Federal-Provincial Fiscal Arrangements Act (R.S.C., 1985, c. F-8)

Territorial Formula Financing Payments

Marginal note:Territorial formula financing payments

• 4.1 (1) Subject to the other provisions of this Act, there may be paid to a territory a territorial formula financing payment not exceeding the amounts determined under this Part for each fiscal year in the period beginning on April 1, 2014 and ending on March 31, 2029.

• (2) [Repealed, 2013, c. 33, s. 123]

• Marginal note:Subsequent fiscal years

  (3) Subject to the other provisions of this Part, the territorial formula financing payment that may be paid to a territory for a fiscal year beginning after March 31, 2008 is equal to the amount, as determined by the Minister, by which

  • (a) the aggregate of the gross expenditure base and the superannuation adjustment for that territory for that fiscal year

  is greater than

  • (b) the eligible revenues for that territory for that fiscal year.

• Marginal note:Adjusted gross expenditure base

  (4) For the purpose of paragraph (3)(a), for the fiscal year beginning on April 1, 2014, the gross expenditure base is equal to the amount determined by the formula

  A + 0.7 (B + C + D + E – F – G – H)

  where

  A

  is the gross expenditure base that would, in the absence of this subsection, be calculated for the fiscal year;

  B

  is equal to the average adjusted yield calculated for revenues relating to personal income;

  C

  is equal to the average yield calculated for revenues relating to corporate income and government business enterprises;

  D

  is equal to the average yield calculated for revenues derived from property taxes and miscellaneous revenues;

  E

  is equal to the average yield calculated for revenues relating to consumption taxes excluding revenues derived from excise taxes;

  F

  is $63,891,572 in respect of Yukon, $125,998,429 in respect of the Northwest Territories and $104,674,613 in respect of Nunavut;

  G

  is equal to the average yield calculated for revenues derived from personal income; and

  H

  is equal to the average yield calculated for revenues derived from corporate income and government business enterprises.

• Marginal note:Definitions

  (5) The following definitions apply in this subsection and in subsection (4).

  average adjusted yield

  average adjusted yield means, in respect of revenues relating to personal income of a territory for the fiscal year beginning on April 1, 2014, the amount determined by the formula

  (A + B + C) / 3

  where

  A

  is the yield for that revenue source for the fiscal year beginning on April 1, 2012, calculated by adjusting the national average rate of tax for that fiscal year to exclude the revenues to be equalized adjustment for that fiscal year from the aggregate of the revenue to be equalized for that revenue source for the fiscal year for all provinces and territories;

  B

  is the yield for that revenue source for the fiscal year beginning on April 1, 2011, calculated by adjusting the national average rate of tax for that fiscal year to exclude the revenues to be equalized adjustment for that fiscal year from the aggregate of the revenue to be equalized for that revenue source for the fiscal year for all provinces and territories; and

  C

  is the yield for that revenue source for the fiscal year beginning on April 1, 2010, calculated by adjusting the national average rate of tax for that fiscal year to exclude the revenues to be equalized adjustment for that fiscal year from the aggregate of the revenue to be equalized for that revenue source for the fiscal year for all provinces and territories. (rendement rajusté moyen)

  average yield

  average yield means, in respect of a given revenue source of a territory for the fiscal year beginning on April 1, 2014, the amount determined by the formula

  (A + B + C) / 3

  where

  A

  is the yield for that revenue source for the fiscal year beginning on April 1, 2012, that yield being calculated, in respect of G and H of the formula provided for in subsection (4), in accordance with the provisions of this Act and the regulations as they read on December 17, 2012;

  B

  is the yield for that revenue source for the fiscal year beginning on April 1, 2011, that yield being calculated, in respect of G and H of the formula provided for in subsection (4), in accordance with the provisions of this Act and the regulations as they read on December 17, 2012; and

  C

  is the yield for that revenue source for the fiscal year beginning on April 1, 2010, that yield being calculated, in respect of G and H of the formula provided for in subsection (4), in accordance with the provisions of this Act and the regulations as they read on December 17, 2012. (rendement moyen)

  revenues to be equalized adjustment

  revenues to be equalized adjustment means the amount determined by the Minister for the fiscal year that corresponds to the amount, for all taxpayers, of any rebate, credit or reduction in relation to revenue relating to personal income that a territory, province or one of their local governments grant in favour of a taxpayer for the fiscal year, up to a maximum that reduces to zero the amount of the taxpayer’s tax that is included in that revenue source for that fiscal year. (rajustement de revenus sujets à péréquation)

Marginal note:Additional payment for 2016-2017

4.11 An amount may be paid to a territory equal to the difference between the amount determined by the Minister under paragraph (a) and the amount set out under paragraph (b) for that territory:

• (a) the amount of the territorial formula financing payment that would have been paid to a territory for the fiscal year beginning on April 1, 2016, if that amount had been determined using the amount determined to be the gross expenditure base under subsection 4(2); and

• (b) as the case may be,

  • (i) $878,040,329 in respect of Yukon,

  • (ii) $1,195,799,238 in respect of the Northwest Territories, and

  • (iii) $1,462,488,258 in respect of Nunavut.

Other Payments

Marginal note:Payments — Yukon and Northwest Territories

4.12 The following amounts may be paid for each fiscal year in the period beginning on April 1, 2019 and ending on March 31, 2024:

• (a) to Yukon, $1,270,000; and

• (b) to the Northwest Territories, $1,744,000.

General

Marginal note:Powers of the Minister

4.2 The Minister may determine, in respect of a territory for a fiscal year,

• (a) the amount of the gross expenditure base adjustment, in order to reflect

  • (i) a transfer of responsibilities between Canada and the government of a territory or the government of a territory and an aboriginal government,

  • (ii) the signing of land claims, comprehensive land claims or self-government agreements with aboriginal governments, and

  • (iii) personal income tax room sharing agreements between the government of Yukon and an aboriginal government in Yukon; and

• (b) the amount of the yield adjustment, in order to reflect

  • (i) personal income tax room sharing agreements between the government of Yukon and an aboriginal government in Yukon,

  • (ii) federal statutory limitations on territo-rial revenue raising capacity.

  • (iii) [Repealed, 2013, c. 33, s. 124]

Marginal note:Time of calculation

4.3 The territorial formula financing payment payable to a territory for a fiscal year shall be calculated, at a time determined by the Minister, no later than three months before that fiscal year begins.

4.31 [Repealed, 2007, c. 29, s. 62]

Marginal note:Underpayment

4.4 If the Minister determines that the Minister has underpaid any amounts payable to a territory under this Part, the Minister may, within the prescribed time and in the prescribed manner, pay that territory an amount equal to the underpayment.

Marginal note:Overpayment

4.5 If the Minister determines that the Minister has overpaid any amounts paid to a territory under this Part, the Minister may recover the amount of that overpayment

• (a) within the prescribed time and in the prescribed manner, from any amount payable under this Act to that territory; or

• (b) from that territory as a debt due to Her Majesty in right of Canada.

Marginal note:Time and manner of payments

4.6 There may be paid out of the Consolidated Revenue Fund, on the requisition of the Minister, any amounts authorized to be paid by this Part at the times and in the manner that the Minister considers appropriate.

Marginal note:Recovery — Yukon

• 4.7 (1) The Minister may recover, from any amount payable under this Part to Yukon, the amount, as determined by the Minister, that is computed under sections 7.5 and 7.7 of the Canada-Yukon Oil and Gas Accord, signed on May 28, 1993, and under section 7.27 of the Yukon Northern Affairs Program Devolution Transfer Agreement, signed on October 29, 2001.

• Marginal note:Recovery — Northwest Territories

  (2) The Minister may recover, from any amount payable under this Part to the Northwest Territories, the amount, as determined by the Minister, that is computed under section 10.2 of the Northwest Territories Lands and Resources Devolution Agreement that was made on June 25, 2013, as amended from time to time.

4.8 [Repealed, 2007, c. 29, s. 62]

4.9 [Repealed, 2007, c. 29, s. 62]

4.91 [Repealed, 2007, c. 29, s. 62]

4.92 [Repealed, 2007, c. 29, s. 62]

4.93 [Repealed, 2007, c. 29, s. 62]

4.94 [Repealed, 2007, c. 29, s. 62]

PART IIFiscal Stabilization Payments to Provinces

Marginal note:Fiscal stabilization payment

5 Subject to this Act, the Minister may pay to a province, for each fiscal year that begins after March 31, 1987, a fiscal stabilization payment not exceeding the amount computed in accordance with section 6.

Marginal note:Computation of payments

• 6 (1) Subject to subsections (8) to (10), the fiscal stabilization payment that may be paid to a province for a fiscal year is the amount determined by the formula

  (0.95 × A) – B + (C × D) – (E × F)

  where

  A

  is the non-natural resource revenue of the province for the preceding fiscal year;

  B

  is the non-natural resource revenue of the province for the fiscal year;

  C

  is equal to

  • (a) 95%, if the natural resource revenue of the province for the fiscal year is greater than 95% of the natural resource revenue of the province for the preceding fiscal year,

  • (b) 50%, if the natural resource revenue of the province for the fiscal year is less than one half of the natural resource revenue of the province for the preceding fiscal year, or

  • (c) zero, in any other case;

  D

  is the natural resource revenue of the province for the preceding fiscal year;

  E

  is equal to

  • (a) one, if the natural resource revenue of the province for the fiscal year is either greater than 95% of the natural resource revenue of the province for the preceding fiscal year or less than one half of the natural resource revenue of the province for the preceding fiscal year, or

  • (b) zero, in any other case; and

  F

  is the natural resource revenue of the province for the fiscal year.

• (1.1) [Repealed, 2010, c. 25, s. 173]

• Marginal note:Adjustment

  (2) For the purposes of determining the amount under subsection (1), the Minister may adjust, in the prescribed manner, the natural resource revenue and the non-natural resource revenue of a province for the fiscal year

  • (a) to offset the amount, as determined by the Minister, of any change in either of those revenues for the fiscal year resulting from changes made by the province in the rates or structure of provincial taxes or of other means of raising the revenue of the province from the rates or structures in effect in the preceding fiscal year; and

  • (b) to account for the absence of indexation in a provincial personal income tax system.

• Marginal note:Interpretation

  (2.1) If a province has entered into a tax collection agreement respecting personal income tax or corporation income tax, a change to the Income Tax Act affecting the province’s Common Tax Base as defined in Chapter 2 or 3, as the case may be, of the tax collection agreement is deemed to be a change in the rates or in the structures of provincial taxes for the purposes of subsection (2).

• (2.2) [Repealed, 2010, c. 25, s. 173]

• Marginal note:Natural resource revenue

  (3) For the purposes of determining the amount under subsection (1), the natural resource revenue of a province for a fiscal year is the aggregate of the total revenue, as determined by the Minister, derived by the province for the fiscal year from the revenue sources described in paragraphs (l) to (w) of the definition revenue source in subsection 3.9(1) and from the revenue sources described in paragraph (z.5) of that definition that relate to natural resources.

• Marginal note:Non-natural resource revenue

  (4) For the purposes of determining the amount under subsection (1), the non-natural resource revenue of a province for a fiscal year is equal to

  • (a) the aggregate of

    • (i) the total revenue, as determined by the Minister, derived by the province for the fiscal year from the revenue sources described in paragraphs (a) to (k), (x), (y) and (z.1) to (z.3) of the definition revenue source in subsection 3.9(1),

    • (ii) the total revenue, as determined by the Minister, derived by the province for the fiscal year from the revenue sources described in paragraph (z.5) of that definition that do not relate to natural resources,

    • (iii) the fiscal equalization payment made to the province for the fiscal year under Part I, and

    • (iv) the additional cash payment made to the province for the fiscal year under section 24.703,

  minus

  • (b) despite subsection (5), the value of the additional tax abatement units as determined in accordance with subsection 27(2).

• Marginal note:Non-natural resource revenue

  (5) For the purposes of determining the non-natural resource revenue of a province for a fiscal year,

  • (a) subsection 3.9(2) applies, with any modifications that the circumstances require, in determining the revenue derived by the province for the fiscal year from personal income taxes, described in paragraph (a) of the definition revenue source in subsection 3.9(1), except that no deduction may be made in respect of the tax abatement units referred to in subsection 27(2);

  • (b) the province’s revenue for the fiscal year derived from personal income taxes, described in paragraph (a) of the definition revenue source in subsection 3.9(1), is deemed to be the total amount, determined in accordance with the regulations, of the provincial personal income taxes that are payable as the result of assessments or reassessments made in the calendar year that begins in the fiscal year; and

  • (c) the province’s revenue for the fiscal year derived from that part of the revenue source described in paragraph (b) of the definition revenue source in subsection 3.9(1) that consists of corporation income taxes is deemed to be the amount, determined in accordance with the regulations, of the provincial corporation income taxes that are payable as the result of assessments or reassessments made in the calendar year that begins in the fiscal year.

• Marginal note:Exception

  (6) Despite subsection (4), for the purposes of determining the amount under subsection (1) for a fiscal year, the payment under section 3.12 and the additional cash payment under section 24.703 are not included in the province’s non-natural resource revenue for the preceding fiscal year.

• Marginal note:Application by province for payment

  (7) A fiscal stabilization payment may be paid to a province for a fiscal year only on receipt by the Minister, not later than the end of the next fiscal year, of an application by the province containing any information that may be prescribed.

• Marginal note:Limit

  (8) Subject to subsection (9), for each fiscal year that begins after March 31, 2019, the maximum amount of the fiscal stabilization payment that may be paid to a province is the amount obtained by multiplying the population of the province for the fiscal year by the amount determined by the formula

  A × B ÷ C

  where

  A

  is $166;

  B

  is the highest per capita nominal gross domestic product of Canada of any calendar year from 2018 to the calendar year that ends during the fiscal year, inclusive; and

  C

  is the per capita nominal gross domestic product of Canada for the calendar year 2018.

• Marginal note:Population

  (8.1) For the purposes of subsection (8),

  • (a) the population of a province for a fiscal year is its population as of July 1 of that year, based on the most recent information that has been prepared by Statistics Canada in accordance with the regulations; and

  • (b) the per capita nominal gross domestic product of Canada for a calendar year is to be determined by the Minister using the population of Canada as of July 1 of that year, based on the most recent information for the population that has been prepared by Statistics Canada in accordance with the regulations.

• Marginal note:Loan

  (9) If the amount of the fiscal stabilization payment of a province calculated pursuant to subsections (1) to (7) exceeds the amount calculated in respect of the province pursuant to subsection (8) any amount of the difference between those amounts may, at the discretion of the Minister, be lent to the province on the prescribed terms and conditions and in prescribed manner.

• Marginal note:Repayment

  (10) Any amount lent pursuant to subsection (9) does not bear interest and shall be repaid, in prescribed manner, by the province before the expiration of the period of five years following the date the amount is lent or shall be recovered, in prescribed manner, from any amount that may become payable to the province pursuant to this Act within that period.

• (11) [Repealed, 2010, c. 25, s. 173]