Federal-Provincial Fiscal Arrangements Act, 1972 (S.C. 1972, c. 8)

Marginal note:Eligibility for payment

• 13 (1) No payment under this Part may be made to a province for a fiscal year unless,

  • (a) pursuant to a tax collection agreement entered into or deemed to have been entered into under section 8, Canada, on behalf of the province, has undertaken to collect taxes imposed by the province under the provincial Act on the incomes of individuals for the taxation year ending in the fiscal year, or on the incomes of individuals for that taxation year and the incomes of corporations for taxation years ending in the calendar year that ends in the fiscal year, or

  • (b) the provisions of the provincial Act pursuant to which a tax is imposed on the incomes of individuals for the taxation year ending in the fiscal year, and the provisions of the federal Act pursuant to which a tax is imposed on the incomes of individuals for that taxation year, are, in the opinion of the Minister, similar as to weight and structure except for differences between the Acts with respect to personal deductions, which differences are not greater than those that existed between the Acts as they read in their application to the 1971 taxation year.

• Marginal note:Reduction of provincial tax revenue guarantee payment

  (2) When the provisions of any amendment, modification or revision made in the federal Act, as it applies to a taxation year coinciding with a calendar year ending in a fiscal year, that would result in reducing the revenue derived pursuant to the federal Act for that taxation year are not implemented by a province under its provincial Act as it applies to that taxation year, the provincial tax revenue guarantee payment that may be paid to the province for the fiscal year may, notwithstanding any other provisions of this Part, be reduced by the additional amount that, in the opinion of the Minister, would not have been so derived pursuant thereto had the provincial Act as it applied to that taxation year been amended so as to comply with the provisions of the federal Act as it applied to that taxation year.

Marginal note:Eligibility for payment

14 A province is not eligible for a tax revenue guarantee payment under this Part for the fiscal year commencing with the 1st day of April, 1972 and ending with the 31st day of March, 1973, unless,

• (a) it had given notification in prescribed manner, on or before a prescribed date, to the effect that the rate of personal income tax applicable under the provincial Act to the 1972 taxation year will not exceed the specified converted rate applicable to that province, but the subsequent alteration of any rate of personal income tax applicable under the provincial Act, in the manner provided in a tax collection agreement relating to personal income taxes entered or deemed to have been entered into under section 8 between the Government of Canada and the province, does not render the province ineligible for a tax revenue guarantee payment under this Part, or

• (b) in the opinion of the Minister, the revenue that would be derived by the province from a personal income tax on every individual

  • (i) who was resident in the province on the last day of 1972, or

  • (ii) who, not being resident in the province on the last day of 1972, had income earned in 1972 in the province as determined under the provincial Act,

  computed in accordance with the provincial Act, as it applied to the 1972 taxation year of individuals, at the rate that was in effect thereunder at the commencement of 1972 as being applicable to the 1972 taxation year of individuals, is not greater than the revenue derived by the province from a personal income tax on every individual described in subparagraph (i) or (ii), computed in accordance with the provincial Act, as it is applied to the 1971 taxation year of individuals, at the actual rate applicable thereunder to the 1971 taxation year.

Marginal note:Specified converted rate

15 For the purposes of this Part, the specified converted rate applicable to a province is

• (a) in the case of Newfoundland, 36%;

• (b) in the case of Prince Edward Island, 36%;

• (c) in the case of Nova Scotia, 30.5%;

• (d) in the case of New Brunswick, 41.5%;

• (e) in the case of Ontario, 30.5%;

• (f) in the case of Manitoba, 42.5%;

• (g) in the case of Saskatchewan, 37%;

• (h) in the case of Alberta, 36%; and

• (i) in the case of British Columbia, 30.5%.

Marginal note:Definitions

16 In this Part,

federal Act

federal Act means the Income Tax Act; (loi fédérale)

provincial Act

provincial Act in relation to any province means the Act of the legislature of the province that imposes taxes on the incomes of individuals or corporations, or both, as the case may be. (loi provinciale)

Marginal note:Subsection 12(2) not applicable

17 Subsection 12(2) does not apply to a province that did not enter or was not deemed to have entered into a tax collection agreement under subsection 20(1) of the former Act.

PART VTransfer Payments with Respect to Tax on 1971 Undistributed Income on Hand

Marginal note:Transfer payments in respect of tax under Part IX of Income Tax Act

18 Subject to this Act, the Minister may pay to a province, in respect of any tax paid under Part IX of the Income Tax Act by a corporation described therein, an amount computed in accordance with section 19.

Marginal note:Calculation of payments

19 The amount that may be paid to a province under section 18 in respect of any tax paid under Part IX of the Income Tax Act by a corporation described therein is an amount, as determined by the Minister of National Revenue, equal to 20% of that proportion of the tax so paid that

• (a) the corporation’s taxable income earned in its 1971 taxation year in the province

is of

• (b) the corporation’s taxable income earned in its 1971 taxation year in Canada,

except that where the taxable income of a corporation earned in its 1971 taxation year in Canada would, but for this subsection, be nil, the corporation shall be deemed to have a taxable income earned in its 1971 taxation year in Canada equal to the tax paid by it under Part IX of the Income Tax Act.

Marginal note:Recovery of refunds made under Part IX of Income Tax Act

20 Where, in respect of any dividend paid by a corporation controlled (within the meaning assigned by section 28 of the Income Tax Act as it read in its application to the 1971 taxation year) by a Canadian corporation, the Minister of National Revenue has, under subsection 196(2) of the Income Tax Act, made a payment to the controlling corporation, an amount equal to 20% of that proportion of the payment so made to the controlling corporation that the controlled corporation’s taxable income earned in its 1971 taxation year in a province is of the controlled corporation’s taxable income earned in its 1971 taxation year in Canada, as determined under section 19, may be recovered in accordance with the regulations as an overpayment made to the province under this Act.

Marginal note:Meaning of certain words and expressions

21 For the purpose of this Part,

• (a) the “taxable income” of a corporation earned in a year in a province has the meaning given to that expression by section 40 of the Income Tax Act as it read in its application to the 1971 taxation year;

• (b) the “taxable income” of a corporation earned in a year in Canada means the aggregate of the taxable incomes of the corporation earned in the year in each of the provinces including the Northwest Territories and Yukon Territory; and

• (c) other words and expressions, except “province”, have the same meaning as in the Income Tax Act.

PART VIPost-Secondary Education Adjustment Payments

Marginal note:Post-secondary education adjustment payments

22 Subject to this Act, the Secretary of State may, for each fiscal year in the period commencing with the 1st day of April, 1972 and ending with the 31st day of March, 1977, authorize the payment to a province of a post-secondary education adjustment payment not exceeding the amount computed in accordance with this Part.

Marginal note:Adjustment payments

• 23 (1) Subject to subsection (2) and section 24, the adjustment payment that may be paid to a province for a fiscal year is the amount by which,

  • (a) in the case of the Provinces of New Brunswick, Prince Edward Island and Newfoundland, the product obtained by multiplying

    • (i) the amount for the immediately preceding fiscal year determined under paragraph 13(2)(b) of the former Act if that year commenced with the 1st day of April, 1971, or determined under this paragraph if that year commenced with or after the 1st day of April, 1972,

    by

    • (ii) the quotient obtained by dividing

      • (A) the aggregate of the amounts, as determined by the Secretary of State, of the operating expenditures for post-secondary education in all the provinces in the fiscal year,

      by

      • (B) the aggregate of the amounts, as determined by the Secretary of State, of the operating expenditures for post-secondary education in all the provinces in the immediately preceding fiscal year, and

  • (b) in the case of any other province, the amount, as determined by the Secretary of State, that is equal to 50% of the operating expenditures for post-secondary education in the province in the fiscal year,

  exceeds the aggregate of

  • (c) the federal revenue reduction relating to post-secondary education applicable to the province for the fiscal year,

  • (d) the portion, determined in prescribed manner, of the provincial revenue equalization payment payable to the province for the fiscal year under Part I that is attributable to the federal revenue reduction relating to post-secondary education applicable to the province for the fiscal year, and

  • (e) the portion, determined in prescribed manner, of the provincial tax revenue guarantee payment payable to the province for the fiscal year under Part IV that is attributable to the federal revenue reduction relating to post-secondary education applicable to the province for the fiscal year.

• Marginal note:Alteration of adjustment payments

  (2) Subject to section 24, where the adjustment payment that may be paid to a province described in paragraph (1)(a) for a fiscal year is less than the amount by which

  • (a) the amount, as determined by the Secretary of State, equal to 50% of the operating expenditures for post-secondary education in the province in the fiscal year

  exceeds

  • (b) the aggregate for the fiscal year of the amounts determined under paragraphs (1)(c), (d) and (e) in the case of the province,

  the adjustment payment that may be paid to the province for the fiscal year is the amount by which the amount referred to in paragraph (a) exceeds the aggregate referred to in paragraph (b), and in computing the adjustment payment that may be paid to the province for any subsequent fiscal year the province shall be deemed to be a province described in paragraph (1)(b).

Marginal note:Limitation on amount of federal contribution

• 24 (1) Where, for any fiscal year commencing with or after the 1st day of April, 1972,

  • (a) the aggregate of the federal contributions to each of the provinces is greater than 115% of the aggregate of the federal contributions to each of the provinces for the immediately preceding fiscal year, and

  • (b) the federal contribution to a particular province is greater than 115% of the federal contribution to that particular province for the immediately preceding fiscal year,

  the adjustment payment that may be paid to any one particular province described in paragraph (b) for the fiscal year is an amount determined by the following rules:

  • (c) determine the amount by which

    • (i) the aggregate of the federal contributions to each of the provinces for the fiscal year

    exceeds

    • (ii) 115% of the aggregate of the federal contributions to each of the provinces for the immediately preceding fiscal year;

  • (d) determine, for each particular province described in paragraph (b), the amount by which

    • (i) the federal contribution to that particular province for the fiscal year

    exceeds

    • (ii) 115% of the federal contribution to that particular province for the immediately preceding fiscal year;

  • (e) determine the aggregate of the amounts determined under paragraph (d) for each of the provinces to which that paragraph applies;

  • (f) determine, for each particular province described in paragraph (b), the proportion, as a percentage, that the amount determined under paragraph (d) in the case of that province is of the aggregate determined under paragraph (e);

  • (g) determine, for each particular province described in paragraph (b), the product obtained by multiplying the percentage determined under paragraph (f) in the case of that province by the amount determined under paragraph (c);

  and the adjustment payment that may be paid to any one particular province described in paragraph (b) for the fiscal year is the amount that, but for this section, would be the adjustment payment payable to that province for the fiscal year minus the amount determined under paragraph (g) in the case of that province.

• Marginal note:Determination of amount of federal contribution to province for fiscal year

  (2) For the purpose of applying subsection (1) to determine the adjustment payment that may be paid to a province for the fiscal year commencing with the 1st day of April, 1972, the amount of the federal contribution to a province for any fiscal year is,

  • (a) in the case of the fiscal year commencing with the 1st day of April, 1971, an amount, as determined by the Secretary of State, equal to the aggregate of

    • (i) the adjustment payment that may be paid to the province for that fiscal year, computed under section 13 of the former Act, and

    • (ii) the aggregate for that fiscal year determined under paragraph 13(2)(c) of the former Act in the case of the province, and

  • (b) in the case of the fiscal year commencing with the 1st day of April, 1972, an amount, as determined by the Secretary of State, equal to the aggregate of

    • (i) the adjustment payment that, but for this section, would be payable to the province for that fiscal year, and

    • (ii) the aggregate for that fiscal year of the amounts determined under paragraphs 23(1)(c), (d) and (e) in the case of the province;

  and for the purpose of applying subsection (1) to determine the adjustment payment that may be paid to a province for the fiscal year commencing with the 1st day of April, 1973, the amount of the federal contribution to a province for any fiscal year is,

  • (c) in the case of the fiscal year commencing with the 1st day of April, 1972, an amount, as determined by the Secretary of State, equal to the aggregate of

    • (i) the adjustment payment that may be paid to the province for that fiscal year, and

    • (ii) the aggregate for that fiscal year of the amounts determined under paragraphs 23(1)(c), (d) and (e) in the case of the province, and

  • (d) in the case of the fiscal year commencing with the 1st day of April, 1973, an amount, as determined by the Secretary of State, equal to the aggregate of

    • (i) the adjustment payment that, but for this section, would be payable to the province for that fiscal year, and

    • (ii) the aggregate for that fiscal year of the amounts determined under paragraphs 23(1)(c), (d) and (e) in the case of the province.

• Marginal note:Determination of amount of contribution

  (3) For the purpose of applying subsection (1) to determine the adjustment payment that may be paid to a province for each fiscal year in the period commencing with the 1st day of April, 1974 and ending with the 31st day of March, 1977, the amount of the federal contribution to a province for any such fiscal year is

  • (a) in the case of that fiscal year, an amount, as determined by the Secretary of State, equal to the aggregate of

    • (i) the adjustment payment that, but for this section, would be payable to the province for that fiscal year, and

    • (ii) the aggregate for that fiscal year of the amounts determined under paragraphs 23(1)(c), (d) and (e) in the case of the province; and

  • (b) in the case of the immediately preceding fiscal year, an amount, as determined by the Secretary of State, equal to the aggregate of

    • (i) the adjustment payment that may be paid to the province for that immediately preceding fiscal year, and

    • (ii) the aggregate for that immediately preceding fiscal year of the amounts determined under paragraphs 23(1)(c), (d) and (e) in the case of the province.