Bill 81, Tax Credits and Revenue Protection Act, 1998

Versions

B081_E

Bill 81 1998

An Act to implement tax credits and revenue protection measures contained in the 1998 Budget, to make amendments to other statutes and to enact a new statute

CONTENTS

Part I

Part II

Part III

Part IV

Part V

Part VI

Part VII

Part VIII

Part IX

Part X

Part XI

Part XII

Part XIII

Schedule

Ambulance Act

Community Small Business Investment Funds Act

Corporations Tax Act

Employer Health Tax Act

Estate Administration Tax Act, 1998 and the Estates Act

Income Tax Act

Land Transfer Tax Act

Ontario Lottery Corporation Act

Pension Benefits Act

Retail Sales Tax Act

Teachers' Pension Act

Tobacco Tax Act

Commencement and short title

Estate Administration Tax Act, 1998

Partie I

Partie II

Partie III

Partie IV

Partie V

Partie VI

Partie VII

Partie VIII

Partie IX

Partie X

Partie XI

Partie XII

Partie XIII

Annexe

Loi sur les ambulances

Loi sur les fonds communautaires d'investissement dans les petites entreprises

Loi sur l'imposition des corporations

Loi sur l'impôt-santé des employeurs

Loi de 1998 de l'impôt sur l'administration des successions et Loi sur les successions

Loi de l'impôt sur le revenu

Loi sur les droits de cession immobilière

Loi sur la Société des loteries de l'Ontario

Loi sur les régimes de retraite

Loi sur la taxe de vente au détail

Loi sur le régime de retraite des enseignants

Loi de la taxe sur le tabac

Entrée en vigueur et titre abrégé

Loi de 1998 de l'impôt sur l'administration des successions

______________

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

PART I

AMBULANCE ACT

1. The definition of "designated area" in subsection 1 (1) of the Ambulance Act, as enacted by the Statutes of Ontario, 1997, chapter 30, Schedule A, section 2, is amended by striking out "designated under subsection 6.7 (3)" in the first and second lines and substituting "described in an order made under subsection 6.7 (1)".

2. Section 6.2 of the Act, as enacted by the Statutes of Ontario, 1997, chapter 30, Schedule A, section 6, is repealed.

3. (1) Subsections 6.7 (1), (2) and (3) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 30, Schedule A, section 6, are repealed and the following substituted:

Designation of delivery agent

(1) For the purposes of this Part, the Minister may by order designate a delivery agent for any geographic area of the Province described in the order.

Designated area

(2) Despite Part III, a designated area described in an order made under subsection (1) may include the territory of one or more upper-tier municipalities.

Delivery agents

(3) The following organizations may be designated as delivery agents under this section:

1. An upper-tier municipality or a local municipality.

2. An agency, board or commission established by the Province.

(2) Subsection 6.7 (5) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 30, Schedule A, section 6, is amended by inserting "and upper-tier municipality" after "municipality" in the third line.

4. (1) Subsection 6.8 (1) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 30, Schedule A, section 6, is amended by striking out "Subject to subsection (3)," at the beginning.

(2) Section 6.8 of the Act, as enacted by the Statutes of Ontario, 1997, chapter 30, Schedule A, section 6, is amended by adding the following subsection:

If upper-tier municipality included in designated area

(1.1) If a designated area includes an upper-tier municipality, the upper-tier municipality ceases to have the powers, duties and responsibilities assigned to it under Part III.

(3) Subsection 6.8 (2) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 30, Schedule A, section 6, is amended by striking out "Subject to subsection (3)," at the beginning.

(4) Subsection 6.8 (3) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 30, Schedule A, section 6, is repealed.

5. (1) Subsection 6.9 (2) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 30, Schedule A, section 6, is amended,

(a) by striking out "local municipalities" in the second line and substituting "local or upper-tier municipalities"\; and

(b) by striking out "local" in the fifth line and in the sixth line.

(2) Subsection 6.9 (3) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 30, Schedule A, section 6, is amended,

(a) by striking out "local municipalities" in the second line and substituting "local or upper-tier municipalities"\; and

(b) by striking out "local" in the sixth line and in the seventh line.

(3) Subsection 6.9 (6) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 30, Schedule A, section 6, is amended by striking out "local municipality" in the second and third lines and substituting "local or upper-tier municipality".

6. Subsection 6.10 (3) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 30, Schedule A, section 6, is amended by inserting "or any person or body designated by the Minister" after "Minister" in the first line.

7. Subsection 17 (2) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 30, Schedule A, section 13, is repealed and the following substituted:

Service on municipality

(2) Any notice under this Act required to be served on a delivery agent that is a local municipality or an upper-tier municipality shall,

(a) if served personally, be served on the treasurer, clerk or deputy-clerk of the municipality; or

(b) if served by registered mail, be sent to the office of the treasurer, clerk or deputy-clerk of the municipality.

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

By-laws

17.1 (1) The council of a local municipality or upper-tier municipality may pass by-laws,

(a) relating to the establishment or acquisition of an ambulance service and the maintenance, operation and use of such a service; and

(b) with respect to ensuring the provision of land ambulance services in the municipality.

Conflict

(2) A by-law passed under this section is without effect to the extent that it conflicts with a regulation, an order made under this Act or a condition of a licence issued under this Act.

9. (1) Paragraph 1 of subsection 22 (2.1) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 30, Schedule A, section 18, is amended by adding "subject to prescribed conditions" at the end.

(2) Paragraph 1 of subsection 22 (2.3) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 30, Schedule A, section 18, is amended,

(a) by striking out "local municipalities" in the first line and substituting "local and upper-tier municipalities"\; and

(b) by adding "subject to prescribed conditions" at the end.

(3) Paragraph 2 of subsection 22 (2.3) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 30, Schedule A, section 18, is amended by striking out "local municipalities" in the fourth line and substituting "local and upper-tier municipalities".

(4) Paragraph 3 of subsection 22 (2.3) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 30, Schedule A, section 18, is amended,

(a) by striking out "local municipalities" in the third line and substituting "local and upper-tier municipalities"\; and

(b) by striking out "local" in the sixth line.

(5) Clause 22 (2.6) (b) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 30, Schedule A, section 18, is amended by striking out "local" in the second line.

(6) Clause 22 (2.6) (c) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 30, Schedule A, section 18, is repealed and the following substituted:

(c) require the payment of interest if payment is late and either prescribe the interest or method of determining interest or provide that interest be set by a municipality or delivery agent specified in the regulation.

(7) Section 22 of the Act, as amended by the Statutes of Ontario, 1996, chapter 32, section 59, 1997, chapter 15, section 1 and 1997, chapter 30, Schedule A, section 18, is further amended by adding the following subsection:

Retroactive

(2.7) A regulation under subsection (2.1) or (2.3) may, if it so provides, be effective with respect to a period before it is filed so long as that period commences no earlier than January 1, 1998.

10. Section 22.0.1 of the Act, as enacted by the Statutes of Ontario, 1997, chapter 30, Schedule A, section 19, is amended by adding the following subsections:

Allocation of shared costs

(2.1) A regulation under clause (2) (b) may do one or more of the following:

1. Authorize the affected upper-tier municipalities and delivery agents to determine by agreement how the shared costs are to be allocated among them, subject to prescribed conditions.

2. Provide for an arbitration process to determine how the shared costs are to be allocated among the affected upper-tier municipalities and delivery agents.

3. Provide for the manner in which costs are to be allocated and for the time and manner in which they are to be paid, on an interim basis, until such time as an agreement is reached or as a determination is made by arbitration.

4. Permit an agreement or the arbitration decision to apply to costs incurred and paid before the agreement or the arbitration decision is reached.

5. Provide for the reconciliation of amounts paid on an interim basis.

Same

(2.2) A regulation under paragraph 3 of subsection (2.1) may provide that it applies despite any agreement or arbitration decision or class of agreement or arbitration decision, or any provision thereof, referred to paragraph 1 or 2 of subsection (2.1).

Same

(2.3) A regulation under subsection (2.1) may,

(a) prescribe the time and manner in which apportioned amounts must be paid to an upper-tier municipality or a delivery agent, as the case may be;

(b) require the payment of any penalty by any upper-tier municipality or delivery agent if payment is late;

Retroactive

(2.4) A regulation under subsection (2.1) may, if it so provides, be effective with respect to a period before it is filed so long as that period commences no earlier than January 1, 1998.

Commencement

11. (1) Subject to subsection (2), this Part comes into force on the day the Tax Credits and Revenue Protection Act, 1998 receives Royal Assent.

Same

(2) Sections 1 to 10 come into force on a day to be named by proclamation of the Lieutenant Governor.

PART II

COMMUNITY SMALL BUSINESS INVESTMENT FUNDS ACT

12. Subsection 1 (1) of the Community Small Business Investment Funds Act, as amended by the Statutes of Ontario, 1994, chapter 17, section 76 and 1997, chapter 43, Schedule C, sections 2 and 23, is further amended by adding the following definition:

qualifying individual" means an individual who is ordinarily resident in Canada but does not include a trust. ("particulier admissible")

13. Subsection 17 (2) of the Act, as re-enacted by the Statutes of Ontario, 1997, chapter 43, Schedule C, section 8, is repealed and the following substituted:

Requirement to maintain eligible investments

(2) A labour sponsored investment fund corporation shall maintain in eligible investments an amount equal to the amount determined in the following manner:

1. Subtract the aggregate amount paid on the return of capital of Class A shares of the corporation from the amount of equity capital received by the corporation on the issue of its Class A shares.

2. Subtract from that amount the aggregate amount of equity capital received by the corporation on the issue of its Class A shares that have been issued and outstanding,

i. for at least five years, in the case of shares issued before May 7, 1996, and

ii. for at least eight years, in the case of shares issued after May 6, 1996.

3. Multiply the amount calculated under paragraph 2 by 70 per cent.

4. Add to that amount the lesser of,

i. the aggregate amount of realized gains of the corporation on its eligible investments, and

ii. the aggregate amount of realized losses of the corporation on its eligible investments.

5. Subtract from the amount calculated under paragraph 4 the aggregate amount of realized losses of the corporation on its eligible investments.

6. Subtract from that amount the amount of taxes that have been paid by the corporation under subsection 28 (3).

7. Subtract from the amount calculated under paragraph 6 the amount of taxes and penalties calculated using the formula,

A [ ( B * C ) / D ]

in which, "

A" is the amount of taxes and penalties that have been paid by the corporation under Part X.3 of the Income Tax Act (Canada), "

B" is the aggregate amount of equity capital received by the corporation, before the taxes or penalties were paid, on the issue of Class A shares to shareholders who were ordinarily resident in Ontario when the shares were issued, "

C" is the aggregate amount paid, before the taxes or penalties were paid, as a return of capital on Class A shares to shareholders who were ordinarily resident in Ontario when the shares were issued, and "

D" is the total equity capital of the corporation at the time the taxes or penalties were paid.

8. Add to that amount the amount of taxes and penalties described in paragraphs 6 and 7 that have been refunded to the corporation.

14. (1) Subsection 18.1 (4.1) of the Act, as re-enacted by the Statutes of Ontario, 1997, chapter 43, Schedule C, section 9, is repealed and the following substituted:

Restriction, eligible small business investments

(4.1) A labour sponsored investment fund corporation shall maintain in eligible small business investments an amount at least equal to the lesser of "A" and "B",

where, "

A" is the amount calculated by multiplying,

(a) 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), and

(b) the amount of equity capital received by the corporation on the issue of its Class A shares required by subsection 17 (2) to be maintained in eligible investments, and "

B" is the amount determined in the following manner:

1. Subtract the aggregate amount paid on the return of capital of Class A shares of the corporation from the amount of equity capital received by the corporation on the issue of its Class A shares.

2. Subtract from that amount the aggregate amount of equity capital received by the corporation on the issue of its Class A shares that have been issued and outstanding,

i. for at least five years, in the case of shares issued before May 7, 1996, and

ii. for at least eight years, in the case of shares issued after May 6, 1996.

3. Multiply the amount calculated under paragraph 2 by 70 per cent.

4. Multiply that amount by 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).

5. Add to the amount calculated under paragraph 4 the lesser of,

i. the aggregate amount of realized gains of the corporation on its eligible investments in small businesses, and

ii. the aggregate amount of realized losses of the corporation on its eligible investments in small businesses.

6. Subtract from that amount the aggregate amount of realized losses of the corporation on its eligible investments in small businesses.

7. Subtract from the amount calculated under paragraph 6 the amount calculated as follows:

i. Subtract from the amount described in subsection (4.2.1) the amount of taxes and penalties described in that subsection that have been refunded to the corporation.

ii. Multiply the amount calculated under subparagraph i by 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).

(2) Subsection 18.1 (4.2) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule C, section 9, is repealed and the following substituted:

Restriction, reporting issuer investments

(4.2) A labour sponsored investment fund corporation shall not hold in eligible investments that are reporting issuer investments an amount exceeding the lesser of "A" and "B",

where, "

A" is the amount calculated by multiplying,

(a) the maximum percentage of the equity capital received by the corporation on the issue of its Class A shares permitted under subsection (2.1) to be invested in eligible businesses that are reporting issuers, and

(b) the amount of equity capital received by the corporation on the issue of its Class A shares required by subsection 17 (2) to be maintained in eligible investments, and "

B" is the amount determined in the following manner:

1. Subtract the aggregate amount paid on the return of capital of Class A shares of the corporation from the amount of equity capital received by the corporation on the issue of its Class A shares.

2. Subtract from that amount the aggregate amount of equity capital received by the corporation on the issue of its Class A shares that have been issued and outstanding,

i. for at least five years, in the case of shares issued before May 7, 1996, and

ii. for at least eight years, in the case of shares issued after May 6, 1996.

3. Multiply the amount calculated under paragraph 2 by 70 per cent.

4. Multiply that amount by the maximum percentage of the equity capital received by the corporation on the issue of its Class A shares permitted under subsection (2.1) to be invested in eligible businesses that are reporting issuers.

5. Add to the amount calculated under paragraph 4 the lesser of,

i. the aggregate amount of realized gains of the corporation on its eligible investments in reporting issuers, and

ii. the aggregate amount of realized losses of the corporation on its eligible investments in reporting issuers.

6. Subtract from that amount the aggregate amount of realized losses of the corporation on its eligible investments in reporting issuers.

7. Subtract from the amount calculated under paragraph 6 the amount calculated as follows:

i. Subtract from the amount described in subsection (4.2.1) the amount of taxes and penalties described in that subsection that have been refunded to the corporation.

ii. Multiply the amount calculated under subparagraph i by the maximum percentage of the equity capital received by the corporation on the issue of its Class A shares permitted under subsection (2.1) to be invested in eligible businesses that are reporting issuers.

Same

(4.2.1) The amount referred to in subparagraph i of paragraph 7 of the definition of "B" in subsection (4.1) and in the same subparagraph in subsection (4.2) is the amount of taxes and penalties calculated using the formula,

C + [ D ( E * F ) / G ]

in which, "

C" is the amount of taxes that have been paid by the corporation under subsection 28 (3), "

D" is the amount of taxes and penalties that have been paid by the corporation under Part X.3 of the Income Tax Act (Canada), "

E" is the aggregate amount of equity capital received by the corporation, before the taxes or penalties were paid, on the issue of Class A shares to shareholders who were ordinarily resident in Ontario when the shares where issued, "

F" is the aggregate amount paid, before the taxes or penalties were paid, as a return of capital on Class A shares to shareholders who were ordinarily resident in Ontario when the shares were issued, and "

G" is the total equity capital of the corporation at the time the taxes or penalties were paid under Part X.3 of the Income Tax Act (Canada).

15. (1) The definition of "eligible investor" in subsection 18.2 (1) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule C, section 10, is amended by adding the following clause:

(b.1) an individual, a pension fund or a corporation that is not described in clause (a) or (b).

(2) Subsection 18.2 (2) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule C, section 10, is amended by striking out "December 31, 1998" in the third and fourth lines and substituting "December 31, 1999".

(3) Subsection 18.2 (3) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule C, section 10, is repealed and the following substituted:

Same

(3) If a labour sponsored investment fund corporation set funds aside in accordance with section 24.1 before May 5, 1998, the investment period for investing those funds in a corporation registered under this Part ends on December 31, 1998.

16. (1) Clause 18.4 (1) (d) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule C, section 10, is repealed and the following substituted:

(d) the articles of the corporation restrict investment in shares of the corporation by a single investor or a related group to a maximum of $5 million;

(d.1) the articles of the corporation restrict the aggregate investment in shares of the corporation to a maximum of $10 million.

(2) Subsection 18.4 (1) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule C, section 10, is amended by adding the following clause:

(d.2) the articles of the corporation specify that each eligible investor who is described in clause (b.1) of the definition of "eligible investor" in subsection 18.2 (1) is not permitted to invest less than $150,000 in shares of the corporation.

17. Subsection 18.5 (1) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule C, section 10, is repealed and the following substituted:

Entitlement to registration

(1) A community sponsor is entitled to registration of a corporation by the Minister if all of the following requirements are met:

1. The community sponsor applies for registration under this Part and files the required documents before January 1, 2000.

2. The other requirements of this Part are satisfied.

3. The corporation has received offers from eligible investors to subscribe for its shares for an aggregate amount of not less than $5 million.

4. The corporation has received offers from eligible investors who are described in clauses (a) and (b) of the definition of "eligible investor" in subsection 18.2 (1) to subscribe for its shares for an aggregate amount greater than 50 per cent of the proposed capitalization of the corporation (as specified in the investment plan referred to in subsection 18.3 (2)).

18. (1) Clause 18.8 (1) (a) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule C, section 10, is repealed and the following substituted:

(a) the investment is made in a business that, when the investment is made, is an eligible business primarily engaged in one or more eligible business activities carried on within the community.

(2) Subclause 18.8 (1) (b) (i) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule C, section 10, is amended by striking out "Class A shares" in the sixth line and substituting "shares".

(3) Subclause 18.8 (1) (c) (iv) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule C, section 10, is amended by adding "subject to subsection (1.1)" at the beginning.

(4) Section 18.8 of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule C, section 10, is amended by adding the following subsection:

Exception

(1.1) Subclause (1) (c) (iv) does not apply with respect to the purchase of goods or services from a shareholder who is a sponsor of the corporation described in paragraph 2, 3, 4 or 5 of subsection 18.3 (1) or from a person who is related to such a shareholder.

(5) Subsection 18.8 (2) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule C, section 10, is amended by striking out "subsections 20 (5) and (6) and section 28.1" in the first and second lines and substituting "and subsections 20 (5) and (6)".

(6) Section 18.8 of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule C, section 10, is amended by adding the following subsection:

Deemed cost

(3) For the purposes of subsection 28.1 (1), the cost to a community small business investment fund corporation of an eligible investment that is a guarantee shall be deemed to be 25 per cent of the aggregate amount of the debt obligations in respect of which the guarantee is provided.

19. (1) Section 19 of the Act, as amended by the Statutes of Ontario, 1997, chapter 43, Schedule C, section 11, is further amended by adding the following subsection:

Exception

(1.1) Despite subsection (1), the Minister may permit an investment corporation to maintain assets in an investment that is not an eligible investment,

(a) if the investment is an additional investment in a business that was an eligible business when the corporation first invested in the business;

(b) if the additional investment is made in order to facilitate a financial restructuring of the business; and

(c) if the corporation undertakes (in a form satisfactory to the Minister) to dispose of the additional investment within 36 months after it is made or within such other period as the Minister approves.

(2) Clause 19 (2) (a) of the Act, as re-enacted by the Statutes of Ontario, 1997, chapter 43, Schedule C, section 11, is amended by striking out "paragraphs (a), (b), (c), (f) and (h)" in the first and second lines and substituting "paragraphs (a), (b), (c), (f), (g) and (h)".

(3) Clause 19 (2) (a) of the Act, as amended by subsection (2), is further amended by striking out "(g) and (h)" in that amendment and substituting "and (g)".

20. (1) Subsection 24.1 (2) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule C, section 14, is repealed and the following substituted:

Investment credit

(2) Subject to subsection (3), if a labour sponsored investment fund corporation invests or sets aside funds for investment in a community small business investment fund corporation, the Minister may, on application, allow the corporation to do one of the following things:

1. To treat twice the amount invested or set aside as an amount invested in an eligible business that is a small business, for the purpose of determining whether the corporation meets the requirements of subsection 18.1 (3); and, to treat the amount invested or set aside as an amount invested in an eligible investment, for the purpose of determining whether the corporation meets the requirements of subsections 17 (1) and (2).

2. To reduce the amount of tax owing by the corporation under subsection 28 (3) for the calendar year in which the funds are invested or set aside. The amount of the tax reduction is twice the amount invested or set aside.

(2) Subsection 24.1 (3) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule C, section 14, is repealed and the following substituted:

Investment deadlines

(3) The following are the deadlines for investing the funds set aside under subsection (1) and the consequences of missing the deadlines:

1. Funds set aside before May 5, 1998 must be invested in a community small business investment fund corporation before January 1, 1999. If they are not,

i. in the case of a corporation that treated the amount set aside as described in paragraph 1 of subsection (2), that paragraph ceases to apply on December 31, 1998 with respect to the funds that are not so invested and the corporation is required to invest the funds, together with the interest earned on them, as required by subsection 18.1 (3), and

ii. in the case of a corporation that reduced the amount of tax owing as described in paragraph 2 of subsection (2), that paragraph shall be deemed never to have applied with respect to the funds set aside.

2. Funds set aside after May 4, 1998 must be invested in a community small business investment fund corporation before January 1, 2000. If they are not,

i. in the case of a corporation that treated the amount set aside as described in paragraph 1 of subsection (2), that paragraph ceases to apply on December 31, 1999 with respect to the funds that are not so invested and the corporation is required to invest the funds, together with the interest earned on them, as required by subsection 18.1 (3), and

(3) Subsection 24.1 (4) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule C, section 14, is amended by,

(a) striking out "this Part" in the third line and substituting "Part III.1"\;

(b) striking out "subsection 17 (1)" in the ninth line and substituting "subsections 17 (1) and (2)"\; and

(c) adding at the end "in eligible investments".

21. (1) Paragraph 5 of subsection 25 (4) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 24, section 7, is repealed and the following substituted:

5. The amount of the tax credit deductible in determining the amount of tax payable under the Income Tax Act for the 1997 taxation year is the lesser of,

i. $525, and

ii. an amount equal to 15 per cent of the equity capital received by the corporation from the eligible investor after 1996 and before March 2, 1998 for Class A shares issued by the corporation, excluding any portion of the equity capital that was taken into consideration in determining the amount of a tax credit for the 1996 taxation year.

6. The amount of the tax credit deductible in determining the amount of tax payable under the Income Tax Act for any taxation year after 1997 is the lesser of,

i. $750, and

ii. an amount equal to 15 per cent of the equity capital received by the corporation from the eligible investor after the end of the preceding taxation year and before the day that is 61 days after the end of the taxation year for Class A shares issued by the corporation, excluding any portion of the equity capital that was taken into consideration in determining the amount of a tax credit for the preceding year.

(2) Subsection 25 (4.1) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule C, section 15, is amended by striking out "December 31, 1998" in the tenth line and substituting "December 31, 1999".

(3) Subsection 25 (4.2) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule C, section 15, is repealed and the following substituted:

Additional credit

(4.2) If a community small business investment fund corporation makes one or more eligible investments under Part III.1 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 calculated using the formula,

A B

in which, "

A" is the amount invested in the year by the community small business investment fund corporation in eligible investments, and "

B" is the percentage of Class A shares of the community small business investment fund corporation that are held by the qualifying financial institution or by a specified corporation or insurance corporation related to the qualifying financial institution for the purposes of section 66.1 of the Corporations Tax Act.

(4) Section 25 of the Act, as amended by the Statutes of Ontario, 1994, chapter 17, section 88, 1996, chapter 24, section 7 and 1997, chapter 43, Schedule C, section 15, is further amended by adding the following subsections:

Investment incentive for qualifying individuals

(4.3) A qualifying individual may apply for an investment incentive if the individual is the beneficial and registered owner of Class A shares of a community small business investment fund corporation purchased directly from the corporation before January 1, 2000.

Additional incentive

(4.4) A qualifying individual may apply for an additional investment incentive if the individual holds Class A shares of a community small business investment fund corporation that makes one or more eligible investments under this Part.

Application for incentive

(4.5) An application for an investment incentive or an additional investment incentive shall be made to the Minister and shall be in a form approved by the Minister.

Same

(4.6) The Minister may authorize a community small business investment fund corporation to apply on behalf of its shareholders for investment incentives and additional investment incentives, and may impose conditions with respect to the authorization.

Payment of incentives

(4.7) Subject to subsection (4.8), the Minister shall pay the investment incentive and, if applicable, the additional investment incentive to the qualifying individual if the Minister is satisfied of the following:

1. That the community small business investment fund corporation and its eligible investors are complying with the corporation's approved investment plan.

2. That the shares to which the incentive relates do not constitute a type of security that entitles the holder to receive any other financial assistance from a government, municipality or public authority in respect of the acquisition of those shares.

3. That the incentive relates to shares purchased by the individual directly from the corporation issuing the shares.

4. That such other requirements as may be prescribed are met.

Exception

(4.8) The Minister shall not pay the investment incentive and, if applicable, the additional investment incentive to the qualifying individual if the Minister considers that the community small business investment fund corporation, or its directors, officers or shareholders, are conducting the affairs of the corporation in a manner contrary to the spirit and intent of this Act, whether or not this Act or the regulations have been contravened.

Amount of incentive

(4.9) The amount of the investment incentive referred to in subsection (4.3) is the lesser of,

(a) $37,500; and

(b) 7.5 per cent of the amount paid by the qualifying individual before January 1, 2000 to the community small business investment fund corporation on the issue of Class A shares.

Amount of additional incentive

(4.10) The amount of the additional incentive referred to in subsection (4.4) is the lesser of,

(a) $37,500; and

(b) 7.5 per cent of the amount invested by the community small business investment fund corporation in eligible investments under Part III.1 multiplied by the percentage of Class A shares of the corporation that are held by the qualifying individual.

(5) Section 25 of the Act, as amended by the Statutes of Ontario, 1994, chapter 17, section 88, 1996, chapter 24, section 7 and 1997, chapter 43, Schedule C, section 15, is further amended by adding the following subsections:

Extensions for 1997, certain investors

(10) The following rules apply with respect to eligible investors who ordinarily resided between January 1 and March 1, 1998 in an area of Ontario in which the postal code begins with the letter "K":

1. The application required by subsection (3) on behalf of those eligible investors who paid during 1997 must be made on or before March 31, 1998.

2. The amount of the tax credit for 1997 that may be claimed under paragraph 5 of subsection (4) by those eligible investors is determined as if the reference to the 61st day in that paragraph were a reference to the 91st day.

Repeal

(11) Subsection (10) is repealed on December 31, 1998.

22. Section 25.1 of the Act, as enacted by the Statutes of Ontario, 1996, chapter 24, section 8 and amended by 1996, chapter 29, section 13, is further amended by adding the following subsections:

Declaration of non-application

(5.1) The Minister may declare that subsections (3), (4) and (5) do not apply to a corporation if the corporation has reduced its tax liability under subsection 28 (3) for a calendar year to nil as a result of a reduction described in paragraph 2 of subsection 24.1 (2).

Same

(5.2) The declaration applies with respect to such period as the Minister specifies, but the period shall expire no earlier than the end of the calendar year after the calendar year referred to in subsection (5.1).

Revocation of declaration

(5.3) The Minister may revoke the declaration if the Minister considers that the corporation set aside funds as described in subsection 24.1 (1) for the primary purpose of avoiding the application of subsections (3), (4) and (5).

Penalty upon revocation

(5.4) If the Minister revokes the declaration, the corporation shall pay a penalty equal to the total amount of all investment corporation tax credits for which it issued tax credit certificates while the declaration was in effect.

23. Clause 28 (4) (b) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 29, section 14, is repealed and the following substituted:

(b) the Minister is satisfied that the corporation,

(i) is maintaining the required level of eligible investments,

(ii) does not hold eligible investments in excess of the level permitted by section 18.1 in eligible businesses that are reporting issuers under the Securities Act, and

(iii) is maintaining the level of eligible investments required by section 18.1 in eligible businesses that are small businesses.

24. (1) Subsection 28.1 (1) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule C, section 18, is amended by inserting at the beginning "Subject to subsection (1.1)".

(2) The definition of "P" in subsection 28.1 (1) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule C, section 18, 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:

(3) Section 28.1 of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule C, section 18, is amended by adding the following subsection:

Maximum amount

(1.1) A shareholder who is a qualifying individual is not required to pay tax under subsection (1) in an amount greater than $37,000 less the total of all amounts paid under that subsection that have not been rebated.

Commencement

25. (1) Except as otherwise specified in this section, this Part comes into force on the day the Tax Credits and Revenue Protection Act, 1998 receives Royal Assent.

Same

(2) Subsection 16 (1), sections 17 and 18 and subsections 19 (2), 20 (1) and (3) and 21 (3) shall be deemed to have come into force on May 7, 1997.

Same

(3) Section 12, subsections 15 (1), 16 (2) and 21 (4) and section 24 shall be deemed to have come into force on January 1, 1998.

Same

(4) Subsection 21 (5) shall be deemed to have come into force on March 1, 1998.

Same

(5) Subsection 20 (2) shall be deemed to have come into force on May 5, 1998.

Same

(6) Subsection 19 (1) and section 22 shall be deemed to have come into force on November 23, 1998.

PART III

CORPORATIONS TAX ACT

26. Section 1 of the Corporations Tax Act, as amended by the Statutes of Ontario 1992, chapter 3, section 1, 1994, chapter 14, section 1, 1996, chapter 1, Schedule B, section 1, 1996, chapter 29, section 36, 1997, chapter 19, section 4 and 1997, chapter 43, Schedule A, section 1, is further amended by adding the following subsection:

Income Tax Regulations (Canada)

(7.1) The reference in subsection (7) to the provisions of the Income Tax Act (Canada) includes a reference to the provisions of the Income Tax Regulations (Canada) as made, amended and remade from time to time.

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

Anti-avoidance of provincial tax

5.2 (1) Subject to subsections (2) and (3), if a corporation deducts or claims an amount under a provision of this Act, or of the Income Tax Act (Canada) as it applies for the purposes of this Act, that is less than the maximum amount the corporation may deduct or claim in determining its income or taxable income for the taxation year, or fails to deduct or claim any amount under the provision for the taxation year, the corporation shall be deemed to deduct or claim an amount under the provision in determining its income or taxable income, as the case may be, for the taxation year, in addition to the amount, if any, that it has deducted or claimed under the provision, equal to the amount, if any, by which the lesser of "A" and "B" exceeds "C",

where, "

A" is the greatest amount that may be deducted or claimed by the corporation under the provision in determining its income or taxable income under this Act for the taxation year, "

B" is the greatest of the amounts deducted or claimed by the corporation under the corresponding provisions of the laws of other provinces in computing its income or taxable income for the taxation year under the laws of the other provinces, and "

C" is the amount, if any, that the corporation deducted or claimed under the provision for the taxation year before the application of this subsection.

Same

(2) Subsection (1) does not apply to a corporation for a taxation year unless the following conditions are satisfied:

1. The corporation's Ontario allocation factor for a subsequent taxation year, within the meaning of subsection 12 (1), is at least 20 per cent greater than the corporation's Ontario allocation factor for the taxation year.

2. The amount that would be the corporation's income or taxable income for the taxation year, determined under this Act before the deduction of any amount deemed by subsection (1) to be deducted or claimed under the provision referred to in that subsection, is greater than the corporation's income or taxable income, as the case may be, for the taxation year determined under the law of a province other than Ontario because the corporation deducted or claimed a greater amount in determining its income or taxable income under the corresponding provision of the law of the other province.

3. The total amount of all income tax that would be payable by the corporation to one or more provinces for all taxation years commencing with the taxation year and ending with the subsequent taxation year, determined before the deduction of any amount deemed to be claimed or deducted under subsection (1) for the taxation year, is less than the total amount of provincial income tax that would be payable by the corporation for those taxation years, determined after the deduction of the amount deemed to be claimed or deducted under subsection (1) and after all consequential adjustments are made to the corporation's income and taxable income for those taxation years that would be required by reason of the increase required by subsection (1) in the total amount deducted or claimed under the provision for the taxation year.

Limitation

(3) The maximum amount that a corporation is deemed to deduct or claim for a taxation year by virtue of subsection (1) under the provisions of this Act, or of the Income Tax Act (Canada) as they apply for the purposes of this Act, shall not exceed the amount that would be the corporation's taxable income for the taxation year under this Act before any amount is deemed to be deducted or claimed under this section for the taxation year.

Partnerships

(4) If a corporation is a member of a partnership during a taxation year, subsections (1), (2) and (3) apply with necessary modifications in determining the corporation's share of the income or loss of the partnership for a fiscal period ending in the taxation year.

(2) Section 5.2 of the Act, as enacted by subsection (1), applies in respect of taxation years ending after the day subsection (1) comes into force.

28. (1) Subsection 11 (5) of the Act, as re-enacted by the Statutes of Ontario, 1997, chapter 43, Schedule A, section 5, is repealed and the following substituted:

Add-back 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 the total of the amounts described in subsection (5.1) deducted by the corporation in computing its income for the taxation year, each of which is paid or payable to,

(a) a non-resident person who, at any time in the corporation's taxation year, did not deal at arm's length with the corporation; or

(b) a non-resident owned investment corporation which, at any time in the corporation's taxation year, did not deal at arm's length with the corporation.

Payments

(5.1) The following amounts are described in this subsection for the purposes of subsection (5):

1. All management or administration fees and charges, including fees and charges calculated by reference to the sale of goods or services, production or profits, but not including,

i. any amount that is not included in the amount determined under subsection 212 (4) of the Income Tax Act (Canada), or

ii. if the management or administration fee or charge is calculated on the basis of cost plus a mark-up, the portion of that fee or charge equal to the total of specific expenses incurred by the non-resident person in the performance of the service for the benefit of the corporation.

2. All rents, royalties and similar payments other than amounts,

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

ii. that are for the use of, or for 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 payments are 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.

3. Amounts in consideration for a right in or for the use of,

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.

Exclusions from amount

(5.2) Despite subsection (5.1), the following amounts shall not be included in the amounts described in that subsection:

1. An amount that would otherwise be included in an amount described in subsection (5.1) that is paid or payable to a person for the benefit of a third person who is a non-resident person entitled to the payment if,

i. the third person deals at arm's length with the corporation, and

ii. the amount is subsequently paid or payable to the third person.

2. An amount paid or payable to a non-resident person who is subject to tax under this Part or under Part I of the Income Tax Act (Canada), if the amount is included in computing the non-resident person's taxable income earned in Canada.

Interpretation

(5.3) For the purposes of subsection (5.1), a specific expense of a person is an explicit and identifiable expense that is paid or payable and is incurred directly by the person to provide for either the use of property by the corporation making the payment or to obtain goods or services for the benefit of the corporation making the payment.

Adjustment for unpaid amount

(5.4) A corporation may deduct an amount in computing its income for a taxation year equal to 5/15.5 of any amount required to be included in the corporation's income for the year under section 78 of the Income Tax Act (Canada), if the amount is included in the calculation of an amount included in the corporation's income under subsection (5) or (6) for the taxation year or a prior taxation year.

(2) Subsection 11 (7) of the Act is repealed and the following substituted:

Partnerships

(7) For the purposes of subsections (5), (5.1), (5.2), (5.4) and (6), if an amount is payable to a partnership, or by a partnership to a non-resident person, a non-resident owned investment corporation or another partnership, the following rules apply:

1. If the amount is paid or payable to a partnership, the amount shall be deemed to be paid or payable to each member of the partnership to the extent of that member's profit entitlement in the partnership.

2. If the amount is paid or payable by a partnership, the amount shall be deemed to be paid or payable by each member of the partnership to the extent of the member's profit entitlement in the partnership.

3. A person who is a member of a partnership that is a member of a second partnership is deemed to be a member of the second partnership entitled to a pro rata share of the income or loss of the second partnership that is reasonable in the circumstances.

4. The profit entitlement of a person as a member of a partnership is the person's proportionate share of the income or loss of the partnership to which the person is entitled under the partnership agreement, under paragraph 3 or at law.

(3) Subsections 11 (5), (5.1), (5.2), (5.3), (5.4) and (7) of the Act, as enacted or re-enacted by subsections (1) and (2), apply in respect of amounts that,

(a) are paid or payable after the day this Act receives Royal Assent; and

(b) are included in income for taxation years ending after the day this Act receives Royal Assent.

(4) Section 11 of the Act, as amended by the Statutes of Ontario, 1992, chapter 3, section 2, 1994, chapter 14, section 4, 1996, chapter 29, section 37 and 1997, chapter 43, Schedule A, section 5, is further amended by adding the following subsection:

Life insurance companies, "SAT" not deductible

(27) No deduction may be claimed by a corporation in computing its income for a taxation year in respect of any tax payable by the corporation under section 74.1.

(5) Subsection 11 (27) of the Act, as enacted by subsection (4), applies in respect of taxation years ending after the day this Act receives Royal Assent.

29. (1) Clauses (a) and (b) of the definition of "Ontario allocation factor" in subsection 12 (1) of the Act, as amended by the Statutes of Ontario, 1998, chapter 5, section 7, are further amended by striking out "section 13 or 13.1" in that amendment and substituting in each case "any of sections 13, 13.1 and 13.2".

(2) Clauses (a) and (b) of the definition of "Ontario allocation factor" in subsection 12 (1) of the Act, as amended by subsection (1), are further amended by striking out "13.1 and 13.2" in that amendment and substituting in each case "13.1, 13.2 and 13.3".

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

Workplace child care tax incentive

13.2 (1) A corporation, other than a child care operator, may deduct in computing its income from a business for a taxation year a workplace child care tax incentive for the taxation year equal to the amount determined using the formula,

( A / B ) 30%

in which, "

A" is the amount of the corporation's qualifying expenditures for the taxation year, and "

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

Qualifying expenditures

(2) Subject to subsection (4), the amount of a corporation's qualifying expenditures for a taxation year is the total of,

(a) all capital costs in respect of expenditures incurred by the corporation after May 5, 1998,

(i) in the construction or renovation of a licensed child care facility in Ontario that are included by the corporation for that year for the purposes of the Income Tax Act (Canada) in Class 1, 3, 6 or 13 of Schedule II to the regulations made under that Act, and

(ii) on the acquisition of playground equipment for the child care facility that are included by the corporation for that year for the purposes of the Income Tax Act (Canada) in Class 8 of Schedule II to the regulations made under that Act;

(b) all payments of money and the value of qualified contributions that are made by the corporation after May 5, 1998 to a child care operator who deals at arm's length with the corporation, to the extent the child care operator has used the money and contributions for the purposes described in clause (a) in the corporation's taxation year, so long as the operator has provided to the corporation,

(i) confirmation in writing of the amount of money and qualified contributions used for those purposes, and

(ii) the operator's license number under the Day Nurseries Act\; and

(c) repayments of government assistance made by the corporation during the taxation year that do not exceed the amount of the assistance that,

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

(ii) can reasonably be considered to have reduced the amount of a deduction that would otherwise have been allowed to the corporation under this section.

Qualified contribution

(3) The following contributions are qualified contributions from a corporation for the purposes of clause (2) (b):

1. The fair market value of property the ownership of which is transferred by the corporation to the child care operator, if the property is used by the child care operator in the activities and for the purposes described in clause (2) (a).

2. The fair market value of services provided by the corporation to the child care operator, if the services are used by the child care operator in the activities and for the purposes described in clause (2) (a).

3. The reasonable monetary value of the benefit from a loan or a loan guarantee given by the corporation to the child care operator, to the extent the proceeds of the loan are used by the child care operator in the activities and for the purposes described in clause (2) (a).

Limitation on qualifying expenditures

(4) The amount of a corporation's qualifying expenditures for a taxation year shall be determined after the deduction of,

(a) 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 section 75 for the taxation year for which the deduction is claimed under this section, the corporation has received, is entitled to receive or may reasonably be expected to be entitled to receive; and

(b) the amount, if any, of the expenditures that would not be considered to be reasonable in the circumstances if they had been incurred by persons dealing with each other at arm's length.

Corporate partner

(5) If a corporation is a member of an eligible partnership at the end of a taxation year and the partnership incurs, in a fiscal period of the partnership that ends in the taxation year, an expenditure in respect of a licensed child care facility that would be a qualifying expenditure for the purposes of this section if the expenditure had been made by the corporation, the portion of the expenditure that may reasonably be considered to be the corporation's share may be included in the corporation's qualifying expenditures for the taxation year for the purposes of this section.

Limited partner

(6) Despite subsection (5), a limited partner's share of an expenditure that is considered under subsection (5) to be a qualifying expenditure for the purposes of this section shall be deemed to be nil.

Definitions

(7) In this section, "

child care facility" means a day nursery as defined in the Day Nurseries Act (Ontario); ("garderie")

child care operator" means a person who has control or management of a child care facility; ("exploitant de garderie")

eligible partnership" means a partnership that does not carry on the business of a child care operator; ("société admissible")

licensed child care facility" means a child care facility operated under the authority of a licence issued by the Ministry of Community and Social Services under the Day Nurseries Act (Ontario); ("garderie agréée")

Ontario allocation factor" of a corporation for a taxation year has the meaning assigned by subsection 12 (1); ("coefficient de répartition de l'Ontario")

playground equipment" means a structure erected in the playground area of a licensed child care facility for recreational purposes. ("matériel de terrains de jeux")

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

Workplace accessibility tax incentive

13.3 (1) Subject to subsection (10), a corporation may deduct a workplace accessibility tax incentive in computing its income from a business for a taxation year.

Amount of tax incentive

(2) The amount of a corporation's workplace accessibility tax incentive for a taxation year is an amount equal to the total of the amounts determined under the following paragraphs:

1. The amount determined by dividing the amount of expenditures, if any, incurred by the corporation after July 1, 1998 and in the taxation year to provide during a job interview in Ontario the support services of a sign language interpreter, an intervenor, a note-taker, a reader or an attendant, by the corporation's Ontario allocation factor for the taxation year.

2. The total of all amounts, each of which is determined in respect of a qualifying employee and is equal to the lesser of,

i. the total amount of qualifying expenditures, other than qualifying expenditures included in the amount determined under paragraph 1, that are incurred by the corporation in the taxation year in respect of the qualifying employee, divided by the corporation's Ontario allocation factor for the taxation year, and

ii. the amount calculated using the formula,

( $50,000 * A ) / B

in which, "

A" is the total of all amounts, each of which is a qualifying expenditure in respect of the qualifying employee that was included in determining a workplace accessibility tax incentive deducted by the corporation in computing its income for a prior taxation year, and "

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

3. The amount determined by dividing by the corporation's Ontario allocation factor for the taxation year the amount of repayments of government assistance made by the corporation during the taxation year, if any, that does not exceed the amount of the assistance that,

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

ii. can reasonably be considered to have reduced the amount of a deduction that would otherwise have been allowed to the corporation under this section.

Corporate partner's workplace accessibility tax incentive

(3) If a corporation is a member of a partnership at the end of a taxation year and the partnership incurs, in a fiscal period of the partnership that ends in the taxation year, an expenditure in respect of which the partnership would be entitled to claim a deduction under this section if the expenditure had been made by a corporation, the corporation may, subject to subsection (10), deduct in computing its income from a business for the taxation year the amount determined for the taxation year under subsection (4).

Amount of corporate partner's deduction

(4) Subject to subsections (5) and (6), the amount a corporation may deduct under subsection (3) for a taxation year in respect of expenditures incurred by a partnership of which it is a member is the amount determined by multiplying the percentage of the share of the income or loss of the partnership to which the corporation is entitled for the fiscal period ending in the taxation year by the amount that would be determined to be the amount of the partnership's deduction under this section for that fiscal period using the corporation's Ontario allocation factor for the taxation year.

Limited partner

(5) Despite subsections (3) and (4), no amount may be deducted by a corporation in respect of an expenditure incurred by a partnership in which the corporation is a limited partner.

Qualifying expenditure

(6) Each of the following expenditures incurred after July 1, 1998 by a corporation or partnership in respect of a qualifying employee is a qualifying expenditure of the corporation or partnership:

1. An expenditure that is incurred not more than three months before and not more than 12 months after the date of commencement of the qualifying employee's employment with the corporation or partnership and,

i. that is in respect of a building, a device or equipment in Ontario and that is deductible by the corporation or partnership in computing its income under paragraph 20 (1) (qq) or (rr) of the Income Tax Act (Canada),

ii. that is for the installation at a location in Ontario of a passenger elevator, vertical platform lift, inclined platform lift or stairway lift to accommodate the qualifying employee in performing his or her job functions, or

iii. that is for the acquisition of any of the following devices or equipment, if the device or equipment is required by the qualifying employee at a location in Ontario to perform his or her job functions:

A. an environmental control unit to operate a telephone and lights, a door opener or other office equipment modified to accommodate an individual with mobility impairment,

B. an ergonomic work station and seating, a customized filing system or other office furniture adapted to accommodate an individual with mobility impairment,

C. a telephone headset for use by an individual with a mobility impairment,

D. specialized lighting for an individual with a visual impairment or epilepsy,

E. a real time captioning or alphanumeric pager for an individual with hearing impairment,

F. a tool, machinery or information communication system adapted for use by an individual with a physical or mental impairment,

G. computer hardware or a hardware attachment that is required to use disability-specific computer software.

2. An expenditure incurred not more than six months after the date of commencement of the qualifying employee's employment with the corporation or partnership to provide the support services at a location in Ontario of a job coach, note-taker, sign language interpreter, intervenor, reader or attendant for the employee, if the services are required by the employee by reason of a physical or mental impairment.

3. An expenditure incurred not more than 12 months after the date of commencement of the qualifying employee's employment with the corporation or partnership to train the employee or his or her coworkers to use equipment described in subparagraph iii of paragraph 1.

4. An expenditure prescribed by the regulations.

Limitation on qualifying expenditures

(7) The amount of a corporation's qualifying expenditures for a taxation year shall be determined after the deduction of,

(a) 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 section 75 for the taxation year for which the deduction is claimed under this section, the corporation, or the partnership of which the corporation is a member, has received, is entitled to receive or may reasonably be expected to be entitled to receive;

(b) the amount, if any, of the expenditures that would not be considered to be reasonable in the circumstances if they had been incurred by persons dealing with each other at arm's length; and

(c) the amount, if any, of the expenditures that were included in determining the amount of a deduction for a taxation year under this section in respect of another qualifying employee.

Qualifying employee

(8) A qualifying employee of a corporation, or of a partnership of which the corporation is a member, is an individual who,

(a) deals at arm's-length with the corporation;

(b) is employed by the corporation or partnership for at least 60 hours per month;

(d) within 12 months prior to the date of commencing employment with the corporation or partnership, was not employed by the corporation, a partnership of which the corporation is a member or a corporation associated with the corporation; and

(e) is an individual described in subsection (9) or who has obtained a Workplace Accessibility Tax Incentive Certificate in a form approved by the Minister from a qualified medical practitioner certifying,

(i) that the individual has a physical or mental impairment that is continuous or recurrent and expected to last at least one year, and

(ii) that, in the opinion of the practitioner, the impairment constitutes a substantial barrier to competitive employment without accommodations.

Same

(9) For the purposes of clause (8) (e), an individual is described in this subsection if,

(a) the individual is an individual in respect of whom a tax credit under section 118.3 of the Income Tax Act (Canada) may be claimed;

(b) the individual is eligible for income support or employment supports under the Ontario Disability Support Program Act, 1997, immediately prior to commencing employment with the corporation or partnership;

(c) the individual is in receipt of a Disability Benefits Canada Pension under the Canada Pension Plan Act immediately prior to commencing employment with the corporation or partnership;

(d) the individual is registered with the Canadian National Institute for the Blind;

(e) the individual is eligible to receive assistance from the Assistive Device Program administered by the Ministry of Health; or

(f) the individual satisfies the conditions prescribed by the regulations.

Exception

(10) No deduction may be made by a corporation under this section in respect of an expenditure incurred in respect of a qualifying employee of the corporation or of a partnership of which it is a member, unless the corporation retains, as part of its records that are required to be kept under section 94, a copy of the certificate referred to in subsection (8) or a copy of the documentation upon which the corporation relies in claiming that the employee is an individual described in subsection (9).

Definitions

(11) In this section, "

attendant" means an individual who provides personal support services to a person with a physical disability under the direction of the person on a pre-scheduled visitation basis; ("préposé")

intervenor" means an individual who acts as a communication link by providing information, facts and support to a person who is deaf and blind; ("intermédiaire")

job coach" means an individual who assists a newly-hired qualifying employee to attain productivity in the workplace that matches other employees by working on-site with the qualifying employee to help him or her to,

(a) become oriented in the workplace,

(b) learn the specific work tasks required by the position,

(d) adjust to the work environment; ("agent d'intégration") "

mental impairment" means a developmental or learning impairment, a psychiatric impairment or an impairment resulting from a head injury; ("déficience mentale")

Ontario allocation factor" of a corporation for a taxation year has the meaning assigned by subsection 12 (1); ("coefficient de répartition de l'Ontario")

personal support services" include assistance with personal grooming and hygiene, dressing, breathing by operating respiratory equipment, toileting, eating, essential communication by way of bliss boards and augmentive communication, positioning and transferring; ("services de soutien personnel")

qualified medical practitioner" means an individual described in section 3 of Ontario Regulation 223/98 made under the Ontario Disability Support Program Act, 1997\; ("professionnel de la santé")

sign language interpreter" means an individual who acts as a communication link by using sign language to provide information, facts and support to a deaf person. ("interprète gestuel")

32. (1) Section 14 of the Act, as amended by the Statutes of Ontario, 1997, chapter 43, Schedule A, section 9, is further amended by adding the following subsections:

Exception

(3.2) Subsection (3.1) does not apply in determining the amount of a corporation's gain for a taxation year from the disposition of a property if section 5.2 applies in determining the amount deducted by the corporation under subparagraph 40 (1) (a) (iii) of the Income Tax Act (Canada), as it applies for the purposes of this Act, in determining the amount of the gain.

Same

(3.3) Subsection (3.2) applies to taxation years ending after the day on which that subsection comes into force.

(2) Subclause 14 (5) (e) (i) of the Act, as amended by the Statutes of Ontario, 1998, chapter 5, section 8, is further amended by adding the following sub-subclause:

(D) under section 13.2 in respect of the corporation's share of the qualifying expenditures made by the partnership in the fiscal period, and

. . . . .

(3) Sub-subclause 14 (5) (e) (i) (D) of the Act, as enacted by subsection (2), is repealed and the following substituted:

(D) under sections 13.2 and 13.3 in respect of the corporation's share of the qualifying expenditures under each of those sections made by the partnership in the fiscal period, and

. . . . .

33. (1) Subsection 29.1 (1) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule A, section 11, is amended by,

(a) striking out "or for the previous taxation year" in the fourth line of clause (a); and

(b) striking out "or the previous fiscal period" in the fourth and fifth lines of clause (b).

(2) Subsections 29.1 (4), (5) and (6) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule A, section 11, are repealed and the following substituted:

Elected amounts

(4) If all of the corporations required to make an election referred to in subsection (2), in respect of a disposition occurring after May 4, 1998, 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, elect an amount in respect of the property equal to,

(a) the amount elected or deemed to have been elected in respect of the property under the Income Tax Act (Canada);

(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 disposition to which the election relates; or

(c) an amount that is greater than the lesser of the amounts described in clauses (a) and (b), but less than the greater of the amounts described in clauses (a) and (b).

Same

(5) If the property, in respect of which an election is made under the Income Tax Act (Canada), in respect of a disposition occurring after May 4, 1998, is property referred to in subclause 5.1 (8) (a) (i) or (ii), the corporations making the election, if each of them has a permanent establishment in Ontario, 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 in respect of the property equal to,

(a) the amount elected or deemed to have been elected in respect of the property under the Income Tax Act (Canada);

(c) an amount that is greater than the lesser of the amounts described in clauses (a) and (b), but less than the greater of the amounts described in clauses (a) and (b).

Anti-avoidance

(6) Subsection (4) does not apply in respect of the disposition of a property occurring after May 4, 1998 if,

(a) the corporation that holds the property immediately after the disposition,

(i) ceases to be an Ontario corporation within 36 months after the end of its 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 end of its taxation year to which the election relates; 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 is to increase or reduce an amount elected for the purposes of this Act.

Same

(7) Subsection (5) does not apply in respect of the disposition of a property occurring after May 4, 1998 referred to in that subsection if,

(a) within 36 months after the end of its taxation year to which the election relates,

(i) the corporation that holds the property immediately after the disposition, disposes of the property, or

(ii) that corporation's Ontario allocation factor is at least 10 per cent less than its Ontario allocation factor for the taxation year to which the election relates; or

(b) it is reasonable to believe that one of the reasons for the manner in which the corporation or any other person has conducted their business and affairs is to increase or reduce an amount elected for the purposes of this Act.

(3) Subsection 29.1 (1) of the Act, as amended by subsection (1), applies in respect of taxation years ending after May 4, 1998.

34. (1) Section 31 of the Act, as amended by the Statutes of Ontario, 1992, chapter 3, section 7 and 1997, chapter 43, Schedule A, section 12, is further amended by adding the following subsection:

No deduction of reserve

(1.1) Paragraph 20 (1) (n) of the Income Tax Act (Canada) does not apply in determining for the purposes of this Act a partnership's income for a fiscal period from a business in respect of a property sold in the course of the business if any property taken as security on the sale of the property has been sold, pledged, assigned or otherwise disposed of.

(2) Subsection 31 (1.1) of the Act, as enacted by subsection (1), applies in respect of property sold by a partnership in the course of business after the day this Act receives Royal Assent.

35. Subsections 31.1 (4), (5) and (6) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule A, section 13, are repealed and the following substituted:

Elected amounts

(4) If every corporation required to make an election referred to in subsection (2), in respect of a disposition occurring after May 4, 1998, 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, elect an amount in respect of the disposition equal to,

(a) the amount elected or deemed to have been elected in respect of the property under the Income Tax Act (Canada);

(c) an amount that is greater than the lesser of the amounts described in clauses (a) and (b), but less than the greater of the amounts described in clauses (a) and (b).

Same

(5) If the property in respect of which an election is made under the Income Tax Act (Canada), in respect of a disposition occurring after May 4, 1998, is property referred to in subclause 5.1 (8) (a) (i) or (ii), the corporations and members of the partnership making the election, if each of them has a permanent establishment in Ontario, 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 in respect of the property equal to,

(a) the amount elected or deemed to have been elected in respect of the property under the Income Tax Act (Canada);

(c) an amount that is greater than the lesser of the amounts described in clauses (a) and (b), but less than the greater of the amounts described in clauses (a) and (b).

Anti-avoidance

(6) Subsection (4) does not apply in respect of the disposition of a property occurring after May 4, 1998 if,

(a) the partnership that holds the property immediately after the disposition,

(i) ceases to be an Ontario partnership within 36 months after the end of its fiscal period 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 end of its fiscal period to which the election relates; 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 is to increase or reduce an amount elected for the purposes of this Act.

Same

(7) Subsection (5) does not apply in respect of the disposition of a property occurring after May 4, 1998 referred to in that subsection if,

(a) within 36 months after the end of its fiscal period to which the election relates,

(i) the partnership that holds the property immediately after the disposition, disposes of the property, or

(ii) the percentage of the partnership's income for the fiscal period that 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 income for the fiscal period, is at least 10 per cent less than the percentage of its income that would be deemed to be earned outside Ontario for the fiscal period to which the election relates; or

(b) it is reasonable to believe that one of the reasons for the manner in which the partnership, a member of the partnership or any other person has conducted their business and affairs is to increase or reduce an amount elected for the purposes of this Act.

36. (1) Section 34 of the Act, as amended by the Statutes of Ontario, 1992, chapter 3, section 8, 1994, chapter 14, section 11, 1996, chapter 29, section 45 and 1997, chapter 43, Schedule A, section 15 is further amended by adding the following subsection:

Gifts to Her Majesty in right of Ontario

(1.1) The amount of a deduction for a taxation year under subsection 110.1 (1) of the Income Tax Act (Canada) in respect of gifts made to Her Majesty in right of Ontario, to a Crown agency within the meaning of the Crown Agency Act or to a foundation established under the Crown Foundations Act, 1996 is the lesser of "A" and "B",

where, "

A" is the amount by which the income of the corporation for the taxation year exceeds the total of all other amounts, if any, deducted by the corporation under this Act for the taxation year,

(a) under paragraph 110.1 (1) (b) of the Income Tax Act (Canada), as it applies for the purposes of this Act in respect of gifts to Her Majesty in right of Canada or to a province other than Ontario, or

(b) under paragraph 110.1 (1) (a) of the Income Tax Act (Canada) as it applies for the purposes of this Act in respect of other gifts, and "

B" is the amount that is the lesser of,

(a) the income of the corporation for the taxation year, and

(b) the amount of gifts made in the taxation year or in any of the five preceding taxation years to Her Majesty in right of Ontario, a Crown agency within the meaning of the Crown Agency Act or a foundation established under the Crown Foundations Act, 1996 that was not deducted in the year or in a previous taxation year.

(2) Subsection 34 (10.2) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule A, section 15, is repealed and the following substituted:

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) for a taxation year ending after May 4, 1998 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, designate an amount in respect of a property equal to the total of,

(a) an amount equal to,

(i) the amount designated in respect of the property under the Income Tax Act (Canada),

(ii) 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, or

(iii) an amount that is greater than the lesser of the amounts described in subclauses (i) and (ii), but less than the greater of the amounts described in subclauses (i) and (ii); and

(b) the sum of,

(i) 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

(ii) 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.

(3) Clause 34 (10.3) (b) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule A, section 15, is repealed and the following substituted:

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

(4) Subsection 34 (10.3) of the Act, as amended by subsection (3), applies in respect of taxation years ending after May 4, 1998.

37. (1) Clause 35 (1) (a) of the Act, as amended by the Statutes of Ontario, 1997, chapter 43, Schedule A, section 16, is further amended by striking out "13 and 13.1" in that amendment and substituting "13, 13.1 and 13.2".

(2) Clause 35 (1) (a) of the Act, as amended by subsection (1), is further amended by striking out "13.1 and 13.2" in that amendment and substituting "13.1, 13.2 and 13.3".

(3) Subsection 35 (2) of the Act, as amended by the Statutes of Ontario, 1998, chapter 5, section 9, is further amended by striking out "13 and 13.1" in that amendment and substituting "13, 13.1 and 13.2".

(4) Subsection 35 (2) of the Act, as amended by subsection (3), is further amended by striking out "13.1 and 13.2" in that amendment and substituting "13.1, 13.2 and 13.3".

(5) Subsection 35 (3) of the Act, as amended by the Statutes of Ontario, 1998, chapter 5, section 9, is further amended by striking out "section 12, 13 or 13.1" wherever it appears and substituting in each case "any of sections 12, 13, 13.1 and 13.2".

(6) Subsection 35 (3) of the Act, as amended by subsection (5), is further amended by striking out "13.1 and 13.2" in each amendment in subsection (5) and substituting in each case "13.1, 13.2 and 13.3".

38. Section 36 of the Act, as amended by the Statutes of Ontario, 1998, chapter 9, section 80, is further amended by adding the following subsection:

Application

(1.1) Subclause (1) (a) (iii), as re-enacted by the Statutes of Ontario, 1998, chapter 9, section 80, applies to contributions made after December 31, 1998, and each change to the amount determined under that subclause applies to contributions made on or after the date the change takes effect.

39. (1) Subsection 43.2 (3) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 1, Schedule B, section 6, is amended by striking out "mining reclamation trust" in the first and second lines and in the eighth line and substituting in each case "qualifying environmental trust".

(2) Subsection 43.2 (4) of the Act, as re-enacted by the Statutes of Ontario, 1996, chapter 29, section 47, is amended by striking out "mining reclamation trust tax credit" in the sixth and seventh lines and substituting "qualifying environmental trust tax credit".

(3) Subsections 43.2 (3) and (4) of the Act, as amended by subsections (1) and (2), apply in respect of taxation years ending after February 18, 1997.

40. (1) The definition of "government assistance" in subsection 43.6 (14) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule A, section 20 and amended by 1998, chapter 5, section 14, is further amended by adding the following paragraph:

6.2 An Ontario interactive digital media tax credit under section 43.11.

(2) The definition of "government assistance" in subsection 43.6 (14) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule A, section 20 and amended by 1998, chapter 5, section 14, is further amended by adding the following paragraph:

6.3 An Ontario sound recording tax credit under section 43.12.

41. (1) Subsection 43.8 (3) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule A, section 22, is repealed and the following substituted:

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 sum of,

(a) the lesser of,

(i) 20 per cent of that portion, if any, of the corporation's qualifying labour expenditure for the taxation year in respect of eligible productions that is determined by reference to eligible labour expenditures incurred prior to May 6, 1998 in respect of eligible computer animation and special effects activities, and

(ii) 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); and

(b) 20 per cent of that portion, if any, of the corporation's qualifying labour expenditure for the taxation year in respect of eligible productions that is determined by reference to eligible labour expenditures incurred after May 5, 1998 in respect of eligible computer animation and special effects activities.

(2) Subsection 43.8 (6) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule A, section 22, is repealed and the following substituted:

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 a certificate, and any amended certificate it considers appropriate, to the qualifying corporation with respect to its eligible productions for the taxation year, certifying,

(a) 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 for each eligible production for which eligible labour expenditures are incurred before May 6, 1998; and

(b) the estimated amount of the corporation's tax credit under this section for the taxation year in respect of each eligible production for which eligible labour expenditures are incurred after May 5, 1998.

(3) Clause 43.8 (8) (b) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule A, section 22, is repealed and the following substituted:

(b) $500,000 in respect of eligible computer animation and special effects activities for which eligible labour expenditures are incurred after December 31, 1997 and before May 6, 1998.

(4) Subsection 43.8 (9) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule A, section 22, is repealed and the following substituted:

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 out by the qualifying corporation and by all corporations associated with the qualifying corporation would exceed,

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

(b) $500,000 in respect of activities for which eligible labour expenditures are incurred after December 31, 1997 and before May 6, 1998.

(5) Section 43.8 of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule A, section 22 and amended by 1998, chapter 5, section 16, is further amended by adding the following subsection:

Television production

(16.1) The amount of the corporation's Ontario labour expenditure for a taxation year for eligible computer animation and special effects activities in respect of an eligible production that is a television production shall not include any amounts incurred before May 6, 1998 unless the production is directed primarily at children or is suitable for initial broadcast in a standard television time slot of at least 30 minutes or, if the production consists of two or more episodes, each episode of the production is suitable for initial broadcast in a standard television time slot of at least 30 minutes.

(6) The definition of "eligible production" in subsection 43.8 (17) of the Act, as re-enacted by the Statutes of Ontario, 1998, chapter 5, section 16, is amended by striking out paragraph 5 and substituting the following:

5. If the production is a television production for which all amounts included in the corporation's Ontario labour expenditure for the production are incurred before May 6, 1998, the production is directed primarily at children or is suitable for initial broadcast in a standard television time slot of at least 30 minutes or, if the production consists of two or more episodes, each episode of the production is suitable for initial broadcast in a standard television time slot of at least 30 minutes.

(7) The definition of "government assistance" in subsection 43.8 (17) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule A, section 22 and amended by 1998, chapter 5, section 16, is further amended by striking out "or" at the end of clause (b), by adding "or" at the end of clause (c) and by adding the following clause:

(d) a film or video production services tax credit under section 125.5 of the Income Tax Act (Canada).

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

Ontario interactive digital media tax credit

43.11 (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 and 43.2 to 43.10 for the taxation year, an amount not exceeding the amount of its Ontario interactive digital media 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 of the Act an amount not exceeding the amount by which its Ontario interactive digital media 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 interactive digital media tax credit for a taxation year is 20 per cent of the corporation's qualifying labour expenditure for the taxation year.

Qualifying labour expenditure

(4) 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 qualifying corporation in respect of an eligible product for the taxation year.

Eligible labour expenditure

(5) A qualifying corporation's eligible labour expenditure for an eligible product for a taxation year is equal to the amount, if any, by which the sum of "A" and "B" exceeds "C",

where, "

A" is the Ontario labour expenditure incurred by the qualifying corporation in the taxation year for the eligible product, "

B" is the amount, if any, by which the total of all amounts each of which is the Ontario labour expenditure incurred by the qualifying corporation in a prior taxation year for the eligible product, to the extent that it is incurred in the 24-month period ending immediately before the month in which the eligible product is completed, exceeds the total of all amounts each of which is the eligible labour expenditure for the eligible product that was included in the determination of the amount of the qualifying corporation's tax credit under this section for a prior taxation year, and "

C" is the total of all government assistance, if any, in respect of the Ontario labour expenditure for the eligible product that, at the time the qualifying corporation's return is required to be delivered under subsection 75 (1) for the taxation year, the qualifying corporation or any other person or partnership has received, is entitled to receive or can reasonably be expected to receive, to the extent the government assistance has not been repaid pursuant to a legal obligation to do so.

Application for certificate

(6) In order to be eligible to deduct or claim an amount in respect of an Ontario interactive digital media tax credit under this section for a taxation year, a qualifying corporation shall apply to the Ontario Film Development Corporation, or to another person designated by the Minister of Citizenship, Culture and Recreation, for certification of its eligible products for the purposes of this section.

Same

(7) A qualifying corporation that applies for certification shall provide the information specified for the purposes of this section by the Ontario Film Development Corporation or the person designated by the Minister of Citizenship, Culture and Recreation to the person who specified that it be provided.

Certificate

(8) If a qualifying corporation provides the information in accordance with subsection (7) in respect of its eligible products for a taxation year, the Ontario Film Development Corporation or the person designated by the Minister of Citizenship, Culture and Recreation shall issue a certificate, and any amended certificates it considers appropriate, to the qualifying corporation with respect to its eligible products for the taxation year, certifying in respect of each eligible product,

(a) that the product is an eligible product for the purposes of this section; and

(b) the estimated amount of the corporation's tax credit under this section applicable to the product.

Certificate to be delivered with return

(9) 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 for the taxation year that is most recently issued under subsection (8), or a certified copy of the certificate.

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" exceeds "B",

where, "

A" is its Ontario interactive digital media tax credit for the taxation year, and "

B" is 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

(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 (8) may be revoked,

(a) if an omission or incorrect statement was made and it is reasonable to believe that, if the omitted information had been disclosed or if the person issuing the certificate had known that the statement was incorrect, he or she would not have issued the certificate;

(b) if none of the products in respect of which the certificate is issued is an eligible product; or

Same

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

Application

(14) This section applies with respect to expenditures incurred after June 30, 1998 that are included in the Ontario labour expenditure for an eligible product.

Definitions

(15) In this section, "

eligible product" means a product that satisfies the conditions prescribed by the regulations and for which, in the opinion of the Ontario Film Development Corporation or, if another person is designated under subsection (6), in the opinion of that person, public financial support would not be contrary to public policy; ("produit admissible")

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 tax credit under this section; ("aide gouvernementale")

Ontario labour expenditure" means the amount determined under the rules prescribed by the regulations; ("dépense de main-d'oeuvre en Ontario")

qualifying corporation" means a Canadian corporation,

(a) that develops an eligible product at a permanent establishment in Ontario operated by it,

(b) that 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),

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

(d) that is not a corporation to which subsection 57.2 (1) would apply for the immediately preceding taxation year,

(i) if the references to $5 million in clause 57.2 (1) (a) and in subclause 57.2 (1) (c) (i) were read as $10 million, and

(ii) if the references to $10 million in clause 57.2 (1) (b) and in subclause 57.2 (1) (c) (ii) were read as $20 million. ("corporation admissible")

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

Ontario sound recording tax credit

43.12 (1) A corporation that is an eligible sound recording 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 43.11, an amount not exceeding the amount of its Ontario sound recording 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 sound recording 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 sound recording tax credit for a taxation year is the sum of all amounts, each of which is in respect of an eligible Canadian sound recording in relation to which the corporation is an eligible sound recording company and each of which is equal to the lesser of "A" and "B",

where, "

A" is 20 per cent of the qualifying expenditures incurred by the corporation after January 1, 1999 and before the end of the taxation year in respect of the recording to the extent that the expenditures were not included in determining the amount of the corporation's available tax credit under this section for a prior taxation year, and "

B" is an amount calculated in the manner prescribed by the regulations for the purposes of this subsection.

Corporate partner

(4) If a corporation is a member of a partnership at the end of a fiscal period of the partnership in which the partnership would qualify for an Ontario sound recording tax credit in respect of one or more eligible Canadian sound recordings if the partnership were a corporation whose fiscal period was its taxation year, and if the corporation would be an eligible sound recording company for the taxation year in relation to the eligible Canadian sound recordings, the portion of the Ontario sound recording 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 sound recording tax credit for the corporation's taxation year.

Limited partner

(5) Despite subsection (4), a limited partner's share of an Ontario sound recording tax credit to which a partnership would be entitled if it were a corporation shall be deemed to be nil.

Application for certificate

(6) In order to be eligible to deduct or claim an amount in respect of an Ontario sound recording tax credit under this section in respect of a sound recording, a corporation shall apply to a person designated by the Minister of Citizenship, Culture and Recreation for certification that the sound recording is an eligible Canadian sound recording and that the corporation is an eligible sound recording company for the taxation year in relation to the eligible Canadian sound recording for the purposes of this section.

Same

(7) A corporation that applies for certification under this section shall provide to the designated person the information the designated person specifies for the purposes of making the determinations required under subsection (6).

Certificate

(8) If the particular sound recording is an eligible Canadian sound recording for the purposes of this section and the corporation is an eligible sound recording company for the taxation year in relation to the recording, the designated person shall issue to the corporation a certificate so certifying.

No deduction or claim unless certificate delivered

(9) No amount may be deducted or claimed under this section for a taxation year in respect of a sound recording unless the corporation delivers to the Minister with its return under section 75 for the taxation year the certificate issued under this section in respect of the sound recording, or a certified copy of the certificate.

Revocation of certificate

(10) A certificate issued under this section may be revoked if,

(a) an omission or incorrect statement was made and it is reasonable to believe that, if the omitted information had been disclosed or if the person designated had known that the statement was incorrect, the designated person would have found that the corporation was not an eligible sound recording company for the purposes of this section or that the recording was not an eligible Canadian sound recording for the purposes of this section;

(b) the corporation is not an eligible sound recording company for the taxation year in relation to the eligible Canadian sound recording; or

Same

(11) A certificate that is revoked under this section shall be deemed never to have been issued.

Definitions

(12) In this section, "

eligible Canadian sound recording" means a sound recording that satisfies the rules prescribed by the regulations and is by an emerging Canadian artist or group; ("enregistrement sonore canadien admissible")

eligible sound recording company" has the meaning prescribed by the regulations; ("société d'enregistrement sonore admissible")

emerging Canadian artist or group" means an artist or group that satisfies the rules prescribed by the regulations; ("nouvel artiste ou ensemble canadien")

qualifying expenditure" means an amount determined in the manner prescribed by the regulations in respect of an expenditure that satisfies the rules prescribed by the regulations. ("dépense admissible")

Deemed tax payment

(13) 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" exceeds "B",

where, "

A" is the corporation's Ontario sound recording tax credit for the taxation year, and "

B" is 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

(14) A corporation shall be deemed to make the payment referred to in subsection (13) 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.

44. (1) 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, 1997, chapter 43, Schedule A, section 24 and 1998, chapter 5, section 18, is further amended by adding the following paragraph:

10. An Ontario interactive digital media tax credit under section 43.11.

(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, 1997, chapter 43, Schedule A, section 24 and 1998, chapter 5, section 18, is further amended by adding the following paragraph:

11. An Ontario sound recording tax credit under section 43.12.

(3) Subsection 44.1 (5) of the Act, as re-enacted by the Statutes of Ontario, 1998, chapter 5, section 18, is repealed and the following substituted:

When assistance received

(5) For the purposes of this Act, other than sections 43.3 to 43.11, 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 43.11 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.

(4) Subsection 44.1 (5) of the Act, as re-enacted by subsection (3), is amended by striking out "43.11" wherever it appears and substituting in each case "43.12".

45. (1) Subsection 46 (1) of the Act is amended by striking out the portion before clause (a) and substituting the following:

Application of s. 48

(1) If a corporation is an investment corporation throughout a taxation year, but is not a mutual fund corporation throughout the year, subsections 131 (1), (2, (3) and (6) of the Income Tax Act (Canada), as made applicable by section 48 of this Act, apply in respect of the corporation for the taxation year as if,

. . . . .

(2) Subsection 46 (1) of the Act, as amended by subsection (1), applies in respect of taxation years ending after December 31, 1992.

46. (1) Clause 48 (2) (c) of the Act is repealed and the following substituted:

(c) the references in paragraph (b) thereof to "subsection 152 (4)", "this Part" and "paragraph 152 (4) (a)" shall be read as references to subsection 80 (11), Part II and clause 80 (11) (a) of this Act, respectively.

(2) Clause 40 (2) (c) of the Corporations Tax Act, being chapter 97 of the Revised Statutes of Ontario, 1980, as enacted by the Statutes of Ontario, 1990, chapter 22, section 21, is repealed and the following substituted:

(c) the references in paragraph (b) thereof to "subsection 152 (4)", "this Part" and "paragraph 152 (4) (a)" shall be read as references to subsection 73 (7), Part II and clause 73 (7) (a) of this Act, respectively.

47. (1) Clause 57 (1) (a) of the Act, as re-enacted by the Statutes of Ontario, 1994, chapter 14, section 20, is repealed and the following substituted:

(a) a corporation referred to in any of paragraphs 149 (1) (c), (d), (d.1), (d.2), (d.3), (d.4), (d.5), (e), (f), (h.1), (i), (j), (k), (m), (n) (o.1), (o.2), (o.3) and (t) of the Income Tax Act (Canada); or

. . . . .

(2) Subsection 57 (4) of the Act, as amended by the Statutes of Ontario, 1994, chapter 14, section 20, is repealed and the following substituted:

Application of rules in Income Tax Act (Canada), s. 149

(4) The rules in subsections 149 (1.1), (1.2), (1.3), (2), (3), (4), (4.1), (4.2), (4.3), (6), (8), (9), (10) and (11) of the Income Tax Act (Canada) apply for the purposes of this section.

(3) Subsection 57 (7) of the Act is repealed and the following substituted:

Application of Income Tax Act (Canada), s. 149 (10)

(7) In the application of subsection 149 (10) of the Income Tax Act (Canada) for the purposes of this Act, the reference to "this Part" shall be read as a reference to Part II of this Act.

(4) Clause 57 (1) (a) of the Act, as re-enacted by subsection (1), and subsection 57 (4) of the Act, as re-enacted by subsection (2), apply in respect of taxation years commencing after December 31, 1997.

(5) Subsection 57 (7) of the Act, as re-enacted by subsection (3), applies to corporations that become or cease to be exempt from tax under Part II after April 26, 1995.

48. (1) Clause 62 (1) (c) of the Act, as amended by the Statutes of Ontario, 1994, chapter 14, section 26, 1997, chapter 19, section 4, 1997, chapter 43, Schedule A, section 32 and 1998, chapter 5, section 19, is repealed and the following substituted:

(c) subject to subsection (1.2), the amount that equals that proportion of the paid-up capital remaining after the deduction of the amounts deductible under clauses (b), (d), (e) and (f) which the total cost of investments made by the corporation in other corporations bears to the total assets of the corporation remaining after the deduction of the amounts deductible under clauses (b), (d), (e) and (f).

(2) Section 62 of the Act, as amended by the Statutes of Ontario, 1994, chapter 14, section 26, 1997, chapter 19, section 4, 1997, chapter 43, Schedule A, section 32 and 1998, chapter 5, section 19, is further amended by adding the following subsections:

Interpretation

(1.1) For the purposes of clause (1) (c) and subsection (1.2), the following are investments in another corporation:

1. An investment by the corporation in shares issued by the other corporation.

2. An investment by the corporation in bonds, lien notes and similar obligations issued by the other corporation.

3. A loan or advance to the other corporation.

Rules for determining investment allowance

(1.2) In determining the amount, if any, of a corporation's deduction for a taxation year under clause (1) (c), the following rules apply:

1. The corporation's deduction for the taxation year under clause (1) (c) shall not exceed the total cost of the investments in respect of which the deduction is claimed.

2. An amount of cash on deposit with any corporation authorized to accept deposits from the public shall not be included in determining the amount of a deduction under clause (1) (c).

3. A loan or advance to a corporation with its head office outside Canada that is owed to a related corporation that is subject to tax under this Part shall not be included in determining the amount of the related corporation's deduction under clause (1) (c) unless the amount was outstanding for at least 120 days before the end of the taxation year of the related corporation.

4. A loan or advance that was issued for a term of less than 120 days or was held by the corporation for less than 120 days before the end of its taxation year shall not be included in determining the amount of a deduction under clause (1) (c) if the loan or advance is owed by a corporation,

i. that would be considered to be a financial institution if it carried on business in Canada and had been incorporated in Canada, or

ii. that does not deal at arm's length with a financial institution or with a corporation described in subparagraph i, if the financial institution or corporation described in subparagraph i guarantees the amount of the loan or advance or provides security, directly or indirectly, for the repayment of the loan or advance.

5. No amount shall be included in determining the amount of a deduction under clause (1) (c) in respect of an investment in a financial institution unless,

i. the investment is in long-term debt of the financial institution, as defined in subsection 181 (1) of the Income Tax Act (Canada),

ii. the investment is in shares of the financial institution, or

iii. the investment is in a banker's acceptance that was issued for a term of at least 120 days and was held by the corporation for at least 120 days before the end of its taxation year.

6. No amount shall be included in determining the amount of a deduction under clause (1) (c) in respect of an investment in a corporation that is not subject to tax under this Part by reason of subsection 71 (1).

7. Commercial paper issued by a corporation shall not be included in determining the amount of a deduction under clause (1) (c) unless the commercial paper was issued for a term of at least 120 days and was held by the corporation claiming the deduction for at least 120 days before the end of its taxation year or, if the commercial paper was issued without a specified term, it was held by the corporation claiming the deduction for at least 120 days before the end of its taxation year.

8. An account receivable by the corporation shall not be included in determining the amount of a deduction under clause (1) (c) for a taxation year unless it is owed by a corporation and,

i. if the account receivable is owed by a related corporation, it has been outstanding for at least 120 days before the end of the taxation year, or

ii. if the account receivable is owed by a corporation other than a related corporation, it has been outstanding for at least 365 days before the end of the taxation year.

9. A cash deposit paid by a corporation for goods to be delivered or services to be rendered after the end of the corporation's taxation year shall not be included in determining the amount of a deduction under clause (1) (c) for the taxation year unless the deposit is included in the determination of the amount of its investment allowance under paragraph 181.2 (4) (b) of the Income Tax Act (Canada), or would be included if the corporation were subject to tax under Part I.3 of that Act.

10. An investment in a related corporation shall not be included in determining the amount of a deduction under clause (1) (c) for the taxation year if,

i. the investment was made less than 120 days before the end of the corporation's taxation year,

ii. the investment was made after the end of the last taxation year of the related corporation that ended before the end of the corporation's taxation year, and

iii. the investment is part of a series of investments and repayments or redemptions.

Interpretation

(1.3) For the purposes of paragraph 10 of subsection (1.2), an investment shall be considered to be part of a series of investments and repayments or redemptions if,

(a) the investment is repaid or redeemed by the related corporation before the end of its first taxation year ending after the end of the corporation's taxation year; and

(b) the Minister is of the opinion that the amount of the investment has not been replaced by new debt or equity capital or by an increase in the related corporation's surplus.

(3) Subsections 62 (5.1) and (5.2) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule A, section 32, are repealed, but continue to apply in determining the amount deductible under clause 62 (1) (c) of the Act for taxation years ending before October 31, 1998.

(4) Clause 62 (1) (c) of the Act, as re-enacted by subsection (1), and subsections 62 (1.1) to (1.3) of the Act, as enacted by subsection (2), apply in determining the amount deductible under clause 62 (1) (c) of the Act for taxation years ending after October 30, 1998.

49. Subsection 62.1 (10) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule A, section 33, is amended by,

(a) striking out "or an insurance corporation" in the first and second lines of subparagraph i of paragraph 1;

(b) striking out "or related insurance corporation" in the seventh and eighth lines of the definition of "C" in paragraph 1; and

(c) striking out "or corporation" in the eleventh and twelfth lines of the definition of "C" in paragraph 1.

50. Subsection 66 (5) of the Act, as re-enacted by the Statutes of Ontario, 1997, chapter 43, Schedule A, section 35, is amended by,

(a) striking out "or an insurance corporation" in the first and second lines of subparagraph i of paragraph 1;

(b) striking out "or an insurance corporation" in the first and second lines of subparagraph i of paragraph 2; and

(c) striking out "or related insurance corporation" in second and third lines of subparagraph v of paragraph 2.

51. Subsection 66.1 (1.2) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule A, section 36, is amended by,

(a) striking out "or an insurance corporation" in the first and second lines of subclause (b) (i);

(b) striking out "or an insurance corporation" in the first and second lines of subclause (c) (i);

(c) striking out "or related insurance corporation" in the second and third lines of subclause (c) (v).

52. (1) Subsection 76 (1) of the Act, as re-enacted by the Statutes of Ontario, 1994, chapter 14, section 34, is repealed and the following substituted:

Penalty for failure to deliver return

(1) Every corporation or person who fails to deliver a return for a taxation year as and when required under this Act is liable to a penalty in the amount calculated using the formula,

( 0.05 D ) + M ( 0.01 D )

in which, "

D" is the amount, if any, of the deficiency in the corporation's tax account for the taxation year as of the day the return was required to be delivered, determined under section 79 before taking into consideration the penalty imposed under this subsection, and "

M" is the number of complete months, not exceeding 12, from the date on which the return was required to be delivered to the date on which the return is delivered.

Repeated failures to deliver returns

(2) Every corporation or person who fails to deliver a return for a taxation year as and when required under this Act, and who has received a demand for a return for the taxation year under subsection 75 (4), is liable to a penalty determined in accordance with the following formula, instead of a penalty under subsection (1), if, before the time the return was required to be delivered, the corporation or person failed to deliver a return as and when required under this Act for any of the three previous taxation years:

( 0.10 D ) + M ( 0.02 D )

in which, "

M" is the number of complete months, not exceeding 20, from the date on which the return was required to be delivered to the date on which the return is delivered.

(2) Subsections 76 (1) and (2) of the Act, as re-enacted and enacted by subsection (1), apply to penalties for the failure to deliver returns required to be delivered on or after the day this Act receives Royal Assent.

(3) Subsection 76 (6) of the Act, as re-enacted by the Statutes of Ontario, 1996, chapter 1, Schedule B, section 10 and amended by 1996, chapter 1, Schedule B, section 10, 1996, chapter 24, section 28, 1997, chapter 43, Schedule A, section 44 and 1998, chapter 5, section 21, is further amended by striking out clauses (b), (c), (d), (e), (f), (g), (h), (i) and (j) and substituting the following:

(b) the total of all amounts, if any, each of which is the amount by which "A" exceeds "B",

where, "

A" is the amount that would be deemed by one of sections 43.2 to 43.11 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, and

B" is the maximum amount that the corporation is entitled to claim for the year under that section as a deemed payment on account of its tax payable for the year.

(4) The definition of "A" in clause 76 (6) (b) of the Act, as enacted by subsection (3), is amended by striking out "43.11" and substituting "43.12".

53. (1) Clause 78 (5) (b) of the Act, as re-enacted by the Statutes of Ontario, 1996, chapter 24, section 29 and amended by 1997, chapter 43, Schedule A, section 45 and 1998, chapter 5, section 22, is further amended by striking out "any of sections 43.2 to 43.10" in the amendment of 1998 and substituting "any of sections 43.2 to 43.11".

(2) Clause 78 (5) (b) of the Act, as amended by subsection (1), is further amended by striking out "43.11" in that amendment and substituting "43.12".

(3) Clause 78 (6) (a) of the Act, as re-enacted by the Statutes of Ontario, 1998, chapter 5, section 22, 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 43.11 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.

(4) Clause 78 (6) (a) of the Act, as re-enacted by subsection (3), is amended by striking out "43.11" and substituting "43.12".

54. (1) Subsection 79 (3.1) of the Act, as enacted by the Statutes of Ontario, 1994, chapter 14, section 37, is repealed and the following substituted:

Exception, instalment period

(3.1) Despite clause (3) (c), if, at the time a calculation of interest is done under this Act, the most recent assessment or reassessment for the taxation year was made before the day the balance of tax payable, if any, for the taxation year is required to be paid under clause 78 (2) (b), the instalment period for the taxation year shall be deemed to have ended on the day before the day the assessment or reassessment was made if the result would be a surplus in the corporation's tax account for the taxation year on the day the assessment or reassessment was made.

(2) Subsection 79 (3.1) of the Act, as re-enacted by subsection (1), applies to assessments made after the day this Act receives Royal Assent.

55. (1) Clause 80 (1) (b.1) of the Act, as re-enacted by the Statutes of Ontario, 1996, chapter 24, section 30 and amended by 1997, chapter 43, Schedule A, section 46 and 1998, chapter 5, section 23, is further amended by striking out "43.9 or 43.10" in the amendment of 1998 and substituting "43.9, 43.10 or 43.11".

(2) Clause 80 (1) (b.1) of the Act, as amended by subsection (1), is further amended by striking out "43.10 or 43.11" in that amendment and substituting "43.10, 43.11 or 43.12".

(3) Clause 80 (11) (b) of the Act, as amended by the Statutes of Ontario, 1992, chapter 3, section 16 and 1997, chapter 43, Schedule A, section 46, is further amended by striking out "or" at the end of subclause (iv), by striking out "and" at the end of subclause (v) and substituting "or" and by adding the following subclause:

(vi) subsection 5.2 (1) applies to the corporation for the taxation year; and

. . . . .

(4) Subsection 80 (15) of the Act is amended by striking out "or" at the end of clause (b) and by adding the following clauses:

(d) dispositions and acquisitions of property referred to in subclause (11) (b) (iv);

(e) designations referred to in subsection 34 (10.3); or

(f) the deduction or claim referred to in subsection 5.2 (1).

56. Section 87 of the Act, as amended by the Statutes of Ontario, 1997, chapter 43, Schedule A, section 49, is further amended by adding the following subsections:

Settlement of appeal

(5) Despite clauses 80 (11) (b) and (c), the Minister may at any time vacate the assessment, vary the assessment, assess or reassess in order to give effect to the terms of a settlement of the appeal that have been agreed to by the Minister and the corporation.

Same

(6) Sections 84 and 85 do not apply to an assessment or reassessment made under subsection (5).

Commencement

57. (1) Except as otherwise provided by this section, this Part comes into force on the day the Tax Credits and Revenue Protection Act, 1998 receives Royal Assent.

Same

(2) Subsection 46 (2) shall be deemed to have come into force on April 28, 1989.

Same

(3) Subsection 46 (1) shall be deemed to have come into force on January 1, 1991.

Same

(4) Section 45 shall be deemed to have come into force on January 1, 1993.

Same

(5) Subsections 47 (3) and (5) shall be deemed to have come into force on April 27, 1995.

Same

(6) Subsection 36 (1) and section 39 shall be deemed to have come into force on February 19, 1997.

Same

(7) Sections 49, 50 and 51 shall be deemed to have come into force on May 7, 1997.

Same

(8) Subsection 41 (7) shall be deemed to have come into force on November 1, 1997.

Same

(9) Subsections 47 (1), (2) and (4) shall be deemed to have come into force on January 1, 1998.

Same

(10) Sections 33 and 35 and subsections 36 (2), (3) and (4) and 41 (1) to (6) shall be deemed to have come into force on May 5, 1998.

Same

(11) Subsection 29 (1), section 30 and subsections 32 (2) and 37 (1), (3) and (5) shall be deemed to have come into force on May 6, 1998.

Same

(12) The following provisions shall be deemed to have come into force on July 1, 1998:

1. Subsection 29 (2).

2. Section 31.

3. Subsections 32 (3), 37 (2), (4) and (6) and 40 (1).

4. Section 42.

5. Subsections 44 (1) and (3), 52 (3), 53 (1) and (3) and 55 (1).

Same

(13) Section 48 shall be deemed to have come into force on October 31, 1998.

Same

(14) The following provisions come into force on January 1, 1999:

1. Section 38.

2. Subsection 40 (2).

3. Section 43.

4. Subsections 44 (2) and (4), 52 (4), 53 (2) and (4) and 55 (2).

PART IV

EMPLOYER HEALTH TAX ACT

58. Clause 1 (4) (c) of the Employer Health Tax Act, as re-enacted by the Statutes of Ontario, 1996, chapter 18, section 4, is repealed and the following substituted:

59. Section 1 of the Act, as amended by the Statutes of Ontario 1994, chapter 8, section 1, 1994, chapter 17, section 57, 1996, chapter 18, section 4 and 1996, chapter 24, section 1, is further amended by adding the following subsections:

Deemed remuneration

(7) If all of the following circumstances exist, an amount paid to an employee of an employer by a third person after December 31, 1998 shall be deemed to be remuneration paid by the employer to the employee:

1. The amount is paid to the employee for providing a service in Ontario to a person other than the employer.

2. The service is substantially similar to employment functions that can reasonably be expected to be performed by an employee of the employer in the normal course of employment.

3. At the time the employee provides the service, he or she is an employee of the employer.

4. It is reasonable to believe that the employee would not have been engaged to provide the service if he or she was not employed by the employer.

5. The employer does not pay the employee any reasonable amount of remuneration or other compensation for providing the service.

6. The amount is not otherwise included in the employer's total Ontario remuneration paid for the year.

Same

(8) An amount that is deemed to be remuneration paid by an employer to an employee under subsection (7) shall be deemed, for the purposes of subsection 3 (4), to be paid by the employer in the same month or quarter, as applicable, in which the third person pays the amount to the employee.

Same, definition

(9) For the purposes of subsections (7) and (8), "

third person" includes a partnership, an unincorporated association, syndicate or organization, a trust, a government, an agency, a statutory authority, a board or commission and any other type of entity, whether or not it is a person at law.

60. Clause 2 (6) (c) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 18, section 5, is repealed and the following substituted:

. . . . .

Commencement

61. (1) Subject to subsections (2) and (3), this Part comes into force on the day the Tax Credits and Revenue Protection Act, 1998 receives Royal Assent.

Same

(2) Sections 58 and 60 shall be deemed to have come into force on January 1, 1998.

Same

(3) Section 59 comes into force on January 1, 1999.

PART V

ESTATE ADMINISTRATION TAX ACT, 1998 AND THE ESTATES ACT

Enactment

62. The Estate Administration Tax Act, 1998 as set out in the Schedule is hereby enacted.

Complementary amendments

63. (1) Section 33 of the Estates Act is repealed.

(2) Section 51 of the Act is repealed.

(3) Subsection 52 (1) of the Act is amended by striking out "and the prescribed fees are paid" in the ninth line and substituting "and the amount required by the Estate Administration Tax Act, 1998 is deposited with an officer of the court".

(4) Section 53 of the Act is repealed.

Commencement

64. (1) Subject to subsection (2), this Part comes into force on the day the Tax Credits and Revenue Protection Act, 1998 receives Royal Assent.

Same

(2) Section 62 shall be deemed to have come into force on May 15, 1950.

PART VI

INCOME TAX ACT

65. (1) The definition of "mining reclamation trust" in subsection 1 (1) of the Income Tax Act, as enacted by the Statutes of Ontario, 1996, chapter 1, Schedule C, section 1, is repealed.

(2) The definition of "permanent establishment" in subsection 1 (1) of the Act is repealed and the following substituted:

permanent establishment" has the meaning given to that expression by subsection 2600 (2) of the Federal Regulations and, in the application of that subsection to a partnership, references to "individual" shall be read as references to the partnership. ("établissement permanent")

(3) The definition of "province" in subsection 1 (1) of the Act is repealed and the following substituted:

province" means a province of Canada and includes each of the territories of Canada. ("province")

(4) The definition of "Provincial Minister" in subsection 1 (1) of the Act, as re-enacted by the Statutes of Ontario, 1993, chapter 29, section 1 and amended by 1996, chapter 24, section 11, is repealed and the following substituted:

Provincial Minister" means the Minister of Finance or, where a collection agreement is entered into, means,

(a) the Receiver General for Canada, in relation to the remittance of an amount as or on account of tax payable under this Act, and

(b) the Minister, in relation to the administration and enforcement of this Act other than,

(i) sections 8.5 and 8.6, subsections 10 (3) and (4) and sections 22.1, 28, 45, 49 and 53,

(ii) in relation to the assessment of a penalty under subsection 19 (3.1),

(iii) in relation to an objection to an assessment of a penalty under subsection 19 (3.1) or an appeal from such an assessment, and

(iv) Part III as it applies in relation to the Ontario child care supplement for working families. ("ministre provincial")

(5) Subsection 1 (1) of the Act, as amended by the Statutes of Ontario, 1993, chapter 29, section 1, 1996, chapter 1, Schedule C, section 1 and 1996, chapter 24, section 11, is further amended by adding the following definition:

qualifying environmental trust" means a qualifying environmental trust, as defined in subsection 248 (1) of the Federal Act, that is resident in Ontario. ("fiducie pour l'environnement admissible")

(6) Section 1 of the Act, as amended by the Statutes of Ontario, 1993, chapter 29, section 1, 1996, chapter 1, Schedule C, section 1 and 1996, chapter 24, section 11, is further amended by adding the following subsection:

Application of s. 257, Federal Act

(7) Section 257 of the Federal Act applies for the purposes of this Act.

66. Section 2.1 of the Act, as enacted by the Statutes of Ontario, 1996, chapter 1, Schedule C, section 2, is amended by striking out "mining reclamation trust" in the first and second lines and substituting "qualifying environmental trust".

67. Section 4.1 of the Act, as enacted by the Statutes of Ontario, 1996, chapter 1, Schedule C, section 5, is amended by striking out "mining reclamation trust" in the second line and substituting "qualifying environmental trust".

68. Subsection 7 (5) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 1, Schedule C, section 7, is amended by striking out "mining reclamation trust" in the first and second lines and substituting "qualifying environmental trust".

69. (1) The definition of "eligible child" in subsection 8 (1) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule B, section 4, is repealed.

(2) Subclause (c) (i) of the definition of "housing unit" in subsection 8 (1) of the Act is amended by striking out "residential or farm property" in the eighth and ninth lines and substituting "residential/farm or multi-residential property".

(3) 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, 1996, chapter 29, section 9 and 1997, chapter 43, Schedule B, section 4, 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), (15.2) and (15.3), a person who died in the taxation year or a person who is, on December 31 in the taxation year,

. . . . .

(4) Clause (d) of the definition of "individual" in subsection 8 (1) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 1, Schedule C, section 8, is repealed and the following substituted:

(d) a qualifying environmental trust.

(5) Clause (d) of the definition of "individual" in subsection 8 (1) of the Act, as it read on February 18, 1997, continues to apply with respect to taxation years ending before February 19, 1997.

(6) Clause (a) of the definition of "municipal tax" in subsection 8 (1) of the Act, as re-enacted by the Statutes of Ontario, 1992, chapter 25, section 3, is amended by striking out "residential or farm property" in the third and fourth lines and substituting "residential/farm or multi-residential property".

(7) Subsection 8 (7) of the Act, as re-enacted by the Statutes of Ontario, 1997, chapter 43, Schedule B, section 4, 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) and (4) 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.

(8) 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, 1996, chapter 29, section 9 and 1997, chapter 43, Schedule B, section 4, is further amended by striking out "(15.1) or (15.2)" in the amendment of 1997 and substituting "(15.1), (15.2) or (15.3)".

(9) The English version of clause 8 (8.1.1) (c) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 24, section 13, is amended by striking out "and" at the end.

(10) Clause 8 (8.1.1) (d) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 24, section 13, is repealed and the following substituted:

(d) $525 for the 1997 taxation year; and

(e) unless otherwise prescribed, $750 for the 1998 and each subsequent taxation year.

(11) Subsection 8 (8.1.2) of the Act, as enacted and amended by the Statutes of Ontario, 1997, chapter 43, Schedule B, section 4, is repealed and the following substituted:

No tax credit for 1997

(8.1.2) If an individual redeemed a Class A share of a corporation registered under Part III of the Community Small Business Investment Funds Act during 1997, no tax credit may be deducted by or allowed to the individual under subsection (8.1) for the 1997 taxation year.

(12) Subsections 8 (8.3) and (8.4) of the Act, as enacted by the Statutes of Ontario, 1996, chapter 1, Schedule C, section 8, are repealed and the following substituted:

Environmental trust tax credit

(8.3) An individual who is a beneficiary of a qualifying environmental trust may deduct from tax otherwise payable under this Act for a taxation year an amount not exceeding the amount of the individual's environmental trust tax credit for the year.

Amount of environmental trust tax credit

(8.4) The amount of an individual's environmental trust tax credit for a taxation year is the amount that would be determined under subsection 127.41 (1) of the Federal Act to be the amount of the individual's "Part XII.4 tax credit" for the taxation year if the tax payable under Part XII.4 of the Federal Act by a qualifying environmental trust for a taxation year ending in the individual's taxation year equalled the amount of tax payable by the trust for that year under section 2.1.

(13) Subsections 8 (8.3) and (8.4) of the Act, as they read on February 18, 1997, continue to apply with respect to taxation years ending before February 19, 1997.

(14) Subsection 8 (10) of the Act, as re-enacted by the Statutes of Ontario, 1997, chapter 43, Schedule B, section 4, is amended by striking out "(10.2)" in the first line.

(15) Subsection 8 (10.1) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule B, section 4, is amended by striking out "Subject to subsection (10.2)" in the first line.

(16) Subsection 8 (10.2) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule B, section 4, is repealed.

(17) Subsection 8 (10.2) of the Act, as it read on December 31, 1997, continues to apply to amounts available from the 1997 taxation year for application to liabilities.

(18) Subsection 8 (15.2) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule B, section 4, is repealed and the following substituted:

Workplace child care tax credit

(15.2) An individual who is an eligible individual for a taxation year under section 8.3 may deduct from tax otherwise payable under this Act for the taxation year an amount not exceeding the amount of his or her workplace child care tax credit determined under section 8.3 for the taxation year.

Workplace accessibility tax credit

(15.3) An individual who is an eligible employer under section 8.4 may deduct from tax otherwise payable under this Act for a taxation year an amount not exceeding the amount of his or her workplace accessibility tax credit determined under section 8.4 for the taxation year.

(19) Paragraph 2 of subsection 8 (17) of the Act, as re-enacted by the Statutes of Ontario, 1997, chapter 43, Schedule B, section 4, is amended by striking out "subsection (15) or (15.1)" in the second and third lines and substituting "any of subsections (15), (15.1), (15.2) and (15.3)".

(20) Paragraph 3 of subsection 8 (17) of the Act, as re-enacted by the Statutes of Ontario, 1997, chapter 43, Schedule B, section 4, is amended by striking out "subsection (15) or (15.1)" in the fourth line and substituting "any of subsections (15), (15.1), (15.2) and (15.3)".

(21) Paragraph 6 of subsection 8 (17) of the Act, as re-enacted by the Statutes of Ontario, 1997, chapter 43, Schedule B, section 4, is amended by striking out "and any amount deducted under section 63 of the Federal Act" in the fourth and fifth lines.

(22) Paragraph 7 of subsection 8 (17) of the Act, as re-enacted by the Statutes of Ontario, 1997, chapter 43, Schedule B, section 4, is amended by striking out "subsection (15) or (15.1)" in the first and second lines and substituting "any of subsections (15), (15.1), (15.2) and (15.3)".

(23) Paragraph 8 of subsection 8 (17) of the Act, as re-enacted by the Statutes of Ontario, 1997, chapter 43, Schedule B, section 4, is amended by striking out "subsection (15) or (15.1)" in the first and second lines and substituting "any of subsections (15), (15.1), (15.2) and (15.3)".

70. The definition of "government assistance" in subsection 8.1 (11) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule B, section 5, is amended by inserting after "subsection 8 (15.1)" in the seventh line "a workplace accessibility tax credit under subsection 8 (15.3)".

71. The definition of "government assistance" in subsection 8.2 (3) of the Act, as enacted by the Statutes of Ontario, 1997, chapter 43, Schedule B, section 6, is amended by inserting after "subsection 8 (15)" in the seventh line "a workplace accessibility tax credit under subsection 8 (15.3)".

72. Division C of Part II of the Act is amended by adding the following section:

Workplace child care tax credit

8.3 (1) The amount of an eligible individual's workplace child care tax credit for a taxation year is the amount equal to 5 per cent of the individual's qualifying expenditures for the taxation year.

Qualifying expenditures

(2) Subject to subsection (4), the amount of an eligible individual's qualifying expenditures for a taxation year is the total of,

(a) all capital costs incurred by the individual after May 5, 1998,

(i) in the construction or renovation of a licensed child care facility in Ontario that are included by the individual for that year for the purposes of the Federal Act in Class 1, 3, 6 or 13 of Schedule II to the regulations made under that Act, and

(ii) on the acquisition of playground equipment for the child care facility that are included by the individual for that year for the purposes of the Federal Act in Class 8 of Schedule II to the regulations made under that Act;

(b) all payments of money and the value of qualified contributions that are made by the individual after May 5, 1998 to a child care operator who deals at arm's length with the individual, to the extent that the child care operator has used the money and contributions for the purposes described in clause (a) in the individual's taxation year so long as the operator has provided to the individual,

(i) confirmation in writing of the amount of money and qualified contributions used for those purposes, and

(ii) the operator's licence number under the Day Nurseries Act\; and

(c) repayments of government assistance made by the individual during the taxation year that do not exceed the amount of the assistance that,

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

(ii) can reasonably be considered to have reduced the amount of a tax credit that would otherwise have been allowed to the individual under subsection 8 (15.2).

Qualified contribution

(3) The following contributions are qualified contributions from an eligible individual for the purposes of clause (2) (b):

1. The fair market value of property the ownership of which is transferred by the individual to the child care operator, if the property is used by the child care operator in the activities and for the purposes described in clause (2) (a).

2. The fair market value of services provided by the individual to the child care operator, if the services are used by the child care operator in the activities and for the purposes described in clause (2) (a).

3. The reasonable monetary value of the benefit from a loan or a loan guarantee given by the individual to the child care operator, to the extent the proceeds of the loan are used by the child care operator in the activities and for the purposes described in clause (2) (a).

Limitation on qualifying expenditures

(4) The amount of an eligible individual's qualifying expenditures for a taxation year shall be determined after the deduction of,

(a) all government assistance, if any, in respect of the qualifying expenditures that, at the time the individual's return is required to be delivered under section 9 for the taxation year for which the tax credit is claimed under this section, the individual has received, is entitled to receive or may reasonably be expected to be entitled to receive; and

(b) the amount, if any, of the expenditures that would not be considered to be reasonable in the circumstances if they had been incurred by persons dealing with each other at arm's length.

Partnership

(5) If an eligible individual is a member of an eligible partnership at the end of a taxation year and the partnership incurs, in a fiscal period of the partnership that ends in the taxation year, an expenditure in respect of a licensed child care facility that would be a qualifying expenditure for the purposes of this section if the expenditure had been made by an eligible individual, the portion of the expenditure that may reasonably be considered to be the individual's share may be included by the individual in the amount of his or her qualified expenditures for the taxation year for the purposes of this section.

Limited partner

Definitions

(7) In this section, "

child care facility" means a day nursery as defined in the Day Nurseries Act\; ("garderie")

child care operator" means a person who has control or management of a child care facility; ("exploitant de garderie")

eligible individual" means, in respect of a taxation year, an individual,

(a) who carries on business through a permanent establishment in Ontario in the taxation year,

(b) who is not a child care operator, and

eligible partnership" means, in respect of a fiscal period, a partnership,

(a) that has one or more members, other than limited partners, who are eligible individuals for the taxation year in which the fiscal period ends, and

(b) that carries on business through a permanent establishment in Ontario in the fiscal period but does not carry on the business of a child care operator; ("société admissible") "

government assistance" means assistance from a government, municipality or other public authority in any form including a grant, subsidy, forgiveable loan, deduction from tax and investment allowance, but not including a workplace child care tax credit under subsection 8 (15.2) or any other amount that may be prescribed; ("aide gouvernementale")

playground equipment" means a structure erected in the playground area of a licensed child care facility for recreational purposes. ("matériel de terrains de jeux")

73. Division C of Part II of the Act is amended by adding the following section:

Workplace accessibility tax credit

8.4 (1) Subject to subsection (8), the amount of an eligible employer's workplace accessibility tax credit for a taxation year under subsection 8 (15.3) is 15 per cent of the total of the amounts determined under the following paragraphs:

1. The amount, if any, incurred by the employer after July 1, 1998 and in the taxation year to provide during a job interview in Ontario the support services of a sign language interpreter, an intervenor, a note-taker, a reader or an attendant.

2. The total of all amounts, each of which is determined in respect of a qualifying employee and is equal to the lesser of,

i. the total amount of qualifying expenditures, other than qualifying expenditures included in the amount determined under paragraph 1, that are incurred by the employer in the taxation year in respect of the qualifying employee, and

ii. the amount by which $50,000 exceeds the total of all amounts, each of which is a qualifying expenditure in respect of the qualifying employee that was included in determining a workplace accessibility tax credit of the employer for a prior taxation year.

3. The amount of repayments of government assistance made by the employer during the taxation year, if any, that does not exceed the amount of the assistance that,

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

ii. can reasonably be considered to have reduced the amount of a tax credit that would otherwise have been allowed to the employer under subsection 8 (15.3).

Eligible partnership

(2) If an employer is a member of an eligible partnership at the end of a taxation year and the partnership incurs, in a fiscal period of the partnership that ends in the taxation year, an expenditure in respect of which the partnership would be entitled to claim a tax credit under subsection 8 (15.3) if the expenditure had been made by an eligible employer, the employer may claim a tax credit equal to the portion of the tax credit that would be determined in respect of the partnership for the fiscal period under subsection (1) that can reasonably be considered to be the employer's share of the tax credit.

Limited partner

(3) Despite subsection (2), no amount may be deducted by an eligible employer in respect of an expenditure incurred by a partnership in which the employer is a limited partner.

Qualifying expenditure

(4) Subject to subsection (5), each of the following expenditures incurred after July 1, 1998 by an eligible employer or eligible partnership in respect of a qualifying employee is a qualifying expenditure:

1. An expenditure that is incurred not more than three months before and not more than 12 months after the date of commencement of the qualifying employee's employment with the employer or partnership and,

i. that is in respect of a building, device or equipment in Ontario and is deductible by the employer or partnership in computing its income under paragraph 20 (1) (qq) or (rr) of the Federal Act,

A. an environmental control unit to operate a telephone and lights, a door opener or other office equipment modified to accommodate an individual with mobility impairment,

B. an ergonomic work station and seating, a customized filing system or other office furniture adapted to accommodate an individual with mobility impairment,

C. a telephone headset for use by an individual with a mobility impairment,

D. specialized lighting for an individual with a visual impairment or epilepsy,

E. a real time captioning or alphanumeric pager for an individual with hearing impairment,

F. a tool, machinery or information communication system adapted for use by an individual with a physical or mental impairment,

G. computer hardware or a hardware attachment that is required to use disability-specific computer software.

2. An expenditure incurred not more than six months after the date of commencement of the qualifying employee's employment with the employer or partnership to provide the support services at a location in Ontario of a job coach, a note-taker, a reader, a sign language interpreter, an intervener or an attendant for the employee, if the services are required by the employee by reason of a physical or mental impairment.

3. An expenditure incurred not more than 12 months after the date of commencement of the qualifying employee's employment with the employer or partnership to train the employee or his or her coworkers to use a device or equipment described in subparagraph iii of paragraph 1.

4. An expenditure prescribed by the regulations.

Limitation on qualifying expenditures

(5) The amount of an eligible employer's qualifying expenditures for a taxation year shall be determined after the deduction of,

(a) all government assistance, if any, in respect of the qualifying expenditures that, at the time the employer's return is required to be delivered under section 9 for the taxation year for which the tax credit is claimed under this section, the employer, or the partnership of which the employer is a member, has received, is entitled to receive or may reasonably be expected to be entitled to receive;

(b) the amount, if any, of the expenditures that would not be considered to be reasonable in the circumstances if they had been incurred by persons dealing with each other at arm's length; and

(c) the amount, if any, of the expenditures that were included in determining the amount of a tax credit for a taxation year under this section in respect of another qualifying employee.

Qualifying employee

(6) A qualifying employee of an eligible employer, or of an eligible partnership of which the employer is a member, is an individual who,

(a) deals at arm's-length with the employer;

(b) is employed by the employer or the partnership for at least 60 hours per month;

(d) within 12 months prior to the date of commencing employment with the employer or partnership, was not employed by the employer or by a partnership of which the employer is a member; and

(e) is an individual described in subsection (7) or who has obtained a Workplace Accessibility Tax Incentive Certificate in a form approved by the Provincial Minister from a qualified medical practitioner certifying,

(i) that the individual has a physical or mental impairment that is continuous or recurrent and expected to last at least one year, and

(ii) that, in the opinion of the practitioner, the impairment constitutes a substantial barrier to competitive employment without accommodations.

Same

(7) For the purposes of clause (6) (e), an individual is described in this subsection if,

(a) the individual is an individual in respect of whom a tax credit under section 118.3 of the Federal Act may be claimed;

(b) the individual is eligible for income support or employment supports under the Ontario Disability Support Program Act, 1997 immediately prior to commencing employment with the employer or partnership;

(c) the individual is in receipt of a Disability Benefits Canada Pension under the Canada Pension Plan Act immediately prior to commencing employment with the employer or partnership;

(d) the individual is registered with the Canadian National Institute for the Blind;

(e) the individual is eligible to receive assistance from the Assistive Devices Program administered by the Ministry of Health; or

(f) the individual satisfies the conditions prescribed by the regulations.

Exception

(8) No amount may be included in determining the amount of a tax credit under subsection 8 (15.3) in respect of an expenditure incurred in respect of a qualifying employee of the employer or of a partnership of which the employer is a member, unless the employer retains, as part of its records that are required to be kept under the Federal Act, a copy of the certificate referred to in subsection (6) or a copy of the documentation upon which the employer relies in claiming that the employee is an individual described in subsection (7).

Definitions

(9) In this section, "

attendant" means an individual who provides personal support services to a person with a physical disability under the direction of the person on a pre-scheduled visitation basis; ("préposé")

eligible employer" means an individual who carries on business through a permanent establishment in Ontario and is not exempt from tax under section 6; ("employeur admissible")

eligible partnership" means a partnership that carries on business through a permanent establishment in Ontario and that has one or more members, other than limited partners, who are eligible employers; ("société admissible")

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 workplace accessibility tax credit under subsection 8 (15.3) or any other amount that may be prescribed; ("aide gouvernementale")

intervenor" means an individual who acts as a communication link by providing information, facts and support to a person who is deaf-blind; ("intermédiaire")

(a) become oriented in the workplace,

(b) learn the specific work tasks required by the position,

(d) adjust to the work environment; ("agent d'intégration") "

mental impairment" means a developmental or learning impairment, a psychiatric impairment or an impairment resulting from a head injury; ("déficience mentale")

personal support services" include assistance with personal grooming and hygiene, dressing, breathing by operating respiratory equipment, toileting, eating, essential communication by way of bliss boards and augmentative communication, positioning and transferring; ("services de soutien personnels")

qualified medical practitioner" means an individual described in section 3 of Ontario Regulation 223/98 made under the Ontario Disability Support Program Act, 1997\; ("professionnel de la santé qualifié")

sign language interpreter" means an individual who acts as a communication link by using sign language to provide information, facts and support to a deaf person. ("interprète gestuel")

74. Division C of Part II of the Act is amended by adding the following sections:

Interpretation

8.5 (1) In this section,

adjusted earned income" of an individual for a base taxation year is the total of the earned income for the base taxation year of the individual and of the person who is the individual's cohabiting spouse for the purposes of subdivision a.1 of Division E of Part I of the Federal Act; ("revenu gagné modifié")

adjusted income" of an individual for a base taxation year is the total of the income for the base taxation year, if no amount were included in respect of a gain from a disposition of property to which section 79 of the Federal Act applies in computing that income, of the individual and of the person who is the individual's cohabiting spouse for the purposes of subdivision a.1 of Division E of Part I of the Federal Act; ("revenu modifié")

base taxation year", in relation to a month, has the meaning given to that expression by section 122.6 of the Federal Act; ("année de base")

benefit year" means the period from July 1 of a year to June 30 of the following year; ("année du calcul des prestations")

Canada Child Tax Benefit" means the Canada Child Tax Benefit under subdivision a.1 of Division E of Part I of the Federal Act; ("prestation fiscale canadienne pour enfants")

child care expense" means a child care expense as defined in subsection 63 (3) of the Federal Act for which a receipt described in subsection 63 (1) of that Act is issued; ("frais de garde d'enfants")

child care services" means the prescribed services as listed in paragraphs 5 to 9 of subsection 66.1 (1) and paragraphs 5 to 7 of subsection 66.1 (2) of Regulation 262 of the Revised Regulations of Ontario, 1990, made under the Day Nurseries Act\; ("services de garde d'enfants")

child care subsidy" means financial assistance that meets the requirements described in subsection (2); ("subvention pour frais de garde d'enfants")

cohabiting spouse", of an individual at any time, means the person who, at that time, is the individual's cohabiting spouse for the purposes of subdivision a.1 of Division E of Part I of the Federal Act; ("conjoint visé")

designated percentage", in respect of an individual at the beginning of a month, is nil if the individual has no qualified dependants at the beginning of the month, 20 per cent if the individual has one qualified dependant at the beginning of the month, 40 per cent if the individual has two qualified dependants at the beginning of the month, or 60 per cent if the individual has three or more qualified dependants at the beginning of the month; ("pourcentage désigné")

earned income" has the meaning given to that expression by subsection 63 (3) of the Federal Act; ("revenu gagné")

eligible individual" means, in respect of a qualified dependant at any time, the individual who, at that time, is an eligible individual in respect of the dependant for the purposes of subdivision a.1 of Division E of Part I of the Federal Act; ("particulier admissible")

qualified dependant", at the beginning of a month, means an individual who has not attained the age of seven years before the first day of the month and who is a qualified dependant for the purposes of subdivision a.1 of Division E of Part I of the Federal Act; ("personne à charge admissible")

qualifying child care expenses" means, for a base taxation year in relation to a month, all child care expenses claimed by the individual or the individual's cohabiting spouse that are deductible and allowed as a deduction for the base taxation year under section 63 of the Federal Act; ("frais de garde d'enfants admissibles")

return of income", filed by an individual for a taxation year, means the return of income filed by the individual for the taxation year for the purposes of subdivision a.1 of Division E of Part I of the Federal Act. ("déclaration de revenu")

Child care subsidy

(2) Financial assistance that meets the following requirements constitutes a child care subsidy for the purposes of the Act:

1. It is provided for the benefit of an eligible individual or his or her cohabiting spouse who is a person in need as defined in section 1 of Regulation 262 of the Revised Regulations of Ontario, 1990, made under the Day Nurseries Act.

2. It is provided to pay for the costs of child care services for a qualified dependant of the individual or his or her cohabiting spouse.

3. It is provided by,

i. a municipality within the meaning of the Day Nurseries Act,

ii. a prescribed board under section 68.3 of Regulation 262,

iii. an approved corporation within the meaning of the Day Nurseries Act,

iv. a delivery agent designated under the Day Nurseries Act other than a band as defined in subsection 1 (1) of that Act, or

v. the Ministry of Community and Social Services.

Eligible individual at the beginning of a month

(3) An individual is an eligible individual in respect of a qualified dependant at the beginning of a particular month for the purposes of subsection (4) if,

(a) the individual is an eligible individual in respect of the qualified dependant at the beginning of the month;

(b) the individual has filed with the Minister no later than 11 months after the end of the month the notice referred to in subsection 122.62 (1) of the Federal Act; and

Ontario child care supplement for working families

(4) An overpayment on account of an individual's liability for tax under this Act for a taxation year shall be deemed to arise during a month after June 1998 if,

(a) the individual is an eligible individual at the beginning of the month in respect of one or more qualified dependants;

(b) the individual is resident in Ontario on the first day of the month and on the last day of the immediately preceding month;

(c) an application for the supplement for the benefit year, or other period ending on June 30 that includes the month, containing the information and signed by the persons required by the Provincial Minister under subsection (8), is completed and filed not more than 18 months after the end of the month by the individual; and

(d) the individual and, if required by the Provincial Minister, the person who is the individual's cohabiting spouse for the purposes of subdivision a.1 of Division E of Part I of the Federal Act, if the individual has such a cohabiting spouse, have each filed a return of income for the base taxation year in relation to the month.

Amount of deemed overpayment

(5) The overpayment of tax, if any, referred to in subsection (4) that is deemed to arise during a month on account of an individual's liability under this Act for a taxation year in respect of a qualified dependant is equal to the amount determined in accordance with the formula,

[ 1/12 (A * B) ] 1/C

in which, "

A" is the lesser of,

(a) the amount equal to the greater of,

(i) the amount determined by multiplying the individual's designated percentage by the amount by which the individual's adjusted earned income for the base taxation year in relation to the month exceeds $5,000, and

(ii) 50 per cent of the individual's qualifying child care expenses for the base taxation year in relation to the month for persons who are qualified dependants for the purposes of subdivision a.1 of Division E of Part I of the Federal Act, and

(b) the amount obtained by multiplying $1,020 by the number of qualified dependants in respect of whom the individual was an eligible individual at the beginning of the month, "

B" is 8 per cent of the amount, if any, by which the individual's adjusted income for the base taxation year in relation to the month exceeds $20,000, and "

C" is the number of qualified dependants in respect of whom the individual is an eligible individual at the beginning of the month.

If in receipt of subsidy

(6) Despite subsection (5), if the individual or his or her cohabiting spouse receives the benefit of a child care subsidy in respect of a qualified dependant in a particular month of the benefit year, the overpayment of tax that is deemed to arise during the month in respect of the qualified dependant shall be deemed to be the amount equal to the lesser of,

(a) the amount of the overpayment that would otherwise be deemed to arise for the month under subsection (5) in respect of the qualified dependant; and

(b) the amount equal to half of the total child care expenses paid for the month by the individual or his or her cohabiting spouse in respect of the qualified dependant.

Minimum deemed overpayment

(7) Despite subsections (5) and (6), if the overpayment that is deemed to arise under this section for a benefit year in respect of an individual is greater than zero but less than $10, the individual's total overpayment for the benefit year is deemed to be $10.

Application for supplement

(8) For the purposes of determining the amount of an overpayment, if any, that is deemed to arise under this section, an application in respect of each benefit year, or other period ending on June 30 to which the application relates, shall be filed with the Provincial Minister in the manner and form approved by the Provincial Minister, containing the information and signed by the persons required by the Provincial Minister.

Consideration of application

(9) On receiving an application under this section, the Provincial Minister shall consider the application and,

(a) determine the total amount, if any, of the overpayment that is deemed to arise under this section during each month in the benefit year, or during each month in the period to which the application relates; or

(b) determine that no overpayment is deemed to arise under this section for the benefit year or for the period to which the application relates.

Notice of entitlement

(10) After making a determination under subsection (9), the Provincial Minister shall send to the individual a notice of entitlement setting out whether an overpayment is deemed to arise under this section in respect of the individual, the amount of any overpayment to which the individual is entitled and the basis on which the Provincial Minister's determination is made, and shall notify the individual of his or her right to object to the notice of entitlement.

Payment of supplement

(11) Subject to subsections (12), (13) and (18), the Provincial Minister shall pay to an eligible individual the total amount of any overpayment to which the eligible individual is entitled for a benefit year under this section by means of monthly payments.

Exception for 1998

(12) Payment of an overpayment that is deemed to arise during any month before 1999 may be made after November 1998.

Lump sum annual payment

(13) The Provincial Minister may pay the total amount of any overpayment to which an eligible individual is entitled for a benefit year under this section by means of one lump sum payment if,

(a) the total amount of the overpayment for the benefit year is not more than $10 or is deemed under this section to be $10; or

(b) the overpayment during each month of the benefit year is less than $10.

Notification of change

(14) Every eligible individual shall notify the Provincial Minister in a form and manner satisfactory to the Provincial Minister of the occurrence of any of the following events, and shall provide the following information as part of the notification:

1. The event: the individual or his or her cohabiting spouse begins to receive the benefit of a child care subsidy. The information: for the first month in which he or she receives the benefit, the amount of the child care expenses paid by him or her for the care of the qualified dependant in respect of whom the subsidy is received.

2. The event: the individual or his or her cohabiting spouse ceases to receive the benefit of a child care subsidy. The information: the first month in which he or she did not receive the benefit.

3. The event: the amount of child care expenses paid by the individual or his or her cohabiting spouse for a particular month is different from the monthly amount last reported to the Provincial Minister for the care of a qualified dependant in respect of whom the benefit of a child care subsidy is received. The information: the amount of the child care expenses paid for the particular month for that dependant.

Notification and election on change

(15) A notification given under subsection 122.62 (4) of the Federal Act or an election made under any of subsections 122.62 (5) to (7) of that Act shall also be considered to be a notification or election given or made for the purposes of this section, except that an election shall not be considered to be an election for the purposes of this Act if the result of it would be a reduction in the amount of the overpayment of tax deemed under this section to arise during the remaining months in the benefit year to which the election relates.

Notice of entitlement in event of change

(16) The Provincial Minister shall send to an individual a notice of entitlement whenever the Provincial Minister becomes aware,

(a) that a change has occurred that affects the amount of the individual's overpayment of tax that is deemed to arise under this section for a benefit year; or

(b) that the individual has received an amount to which he or she is not entitled under this section.

Same

(17) The notice of entitlement shall contain,

(a) the information required by subsection (10);

(b) the individual's rights to object to the Provincial Minister's determination; and

Payment of additional supplement

(18) The Provincial Minister may pay to an eligible individual an additional amount under this section for a benefit year, if the amount is not less than $10 and if,

(a) the individual gives the notification and provides the information required under subsection (14) within four years of the day the original notice of entitlement for the benefit year under subsection (10) is mailed to the individual, in the case where the individual is entitled to the additional amount as a result of an event described in subsection (14); or

(b) the Provincial Minister receives information from the Department of National Revenue establishing that the individual is entitled to the additional amount, in any other case.

Person acting for individual

(19) Subsection 159 (1) of the Federal Act applies with necessary modifications for the purposes of this section and section 8.6.

Part-year residents

(20) For the purposes of this section, unless an individual is resident in Canada throughout a taxation year,

(a) the individual's income for the year shall be deemed to be equal to the amount that would have been the individual's income for the year had the individual been resident in Canada throughout the year; and

(b) the individual's earned income for the year shall not exceed that portion of the amount that would, but for this clause, be the individual's earned income that is included by virtue of section 114 of the Federal Act or subsection 115 (1) of that Act in computing the individual's taxable income or taxable income earned in Canada, as the case may be, for the year.

Bankruptcy

(21) For the purposes of this section, if an individual becomes bankrupt in a taxation year,

(a) the individual's earned income for the year shall include the individual's earned income for the taxation year that begins on January 1 of the calendar year that includes the date of bankruptcy;

(b) the individual's income for the year shall include the individual's income for the taxation year that begins on January 1 of the calendar year that includes the date of bankruptcy; and

(c) the total of all amounts deducted under section 63 of the Federal Act in computing the individual's income for the year shall include the amount deducted under that section for the individual's taxation year that begins on January 1 of the calendar year that includes the date of bankruptcy.

Provincial Minister's discretion

(22) Despite any other provision of this section, the Provincial Minister may pay to an individual under this section an amount to which the individual would otherwise not be entitled, or an additional amount in excess of the amount to which the individual would otherwise be entitled, and may determine the amount or additional amount if the Provincial Minister considers that the payment should be granted for the relief of financial hardship.

Provincial Minister's decision final

(23) A decision by the Provincial Minister under subsection (22) is final and not subject to review in respect of whether to pay an amount or additional amount and the amount of the payment.

Amount not to be charged

(24) An amount deemed by this section to be an overpayment of tax on account of an individual's liability under this Act for a taxation year,

(a) cannot be assigned, charged, attached or given as security and any transaction purporting to assign, charge, attach or give it as security is void;

(b) cannot be garnished; and

Repayment

(25) If an individual receives under this section an amount to which the individual is not entitled or that is in excess of the individual's entitlement under this section, the individual is liable to repay the amount to the Provincial Minister.

Recovery of amount

(26) Subject to subsection (27), an amount repayable under subsection (25) that has not been repaid to the Provincial Minister,

(a) constitutes a debt to the Crown in right of Ontario and may be recovered by way of deduction, set-off or in any court of competent jurisdiction in proceedings commenced at any time or in any other manner provided by this Act; and

(b) shall be deemed for the purposes of sections 31 to 36 to be tax payable under this Act.

Time limit

(27) Subject to subsections (28) and (29), an individual ceases to be liable to repay an amount under subsection (25) on the day that is four years after the date of mailing of the original notice of entitlement for the benefit year to which the amount or excess amount relates, unless before that day the Provincial Minister has sent a notice of entitlement under subsection (16) setting out the amount required to be repaid.

Exception

(28) Subsection (27) does not apply if the liability to repay the amount under subsection (25) arises by reason of a change in an amount determined under the Federal Act.

Same

(29) Subsection (27) does not apply,

(a) if the individual or another person who filed an application or provided information under this section or section 8.6 made any misrepresentation or omission that is attributable to neglect, carelessness or wilful default or committed any fraud in filing a return under this Act or the Federal Act, or in filing an application or providing information under this section or section 8.6; and

(b) if it is reasonable to believe that part or all of the amount repayable under subsection (25) would not have been paid by the Provincial Minister in default of the misrepresentation, omission or fraud.

Cohabiting spouse liable

(30) If a person was the cohabiting spouse of an individual on the day the individual filed an application under this section, the individual and the person are jointly and severally liable to repay any amount that the individual is required to repay under this section in respect of the time period to which the application relates, if the person was the individual's cohabiting spouse at the time the amount was paid to the individual.

Special circumstances

(31) Despite subsection (25), if because of special circumstances the Provincial Minister, in his or her discretion, considers it unreasonable to demand repayment of the whole amount due under that subsection, the Provincial Minister may accept such amount as he or she considers appropriate in the circumstances.

Powers and duties not transferred

(32) In the application of sections 31 to 36 to recover amounts referred to in subsection (25), all references to "Minister" and "Provincial Minister" shall be read as references to "Minister of Finance", and subsection 31 (4) shall not apply.

Notices

(33) Any notice or other document sent by the Provincial Minister under this section or section 8.6 by first class mail or its equivalent shall be deemed to be received by the person to whom it was sent on the day it is mailed.

Regulations

(34) The Lieutenant Governor in Council may make regulations prescribing, with or without modifications, additional provisions of the Federal Act that apply for the purposes of this section and the manner in which they apply.

Investigations

8.6 (1) Any person authorized by the Provincial Minister for any purpose related to the administration or enforcement of section 8.5 may at all reasonable times enter into any premises or place where any business, municipal government or child care is carried on, where any property is kept, where anything is done in connection with any business, municipal government or child care or where any books or records are kept or should be kept that contain information relevant in the administration of section 8.5 and,

(a) audit or examine the books and records and any account, voucher, letter, telegram or other document that relates to or may relate to the information that is or should be in the books or records, or that relates to or may relate to any amount taken into consideration in determining an amount under section 8.5 or the eligibility of any individual to receive an amount under section 8.5;

(b) examine any property, process or matter, an examination of which may, in the person's opinion, assist in determining the accuracy of an application under section 8.5 or in ascertaining the information that is or should be in the books or records or in such application, or the amount of any payment under section 8.5; and

(c) require any person on the premises to give him or her all reasonable assistance with the audit or examination and to answer all questions relating to the audit or examination, either orally or, if he or she so requires, in writing, on oath or by statutory declaration, and for that purpose, he or she may require the person to attend at the premises or place with him or her.

Demand for information

(2) The Provincial Minister may, for any purpose related to the administration or enforcement of section 8.5 and this section, by registered letter, or by a demand served personally or delivered by a courier service, within such reasonable time as is stipulated in the registered letter or demand, require from any person, partnership, syndicate, trust, corporation, delivery agent under section 8.5 or other entity or from any partner, agent, member, director or officer of it,

(a) any information or additional information or the production of books, letters, accounts, invoices, financial statements, computer programs or data files, or any other documents on paper or stored electronically; or

(b) a written statement, concerning any matter that may be relevant to the administration or enforcement of this Act or the regulations.

Same

(3) The Provincial Minister may require that a written statement referred to in clause (2) (b) be made by way of affidavit or statutory declaration.

Copies

(4) Where a book, record or other document has been examined or produced under this section, the person by whom it is examined or to whom it is produced or any officer of the Ministry of Finance may make, or cause to be made, one or more copies of it, and a document purporting to be certified by the Provincial Minister, or a person authorized by the Provincial Minister, to be a copy made pursuant to this section is admissible in evidence and has the same probative force as the original document would have had if it had been proven in the ordinary way.

Print-out admissible in evidence

(5) If an application, return, document or any information has been received by the Provincial Minister on computer disk or other electronic medium, or by electronic filing under the Federal Act, a document, accompanied by the certificate of the Provincial Minister, or of a person authorized by the Provincial Minister, stating that the document is a print-out of the application, return, document or information received by the Provincial Minister and certifying that the information contained in the document is a true and accurate representation of the application, return, document or information received by the Provincial Minister, is admissible in evidence and shall have the same probative force as the original return, document or information would have had if it had been delivered in paper form.

Same

(6) The Provincial Minister or a person authorized by the Provincial Minister may reproduce from original data stored electronically any document previously issued by the Provincial Minister and the electronically reproduced document shall be admissible in evidence and shall have the same probative force as the original document would have had if it had been proved in the ordinary way.

Same

(7) If the data contained on an application or other document received by the Provincial Minister from a person has been stored electronically by the Provincial Minister on computer disk or other electronic medium and the application or other document has been destroyed by a person so authorized by the Provincial Minister, a document, accompanied by the certificate of the Provincial Minister or of a person authorized by the Provincial Minister, stating that the document is a print-out of the data contained on the application or other document received and stored electronically by the Provincial Minister and certifying that the information contained in the document is a true and accurate representation of the data contained on the application or document delivered by the person, is admissible in evidence and shall have the same probative force as the original application or document would have had if it had been proved in the ordinary way.

Administration of oaths

(8) Declarations or affidavits in connection with applications delivered under section 8.5 or statements of information submitted pursuant to this section may be taken before any person having authority to administer an oath or before any person specially authorized for that purpose by the Lieutenant Governor in Council, but any person so specially authorized shall not charge any fee therefor.

75. Section 10 of the Act, as amended by the Statutes of Ontario, 1997, chapter 10, section 4, is further amended by adding the following subsections:

Determination of deemed amount

(3) An individual may, during any month, request in writing that the Provincial Minister determine the amount deemed by section 8.5 to be an overpayment of tax during the month or any month in the immediately preceding 18 months.

Notice of entitlement

(4) On receipt of a request under subsection (3), the Provincial Minister shall determine the amount deemed by section 8.5 to be an overpayment of tax or shall determine that no overpayment of tax is deemed to arise under that section, and shall forward a notice of entitlement to the individual containing the information required under subsection 8.5 (10) and shall notify the individual of his or her rights to object to the Provincial Minister's determination in the notice of entitlement.

76. Section 16 of the Act is amended by striking out the portion before clause (a) and substituting the following:

Refund of tax credits

16. In applying subsection 160.1 (1) of the Federal Act for the purposes of this Act, "refund" includes a refund that arises by reason of a provision of this Act, other than section 8.5, that,

. . . . .

77. Section 19 of the Act, as amended by the Statutes of Ontario, 1992, chapter 25, section 8, is further amended by adding the following subsection:

Penalty

(3.1) Every person, who knowingly, or under circumstances amounting to gross negligence, makes or participates in, assents to or acquiesces in the making of a false statement or omission in any application or other document filed or provided to the Provincial Minister under section 8.5 or 8.6 in respect of an individual is liable to a penalty, when assessed therefor, equal to the greater of $100 and 50 per cent of the amount by which "A" exceeds "B",

where, "

A" is the amount of the overpayment that would be deemed to arise under section 8.5 if the overpayment were computed based on the false statement or omission, and "

B" is the amount, if any, of the overpayment to which the individual is entitled under section 8.5.

78. (1) Subsection 21 (1) of the Act, as re-enacted by the Statutes of Ontario, 1992, chapter 25, section 9 and amended by 1993, chapter 29, section 12, is further amended by adding at the end "other than section 8.5".

(2) Section 21 of the Act, as amended by the Statutes of Ontario, 1992, chapter 25, section 9, 1993, chapter 29, section 12 and 1997, chapter 43, Schedule B, section 7, is further amended by adding the following subsection:

Exception

(7) Subsections (4) and (5) do not apply to amounts that are deemed overpayments under section 8.5.

79. Section 22 of the Act is repealed and the following substituted:

Objections to assessments

22. Section 165 of the Federal Act applies for the purposes of this Act, but not in respect of objections to which section 22.1 applies.

Objections, Ontario child care supplement for working families

22.1 (1) An individual who objects to a determination made under section 8.5 or under subsection 10 (4) may, within 90 days after the day the notice of entitlement under section 8.5 or subsection 10 (4) is sent, serve on the Provincial Minister a notice of objection in the form approved by the Provincial Minister.

Issues not subject to objection

(2) For the purposes of section 8.5, an individual shall not raise by way of objection under subsection (1) any issue related to whether a person is a cohabiting spouse, eligible individual or qualified dependant.

Issues on objection

(3) For the purposes of section 8.5, an individual may raise by way of objection under subsection (1) only issues related to,

(a) the residence of the individual for the purposes of section 8.5; and

(b) the computation of the amount of the deemed overpayment or the determination of amounts used in the computation of the deemed overpayment, other than amounts determined under the Federal Act or by reference to amounts determined under that Act.

Content of notice of objection

(4) 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 individual in respect of each issue.

Additional information

(5) If a notice of objection does not fully set out the facts and reasons relied on by the individual in respect of an issue, the Provincial Minister may in writing request the individual to provide the information, and the individual shall be deemed to have complied with clause (4) (b) in respect of the issue if the individual provides the information to the Provincial Minister in writing within 60 days after the day the request is made by the Provincial Minister, but if the individual does not comply within that time, the Provincial Minister may, at his or her discretion, consider the notice of objection to be void and the determination of the Provincial Minister to be final and binding on the individual.

Calculating time limits

(6) For the purposes of calculating the number of days mentioned in subsections (1) and (5),

(a) a notice of entitlement referred to in subsection (1) shall be deemed to have been sent on the date stated in the notice; and

(b) a request for information under subsection (5) shall be deemed to have been made on the date stated in the notice.

Service of notice of objection

(7) Service of a notice of objection under this section shall be by registered mail addressed to the Provincial Minister or by another method that is prescribed.

Same

(8) The Provincial Minister may accept a notice of objection under this section even though the notice was not served in the manner required by subsection (7).

Extension of time

(9) The time within which a notice of objection is to be served may be extended by the Provincial Minister if application for the extension is made within 180 days from the day of mailing of the notice of entitlement which is the subject of the objection.

Reconsideration by Provincial Minister

(10) Upon receipt of a notice of objection, the Provincial Minister shall, as quickly as possible, reconsider the determination and confirm or vary it.

Notification

(11) The Provincial Minister shall notify the individual in writing as to the action taken by the Provincial Minister under subsection (10) as quickly as possible after taking the action.

Decision final

(12) The Provincial Minister's decision under subsection (10) is final and is not subject to appeal unless the decision involves the interpretation of a provision of this Act or involves an issue solely of law.

Appeal on question of law

(13) If an individual disagrees with the decision of the Provincial Minister under subsection (10), the individual and the Provincial Minister may agree in writing as to the undisputed facts and then apply to the Ontario Court (General Division) to have the issue in dispute determined if,

(a) under subsection (3), the issue in dispute may be raised on an objection;

(b) the issue in dispute is not an issue that the individual is not entitled to raise on objection by reason of subsection (2); and

(c) the issue in dispute involves the interpretation of a provision of this Act or is solely an issue of law in which no facts are in dispute, or the issue in dispute involves the proper inference to be drawn from facts that are not in dispute.

Same

(14) If the Provincial Minister does not apply to the court under subsection (13) within six months after the date on which the Provincial Minister and the individual have both agreed in writing on the facts, the individual may apply to the court to have the issue determined.

80. Clause 23 (2) (d) of the Act, as re-enacted by the Statutes of Ontario, 1996, chapter 24, section 17, is repealed and the following substituted:

(d) the amount of tax payable by a qualifying environmental trust under section 2.1.

81. Subsection 29 (1) of the Act, as amended by the Statutes of Ontario, 1996, chapter 24, section 19 and 1997, chapter 43, Schedule B, section 8, is further amended by adding the following clause:

(f) defining any word or expression used in this Act or a regulation that has not been expressly defined in the Act.

82. Subsection 42 (1) of the Act is amended by adding the following clause:

(a.1) fails to comply with section 8.6.

83. (1) Clause 43 (a) of the Act is repealed and the following substituted:

(a) made, or participated in, assented to or acquiesced in the making of false or deceptive statements in a return, a certificate, a statement, an application or other document filed or provided under section 8.5 or 8.6, or an answer filed or made as required by or under this Act or a regulation or by or under a provision of the Federal Act or of the Federal Regulations as that provision applies for the purposes of this Act.

(2) Clause 43 (b) of the Act is amended by striking out "or" at the end of subclause (i), by adding "or" at the end of subclause (ii) and by adding the following subclause:

(iii) obtain for the benefit of the person or another person a deemed overpayment under section 8.5 in excess of the amount to which the person or other person is entitled under that section.

(3) Clause 43 (f) of the Act is repealed and the following substituted:

(f) a fine of not less than 50 per cent and not more than 200 per cent of the amount of the tax that was sought to be evaded, the amount of the tax credit under section 8 or the deemed overpayment under section 8.5 that was sought to be obtained, as applicable; or

. . . . .

84. Section 49 of the Act, as amended by the Statutes of Ontario, 1993, chapter 29, section 2, is further amended by adding the following subsection:

Exception

(5) Subsections (3) and (4) do not apply in respect of the employment of powers, the exercise of discretion and the performance of duties under any section of this Act as it relates to the Ontario child care supplement for working families under section 8.5 and proceedings in connection with it.

Repeal

85. Subsection 4 (10) of Schedule B to the Tax Credits to Create Jobs Act, 1997 is repealed.

Commencement

86. (1) Subject to subsection (2) to (6), this Part comes into force on the day the Tax Credits and Revenue Protection Act, 1998 receives Royal Assent.

Same

(2) Subsection 65 (5) shall be deemed to have come into force on January 1, 1992.

Same

(3) Sections 66, 67, 68 and 80 shall be deemed to have come into force on January 1, 1997.

Same

(4) Subsections 69 (4), (5), (12) and (13) shall be deemed to have come into force on February 19, 1997.

Same

(5) The following provisions shall be deemed to have come into force on January 1, 1998:

1. Subsections 65 (1) and (2).

2. Subsections 69 (1), (2), (3), (6) to (11) and (14) to (23).

3. Sections 70, 71, 72, 73 and 85.

Same

(6) Subsections 65 (4) and (6) and sections 74, 75, 76, 77, 78, 79, 82, 83 and 84 shall be deemed to have come into force on July 1, 1998.

PART VII

LAND TRANSFER TAX ACT

87. Subsection 8 (4) of the Land Transfer Tax Act, as amended by the Statutes of Ontario, 1994, chapter 18, section 4 and 1996, chapter 18, section 11, is repealed and the following substituted:

Same, land not transferred

(4) In the following circumstances, the Minister may refund all or part of the tax paid on the tender or submission for registration of a conveyance that is a caution or notice of any kind signifying the existence of any unregistered instrument or writing by which an interest in land is conveyed:

1. The caution or notice evidences an agreement to transfer or to extinguish an interest in land.

2. The Minister is satisfied that the transfer or extinguishment of the interest,

i. has not taken place in whole or in part, or

ii. is not part of another conveyance or a disposition of a beneficial interest in land between the same parties.

Same, related conveyance or disposition

(4.1) In the following circumstances and only to the extent that the Minister considers it equitable to do so, the Minister may refund tax paid on the tender or submission for registration of a conveyance that is a caution or notice of any kind signifying the existence of any unregistered instrument or writing by which an interest in land is conveyed:

1. The caution or notice evidences an agreement to transfer or to extinguish an interest in land.

2. The transfer or extinguishment has occurred as part of another conveyance or a disposition of a beneficial interest in land between the same parties.

3. The Minister is satisfied that tax has been paid under the Act in respect of the other conveyance or disposition.

4. The refund does not exceed the amount necessary to eliminate any incidence of double taxation under the Act on the transfer or extinguishment of the interest in land.

Commencement

88. This Part comes into force on the day the Tax Credits and Revenue Protection Act, 1998 receives Royal Assent.

PART VIII

ONTARIO LOTTERY CORPORATION ACT

89. Subsection 3 (2) of the Ontario Lottery Corporation Act is amended by striking out "or more than nine" in the second line.

Commencement

90. This Part comes into force on the day the Tax Credits and Revenue Protection Act, 1998 receives Royal Assent.

PART IX

PENSION BENEFITS ACT

91. (1) Subsection 67 (1) of the Act is amended by inserting after "surrendered" in the seventh line "in whole or in part".

(2) Subsection 67 (2) of the Act is amended by inserting after "surrender" in the second line "in whole or in part".

(3) Section 67 of the Act is amended by adding the following subsection:

Same

(4) Subsections (1) and (2) do not apply to the commutation or surrender, in whole or in part, of a prescribed retirement savings arrangement in such circumstances or in such amounts as may be prescribed, subject to such restrictions as may be prescribed.

Commencement

92. This Part comes into force on the day the Tax Credits and Revenue Protection Act, 1998 receives Royal Assent.

PART X

RETAIL SALES TAX ACT

93. Clause 2 (2) (a) of the Retail Sales Tax Act, as re-enacted by the Statutes of Ontario, 1993, chapter 12, section 2, is amended by striking out "Liquor Licence Board" in the fourth and fifth lines and substituting "Alcohol and Gaming Commission of Ontario".

94. Subsection 13 (2) of the Act, as enacted by the Statutes of Ontario, 1994, chapter 13, section 10, is repealed and the following substituted:

Offence

(2) Every person who contravenes subsection (1) is guilty of an offence and is liable on conviction to one or both of the following penalties in addition to any penalty otherwise provided by the Act:

1. A fine that is,

i. a mimumum of $100 or 25 per cent of the amount of tax and amounts collected as, or on account of, tax under the Act that were not remitted, whichever is greater, and

ii. a maximum of double the amount of tax and amounts collected as, or on account of, tax under the Act that were not remitted, if the maximum so calculated is greater than $100.

2. Imprisonment for a term of not more than two years.

95. Section 16 of the Act is amended by adding the following subsection:

Same, sale of tobacco

(5) If a wholesaler who does not hold a wholesaler permit under the Tobacco Tax Act sells tobacco (within the meaning of that Act) to persons for resale and,

(a) does not keep records that clearly identify the persons to whom the tobacco is sold for resale; or

(b) does not issue sales invoices to the persons to whom the tobacco is sold for resale,

the sales of tobacco shall be deemed to have been retail sales.

96. (1) Subsection 32 (4) of the Act, as amended by the Statutes of Ontario, 1994, chapter 13, section 19, is further amended,

(a) by inserting after "person" in the first line "is guilty of an offence"\; and

(b) by striking out the portion following clause (e).

(2) Section 32 of the Act, as amended by the Statutes of Ontario, 1993, chapter 12, section 10 and 1994, chapter 13, section 19, is further amended by adding the following subsection:

Penalty

(4.1) A person convicted of an offence under subsection (4) is liable to one or both of the following penalties in addition to any penalty otherwise provided by the Act:

1. A fine that is,

i. a minimum of $1,000 or 50 per cent of the amount of tax that should have been remitted as collected or payable or that was sought to be evaded, whichever is greater, and

ii. a maximum of double the amount of tax that should have been remitted as collected or payable or that was sought to be evaded, if the maximum so calculated is greater than $1,000.

2. Imprisonment for a term of not more than two years.

Commencement

97. (1) Subject to subsection (2), this Part comes into force on the day the Tax Credits and Revenue Protection Act, 1998 receives Royal Assent.

Same

(2) Section 93 shall be deemed to have come into force on February 21, 1998.

PART XI

TEACHERS' PENSION ACT

98. (1) The definitions of "Schedule 1" and "Schedule 2" in section 1 of the Teachers' Pension Act are repealed and the following substituted:

Schedule 1" means Schedule 1 to the Teachers' Pension Act, 1989 as amended from time to time. ("annexe 1")

(2) Section 1 of the Act, as amended by the Statutes of Ontario, 1991, chapter 52, section 1 and 1993, chapter 39, section 1, is further amended by adding the following subsection:

Interpretation

(2) Expressions in this Act have the same meaning as under the Pension Benefits Act unless the context requires otherwise.

99. Subsection 2 (4) of the Act, as enacted by the Statutes of Ontario, 1991, chapter 52, section 2 and amended by 1993, chapter 39, section 2, is further amended by striking out "any special payments under Schedule 2 or" in the second and third lines.

100. (1) Subsection 5 (1.2) of the Act, as enacted by the Statutes of Ontario, 1991, chapter 52, section 3, is amended by striking out "subsections (2) to (7)" in the second line and substituting "subsections (3), (4) and (7)".

(2) Subsection 5 (2) of the Act, as amended by the Statutes of Ontario, 1993, chapter 39, section 3, is repealed.

101. Section 5.1 of the Act, as enacted by the Statutes of Ontario, 1993, chapter 39, section 4, is repealed.

102. Section 12.1 of the Act, as enacted by the Statutes of Ontario, 1991, chapter 52, section 8 and amended by 1993, chapter 39, section 7, is repealed and the following substituted:

Going concern valuation

12.1 (1) A going concern valuation of the pension plan must be calculated in accordance with the documents that create and support the plan and with the following requirements:

1. The going concern assets of the plan, within the meaning of Regulation 909 ("General") made under the Pension Benefits Act, must also include,

i. the present value of the basic contributions described in paragraph 2 that will be made in respect of service after the valuation date by the persons who were members of the plan on the valuation date, and

ii. the present value of any remaining special payments resulting from the initial valuation referred to in Schedule 2 as it read on January 1, 1998.

2. The basic contributions are the contributions required by sections 19 and 21 and clause 23 (a) of Schedule 1 calculated at the rate specified on January 1, 1998 and the contributions required by sections 25 and 26 of Schedule 1 as those sections read on January 1, 1998.

3. The going concern liabilities of the plan, within the meaning of Regulation 909, must also include,

i. the present value of the pension benefits and escalated adjustments that will accrue after the valuation date to the persons who were members of the plan on the valuation date, and

ii. the present value of the ancillary benefits for which the eligibility requirements will be satisfied after the valuation date by the persons who were members or former members of the plan on the valuation date.

Same, filed with the Superintendent

(2) A going concern valuation of the pension plan which is filed with the Superintendent of Financial Services must include the following information, determined in accordance with subsection (1) and section 12.2:

1. The present value of the future basic contributions.

2. The amount of any going concern unfunded liability.

3. The present value of any future unfunded liability contribution surcharge effective before the valuation date.

4. The amount of any actuarial gain or actuarial loss since the previous going concern valuation filed with the Superintendent.

5. The present value of any unfunded liability contribution surcharge that is required after taking into account any actuarial gain or actuarial loss since the previous going concern valuation filed with the Superintendent.

6. The unfunded liability contribution surcharge rate.

Solvency valuation

(3) A solvency valuation of the pension plan must be calculated in accordance with the documents that create and support the plan and with the following requirements:

1. The solvency assets of the plan, within the meaning of Regulation 909, must also include the present value of any remaining special payments resulting from the initial valuation referred to in Schedule 2 to the Act as it read on January 1, 1998.

2. The solvency liabilities of the plan, within the meaning of Regulation 909, must also include the present value of all of the liabilities relating to future escalated adjustments in respect of pension benefits accrued before the valuation date.

Transfer ratio

(4) The transfer ratio for the pension plan must be calculated in accordance with the following rules, despite the definition of "transfer ratio" in subsection 1 (2) of Regulation 909 made under the Pension Benefits Act and section 19 of that Regulation:

1. The solvency assets and solvency liabilities may be adjusted in the following manner:

i. The amount of the solvency assets (excluding the present value of any remaining special payments resulting from the initial valuation referred to in Schedule 2 as it read on January 1, 1998) is adjusted using an averaging method calculated over a period of not more than five years that stabilizes fluctuations in the market value of the assets of the plan.

ii. The solvency liabilities are adjusted using a solvency valuation interest rate that is the average of market interest rates calculated over the same period as is used for the averaging method referred to in subparagraph i.

2. The adjustments authorized by paragraph 1 must be made to both the solvency assets and the solvency liabilities.

3. The present value of any remaining special payments in respect of a solvency deficiency must be included in the solvency assets.

Special payments

12.2 (1) This section applies if, in the absence of subsection (2), special payments would be required under the Pension Benefits Act as a result of a going concern valuation of the pension plan calculated in accordance with this section.

Plan amendments

(2) The pension plan must be amended so that the actuarial value of the changes made by the amendment results in the elimination of the going concern unfunded liability in respect of which the special payments would otherwise be required under the Pension Benefits Act.

Same

(3) The amendment required by subsection (2) must take effect no later than the first January 1 after the valuation date, despite section 12 of Regulation 909 made under the Pension Benefits Act.

Going concern valuation

(4) A going concern valuation of the pension plan must be calculated in accordance with subsection 12.1 (1) and with the following requirements:

1. Any actuarial gain described in paragraph 2 must first be used to eliminate or reduce the present value of any unfunded liability contribution surcharge described in paragraph 3. The present value of any remaining unfunded liability contribution surcharge must be amortized over the remainder of the existing amortization period or over a shorter period. Subsection 7 (1) of Regulation 909 does not apply with respect to the actuarial gain.

2. For the purposes of paragraph 1, the actuarial gain must be determined before taking into account any amendment to the plan since the previous valuation date which results in an increase in going concern liabilities or a decrease in going concern assets.

3. The unfunded liability contribution surcharge is the amount of the contribution that employers and members will be required to make in any year following the valuation date that exceeds the amount of their basic contributions.

4. The unfunded liability contribution surcharge for a year is calculated by multiplying the pensionable salaries in that year of all members of the plan by the unfunded liability contribution surcharge rate described in paragraph 5.

5. The unfunded liability contribution surcharge rate for a year is calculated using the formula,

[ A / B ] / 2

in which, "

A" is the going concern unfunded liability, determined before taking into account any amendment to the plan since the previous valuation date which results in an increase in going concern liabilities or a decrease in going concern assets, and "

B" is the present value of the future pensionable salaries earned after the valuation date by the persons who were members of the plan on the valuation date.

103. (1) The definitions of "actuarial gain" and "actuarial loss", "going concern assets", "going concern liabilities", "going concern unfunded actuarial liability", "going concern valuation", "past service unfunded actuarial liability", "review date", "solvency assets", "solvency deficiency", "solvency gain" and "solvency liabilities" in subsection 1 (1) of Schedule 2 to the Act are repealed.

(2) Subsections 1 (2) and (3) of Schedule 2 to the Act are repealed and the following substituted:

Solvency assets

(2) For the purposes of the description of solvency assets in subsection 12.1 (3) of the Act, the present value of any remaining payments resulting from the initial valuation shall be determined on the basis of the assumed interest rate used in determining whether there is a solvency deficiency.

(3) Schedule 2 to the Act is repealed.

Commencement

104. (1) Subject to subsection (2), this Part comes into force on the day the Tax Credits and Revenue Protection Act, 1998 receives Royal Assent.

Same

(2) Sections 98, 99, 100, and 101 and subsection 103 (3) come into force on a day to be named by proclamation of the Lieutenant Governor, which day shall not be prior to the date on which the actuary for the Ontario Teachers' Pension Plan files a report with the Superintendent of Financial Services under the Pension Benefits Act stating that the special payments required by Schedule 2 to the Teachers' Pension Act are no longer required to eliminate the going concern unfunded liability of the plan that was disclosed in the initial valuation as at January 1, 1990.

PART XII

TOBACCO TAX ACT

105. Clause (a) of the definition of "interjurisdictional transporter" in section 1 of the Tobacco Tax Act, as re-enacted by the Statutes of Ontario, 1991, chapter 48, section 1, is amended by striking out "inside or outside" in the first and second lines and substituting "inside and outside".

106. Subsection 12 (2) of the Act is amended by adding the following clause:

(b.1) every importer who acquires tobacco products, other than marked cigarettes, outside Ontario for distribution in Ontario, in an amount equal to the greater of $10,000 or the average tax that would be collectable and payable by the importer for any three months in the 12-month period immediately preceding the date of the Minister's demand if the tobacco products were sold to a consumer in Ontario in that 12-month period.

107. Clause 24 (4) (a) of the Act is repealed and the following substituted:

(a) is an interjurisdictional transporter registered under subsection 6 (1) who has the documents described in subsection 6 (5) in his, her or its possession.

108. (1) Subsection 29 (4) of the Act is repealed and the following substituted:

Penalty

(4) Every person who, except as permitted under the Act or regulations,

(a) purchases or receives for sale any unmarked cigarettes; or

(b) has in the person's possession 1,000 or more cigarettes in packages that are not marked or stamped in accordance with the regulations,

shall pay a penalty, when assessed therefor, equal to three times the amount of tax that would be payable under section 2 if the cigarettes were marked cigarettes sold to consumers in Ontario.

(2) Section 29 of the Act, as amended by the Statutes of Ontario, 1992, chapter 28, section 1 and 1994, chapter 18, section 8, is further amended by adding the following subsection:

Same

(6) A person who has in the person's possession 10,000 or more cigarettes in packages that are not marked or stamped in accordance with the regulations, who is liable to a penalty under subsection (3) or (4) and who has not been assessed a penalty under subsection (5) shall pay an additional penalty, when assessed therefor, of $91 for every 200 cigarettes in the person's possession.

109. Subsection 31 (2) of the Act is repealed and the following substituted:

Offence

(2) Every person who sells tobacco in Ontario for resale and who does not have a subsisting wholesale dealer's permit issued under the Act is guilty of an offence and on conviction is liable to the following penalty:

1. If the tobacco sold is cigarettes in packages, cartons or cases that are not marked or stamped in accordance with the regulations,

i. a fine of not less than the amount of tax that would be exigible on the tobacco if it had been purchased by a consumer in Ontario and not more than twice that amount, or

ii. imprisonment for a term of not more than two years.

2. If the tobacco sold is cigarettes in packages, cartons or cases that are marked or stamped in accordance with the regulations, a fine of $2 for each 200 cigarettes sold.

3. If the tobacco sold is not cigarettes, a fine of not less than $1,000 and not more than $50,000.

Forfeiture

(3) Upon convicting a person for an offence under subsection (2), the court shall order the forfeiture to Her Majesty of all tobacco found in the possession of the person that has not been forfeited, ordered forfeited or disposed of under another provision of the Act.

Same

(4) Tobacco forfeited under subsection (3) may be disposed of in any manner determined by the Minister.

110. Subsections 35 (1) and (2) of the Act are repealed and the following substituted:

General penalty

(1) Every person who contravenes a provision of the Act or regulations for which no other penalty is provided is guilty of an offence and on conviction is liable to a fine of not less than $1,000 and not more than $25,000.

Offence

(2) Every person who purchases tobacco for resale from a person who is not designated a collector, who is not an importer holding a registration certificate under section 5 or who is not a wholesaler holding a permit under section 3 is guilty of an offence and on conviction is liable to the following penalty:

1. If the tobacco purchased is cigarettes in packages, cartons or cases that are not marked or stamped in accordance with the regulations,

i. a fine of not less than the amount of tax that would be exigible on the tobacco if it had been purchased by a consumer in Ontario and not more than twice that amount, or

ii. imprisonment for a term of not more than two years.

2. If the tobacco purchased is cigarettes in packages, cartons or cases that are marked or stamped in accordance with the regulations, a fine of $2 for each 200 cigarettes sold.

3. If the tobacco purchased is not cigarettes, a fine of not less than $1,000 and not more than $50,000.

Forfeiture

(2.1) Upon convicting a person for an offence under subsection (2), the court shall order the forfeiture to Her Majesty of all tobacco found in the possession of the person that has not been forfeited, ordered forfeited or disposed of under another provision of the Act.

Same

(2.2) Tobacco forfeited under subsection (2.1) may be disposed of in any manner determined by the Minister.

Commencement

111. This Part comes into force on the day the Tax Credits and Revenue Protection Act, 1998 receives Royal Assent.

PART XIII

COMMENCEMENT AND SHORT TITLE

Commencement

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

Same

(2) Each Part of this Act comes into force as provided in the commencement section at the end of the Part.

Short title

113. The short title of this Act is the Tax Credits and Revenue Protection Act, 1998.

SCHEDULE

ESTATE ADMINISTRATION TAX ACT, 1998

Definitions

1. In this Act,

estate certificate" means,

(a) a grant of probate, administration or testamentary guardianship by the Ontario Court (General Division) or the Surrogate Court made before January 1, 1995, but not a grant of double probate, a cessate grant or a grant of administration de bonis non administratis by either of those courts before that date,

(b) a certificate of appointment of estate trustee issued by the Ontario Court (General Division) after December 31, 1994, but not a certificate of succeeding estate trustee or a certificate of estate trustee during litigation issued by that court after that date; ("certificat successoral") "

estate representative" includes, with respect to the estate of a deceased person,

(a) an executor or administrator of the estate,

(b) a person entitled to act in the capacity of executor or administrator of the estate,

(c) a person appointed as guardian of a person who is a beneficiary of the estate of the deceased person or as guardian of the beneficiary's property,

(d) an estate trustee,

(e) an estate trustee with a will, and

(f) an estate trustee without a will; ("représentant successoral") "

value of the estate" means the value which is required to be disclosed under section 32 of the Estates Act (or a predecessor thereof) of all the property that belonged to the deceased person at the time of his or her death less the actual value of any encumbrance on real property that is included in the property of the deceased person. ("valeur de la succession")

Tax on estate

2. (1) A tax determined in accordance with this section is payable to Her Majesty in right of Ontario by the estate of a deceased person immediately upon the issuance of an estate certificate.

Exemption

(2) If the value of the estate does not exceed $1,000, the estate is exempt from tax under this Act.

Amount, certificate sought before May 12, 1960

(3) The amount of tax payable upon the issuance of an estate certificate for which application is made after May 14, 1950 and before May 12, 1960 is $2.50 for each $1,000 or part thereof of the value of the estate.

Amount, certificate sought before September 1, 1966

(4) The amount of tax payable upon the issuance of an estate certificate for which application is made after May 11, 1960 and before September 1, 1966 is $3 for each $1,000 or part thereof of the value of the estate.

Amount, certificate sought before June 8, 1992

(5) The amount of tax payable upon the issuance of an estate certificate for which application is made after August 31, 1966 and before June 8, 1992 is $5 for each $1,000 or part thereof of the value of the estate.

Amount, certificate sought after June 7, 1992

(6) The amount of tax payable upon the issuance of an estate certificate for which application is made after June 7, 1992 is,

(a) five dollars for each $1,000 or part thereof of the first $50,000 of the value of the estate; and

(b) fifteen dollars for each $1,000 or part thereof by which the value of the estate exceeds $50,000.

Subsequently-discovered property of the estate

(7) If, after an estate certificate is issued, a statement is delivered under subsection 32 (2) of the Estates Act disclosing subsequently-discovered property of the estate, tax in respect of the value of the property is payable when the statement is delivered.

Payment by estate representative

(8) Tax is payable by the estate representative in his, her or its representative capacity only.

Deposit on account of tax

3. (1) When an application for an estate certificate is made, the applicant shall deposit the amount determined in accordance with this section with an official of the court at which the application is made.

Amount of deposit

(2) Subject to subsection (3), the amount to be deposited is an amount equal to the tax that will become payable by the estate under this Act.

Amount based on estimate

(3) If the applicant is able only to estimate the value of the estate when making the aplication, the amount to be deposited shall be based on the estimated value.

Same

(4) If the amount to be deposited is based on the estimated value of the estate, the applicant shall give the undertaking described in subsection 4 (3) when making the application.

Payment of tax

(5) The amount deposited shall be applied to reduce the estate's liability for tax under this Act on the issuance of the estate certificate.

Refund of deposit

(6) The amount deposited shall be refunded if no estate certificate is issued.

Partial refund

(7) If the amount deposited is based upon an estimated value, and if the estimated value of the estate is greater than the actual value subsequently ascertained, the amount referable to the difference shall be refunded.

Restriction on issuance of estate certificate

4. (1) A person who wishes to obtain an estate certificate before making the deposit required by section 4 may apply to the Ontario Court (General Division), without notice, for issuance of the certificate.

Same

(2) The estate certificate shall not be issued before the deposit required by section 4 is made unless a judge is satisfied, based upon the applicant's affidavit and upon such other material as the judge may require,

(a) that the estate certificate is urgently required;

(b) that financial hardship would result from not issuing the estate certificate before the deposit is made; and

Restriction, deposit based on estimate

(3) If the amount of the deposit is based upon an estimated value, the estate certificate shall not be issued until the applicant for the certificate gives the court a signed undertaking that the applicant will, within six months after giving the undertaking,

(a) file a sworn statement of the actual total value of the estate; and

(b) pay any additional tax payable under this Act if the actual value is higher than the estimated value.

Undertaking not fulfilled

(4) If the undertaking is not fulfilled, the court may, on the request of the registrar of the court, make an order for compliance.

Recovery of tax

5. (1) The Minister of Finance may commence proceedings to recover any tax payable after this section comes into force that has not been paid.

Same

(2) A proceeding may be brought in any court of competent jurisdiction in the name of the Minister of Finance or in his or her name of office and may be continued by his or her successor in office as if no change had occurred.

Same

(3) Subsection (1) is in addition to any other remedy available to the Crown for the recovery of a debt due to the Crown.

Regulations

6. (1) The Lieutenant Governor in Council may make regulations,

(a) exempting an estate from the payment of all or part of the tax under this Act on the basis of the value of the estate or on such other basis as the Lieutenant Governor in Council considers appropriate;

(b) providing for the refund of all or part of the tax payable by an estate under this Act and providing for the manner of applying for a refund;

(c) prescribing procedures to be followed and information or evidence to be given to any person by a person applying for an estate certificate, for the purpose of establishing the value of the estate; and

(d) providing for such administrative and procedural matters as are considered necessary or advisable to carry out the intent and purpose of this Act.

Scope of regulations

(2) A regulation may be general or particular in its application.

Retroactivity

(3) A regulation is, if it so provides, effective with reference to a period before it is filed.

Transition

7. (1) This section applies with respect to estates for which an estate certificate was issued after May 14, 1950 and before the day on which the Tax Credits and Revenue Protection Act, 1998 receives Royal Assent.

Exemption

(2) The estate of Donald Valentine Eurig, who died on or about October 14, 1993, is exempt from tax under this Act.

Fees

(3) Amounts paid before the Tax Credits and Revenue Protection Act, 1998 receives Royal Assent as fees for the issuance of an estate certificate under the Administration of Justice Act or under the Surrogate Courts Act for an estate shall be applied to discharge the estate's liability for tax under this Act.

Commencement

8. (1) Subject to subsection (2), the Act set out in this Schedule shall be deemed to have come into force on May 15, 1950.

Same

(2) Sections 4, 5 and 6 come into force on the day the Tax Credits and Revenue Protection Act, 1998 receives Royal Assent.

Short title

9. The short title of the Act set out in this Schedule is the Estate Administration Tax Act, 1998.

Tax Credits and Revenue Protection Act, 1998

EXPLANATORY NOTE

The Bill implements measures contained in the 1998 Budget, enacts a new Act relating to a recent judgment of the Supreme Court of Canada and amends other statutes. The major amendments are described below.

PART I - AMBULANCE ACT

Part III of the Ambulance Act currently gives all upper-tier municipalities, as defined in the Act, the responsibility for ensuring the proper provision of land ambulance services. An amendment allows the Minister to include an upper-tier municipality as part of a designated area under Part IV of the Act. In such a case, the upper-tier municipality would cease to have any responsibility for ensuring the provision of land ambulance services; a delivery agent would be designated for that purpose.

Delivery agents are permitted to assume responsibility for ensuring the proper provision of land ambulance services in the municipality under subsection 6 (7) of the Act before January 1, 2000. Under the current Act, only upper-tier municipalities are allowed to assume such responsibility before January 1, 2000.

The regulation-making powers under the Act are amended to ensure that, if a designated area includes an upper-tier municipality, the apportionment of the costs of the delivery agent for the area may be determined by agreement or by arbitration. Similarly, the regulation-making powers under section 22.0.1 of the Act are amended to allow two or more upper-tier municipalities or delivery agents who share costs with respect to the provision of land ambulance services to apportion those shared costs by agreement or by arbitration.

PART II - COMMUNITY SMALL BUSINESS INVESTMENT FUNDS ACT

An amendment to the Community Small Business Investment Funds Act extends the deadline for registering a community small business investment fund corporation from December 31, 1998 to December 31, 1999.

The deadline is also extended from December 31, 1998 to December 31, 1999 for investments by labour sponsored investment fund corporations, financial institutions and other eligible investors in a community small business investment fund corporation.

An individual who invests at least $150,000 in a community small business investment fund corporation will receive an investment incentive of up to 15 per cent of the amount invested (up to a maximum investment of $500,000). An amendment enables additional classes of persons to invest in such corporations.

Technical amendments are made. Some amendments correspond to changes announced by the federal government to be made to federal legislation governing labour sponsored investment fund corporations. These changes relate to such matters as the requirement that such corporations maintain a specified level of investment in assets that are "eligible investments" under the Act, and the right of such a corporation to a refund of penalty taxes in specified circumstances.

The maximum tax credit available to an individual who purchases shares in a registered labour sponsored investment fund corporation is increased from $525 to $750 per taxation year.

PART III - CORPORATIONS TAX ACT

The following are some of the matters addressed by amendments to the Corporations Tax Act.

A new section 5.2 of the Act governs certain corporations that have significant increases in their Ontario allocation percentage from one year to another. A rule is established concerning their discretionary deductions in a year with a lower Ontario allocation percentage.

The Act requires a corporation to add back to its income for tax purposes a portion of certain payments (such as management fees, rent and royalties) made to non-arm's length persons who are not resident in Canada. Technical amendments to subsections 11 (5) to (7) of the Act codify existing administrative practices relating to this requirement.

An amendment to subsection 11 (27) of the Act provides that the special additional tax payable by life insurance companies under section 74.1 of the Act is not deductible from their income.

A new section 13.2 of the Act permits the workplace child care tax incentive to be deducted from income. The amount of the incentive is based upon qualifying expenditures that are incurred in constructing or renovating child care facilities.

A new section 13.3 of the Act permits the workplace accessibility tax incentive to be deducted from income. The amount of the incentive is based upon the cost of certain support services and physical accommodations that are intended to enable employees with disabilities to carry out employment functions. The maximum deduction is $50,000 per employee with a disability.

Currently, sections 29.1, 31.1 and 34 of the Act prevent the undue reduction of provincial tax through interprovincial asset transfers. Technical amendments are made to these sections. The anti-avoidance rules in subsections 29.1 (6), 31.1 (6) and 34 (10.3) are extended to apply to a broader range of transactions.

Recent federal income tax changes have limited the deduction from income for gifts to the Crown and other charitable gifts to 75 per cent of income. A new subsection 34 (1.1) permits corporations to continue to deduct gifts to Ontario of up to 100 per cent of their income (after deduction of other charitable gifts).

The amendments to section 36 clarify the application of the recent increase in the deduction for political contributions, and the application of the indexing of the deductions.

The rules respecting the mining reclamation trust tax credit in section 43.2 of the Act are made applicable to similar environmental trust funds established for waste disposal sites and for quarries for the extraction of aggregates. This change corresponds to recent federal income tax changes.

Amendments are made with respect to the Ontario graduate transitions tax credit in section 43.6 of the Act. The amendments provide that the tax credit is not reduced if a corporation receives the new Ontario interactive digital media tax credit or the new Ontario sound recording tax credit.

The Ontario computer animation and special effects ("OCASE") tax credit in section 43.8 of the Act is amended. The annual maximum on this tax credit, now $500,000 per corporation or associated group of corporations, is eliminated. The tax credit is made available for all qualifying television productions that are less than 30 minutes long.

The new section 43.11 establishes the Ontario interactive digital media tax credit. It is a 20 per cent refundable tax credit available to corporations for qualifying labour expenditures incurred to create interactive digital media products in Ontario.

The new section 43.12 establishes the new Ontario sound recording tax credit. It is a 20 per cent refundable tax credit available to eligible sound recording companies for certain qualifying expenditures on eligible sound recordings by emerging Canadian artists or groups.

Amendments to section 62 harmonize with the federal Large Corporations Tax. Other amendments to Part III of the Act exclude insurance corporations from the corporate group of a financial institution, retroactively to May 7, 1997 (which is the effective date of capital tax harmonization for financial institutions).

Section 76 currently provides for a 5 per cent penalty for filing a late or incomplete tax return. Amendments to that section increase the penalty by 1 per cent per month (to a maximum of 12 months) while the return is outstanding The penalty is also doubled for subsequent occurrences. Existing penalties are made applicable when false statements are made for the purpose of obtaining new tax credits. Changes are made to harmonize the provision with the corresponding federal rules.

PART IV - EMPLOYER HEALTH TAX ACT

Amendments to the Employer Health Tax Act accelerate the increase in the employer health tax exemption that was created in 1997. The amount of the exemption for 1998 is increased from $300,000 to $350,000 for employers and for self-employed individuals.

In specified circumstances, an amount paid by a third person to another employer's employee is deemed to have been paid by the employer to the employee.

PART V - ESTATE ADMINISTRATION TAX ACT, 1998 and the ESTATES ACT

A new Act, the Estate Administration Tax Act, 1998, is enacted. The text of the new Act is set out in the Schedule to the Bill.

The new Act imposes a tax on an estate when an estate certificate (defined in the new Act) is issued. The tax is made applicable with respect to all estate certificates issued after May 14, 1950. The new Act is retroactive to May 15, 1950.

The amount of tax payable under the new Act is the same as the amount of fees that were payable for such certificates according to regulations made under the Surrogate Courts Act and the Administration of Justice Act. The Supreme Court of Canada recently held that the regulations imposing these fees were not authorized by the statutes under which the regulations were made.

The new Act provides that the fees that were paid under those unauthorized regulations are to be applied to discharge the liability for taxes under the new Act.

Complementary amendments are made to the Estates Act.

PART VI - INCOME TAX ACT

The child care tax credit in effect for 1997 under the Income Tax Act is replaced with the Ontario child care supplement. (See the new section 8.5 of the Act.) Eligible individuals who make an application will receive monthly payments directly from the Province of up to $85 for each child under seven years of age.

The refundable workplace child care tax credit is implemented. (See the new subsection 8 (15.2) and section 8.3 of the Act.) This tax credit is equal to 5 per cent of qualifying expenditures incurred after May 5, 1998 in constructing or renovating licensed child care facilities. The tax credit is available to individuals who carry on business (other than a child care business) through a permanent establishment in Ontario.

The refundable workplace accessibility tax credit is implemented. (See the new subsection 8 (15.3) and section 8.4 of the Act.) This tax credit is equal to 15 per cent of the qualifying expenditures incurred after July 1, 1998 for support services and physicial accommodations enabling employees with disabilities to carry out employment functions. The maximum expenditure is $50,000 per employee with a disability.

The tax treatment of mining reclamation trusts and the mining reclamation trust tax credit is extended to similar environmental trust funds established for waste disposal sites and for quarries. This corresponds with recent federal income tax changes.

The maximum annual investment in a labour sponsored investment fund corporation that is eligible for a tax credit is increased from $3,500 to $5,000. The three year "cooling off" period for investors who redeem their shares of a labour sponsored investment fund corporation is amended so that it applies only to 1997. These changes correspond to changes recently announced by the federal government.

Section 8 of the Act is amended to incorporate terminology from recent amendments to the Assessment Act.

PART VII - LAND TRANSFER TAX ACT

The amendment to subsection 8 (4) of the Land Transfer Tax Act clarifies a circumstance in which tax may be refunded in respect of an intended transfer of land that does not take place. Tax may be refunded if the intended transfer is subsequently carried out as part of a different transaction, but only to the extent necessary to eliminate any double taxation.

PART VIII - ONTARIO LOTTERY CORPORATION ACT

The Ontario Lottery Corporation Act now provides that it is to be composed of a minimum of three and a maximum of nine members. An amendment deletes the maximum.

PART IX - PENSION BENEFITS ACT

Section 67 of the Pension Benefits Act now prevents the commutation or surrender of pension benefits (with two specified exceptions), but does not indicate whether this includes commutation or surrender of only a part of a person's pension benefits. An amendment prevents the commutation or surrender in whole or in part. New exceptions are also established. In prescribed circumstances, prescribed retirement savings arrangements will be able to be commuted or surrendered, in whole or in part. The amount that may be commuted or surrendered, as well as other restrictions, may also be prescribed.

PART X - RETAIL SALES TAX ACT

Clause 2 (2) (a) of the Retail Sales Tax Act is amended to reflect a recent transfer of duties from the Liquor Licence Board to the Alcohol and Gaming Commission of Ontario.

Subsection 13 (2) of the Act is amended to increase the minimum fine for offences under the Act for which no other penalty is provided. The minimum fine is increased from $50 to either $100 or 25 per cent of the tax not remitted, whichever is greater.

Section 16 of the Act is amended to treat specified sales of tobacco products at wholesale as if they had been retail sales which are liable to tax under the Act. Sales at wholesale are taxable as retail sales if the wholesaler did not have the required permit under the Tobacco Tax Act and did not keep adequate records showing the person to whom the tobacco products were sold for resale.

Section 32 of the Act is amended to increase the minimum fine for evasion of tax from $500 to either $1,000 or 50 per cent of the tax sought to be evaded, whichever is greater.

PART XI - TEACHERS' PENSION ACT

The Ontario Teachers' Pension Plan is now exempt from the requirement under the Pension Benefits Act that actuarial gains in the pension fund must first be applied to reduce any unfunded actuarial liability of the plan. The amendments to the Teachers' Pension Act repeal that exemption. Technical amendments are also made with respect to the use of such actuarial gains. The requirement that the Minister of Finance make payments respecting the initial unfunded actuarial liability of the plan is to be repealed by proclamation after that liability has been eliminated.

PART XII - TOBACCO TAX ACT

The amendment to the definition of "interjurisdictional transporter" in section 1 of the Tobacco Tax Act clarifies that an interjurisdictional transporter is one who operates both inside and outside Ontario.

Subsection 12 (2) of the Act is amended to permit the Minister to demand that an importer of tobacco products, other than marked cigarettes, furnish security for tax payable under the Act. The security cannot exceed the greater of $10,000 and the importer's average tax collectable or payable for three months in the preceding year.

Clause 24 (4) (a) of the Act is amended to provide that tobacco in bulk in Ontario that is under the control or in the possession of an interjurisdictional transporter may not be seized under the Act when the interjurisdictional transporter is registered and has the required documents respecting the tobacco.

Section 29 of the Act is amended to provide a penalty for the possession of unmarked packages containing 1,000 or more cigarettes. The penalty is three times the amount of tax. If the person is in possession of unmarked packages containing 10,000 or more cigarettes, an additional penalty of $91 for each 200 cigarettes so possessed is authorized.

Subsection 31 (2) of the Act is amended to provide different minimum and maximum fines for the offences of selling at wholesale marked cigarettes, unmarked cigarettes or tobacco other than cigarettes when the seller does not have a subsisting wholesale dealer permit under the Act. A further amendment to section 31 requires the court to order the forfeiture to the Crown of tobacco in the possession of a person convicted of an offence under subsection 31 (2).

Section 35 of the Act is amended to provide fines and forfeiture provisions similar to those to be enacted in the amendments to section 31 of the Act, but with respect to a person convicted of the offence of purchasing tobacco for resale from a wholesaler who is not authorized under the Act to sell at wholesale. A further amendment to this section increases the minimum and maximum fines for a conviction for contravening the Act or regulations for which no other penalty is provided.

Office of the Legislative Assembly of Ontario

Toronto, Ontario, Canada.