Federal-Provincial Fiscal Arrangements Regulations, 2007 (SOR/2007-303)

Adjustment

• 25 (1) If, following the conclusion of a personal income tax room sharing agreement between the Government of Yukon and a specified Yukon aboriginal government, the Minister determines, under subparagraph 4.2(a)(iii) of the Act, that the gross expenditure base of Yukon is to be adjusted by the amount determined by the following formula, the adjustment shall be applied on a non-cumulative basis for each of the second, third and fourth fiscal years following that in which the agreement was concluded:

  A - (70% × B)

  where

  A

  is equal to the amount of tax, determined in accordance with the agreement, that is foregone by the Government of Yukon for the taxation year that is two years prior to the fiscal year for which the territorial formula financing payment for Yukon is being calculated, and

  B

  is the average difference — for the taxation years that are two, three and four years prior to the fiscal year for which the territorial formula financing payment for Yukon is being calculated — between the yield for Yukon revenues derived from personal income, net of federal and Yukon territorial personal income tax assessed in respect of Yukon residents, when it is calculated

  • (a) without taking into account the specified Yukon aboriginal government’s federal tax abatement and territorial tax credit, and

  • (b) taking into account that abatement and that credit.

• (2) Only the adjustment made in the fourth fiscal year is subject to escalation under the population adjusted gross expenditure escalator.

Recalculation

26 For the purpose of recalculating the gross expenditure base under subsection 4(2) of the Act, the prescribed information is the population information set out in the certificate in accordance with paragraph 28(3)(b), but it does not include the information for a fiscal year prior to fiscal year 2003–2004.

Population

27 For the purposes of this Part, the manner in which the Chief Statistician of Canada shall determine the population of a province or territory for a fiscal year is by basing that determination on Statistics Canada’s official estimate of that population on

• (a) June 1 of that fiscal year, for any fiscal year ending before April 1, 2024; or

• (b) July 1 of that fiscal year, for any fiscal year beginning after March 31, 2024.

Certificate

• 28 (1) The Chief Statistician of Canada shall, in each fiscal year, prepare and submit a certificate to the Minister on or before December 1 of the fiscal year.

• (2) The information set out in the certificate shall

  • (a) be based on the most recent publication of Statistics Canada — or the most recent information of Statistics Canada if the publication is not available, its contents have been superseded by more recent information or these Regulations require information that is not published — that is available on or before November 22 of the fiscal year in which the certificate is submitted; and

  • (b) be provided

    • (i) if the information is required on a fiscal year basis, for the three fiscal years immediately preceding the fiscal year in which the certificate is submitted, or

    • (ii) if the information is required on a calendar year basis, for the calendar year that ends in the fiscal year immediately preceding the fiscal year in which the certificate is submitted and the two prior calendar years.

• (3) The certificate shall set out the following information:

  • (a) [Repealed, SOR/2023-230, s. 16]

  • (b) the population of all provinces and territories, including that for the seven prior fiscal years if the fiscal year is one in which Statistics Canada releases Census population results, as determined by the Chief Statistician of Canada in accordance with section 27;

  • (c) the information produced by Statistics Canada that is referred to in section 19 and used to calculate each revenue base described in that section, other than

    • (i) the individualized profits and losses of business enterprises referred to in clause 19(1)(b)(ii)(B),

    • (ii) the assessed market value of residential property referred to in the description of R in paragraph 19(1)(h), and

    • (iii) the assessed market value of commercial-industrial property referred to in the description of N in paragraph 19(1)(h);

  • (d) for each province and territory, information from the Government Finance Statistics regarding the revenues described in section 18 and subsections 20(3) and (4), other than those described in paragraph 20(3)(c); and

  • (e) the information respecting the provincial local government expenditures referred to in subsection 24(1).

• (4) The Chief Statistician of Canada shall, in the certificate,

  • (a) if an aggregate of two or more revenue sources is provided in the certificate, inform the Minister of that aggregate; and

  • (b) if any information required to be set out in the certificate is not available, inform the Minister that the information is missing.

Calculation

29 When calculating a territorial formula financing payment for a fiscal year under section 4.1 of the Act, the Minister shall use

• (a) the information set out in the certificate that is submitted in the fiscal year preceding that for which the calculation is performed; and

• (b) in the case of information that is not required to be set out in the certificate, the most recent data from the information source identified in these Regulations that is available as of December 1 of the fiscal year preceding that for which the calculation is performed.

• 30 (1) When determining the revenue to be equalized from a revenue source for a fiscal year for the purpose of making a calculation referred to in section 29, the Minister may, if information that is necessary for that determination is incorrect, missing from the certificate or, in the case of information that is not required to be set out in the certificate, unavailable from the information source identified in these Regulations, estimate the revenue to be equalized on the basis of any information that is available to the Minister at the time of the calculation.

• (2) When determining a revenue base for the purpose of making a calculation referred to in section 29, the Minister may, if information that is necessary for that determination is unavailable or incorrect, estimate the base using the following substitutions:

  • (a) if, when determining a revenue base referred to in paragraph 19(1)(a) for a fiscal year, information from T1 tax returns that are assessed or reassessed by the Canada Revenue Agency during the last three months of the calendar year that ends in the following fiscal year is not available for the purpose of calculating the simulated average revenue yield relating to personal income for the province or territory for the taxation year that ends in the fiscal year, the Minister may use in place of that yield the product of

    • (i) the simulated average revenue yield relating to personal income for the province or territory that is calculated in accordance with the method set out in subsection 21(2) on the basis of the T1 tax returns assessed or reassessed during the first nine months of the calendar year that ends in the following fiscal year, and

    • (ii) the average, over the taxation years that end in the three fiscal years immediately preceding the fiscal year, of a fraction

      • (A) whose numerator is the total federal income tax as determined by the micro-simulation model that is assessed or reassessed for the taxation year for individuals, not including trusts, in the province or territory during the calendar year following that taxation year, and

      • (B) whose denominator is the total federal income tax as determined by the micro-simulation model that is assessed or reassessed for the taxation year for individuals, not including trusts, in the province or territory during the first nine months of the calendar year following that taxation year;

  • (b) if, when determining a revenue base referred to in paragraph 19(1)(b) for a fiscal year, information from corporation tax returns that are assessed or reassessed by the Canada Revenue Agency during the last two or three months of the calendar year that ends in the following fiscal year is not available for the purpose of calculating the allocated corporation taxable income attributable to a province or territory for the fiscal year, the Minister may use in place of

    • (i) the corporations’ taxable income earned in the province or territory for their taxation years ending in the calendar year that ends in the fiscal year in respect of which they are eligible for a deduction under subsection 125(1) of the Income Tax Act, the income in respect of which they are eligible for a deduction as assessed or reassessed by the Canada Revenue Agency during the first nine months of the calendar year that ends in the following fiscal year,

    • (ii) the corporations’ taxable income earned in the province or territory for their taxation years ending in the calendar year that ends in the fiscal year, the income assessed or reassessed by the Canada Revenue Agency during the first 10 months of the calendar year that ends in the following fiscal year, and

    • (iii) the capital gains refunds payable to investment corporations and mutual fund corporations that constitute income earned in the province or territory for their taxation years ending in the calendar year that ends in the fiscal year, those refunds that are assessed or reassessed by the Canada Revenue Agency during the first 10 months of the calendar year that ends in the following fiscal year;

  • (c) if information that is necessary for determining a revenue base referred to in paragraph 19(1)(d) or (f) for a fiscal year is incorrect, missing from the certificate or, in the case of information that is not required to be set out in the certificate, unavailable from the information source identified in these Regulations, the Minister may replace the revenue base with the product of

    • (i) an estimate of the revenue base derived by substituting, in the calculation of the base, information for the most recent fiscal year or calendar year, as the case may be, for which the required information is set out in the certificate or is available from the identified information source, and

    • (ii) a fraction

      • (A) whose numerator is one plus a fraction whose numerator is the province or territory’s percentage of the population of all provinces and territories for the fiscal year for which the revenue base is being determined and whose denominator is that percentage for the fiscal year referred to in subparagraph (i) or, if that subparagraph refers to a calendar year, the fiscal year in which that calendar year ends, and

      • (B) whose denominator is two;

  • (d) if, when determining a revenue base referred to in paragraph 19(1)(g) for a fiscal year, information on the wages and salaries described in subparagraph (ii) of the description of F in that paragraph for the calendar year that ends in the fiscal year is missing from the certificate, the Minister may use in place of that information the product of the amount determined for that subparagraph for the most recent calendar year for which the information is provided in the certificate and a fraction

    • (i) whose numerator is the provincial or territorial government’s current expenditures, as determined by Statistics Canada for the purpose of its Provincial and Territorial Economic Accounts for the calendar year for which the wages and salaries information is missing from the certificate, and

    • (ii) whose denominator is the provincial or territorial government’s current expenditures, as determined by Statistics Canada for the purpose of its Provincial and Territorial Economic Accounts for the most recent calendar year for which the wages and salaries information is provided in the certificate;

  • (e) if, when determining a revenue base referred to in paragraph 19(1)(i) for a fiscal year, the expenditure and tax information required to calculate C, D and I for a province or territory for a calendar year is missing from the certificate, the Minister may use in place of C, D and I, respectively,

    • (i) the product of C as calculated for that province or territory for the most recent calendar year for which information is provided in the certificate and a fraction

      • (A) whose numerator is the C as calculated under these Regulations as they read on December 31, 2017 for the calendar year for which the information required to calculate C is missing from the certificate, and

      • (B) whose denominator is the C as calculated under these Regulations as they read on December 31, 2017 for the most recent calendar year for which the information required to calculate C is provided in the certificate;

    • (ii) the product of D as calculated for that province or territory for the most recent calendar year for which information is provided in the certificate and a fraction

      • (A) whose numerator is the D as calculated under these Regulations as they read on December 31, 2017, for the calendar year for which the information required to calculate D is missing from the certificate, and

      • (B) whose denominator is the D as calculated under these Regulations as they read on December 31, 2017, for the most recent calendar year for which the information required to calculate D is provided in the certificate,

    • (iii) the product of I as calculated for that province or territory for the most recent calendar year for which information is provided in the certificate and a fraction

      • (A) whose numerator is the I as calculated under these Regulations as they read on December 31, 2017 for the calendar year for which the information required to calculate I is missing from the certificate, and

      • (B) whose denominator is the I as calculated under these Regulations as they read on December 31, 2017 for the most recent calendar year for which the information required to calculate I is provided in the certificate, and;

  • (e.1) if, when determining a revenue base referred to in paragraph 19(1)(i) for a fiscal year, the expenditure and tax information required to calculate G for a province or territory for a calendar year is missing from the certificate, the Minister may use in place of G

    • (i) for the earliest of the calendar years for which the information necessary to calculate G is missing from the certificate, the product of G as calculated for that province or territory for the most recent calendar year for which information is provided in the certificate multiplied by one plus the average of the annual rates of growth of the provincial or territorial government’s current expenditures and non-profit institutions serving households’ final consumption expenditures, as determined by Statistics Canada for the purpose of its Provincial and Territorial Economic Accounts, for the calendar year for which the information required to calculate G is missing from the certificate, and

    • (ii) for any other calendar year for which the information required to calculate G is missing from the certificate, the result obtained under subparagraph (i) multiplied by one plus the sum of the annual averages of the annual rates of growth of the provincial or territorial government’s current expenditures and non-profit institutions serving households’ final consumption expenditures, as determined by Statistics Canada for the purpose of its Provincial and Territorial Economic Accounts, as determined for all calendar years for which the information required to calculate G is missing from the certificate;

  • (e.2) if, when determining a revenue base referred to in paragraph 19(1)(i) for a fiscal year, the expenditure and tax information required to calculate H for a province or territory for a calendar year is missing from the certificate, the Minister may use in place of H the product of H as calculated for that province or territory for the most recent calendar year for which information is provided in the certificate and a fraction

    • (i) whose numerator is the current dollar provincial or territorial gross domestic product at market prices for that province or territory, as determined by Statistics Canada for the purpose of its Provincial and Territorial Economic Accounts, for the calendar year for which the information required to calculate H is missing from the certificate, and

    • (ii) whose denominator is the current dollar provincial gross domestic product at market prices for that province or territory, as determined by Statistics Canada for the purpose of its Provincial and Territorial Economic Accounts, for the most recent calendar year for which the information required to calculate H is provided in the certificate;

  • (f) if, when determining a revenue base referred to in paragraph 19(1)(i) for a fiscal year, information on taxes on products, other than federal, provincial and territorial general sales taxes, is not available from Statistics Canada for the purpose of netting those taxes from household final consumption expenditures, capital expenditures for intellectual property products, capital expenditures for machinery and equipment or capital expenditures for non-residential structures in a province or territory, the Minister may use in place of that information

    • (i) in respect of household final consumption expenditures, the product, for each household final consumption expenditure category, of those expenditures in the province or territory for the fiscal year, net of federal, provincial and territorial general sales taxes, and a fraction

      • (A) whose numerator is the amount of taxes on products, other than federal, provincial and territorial general sales taxes, paid in relation to those expenditures for that category in the province or territory for the most recent fiscal year for which information on those taxes is available from Statistics Canada, and

      • (B) whose denominator is the expenditures for that category, net of federal, provincial and territorial general sales taxes, in the province or territory for that most recent fiscal year, and

    • (ii) in respect of each type of capital expenditure, the product, for each public education or non-profit entity category, of those expenditures in the province or territory for the fiscal year, net of federal, provincial and territorial general sales taxes, and a fraction

      • (A) whose numerator is the amount of taxes on products, other than federal, provincial and territorial general sales taxes, paid in relation to that type of capital expenditure by that category or sector in the province or territory for the most recent fiscal year for which information on those taxes is available from Statistics Canada, and

      • (B) whose denominator is the capital expenditures of that type by that category or sector, net of federal, provincial and territorial general sales taxes, in the province or territory for that most recent fiscal year; and

  • (g) if, in circumstances other than those described in paragraphs (a) to (f), information that is necessary for determining a revenue base for a fiscal year is incorrect, missing from the certificate or, in the case of information that is not required to be set out in the certificate, unavailable from the information source identified in these Regulations, the Minister may estimate the revenue base by substituting in the relevant calculations the information for the most recent fiscal, calendar, or taxation year, as the case may be, that is available in a certificate or from the identified source.

• (3) If a revenue base for a fiscal year is estimated in accordance with subsection (2), the Minister may further adjust that estimate to take into account factors or trends that could change the provincial or territorial share of that revenue base between the earlier fiscal year from which information was used to estimate the base for the fiscal year and the fiscal year for which the revenue base is estimated.

• (4) If the Minister is unable to estimate a revenue base in accordance with subsection (2), the Minister shall make an estimate on the basis of any information that is available to the Minister.

• (5) If an aggregate of the revenues of two or more revenue sources is provided on a certificate under paragraph 28(3)(d), the Minister shall determine the portion of the aggregate that is to apply to each of those revenue sources.