment region in which the property is located" in the fifth and sixth lines and substituting "assessment corporation".

(21) Subsection 25 (2) of the Act is repealed and the following substituted: Notice

(2) On or before October 1 every year, the pipe line company shall notify the assessment corporation of the age, length and diameter of all of its transmission pipe lines located in each municipality on September 1 of that year.

(22) Subsection 30 (1) of the Act is amended by striking out the portion before clause (a) and substituting the following: Annual statement by railway company

(1) Every year on or before July 1, every railway company shall give the assessment corporation a statement with respect to any part of the roadway and other land of the company located in each municipality or locality.The statement must show,

. . . . .

(23) Section 31 of the Act, as amended by the Statutes of Ontario, 1997, chapter 5, section 20, is further amended by striking out "assessment commissioner" wherever it occurs and substituting in each case "assessment corporation".

(24) Section 32 of the Act is amended by,

(a) striking out "assessment commissioner" wherever it occurs and substituting in each case "assessment corporation"\; and

(b) striking out "he or she" and "him or her" wherever they occur in the English version and substituting in each case "the corporation".

(25) Subsection 36 (2) of the Act is amended by striking out "Minister" in the sixth line and substituting "assessment corporation".

(26) Subsection 36 (3) of the Act is repealed and the following substituted: Notice of extension

(3) If the assessment corporation extends the time for the return of the assessment roll, the corporation shall ensure that a notice of the extension is published in a daily or weekly newspaper that, in its opinion, has such circulation within the municipality as to provide reasonable notice to persons affected by the extension.The notice must state the date on which the roll will be returned and the final date for making a complaint to the Assessment Review Board.

(27) Section 36.1 of the Act, as enacted by the Statutes of Ontario, 1997, chapter 5, section 24, is amended by striking out "The Minister" in the first line and substituting "The assessment corporation".

(28) Section 39 of the Act is repealed and the following substituted: Delivery of roll to clerk

39.(1) The assessment corporation shall deliver the assessment roll to the clerk of the municipality and shall do so on or before the date fixed for the return of the roll. Inspection by public

(2) Immediately upon receipt of the assessment roll, the clerk shall make it available for inspection by the public during office hours.

(29) Section 39.1 of the Act, as enacted by the Statutes of Ontario, 1997, chapter 5, section 25, and as it may be amended by the Fair Municipal Finance Act, 1997 (No. 2), being Bill 149 of the 1st Session of the 36th Legislature, is amended by striking out "assessment commissioner" wherever it occurs and substituting in each case "assessment corporation".

(30) Section 40 of the Act, as amended by the Statutes of Ontario, 1997, chapter 5, section 26, and as it may be amended by the Fair Municipal Finance Act, 1997 (No. 2), being Bill 149 of the 1st Session of the 36th Legislature, is further amended by,

(a) striking out "assessment commissioner" wherever it occurs and substituting in each case "assessment corporation"\; and

(b) striking out "Minister" in the first line of subsection (2.2) and substituting "assessment corporation".

(31) Subsection 46 (1) of the Act, as re-enacted by the Statutes of Ontario, 1997, chapter 5, section 31, is amended by striking out "assessment commissioner" in the first and second lines and substituting "assessment corporation".

(32) Subsection 46 (2) of the Act is amended by striking out "assessment commissioner" in the fourth line and substituting "assessment corporation".

(33) Subsection 53 (1) of the Act, as re-enacted by the Statutes of Ontario, 1996, chapter 4, section 43, is amended by striking out "Ministry of Finance" in the second line and substituting "assessment corporation".

(34) Clause 53 (2) (a) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 4, section 43, is repealed and the following substituted:

(a) to the assessment corporation or any authorized employee of the corporation; or

. . . . .

(35) Section 53 of the Act, as enacted by the Statutes of Ontario, 1996, chapter 4, section 43 and amended by 1997, chapter 5, section 36, is further amended by adding the following subsection: Information for tenants

(4.1) Upon request, a tenant is entitled to receive the information maintained by the assessment corporation in respect of a property, or the portion of a property, leased by the tenant and to receive any other information about the property; the tenant is not entitled to receive the information referred to in subsection (1).

(36) Subsection 53 (5) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 4, section 43 and amended by 1997, chapter 5, section 36, is repealed and the following substituted: Disclosure

(5) Subject to subsection (1) and to any requirement of the Assessment Review Board concerning the disclosure of evidence, the assessment corporation may disclose any information acquired by it and may do so on such terms as it determines.

(37) The Form to the Act is repealed. Conservation Authorities Act

19.Section 33 of the Conservation Authorities Act, as amended by the Statutes of Ontario, 1997, chapter 5, section 64, is further amended by striking out "Ministry of Finance" wherever it occurs and substituting in each case "Ontario Property Assessment Corporation". Education Act

20.(1) The definition of "assessment commissioner" in subsection 1 (1) of the Education Act, as re-enacted by the Statutes of Ontario, 1997, chapter 3, section 2, and as it may be re-enacted by the Education Quality Improvement Act, 1997, being Bill 160 of the 1st Session of the 36th Legislature, is repealed.

(2) Section 1 of the Act, as amended by the Statutes of Ontario, 1992, chapter 16, section 1, 1993, chapter 11, sections 8 and 9, 1993, chapter 23, section 67, 1996, chapter 12, section 64, 1996, chapter 32, section 70, 1997, chapter 3, section 2 and 1997, chapter 22, section 1, and as it may be amended by the Education Quality Improvement Act, 1997, being Bill 160 of the 1st Session of the 36th Legislature, is further amended by adding the following subsection: Ontario Property Assessment Corporation

(1.2.1) Beginning on the day on which subsection 9 (1) of the Ontario Property Assessment Corporation Act, 1997 comes into force, a reference in this Act to the assessment commissioner or to the appropriate assessment commissioner shall be deemed to be a reference to the Ontario Property Assessment Corporation. Homes for the Aged and Rest Homes Act

21.Section 24 of the Homes for the Aged and Rest Homes Act is amended by striking out "Ministry of Revenue" wherever it occurs and substituting in each case "Ontario Property Assessment Corporation". Juries Act

22.The definition of "Director of Assessment" in section 1 of the Juries Act is repealed and the following substituted:

"Director of Assessment" means the employee of the Ontario Property Assessment Corporation who is appointed by the Corporation to be the Director of Assessment under this Act. ("directeur de l'valuation") Municipal Act

23.(1) The definition of "assessment commissioner" in subsection 1 (1) of the Municipal Act is repealed.

(2) The definition of "assessor" in subsection 1 (1) of the Act is repealed and the following substituted:

"assessor" means a person acting as assessor as authorized by the Ontario Property Assessment Corporation. ("valuateur")

(3) Section 1 of the Act, as amended by the Statutes of Ontario, 1996, chapter 32, section 2 and 1997, chapter 5, section 40, is further amended by adding the following subsection: Ontario Property Assessment Corporation

(3) Beginning on the day on which subsection 9 (1) of the Ontario Property Assessment Corporation Act, 1997 comes into force, a reference in this Act to the assessment commissioner shall be deemed to be a reference to the Ontario Property Assessment Corporation.

(4) Subsection 443 (4) of the Act is amended by striking out "Minister of Revenue" in the first line and substituting "Ontario Property Assessment Corporation". Power Corporation Act

24.(1) Subsection 52 (12) of the Power Corporation Act, as re-enacted by the Statutes of Ontario, 1997, chapter 5, section 68, is amended by striking out "Ministry of Finance" in the fourth line and substituting "Ontario Property Assessment Corporation".

(2) Subsection 52 (14) of the Act, as amended by the Statutes of Ontario, 1997, chapter 5, section 68, is further amended by striking out "Ministry of Finance" in the first line and substituting "Ontario Property Assessment Corporation. Commencement and Short Title Commencement

25.(1) Subject to subsections (2) and (3), this Act comes into force on the day the Tax Credits to Create Jobs Act, 1997 receives Royal Assent. Same

(2) Section 13 comes into force on January 1, 1998. Same

(3) Sections 9, 10 and 15 to 25 come into force on a day to be named by proclamation of the Lieutenant Governor but shall not come into force before January 1, 1998. Short title

26.The short title of the Act set out in this Schedule is the Ontario Property Assessment Corporation Act, 1997.