Bill 47, Tax Cut and Economic Growth Act, 1996

Eves, Hon. Ernie Minister of Finance

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Status

Versions

Original

Tax Cut and Economic Growth Act, 1996

EXPLANATORY NOTE

The amendments set out below implement some of the 1996 budget proposals.

PART I

AMENDMENTS TO THE INCOME TAX ACT

The general income tax rate is reduced from 58 per cent of basic federal tax in 1995 to 56 per cent of basic federal tax for 1996 and 49 per cent of basic federal tax for 1997 and subsequent years. (The Government intends to provide, by regulation, that tax at the rate of 54 per cent is to be withheld at source from July 1, 1996 to the end of the year to reflect the full year tax reduction for 1996.)

The Ontario Tax Reduction Program is changed to benefit more lower income taxpayers.

The Fair Share Health Care Levy is incorporated into the existing income tax surcharge.

PART II

AMENDMENTS TO THE EMPLOYER HEALTH TAX ACT

The payroll tax on self-employed individuals is phased out between 1997 and 1999.

The annual $400,000 payroll tax exemption for businesses is phased in over a 3 year period, starting with a $200,000 payroll exemption in 1997 and increasing by $100,000 per year to $400,000 for 1999 and later years.

PART III

AMENDMENTS TO THE LAND TRANSFER TAX ACT

A temporary refund of tax is available, to a maximum of $1,725, to first time home buyers who agree to purchase a newly constructed home before March 31, 1997 and who acquire their home between May 8, 1996 and June 30, 1997.

The Act is amended to permit the electronic filing of deeds. The submission of the information now contained on the affidavit of residence can be done electronically without the deed and no affidavit need be submitted on registration.

PART IV

AMENDMENTS TO THE RACE TRACKS TAX ACT

Upon proclamation, the rate of tax on placing a bet will be reduced from 7 per cent or 9 per cent of the amount of the bet to 0.5 per cent of the amount of the bet.

PART V

AMENDMENTS TO THE RETAIL SALES TAX ACT

The Act is amended to exempt 1-800 and 1-888 toll free telephone services, except where the Minister prescribes otherwise.

A temporary rebate is provided to farmers on materials purchased to be incorporated into structures used for farming purposes.

PART VI

AMENDMENTS TO THE TOBACCO TAX ACT

The basis on which tax is calculated is altered from 1.7 cents on a cigarette or gram of cut tobacco to 24 per cent of the average retail price on a package of 25 cigarettes. There is no change to the amount of tax now payable under the Act, but in future, the tax payable will change as the average retail price of a package of 25 cigarettes changes and to match any increase or decrease in the federal excise and duty on cigarettes.

PART VII

AMENDMENTS TO THE CORPORATIONS TAX ACT

A temporary surcharge is imposed on banks in respect of their taxable paid-up capital exceeding $400,000,000, calculated at the rate of 10 per cent of the bank capital tax rate of 1.12 per cent.

A 10 per cent tax credit is deductible from a bank's capital tax in respect of eligible investments made in Ontario small businesses between May 8, 1996 and the end of 1999. The total of the tax credits available to a bank is limited to the total of its temporary surcharges.

PART VIII

AMENDMENT TO THE FINANCIAL ADMINISTRATION ACT

The Ontario Opportunities Fund is established to record donations made to reduce the deficit and debt, the proceeds of sale of assets of Ontario or its Crown agencies sold for $1,000,000 or more and the amount, for each fiscal year in which a deficit is estimated in the budget, by which that estimate exceeds the actual deficit. The amendment requires that the amounts recorded as donations and proceeds of sale be applied toward the reduction of the provincial deficit and debt.

PART IX

AMENDMENT TO THE FAMILY BENEFITS ACT

Section 2 of the Family Benefits Act provides that the benefits under that Act will cease when the federal government ceases to make its financial contribution as provided for under the Canada Assistance Plan Act and agreements made under that Act. No funding under the Canada Assistance Plan Act is being made in respect of any fiscal year commencing on or after April 1, 1996. Accordingly, section 2 is repealed effective April 1, 1996 in order to ensure the continuation of the necessary authority for the Family Benefits program.

PART X

GENERAL

The Ontario Loan Act, 1996, set out in the Schedule, is enacted. In addition, this Part contains commencement provisions for the Bill and its short title.

Schedule

ONTARIO LOAN ACT, 1996

The Ontario Loan Act, 1996 authorizes the borrowing of up to $10.4 billion, in total, for the Consolidated Revenue Fund. It is expected that the public capital markets, the international loan market and the Canada Pension Plan will be the principal sources of funds. The borrowing authority expires at the end of December, 1997.

Bill1996

An Act to cut taxes, to stimulate economic growth

and to implement other measures

contained in the 1996 Budget

CONTENTS


Part	Sections
I	Amendments to the Income Tax Act	1-3
II	Amendments to the Employer Health Tax Act	4-6
III	Amendments to the Land Transfer Tax Act	7-14
IV	Amendments to the Race Tracks Tax Act	15-16
V	Amendments to the Retail Sales Tax Act	17-18
VI	Amendments to the Tobacco Tax Act	19
VII	Amendments to the Corporations Tax Act	20-23
VIII	Amendment to the Financial Administration Act	24
IX	Amendment to the Family Benefits Act	25
X	General	26-28
Schedule	Ontario Loan Act, 1996

_____________

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

PART I

AMENDMENTS TO THE INCOME TAX ACT

1. (1) Paragraph 3 of subsection 3 (1) of the Income Tax Act, as enacted by the Statutes of Ontario, 1993, chapter 29, section 3, is amended by striking out "subsequent" in the first line and substituting "1995".

(2) Subsection 3 (1) of the Act, as re-enacted by the Statutes of Ontario, 1992, chapter 25, section 1 and amended by 1993, chapter 29, section 3 and 1996, chapter 1, Schedule C, section 3, is further amended by adding the following paragraphs:

4. For 1996, the additional income tax shall equal the aggregate of,

i. 20 per cent of the amount, if any, by which the gross tax amount of the individual for the taxation year exceeds $5,310, and

ii. 13 per cent of the amount, if any, by which the gross tax amount of the individual for the taxation year exceeds $7,635.

5. For 1997 and subsequent taxation years, the additional income tax for each taxation year shall equal the aggregate of,

i. 20 per cent of the amount, if any, by which the gross tax amount of the individual for the taxation year exceeds $4,650, and

ii. 24 per cent of the amount, if any, by which the gross tax amount of the individual for the taxation year exceeds $6,360.

2. Subsection 4 (5) of the Act, as amended by the Statutes of Ontario, 1992, chapter 25, section 2 and 1993, chapter 29, section 4, is further amended by striking out "and" at the end of clause (p), by striking out clause (q) and by substituting the following:

(q) 58 per cent in respect of the 1993, 1994 and 1995 taxation years;

(r) 56 per cent in respect of the 1996 taxation year; and

(s) 49 per cent in respect of the 1997 and subsequent taxation years.

3. Subsection 7 (2) of the Act, as re-enacted by the Statutes of Ontario, 1992, chapter 18, section 55 and amended by 1993, chapter 29, section 5, is repealed and the following substituted:

Tax reduction

(2) If the tax otherwise payable by an individual under this Act for a taxation year exceeds the individual's personal amount for the taxation year, the tax payable under this Act in respect of 1997 and subsequent taxation years may be reduced by the amount, if any, by which twice the individual's personal amount for the taxation year exceeds the amount of tax otherwise payable by the individual under this Act for the taxation year.

PART II

AMENDMENTS TO THE EMPLOYER HEALTH TAX ACT

4. (1) Clause (e) of the definition of "eligible employer" in subsection 1 (1) of the Employer Health Tax Act, as enacted by the Statutes of Ontario, 1994, chapter 17, section 57, is repealed and the following substituted:

(e) a person prescribed not to be an eligible employer for the purposes of section 2 or 2.1.

(2) Subsection 1 (4) of the Act, as enacted by the Statutes of Ontario, 1994, chapter 8, section 1, is repealed and the following substituted:

Taxable self-employment income

(4) The taxable self-employment income of an individual for a year is the amount by which his or her net self-employment income for the year from all sources exceeds,

(a) $40,000, for 1996 and previous years;

(b) $200,000, for 1997; and

(3) Section 1 of the Act, as amended by the Statutes of Ontario, 1994, chapter 8, section 1 and 1994, chapter 17, section 57, is further amended by adding the following subsection:

Associated employers

(6) For the purposes of determining if two or more employers are associated at any time in a year,

(a) section 256 of the Income Tax Act (Canada) applies for the purposes of this Act;

(b) if an employer is an individual, the employer shall be deemed to be a corporation, all the issued shares of the capital stock of which have full voting rights under all circumstances and are owned by the individual;

(c) if an employer is a partnership or trust, it shall be deemed to be a corporation having only one class of issued shares which have full voting rights under all circumstances, and each member of the partnership or beneficiary of the trust, as the case may be, shall be deemed to own at a particular time the greatest proportion of the number of issued shares of the capital stock of the corporation that,

(i) the member's or beneficiary's share of the income or loss of the partnership or trust for the fiscal period of the partnership or trust that includes that time,

is of,

(ii) the income or loss of the partnership or trust for that period,

and for the purposes of this clause, if the income and loss of the partnership or trust for that period are nil, that proportion shall be computed as if the partnership or trust had income for that period in the amount of $1;

(d) employers that are corporations, or are deemed to be corporations, that would be associated with each other under the Income Tax Act (Canada) at any time in the year shall be deemed to be employers that are associated with each other at that time; and

(e) if two employers would, but for this clause, not be associated with each other at any time, but are associated at that time with another employer, they shall be deemed to be associated with each other at that time.

5. (1) Subsection 2 (1.1) of the Act, as enacted by the Statutes of Ontario, 1994, chapter 8, section 2, is repealed and the following substituted:

Tax on self-employed individual

(1.1) A health tax for each year before 1999, calculated in accordance with this Act, is imposed on every self-employed individual resident in Ontario on the 31st day of December of the year and shall be payable to the Crown in right of Ontario in addition to any tax that the self-employed individual may be required to pay under this Act as an employer.

(2) Subsection 2 (2) of the Act is amended by striking out the portion before clause (a) and substituting the following:

Calculation of tax

(2) The amount of tax payable by an employer for a year is the amount equal to the product of the taxable total Ontario remuneration paid by the employer during the year multiplied by,

. . . . .

(3) Subsection 2 (2.1) of the Act, as enacted by the Statutes of Ontario, 1994, chapter 8, section 2, is repealed and the following substituted:

Calculation of tax, self-employed individual

(2.1) The amount of tax payable by a self-employed individual for 1997 or a subsequent year under subsection (1.1) is 78 per cent of the amount equal to 1.95 per cent of the taxable self-employment income of the individual for the year from all sources.

(4) Section 2 of the Act, as amended by the Statutes of Ontario, 1994, chapter 8, section 2, is further amended by adding the following subsections:

Taxable total Ontario remuneration

(5) For the purposes of subsection (2), the taxable total Ontario remuneration paid by an employer during a year is,

(a) in the case of an employer who is an eligible employer for the year, the amount by which the total Ontario remuneration paid by the employer during the year exceeds the employer's exemption amount for the year; or

(b) in the case of an employer who is not an eligible employer for the year, the amount of the total Ontario remuneration paid by the employer during the year.

Exemption amount

(6) If an employer who is an eligible employer for a year is not associated in the year with one or more eligible employers, the employer's exemption amount for the year is,

(a) nil if the year is before 1997;

(b) $200,000 if the year is 1997;

(d) $400,000 if the year is after 1998.

Associated employers

(7) If all of the eligible employers who are associated with each other in a year enter into an agreement in which theyallocate an amount to one or more of them for the year, and the amount allocated or the total of the amounts allocated, as the case may be, does not exceed the maximum exemption amount that would otherwise be available for the year under subsection (6) to an eligible employer who is not associated in the year with another eligible employer, the exemption amount for the year of each of the eligible employers is the amount allocated to that employer.

Delivery of agreement

(8) A copy of the agreement referred to in subsection (7) shall be delivered to the Minister by each of the employers with the return for the year required under section 5.

If no agreement

(9) If an eligible employer who is associated in a year with one or more eligible employers does not enter into an agreement for the year that complies with subsection (7), the exemption amount for the year for each of the employers who is associated is nil.

Part-year employer

(10) Despite subsections (6) and (7), an employer's exemption amount for a year shall not exceed the amount otherwise determined under this section multiplied by the ratio of,

(a) the number of days in the year during which the employer has one or more permanent establishments in Ontario,

to,

(b) the number of days in the year.

6. Subsection 3 (4) of the Act, as re-enacted by the Statutes of Ontario, 1994, chapter 8, section 3, is repealed and the following substituted:

Instalment amount, employer

(4) The amount of an instalment payable by a person as an employer under this section shall be determined according to the following formula:

P = (S - E) x R

Where:

P is the amount of the instalment in dollars;

S is the total Ontario remuneration, if any, paidby the employer during the month or quarter, as applicable, last ending before the date the instalment is required to be paid;

E is,

(a) in the case of an employer who is an eligible employer for the year, the amount, if any, of the employer's exemption amount for the year that is available for deduction and is deducted by the employer in determining the amount of the instalment; or

(b) in the case of an employer who is not an eligible employer, nil;

R is the rate applicable under subsection 2 (2),

(a) to the estimated total Ontario remuneration to be paid by the employer during the year both before and after the date the instalment is required to be paid, if the year in respect of which the instalment is being paid is the first or second consecutive year in which the employer is subject to tax under this Act as an employer; or

(b) to the total Ontario remuneration paid by the employer during the immediately preceding year, if the year in respect of which the instalment is being paid is a year subsequent to the first two consecutive years in which the employer is subject to tax under this Act as an employer.

Same

(4.01) For the purposes of subsection (4), the amount of an eligible employer's exemption amount for a year that is available for deduction in determining the amount of an instalment on account of tax payable for the year is the lesser of,

(a) the amount, if any, of the employer's exemption amount for the year that has not been deducted in determining the amount of previous instalments paid on account of tax for the year; and

(b) the total Ontario remuneration, if any, paid by the employer during the month or quarter, as applicable, last ending before the date theinstalment is required to be paid.

Same

(4.02) If the amount that would have been an employer's exemption amount for a year changes during the year, the amount of any instalments on account of tax required to be paid by the employer during the year shall be adjusted to reflect the change.

PART III

AMENDMENTS TO THE LAND TRANSFER TAX ACT

7. (1) Subsection 1 (1) of the Land Transfer Tax Act, as amended by the Statutes of Ontario, 1994, chapter 18, section 4, is further amended by adding the following definition:

"electronic document" means an electronic document as defined by section 17 of the Land Registration Reform Act. ("document électronique")

(2) The definition of "value of the consideration" in subsection 1 (1) of the Act is amended,

(a) in clause (c), by inserting "or submission" after "tender" in the eleventh line;

(b) in clause (f), by inserting "or submission" after "tender" in the third last line; and

(c) in clause (g), by inserting "or submission" after "tender" in the eighth line.

(3) Subsection 1 (6) of the Act, as re-enacted by the Statutes of Ontario, 1994, chapter 18, section 4, is amended by inserting "or submission" after "tender" in the second line and by inserting "or submitted" after "tendered" in the ninth and tenth lines.

8. The Act is amended by adding the following section:

Tax imposed

2.1 (1) Every person who submits for registration, as an electronic document, pursuant to Part III of the Land Registration Reform Act,

(a) a conveyance whereby any land is conveyed to or in trust for any transferee who is not a non-resident person; or

(b) a conveyance that is a conveyance only of unrestricted land that the Minister or a person authorized by the Minister to do so has approved for registration as unrestricted land,

shall, at the time when the electronic document that is a conveyance is submitted for registration, pay a tax computed,

(i) one-half of 1 per cent of the value of the consideration for the conveyance up to and including $55,000,

(ii) 1 per cent of the value of the consideration which exceeds $55,000 up to and including $250,000, and

(iii) 1.5 per cent of the value of the consideration which exceeds $250,000; and

(d) where the value of the consideration for the conveyance exceeds $400,000 and the conveyance is a conveyance of land that contains at least one and not more than two single family residences, an additional tax of one-half of 1 per cent of the amount by which the value of the consideration exceeds $400,000.

Apportionment of consideration

(2) Where, in respect of a conveyance of land,

(a) subsection (3) does not apply;

(b) the value of the consideration for the conveyance exceeds $400,000; and

the Minister may, to the extent he or she considers it practicable, determine what amount of the value of the consideration for the conveyance is reasonably attributable to the land used in connection with a single family residence, and the person submitting for registration an electronic document that is a conveyance is, despite subsection (1), liable to the additional tax of one-half of 1 per cent only upon the amount by which the value of the consideration determined by the Minister to be attributable to land used in connection with a single family residence exceeds $400,000.

Same

(3) Every person who submits for registration, as an electronic document, pursuant to Part III of the Land Registration Reform Act, a conveyance whereby any land that is not unrestricted land is conveyed to or in trust for anytransferee who is a non-resident person shall, when the electronic document that is a conveyance is submitted for registration, pay a tax computed at the rate of 20 per cent of the value of the consideration for the conveyance.

Exemption

(4) No tax is payable where the only transferee in a conveyance that is submitted for registration is the Crown or a Crown agency within the meaning of the Crown Agency Act.

Apportionment of consideration

(5) Where only part of the land being conveyed is unrestricted land and the conveyance is to or in trust for any non-resident person, the Minister may, to the extent the Minister considers practicable, determine what amount of the value of the consideration for the conveyance is reasonably attributable to the unrestricted land being conveyed and the person submitting for registration the electronic document that is a conveyance is, despite subsection (1) or (3), liable to a tax,

(a) with respect to the amount of the value of the consideration determined by the Minister to be reasonably attributable to the unrestricted land being conveyed, computed at the rate of,

(i) 1 per cent of the amount determined by the Minister which does not exceed $250,000, and

(ii) 1.5 per cent of the amount determined by the Minister which exceeds $250,000,

and any tax required to be calculated under clause (1) (d) or subsection (2), whichever is the lesser, on the amount determined by the Minister; and

(b) computed at the rate of 20 per cent of the amount of the value of the consideration for the conveyance that is determined by the Minister not to be reasonably attributable to the unrestricted land being conveyed.

Transmission in lieu of affidavit

(6) For the purposes of this section, the information required to be included in an affidavit under section 5 shall be included as part of the electronic document submitted for registration and no affidavit need be filed with the collector.

Return

(7) The Minister may make regulations requiring the filing of a return containing the information submitted under subsection(6) at such times and in such manner as the Minister may require, and specifying the manner in which the tax payable under this section shall be paid to the Minister.

Minister's certification

(8) Where the Minister or some other person authorized by him or her in writing to do so has indicated to the Director of Land Registration appointed under subsection 6 (1) of the Registry Act in a manner approved by the Director that such tax as is payable has been paid or that no tax is payable, the electronic document that is a conveyance may be submitted for registration without the payment of tax and without the information required by subsection (6), but the Minister or person acting under his or her authority shall so indicate to the Director only when satisfied that no tax is payable or that all tax is paid or that acceptable security for the payment of the tax has been furnished to the Minister.

9. (1) Subsection 3 (5) of the Act is amended by striking out "or" at the end of clause (a) and by adding the following clause:

(a.1) an electronic document evidencing the disposition of the beneficial interest in land is submitted for registration within 30 days after the date of disposition and the tax payable under section 2.1 has been paid; or

. . . . .

(2) Subsections 3 (6), (7) and (8) of the Act are repealed and the following substituted:

Tax only paid once

(6) If a person who has paid the tax under this section proposes to register an instrument or submit an electronic document evidencing the disposition, no tax is payable under section 2 or 2.1 if the Minister is satisfied that the instrument or electronic document,

(a) does not transfer any beneficial interest in land to any person other than the person who has paid the tax on the disposition under this section; and

(b) does not increase any person's beneficial interest in land in excess of the beneficial interest transferred by the disposition.

Verification of Minister

(7) If the tax payable under this section has been paid, or no tax is payable under this Act, the Minister, or a person authorized in writing by the Minister, shall so verify,

(a) over his or her signature on the instrument; or

(b) in the manner approved by the Director of Land Registration, appointed under subsection 6 (1) of the Registry Act, where an electronic document is submitted for registration.

Registration of instrument, etc.

(8) Where an instrument or electronic document has been verified under subsection (7), the instrument or electronic document may be registered without the payment of tax under section 2 or 2.1 and without the production of the affidavits or other information required by this Act.

(3) Clause 3 (9) (c) of the Act is amended by inserting "or electronic document" after "instrument" in the first line.

(4) Clause 3 (11) (b) of the Act is repealed and the following substituted:

(b) a conveyance or instrument or electronic document evidencing the disposition of the beneficial interest in land to the corporation has been registered and the tax payable under section 2 or 2.1 has been paid; or

. . . . .

10. Section 5 of the Act, as amended by the Statutes of Ontario, 1994, chapter 18, section 4, is further amended by adding the following subsection:

Same

(11.1) Every person who submits for registration a conveyance under section 2.1 and who pays, at the time, an amount that is less than the amount of tax payable by that person under section 2.1 shall pay a penalty, when the Minister so assesses, of an amount equal to 5 per cent of the difference between the tax payable and the amount actually paid.

11. (1) Subsection 8 (3) of the Act is amended by inserting "or submitted" after "tendered" in the first and second lines.

(2) Clause 8 (3) (a) of the Act is amended by striking out "or (2)" in the third line and substituting "2 (2), 2.1 (1) or 2.1 (2)".

(3) Subsection 8 (4) of the Act, as amended by the Statutes of Ontario, 1994, chapter 18, section 4, is further amended by inserting "or submission" after "tender" in the second last line.

(4) Subsection 8 (5) of the Act is repealed and thefollowing substituted:

Refunds on conveyances of unrestricted land

(5) Where tax has been paid with respect to the registration of a conveyance of unrestricted land to or in trust for a non-resident person, and it is established to the satisfaction of the Minister that the certification in accordance with clause 2 (1) (b) or the approval by the Minister for registration under clause 2.1 (1) (b) was erroneously refused after full and complete disclosure of all relevant circumstances and facts to the person requested to make the certification or approval, the Minister may refund any tax that would not have been payable had the certification or approval been properly given, provided that application for the refund is made within three years of the payment of the tax of which a refund is sought.

(5) Subsection 8 (6) of the Act is amended by striking out "upon the" in the fourth line and substituting "or 2.1 upon the registration of or submission for".

12. (1) Subsection 9 (5) of the Act is amended by inserting "or section 9.2" after "section" in the third line.

(2) Subsection 9 (6) of the Act is amended by inserting "or section 9.2" after "section" in the second line.

(3) Section 9 of the Act, as amended by the Statutes of Ontario, 1994, chapter 18, section 4, is further amended by adding the following subsection:

No refund

(7) No refund shall be made under this section to any transferee who has received a refund under section 9.2.

13. The Act is amended by adding the following section:

Definitions

9.2 (1) In this section,

"newly constructed home" means a home in respect of which the purchaser is entitled to a warranty under section 13 of the Ontario New Home Warranties Plan Act and which is sold to the purchaser by a vendor as defined in that Act; ("logement neuf")

"purchaser" means an individual who is at least 18 years of age and who has never owned an eligible home, as defined in the Ontario Home Ownership Savings Plan Act, anywhere in the world and whose spouse has not owned an eligible home anywhere in the world while he or she was a spouse of the individual. ("acheteur")

Refund on purchase of newly constructed home

(2) The Minister may refund, in such manner as the Minister may prescribe, tax payable by a purchaser under the Act, up to a maximum amount of $1,725 for a newly constructed home, without interest thereon, in respect of agreements of purchase and sale entered into on or before March 31, 1997, to acquire the newly constructed home to be used by the purchaser as his or her principal residence where the conveyance to the purchaser on which tax is payable under section 2, 2.1 or 3 occurs on or after May 8, 1996 and not after June 30, 1997.

Maximum refund

(3) If the purchaser is not the only transferee named in the conveyance, the refund payable under subsection (2) to the purchaser shall be reduced to the portion of the refund, determined for all transferees, applicable to,

(a) the purchaser's interest acquired under the conveyance; and

(b) the interest of the spouse of the purchaser who previously owned an eligible home anywhere in the world prior to the time he or she became the spouse of the purchaser, if the spouse is named in the conveyance.

No refund

(4) No refund shall be made under this section to any purchaser who has received a refund under section 9.

Limitation

(5) An application for a refund under this section shall be made no later than December 31, 1997.

14. (1) Subsection 22 (1) of the Act is amended by adding the following clause:

(d) defining "owned" for the purposes of the definition of "purchaser" in subsection 9.2 (1).

(2) Clause 22 (2) (a) of the Act is amended by inserting "or submitting" after "tendering" in the first and second lines.

(3) Clause 22 (2) (g) of the Act is amended by inserting "or 2.1 (3)" after "2 (3)" in the fifth line and by inserting "or submitting" after "tendering" in the seventh line.

PART IV

AMENDMENTS TO THE RACE TRACKS TAX ACT

15. The definition of "triactor bet" in section 1 of the Race Tracks Tax Act is repealed.

16. Section 2 of the Act is repealed and the followingsubstituted:

Tax rate

2. Every person who places a bet in Ontario upon a race run at a race meeting held in Ontario or elsewhere shall pay to Her Majesty in right of Ontario a tax equal to 0.5 per cent of the amount of money deposited by the person with the operator at the time the bet is placed.

PART V

AMENDMENTS TO THE RETAIL SALES TAX ACT

17. (1) Subsection 7 (1) of the Retail Sales Tax Act, as amended by the Statutes of Ontario, 1992, chapter 13, section 4 and 1994, chapter 13, section 9, is further amended by adding the following paragraph:

2.2 1-800 and 1-888 telephone services, except for such telephone services as may be prescribed by the Minister.

(2) Section 7 of the Act, as amended by the Statutes of Ontario, 1992, chapter 13, section 4 and 1994, chapter 13, section 9, is further amended by adding the following subsection:

Application

(6) Paragraph 2.2 of subsection (1) applies to services rendered and charges incurred on or after July 1, 1996.

18. Subsection 48 (3) of the Act, as amended by the Statutes of Ontario, 1993, chapter 12, section 14 and 1994, chapter 13, section 25, is further amended by adding the following clause:

(m) providing for a rebate of the tax in whole or in part to a person engaged in the business of farming in respect of tangible personal property purchased on or after May 8, 1996 and not later than March 31, 1997 and incorporated into structures to be used exclusively for farm purposes and prescribing the terms and conditions under which such rebates may be made.

PART VI

AMENDMENTS TO THE TOBACCO TAX ACT

19. Subsection 2 (1) of the Act, as re-enacted by the Statutes of Ontario, 1994, chapter 18, section 8, is repealed and the following substituted:

Tax on consumers

(1) Every consumer shall pay to Her Majesty in right ofOntario a tax at the rate of,

(a) 24 per cent of the taxable price per cigarette on every cigarette and on every gram or part thereof of any tobacco, other than cigars and cigarettes, purchased by the consumer, rounded to the nearest tenth of a cent; and

(b) 45 per cent of the price at retail of every cigar that is purchased by the consumer, provided that where the application of such a rate of tax produces a fraction of a cent, the fraction shall be counted as one full cent.

Same

(1.1) If, after May 7, 1996,

(a) the duty levied under the Excise Act (Canada) is changed under that Act from $0.027475 on a cigarette; or

(b) the tax levied under the Excise Tax Act (Canada), other than under Part IX, on cigarettes marked or stamped in accordance with this Act is changed under that Act from $0.006776 on a cigarette,

the tax levied under clause (1) (a) shall increase or decrease, as the case may be, by the full amount of the change, rounded to the nearest tenth of a cent, and shall be effective on the same day as the change.

Taxable price per cigarette

(1.2) For the purposes of subsection (1), the taxable price per cigarette is the price per cigarette from time to time prescribed by the Minister as the taxable price per cigarette for such period as the Minister prescribes, and in determining the taxable price per cigarette, the Minister shall use the average price obtained by the Minister from any periodic sampling the Minister considers appropriate of retail prices of packages of 25 cigarettes in such parts of Ontario as the Minister shall direct a sample to be taken.

Same

(1.3) The retail prices of packages of 25 cigarettes shall be determined under subsection (1.2) excluding,

(a) tax under this Act, the Retail Sales Tax Act, and Part IX of the Excise Tax Act (Canada);

(b) the amount of the duty under the Excise Act (Canada) that is set out in clause (1.1) (a); and

Transition

(1.4) Until the taxable price per cigarette is prescribed by the Minister, every consumer shall pay to Her Majesty in right of Ontario a tax at the rate of 1.7 cents on every cigarette and on every gram or part thereof of tobacco, other than cigars and cigarettes, purchased by the consumer, rather than the amount set out in clause (1) (a).

PART VII

AMENDMENTS TO THE CORPORATIONS TAX ACT

20. The Corporations Tax Act is amended by adding the following section:

Surcharge on banks

66.1 (1) In addition to the tax determined under subsection 66 (2) for a taxation year, every bank shall pay an additional tax for the year equal to the amount, if any, determined according to the following formula:

T = 0.00112 x (A - $400,000,000) x B/C x D/A

Where:

"T" is the amount of the additional tax payable by the bank for the taxation year;

"A" is the bank's taxable paid-up capital for the taxation year;

"B" is the number of days in the taxation year after May 7, 1996 and before November 1, 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 that is not deemed for the purposes of section 67 to be used by the bank in the taxation year in a jurisdiction outside Ontario.

Small business investment tax credit

(2) A bank 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 the bank's surcharge account for the year;

(b) the amount of the bank's small business investment tax credit account for the year or nil, if the amount of the bank's small business investment taxcredit account is a negative amount; and

Surcharge account

(3) The amount of a bank's surcharge account for a taxation year is the amount, if any, by which,

(a) the total of the additional taxes payable by the bank as determined under subsection (1) for the taxation year and all prior taxation years, plus the total of all small business investment tax credit repayments, if any, required to be paid under subsection (12) for prior taxation years,

exceeds,

(b) the total of all small business investment tax credits that were deductible and were deducted by the bank under subsection (2) for prior taxation years.

Small business investment tax credit account

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

(a) 10 per cent of the total of all amounts each of which is the qualifying amount of an eligible investment made before the end of the taxation year in a qualifying small business corporation by the bank or by a specified corporation in which the bank held an ownership interest 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 bank under subsection (12) for prior taxation years,

exceeds the total of,

(c) 10 per cent of the total of all amounts each of which is the amount determined under rules prescribed by the regulations in respect of the disposition of an investment prescribed by the regulations, after May 7, 1996 and before the end of the taxation year, by the bank or by a specified corporation in which the bank held an ownership interest at the time of the disposition; and

(d) all small business investment tax credits that were deductible and deducted by the bank undersubsection (2) for prior taxation years.

Qualifying small business corporation

(5) A corporation is a qualifying small business corporation at a particular time if,

(a) it is a Canadian-controlled private corporation;

(b) it carries on business in Ontario through one or more permanent establishments;

(d) all or substantially all of the fair market value of the corporation's assets is attributable to assets used principally in an active business carried on by the corporation primarily in Ontario.

Same

(6) A corporation is also a qualifying small business corporation at a particular time if it is associated with a corporation referred to in subsection (5) and satisfies the conditions prescribed by the regulations.

Eligible investment

(7) An investment in a corporation is an eligible investment in a qualifying small business corporation if,

(a) the investment is made after May 7, 1996 and before January 1, 2000;

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

(d) at the time the investment is made and immediately afterwards, the corporation is a qualifying small business corporation.

Specified corporation

(8) A corporation is a specified corporation with respect to a particular investment in a qualifying small business corporation if,

(a) it is either a specialized financing corporation for the purposes of Part IX of the Bank Act (Canada) or a type of corporation prescribed by the regulations; and

(b) it satisfies the requirements prescribed by theregulations.

Qualifying amount of eligible investment

(9) The qualifying amount of an eligible investment made by a bank in a qualifying small business corporation shall be determined in accordance with the following rules:

1. If immediately before the investment is made neither the amount of the total assets of the qualifying small business corporation's corporate group nor the amount of the corporate group's gross revenue is greater than $1,000,000, the qualifying amount of the eligible investment is the amount of the eligible investment as determined under the rules prescribed by the regulations.

2. If immediately before the investment is made either the amount of the total assets of the qualifying small business corporation's corporate group or the amount of the corporate group's gross revenue is equal to or greater than $5,000,000, the qualifying amount of the eligible investment is nil.

3. If immediately before the investment is made the amount of the total assets of the qualifying small business corporation's corporate group or the corporate group's gross revenue, whichever is the greater amount, exceeds $1,000,000 but is less than $5,000,000, the qualifying amount of the eligible investment is the amount determined in accordance with the following formula:

A = B x (1 - C / 4,000,000)

Where:

"A" is the qualifying amount of the eligible investment;

"B" is the amount of the eligible investment as determined under the rules prescribed by the regulations; and

"C" is the amount by which the amount of the total assets of the qualifying small business corporation's corporate group or the amount of the corporate group's gross revenue, whichever is greater, exceeds $1,000,000.

Same

(10) The qualifying amount of an eligible investment made in a qualifying small business corporation by a specifiedcorporation shall be the amount determined by multiplying,

(a) the amount that would be determined under subsection (9) to be the qualifying amount of the eligible investment if the bank had made the eligible investment in the qualifying small business corporation,

by,

(b) the percentage determined under the rules prescribed by the regulations.

Determination of total assets and gross revenue

(11) For the purposes of this section, the amount of the total assets and gross revenue of a qualifying small business corporation's corporate group shall be determined in accordance with the following rules:

1. The total assets of the corporate group shall include the total assets of all corporations in the group.

2. The gross revenue of the corporate group shall include the gross revenue of all corporations in the group.

3. The total assets of a corporation in the corporate group shall include, if the corporation is a member of a partnership, 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 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 corporation in the corporate group shall include, if the corporation is a member of a partnership, 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 corporation is entitled as a partner in the partnership.

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

Small business investment tax credit repayment

(12) If the amount of a bank's small business investment tax credit account is a negative amount for a taxation year, the bank 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 bank under subsection (2) for prior taxation years exceeds the total of all small business investment tax credit repayments required to be paid by the bank under this subsection for prior taxation years.

Deemed tax

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

Definition

(14) In this section,

"corporate group", in respect of a qualifying small business corporation, means the group of corporations that includes the qualifying small business corporation and all corporations associated with it. ("groupe")

21. Subsection 67 (2) of the Act, as re-enacted by the Statutes of Ontario, 1994, chapter 14, section 29, is repealed and the following substituted:

Deduction from tax for banks

(2) A bank may deduct from the tax determined under subsection 66 (2) that would otherwise be payable by it for a taxation year an amount equal to 1.12 per cent of that portion of its taxable paid-up capital that is deemed under the rules prescribed by the regulations to have been used by the bank during the taxation year in a jurisdiction outside Ontario.

22. Section 72 of the Act is amended by striking out "or" at the end of clause (a), by adding "or" at the end of clause (b) and by adding the following clause:

23. Subsection 112 (1) of the Act, as amended by the Statutes of Ontario, 1994, chapter 14, section 52, is further amended by adding the following clauses:

(h) prescribing the method for determining the total assets or gross revenue of a corporation in a qualifying small business corporation's corporate group under subsection 66.1 (11);

(i) defining "disposition" for the purposes of section 66.1.

PART VIII

AMENDMENT TO THE FINANCIAL ADMINISTRATION ACT

24. Section 1.1 of the Financial Administration Act, as enacted by the Statutes of Ontario, 1994, chapter 17, section 62, is repealed and the following substituted:

Ontario Opportunities Fund

1.1 (1) The Minister of Finance shall establish as part of the Public Accounts of Ontario an account to be known as the Ontario Opportunities Fund in which shall be recorded,

(a) money paid to Ontario by any person for the purpose of deficit reduction or the retirement of any part of the indebtedness of Ontario or the purchase for cancellation of any securities issued by Ontario;

(b) the proceeds paid into the Consolidated Revenue Fund from the sale by Ontario or any Crown agency of assets sold for $1,000,000 or more; and

(c) the amount in each fiscal year by which the provincial deficit estimated in the Budget presented by the Minister of Finance to the Legislature for the fiscal year exceeds the actual provincial deficit for the fiscal year, after taking into account amounts recorded in the Fund under clauses (a) and (b), as disclosed in the Public Accounts for the fiscal year.

Same

(2) The amounts recorded in the Fund under clauses (1) (a) and (b) shall be applied in the fiscal year in which they are recorded toward the reduction of the provincial deficit for the fiscal year or to the reduction of the outstanding indebtedness of Ontario in a fiscal year in which there is no provincial deficit.

Application

(3) This section applies with respect to the fiscal yearended March 31, 1996 and to subsequent fiscal years.

PART IX

AMENDMENT TO THE FAMILY BENEFITS ACT

25. Section 2 of the Family Benefits Act is repealed.

PART X

GENERAL

Enactment of Schedule

26. The Ontario Loan Act, 1996, as set out in the Schedule, is hereby enacted.

Commencement

27. (1) Subject to subsections (2) to (8), this Act, including the Schedule, comes into force on the day it receives Royal Assent.

Same

(2) Sections 1 and 2 shall be deemed to have come into force on January 1, 1996.

Same

(3) Section 25 shall be deemed to have come into force on April 1, 1996.

Same

(4) Sections 12 and 13, subsection 14 (1) and sections 18 to 23 shall be deemed to have come into force on May 8, 1996.

Same

(5) Sections 7 to 11 and subsections 14 (2) and (3) shall be deemed to have come into force June 1, 1996.

Same

(6) Section 17 comes into force on July 1, 1996.

Same

(7) Sections 3, 4, 5 and 6 come into force on January 1, 1997.

Same

(8) Sections 15 and 16 come into force on a day to be named by proclamation of the Lieutenant Governor.

Short title

28. The short title of this Act is the Tax Cut and Economic Growth Act, 1996.

Schedule

ONTARIO LOAN ACT, 1996

Borrowing authorized

1. (1) The Lieutenant Governor in Council may borrow in any manner provided by the Financial Administration Act such sums, not exceeding a total aggregate amount of $10.4 billion, as are considered necessary to discharge any indebtedness or obligation of Ontario, to make any payment authorized or required by any Act to be made out of the Consolidated Revenue Fund or to reimburse the Consolidated Revenue Fund for money expended for any of such purposes.

Other Acts

(2) The authority to borrow conferred by this Act is in addition to that conferred by any other Act.

Expiry

2. No order in council authorizing borrowing under this Act shall be made after December 31, 1997.

Short title

3. The short title of the Act set out in this Schedule is the Ontario Loan Act, 1996.