Keeping the Promise for a Strong Economy Act (Budget Measures), 2002, S.O. 2002, c. 22 - Bill 198

• Jurisdiction: Ontario
• Bill Number: 198
• Date: 09 December 2002

EXPLANATORY NOTE

This Explanatory Note was written as a reader’s aid to Bill 198 and does not form part of the law. Bill 198 has been enacted as Chapter 22 of the Statutes of Ontario, 2002.

The Bill implements measures contained in the 2002 Budget and other initiatives of the Government. The major elements of the Bill are described below.

Part I
assessment act

Currently, subsection 33 (1) of the Assessment Act requires the clerk of a municipality to add to the collector’s roll any land that has been omitted in whole or in part from the roll in the circumstances described in that subsection. Amendments permit the Minister to prescribe exceptions to this requirement. The amendments are made effective as of January 1, 2000.

References throughout the Act to the “residential/farm property class” are changed to “residential property class” and references to the “farmlands property class” are changed to “farm property class”.

A technical amendment is made to subsection 3 (1) of the Act.

Part II
Business Corporations Act

The Business Corporations Act is amended to specify that professional corporations are permitted to invest the surplus funds that they earn. Currently, the Act specifies that they may temporarily invest such funds.

part Iii
commodity futures act

The maximum penalties for offences under the Commodity Futures Act are increased from a fine of $1 million and imprisonment for two years to a fine of $5 million and imprisonment for five years less a day. (See the amendments to section 55 of the Act.)

If a person or company fails to comply with Ontario commodity futures law, the Ontario Securities Commission is given power to order the payment of an administrative penalty of up to $1 million and to order the disgorgement of amounts obtained as a result of the non-compliance. (See the amendments to section 60 and subsection 65 (2) of the Act and the new section 60.5 of the Act.)

The amendments prohibit engaging in acts that a person or company knows or reasonably ought to know perpetrate a fraud or result in a misleading appearance of trading activity in, or an artificial price for, a commodity, commodity futures contract or commodity futures option. The amendments also contain a general prohibition on making statements that a person or company knows or reasonably ought to know are misleading or untrue and significantly affect, or would reasonably be expected to have a significant effect on, the market price or value of a commodity, commodity futures contract or commodity futures option. (See the new sections 59.1 and 59.2 of the Act.)

part iV
community small business
investment funds act

The amendment to section 18.5 of the Community Small Business Investment Funds Act extends the registration deadline for new “CSBIFs” from December 31, 2002 to December 31, 2003.

Amendments to sections 18.2 and 18.3 of the Act allow an Ontario Centre of Excellence to sponsor a corporation as a community small business investment fund corporation.

Technical amendments are made to the Act, including amendments to correct errors in terminology, to update references to other statutes and to repeal spent provisions of the Act.

part V
compulsory Automobile
Insurance Act

Section 13 of the Compulsory Automobile Insurance Act is amended to provide that a motor vehicle permit may not be issued, validated or transferred until the Ministry of Transportation is satisfied through information it has obtained that the motor vehicle is insured under a contract of automobile insurance. The Act is also amended to require insurers and other persons to give to the Registrar, upon the request of the Minister of Transportation, certain information concerning automobile insurance. The Act is further amended to provide that prescribed information may be collected and kept by agents and delegates of the Minister of Transportation. The Act is also amended to allow insurers to prepare a statutory declaration, instead of attending court, in order to give evidence about whether or not a motor vehicle is insured.

part VI
corporations tax act

Amendments to sections 38 and 43 of the Corporations Tax Act delay by one year each of the reductions to the general corporate income tax rate and the tax rate on income from manufacturing and processing, mining, logging, farming and fishing originally enacted to take effect on January 1 in 2003, 2004 and 2005. Consequential amendments are made in respect of the calculation of income in respect of certain amounts paid to non-residents (subsection 11 (8.1) of the Act), the small business incentive deduction (subsections 41 (1.1) and (1.4) of the Act), the surtax on Canadian-controlled private corporations (subsection 41.1 (3) of the Act) and the extension of the small business tax rate to credit unions (subsection 51 (4.1) of the Act).

Section 4 of the Act is amended to parallel Canada’s income tax treaties, for the purpose of determining whether a non-resident corporation has a permanent establishment in Ontario.

An amendment to clause 13.4 (2) (b) of the Act extends the deadline for acquiring an eligible school bus under the Ontario school bus safety tax incentive from May 4, 2002 to December 31, 2005.

A new section 37.1 of the Act creates a tax incentive for corporations that own Ontario Jobs and Opportunity Bonds. These are bonds, debentures and other securities that are issued by the Ontario Municipal Economic Infrastructure Financing Authority or by a related entity and designated by the Authority as Ontario Jobs and Opportunity Bonds. The Minister of Finance may also designate bonds, debentures and securities as Ontario Jobs and Opportunity Bonds. The details of the tax incentive are to be set out in the regulations. The new section comes into force on proclamation.

Amendments to subsection 43.1 (4) and section 57.5 of the Act and the enactment of the new section 57.9.1 allow a Canadian subsidiary of a foreign bank to transfer to its parent company assets on a tax-deferred basis and unused corporate minimum tax credits and losses.

The rules concerning associated corporations under the Ontario innovation tax credit in section 43.3 of the Act are amended. The amendments provide that certain non-resident corporations with no permanent establishment in Canada will be treated as associated corporations, effective on the day the Bill receives Royal Assent. The amendments also provide that certain Canadian corporations and non-resident corporations with a permanent establishment in Canada but not in Ontario will be treated as associated corporations, effective May 5, 1999.

Amendments are made to the Ontario interactive digital media tax credit in section 43.11 of the Act. The amendments allow tax credit entitlements to be transferred to an eligible successor corporation or a wholly-owned affiliate if a corporate reorganization occurs when an eligible product is being developed.

Section 69 of the Act is amended to provide an additional method for allocating the $5 million deduction from paid up capital among associated corporations. Amendments to section 69 also allow foreign branches of a corporation to apply the $5 million deduction against total paid-up capital employed in Canada. The amendments also provide that financial institutions and corporations exempt from capital tax are to be excluded when the deduction is allocated among associated corporations.

Technical amendments are made to the administrative provisions of the Act relating to repeated failures to file a return (section 79 of the Act), assessments (section 80 of the Act) and the alternative objection and appeals procedure (section 92 of the Act). Other technical amendments extend the increases in the Ontario small business limit to a partner’s share of partnership income (new subsections 41 (6) and (7) of the Act). The tax credit for investments in a community small business investment fund corporation is extended to investments made before January 1, 2004 to conform with the extension of the community small business investment funds program to the end of 2003 (subsection 66.1 (4.5) of the Act).

part VII
education act

References throughout the Education Act to the “residential/farm property class” are changed to “residential property class” and references to the “farmlands property class” are changed to “farm property class”.

part viiI
electricity act, 1998

Technical amendments are made to sections 85.15 and 85.16 of the Electricity Act, 1998 concerning refunds. Under section 85.15, the Financial Corporation is permitted to make refunds under that section with the authorization of the Minister of Finance. The amendment to section 85.16 specifies that refunds under that section are to be made by the Financial Corporation.

Technical amendments are made to section 94 of the Act to allow municipal electricity utilities and municipal corporations to reduce the transfer tax payable under the Act to take into account any taxable capital gain that arises when an interest in a property is transferred.

Part iX
Employer Health Tax Act

Section 1 of the Employer Health Tax Act is amended to specify the circumstances in which an employee is considered to “report for work at a permanent establishment” of an employer if the employee does not come to the establishment in person to work. This amendment is made effective on January 1, 2003.

Technical amendments are made to sections 7 and 30 of the Act. Currently, subsections 7 (1.1) and 30 (2.1) of the Act provide for the cancellation of the interest and penalty payable under the Act for late payments by an employer, if the employer’s total Ontario remuneration for the previous year does not exceed $600,000. The amendments address the situation of an employer that has undergone a corporate reorganization. They are made effective on January 1, 2000.

Part X
Financial Administration Act

Currently, section 5 of the Financial Administration...