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Second Session, Thirty-Ninth Legislature

This version is based on the printed bill that was distributed in the Legislature after First Reading.   It is not the official version.   If accuracy is critical, you can obtain a copy of the printed bill from Statutory Publications or view the online bilingual version (PDF).

Bill 44

The Budget Implementation and Tax Statutes Amendment Act, 2008


Explanatory Note

(Assented to                                         )

HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Manitoba, enacts as follows:

PART 1

THE CORPORATION CAPITAL TAX ACT

C.C.S.M. c. C226 amended

1           The Corporation Capital Tax Act is amended by this Part.

2(1)        Subsection 6(1) is amended

(a) in the part before clause (a),

(i) by striking out "A corporation" and substituting "Subject to sections 13 and 13.1 (exemptions), a corporation", and

(ii) by adding "beginning before January 1, 2011," after "each fiscal year";

(b) in clause (b),

(i) in the part before subclause (i), by striking out "ends before January 2" and substituting "not after January 1", and

(ii) by striking out "or" at the end of subclause (iii);

(c) in the part of clause (c) before subclause (i), by adding "and not after January 1, 2009," after "2008,"; and

(d) by adding the following after clause (c):

(d) if the fiscal year begins after January 1, 2009, and not after January 1, 2010,

(i) 0.1% of its amount taxable as at the close of the fiscal year, if the amount taxable does not exceed $10,000,000.,

(ii) $10,000. plus 2.3% of its amount taxable as at the close of the fiscal year in excess of $10,000,000., if the amount taxable exceeds $10,000,000. but does not exceed $11,000,000., or

(iii) 0.3% of its amount taxable as at the close of the fiscal year, if the amount taxable exceeds $11,000,000.; or

(e) if the fiscal year begins after January 1, 2010,

(i) nil, if the amount taxable is $10,000,000. or less,

(ii) 2.2% of its amount taxable as at the close of the fiscal year in excess of $10,000,000., if the amount taxable exceeds $10,000,000. but does not exceed $11,000,000., or

(iii) 0.2% of its amount taxable as at the close of the fiscal year, if the amount taxable exceeds $11,000,000.

2(2)        The following is added after subsection 6(1):

Fiscal year straddling December 31, 2010

6(1.1)      Despite clause (1)(e), if the fiscal year ends after December 31, 2010, the tax payable under that clause is the amount determined by the following formula:

Tax payable = T × A/B

In this formula,

T   is the tax otherwise payable under clause (1)(e);

A   is the number of days in the fiscal year that occur in 2010;

B   is the number of days in the fiscal year.

3(1)        The section heading for subsection 13(1) is replaced with "Exemption for credit unions, co-operatives and family farm corporations".

3(2)        The section heading for subsection 13(2) is replaced with "Exemption for corporations exempt from income tax".

4           The following is added after section 13:

Exemption for qualifying manufacturers

13.1(1)     No tax is payable under subsection 6(1) by a qualifying manufacturer for a fiscal year that begins on or after July 1, 2008.

Fiscal year straddling July 1, 2008

13.1(2)     For the fiscal year of a qualifying manufacturer that begins before July 1, 2008, and ends after that date, the tax payable is the amount determined by the following formula:

Tax payable = T × A/B

In this formula,

T   is the tax otherwise payable under subsection 6(1) for the fiscal year;

A   is the number of days in the fiscal year that occur before July 1, 2008;

B   is the number of days in the fiscal year.

"Qualifying manufacturer" defined

13.1(3)     For the purpose of this section, a corporation is a qualifying manufacturer for a fiscal year if the total of

(a) its cost of manufacturing and processing capital for the fiscal year; and

(b) its cost of manufacturing and processing labour for the fiscal year;

is more than 50% of the total of

(c) its cost of capital for the fiscal year; and

(d) its cost of labour for the fiscal year.

How to determine costs

13.1(4)     The costs referred to in subsection (3) are to be determined in accordance with section 5202 of the Income Tax Regulations (Canada), with the following changes:

(a) the references to "taxation year" are to be read as "fiscal year";

(b) the references to "Canada" in the following provisions are to be read as "Manitoba":

(i) paragraph (c) of the definition "cost of capital",

(ii) paragraph (d) of the definition "cost of labour",

(iii) paragraphs (a) and (b) of the definition "qualified activities";

(c) the definition "cost of manufacturing and processing capital" is to be read without reference to "100/85 of";

(d) the definition "cost of manufacturing and processing labour" is to be read without reference to "100/75 of";

(e) the definition "qualified activities" is to be read as if the expression "manufacturing or processing" had the same meaning as in subsection 125.1(3) of the Income Tax Act (Canada), and did not include any activities of a corporation that in the fiscal year receives more than 50% of its funding directly or indirectly from the Government of Canada, the Government of Manitoba or a municipality, or from any combination of them.

5           The following is added after subsection 17(5):

Transitional — qualifying manufacturer's year straddling July 1, 2008

17(6)       If subsection 13.1(2) applies to a corporation for a fiscal year, the following rules apply in determining the amounts payable by instalment for that fiscal year:

(a) the amount of each instalment must be determined without reference to subsection 13.1(2);

(b) in the case of a quarterly instalment,

(i) if the due date is July 15, 2008, the amount of the instalment may be reduced by 1/3,

(ii) if the due date is August 15, 2008, the amount of the instalment may be reduced by 2/3, and

(iii) if the due date is after August 15, 2008, the amount of the instalment is nil;

(c) in the case of an annual instalment, the amount payable is that proportion of the amount otherwise determined that

(i) the number of full and partial months in the fiscal year and before July 1, 2008,

is of

(ii) the number of full and partial months in the fiscal year.

Transitional — year straddling December 31, 2010

17(7)       If subsection 6(1.1) applies to a corporation for a fiscal year, the following rules apply in determining the amounts payable by instalment for that fiscal year:

(a) the amount of each instalment must be determined without reference to subsection 6(1.1);

(b) in the case of a quarterly instalment,

(i) if the due date is January 15, 2011, the amount of the instalment may be reduced by 1/3,

(ii) if the due date is February 15, 2011, the amount of the instalment may be reduced by 2/3, and

(iii) if the due date is after February 15, 2011, the amount of the instalment is nil;

(c) in the case of an annual instalment, the amount payable is that proportion of the amount otherwise determined that

(i) the number of full and partial months in the fiscal year and before January 1, 2011,

is of

(ii) the number of full and partial months in the fiscal year.

PART 2

THE GASOLINE TAX ACT

C.C.S.M. c. G40 amended

6           The Gasoline Tax Act is amended by this Part.

7            Section 1 is amended

(a) by repealing the definitions "denatured alcohol" and "gasohol"; and

(b) by replacing the definition "gasoline" with the following:

"gasoline" means a gaseous or liquid fuel — other than motive fuel as defined in The Motive Fuel Tax Act — that may be used to power an internal combustion engine or for heating, and any other fuel designated in the regulations as gasoline, but does not include

(a) natural gas,

(b) propane, butane or any other manufactured gas, or

(c) acetylene, a solvent, mechanical lighter fluid, fire starter fluid or any similar mixture or product,

unless it is delivered from a filling station directly into a tank or refillable container provided by a purchaser; (« essence »)

8           Subclause 2.1(1)(a)(ii) is amended by striking out "that Act" and substituting "The Drivers and Vehicles Act".

9           Subsections 4(5), (6) and (9) are repealed.

10          Subsection 5(4) is amended by striking out "or denatured alcohol".

11          Subsections 15(1) to (4) are amended by striking out "or gasohol" wherever it occurs.

Unproclaimed amendments repealed

12          Section 20 of The Biofuels and Gasoline Tax Amendment Act, S.M. 2003, c. 5, is repealed.

PART 3

THE HIGHWAY TRAFFIC ACT

C.C.S.M. c. H60 amended

13          The Highway Traffic Act is amended by this Part.

14          Subsection 68(13.2) is amended by striking out "$12." and substituting "$13.20".

15          Subsection 86(5.5) is amended by striking out "$12." and substituting "$13.20".

16          Subsection 238(2) is amended by striking out "$7." and substituting "$7.70".

PART 4

THE INCOME TAX ACT

C.C.S.M. c. I10 amended

17          The Income Tax Act is amended by this Part.

18          Subsection 4(1) is amended

(a) in Rule 1, by striking out "and" at the end of subclause (b)(v) and replacing subclause (b)(vi) with the following:

(vi) under subsection 4.1(2.4) of the 2007 taxation year,

(vii) under subsection 4.1(2.5) for the 2008 taxation year, and

(viii) under subsection 4.1(2.6) for the 2009 and subsequent taxation years.

(b) in Rule 6, by replacing clauses (a) and (b) with the following:

(a) the pension income amount claimed by the individual for the year under subsection 4.6(10), multiplied by the percentage that applies to the taxation year under clause 4.6(2)(a);

(b) the amount claimed by the individual for the year under subsection 4.6(10.1) in respect of adoption costs, multiplied by the percentage that applies to the taxation year under clause 4.6(2)(a);

(b.1) the amount claimed by the individual for the year under subsection 4.6(10.2) (children's fitness expenses), multiplied by the percentage that applies to the taxation year under clause 4.6(2)(a);

(c) in clause (b) of Rule 9 of the English version, by striking out "co-operative education" and substituting "co-op education and apprenticeship"; and

(d) in Rule 9, by adding the following after clause (c):

(d) the amount, if any, that the individual is deemed by section 10.3 (refundable green energy equipment tax credit) to have paid on account of his or her tax payable for the year;

(e) the amount, if any, that the individual is deemed by subsection 10.4(1) (Manitoba book publishing tax credit) to have paid on account of his or her tax payable for the year.

19(1)       Subsection 4.1(2.5) is amended

(a) in the section heading, by striking out "and subsequent taxation years" and substituting "taxation year"; and

(b) in the part before the table, by striking out "and for each subsequent taxation year".

19(2)       The following is added after subsection 4.1(2.5):

Basic tax payable — 2009 and subsequent taxation years

4.1(2.6)    An individual's basic tax payable for the 2009 taxation year and for each subsequent taxation year is the amount determined according to the following table:

Taxable income (TI) Basic tax payable (BT)
$31,000. or less BT = 10.8% × TI
more than $31,000. but not more than $67,000. BT = $3,348. + 12.75% × (TI − $31,000.)
more than $67,000. BT = $7,938. + 17.4% × (TI − $67,000.)

20(1)       Clause 4.6(2)(a) is replaced with the following:

(a) all amounts, each of which is the following percentage of an amount claimed for the year under any of subsections (3) to (17) and subsection (19):

(i) 10.9%, if the taxation year ends before 2009,

(ii) 10.8%, if the taxation year ends after 2008;

20(2)       Subsection 4.6(3) is amended by striking out "and" at the end of clause (c) and replacing clause (d) with the following:

(d) $8,034. for a taxation year ending after 2007 and before 2009; and

(e) $8,134. for a taxation year ending after 2008.

20(3)       Subsection 4.6(5) is amended

(a) in clause (d), by adding "and before 2009" after "2007"; and

(b) by adding the following after clause (d):

(e) for a taxation year ending after 2008, the amount determined by the following formula:

$8,134. − A

20(4)       Subsection 4.6(6) is amended

(a) in clause (d), by adding "and before 2009" after "2007"; and

(b) by adding the following after clause (d):

(e) for a taxation year ending after 2008, the amount determined by the following formula:

$8,134. − A

20(5)       Subsection 4.6(12) is amended

(a) in the formula, by striking out ".109" and substituting "P"; and

(b) by striking out "and" at the end of the description of A and adding the following after the description of B:

P   is the percentage that applies to the taxation year under clause (2)(a).

20(6)       Subsection 4.6(13) is amended

(a) in the formula, by striking out ".109" and substituting "P";

(b) in clause (a) of the description of C, by striking out ".109" and substituting "the percentage determined for P"; and

(c) by striking out "and" at the end of the description of D and adding the following after the description of E:

P   is the percentage that applies to the taxation year under clause (2)(a).

20(7)       Subsection 4.6(14.1) is amended

(a) in the formula, by striking out ".109" and substituting "P";

(b) in clause (b) of the description of A, by striking out ".109" and substituting "the percentage determined for P"; and

(c) by striking out "and" at the end of the description of A and adding the following after the description of B:

P   is the percentage that applies to the taxation year under clause (2)(a).

20(8)       In subsection 4.6(16), the description of C in the formula is amended

(a) in the formula, by striking out ".109" and substituting "P";

(b) in clause (a) of the description of E, by striking out ".109" and substituting "the percentage determined for P"; and

(c) by striking out "and" at the end of the description of D and adding the following after the description of E:

P   is the percentage that applies to the taxation year under clause (2)(a).

20(9)       Clause 4.6(18)(a) is amended by striking out "10.9%" and substituting "the percentage that applies to the taxation year under clause (2)(a)".

20(10)      Subsection 4.6(20) is amended

(a) in subclause (l)(i), by striking out "(14), (15.1)" and substituting "(10.1), (10.2), (10.4), (14)";

(b) in subclause (l)(ii), by striking out "and (16)" and substituting ", (16) and (16.1)";

(c) in subclause (q)(i), by adding "(10.1), (10.2), (10.4)," after "(10),"; and

(d) in subclause (q)(ii), by striking out "and (16)" and substituting ", (16) and (16.1)".

21(1)       In clause 4.13(1)(b), the descriptions of A, B and C in the formula are replaced with the following:

A   is the trust's capital gains redemptions under subsection 132(4) of the federal Act for the year,

B   is the trust's Manitoba income for the year or, if it has no income for the year, the amount that would be its Manitoba income for the year if its income for the year were $1,000.,

C   is the trust's income for the year or, if it has no income for the year, $1,000.

21(2)       In clause 4.13(2)(b), the descriptions of B and C in the formula are replaced with the following:

B   is the trust's Manitoba income for the particular year or, if it has no income for that year, the amount that would be its Manitoba income for that year if its income for that year were $1,000.,

C   is the trust's income for the particular year or, if it has no income for that year, $1,000.;

22          Subsection 5(1) is amended by adding the following clause:

(e) the individual's primary caregiver tax credit, if any, determined under section 5.11.

23(1)       In subsection 5.4(3), the description of A in the formula is amended in subclause (b)(i) by striking out "$150." and substituting "$75.".

23(2)       Subsection 5.4(4) is amended

(a) by striking out "$150." and substituting "$75."; and

(b) by striking out "$275." and substituting "$200.".

24(1)       Subsection 5.7(2) is amended in the part before the formula by striking out "subsection (5)" and substituting "subsections (2.1) and (5)".

24(2)       The following is added after subsection 5.7(2):

Adjustments to personal credit

5.7(2.1)    For a taxation year ending after 2008, the amounts in the description of A in the formula in subsection (2) are to be read as follows:

(a) in clauses (a) and (b), "$190." is to be read as "$195.";

(b) in clause (c), "$60." is to be read as "$62.";

(c) in clause (d), "$25." is to be read as "$26.";

(d) in clause (e), "$110." is to be read as "$113.".

25          The following is added as section 5.11:

Primary Caregiver Tax Credit

Definitions

5.11(1)     The following definitions apply in this section.

"creditable period" of a primary caregiver in relation to a qualified home care client means the period that

(a) begins when the caregiver has provided care or supervision to the client for a period of 90 days beginning after the caregiver last became the client's primary caregiver; and

(b) ends when

(i) the caregiver ceases to provide care or supervision as the client's primary caregiver,

(ii) an interruption period in relation to the creditable period has lasted three years, or

(iii) the client permanently ceases to be a qualified home care client,

as determined by the responsible regional health authority. (« période ouvrant droit à un crédit »)

"interruption period" in relation to a primary caregiver's creditable period for a qualified home care client means, subject to the regulations, a period of more than 14 consecutive days during which

(a) the client is hospitalized or temporarily residing in a personal care home or other institution; or

(b) the client has temporarily ceased to be a qualified home care client, or the caregiver has not provided care to the client, as determined by the responsible regional health authority;

and includes a period prescribed by regulation as an interruption period. (« période d'interruption »)

"Manitoba Home Care Program" means the community-based program that provides support to individuals who require health services or assistance with daily living activities and is administered by regional heath authorities established or continued under The Regional Health Authorities Act. (« Programme de soins à domicile du Manitoba »)

"primary caregiver", in relation to a taxation year, means an individual who

(a) is resident in Manitoba at the end of the taxation year;

(b) without any remuneration other than the tax credit under this section, personally provides care or supervision to a qualified home care client;

(c) is designated in the client's official home care plan as the client's sole primary caregiver for the purpose of the tax credit under this section; and

(d) has acknowledged in writing to the responsible regional health authority, in a form acceptable to that authority, his or her role as the client's primary caregiver. (« soignant primaire »)

"qualified home care client" means an individual who

(a) ordinarily resides in a private home or apartment in Manitoba; and

(b) has most recently been assessed as requiring level 2, 3 or 4 care under the Manitoba Home Care Program, using assessment tools and standards acceptable to the responsible regional health authority. (« client des soins à domicile admissible »)

"responsible regional health authority", in relation to a qualified home care client, means the regional health authority that administers the Manitoba Home Care Program in the area in which the qualified home care client resides. (« office régional de la santé compétent »)

Primary caregiver tax credit

5.11(2)     An individual's primary caregiver tax credit for a taxation year after 2008 is the total of all amounts each of which is the amount determined by the following formula in relation to a qualified home care client:

tax credit = $1,020. × A/365

In this formula, A is the total number of days in the taxation year each of which

(a) is within the individual's creditable period in relation to the client;

(b) does not fall within an interruption period in relation to the client;

(c) is not included in determining the caregiver's tax credit for the taxation year in respect of more than two other qualified home care clients; and

(d) is not included in determining another individual's primary caregiver tax credit for the taxation year in respect of the client.

Regulations

5.11(3)     The Lieutenant Governor in Council may make regulations

(a) defining any term used in this section but not defined in this Act;

(b) for the purpose of the definition "interruption period" in subsection (1),

(i) prescribing circumstances in which a period is not an interruption period, or in which days are not to be considered part of an interruption period, and

(ii) prescribing other periods as interruption periods;

(c) for the purpose of verifying the validity of a claim for a tax credit under this section,

(i) respecting the maintenance of books and records, and the provision of information or access to information, including personal health information, by primary caregivers, and

(ii) respecting the maintenance of books and records, and the provision of information or access to information, including personal health information, by regional health authorities about primary caregivers;

(d) respecting any other matter that the Lieutenant Governor in Council considers necessary to carry out effectively the intent and purpose of this section.

26          The last row in the table in subsection 7(3) is replaced with the following:

July 1, 2008 to Dec. 31, 2008 13% 11%
Jan. 1, 2009 to June 30, 2009 13% 12%
after June 30, 2009 12% 11%

27(1)       Clause 7.2(1.2)(c) is replaced with the following:

(c) for a taxation year ending after 2007, it is to be read as "35%" in respect of property acquired before 2008, and as "70%" in respect of property acquired after 2007.

27(2)       The definition "qualified property" in subsection 7.2(2) is amended in the part before clause (a) by striking out "July 1, 2009" and substituting "2012".

28(1)       Subsection 7.5(1) is amended

(a) in the definitions "eligible employee" and "eligible individual", by adding ", in relation to a taxation year of a corporation for which the corporation is claiming a tax credit," before "means";

(b) by adding the following definition:

"eligible non-resident individual", in relation to a taxation year of a corporation for which the corporation is claiming a tax credit, means an individual (other than a trust or estate) who

(a) was not resident in Manitoba on December 31 of the taxation year, and

(b) in that taxation year or the immediately preceding taxation year provided technical services in Manitoba for the production of an eligible film as a member of a film production technical crew of which at least one other member (referred to in this subsection as a "trainee") is an eligible individual who, during the production of the film, received eligible training or provided technical services for which the corporation has received or is eligible to receive a tax credit under section 10.1 (co-op education and apprenticeship tax credit); (« non-résident admissible »)

(c) in the definition "eligible salaries", by striking out "and" at the end of clause (b) and adding the following after clause (c):

(d) the lesser of

(i) the total increase in the amounts that would be included under clause (a) or (b) if the amounts paid by the corporation for services provided in Manitoba by eligible non-resident individuals were paid for services provided by eligible individuals, but no amount were included in respect of the benefits or allowances that are included (or would be included if they were employees resident in Canada) in the income of the eligible non-resident individuals under section 6 of the federal Act, and

(ii) the following percentage of the total of the amounts determined under clauses (a) to (c) for the taxation year:

(A) 30%, if at least two individuals participated, as trainees, in the film production technical crew in which the eligible non-resident individual provided services, or

(B) 10%, if only one individual participated, as a trainee, in the film production technical crew in which the eligible non-resident individual provided services;

(d) in the definition "government assistance", by striking out "and" at the end of clause (b), adding "and" at the end of clause (c) and adding the following after clause (c):

(d) the amount of a credit under section 10.1 (co-op education and apprenticeship tax credit);

28(2)       The following is added after subsection 7.5(3):

Eligible training

7.5(3.1)    For the purpose of the definition "eligible non-resident individual" in subsection (1), an individual is considered to have received eligible training if the training is designed to improve his or her technical film production skills and is authorized or approved by

(a) Film Training Manitoba;

(b) the Directors Guild of Canada;

(c) the International Alliance of Theatrical Stage Employees, Moving Picture Technicians, Artists and Allied Crafts of the United States, Its Territories and Canada;

(d) the Alliance of Canadian Cinema, Television and Radio Artists; or

(e) any other person or organization prescribed by regulation.

29(1)       Subsection 7.6(1) is amended by replacing the formula with the following:

tax credit = .45A + .05(B + C + D + E)

In this formula,

A   is the amount, if any, by which

(a) the corporation's eligible salaries for the film for the year,

exceeds

(b) the amount of any government assistance received or to be received by the corporation in connection with those salaries;

B   is nil, unless

(a) the principal photography for the film commenced after April 19, 2004, and after the commencement of principal photography for two other eligible films for which, in each case, most of the principal photography was carried out after April 22, 2003,

(b) some of the principal photography for each of the three films referred to in clause (a) took place within the same two-year period, and

(c) the principal owner of each of the three films referred to in clause (a) is the same person or group of persons,

in which case B is the amount determined for A;

C   is nil, unless

(a) the principal photography for the film commenced after 2007, and after the commencement of principal photography for two other eligible films,

(b) some of the principal photography for each of the three films referred to in clause (a) took place within the same two-year period, and

(c) the principal owner of each of the three films referred to in clause (a) is the same person or group of persons,

in which case C is the amount determined for A;

D   is nil, unless

(a) the corporation has, at any time during principal photography for the film, a permanent establishment in Manitoba at least 35 kilometres from Winnipeg,

(b) the principal photography for the film commenced after April 19, 2004, and

(c) the principal photography for the film took place in Manitoba at least 35 kilometres from Winnipeg for at least 1/2 of the days that principal photography took place in Manitoba,

in which case D is the amount determined for A;

E   is nil, unless

(a) the principal photography for the film commenced after 2007, and

(b) a person who is resident in Manitoba in the year in which principal photography ends, or in the immediately preceding year, receives credit as a producer, co-producer or executive producer of that film,

in which case E is the amount determined for A.

29(2)       Subsection 7.6(1.3) is amended in the part before clause (a) by striking out "amount for B" and substituting "amounts for B and C".

30          Subclause 7.7(b)(i) is replaced with the following:

(i) to eligible employees and employees who are eligible non-resident individuals in relation to the eligible film for which the tax credit is claimed, and

31          Section 7.8 is amended

(a) in clause (a), by adding ", if requested by the minister" at the end; and

(b) by adding the following after clause (c):

(c.1) a list of the eligible non-resident individuals whose eligible salaries are included in computing the tax credit, including their names, social insurance numbers if applicable, eligible salaries, occupations and addresses;

32          Clause 7.12(a.1) is repealed.

33          Section 9 is replaced with the following:

Capital gains refund

9(1)        Where an amount is to be refunded to a corporation for a taxation year under section 131 of the federal Act, the treasurer shall, subject to subsection (2), at such time and in such manner as is provided in that section, refund to the corporation an amount (in this section referred to as its "capital gains refund" for the year) equal to the lesser of

(a) the corporation's Manitoba refundable capital gains tax on hand at the end of the year; and

(b) the amount determined by the following formula:

0.5 × T × (D + R) × I1/I2

In this formula,

T   is the applicable tax rate for the taxation year,

D   is the total of all dividends paid by the corporation in the period commencing 60 days after the beginning of the taxation year and ending 60 days after the end of the taxation year that are capital gains dividends for that year for the purposes of section 131 of the federal Act,

R   is the amount of the corporation's capital gains redemptions for the year as determined for the purposes of section 131 of the federal Act,

I1 is the corporation's taxable income earned in the year in Manitoba or, if the corporation has no taxable income for the year, the amount that would be its taxable income earned in the year in Manitoba if its taxable income for the year were $1,000.,

I2 is the corporation's taxable income for the year or, if it has no taxable income for the year, $1,000.

Manitoba refundable capital gains tax on hand

9(2)        For the purpose of subsection (1), a corporation's Manitoba refundable capital gains tax on hand at the end of a taxation year is the amount determined by the following formula:

T − R

In this formula,

T   is the total of all amounts each of which is the least of the following amounts determined in relation to a particular taxation year that is the current taxation year or a previous taxation year ending after 2005 throughout which the corporation was a mutual fund corporation:

(a) the tax otherwise payable by the corporation under this Act for the particular taxation year,

(b) the corporation's taxed capital gains, as determined under subsection 130(3) of the federal Act for the particular taxation year, multiplied by the applicable tax rate for that year,

(c) the corporation's taxable income for the particular taxation year multiplied by the applicable tax rate for that year;

R   is the total of all amounts refunded to the corporation under this section for a previous taxation year ending after 2005.

"Applicable tax rate" defined

9(3)        For the purposes of subsections (1) and (2), the applicable tax rate for a taxation year is the applicable tax rate for that year under subsection 7(3) or, if different rates under that subsection apply to different periods in the year, the applicable tax rate is the total of all rates each of which is the rate determined by the following formula for such a period:

rate = R x Dp/Dy

In this formula,

R   is the applicable tax rate under subsection 7(3) for the period;

Dp is the number of days in the taxation year that fall within the period;

Dy is the number of days in the taxation year.

Applying refund to other liability

9(4)        Instead of refunding an amount to a corporation under subsection (1), the treasurer may, where the corporation is liable or about to become liable to make any payment under this Act, apply the amount to that other liability and notify the corporation of that action.

34          The centred heading before section 10.1 is replaced with "CO-OP EDUCATION AND APPRENTICESHIP TAX CREDIT".

35(1)       Subsection 10.1(1) is amended by striking out "co-operative education" and substituting "co-op education and apprenticeship".

35(2)       Subsection 10.1(2) is amended

(a) in the section heading, by striking out "co-operative education";

(b) in the part before clause (a), by striking out "co-operative education" and substituting "co-op education and apprenticeship"; and

(c) by striking out "or" at the end of clause (a), adding "or" at the end of clause (b) and adding the following after clause (b):

(c) a tax credit of the taxpayer for the year, as determined under subsection (6.1), in respect of the salary or wages paid by the taxpayer for a period of qualifying employment of a qualifying journeyperson who first became certified in Canada as a journeyperson after April 9, 2008.

35(3)       In subsection 10.1(5), the description of A in the formula is amended by adding "to the graduate" before "for the period".

35(4)       The following is added after subsection 10.1(6):

Credit for employment of journeyperson

10.1(6.1)   Subject to subsections (6.2) and (6.3), the tax credit of a taxpayer for a taxation year in respect of a period of employment of a qualifying journeyperson is the amount determined by the following formula:

tax credit = W × A/B

In this formula,

W   is the lesser of

(a) $2,500., and

(b) 5% of the amount by which

(i) the total salary and wages paid to the journeyperson for a period of qualifying employment that ended in the taxation year,

exceeds

(ii) the amount of any other government assistance received or receivable by the taxpayer in respect of the salary and wages paid to the journeyperson for that period;

A   is the total salary and wages paid by the taxpayer to the journeyperson for the period of qualifying employment or, if they were paid by a partnership in which the taxpayer is a general partner, the taxpayer's pro rata share of the salary and wages so paid by the partnership;

B   is the total salary and wages paid to the journeyperson for the period of qualifying employment.

Restrictions

10.1(6.2)   The tax credit under subsection (6.1) in respect of a period of employment of a journeyperson is nil if

(a) the taxpayer fails to file with his or her return for the taxation year a statement under subsection (7) certifying the period of employment to be a period of qualifying employment; or

(b) the period of employment relates to an individual who already has two 12-month periods of qualifying employment, unless the credit for the employment is approved by the minister.

Taxpayer must participate in apprenticeship program

10.1(6.3)   The tax credit under subsection (6.1) for a taxation year is nil unless the taxpayer is or has been participating in one or more of the following ways in an apprenticeship program administered by the Manitoba government:

(a) by employing, in that taxation year, at least one apprentice who has completed his or her first year of apprenticeship with the taxpayer;

(b) by having employed, within the preceding five taxation years, at least one apprentice who completed at least two years of apprenticeship with the taxpayer during those years;

(c) by being an active member, in that taxation year, of an association

(i) that is recognized under the regulations under The Apprenticeship and Trades Qualifications Act as an employer under the apprenticeship program, and

(ii) any member of which satisfies the requirement in clause (a) or (b).

35(5)       Subsection 10.1(7) is amended by striking out "or" at the end of clause (a) and replacing clause (b) with the following:

(b) an individual to be a qualifying graduate and a period of employment of that individual to be a period of qualifying employment; or

(c) a period of employment of a journeyperson to be a period of qualifying employment.

35(6)       Subsection 10.1(8) is amended

(a) in clause (a), by striking out "and "qualifying graduate"" and substituting ", "qualifying graduate" and "qualifying journeyperson""; and

(b) in clause (c), by striking out "co-operative education".

35(7)       Subsection 10.1(9) is amended by striking out "co-operative education".

36          The centred heading before section 10.3 of the French version is replaced with "CRÉDIT D'IMPÔT POUR L'ÉQUIPEMENT D'ÉNERGIE VERTE".

37          The following is added after section 10.3:

MANITOBA BOOK PUBLISHING TAX CREDIT

Book publishing tax credit

10.4(1)     Subject to subsection (2), an eligible publisher is deemed to have paid on the publisher's balance-due day for a taxation year, on account of the publisher's tax payable under this Act for that year, such amount as is claimed by the publisher, but not exceeding the total of

(a) the lesser of

(i) $100,000., and

(ii) the amount determined by the following formula:

40% × [A + (L × P1/P2)]

In this formula,

A   is, subject to any limit prescribed by regulation, the total of the non-refundable monetary advances made in the taxation year by the publisher to authors of eligible books published or to be published by the publisher,

L   is the publisher's book publishing labour costs for the taxation year,

P1 is the total number of pages that make up the eligible books published by the publisher in the taxation year,

P2 is the total number of pages that make up the hardcover and paperback books published by the publisher in the taxation year; and

(b) 10% of the publisher's eligible printing costs for the taxation year.

Claim for credit

10.4(2)     No amount may be claimed under subsection (1) for a taxation year except by filing with the minister, within one year after the filing due date for the taxation year and in a form and manner authorized by the minister, the information to be provided on that form.

Definitions

10.4(3)     The following definitions apply in this section.

"book publishing labour costs" of a publisher for a taxation year means the total of the following amounts, to the extent that they are incurred after April 9, 2008 and before 2012 and are reasonable in the circumstances:

(a) the salary or wages that

(i) were paid by the publisher in that taxation year to its employees who were resident in Manitoba on December 31 of that taxation year, and

(ii) are related to the publication of hardcover or paperback books but not to the marketing or promotion of books;

(b) 65% of the fees that are related to the publication of hardcover or paperback books, but not to the marketing or promotion of books, and were paid in the taxation year by the publisher to

(i) an individual who is resident in Manitoba and is not an employee of the publisher, or

(ii) a corporation with a permanent establishment in Manitoba;

(c) any additional amounts determined in accordance with the regulations. (« coûts en main-d'œuvre d'édition »)

"eligible book" means a first edition, non-periodical publication that meets all of the following requirements:

(a) it is published in hardcover or paperback book format;

(b) the agreement between its publisher and the author for the publication of the book was entered into after April 9, 2008 and before 2012;

(c) a prescribed number of copies of the book — or 300 copies, if no number of copies is prescribed — have been printed;

(d) the book is assigned an International Standard Book Number (ISBN), and is classified as fiction, non-fiction, poetry, drama, biography or a children's book;

(e) if it is not a children's book, it is at least 48 pages long;

(f) the entire book, or substantially all of it, has been written, adapted or translated by an author who is a Canadian citizen or permanent resident and is paid a royalty on sales of the book;

(g) if it is an illustrated children's book, the illustrations or substantially all of them have been created by an illustrator who is a Canadian citizen or permanent resident and is paid a royalty on sales of the book;

(h) if it is a book comprising written works by different authors, all or substantially of the written works within the book meet the requirements of clause (f) and, if applicable, clause (g);

(i) its publisher deals at arm's length with the author referred to in clause (f) and, if applicable, with the illustrator referred to in clause (g);

(j) its publisher's costs of publishing the book are recoverable only from sales of the book, and are not directly or indirectly funded or guaranteed to be paid, in whole or in part, by the author, the illustrator or a person who is the subject of the book, or by any person who is related to any of them;

(k) it is not a directory, agenda, catalogue, calendar, map or collection of maps, loose-leaf publication, colouring book, sticker book or other activity book or book of games, or a similar product;

(l) it does not contain any advertising other than the publisher's own promotional material;

(m) it does not contain material that is hate propaganda or child pornography as defined in the Criminal Code (Canada) or is deemed to be obscene under that Act, or any other material the publication, sale or possession of which is an offence under that Act;

(n) it does not contain material that, in the opinion of the minister, it would be contrary to public policy to support with public funds;

(o) any additional requirement prescribed by regulation. (« livre admissible »)

"eligible printing costs" of a publisher for a taxation year means the publisher's costs for the year of printing, assembling and binding eligible books, to the extent that those costs

(a) are reasonable in the circumstances;

(b) are incurred after April 9, 2008 and before 2013;

(c) are incurred in relation to an eligible book in the year it is published or in the immediately following year;

(d) are paid by the publisher in the taxation year;

(e) relate to the publication of eligible books that are printed on paper having at least 30% recycled content comprised of post-consumer waste paper; and

(f) satisfy any other requirements prescribed by regulation. (« coûts d'impression admissibles »)

"minister" means the minister appointed by the Lieutenant Governor in Council to administer this section. (« ministre »)

"tax credit" means the book publishing tax credit under subsection (1). (« crédit d'impôt »)

Interpretation of "book publishing labour costs"

10.4(4)     For the purpose of the definition "book publishing labour costs" in subsection (3),

(a) an amount is related to the publication of a book if it is incurred as a cost of

(i) editing, design, research or project management in relation to the book,

(ii) creating artwork for the book, or

(iii) developing a prototype of the book;

(b) legal and accounting costs are deemed not to be related to the publication of books, even if they are incurred in connection with the publication of books; and

(c) any part of a salary, wage or fee that is determined by reference to profits or revenues is deemed not to be related to the publication of books.

Eligible publisher

10.4(5)     For the purpose of subsection (1), a person is an eligible publisher for a taxation year if

(a) the person is

(i) an individual, other than a trust, who is resident in Manitoba at the end of the taxation year, or

(ii) a corporation that has a permanent establishment in Manitoba in the taxation year;

(b) the person is

(i) carrying on the book publishing business as a university press, or

(ii) primarily engaged in the operation of the book publishing business;

(c) where the business is operated as a university press, at least 25% of the total salaries and wages paid in the taxation year by the person to employees employed in that business was paid to employees who were resident in Manitoba on December 31 of the taxation year;

(d) where the business is not operated as a university press, at least 25% of the total salaries and wages paid in the taxation year by the person to the person's employees was paid to employees who were resident in Manitoba on December 31 of the taxation year; and

(e) the person has published at least two eligible books within the two-year period ending at the end of the taxation year.

Book publishing business

10.4(6)     For the purpose of subsection (5), a business is a book publishing business only if, in the course of that business,

(a) books are selected, edited, published and offered for sale to retailers, or directly or indirectly to consumers;

(b) the owner of the business enters into agreements with authors and copyright holders for the production of books in print form; and

(c) the owner maintains an inventory of books that it publishes, or has agreements to repurchase or allow the return of unsold books.

Duplicate claims

10.4(7)     If more than one publisher claims to be the publisher of an eligible book, the book must be excluded in determining the tax credit of each of them, unless they file with the minister an agreement signed by all of them that allocates among them the number of pages of the book that are to be included in determining their tax credits.

Recovery of overpayment of tax credit

10.4(8)     If the minister determines that all or any part of an amount paid or applied under subsection (1) did not qualify as a tax credit of the person to whom it was paid or for whose benefit it was applied, that amount or part of the amount is recoverable from the person and is a debt due by the person to Her Majesty in right of Manitoba.

Regulations

10.4(9)     The Lieutenant Governor in Council may make regulations

(a) defining any term used in this section but not defined in this Act;

(b) prescribing a limit to non-refundable advances to authors that may be included in determining the amount of a tax credit;

(c) prescribing additional requirements for the purpose of

(i) the definition "eligible book", or

(ii) the definition "eligible printing costs";

(d) prescribing additional categories of expenses that may be included as book publishing labour costs;

(e) respecting information to be provided by a person claiming a tax credit under this section;

(f) respecting the maintenance of books and records, and the provision of information or access to information, for the purpose of verifying the validity of a claim for a tax credit under this section;

(g) respecting any other matter that the Lieutenant Governor in Council considers necessary to carry out effectively the intent and purpose of this section.

Delegation

10.4(10)    The minister may delegate to an employee of the government any power, duty or function of the minister under this section.

INTERACTIVE DIGITAL MEDIA TAX CREDIT

Interactive digital media tax credit

10.5(1)     Subject to subsection (2), a qualifying corporation is deemed to have paid on its balance-due day for a taxation year, on account of its tax payable under this Act for that year, such amount as is claimed by the corporation, but not exceeding 40% of the amount, if any, by which

(a) its eligible labour costs for eligible projects completed in the taxation year;

exceed

(b) the amount of any government assistance, other than the tax credit under this section or section 10.1 (co-op education and apprenticeship tax credit), received or receivable by the corporation in relation to its eligible labour costs for those projects.

Claim for credit

10.5(2)     No amount may be claimed under subsection (1) in respect of an eligible project except by filing with the Minister of National Revenue, within one year after the filing due date for the taxation year in which the project was completed, a tax credit certificate issued under subsection (8) for the project.

"Qualifying corporation" defined

10.5(3)     For the purpose of this section, a corporation is a qualifying corporation in relation to an eligible project if

(a) throughout the project period, it is a taxable Canadian corporation with a permanent establishment in Manitoba; and

(b) at least 25% of the salary and wages paid by the corporation to its employees for the project period was paid to employees who are Manitoba residents for the project period.

Other definitions

10.5(4)     The following definitions apply in this section.

"commencement date", in relation to an eligible project of a corporation, means the date on which the corporation first incurs an expense to be included in the corporation's eligible labour costs for the project. (« date de début »)

"eligible labour costs" of a corporation in relation to an eligible project means the lesser of $1,250,000. and the total of the following amounts, to the extent that they are reasonable in the circumstances, are directly attributable to the project, and were incurred and paid before 2011 and within the project period:

(a) the salaries and wages paid by the corporation to its employees who are Manitoba residents for the project period;

(b) 65% of the fees paid by the corporation to

(i) an individual who is a Manitoba resident for the project period and is not an employee of the corporation, for services performed by the individual or by one or more employees of the individual who are Manitoba residents for the project period,

(ii) a taxable Canadian corporation with a permanent establishment in Manitoba, for services performed on its behalf by one or more employees who are Manitoba residents for the project period, or

(iii) a partnership carrying on business in Canada, for services performed on its behalf by one or more individuals who are employees or members of the partnership and are Manitoba residents for the project period;

(c) 20% of the total of all amounts each of which is an amount that would be included under clause (a) or (b) in respect of services performed in Manitoba for the project by an individual who is not a Manitoba resident for the project period if

(i) the individual were a Manitoba resident for the project period, and

(ii) no amount were included in respect of the benefits or allowances that are included (or would be included if the individual were an employee resident in Canada) in the income of the individual under section 6 of the federal Act. (« coûts de main-d'œuvre admissibles »)

"eligible project" means a project of a corporation, certified by the minister to be an eligible project of the corporation, to develop an interactive digital media product primarily for sale to

(a) one or more purchasers who deal with the corporation at arm's length; or

(b) a purchaser for resale or licensing by the purchaser to one or more other persons, most of whom deal at arm's length with the purchaser and the corporation. (« projet admissible »)

"interactive digital media product" means a product that

(a) consists of a combination of software and data files, in digital format, that are designed to be operated together, interactively by the user, to present information using sound, text and images, or any two of them;

(b) is designed primarily to educate, inform or entertain the user;

(c) in the case of a video game, is classified by the Entertainment Software Rating Board as anything other than "AO" (adults only); and

(d) is not

(i) operating system software,

(ii) a product to be used primarily for interpersonal communication,

(iii) a product to be used primarily for marketing or promoting of an entity, a product or an idea,

(iv) a product that contains hate propaganda or child pornography as defined in the Criminal Code (Canada) or is deemed to be obscene under that Act, or any other material the publication, sale or possession of which is an offence under that Act, or

(v) a product that, in the opinion of the minister, it would be contrary to public policy to support with public funds. (« produit utilisant des médias numériques interactifs »)

"Manitoba resident", in relation to a project period, means resident in Manitoba on any December 31 within the period or, if the period does not include that day, on December 31 of the year in which the period ends. (« résident du Manitoba »)

"minister" means the minister appointed by the Lieutenant Governor in Council to administer this section. (« ministre »)

"project period", in relation to an eligible project, means

(a) the period beginning on the project's commencement date and ending on the day the project is completed; or

(b) the 24-month period ending on the day the project is completed;

whichever is shorter. (« période de projet »)

Interpretation of "eligible labour costs"

10.5(5)     For the purpose of the definition "eligible labour costs" in subsection (4),

(a) no amount may be included in respect of the following:

(i) salary, wages or fees determined by reference to profits or revenues,

(ii) stock options, signing bonuses, or other employment incentives,

(iii) ancillary employment benefits that are not required by law to be provided,

(iv) any benefits or remuneration prescribed by regulation,

(v) an amount that is included in computing the corporation's eligible labour costs in relation to any other project or the eligible labour costs of any other corporation,

(vi) an amount that is included in computing a tax credit claimed under any other section of this Act other than section 10.1 (co-op education and apprenticeship tax credit), or under any Act of another province or territory of Canada; and

(b) an amount is not considered to be directly attributable to an eligible project if it is paid for

(i) services related to distribution, marketing or promotion,

(ii) administrative, payroll or management services, other than management services consisting of managing the project, or

(iii) any other service prescribed by regulation.

Certificate of eligibility

10.5(6)     Upon application by a corporation proposing to develop an interactive digital media product, the minister may issue to the corporation a document that

(a) identifies the project and certifies it to be an eligible project;

(b) sets out the corporation's proposed commencement date and estimated completion date for the project;

(c) provides an estimate of the tax credit; and

(d) includes any other information that the minister considers appropriate or necessary.

Application for certificate of eligibility

10.5(7)     A corporation's application for a certificate of eligibility under subsection (6) must be made in a form approved by the minister and before the commencement date of the project, and must include the following:

(a) the name, address and business number of the corporation;

(b) a description of the interactive digital media product to be developed;

(c) if the product is to be developed for sale to a purchaser for resale or licensing to others, the name and address of the purchaser and, if requested by the minister, a copy of the agreement between the corporation and the purchaser;

(d) if clause (c) does not apply or the purchaser referred to in that clause has not been identified, a copy of the corporation's plan for marketing the product;

(e) an estimate of the corporation's eligible labour costs for the project;

(f) the proposed commencement date and an estimated completion date for the project;

(g) any other information requested by the minister.

Tax credit certificate

10.5(8)     The minister, upon application by a qualifying corporation in accordance with subsection (9), and upon being satisfied that the corporation qualifies for a tax credit for an eligible project, must issue a tax credit certificate that sets out

(a) the name, address and business number of the corporation and the identifier of the project;

(b) the amount of the tax credit;

(c) the taxation year to which the tax credit applies; and

(d) any other information that the minister considers appropriate or necessary.

Application for tax credit certificate

10.5(9)     A corporation's application for a tax credit certificate for an eligible project must be made in a form approved by the minister and must set out or include the following:

(a) the name, address and business number of the corporation;

(b) a copy of the certificate of eligibility for the project;

(c) the commencement date of the project and the date of its completion;

(d) a statement of the eligible labour costs;

(e) information the minister requires in order to verify or be satisfied

(i) that the corporation is a qualifying corporation in relation to the project,

(ii) that the project has been completed and satisfies all the requirements for an eligible project, and

(iii) that the amounts claimed as eligible labour costs qualify as eligible labour costs;

(f) any other information relating to the project or the corporation that the minister considers appropriate or necessary for the administration of the tax credit.

Revocation of certificate

10.5(10)    The minister may revoke a certificate of eligibility or a tax credit certificate issued to a corporation for a project if any information provided by the corporation to obtain the certificate is false or misleading or fails to disclose a material fact.  The minister may also revoke a certificate of eligibility for a project if

(a) the project is not carried out as proposed and ceases to be an eligible project; or

(b) the project is not completed within 36 months after the certificate was issued.

Effect of revocation

10.5(11)    If a certificate is revoked under subsection (10), it is deemed never to have been issued.

Recovery of overpayment of tax credit

10.5(12)    If the Minister of Finance for Manitoba determines that all or any part of an amount paid or applied under subsection (1) did not qualify as a tax credit of the person to whom it was paid or for whose benefit it was applied, that amount or part of the amount is recoverable from the person and is a debt due by the person to Her Majesty in right of Manitoba.

Regulations

10.5(13)    The Lieutenant Governor in Council may make regulations

(a) defining any term used in this section but not defined in this Act;

(b) prescribing benefits or remuneration to be excluded from the definition "eligible labour costs" in subsection (4);

(c) prescribing services the costs of which are not to be considered directly attributable to an eligible project;

(d) respecting information to be provided by a person claiming a tax credit under this section;

(e) respecting the maintenance of books and records, and the provision of information or access to information, for the purpose of verifying the validity of a claim for a tax credit under this section;

(f) respecting any other matter that the Lieutenant Governor in Council considers necessary to carry out effectively the intent and purpose of this section.

Delegation

10.5(14)     The minister may delegate any power, duty or function of the minister under this section to

(a) an employee of the government; or

(b) an officer of New Media Manitoba Inc.

38          Subsection 11.1(1) is amended

(a) by replacing the definition "approved share" with the following:

"approved share" means a Class A share that was issued to an individual who was a Manitoba resident at the time of the original acquisition of the share — or to a qualifying trust for such an individual — by a corporation that, at the time of that acquisition, was registered under The Labour-Sponsored Venture Capital Corporations Act; (« action approuvée »)

(b) by repealing the definition "entity".

39          Clause 11.8(2)(a) is amended by striking out "2009" and substituting "2012".

40(1)       Subsection 11.13(3) is amended

(a) in the part of clause (a) before subclause (i), by striking out "$45,000." and substituting "$135,000.";

(b) in paragraph (b)(ii)(A), by adding ", or $45,000., whichever is less"after "nil"; and

(c) in paragraph (b)(ii)(B), by adding ", or $45,000., whichever is less" at the end.

40(2)       Subsection 11.13(5) is replaced with the following:

CEI tax credit receipt

11.13(5)    The issuer of an eligible investment to an eligible investor must provide a CEI tax credit receipt to the investor, and provide a copy of it to the minister, in accordance with the regulations.

PART 5

THE INSURANCE CORPORATIONS TAX ACT

C.C.S.M. c. I50 amended

41          The Insurance Corporations Tax Act is amended by this Part.

42          Section 2 is amended

(a) in the part before clause (a), by adding "equal to the total of" after "tax"; and

(b) in clause (a), by striking out "equal to".

43          Section 3 is amended

(a) in the part before clause (a), by adding "equal to the total of" after "tax"; and

(b) in clauses (a) and (b), by striking out "equal to".

PART 6

THE LABOUR-SPONSORED VENTURE CAPITAL CORPORATIONS ACT

C.C.S.M. c. L12 amended

44          The Labour-Sponsored Venture Capital Corporations Act is amended by this Part.

45          Subsection 1(1) is amended

(a) in clause (a) of the definition "Class A share", by striking out "The Corporations Act" and substituting "the corporation's governing Act";

(b) in clause (a) of the definition "Class B share", by striking out "The Corporations Act" and substituting "the corporation's governing Act"; and

(c) by adding the following definition:

"prescribed labour-sponsored venture capital corporation" means a prescribed labour-sponsored venture capital corporation under section 6701 of the Income Tax Regulations (Canada). (« corporation à capital de risque de travailleurs visée »)

46(1)       Subsection 3(1) is replaced with the following:

Application for registration

3(1)        The following corporations may apply to the minister for registration under this Act:

(a) a corporation that was caused to be incorporated under The Corporations Act by an employee organization and has not previously carried on business other than the business related to obtaining registration under this Act;

(b) a prescribed labour-sponsored venture capital corporation.

46(2)       Clause 3(2)(b) is replaced with the following:

(b) information necessary to confirm the corporation's status under subsection (1);

47(1)       Section 4 is renumbered as subsection 4(1) and is amended by replacing clause (b) with the following:

(b) the corporation has never previously carried on any business or activities other than

(i) its business as a prescribed labour-sponsored venture capital corporation, or

(ii) activities related to obtaining registration under this Act or becoming a prescribed labour-sponsored venture capital corporation;

47(2)       The following is added as subsection 4(2):

Business restriction

4(2)        If the corporation is a prescribed labour-sponsored venture capital corporation, its articles are deemed to satisfy the requirement in subclause (1)(d)(i) if they satisfy the requirement in subparagraph 204.81(1)(c)(i) of the Income Tax Act (Canada).

48(1)       Subsection 5.1.1(2) is amended

(a) in the part before clause (a), by striking out "before" and substituting "until after"; and

(b) in clause (b), by adding "after becoming registered" at the end.

48(2)       The following is added after subsection 5.1.1(2):

Election of board members

5.1.1(3)    Up to three members of the board of directors of a labour-sponsored venture capital corporation are deemed for the purpose of clause (1)(a) to be have been elected by the holders of the Class A shares if they have been elected or appointed from a list of nominees approved by a resolution of the holders of the Class A shares.

49          Subclause 5.5(1)(a)(iii) is amended by adding "of eligible investments" after "dispositions".

50           The following is added after subsection 5.6(2):

Information in continuous disclosure documents

5.6(3)      Subsection (1) does not apply to information that is included in the most recent prospectus that has been filed with the commission and is available to members of the public free of charge, if the annual report indicates where in the prospectus the information is to be found and where to obtain a copy of the prospectus free of charge.

51          Subsection 18(1) is amended

(a) by replacing clause (o.2) with the following:

(o.2) modifying, extending or limiting the application of this Act or sections 11.1 to 11.5.1 of The Income Tax Act to a corporation and its shareholders in the event of a reorganization, amalgamation or merger — including a transaction or series of transactions that result in all or substantially all of the assets and Class A shareholders of one corporation becoming the assets and Class A shareholders of another corporation — or a plan of arrangement under The Corporations Act;

(b) by adding the following after clause (o.7):

(o.8) modifying, extending or limiting the application of this Act to a corporation in order to resolve a conflict between this Act and any provision of the Income Tax Act (Canada) to which the corporation is subject as a prescribed labour-sponsored venture capital corporation;

PART 7

THE MOTIVE FUEL TAX ACT

C.C.S.M. c. M220 amended

52          The Motive Fuel Tax Act is amended by this Part.

53          Subsection 2.1(2) is amended

(a) in subclause (a)(ii), by striking out "that Act" and substituting "The Drivers and Vehicles Act"; and

(b) in clause (c), by adding "as defined in The Health Services Insurance Act" after "hospital".

54(1)       Subsection 3(1) is amended by adding "clause 2(1)(b) or" after "described in".

54(2)       Subsection 3(2) is amended by adding "clause 2(1)(b) or" after "provided in".

PART 8

THE RETAIL SALES TAX ACT

C.C.S.M. c. R130 amended

55          The Retail Sales Tax Act is amended by this Part.

56          The following heading is added before section 1:

DEFINITIONS, INTERPRETATION, ADMINISTRATION AND ENFORCEMENT

57(1)       Subsection 1(1) is amended by adding the following definition:

"closely related" describes the following relationships:

(a) the relationship between two corporations at any time that

(i) one corporation controls the other corporation and owns shares in the capital stock of the other corporation having a fair market value that is not less than 95% of the fair market value of all the issued and outstanding shares of the other corporation, and

(ii) there exists no right or option that, if exercised, would result in any condition in subclause (i) not being satisfied,

(b) the relationship between two corporations at any time that

(i) they are controlled by the same corporation,

(ii) the controlling corporation owns shares in the capital stock of each controlled corporation that have a fair market value that is not less than 95% of the fair market value of all of the shares of that controlled corporation, and

(iii) there exists no right or option that, if exercised, would result in any condition in subclause (i) or (ii) not being satisfied,

(c) the relationship between two partnerships at any time that

(i) one partnership controls the other partnership and its interest in the other partnership entitles it to be allocated at least 95% of the income or losses of that other partnership, and has a fair market value that is not less than 95% of the fair market value of all of the interests in that other partnership, and

(ii) there exists no right or option that, if exercised, would result in any condition in subclause (i) not being satisfied,

(d) the relationship between two partnerships at any time that

(i) they are controlled by the same partnership,

(ii) the controlling partnership's interest in each controlled partnership entitles it to be allocated at least 95% of the income or losses of that controlled partnership, and has a fair market value that is not less than 95% of the fair market value of all of the interests in that controlled partnership, and

(iii) there exists no right or option that, if exercised, would result in any condition in subclause (i) or (ii) not being satisfied,

(e) the relationship between two partnerships, or between two corporations, where, having regard to the nature of the relationship, the minister considers them to be closely related for the purposes of this Act; (« étroitement liées »)

57(2)       Clause (c) of the definition ""purchase price" or "sale price"" in subsection 1(1) is amended by striking out "and" at the end of subclause (ii), adding "and" at the end of subclause (iii) and adding the following after subclause (iii):

(iv) a tax imposed by a municipality under section 3 of The Municipal Revenue (Grants and Taxation) Act,

57(3)       The definition "software" in subsection 1(1) is amended by striking out everything after "other means".

57(4)       The following is added after subsection 1(1.3):

Interpretation of "closely related"

1(1.4)      For the purpose of the definition "closely related" in subsection (1),

(a) shares in the capital stock of a corporation that are, or are deemed by this clause to be, owned by another corporation (referred to as the "holding company") are deemed to be owned by the shareholders of the holding company in the proportion that

(i) the fair market value of their shares in the holding company,

is of

(ii) the fair market value of all the shares in the holding company;

(b) an interest in a partnership that is, or is deemed by this clause to be, owned by another partnership (referred to as the "holding partnership") is deemed to be owned by the members of the holding partnership in the proportion that

(i) the fair market value of their interests in the holding partnership,

is of

(ii) the fair market value of all the interests in the holding partnership;

(c) the fair market value of a share in the capital stock of a corporation may be determined as at the last time that any share in the capital stock of the corporation was acquired or disposed of by any person; and

(d) the fair market value of an interest in a partnership may be determined as at the last time that any interest in the partnership was acquired or disposed of by any person.

57(5)       Clause 1(2)(b) is replaced with the following:

(b) subclause 4(1)(e)(iii);

57(6)       Subsections 1(5) to (8) are repealed.

58          The following heading is added before section 2:

TAX ON TANGIBLE PERSONAL PROPERTY

59(1)       Subsection 2(1.2) is amended

(a) by replacing subclause (a)(ii) with the following:

(ii) at least 80% of which has the permanently installed capability of being fully heated by electricity;

(b) in clause (b), by striking out "principally" and substituting "exclusively or nearly exclusively".

59(2)       Clause 2(4.1)(a) is amended by adding "or off-road vehicle" after "vehicle".

59(3)       Clause 2(5.3.1)(a) of the English version is amended by striking out "it" after "that".

60          Subsection 2.3(16) is repealed.

61          The following heading is added before section 3:

TAX EXEMPTIONS FOR TANGIBLE PERSONAL PROPERTY

62(1)       Subsection 3(1) is amended

(a) by adding the following after clause (e.1):

(e.2) nicotine replacement therapy products designed to assist a person to quit smoking;

(b) in clauses (m) and (o.1), by striking out "principally" and substituting "exclusively, or nearly exclusively,";

(c) by adding the following after clause (v):

(v.1) non-returnable materials purchased by a vendor and used to protect or stabilize tangible personal property during transportation, commonly known as dunnage;

(d) in clause (w.1), by adding the following after subclause (vi):

(vii) rolling mill rolls,

(viii) press rolls used to produce paper in a pulp and paper mill,

(ix) refractory bricks and liners for kilns;

(e) in clause (w.2), by adding "or gas" before "production";

(f) by adding the following after clause (w.3):

(w.4) welding tips and laser or plasma nozzles, when purchased for use in manufacturing a product for sale or in providing a taxable service;

(g) by replacing clause (ii) with the following:

(ii) fire trucks and related firefighting and rescue equipment;

(h) by replacing clause (mm) with the following:

(mm) ambulances;

62(2)       Clause 3(10)(b) is amended by adding "or off-road vehicle" after "vehicle".

62(3)       Subsection 3(11) is renumbered as subsection 26(4).

62(4)       Subsection 3(11.1) is renumbered as subsection 26(5) and is amended in the part before clause (a) by striking out "subsection (11)" and substituting "subsection (4)".

62(5)       Subsection 3(11.2) is renumbered as subsection 26(6) and is amended by striking out "subsection (11.1)" and substituting "subsection (5)".

62(6)       Subsection 3(11.3) is renumbered as subsection 26(7) and is amended by striking out "subsection (11)" and substituting "subsection (4)".

62(7)       Subsection 3(11.4) is renumbered as subsection 26(11) and is amended by striking out everything after "subsection" and substituting "(4), (8) or (9)".

62(8)       Subsection 3(12) is renumbered as subsection 26(8).

62(9)       Subsection 3(13) is renumbered as subsection 26(9).

62(10)      Subsection 3(13.1) is renumbered as subsection 26(10) and is amended in the part before clause (a) by striking out "clause (11)(a), (12)(a) or (13)(a)" and substituting "clause (4)(a), (8)(a) or (9)(a)".

62(11)      Subsection 3(18) is replaced with the following:

Sale to closely related corporation or partnership

3(18)       No tax is payable in respect of a sale of tangible personal property

(a) by a corporation to another corporation to which it is closely related; or

(b) by a partnership to another partnership to which it is closely related;

if

(c) the seller remains closely related to the purchaser throughout the first six months after the sale; and

(d) the seller has paid tax under this Act in respect of a previous purchase of the property.

Sale to new corporation or partnership by closely related seller

3(18.1)     No tax is payable in respect of a sale of tangible personal property to a newly incorporated corporation or a newly formed partnership if

(a) the property is transferred to the purchaser before the purchaser commences carrying on business;

(b) throughout the first six months after the purchase, the seller is closely related to the purchaser, or would be closely related to the purchaser if the seller were a corporation or a partnership; and

(c) the seller has paid tax under this Act in respect of a previous purchase of the property.

Sale to new corporation for shares

3(18.2)     If tangible personal property is sold to a newly incorporated corporation for consideration that includes shares in the capital stock of the corporation, no tax is payable in respect of the portion of the purchase price that is attributable to those shares if

(a) the property is transferred to the corporation before it commences carrying on business;

(b) for at least six months after those shares are issued,

(i) they remain the property of the seller, and

(ii) no amount is paid or payable to the seller as a return of capital on those shares; and

(c) the seller has paid tax under this Act in respect of a previous purchase of the property.

Sale to new partnership for partnership interest

3(18.3)     If tangible personal property is sold to a newly formed partnership for consideration that includes a partnership interest, no tax is payable in respect of the portion of the purchase price that is attributable to the partnership interest if

(a) the property is transferred to the partnership before it commences carrying on business;

(b) for at least six months after that partnership interest is issued,

(i) it remains property of the seller, and

(ii) no amount is paid or payable to the seller as a return of capital on that partnership interest; and

(c) the seller has paid tax under this Act in respect of a previous purchase of the property.

Transfer to shareholder

3(18.4)     If tangible personal property of a corporation is transferred to a shareholder of the corporation who did not acquire any shares of the corporation in contemplation of the transfer, the following rules apply:

(a) no tax is payable by the shareholder in respect of the transfer if

(i) the transfer is part of a distribution of property to shareholders of the corporation on the winding-up and dissolution of the corporation in satisfaction of their rights to such a distribution and for no other consideration, and

(ii) the corporation previously paid tax under this Act on the full purchase price of the property when it acquired the property;

(b) if the corporation previously acquired the property from the shareholder and the shareholder previously paid tax under this Act on the property, no tax is payable by the shareholder in respect of the proportion of the fair value of the property that

(i) the fair market value of the shareholder's shares of the corporation immediately before the transfer,

is of

(ii) the fair market value of all the issued and outstanding shares of the corporation immediately before the transfer.

Transfer to partner

3(18.5)     If tangible personal property of a partnership is transferred to a member of the partnership who did not acquire any interest in the partnership in contemplation of the transfer, the following rules apply:

(a) no tax is payable by the member in respect of the transfer if

(i) the transfer is part of a distribution of property to members of the partnership on the winding-up and dissolution of the partnership in satisfaction of their rights to such a distribution and for no other consideration, and

(ii) the partnership previously paid tax under this Act on the full purchase price of the property when it acquired the property;

(b) if the partnership previously acquired the property from the member and the member previously paid tax under this Act on the property, no tax is payable by the member in respect of the proportion of the fair value of the property that

(i) the fair market value of the member's interest in the partnership immediately before the transfer,

is of

(ii) the fair market value of all the interests in the partnership immediately before the transfer.

62(12)      Subsections 3(27) and (27.1) are renumbered as subsections 26(12) and (13), respectively.

62(13)      Clause 3(33)(c) is replaced with the following:

(c) repair parts for a vehicle mentioned in clause (a) or a trailer mentioned in clause (b).

62(14)      The following is added after subsection 3(36):

Custom software and modifications

3(37)       No tax is payable by a purchaser in respect of

(a) software modifications made solely to meet the requirements of the purchaser, if

(i) the purchase price or lease price, as the case may be, of the modifications is separate from that of the unmodified software, and

(ii) the purchase price or lease price of the modifications is greater than the purchase price or lease price, as the case may be, of the software in its unmodified form;

(b) software modified solely to meet the requirements of the purchaser, if

(i) the purchase price or lease price, as the case may be, is for the software as modified, and

(ii) that purchase price or lease price is more than double what it would have been for the software in its unmodified form; or

(c) custom software, being

(i) a software program developed solely to meet the requirements of the purchaser, and

(ii) subsequent modifications to software referred to in subclause (i), when performed for the person for whom the software was originally developed;

unless a copy of the software, or the right to use the software, is sold or leased to someone other than the purchaser.

Subsequent purchaser of custom software

3(38)       For the purpose of clause (37)(c), the purchaser of custom software of the seller in the following circumstances is deemed to be the person for whom it was originally developed or modified:

(a) a business is sold to the purchaser as a going concern and the business assets sold to the purchaser include all of the rights, title and interest in and to custom software of the seller used by the seller in that business;

(b) custom software of the seller is sold to the purchaser in circumstances where the purchase would be exempt from tax under subsection (18), (18.1), (18.2) or (18.3) if those provisions did not require the seller to have paid tax in respect of a previous purchase of the software.

63          The following heading is added before section 4:

TAXABLE SERVICES

64(1)       Clause 4(1)(d) is amended by adding "inspecting," after "maintaining,".

64(2)       Clause 4(8)(a) is amended by adding "(w), (w.1), (w.4)," after "(p),".

64(3)       The following is added after subsection 4(9):

No tax on testing for research

4(10)       No tax is payable in respect of the testing of tangible personal property for research purposes.

No tax on vehicle safety inspection

4(11)       No tax is payable on the purchase price of a motor vehicle safety inspection that is required under subsection 44(2) of The Drivers and Vehicles Act for the registration of a vehicle.

65          The following heading is added before section 5:

RST NUMBER

66          The following is added after subsection 5(7):

Registered purchaser

5(8)        A purchaser without an RST number who carries on a business in Manitoba and brings into Manitoba, or receives in Manitoba, tangible personal property purchased outside of Manitoba with a fair value of $400. or more must apply for an RST number.

67          The following heading is added before section 9:

VENDORS AND TAX COLLECTION

68          Section 23 is replaced with the following:

REGISTRATION OF MOTOR VEHICLES

Duty of Registrar of Motor Vehicles

23(1)       Despite any Act of the Legislature, the Registrar of Motor Vehicles must not permit any person to register a vehicle or off-road vehicle under The Drivers and Vehicles Act, other than a vehicle being registered for interjurisdictional commercial purposes, unless

(a) the registration is a renewal; or

(b) the person produces evidence satisfactory to the registrar that

(i) the tax has been paid under this Act in respect of the person's purchase of the vehicle, or

(ii) no tax is payable in respect of the person's purchase of the vehicle.

Registration for interjurisdictional purpose

23(2)       Despite any Act of the Legislature, the Registrar of Motor Vehicles must not permit any person to register a vehicle for interjurisdictional commercial purposes for a vehicle registration year, as defined in section 2.3, unless the person produces evidence satisfactory to the registrar that the tax under that section has been paid in respect of the vehicle for that year.

69           The following heading is added before section 26:

REFUNDS

70          Subsection 26(1.1) is renumbered as section 26.1 and the following heading is added before that section:

MISCELLANEOUS PROVISIONS

71          The following heading is added before section 29:

REGULATIONS

PART 9

THE TAX ADMINISTRATION AND MISCELLANEOUS TAXES ACT

C.C.S.M. c. T2 amended

72          The Tax Administration and Miscellaneous Taxes Act is amended by this Part.

73          Clause 10(2)(c) is replaced with the following:

(c) a permit under The Tobacco Tax Act for producing marks or stamps capable of being applied to the packaging of cigarettes or fine cut tobacco for the tax purposes of Manitoba, if the director is not satisfied that the person seeking the permit will

(i) take reasonable steps to ensure the security of the marks or stamps in the applicant's possession,

(ii) keep adequate records of the quantity of marks or stamps produced by the applicant, and

(iii) co-operate with an inspection, examination or audit;

74          Subsection 21(4) is repealed.

75(1)       Subsection 39(2) is amended in the part after clause (b) by striking out the last sentence.

75(2)       The following is added after subsection 39(3):

Failure to comply with director's order

39(4)       If a person fails to comply with an order under

(a) clause 15(1)(a) or (b) (information returns and reports);

(b) clause 15(1)(e) (trust accounts); or

(c) subsection 21(1) (order to produce records, etc.);

the director may, by assessment under section 46, impose a penalty of not more than $200. for each day that the failure continues.

Penalty in addition to other fine or penalty

39(5)       Each fee or penalty under this section is in addition to any other fee, fine or penalty that may be imposed under this Act.

76          Clause 42(2)(a) is amended

(a) by striking out "21(4) (failure to produce records) or"; and

(b) by adding "or (4) (failure to comply with director's order)" after "(failure to pay or remit tax)".

77          Clause 46(1)(e) is replaced with the following:

(e) a penalty imposed by the director under subsection 39(4) (failure to comply with director's order);

78          Clause 56(1)(b) is amended by striking out "the reference number of" and substituting "include a copy of".

79          Clause 77(1)(g) is amended by striking out "alcohol or".

80          Subsection 80(1) is amended

(a) by replacing clause (b) with the following:

(b) without lawful excuse, has in his or her possession a mark or stamp capable of being applied to the packaging of cigarettes or fine cut tobacco to represent the packaging as being marked or stamped for the tax purposes of Manitoba;

(b) by replacing clause (d) with the following:

(d) acquires a mark or stamp described in clause (b) from a person who does not hold a tax authorization to produce or manufacture it.

Conditional amendment repealed

81          Section 135 of The Budget Implementation and Tax Statutes Amendment Act, 2005, S.M. 2005, c. 40, is repealed.

PART 10

THE TOBACCO TAX ACT

C.C.S.M. c. T80 amended

82          The Tobacco Tax Act is amended by this Part.

83          Section 4.2 is replaced with the following:

Permit for producing mark or stamp

4.2         No person shall produce a mark or stamp capable of being applied to the packaging of cigarettes or fine cut tobacco to represent the packaging as being marked or stamped for the tax purposes of Manitoba, except as authorized by a permit issued by the director.

Permit for equipment

4.3         No person shall, within Manitoba, possess equipment for

(a) manufacturing or packaging tobacco products for sale in Manitoba; or

(b) marking or stamping tobacco products for the tax purposes of Manitoba;

except as authorized by a permit issued by the director.

84          Subsection 28(1) is amended

(a) by adding the following after clause (a.1):

(a.2) defining any term that under this Act is to be defined by regulation;

(b) by repealing subclause (o)(ii.1).

PART 11

COMING INTO FORCE

Coming into force

85(1)       Except as otherwise provided in this section, this Act comes into force on the day it receives royal assent.

Part 1: The Corporation Capital Tax Act

85(2)       Subclause 2(1)(b)(i) is deemed to have come into force on January 1, 2007.

Part 4: The Income Tax Act

85(3)       Clause (b.1) of Rule 6 in subsection 4(1) of The Income Tax Act, as enacted by clause 18(b), is deemed to have come into force on January 1, 2007.

85(4)       Section 23, subsection 27(1), sections 28 to 31 and section 40 are deemed to have come into force on January 1, 2008.

85(5)       Section 37 is deemed to have come into force on April 10, 2008.

Part 8: The Retail Sales Tax Act

85(6)       Subsection 57(2) is deemed to have come into force on June 1, 2008.

85(7)       The following provisions are deemed to have come into force on May 1, 2008:

(a) clauses 62(1)(a), (c), (d) and (f);

(b) subsection 64(2).

Part 9: The Tax Administration and Miscellaneous Taxes Act

85(8)       Section 73 comes into force on a day to be fixed by proclamation.

85(9)       Section 78 comes into force on July 1, 2008.

Part 10: The Tobacco Tax Act

85(10)      Clause 84(b) comes into force on a day to be fixed by proclamation.

Explanatory Note

This Bill implements measures in the 2008 Manitoba Budget, and makes various other amendments to tax and financial legislation.

Budget Measures

The amendments to implement tax measures announced in the Budget include the following:

Corporation Capital Tax (Part 1)

  • eliminating corporation capital tax for qualifying manufacturers effective July 1, 2008 (s. 4)
  • for other corporations (except Crown corporations and financial institutions), reducing the tax in 2009 and 2010, and eliminating it for fiscal years beginning after 2010 (s. 2)

Income Tax (Part 4)

  • reducing the personal income tax rate for the lowest tax bracket from 10.9% to 10.8% and raising the upper limit of the middle tax bracket from $66,000 to $67,000 (s. 18, 19, 20(1) and (5) to (8))
  • increasing the basic personal amount and the maximum spousal and eligible dependant amounts by $100 to $8,134 (s. 20(2) to (4))
  • increasing the education property tax credit base amount from $525 to $600 (s. 23)
  • increasing refundable personal tax credits (s. 24)
  • establishing a new primary caregiver tax credit (s. 25)
  • reducing the general corporate tax rate from 13% to 12% and the small business tax rate for active business income from 2% to 1% (s. 26)
  • extending or enhancing the following tax credits:
    • the manufacturing investment tax credit (s. 27)
    • the film and video production tax credit (s. 28 to 31)
    • the co-op education and apprenticeship tax credit (s. 35)
    • the community enterprise development tax credit (s. 40)
  • establishing the following new tax credits:
    • the Manitoba book publishing tax credit (s. 37)
    • the interactive digital media tax credit (s. 37)

    Retail Sales Tax (Part 8)

  • providing new or expanded exemptions for
    • nicotine replacement therapy products (s. 62(1))
    • non-returnable dunnage materials (s. 62(1))
    • press rolls and rolling mill rolls (s. 62(1))
    • bricks and liners for kilns (s. 62(1))
    • welding tips and laser and plasma nozzles (s. 62(1))
    • services to direct agents (s. 64(2))

    Other Amendments

Other amendments to tax statutes include the following:

  • clarifying retail sales tax exemptions for transactions between closely related parties (s. 57(1) and (4) and 62(11))
  • excluding certain municipal taxes on goods and services from retail sales tax (s. 57(2))
  • extending the permit requirements under The Tobacco Tax Act (s. 83)
  • making corrections and minor amendments
  • streamlining various tax administration measures

The Highway Traffic Act is also amended to allow for the increase in fines and penalties included in the Estimates of Revenue that accompanied the Budget. (s. 13 to 16)

The Income Tax Act and The Labour-Sponsored Venture Capital Corporations Act are also amended to enable labour-sponsored venture capital corporations operating in other jurisdictions to apply for registration in Manitoba. (s. 38 and 44 to 51)