Bill 24, Finance Statute Law Amendment Act, 2007

Duncan, Hon. Dwight Minister of Finance

Versions

Bill 24 2007

An Act to amend the Assessment Act, Community Small Business Investment Funds Act, Corporations Tax Act, Education Act, Income Tax Act, Land Transfer Tax Act and Taxation Act, 2007

Note: This Act amends or repeals more than one Act. For the legislative history of these Acts, see the Table of Consolidated Public Statutes – Detailed Legislative History on www.e-Laws.gov.on.ca.

CONTENTS

Schedule A	Assessment Act
Schedule B	Community Small Business Investment Funds Act
Schedule C	Corporations Tax Act
Schedule D	Education Act
Schedule E	Income Tax Act
Schedule F	Land Transfer Tax Act
Schedule G	Taxation Act, 2007
___________

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

Contents of this Act

1. This Act consists of this section, sections 2 and 3 and the Schedules to this Act.

Commencement

2. (1) Subject to subsections (2) and (3), this Act comes into force on the day it receives Royal Assent.

Same

(2) The Schedules to this Act come into force as provided in each Schedule.

Same

(3) If a Schedule to this Act provides that any provisions are to come into force on a day to be named by proclamation of the Lieutenant Governor, a proclamation may apply to one or more of those provisions, and proclamations may be issued at different times with respect to any of those provisions.

Short title

3. The short title of this Act is the Finance Statute Law Amendment Act, 2007.

Schedule A
Assessment Act

1. The definition of "classification" in section 1 of the Assessment Act is repealed and the following substituted:

"classification" means a determination of the class or subclass of real property that land is in, including a class of property prescribed under clause 257.12 (1) (a) of the Education Act, and "classified" has a corresponding meaning; ("classification", "classé")

Commencement

2. (1) Subject to subsection (2), this Schedule comes into force on the day the Finance Statute Law Amendment Act, 2007 receives Royal Assent.

Same

(2) Section 1 shall be deemed to have come into force on January 1, 2007.

Schedule B
Community Small Business Investment Funds Act

1. Subsection 16.1 (7) of the Community Small Business Investment Funds Act is repealed and the following substituted:

Definition

(7) In this section,

"eligible year" means a calendar year after 2000 and before 2013.

2. (1) Subsection 17 (1.2) of the Act is amended by striking out "December 31 of each year after 2004 and before 2012" in the portion before the definition of "A" and substituting "December 31 of each year after 2004 and before 2013".

(2) Subsection 17 (1.3) of the Act is amended,

(a) by striking out "December 31 of each year after 2011" in the portion before the definition of "A" and substituting "December 31 of each year after 2012"; and

(b) by striking out "before the 61st day of 2011" in the definition of "A" and substituting "before the 61st day of 2012".

3. (1) Subsection 25 (3) of the Act is amended by striking out "2011" and substituting "2012".

(2) Paragraph 7 of subsection 25 (4) of the Act is amended by striking out "2009" in the portion before subparagraph i and substituting "2007".

(3) Subsection 25 (4) of the Act is amended by adding the following paragraph:

7.0.1 If the corporation is a research oriented investment fund during the calendar year in which it issues the Class A shares referred to in subsection (3), the amount of the tax credit deductible in determining the amount of tax payable under the Income Tax Act for any taxation year that is after 2006 but ends before 2010 is the lesser of,

i. $1,500, and

ii. an amount equal to 20 per cent of the equity capital received by the corporation from the eligible investor, or from a qualifying trust for the eligible investor, for Class A shares issued by the corporation that are purchased after the end of the preceding taxation year and before the day that is 61 days after the end of the taxation year, excluding any portion of the equity capital that was taken into consideration in determining the amount of a tax credit for the preceding year.

(4) Paragraph 7.1 of subsection 25 (4) of the Act is amended by striking out "2009" in the portion before subparagraph i and substituting "2010".

(5) Subparagraph 7.1 i of subsection 25 (4) of the Act is amended by striking out "$750" and substituting "$1,125".

(6) Paragraph 7.2 of subsection 25 (4) of the Act is amended by striking out "2010" in the portion before subparagraph i and substituting "2011".

(7) Subparagraph 7.2 i of subsection 25 (4) of the Act is amended by striking out "$500" and substituting "$750".

(8) Paragraph 8 of subsection 25 (4) of the Act is amended by striking out "2009" in the portion before subparagraph i and substituting "2007".

(9) Subsection 25 (4) of the Act is amended by adding the following paragraph:

8.0.1 If the corporation is not a research oriented investment fund during the calendar year in which it issues the Class A shares referred to in subsection (3), the amount of the tax credit deductible in determining the amount of tax payable under the Income Tax Act for any taxation year that is after 2006 but ends before 2010 is the lesser of,

i. $1,125, and

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

(10) Paragraph 8.1 of subsection 25 (4) of the Act is amended by striking out "2009" in the portion before subparagraph i and substituting "2010".

(11) Subparagraph 8.1 i of subsection 25 (4) of the Act is amended by striking out "$500" and substituting "$750".

(12) Paragraph 8.2 of subsection 25 (4) of the Act is amended by striking out "2010" in the portion before subparagraph i and substituting "2011".

(13) Subparagraph 8.2 i of subsection 25 (4) of the Act is amended by striking out "$250" and substituting "$375".

Commencement

4. (1) Subject to subsection (2), this Schedule comes into force on the day the Finance Statute Law Amendment Act, 2007 receives Royal Assent.

Same

(2) Section 3 shall be deemed to have come into force on January 1, 2007.

Schedule C
Corporations Tax Act

1. Subsection 41 (3.2) of the Corporations Tax Act is amended by striking out "and" at the end of clause (d) and by striking out clause (e) and substituting the following:

(e) $400,000 multiplied by the ratio of the number of days in the taxation year that are after December 31, 2003 and before January 1, 2007 to the total number of days in the taxation year; and

(f) $500,000 multiplied by the ratio of the number of days in the taxation year that are after December 31, 2006 and before January 1, 2009 to the total number of days in the taxation year.

2. Clause 41.1 (3) (f) of the Act is repealed and the following substituted:

(f) 4.667 per cent multiplied by the ratio of the number of days in the taxation year that are after December 31, 2002 and before January 1, 2007 to the total number of days in the taxation year; and

(g) 4.25 per cent multiplied by the ratio of the number of days in the taxation year that are after December 31, 2006 and before January 1, 2009 to the total number of days in the taxation year.

3. (1) Subsection 43.5 (4.1) of the Act is repealed and the following substituted:

Eligible credit for first-time production

(4.1) A qualifying production company's eligible credit for a taxation year in respect of a first-time production for which principal photography commences after October 31, 1997 is the sum of the amounts determined under subsections (4.2), (4.3) and (4.3.1) in respect of the production.

(2) Subsection 43.5 (4.2) of the Act is repealed and the following substituted:

Same, expenditures incurred before 2005

(4.2) The amount determined under this subsection in respect of a first-time production for the purposes of subsection (4.1) is the sum of the amounts determined under the following paragraphs for the portion of the qualifying production company's qualifying labour expenditure for the production that relates to expenditures incurred before January 1, 2005:

1. 30 per cent of the lesser of,

i. the amount, if any, by which $240,000 exceeds the total of the company's qualifying labour expenditures, for the production for previous taxation years, and

ii. the company's qualifying labour expenditure for the taxation year for the production.

2. 20 per cent of the amount, if any, by which the company's qualifying labour expenditure for the taxation year for the production exceeds the lesser of the amounts, if any, determined under subparagraphs 1 i and ii.

3. If the production is a regional Ontario production, 10 per cent of the company's qualifying labour expenditure for the taxation year for the production incurred after May 2, 2000.

(3) Subsection 43.5 (4.3) of the Act is repealed and the following substituted:

Same, expenditures incurred after 2004 and before 2008

(4.3) The amount determined under this subsection in respect of a first-time production for the purposes of subsection (4.1) is the sum of the amounts determined under the following paragraphs for the portion of the qualifying production company's qualifying labour expenditure for the production that relates to expenditures incurred after December 31, 2004 and before January 1, 2008:

1. 40 per cent of the lesser of,

i. the amount, if any, by which $240,000 exceeds the sum of,

A. the total of the company's qualifying labour expenditures for the production for previous taxation years, and

B. the lesser of the amounts, if any, determined under subparagraphs 1 i and ii of subsection (4.2) for the production for the taxation year, and

ii. the company's qualifying labour expenditure for the taxation year for the production.

2. 30 per cent of the amount, if any, by which the company's qualifying labour expenditure for the taxation year for the production exceeds the lesser of the amounts, if any, determined under subparagraphs 1 i and ii.

3. If the production is a regional Ontario production, 10 per cent of the company's qualifying labour expenditure for the taxation year for the production.

(4) Section 43.5 of the Act is amended by adding the following subsection:

Same, expenditures incurred after 2007

(4.3.1) The amount determined under this subsection in respect of a first-time production for the purposes of subsection (4.1) is the sum of the amounts determined under the following paragraphs for the portion of the qualifying production company's qualifying labour expenditure for the production that relates to expenditures incurred after December 31, 2007 and in a taxation year that ends before January 1, 2009:

1. 40 per cent of the lesser of,

i. the amount, if any, by which $240,000 exceeds the sum of,

A. the total of the company's qualifying labour expenditures for the production for previous taxation years, and

B. the lesser of the amounts, if any, determined under subparagraphs 1 i and ii of subsection (4.3) for the production for the taxation year, and

ii. the company's qualifying labour expenditure for the taxation year for the production.

2. 35 per cent of the amount, if any, by which the company's qualifying labour expenditure for the taxation year for the production exceeds the lesser of the amounts, if any, determined under subparagraphs 1 i and ii.

3. If the production is a regional Ontario production, 10 per cent of the company's qualifying labour expenditure for the taxation year for the production.

(5) Subsection 43.5 (4.4) of the Act is amended by striking out "paragraph 1, 2 or 3 of subsection (4.2) or paragraph 1, 2 or 3 of subsection (4.3)" and substituting "paragraph 1, 2 or 3 of subsection (4.3.1)".

(6) Subsections 43.5 (6.1) and (6.1.1) of the Act are repealed and the following substituted:

Productions commenced after October 31, 1997 other than first-time productions

(6.1) Subject to subsection (6.1.1), the eligible credit of a qualifying production company for a taxation year in respect of an eligible Ontario production that is not a first-time production and for which principal photography commences after October 31, 1997 is the sum of,

(a) 20 per cent of the company's qualifying labour expenditure for the year in respect of the production, as determined in relation to expenditures that are incurred before January 1, 2005 and included in the Ontario labour expenditure for the year in respect of the production;

(b) 30 per cent of the company's qualifying labour expenditure for the year in respect of the production, as determined in relation to expenditures incurred after December 31, 2004 and before January 1, 2008 that are included in the Ontario labour expenditure for the year in respect of the production; and

(c) 35 per cent of the company's qualifying labour expenditure for the year in respect of the production, as determined in relation to expenditures incurred after December 31, 2007 and in a year that ends before January 1, 2009 that are included in the Ontario labour expenditure for the year in respect of the production.

Same, regional Ontario production

(6.1.1) The eligible credit of a qualifying production company for a taxation year that ends after May 2, 2000 in respect of an eligible Ontario production that is a regional Ontario production but is not a first-time production is the sum of,

(a) 30 per cent of the company's qualifying labour expenditure for the year for the production, as determined in relation to expenditures incurred after May 2, 2000 and before January 1, 2005 that are included in the Ontario labour expenditure for the year in respect of the production;

(b) 40 per cent of the company's qualifying labour expenditure for the year for the production, as determined in relation to expenditures incurred after December 31, 2004 and before January 1, 2008 that are included in the Ontario labour expenditure for the taxation year in respect of the production; and

(c) 45 per cent of the company's qualifying labour expenditure for the year for the production, as determined in relation to expenditures incurred after December 31, 2007 and in a year that ends before January 1, 2009 that are included in the Ontario labour expenditure for the year in respect of the production.

(7) Subsection 43.5 (22) of the Act is repealed and the following substituted:

Regulations

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

(a) prescribing a percentage for the purposes of paragraph 1, 2 or 3 of subsection (4.3.1) for 2008 or any period of time in 2008;

(b) prescribing a percentage for the purposes of clause (6.1) (b) and the period of time after December 31, 2004 and before January 1, 2008 to which it applies;

(d) prescribing a percentage for the purposes of clause (6.1.1) (b) and the period of time after December 31, 2004 and before January 1, 2008 to which it applies;

(e) prescribing a percentage for the purposes of the clause (6.1.1) (c) for 2008 or any period of time in 2008.

4. (1) Clauses 43.10 (4) (b) and (c) of the Act are repealed and the following substituted:

(b) 18 per cent of the portion of its qualifying Ontario labour expenditure in respect of the production for the taxation year that relates to expenditures incurred after December 31, 2004 and before January 1, 2008;

(c) 25 per cent of the portion of its qualifying Ontario labour expenditure in respect of the production for the taxation year that relates to expenditures incurred after December 31, 2007 and in a taxation year that ends before January 1, 2009; and

(2) Clauses 43.10 (15.1) (a) and (b) of the Act are repealed and the following substituted:

(a) prescribing a percentage for the purposes of clause (4) (b) and the period of time after December 31, 2004 and before January 1, 2008 to which it applies;

(b) prescribing a percentage for the purposes of clause (4) (c) and the period of time after December 31, 2007 and before January 1, 2009 to which it applies.

5. (1) Subsection 66 (1.1) of the Act is amended by adding "and" at the end of clause (a) and by striking out clauses (a.1), (b) and (c) and substituting the following:

(b) 0.225 per cent multiplied by the ratio of the number of days in the taxation year that are after December 31, 2006 and before January 1, 2009 to the total number of days in the taxation year.

(2) Subsection 66 (1.2) of the Act is repealed and the following substituted:

No tax payable after December 31, 2008

(1.2) No tax is payable under this Part by a corporation that is not a financial institution for a taxation year ending after December 31, 2008.

(3) The definition of "G" in subsection 66 (4.1) of the Act is repealed and the following substituted:

"G" is the sum of,

(a) 0.6 per cent multiplied by the ratio of the number of days in the taxation year that are before January 1, 2007 to the total number of days in the taxation year, and

(b) 0.45 per cent multiplied by the ratio of the number of days in the taxation year that are after December 31, 2006 and before January 1, 2009 to the total number of days in the taxation year, and

(4) The definition of "J" in subsection 66 (4.2) of the Act is repealed and the following substituted:

"J" is the sum of,

(a) 0.9 per cent multiplied by the ratio of the number of days in the taxation year that are before January 1, 2007 to the total number of days in the taxation year, and

(b) 0.675 per cent multiplied by the ratio of the number of days in the taxation year that are after December 31, 2006 and before January 1, 2009 to the total number of days in the taxation year, and

(5) The definition of "L" in subsection 66 (4.3) of the Act is repealed and the following substituted:

"L" is the sum of,

(a) 0.72 per cent multiplied by the ratio of the number of days in the taxation year that are before January 1, 2007 to the total number of days in the taxation year, and

(b) 0.54 per cent multiplied by the ratio of the number of days in the taxation year that are after December 31, 2006 and before January 1, 2009 to the total number of days in the taxation year, and

(6) Subsection 66 (4.4) of the Act is repealed and the following substituted:

No tax payable after December 31, 2008 by financial institution

(4.4) No tax is payable under this Part by a financial institution for a taxation year ending after December 31, 2008.

6. The definition of "D" in clause 66.1 (3.2) (b) of the Act is repealed and the following substituted:

"D" is the sum of,

(a) 0.9 per cent multiplied by the ratio of the number of days in the taxation year that are before January 1, 2007 to the total number of days in the taxation year, and

(b) 0.675 per cent multiplied by the ratio of the number of days in the taxation year that are after December 31, 2006 and before January 1, 2009 to the total number of days in the taxation year.

7. Section 72 of the Act is amended by striking out the portion before the clauses and substituting the following:

Apportionment of capital tax, short year

72. Where a corporation has a taxation year of less than 365 days, the amount of tax payable by it under this Part for the year shall be determined by multiplying the amount of tax that would otherwise be determined for the year before the application of section 72.1 by the ratio of the number of days in the taxation year to 365, except that this section does not apply,

. . . . .

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

Capital tax relief for manufacturers

Application

72.1 (1) This section applies to a corporation for a taxation year despite any other provision of this Part if,

(a) the taxation year ends after December 31, 2007 and before January 1, 2009;

(b) the corporation would, but for this section, be liable to tax determined under this Part for the year because it is a corporation whose taxable paid-up capital or its taxable paid-up capital employed in Canada, as the case may be, for the year is determined under Division B or C; and

(c) the corporation's Ontario manufacturing labour cost for the taxation year is more than 20 per cent of its total Ontario labour cost for the year.

Capital tax exemption

(2) If the corporation's Ontario manufacturing labour cost for the year is at least 50 per cent of its total Ontario labour cost for the year, its total liability for tax under this Part for the year is calculated using the formula:

A × B/C

in which,

"A" is the amount of tax that would, but for this section, be payable by the corporation under this Part for the year,

"B" is the number of days in the taxation year that are before January 1, 2008, and

"C" is the total number of days in the taxation year.

Capital tax reduction

(3) If the corporation's Ontario manufacturing labour cost for the year is less than 50 per cent but more than 20 per cent of its total Ontario labour cost for the year, its liability for tax under this Part for the year is reduced by the amount calculated using the formula:

in which,

"A" is the amount of tax that would, but for this section, be payable by the corporation under this Part for the year,

"D" is the percentage that its Ontario manufacturing labour cost for the year is of its total Ontario labour cost for the year, expressed in decimals,

"E" is the number of days in the taxation year that are after December 31, 2007, and

"C" is the total number of days in the taxation year.

Ontario manufacturing labour cost

(4) For the purposes of this section, a corporation's Ontario manufacturing labour cost for a taxation year is the amount that would be its cost of manufacturing and processing labour for the year under Part LII (Canadian Manufacturing and Processing Profits) of the regulations made under the Income Tax Act (Canada) if,

(a) the activities described in paragraphs (a), (b), (e), (f), (g) and (l) of the definition of "manufacturing or processing" in subsection 125.1 (3) of that Act were not excluded in determining what constituted qualified activities under Part LII of those regulations;

(b) references in Part LII of those regulations to qualified activities carried out in Canada were read instead as references to qualified activities carried out in Ontario;

(d) paragraph (f) of the definition of "cost of labour" in section 5204 of those regulations did not apply.

Total Ontario labour cost

(5) For the purposes of this section, a corporation's total Ontario labour cost for a taxation year is the amount that would be its cost of labour for the year under Part LII (Canadian Manufacturing and Processing Profits) of the regulations made under the Income Tax Act (Canada) if,

(a) the only salaries and wages taken into account for the purposes of paragraphs (a) and (b) of the definitions of "cost of labour" in sections 5202 and 5204 of those regulations and for the purposes of paragraph (a) of the definitions of "cost of manufacturing and processing labour" in those sections were salaries and wages paid or payable to employees of permanent establishments situated in Ontario;

(b) the reference in paragraph (d) of the definition of "cost of labour" in section 5202 of those regulations to an active business carried on outside Canada were read instead as a reference to an active business carried on outside Ontario; and

(c) the reference in paragraph (e) of the definition of "cost of labour" in section 5204 of those regulations to an active business carried on outside Canada were read instead as a reference to an active business carried on outside Ontario.

Commencement

9. (1) Subject to subsections (2), (3) and (4), this Schedule comes into force on the day the Finance Statute Law Amendment Act, 2007 receives Royal Assent.

Same

(2) Sections 1, 2, 5 and 6 shall be deemed to have come into force on January 1, 2007.

Same

(3) Subsections 3 (1), (4) and (5) and sections 4, 7 and 8 come into force on January 1, 2008.

Same

(4) Subsections 3 (2), (3) and (6) shall be deemed to have come into force on May 11, 2005.

Schedule D
Education Act

1. (1) Clause (b) of the definition of "business property" in section 257.5 of the Education Act is repealed and the following substituted:

(b) property in a class of real property prescribed by the regulations, or

(2) Clause (b) of the definition of "residential property" in section 257.5 of the Act is repealed and the following substituted:

(b) property in a class of real property prescribed by the regulations.

2. Clause 257.12 (1) (a) of the Act is repealed and the following substituted:

(a) prescribing classes of real property for the purposes of clause (b) of the definition of "business property" in section 257.5 or for the purposes of clause (b) of the definition of "residential property" in that section;

Commencement

3. (1) Subject to subsection (2), this Schedule comes into force on the day the Finance Statute Law Amendment Act, 2007 receives Royal Assent.

Same

(2) Section 1 shall be deemed to have come into force on January 1, 2007.

Schedule E
Income Tax Act

1. (1) Clause 8 (8.1.1) (f) of the Income Tax Act is amended by striking out "2009" in the portion before subclause (i) and substituting "2007".

(2) Clauses 8 (8.1.1) (g) and (h) of the Act are repealed and the following substituted:

(g) for each taxation year ending after 2006 and before 2009, unless otherwise prescribed, the amount equal to the total of,

(i) the lesser of $1,125 and the amount equal to 15 per cent of the equity capital received from the taxpayer during that taxation year or during the first 60 days of the following year by the corporations on the issue of Class A shares, and

(ii) the lesser of $375 and the amount equal to 5 per cent of the equity capital received from the taxpayer during that taxation year or during the first 60 days of the following year by the corporations on the issue of Class A shares, if the shares were issued by the corporations as research oriented investment funds under subsection 16.1 (2) of the Community Small Business Investment Funds Act.

Commencement

2. (1) Subject to subsection (2), this Schedule comes into force on the day the Finance Statute Law Amendment Act, 2007 receives Royal Assent.

Same

(2) Section 1 shall be deemed to have come into force on January 1, 2007.

Schedule F
Land Transfer Tax Act

1. The French version of clauses (a) and (b) of the definition of "total purchase price of a qualifying eligible home" in subsection 9 (3) of the Land Transfer Tax Act is amended by striking out "logement admissible" wherever it appears and substituting in each case "logement reconnu".

2. (1) The definition of "purchaser" in subsection 9.2 (1) of the Act is amended by striking out "as defined in the Ontario Home Ownership Savings Plan Act".

(2) Subsection 9.2 (1) of the Act is amended by adding the following definition:

"qualifying home" means,

(a) for agreements of purchase and sale entered into before December 14, 2007, a newly constructed home, and

(b) for agreements of purchase and sale entered into after December 13, 2007, an eligible home. ("logement admissible")

(3) Section 9.2 of the Act is amended by adding the following subsection:

Eligible home

(1.1) For the purposes of this section, an eligible home is,

(a) a detached house;

(b) a semi-detached house, including a dwelling house that is joined to another dwelling house at the footing or foundation by a wall above or below grade or both above and below grade;

(d) a share or shares of the capital stock of a co-operative corporation if the share or shares are acquired for the purpose of acquiring the right to inhabit a housing unit owned by the corporation;

(e) a mobile home that complies with the Canadian Standards Association Standard CAN/CSA-Z240 Mobile Homes and is suitable for year round permanent residential occupation;

(f) a condominium unit;

(g) a residential dwelling that is a duplex, triplex or fourplex;

(h) a partial ownership interest as a tenant in common of real property if the ownership interest was acquired for the purpose of acquiring the right to inhabit a housing unit forming part of the real property;

(i) a manufactured home that is manufactured in whole or in part at an offsite location, that is intended for basement installation, that is suitable for year round permanent residential occupation and that complies with,

(i) the Building Code made under the Building Code Act, 1992,

(ii) if the manufactured home is constructed in sections that are not wider than 4.3 metres, Canadian Standards Association Standard Z240.2.1 Structural Requirements for Mobile Homes and Canadian Standards Association Standard Z240.8.1 Windows for Use in Mobile Homes, or

(iii) if the manufactured home is constructed in sections that are 4.3 metres or wider, Canadian Standards Association Standard A277 Procedure for Certification of Factory Built Houses; or

(j) any other residential property as may be prescribed.

(4) Subsection 9.2 (2) of the Act is amended by striking out "newly constructed home" in the portion before clause (a) and substituting "qualifying home".

(5) Subsection 9.2 (2.1) of the Act is repealed and the following substituted:

Maximum refund

(2.1) The maximum amount of tax refundable under subsection (2) in respect of the acquisition of a qualifying home is $2,000 if the agreement of purchase and sale is entered into by the purchaser after March 31, 1999.

Commencement

3. (1) Subject to subsection (2), this Schedule comes into force on the day the Finance Statute Law Amendment Act, 2007 receives Royal Assent.

Same

(2) Sections 1 and 2 come into force on December 14, 2007.

Schedule G
Taxation Act, 2007

1. Subsection 22 (2) of the Taxation Act, 2007 is repealed and the following substituted:

Interpretation, maximum tax credit

(2) The maximum tax credit permitted for a taxation year in respect of investments made by an individual in corporations registered under Part III of the Community Small Business Investment Funds Act is,

(a) for the 2009 taxation year, unless otherwise prescribed, the sum of,

(i) the lesser of $1,125 and the amount equal to 15 per cent of the equity capital received from the individual during 2009 or during the first 60 days of 2010 by the corporations on the issue of Class A shares, and

(ii) the lesser of $375 and the amount equal to 5 per cent of the equity capital received from the individual during 2009 or during the first 60 days of 2010 by the corporations on the issue of Class A shares, if the shares were issued by the corporations as research oriented investment funds under subsection 16.1 (2) of the Community Small Business Investment Funds Act;

(b) for the 2010 taxation year, unless otherwise prescribed, the sum of,

(i) the lesser of $750 and the amount equal to 10 per cent of the equity capital received from the individual during 2010 or during the first 60 days of 2011 by the corporations on the issue of Class A shares, and

(ii) the lesser of $375 and the amount equal to 5 per cent of the equity capital received from the individual during 2010 or during the first 60 days of 2011 by the corporations on the issue of Class A shares, if the shares were issued by the corporations as research oriented investment funds under subsection 16.1 (2) of the Community Small Business Investment Funds Act; or

(i) the lesser of $375 and the amount equal to 5 per cent of the equity capital received from the individual during 2011 or during the first 60 days of 2012 by the corporations on the issue of Class A shares, and

(ii) the lesser of $375 and the amount equal to 5 per cent of the equity capital received from the individual during 2011 or during the first 60 days of 2012 by the corporations on the issue of Class A shares, if the shares were issued by the corporations as research oriented investment funds under subsection 16.1 (2) of the Community Small Business Investment Funds Act.

2. Subsection 31 (5) of the Act is repealed and the following substituted:

Ontario business limit

(5) The amount of a corporation's Ontario business limit for a taxation year is the amount that would be the corporation's business limit under paragraph 125 (1) (c) of the Federal Act for the year if,

(a) the references to $400,000 in subsections 125 (2) and (3) of that Act were read as references to $500,000; and

(b) the Federal Act were read without reference to subsection 125 (5.1) of that Act.

Specified partnership income

(6) In applying subparagraph 125 (1) (a) (ii) of the Federal Act for the purposes of this section, the reference to "specified partnership income" in that subparagraph shall be read as a reference to the amount that would be determined under the definition of "specified partnership income" in subsection 125 (7) of that Act in respect of a partnership if, in the description of "M" in that definition,

(a) the reference to $400,000 were read as $500,000; and

(b) the reference to $1,096 were read as $1,370.

3. (1) Clause 32 (1) (b) of the Act is repealed and the following substituted:

(b) the amount calculated using the formula,

A × (B + C – $500,000) × D/$500,000

in which,

"A" is the corporation's small business surtax rate for the year as set out in subsection (3),

"B" is the amount of the corporation's adjusted taxable income for the year,

"C" is the sum of all amounts each of which is the adjusted taxable income of another corporation with which the corporation was associated at any time during the year, for the last taxation year of that associated corporation that ended at or before the end of the corporation's taxation year, and

"D" is the amount of the corporation's Ontario small business income for the year.

(2) Subsection 32 (3) of the Act is repealed and the following substituted:

Small business surtax rate

(3) A corporation's small business surtax rate for a taxation year is 4.25 per cent.

4. Subsection 64 (1) of the Act is amended by striking out "January 1, 2012" at the end of the portion before clause (a) and substituting "July 1, 2010".

5. (1) Clauses 72 (2) (a), (b) and (c) of the Act are repealed and the following substituted:

(a) 0.45 per cent multiplied by the ratio of the number of days in the year that are before January 1, 2010 to the total number of days in the year; and

(b) 0.3 per cent multiplied by the ratio of the number of days in the year that are after December 31, 2009 and before July 1, 2010 to the total number of days in the year.

(2) Subparagraphs 1 i, ii and iii of subsection 72 (4) of the Act are repealed and the following substituted:

i. 0.675 per cent multiplied by the ratio of the number of days in the year that are before January 1, 2010 to the total number of days in the year, and

ii. 0.45 per cent multiplied by the ratio of the number of days in the year that are after December 31, 2009 and before July 1, 2010 to the total number of days in the year.

(3) Subparagraphs 2 i, ii and iii of subsection 72 (4) of the Act are repealed and the following substituted:

i. 0.54 per cent multiplied by the ratio of the number of days in the year that are before January 1, 2010 to the total number of days in the year, and

ii. 0.36 per cent multiplied by the ratio of the number of days in the year that are after December 31, 2009 and before July 1, 2010 to the total number of days in the year.

6. The definition of "D" in subsection 73 (4) of the Act is repealed and the following substituted:

"D" is the sum of,

(a) 0.675 per cent multiplied by the ratio of the number of days in the year that are before January 1, 2010 to the total number of days in the year, and

(b) 0.45 per cent multiplied by the ratio of the number of days in the year that are after December 31, 2009 and before July 1, 2010 to the total number of days in the year.

7. Subsection 82 (1) of the Act is repealed and the following substituted:

Capital tax, corporations other than financial institutions

(1) The amount of capital tax payable under this Division by a corporation other than a financial institution for a taxation year commencing before July 1, 2010 is the amount calculated using the formula,

[A × B × (C – D) × E/365] – F

in which,

"A" is the corporation's Ontario allocation factor for the year,

"B" is the corporation's capital tax rate for the year,

"C" is,

(a) the amount of the corporation's taxable capital for the year if the corporation is resident in Canada, or

(b) the amount of the corporation's taxable capital employed in Canada for the year if the corporation is non-resident,

"D" is the corporation's capital deduction for the year,

"E" is,

(a) 365 days if there are at least 51 weeks in the year, or

(b) the number of days in the year, in any other case, and

"F" is the amount, if any, of the corporation's capital tax credit for manufacturers for the year, as determined under section 83.1.

8. Clauses 82 (2) (a), (b) and (c) of the Act are repealed and the following substituted:

(a) 0.225 per cent multiplied by the ratio of the number of days in the year that are before January 1, 2010 to the total number of days in the year; and

(b) 0.15 per cent multiplied by the ratio of the number of days in the year that are after December 31, 2009 and before July 1, 2010 to the total number of days in the year.

9. Part III of the Act is amended by adding the following section:

Capital tax credit for manufacturers

Application

83.1 (1) This section applies to a corporation for a taxation year if the corporation's Ontario manufacturing labour cost for the taxation year is more than 20 per cent of its total Ontario labour cost for the year.

Credit equal to the amount of tax

(2) If the corporation's Ontario manufacturing labour cost for the year is at least 50 per cent of its total Ontario labour cost for the year, its capital tax credit for manufacturers for the year is the total amount of tax that would, but for this section, be payable by the corporation under this Division for the year.

Deduction from tax

(3) If the corporation's Ontario manufacturing labour cost for the year is less than 50 per cent but more than 20 per cent of its total Ontario labour cost for the year, its capital tax credit for manufacturers for the year is calculated using the formula,

in which,

"A" is the amount of tax that would, but for this section, be payable by the corporation under this Division for the year, and

"B" is the percentage that its Ontario manufacturing labour cost for the year is of its total Ontario labour cost for the year, expressed in decimals.

Ontario manufacturing labour cost

(b) references in Part LII of those regulations to qualified activities carried out in Canada were read instead as references to qualified activities carried out in Ontario;

(d) paragraph (f) of the definition of "cost of labour" in section 5204 of those regulations did not apply.

Total Ontario labour cost

10. (1) Subsection 91 (3) of the Act is amended by striking out "subsections (4) and (5)" and substituting "subsections (4), (4.1) and (5)".

(2) Subsection 91 (4) of the Act is amended by striking out the portion before paragraph 1 and substituting the following:

Pre-2008 expenditures

(4) The amount determined under this subsection in respect of a first-time production for the purposes of subsection (3) is the sum of the amounts determined under the following paragraphs for the portion of the qualifying production company's qualifying labour expenditure for the production that relates to expenditures incurred after December 31, 2004 and before January 1, 2008:

. . . . .

(3) Section 91 of the Act is amended by adding the following subsection:

2008 and 2009 expenditures

(4.1) The amount determined under this subsection in respect of a first-time production for the purposes of subsection (3) is the sum of the amounts determined under the following paragraphs for the portion of the qualifying production company's qualifying labour expenditure for the production that relates to expenditures incurred after December 31, 2007 and before January 1, 2010:

1. 40 per cent of the lesser of,

i. the amount, if any, by which $240,000 exceeds the sum of,

A. the total of the company's qualifying labour expenditures for the production for previous taxation years, and

B. the lesser of the amounts, if any, determined under subparagraphs 1 i and ii of subsection (4) in respect of the production for the taxation year, and

ii. the company's qualifying labour expenditure for the taxation year for the production.

3. If the production is a regional Ontario production, 10 per cent of the company's qualifying labour expenditure for the taxation year for the production.

(4) Sub-subparagraph 1 i B of subsection 91 (5) of the Act is amended by striking out "subsection (4)" and substituting "subsection (4.1)".

(5) Subsection 91 (6) of the Act is amended by striking out "paragraph 1, 2 or 3 of subsection (4)" and substituting "paragraph 1, 2 or 3 of subsection (4.1)".

(6) Clause 91 (9) (a) of the Act is amended,

(a) by striking out "January 1, 2010" and substituting "January 1, 2008"; and

(b) by striking out "and" at the end.

(7) Subsection 91 (9) of the Act is amended by adding the following clause:

(a.1) 35 per cent of the company's qualifying labour expenditure for the year in respect of the production, as determined in relation to expenditures incurred after December 31, 2007 and before January 1, 2010 that are included in the Ontario labour expenditure for the year in respect of the production; and

(8) Clause 91 (10) (a) of the Act is amended,

(a) by striking out "January 1, 2010" and substituting "January 1, 2008"; and

(b) by striking out "and" at the end.

(9) Subsection 91 (10) of the Act is amended by adding the following clause:

(a.1) 45 per cent of the company's qualifying labour expenditure for the year for the production, as determined in relation to expenditures incurred after December 31, 2007 and before January 1, 2010 that are included in the Ontario labour expenditure for the year in respect of the production; and

11. (1) Clause 92 (3) (a) of the Act is amended,

(a) by striking out "April 1, 2008" and substituting "January 1, 2008"; and

(b) by striking out "and" at the end.

(2) Subsection 92 (3) of the Act is amended by adding the following clause:

(a.1) 25 per cent of the portion of its qualifying Ontario labour expenditure in respect of the production for the year that relates to expenditures incurred after December 31, 2007 and before January 1, 2010; and

(3) Clause 92 (3) (b) of the Act is amended by striking out "March 31, 2008" and substituting "December 31, 2009".

12. (1) Clauses 172 (1) (a) and (b) of the Act are repealed and the following substituted:

(a) prescribing a percentage for the purposes of paragraph 1, 2 or 3 of subsection 91 (4.1) or paragraph 1, 2 or 3 of subsection 91 (5) and the period of time after December 31, 2007 to which it applies;

(b) prescribing a percentage for the purposes of clause 91 (9) (a.1) or (10) (a.1) or both and the period of time after December 31, 2007 and before January 1, 2010 to which it applies;

(2) Clauses 172 (1) (d) and (e) of the Act are repealed and the following substituted:

(d) prescribing a percentage for the purposes of clause 92 (3) (a) and the period of time after December 31, 2004 and before January 1, 2008 to which it applies;

(d.1) prescribing a percentage for the purposes of clause 92 (3) (a.1) and the period of time after December 31, 2007 and before January 1, 2010 to which it applies;

(e) prescribing a percentage for the purposes of clause 92 (3) (b) and the period of time after December 31, 2009 to which it applies;

Commencement

13. (1) Subject to subsection (2), this Schedule comes into force on the day the Finance Statute Law Amendment Act, 2007 receives Royal Assent.

Same

(2) Sections 1 to 11 come into force on January 1, 2008.

EXPLANATORY NOTE

The major elements of the Bill are described below.

SCHEDULE A
Assessment Act

The definition of "classification" in section 1 of the Assessment Act is re-enacted to acknowledge that real property may be included in a particular class of property by reason of a regulation made under clause 257.12 (1) (a) of the Education Act. The amendment is retroactive to January 1, 2007 to parallel related amendments to section 257.5 of the Education Act.

Schedule B
Community Small Business Investment Funds Act

Under the current Community Small Business Investment Funds Act, labour sponsored investment fund tax credits are available for investments that qualify for the 2010 or an earlier taxation year. The amendments to the Act extend the eligible period in which to make investments for an additional year to include investments that will qualify for the 2011 taxation year.

Under current legislation, labour sponsored investment fund tax credits are phased out by reductions in the tax credit rate beginning in the 2009 taxation year, with no tax credit available for the 2011 or later taxation years. The Act is amended to provide that the reduction in the tax credit rate will not begin until the 2010 taxation year, with no tax credit available for the 2012 or later taxation years.

The amendments relating to the 2007 and later taxation years also increase the maximum investment that qualifies for the tax credit to $7,500 per year.

Consequential amendments are made to provisions of the Act to extend current deadlines for an additional year to reflect the extension of the tax credit program.

Schedule C
Corporations Tax Act

The amendments to the Corporations Tax Act in this Schedule are to provisions of the Act that apply to corporations for taxation years ending before January 1, 2009. Where applicable, amendments are made in Schedule G to the Taxation Act, 2007 which applies for taxation years ending after December 31, 2008.

The amendments to subsection 41 (3.2) of the Act increase the annual amount of active business income of a Canadian-controlled private corporation that is eligible for the small business deduction from $400,000 to $500,000, starting January 1, 2007.

The amendment to subsection 41.1 (3) of the Act reduces the rate of surtax on Canadian-controlled private corporations from 4.667 per cent to 4.25 per cent, starting January 1, 2007.

The amendments to section 43.5 of the Act increase the general tax credit rate for the Ontario film and television tax credit from 30 per cent to 35 per cent, starting January 1, 2008.

The amendments to section 43.10 of the Act increase the tax credit rate for the Ontario production services tax credit from 18 per cent to 25 per cent for the period of January 1, 2008 to March 31, 2008 and from 11 per cent to 25 per cent, starting April 1, 2008.

Currently, capital tax rates are scheduled to be reduced as of January 1, 2009. The amendments to sections 66 and 66.1 of the Act change the effective date for the capital tax rate reduction to January 1, 2007. The re-enactment of subsections 66 (1.2) and (4.4) of the Act is required because capital tax is not imposed under the Act for taxation years ending after December 31, 2008.

The amendment to section 72 of the Act is required by reason of the enactment of section 72.1 of the Act.

The enactment of section 72.1 of the Act provides a capital tax exemption, starting January 1, 2008, for a corporation whose Ontario manufacturing labour cost for a taxation year is at least 50 per cent of its total Ontario labour cost for the year. A phased-out capital tax reduction is available if a corporation's Ontario manufacturing labour cost for the year is less than 50 per cent but more than 20 per cent of its total Ontario labour cost for the year.

Schedule D
Education Act

Currently, the Education Act authorizes the Minister of Finance to prescribe classes of business property and classes of residential property for education tax purposes that are classes of property prescribed under the Assessment Act, other than classes listed in subsection 7 (2) of that Act. The amendments will authorize the Minister to prescribe classes of business property and classes of residential property for education tax purposes for 2007 and later years that are not necessarily prescribed classes of property for municipal tax or provincial land tax purposes.

Schedule E
Income Tax Act

The Income Tax Act provides a tax credit in respect of investments made by individuals in labour sponsored investment fund corporations registered under Part III of the Community Small Business Investment Funds Act. The amendments relating to taxation years ending in 2007 and 2008 reflect the increase in the maximum investment that qualifies for the tax credit to $7,500 per year under the amendments to the Community Small Business Investment Funds Act in Schedule B. Amendments are made to the Taxation Act, 2007 in Schedule G for taxation years ending after December 31, 2008.

Schedule F
Land Transfer Tax Act

Currently, section 9.2 of the Land Transfer Tax Act provides for a refund of land transfer tax of up to $2,000 to first-time home purchasers if the home is a newly constructed home. An amendment to the section extends the refund to homes which are not newly constructed homes. To qualify, the agreement of purchase and sale in respect of the home must be entered into after December 13, 2007.

Schedule G
Taxation Act, 2007

The Taxation Act, 2007 applies to individuals and corporations in respect of taxation years ending after December 31, 2008. Amendments required for taxation years ending before January 1, 2009 are included in Schedule C which amends the Corporations Tax Act and in Schedule E which amends the Income Tax Act.

Section 22 of the Act provides a personal income tax credit in respect of investments made by individuals in labour sponsored investment fund corporations registered under Part III of the Community Small Business Investment Funds Act. Under the current Taxation Act, 2007, the tax credits are phased out through a reduction in the tax credit rates, starting with the 2009 taxation year. The amendments to section 22 of the Act delay the start of the reduction in the tax credit rate until the 2010 taxation year and increase the maximum amount of the tax credit for 2009, 2010 and 2011 to reflect the increase in the maximum investment that qualifies for the tax credit to $7,500 per year under the amendments to the Community Small Business Investment Funds Act.

The amendments to section 31 of the Act increase the annual amount of active business income of a Canadian-controlled private corporation that is eligible for the small business deduction from $400,000 to $500,000.

The amendments to section 32 of the Act reduce the rate of surtax on Canadian-controlled private corporations from 4.667 per cent to 4.25 per cent.

The amendment to subsection 64 (1) of the Act is required because capital tax is no longer imposed after June 30, 2010 under the current Act.

Under the current Corporations Tax Act, the capital tax rate for corporations is scheduled to be reduced, starting January 1, 2009. Amendments to that Act in Schedule C provide that the reduction starts January 1, 2007. The amendments to sections 72 and 73 and subsection 82 (2) of the Taxation Act, 2007 implement the capital tax rate reduction for taxation years ending after December 31, 2008.

The re-enactment of subsection 82 (1) of the Act and the enactment of section 83.1 of the Act implement a new capital tax credit for corporations carrying on manufacturing or certain other specified activities. No capital tax is payable by a corporation for a taxation year if its Ontario manufacturing labour cost is at least 50 per cent of its total Ontario labour cost for the year. A phased-out capital tax reduction is available if the corporation's Ontario manufacturing labour cost is less than 50 per cent but more than 20 per cent of its total Ontario labour cost for the year.

The amendments to section 91 of the Act increase the general tax credit rate for the Ontario film and television tax credit from 30 per cent to 35 per cent for the period of January 1, 2008 to December 31, 2009.

The amendments to section 92 of the Act increase the tax credit rate for the Ontario production services tax credit from 18 per cent to 25 per cent for the period of January 1, 2008 to March 31, 2008 and from 11 per cent to 25 per cent for the period of April 1, 2008 to December 31, 2009.

Subsection 172 (1) of the Act authorizes the Lieutenant Governor in Council to make regulations prescribing different tax credit rates for the Ontario film and television tax credit and the Ontario production services tax credit. The amendments to that subsection are consequential upon the amendments to sections 91 and 92.