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

DIVISION 3General

Revenues to Be Equalized

• 9 (1) The definition revenue to be equalized in subsections 3.5(1) and 3.9(1) of the Act is, in respect of a revenue source for a province for a fiscal year, more particularly defined to

  • (a) include

    • (i) revenues of the provincial and territorial government sub-sector, the local government sub-sector and the school boards sub-sector, other than revenues of provincial or municipal housing authorities and revenues of local transit authorities and the Caisse de dépôt et placement du Québec, and

    • (ii) any grant in lieu of a tax, levy or fee referred to in subsection 4(1) or 7(1) that is paid to a province by the Government of Canada for that fiscal year; and

  • (b) exclude

    • (i) revenues of the universities and colleges sub-sector and the health and social service institutions sub-sector,

    • (ii) any revenue that the province or a local government paid to itself, and

    • (iii) any revenue that the province receives from a local government or that a local government receives from the province.

• (2) In respect of the revenues described in subparagraph 4(1)(a)(ii) and paragraph 7(1)(y), the sum of the amounts referred to in subparagraphs (1)(b)(ii) and (iii) shall be the amount by which the product described in paragraph (a) exceeds the amount described in paragraph (b):

  • (a) the product of the payroll tax rate imposed by the province in the fiscal year and the sum of the wages and salaries paid in the province in the calendar year that ends in the fiscal year by the provincial and territorial general government sector and by the local general government sector to their employees, as determined by Statistics Canada for the purpose of its System of Macroeconomic Accounts;

  • (b) the amount of any payroll tax paid by the province’s government departments that the Chief Statistician of Canada has excluded from the payroll tax revenue for the fiscal year for the province, as set out in the certificate.

• (3) Subject to subsection (4), the following constitute miscellaneous revenues for the purpose of paragraph (b) of the definition revenue to be equalized in subsection 3.5(1) of the Act:

  • (a) any revenues derived by a province that are not included as revenues under subsection 4(1), including

    • (i) those derived from natural resources, other than those described in paragraph 4(1)(e),

    • (ii) those derived from fines and penalties imposed by the province, other than those imposed on businesses, and

    • (iii) those that are included in the “Other taxes on use of goods and on permission to use goods or perform activities”, “Other taxes on goods and services n.e.c.”, “Other taxes”, “Voluntary transfers other than grants” and “Miscellaneous and unidentified revenue n.e.c.” revenue categories of the Government Finance Statistics, including those received for gaming licences or permits issued to charities or other organizations; and

  • (b) any revenues derived by a local government that are not included as revenues under subsection 4(1), including

    • (i) those derived from fines and penalties imposed by a local government, other than those imposed on businesses, and

    • (ii) those that are included in the “Other taxes on use of goods and on permission to use goods or perform activities”, “Other taxes on goods and services n.e.c.”, “Other taxes”, “Voluntary transfers other than grants” and “Miscellaneous and unidentified revenue n.e.c.” revenue categories of the Government Finance Statistics, including those received for gaming licences or permits issued to charities or other organizations.

• (4) The following revenues are excluded from miscellaneous revenues:

  • (a) revenues included in the “Sales of goods and services” revenue category of the Government Finance Statistics;

  • (b) revenues included in the “Social contributions” revenue category of the Government Finance Statistics;

  • (c) revenues included in the “Property income” revenue category of the Government Finance Statistics;

  • (d) any transfer payments received from other governments;

  • (e) payments to a province by the Government of Canada under section 99 of the Softwood Lumber Products Export Charge Act, 2006;

  • (f) personal and commercial auto insurance premiums; and

  • (g) agricultural insurance premiums.

• 9.1 (1) In determining the revenues described in paragraphs 4(1)(a) and 7(1)(a) in respect of Manitoba and Ontario for a fiscal year, the Minister shall not reduce those revenues by the amount of any recoveries from those provinces in respect of overpayments of capital gains taxes pursuant to a tax collection agreement.

• (2) In determining the revenues described in paragraphs 4(1)(e) and 7(1)(l) to (w) in respect of a province for a fiscal year, the Minister may adjust the amount set out in the certificate by adding or deducting the amount of any expense, subsidy, rebate or tax reduction incurred or granted by the government of that province in relation to that revenue source, if that addition or reduction is necessary to ensure that revenues are calculated consistently for all provinces.

• (3) In determining the revenues described in paragraphs 7(1)(a) and (z) in respect of a province for a fiscal year, the Minister may deduct the amount of any refundable income tax credit that the province grants in favour of a taxpayer for the fiscal year in relation to those revenues, as determined by the Minister, up to a maximum equal to the amount of the taxpayer’s tax payable that is included in the revenue for paragraph 7(1)(a) set out in the certificate, from

  • (a) the amount set out in the certificate for the revenue described in paragraph 7(1)(a); or

  • (b) if the refundable income tax credit relates to property tax, the amount set out in the certificate for the revenue described in paragraph 7(1)(z).

• (4) In determining the revenues described in paragraph 7(1)(c) in respect of a province for a fiscal year, the Minister shall deduct one half of the amount set out in the certificate for the part of that revenue source described in subparagraph 7(1)(c)(ii).

• (5) In determining the revenues described in paragraph 7(1)(z.4) in respect of a province for a fiscal year, the Minister shall deduct one half of the amount set out in the certificate for the parts of that revenue source described in clauses 7(1)(z.4)(i)(A) and (ii)(A).

• (6) In determining the revenues described in paragraph 7(1)(b) in respect of a province for a fiscal year, the Minister may

  • (a) deduct from the amount set out in the certificate the amount of any rebate, credit or tax reduction in relation to that revenue, or its components, that the province, or a local government, granted in favour of a taxpayer for the fiscal year, as determined by Statistics Canada, or, if Statistics Canada does not make the determination, as determined by the Minister, up to a maximum that reduces to zero the amount of the taxpayer’s tax that is included in the revenue source; or

  • (b) if the province or a local government applies a rebate, credit or tax reduction against the actual or estimated liability of the taxpayer for another tax that it imposes, deduct the amount of that rebate, credit or tax reduction, up to a maximum that reduces the taxpayer’s liability for that other tax to zero, from the amount that would otherwise be determined for the revenue source that includes that other tax.

Simulated Yield

• 10 (1) The following definitions apply in this section.

  personal taxes

  personal taxes means

  • (a) taxes imposed by a province on the income of individuals, not including trusts, net of

    • (i) tax credits that can be simulated for individuals in all provinces on the basis of information available within, or imputable to, the micro-simulation model, and

    • (ii) in respect of income taxes imposed by Quebec, the refundable Quebec abatement described in paragraph 2500(3)(e) of the Income Tax Regulations; and

  • (b) if this definition is being applied for the purpose of

    • (i) clause 5(a)(i)(A), levies or premiums imposed by a province on individuals specifically for the purpose of financing hospital insurance, medical care insurance or drug insurance, other than contributions to the Nova Scotia Seniors’ Pharmacare Program or the Alberta supplementary health benefits plans, or

    • (ii) clause 8(1)(a)(i)(A), the Ontario Health Premium and the Quebec Health Contribution. (impôts des particuliers)

  provincial system

  provincial system means the set of rules relating to the imposition of personal taxes in a province. (régime provincial)

• (2) For the purpose of clauses 5(a)(i)(A) and 8(1)(a)(i)(A), the simulated average revenue yield relating to personal income for the province for a taxation year ending in a fiscal year shall be determined by means of the micro-simulation model by

  • (a) simulating, in respect of each provincial system in turn, the total amount of personal taxes that would be derived from all individuals in the province in the taxation year if that provincial system applied to those individuals;

  • (b) simulating, in respect of each provincial system in turn, the total amount of personal taxes that would be derived from all individuals in all provinces in the taxation year if that provincial system applied to those individuals;

  • (c) dividing the amount simulated in respect of each provincial system under paragraph (a) by the amount simulated in respect of the same provincial system under paragraph (b);

  • (d) calculating the weight of each province’s provincial system, which shall be equal to a fraction

    • (i) whose numerator is the revenues referred to in subparagraphs 4(1)(a)(i) and (iii) or paragraph 7(1)(a), as the case may be, for the province, as set out in the certificate for the fiscal year, and

    • (ii) whose denominator is the aggregate, over all provinces, of the revenues referred to in subparagraph (i);

  • (e) multiplying each amount calculated under paragraph (c) by the respective weight calculated under paragraph (d); and

  • (f) calculating the sum of the 10 products calculated under paragraph (e).

Population

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

• 12 (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) the population of each province as determined by the Chief Statistician of Canada in accordance with section 11;

  • (b) the information produced by Statistics Canada that is referred to in sections 5 and 8 and used to calculate each revenue base described in those sections, other than

    • (i) the individualized profits and losses of business enterprises referred to in clauses 5(b)(ii)(B) and 8(1)(b)(ii)(B),

    • (ii) the assessed market value of residential property referred to in the description of V in paragraphs 5(d) and 8(1)(z),

    • (ii.1) the assessed market value of commercial-industrial property referred to in the description of VC in paragraph 5(d), and

    • (iii) the information needed to calculate the calculated net profits referred to in paragraph 8(1)(v); and

  • (c) for each province, information from the Government Finance Statistics regarding the revenues described in sections 4 and 7 and subsections 9(3) and (4), other than those described in subparagraphs 4(1)(e)(vii) and (viii) and 7(1)(z.5)(i) and (ii).

• (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.