Ship Construction Subsidy Regulations (C.R.C., c. 347)

Short Title

1 These Regulations may be cited as the Ship Construction Subsidy Regulations.

Interpretation

2 In these Regulations,

approved cost

approved cost of an eligible ship means the cost of the eligible ship determined by the Minister pursuant to subsection 6(7); (frais approuvés)

completed

completed, in relation to an eligible ship, means that

• (a) a certificate of registry has been issued for the ship pursuant to the Canada Shipping Act,

• (b) where required by the Canada Shipping Act, a steamship inspection certificate has been issued for the ship pursuant to that Act, and

• (c) where the eligible ship is a fishing vessel, any fishing trials of the ship deemed necessary by the Minister of Fisheries and Oceans have been carried out to the satisfaction of that Minister; (terminé)

eligible ship

eligible ship means a vessel that is declared by the Minister, pursuant to subsection 4(3), to be an eligible ship for the purposes of these Regulations; (navire admissible)

fishing vessel

fishing vessel means a ship equipped for and to be used in the catching or trapping of fish for sale; (bateau de pêche)

Minister

Minister means the Minister of Industry, Trade and Commerce; (ministre)

proceeds of disposition

proceeds of disposition has the meaning assigned to that phrase in paragraph 13(21)(d) of the Income Tax Act; (produit d'une disposition)

shipbuilder

shipbuilder means a citizen of Canada or a company incorporated in Canada that is engaged in Canada in the business of building ships in Canada; (constructeur de navires)

shipowner

shipowner means a citizen of Canada, a company incorporated in Canada, a Canadian municipal corporation or Her Majesty in right of any province of Canada; (propriétaire de navire)

subsidy

subsidy means the amount of capital subsidy payable in respect of an eligible ship pursuant to these Regulations; (subvention)

vessel

vessel means

• (a) a vessel that is

  • (i) customarily engaged in the transportation of goods or passengers,

  • (ii) used in the construction, servicing or maintenance of other vessels or marine works, or

  • (iii) used in the exploration or exploitation of offshore mineral resources,

  and that is at least of

  • (iv) 100 tons gross tonnage if self-propelled,

  • (v) 200 tons gross tonnage if not self-propelled,

  • (vi) 50 tons gross tonnage if a tug, or

  • (vii) two tons gross tonnage if a submersible capable of operating at depths of at least 1,000 feet, or

• (b) a fishing vessel over 75 feet in overall length in respect of which a certificate of preliminary eligibility has been obtained from the Minister of Fisheries and Oceans. (navire)

Payment of Subsidy

• 3 (1) Where money is voted by Parliament for the purpose of capital subsidies for the construction of commercial and fishing vessels, a subsidy may be paid for an eligible ship the construction of which did not commence before January 1, 1966 and was not the subject of a shipbuilding contract entered into before January 1, 1966.

• (2) The amount of a subsidy shall be determined in accordance with section 6 and may, subject to these Regulations, be paid in accordance with an agreement entered into pursuant to section 4.

• 4 (1) Where an application for a subsidy is made in respect of a vessel, the Minister may, subject to any terms or conditions established by the Treasury Board and subject to subsection (2), enter into an agreement with the shipowner and the shipbuilder thereof or, where the vessel is built by the owner for his own use, with the shipowner thereof, providing for the payment of a subsidy.

• (2) No agreement shall be entered into pursuant to subsection (1), until the Minister has

  • (a) declared the vessel referred to in the application for a subsidy to be an eligible ship pursuant to subsection (3); and

  • (b) determined the maximum amount of the approved cost of the eligible ship.

• (3) Where the Minister is satisfied that the vessel referred to in the application for a subsidy is intended for use in a commercial enterprise and is to be constructed in Canada by

  • (a) a shipbuilder for a shipowner, or

  • (b) a shipowner for his own use,

  the Minister may declare the vessel to be an eligible ship.

• 5 (1) Subject to subsection (2), an application for a subsidy shall be in the prescribed form and shall be made within 60 days after the day on which

  • (a) the contract for the construction of the eligible ship is entered into, or

  • (b) the construction of the hull of the eligible ship is commenced,

  whichever is the earlier.

• (2) The Minister may extend the time for making an application for a subsidy where, in his opinion, the circumstances of the case require an extension.

Amount of Subsidy

• 6 (1) The subsidy for an eligible ship that is not a fishing vessel shall be an amount not exceeding

  • (a) 25 per cent of the approved cost where the eligible ship is completed during the period commencing January 1, 1966 and ending May 31, 1969;

  • (b) 24½ per cent of the approved cost where the eligible ship is completed during the period commencing June 1, 1969 and ending August 31, 1969;

  • (c) 24 per cent of the approved cost where the eligible ship is completed during the period commencing September 1, 1969 and ending November 30, 1969;

  • (d) 23½ per cent of the approved cost where the eligible ship is completed during the period commencing December 1, 1969 and ending February 28, 1970;

  • (e) 23 per cent of the approved cost where the eligible ship is completed during the period commencing March 1, 1970 and ending May 31, 1970;

  • (f) 22½ per cent of the approved cost where the eligible ship is completed during the period commencing June 1, 1970 and ending August 31, 1970;

  • (g) 22 per cent of the approved cost where the eligible ship is completed during the period commencing September 1, 1970 and ending November 30, 1970;

  • (h) 21½ per cent of the approved cost where the eligible ship is completed during the period commencing December 1, 1970 and ending February 28, 1971;

  • (i) 21 per cent of the approved cost where the eligible ship is completed during the period commencing March 1, 1971 and ending May 31, 1971;

  • (j) 20½ per cent of the approved cost where the eligible ship is completed during the period commencing June 1, 1971 and ending August 31, 1971;

  • (k) 20 per cent of the approved cost where the eligible ship is completed during the period commencing September 1, 1971 and ending November 30, 1971;

  • (l) 19½ per cent of the approved cost where the eligible ship is completed during the period commencing December 1, 1971 and ending February 29, 1972;

  • (m) 19 per cent of the approved cost where the eligible ship is completed during the period commencing March 1, 1972 and ending May 31, 1972;

  • (n) 18½ per cent of the approved cost where the eligible ship is completed during the period commencing June 1, 1972 and ending August 31, 1972;

  • (o) 18 per cent of the approved cost where the eligible ship is completed during the period commencing September 1, 1972 and ending November 30, 1972;

  • (p) 17½ per cent of the approved cost where the eligible ship is completed during the period commencing December 1, 1972 and ending February 28, 1973; and

  • (q) 17 per cent of the approved cost where the eligible ship is completed after February 28, 1973.

• (2) The subsidy for an eligible ship that is a fishing vessel shall be an amount not exceeding 35 per cent of the approved cost.

• (3) Where, owing to causes beyond the control of the shipowner and shipbuilder, an eligible ship is completed later than the date on which it might reasonably be expected to have been completed, the Minister may, in his discretion, declare the ship to have been completed on a day earlier than the day on which it was completed and the amount of the subsidy therefor shall be determined in accordance with that declaration.

• (4) Subject to subsections (5) and (6), where

  • (a) an amount equal to the whole or any part of the proceeds of disposition of any vessel described in subsection 13(15) of the Income Tax Act is used by a person for replacement in accordance with subparagraph (a)(i) of that subsection, the approved cost of the replacement shall, if the replacement is an eligible ship in respect of which a subsidy is to be paid under these Regulations, be reduced by an amount equal to the amount used for replacement; or

  • (b) a vessel is acquired as a replacement under such circumstances that the Minister may pay out all or any part of a deposit under subsection 13(19) of the Income Tax Act, the approved cost of such replacement shall, if the replacement is an eligible ship in respect of which a subsidy is to be paid under these Regulations, be reduced by the amount that bears the same relationship to the proceeds of disposition of the vessel disposed of as the amount that may be paid out by the Minister under subsection 13(19) of the Income Tax Act bears to the amount of the deposit described in that subsection.

• (5) Subsection (4) does not apply where a disposition referred to therein

  • (a) was by way of a hire purchase agreement entered into prior to May 12, 1961; or

  • (b) was of a vessel that was an eligible ship in respect of which a subsidy under the Ship Construction Assistance Regulations has not been paid, and was made by way of a hire purchase agreement entered into between May 12, 1961 and August 8, 1962, both dates inclusive.

• (6) Subsection (4) does not apply where the disposition referred to therein was of a vessel that was an eligible ship in respect of which a subsidy was not claimed, was not paid by reason of the use of the proceeds of a disposition described in paragraph (5)(b), or was reduced to that proportion of the proceeds of disposition of the eligible vessel that the proceeds of disposition described in paragraph 5(b) that were used in the eligible vessel in a manner satisfactory to the Canadian Transport Commission under paragraph (1)(a) or paragraph 4(1)(c) of the Canadian Vessel Construction Assistance Act chapter 43 of the Revised Statutes of Canada, 1952, are of the cost of the eligible vessel.

• (7) Subject to subsection (8), the Minister shall before paying

  • (a) a subsidy, where the subsidy is payable in a lump sum, or

  • (b) the balance of a subsidy, where the subsidy is payable by progress payments,

  determine the cost of the eligible ship in respect of which the payment is to be made for the purpose of calculating the subsidy or balance of subsidy, as the case may be.

• (8) The cost of an eligible ship determined pursuant to subsection (7) shall not exceed the maximum amount of the approved cost determined by the Minister pursuant to paragraph 4(2)(b).

Agreements

7 Every agreement entered into pursuant to these Regulations shall provide for

• (a) payment of the subsidy by a lump sum or by progress payments not exceeding in the aggregate 80 per cent of the subsidy before the eligible ship is completed and the balance thereafter;

• (b) the keeping of accurate and complete accounts of expenditures and records of related matters by the shipowner and the shipbuilder and the audit of the accounts and the inspection of the records by persons authorized by the Minister for that purpose at any time before the second anniversary of the final payment of the subsidy;

• (c) an undertaking by the shipowner

  • (i) that for at least the five-year period immediately following the day the eligible ship is completed

    • (A) the eligible ship will be owned by a shipowner and kept in Canadian registry, and

    • (B) where the eligible ship is a fishing vessel, the eligible ship

      • (I) will be kept actively engaged in fishing operations to the satisfaction of the Minister of Fisheries for Canada, and

      • (II) will not be sold or chartered without the prior consent in writing of the Minister of Fisheries and Oceans,

  • (ii) in the event of a failure to carry out the undertaking contained in clause (i)(A), to pay to Her Majesty, on demand, an amount equal to that proportion of the subsidy paid that the period during which the undertaking is not carried out is of the five-year period, and

  • (iii) in the event of a failure to carry out either of the undertakings contained in subclauses (i)(B)(I) and (II), to pay to Her Majesty, on demand, an amount equal to

    • (A) that proportion of the subsidy paid, less the amount of subsidy that would have been payable under subsection 6(1) had the eligible ship not been a fishing vessel, that the period during which the undertaking is not carried out is of the five-year period, or

    • (B) such lesser amount as the Minister may fix; and

• (d) such other matters as the Minister considers necessary or appropriate to protect the interests of Her Majesty or to carry out the purposes and provisions of these Regulations.

Ship Construction Assistance Regulations

• 8 (1) No assistance may be paid under the Ship Construction Assistance Regulations in respect of the construction of an eligible ship for which a subsidy may be paid under these Regulations.

• (2) Except as otherwise provided in subsection (1), nothing in these Regulations affects the payment of assistance under the Ship Construction Assistance Regulations.

Powers of Minister

9 The Minister may, for the purposes of these Regulations,

• (a) authorize persons to sign agreements for him;

• (b) investigate the financial responsibility of a shipowner or shipbuilder and such other matters as he considers necessary to determine questions relating to eligibility or approved cost; and

• (c) prescribe forms and make rules relating to the application for and the payment of subsidies.