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

Revenue Source

• 4 (1) The provincial revenues that are derived from, or that are deemed to be derived from, the revenue sources referred to in paragraphs (a) to (e) of the definition revenue source in subsection 3.5(1) of the Act are

  • (a) in the case of revenues relating to personal income referred to in paragraph (a) of that definition,

    • (i) taxes imposed by a province on the income of individuals or unincorporated businesses, including a levy other than a universal pension plan levy,

    • (ii) taxes imposed by a province on the payroll of employers, and

    • (iii) revenues derived from levies or premiums imposed by a province specifically for the purpose of financing hospitalization insurance, medical care insurance or drug insurance, other than contributions to the Nova Scotia Seniors’ Pharmacare Program or the Alberta supplementary health benefits plans;

    • (iv) [Repealed, SOR/2013-225, s. 5]

  • (b) in the case of revenues relating to business income referred to in paragraph (b) of that definition,

    • (i) taxes, other than those referred to in paragraph (e), that are imposed by a province on the income of corporations,

    • (ii) remittances to a provincial government of profits of business enterprises of the province, other than remittances by

      • (A) a liquor board, commission or authority of the province,

      • (A.1) a cannabis board, commission or authority of the province,

      • (B) an enterprise that is engaged entirely or primarily in the marketing of oil or natural gas,

      • (C) an enterprise, board, commission or authority that is engaged in the administration of a provincial lottery, and

      • (D) an electricity enterprise,

    • (iii) revenues derived by a province from taxes imposed by the province on the paid-up capital of corporations, and

    • (iv) fines and penalties imposed on businesses by a province or local government;

  • (c) in the case of revenues relating to consumption referred to in paragraph (c) of that definition,

    • (i) sales taxes – including those on meals, hotel services, telecommunications and cable television, and amusement taxes – that are not described elsewhere in this subsection and that are imposed by a province or local government on final purchasers or on users of goods and services,

    • (ii) amounts paid to a province in accordance with a sales tax harmonization agreement,

    • (iii) a specific tax imposed by a province on final purchasers of tobacco and tobacco products,

    • (iv) taxes, other than those referred to in subparagraph (xv), that are imposed by a province on final purchasers of gasoline and diesel fuel used in an internal combustion engine, including aviation fuel and railway fuel, and on purchasers of liquefied petroleum gas,

    • (v) revenues derived by a province from fees for

      • (A) driver’s and chauffeur’s licences, and

      • (B) licences for, and registrations of, personal motor vehicles,

    • (vi) revenues derived by a province from fees for licences and registrations of commercial motor vehicles, including

      • (A) fees for licences for, and registrations of, trucks, buses, trailers, tractors and passenger vehicles used for commercial purposes,

      • (B) public service and common carrier fees, and

      • (C) revenues derived under reciprocity agreements with other provinces in respect of the licensing of commercial vehicles,

    • (vii) revenues derived by a province from

      • (A) remittances, to the provincial government by a liquor board, commission or authority of the province, of profits arising from sales of alcoholic beverages,

      • (B) a specific sales tax imposed by the province on the sale of alcoholic beverages by a liquor board, commission or authority of the province, and

      • (C) fees for licences and permits for the privilege of distilling, brewing, making, purchasing or dispensing alcoholic beverages,

    • (viii) [Repealed, SOR/2013-225, s. 5]

    • (ix) taxes imposed by a province on insurance premiums,

    • (x) taxes imposed by a province on amounts wagered in the province on harness and running horse races,

    • (xi) profits derived from the operation of games of chance that are remitted to a provincial government by

      • (A) a business enterprise, commission, authority or board of the province that conducts and manages games of chance in the province,

      • (B) a business enterprise, commission, authority or board that is jointly owned by the province and one or more other provinces and that conducts and manages games of chance in the province, or

      • (C) a business enterprise, commission, authority or board of another province that conducts and manages games of chance in the province,

    • (xii) revenues derived by a province from a tax imposed on casino winnings or from any other similar direct or indirect tax that is imposed in relation to the operation or sale of games of chance,

    • (xiii) profits, other than those referred to in subparagraph (xi), that are derived from the sale of goods or services – including the sale of food, drink, lodging and parking space – that are remitted to a provincial government by a casino that is owned or controlled by a business enterprise, commission, authority or board of the province or another province,

    • (xiv) the province’s share of revenue from any revenue that is shared by Canada and the province, other than the revenues referred to in subparagraphs (xvi) and (e)(vii) and (viii),

    • (xv) a carbon levy or tax imposed by a province, including a tax on fuel that is proportional to the greenhouse gas emissions that are generated by the burning of fuel, and revenues raised from auctioning carbon allowances, credits or permits under an emissions trading system, and

    • (xvi) revenues derived by a province from

      • (A) remittances, to the provincial government by a cannabis board, commission or authority of the province, of profits arising from sales of cannabis products,

      • (B) a specific sales tax imposed by the province on cannabis products by a cannabis board, commission or authority of the province,

      • (C) a specific sales tax imposed by the federal government on cannabis products that is shared with the province, and

      • (D) fees for licences and permits for the privilege of making, purchasing, distributing or selling cannabis products;

  • (d) in the case of revenues derived from property taxes referred to in paragraph (d) of that definition,

    • (i) taxes imposed by a province or local government on

      • (A) the owner of real or immovable property,

      • (B) the occupant of real or immovable property, if the owner is exempt from property taxes on that property, and

      • (C) a person occupying or using real or immovable property for the purpose of carrying on a business, if the taxes are computed in relation to that occupation or use by the person,

    • (ii) grants in lieu of taxes described in subparagraph (i) received by a province or local government in relation to real or immovable property that is exempt from taxation, other than that owned by Her Majesty in right of the province and occupied by a provincial government department or owned by the local government, and

    • (iii) taxes imposed by a province or local government on the sale price or value of real or immovable property when it is transferred; and

    • (iv) [Repealed, SOR/2023-230, s. 5]

    • (v) [Repealed, SOR/2023-230, s. 5]

  • (e) in the case of revenues derived from natural resources referred to in paragraph (e) of that definition,

    • (i) revenues attributable to oil from hydrocarbon deposits in a province, including revenues derived by the province from

      • (A) a levy imposed by the province for the privilege of producing oil from hydrocarbon deposits,

      • (B) a tax imposed by the province that is based on the assessed or estimated value of oil reserves, and

      • (C) a tax imposed by the province that is based on the price of oil produced from hydrocarbon deposits,

    • (ii) revenues derived by a province from a levy imposed by the province for the privilege of

      • (A) mining and carrying out the in-situ production of bitumen that may be used to produce synthetic petroleum, and

      • (B) producing oil from the experimental oil sands project that is subject to approval number 2943 of the Alberta Energy and Utilities Board,

    • (iii) revenues derived by a province, from domestically sold natural gas and exported natural gas, attributable to gas produced from hydrocarbon deposits in the province, including revenues derived from

      • (A) a levy imposed by the province for the privilege of producing gas or gas by-products from hydrocarbon deposits,

      • (B) a tax imposed by the province that is based on the assessed or estimated value of gas reserves, and

      • (C) remittances to the provincial government of the profits of the business enterprises of the province that are engaged, entirely or primarily, in the marketing of gas or gas by-products produced from hydrocarbon deposits,

    • (iv) revenues derived by a province from the granting of leases, reservations or other rights in relation to Crown land in the province for the purpose of exploration or exploitation of that land for the production of crude oil or the production of gas or gas by-products from hydrocarbon deposits,

    • (v) revenues, other than those from a revenue source referred to in any of subparagraphs (i) to (iv), derived by a province from the exploration for and the development and production of oil, natural gas, gas by-products and helium or other gaseous products from hydrocarbon deposits in the province,

    • (vi) revenues, derived by a province from the exploration for and the development and production of oil, natural gas and gas by-products from hydrocarbon deposits in the province, of a kind that falls within a revenue source set out in any of subparagraphs (i) to (iii) but that cannot be attributed only to that revenue source,

    • (vii) revenues received by Newfoundland and Labrador from the Government of Canada under the Canada–Newfoundland and Labrador Atlantic Accord Implementation Act,

    • (viii) revenues received by Nova Scotia from the Government of Canada under the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act,

    • (ix) revenues attributable to mining in a province and derived by the province from

      • (A) a tax imposed by the province specifically on income from the mining of minerals, and

      • (B) royalties, licences, rentals and fees that are related to the exploration, development or production of minerals,

    • (x) revenues, other than payments to a province by the Government of Canada pursuant to section 99 of the Softwood Lumber Products Export Charge Act, 2006, attributable to forestry on Crown land and private land in the province and that are derived by the province from

      • (A) a tax imposed by the province specifically on income from logging on the land, and

      • (B) royalties, stumpage fees, licences, rentals and fees that are related to the exploitation of forestry resources on the land,

    • (xi) revenues derived by a province that are attributable to the right to use, or the use of, water resources, and

    • (xii) remittances to a provincial government of the profits of an electricity enterprise.

• (1.1) [Repealed, SOR/2023-230, s. 5]

• (2) For the purpose of paragraph (1)(e), if a province has changed its method of accounting for a fiscal year so that the revenue referred to in that paragraph is derived during a period that is other than 12 months, the Minister may adjust the amount of that revenue for that fiscal year to offset any effect of that change.

Revenue Base

5 In respect of a revenue source for a province for a fiscal year, the definition revenue base in subsection 3.5(1) of the Act is more particularly defined to mean

• (a) in the case of revenues relating to personal income, described in paragraph 4(1)(a), the aggregate of

  • (i) a fraction, expressed as a percentage for the province,

    • (A) whose numerator is the simulated average revenue yield relating to personal income for the province for the taxation year that ends in the fiscal year, as determined in accordance with subsection 10(2), and

    • (B) whose denominator is the aggregate, over the 10 provinces, of the amount referred to in clause (A), and

  • (ii) the difference obtained by subtracting

    • (A) a fraction, expressed as a percentage for the province,

      • (I) whose numerator is the aggregate, over all individuals — not including trusts — in the province, of the federal income tax as determined by the micro-simulation model for the taxation year that ends in the fiscal year, and

      • (II) whose denominator is the aggregate, over the 10 provinces, of the amount referred to in subclause (I),

    from

    • (B) a fraction, expressed as a percentage for the province,

      • (I) whose numerator is the aggregate, over all individuals in the province – including trusts – of the federal income tax payable for the taxation year that ends in the fiscal year as determined for each individual, and

      • (II) whose denominator is the aggregate, over the 10 provinces, of the amount referred to in subclause (I);

• (b) in the case of the revenues relating to business income, described in paragraph 4(1)(b), the aggregate of

  • (i) the product of the portion of the aggregate of corporate profits in Canada, before the payment of income taxes and without any deduction of the aggregate of corporate losses in Canada, that is attributable to any of the 10 provinces for the calendar year that ends in the fiscal year, as determined by Statistics Canada for the purpose of its System of Macroeconomic Accounts and a fraction

    • (A) whose numerator is the allocated corporation taxable income attributable to the province for the fiscal year, and

    • (B) whose denominator is the aggregate, over the 10 provinces, of the amount referred to in clause (A),

  • (ii) the product, as determined on the basis of data prepared by Statistics Canada for the purpose of the Government Finance Statistics, of

    • (A) the aggregate, over all provinces, of the total profits, before the distribution of dividends, that are attributable to the province for the calendar year that ends in the fiscal year from business enterprises that have a profit in that calendar year and are owned 90% or more by that province, or by that province and one or more other provinces, excluding the profits for that calendar year

      • (I) of a liquor board, commission or authority,

      • (I.1) of a cannabis board, commission or authority,

      • (II) of an enterprise engaged, entirely or primarily, in the marketing of oil or natural gas,

      • (III) of an enterprise carrying on a provincial lottery,

      • (IV) of an electricity enterprise, and

      • (V) of the Ontario Electricity Financial Corporation and the Nova Scotia Power Finance Corporation, and

    • (B) a fraction whose numerator is the amount of the total profits referred to in clause (A) that are attributable to the province less the amount by which any losses that were accumulated in the seven calendar years before that calendar year by a business enterprise referred to in that clause exceed the portion of those losses subtracted under this clause for that business enterprise in relation to that period, but only to the extent that the amount is not more than the total profits for that calendar year of that business enterprise, and whose denominator is the aggregate, over all the provinces, of those numerators; and

  • (iii) the difference, as determined on the basis of data prepared by Statistics Canada for the purpose of the Government Finance Statistics, that is obtained by subtracting all remittances to the provincial government of the profits of an electricity enterprise for the fiscal year from the product of

    • (A) the aggregate, over all provinces, of the total profits, before the distribution of dividends, that are attributable to the province for the calendar year that ends in the fiscal year from electricity enterprises that have a profit in that calendar year and are owned 90% or more by that province, or by that province and one or more other provinces, and

    • (B) a fraction whose numerator is the amount of the total profits referred to in clause (A) that are attributable to the province less the amount by which any losses that were accumulated in the seven calendar years before that calendar year by an electricity enterprise referred to in that clause exceed the portion of those losses subtracted under this clause for that electricity enterprise in relation to that period, but only to the extent that the amount is not more than the total profits for that calendar year of that electricity enterprise, and whose denominator is the aggregate, over all the provinces, of those numerators;

• (c) in the case of revenues relating to consumption, as described in paragraph 4(1)(c), the amount determined on the basis of data provided by Statistics Canada for the calendar year that ends in the fiscal year by the formula

  A + B + C + D + E + F + G + H + I + J

  where

  A

  is the aggregate, over all household final consumption expenditure categories, of the household final consumption expenditures in the province for each category multiplied by a fraction whose numerator is the total of the net provincial sales tax revenues derived from those expenditures for that category in all provinces that levy a general sales tax and whose denominator is the total of those expenditures for that category in all of those provinces,

  B

  is the aggregate, over all housing expenditure categories, of the housing expenditures in the province for each category multiplied by a fraction whose numerator is the total of the net provincial sales tax revenues derived from those expenditures for that category in all provinces that levy a general sales tax and whose denominator is the total of those expenditures for that category in all of those provinces,

  C

  is the aggregate, over all business sector industries and all commodities, of the capital expenditures for machinery and equipment in the province, by each industry for each commodity, multiplied by a fraction whose numerator is the total of the net provincial sales tax revenues derived from those expenditures by that industry for that commodity in all provinces that levy a general sales tax and whose denominator is the total of those expenditures by that industry for that commodity in all of those provinces,

  D

  is the aggregate, over all business sector industries and all commodities, of the capital expenditures for non-residential structures in the province, by each industry for each commodity, multiplied by a fraction whose numerator is the total of the net provincial sales tax revenues derived from those expenditures, by that industry for that commodity, in all provinces that levy a general sales tax and whose denominator is the total of those expenditures, by that industry for that commodity, in all of those provinces,

  E

  is the aggregate, over all public education or non-profit entity categories, of the capital expenditures for machinery and equipment in the province by each category multiplied by

  • (a) in the case of the public education services category, a fraction, whose numerator is the total of the net provincial sales tax revenues derived from those expenditures by that category in all provinces that levy a general sales tax and whose denominator is the total of those expenditures by that category in all of those provinces, multiplied by 25 per cent, and

  • (b) in the case of the non-profit entity category, a fraction whose numerator is the total of the net provincial sales tax revenues derived from those expenditures by that category in all provinces that levy a general sales tax and whose denominator is the total of those expenditures by that category in all of those provinces,

  F

  is the aggregate, over all public education or non-profit entity categories, of the capital expenditures for non-residential structures in the province by each category multiplied by

  • (a) in the case of the public education services category, a fraction, whose numerator is the total of the net provincial sales tax revenues derived from those expenditures by that category in all provinces that levy a general sales tax and whose denominator is the total of those expenditures by that category in all of those provinces, multiplied by 25 per cent, and

  • (b) in the case of the non-profit entity category, a fraction whose numerator is the total of the net provincial sales tax revenues derived from those expenditures by that category in all provinces that levy a general sales tax and whose denominator is the total of those expenditures by that category in all of those provinces,

  G

  is the aggregate, over all post-secondary education or non-profit industries and all intermediate inputs, of the intermediate input expenditures in the province by each industry for each intermediate input multiplied by

  • (a) in the case of the post-secondary educational services industry, a fraction, whose numerator is the total of the net provincial sales tax revenues derived from those expenditures by that industry for that intermediate input in all provinces that levy a general sales tax and whose denominator is the total of those expenditures by that industry for that intermediate input in all of those provinces, multiplied by 50 per cent, and

  • (b) in the case of the non-profit institutions serving households industry, a fraction whose numerator is the total of the net provincial sales tax revenues derived from those expenditures by that industry for that intermediate input in all provinces that levy a general sales tax and whose denominator is the total of those expenditures by that industry for that intermediate input in all of those provinces,

  H

  is the aggregate, over all business sector industries and all intermediate inputs, of the intermediate input expenditures in the province by each industry for each intermediate input, multiplied by a fraction whose numerator is the total of the net provincial sales tax revenues derived from those expenditures by that industry for that intermediate input in all provinces that levy a general sales tax and whose denominator is the total of those expenditures by that industry for that intermediate input in all of those provinces,

  I

  is the aggregate, over all business sector industries and all commodities, of capital expenditures for intellectual property products in the province by each industry for each commodity multiplied by a fraction, whose numerator is the total of the net provincial sales tax revenues derived from those expenditures by that industry for that commodity in all provinces that levy a general sales tax and whose denominator is the total of those expenditures by that industry for that commodity in all of those provinces, and

  J

  is the aggregate, over all public education or non-profit entity categories, of the capital expenditures for intellectual property products in the province by each category multiplied by

  • (a) in the case of the public education services category, a fraction, whose numerator is the total of the net provincial sales tax revenues derived from those expenditures by that category in all provinces that levy a general sales tax and whose denominator is the total of those expenditures by that category in all of those provinces, multiplied by 25 per cent, and

  • (b) in the case of the non-profit entity category, a fraction whose numerator is the total of the net provincial sales tax revenue derived from those expenditures by that category in all provinces that levy a general sales tax and whose denominator is the total of those expenditures by that category in all of those provinces; and

• (d) in the case of revenues derived from property taxes, described in paragraph 4(1)(d), the weighted sum of three sub-bases, determined by the formula

  (B1 × 0.611) + (B2 × 0.378) + (B3 × 0.011)

  where

  B1

  is the market value residential sub-base as determined by the formula

  [(V × 1/V1) × 0.7] + [(P × 1/P1) × 0.3]

  where

  V

  is the assessed market value of residential property in the province for the calendar year that ends in the fiscal year,

  V1

  is the aggregate, over all provinces, of the amounts determined for V,

  P

  is the population of the province for the fiscal year, as determined in accordance with section 11, and

  P1

  is the aggregate, over all provinces, of the amounts determined for P,

  B2

  is the market value commercial-industrial sub-base as determined by the formula

  (VC ÷ VC1 × 0.7) + (P ÷ P1 × 0.3)

  where

  VC

  is the assessed market value of commercial-industrial property in the province for the calendar year that ends in the fiscal year,

  VC1

  is the aggregate, over all provinces, of the amounts determined for VC,

  P

  is the population of the province for the fiscal year, as determined in accordance with section 11, and

  P1

  is the aggregate, over all provinces, of the amounts determined for P, and

  B3

  is the market value farm sub-base as determined by the formula

  (VF ÷ VF1 × 0.7) + (P ÷ P1 × 0.3)

  where

  VF

  is the market value of the land and service buildings components of farm real estate in the province for the calendar year that ends in the fiscal year, as determined by Statistics Canada for the purpose of table 32-10-0056-01, Balance sheet of the agricultural sector as at December 31st,

  VF1

  is the aggregate, over all provinces, of the amounts determined for VF,

  P

  is the population of the province for the fiscal year, as determined in accordance with section 11, and

  P1

  is the aggregate, over all provinces, of the amounts determined for P.