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Federal-Provincial Fiscal Arrangements Act (R.S.C., 1985, c. F-8)

Act current to 2022-09-11 and last amended on 2022-06-23. Previous Versions

PART IFiscal Equalization Payments (continued)

Fiscal Equalization Payments to Provinces (continued)

Marginal note:Interpretation

  •  (1) The following definitions apply in this section and in sections 3 to 3.4.

    average annual per capita national revenue to be equalized

    average annual per capita national revenue to be equalized means, for a fiscal year for a revenue source, the amount determined by the formula

    (A/2 + B/4 + C/4) / D

    where

    A
    is the national revenue to be equalized for that revenue source for the fiscal year that is two years prior to that fiscal year;
    B
    is the national revenue to be equalized for that revenue source for the fiscal year that is three years prior to that fiscal year;
    C
    is the national revenue to be equalized for that revenue source for the fiscal year that is four years prior to that fiscal year; and
    D
    is the aggregate of the average annual population of all provinces for that fiscal year. (revenu national annuel moyen sujet à péréquation par habitant)
    average annual per capita national yield

    average annual per capita national yield means, for a revenue source for a fiscal year, the amount determined by the formula

    (A/2 + B/4 + C/4) / D

    where

    A
    is the national yield for that revenue source for the fiscal year that is two years prior to that fiscal year;
    B
    is the national yield for that revenue source for the fiscal year that is three years prior to that fiscal year;
    C
    is the national yield for that revenue source for the fiscal year that is four years prior to that fiscal year; and
    D
    is the aggregate of the average annual population of all provinces for that fiscal year. (rendement national annuel moyen par habitant)
    average annual per capita revenue to be equalized

    average annual per capita revenue to be equalized means, in respect of a province for a revenue source for a fiscal year, the amount determined by the formula

    (A/2 + B/4 + C/4) / D

    where

    A
    is the revenue to be equalized for that revenue source for the fiscal year that is two years prior to that fiscal year;
    B
    is the revenue to be equalized for that revenue source for the fiscal year that is three years prior to that fiscal year;
    C
    is the revenue to be equalized for that revenue source for the fiscal year that is four years prior to that fiscal year; and
    D
    is the average annual population of that province for that fiscal year. (revenu annuel moyen sujet à péréquation par habitant)
    average annual per capita yield

    average annual per capita yield means, in respect of a province for a revenue source for a fiscal year, an amount determined by the formula

    (A/2 + B/4 + C/4) / D

    where

    A
    is the yield for that revenue source for the fiscal year that is two years prior to that fiscal year;
    B
    is the yield for that revenue source for the fiscal year that is three years prior to that fiscal year;
    C
    is the yield for that revenue source for the fiscal year that is four years prior to that fiscal year; and
    D
    is the average annual population of that province for that fiscal year. (rendement annuel moyen par habitant)
    average annual population

    average annual population means, in respect of a province for a fiscal year, the amount determined by the formula

    A/2 + B/4 + C/4

    where

    A
    is the population of that province for the fiscal year that is two years prior to that fiscal year;
    B
    is the population of that province for the fiscal year that is three years prior to that fiscal year; and
    C
    is the population of that province for the fiscal year that is four years prior to that fiscal year. (population annuelle moyenne)
    equalized fiscal capacity

    equalized fiscal capacity means, in respect of a province for a fiscal year, the product obtained by multiplying the per capita equalized fiscal capacity of that province for that fiscal year by the average annual population of that province for that fiscal year. (capacité fiscale après péréquation)

    national average rate of tax

    national average rate of tax means, in respect of a revenue source, the rate equal to the quotient obtained by dividing the aggregate of the revenue to be equalized for a revenue source for a fiscal year for all provinces by the revenue base in respect of that revenue source for that fiscal year for all provinces. (taux d’imposition national moyen)

    national revenue to be equalized

    national revenue to be equalized means, in respect of a revenue source for a fiscal year, the amount equal to the aggregate of the revenue to be equalized for that revenue source for that fiscal year for all provinces. (revenu national sujet à péréquation)

    national yield

    national yield means, for a revenue source for a fiscal year, the product obtained by multiplying the national average rate of tax for that revenue source for that fiscal year by the aggregate revenue base of all provinces in respect of that revenue source for that fiscal year.  (rendement national)

    per capita equalization payment

    per capita equalization payment means, in respect of a province for a fiscal year, the quotient obtained by dividing the fiscal equalization payment that would be paid to that province for that fiscal year, if the amount of that payment were determined under section 3.2 and subsections 3.4(1) to (4) as if that province had not made an election under subsection 3.2(2), by the average annual population of that province for that fiscal year. (paiement de péréquation par habitant)

    per capita equalized fiscal capacity

    per capita equalized fiscal capacity means, in respect of a province for a fiscal year, the amount determined by the formula

    A + B + (C / F)

    where

    A, B and F
    have the same meaning as the descriptions of A, B and F, respectively, in the definition total per capita fiscal capacity; and
    C
    is any fiscal equalization payment that may be paid to that province for that fiscal year if the amount of that payment were determined under paragraph 3.2(1)(a). (capacité fiscale par habitant après péréquation)
    per capita pre-adjustment equalized fiscal capacity

    per capita pre-adjustment equalized fiscal capacity means, in respect of a province for a fiscal year, the amount determined by the formula

    A + B + C + (E / F)

    where

    A, B, E and F
    have the same meaning as the descriptions of A, B, E and F, respectively, in the definition total per capita fiscal capacity; and
    C
    is the per capita equalization payment for that province for that fiscal year. (capacité fiscale par habitant après péréquation et avant rajustement)
    revenue base

    revenue base means, in respect of a revenue source for a province for a fiscal year, the measure of the relative capacity of that province to derive revenue from that revenue source for that fiscal year and may be defined more particularly by the regulations. (assiette)

    revenue source

    revenue source means any of the following sources from which provincial revenues are or may be derived:

    • (a) revenues relating to personal income;

    • (b) revenues relating to business income;

    • (c) revenues relating to consumption;

    • (d) revenues derived from property taxes and miscellaneous revenues; and

    • (e) revenues derived from natural resources. (source de revenu)

    revenue to be equalized

    revenue to be equalized means, in respect of a revenue source for a province for a fiscal year, the revenue, as determined by the Minister, derived by that province for that fiscal year from that revenue source and may be defined more particularly by the regulations. (revenu sujet à péréquation)

    total per capita fiscal capacity

    total per capita fiscal capacity means, in respect of a province for a fiscal year, the amount determined by the formula

    A + B + [(C + E) / F]

    where

    A
    is the aggregate of that province’s average annual per capita yield for each revenue source, except the one referred to in paragraph (e) of the definition revenue source, for that fiscal year;
    B
    is that province’s average annual per capita revenue to be equalized, for the revenue source referred to in paragraph (e) of the definition revenue source, for that fiscal year;
    C
    is any fiscal equalization payment that would be paid to that province for that fiscal year if the amount of that payment were determined in accordance with section 3.2 without regard to section 3.4;
    E
    is, with respect to Nova Scotia, any amount that may be paid to that province for that fiscal year in accordance with sections 7 and 8 and 10 to 14 of the Nova Scotia and Newfoundland and Labrador Additional Fiscal Equalization Offset Payments Act; and
    F
    is the average annual population of that province for that fiscal year. (capacité fiscale totale par habitant)
    yield

    yield means, in respect of a province for a revenue source for a fiscal year, an amount equal to the product obtained by multiplying the national average rate of tax for that revenue source for that fiscal year by that province’s revenue base for that revenue source for that fiscal year. (rendement)

  • Marginal note:Deduction in computing revenue to be equalized

    (2) In computing the revenue to be equalized from the revenue source described in paragraph (a) of the definition revenue source in subsection (1) for all the provinces for a fiscal year, the Minister may deduct from the amount that, but for this subsection, would be the revenue to be equalized from that revenue source for all the provinces for that fiscal year, the amount, as estimated by the Minister, by which the revenues derived by Canada under the Income Tax Act from personal income taxes for the taxation year ending in that fiscal year are less than the revenues that would have been derived by Canada under that Act from those taxes if no special abatement of those taxes had been provided under subsection 120(2) of that Act or Part VI of this Act.

  • Marginal note:Municipal property taxes and miscellaneous revenues and taxes

    (3) For the purpose of determining the revenue to be equalized derived by a province for a fiscal year, in the case of the part of the revenue source referred to in paragraph (d) of the definition revenue source in subsection (1) that consists of local government property taxes and revenues from sales of goods and services and miscellaneous local government taxes and revenues, the aggregate of the revenue derived from that part of the revenue source by each municipality, board, commission or other local authority in that province that has power to derive those revenues for the financial year of each such local authority ending in that fiscal year is deemed to be revenue derived by that province from that revenue source for that fiscal year.

  • 2007, c. 29, s. 62, c. 35, s. 161
  • 2009, c. 2, s. 386
  • 2013, c. 33, s. 115

 [Repealed, 2013, c. 33, s. 116]

 [Repealed, 2013, c. 33, s. 116]

Nova Scotia

Marginal note:Additional fiscal equalization payment

  •  (1) An additional fiscal equalization payment for the period referred to in subsection (2) may be paid to Nova Scotia equal to the amount by which

    • (a) the aggregate of the following amounts:

      • (i) the aggregate of the fiscal equalization amounts computed under section 3.72 for that province for all fiscal years in the period, and

      • (ii) the aggregate of the amounts that would be paid to that province for all fiscal years in the period in accordance with sections 7 to 14 of the Nova Scotia and Newfoundland and Labrador Additional Fiscal Equalization Offset Payments Act as that Act read on April 1, 2007, computed as if the fiscal equalization payment for that province for each fiscal year in the period were equal to the fiscal equalization amount computed under section 3.72 for that province for that fiscal year

    is greater than

  • Marginal note:Definition of period

    (2) For the purpose of subsection (1), period means the period beginning on April 1, 2008 and ending on the earlier of

  • 2007, c. 35, s. 163
  • 2013, c. 33, s. 116

Marginal note:Fiscal equalization amount

  •  (1) For the purpose of this section and section 3.71, the fiscal equalization amount for a province for a fiscal year is the average of

    • (a) the greater of zero and the amount determined by the formula

      (A - B) × C

      where

      A
      is the per capita equalization standard for that fiscal year,
      B
      is the aggregate of the average annual per capita yield in that province for each revenue source for that fiscal year, and
      C
      is the average annual population of that province for that fiscal year, and
    • (b) the amount determined by the formula

      D × [(E - F) × G] / H

      where

      D
      is
      • (a) for the fiscal year beginning on April 1, 2006, the product obtained by multiplying $10,900,000,000 by 1.035, and

      • (b) for each subsequent fiscal year, the product obtained by multiplying the amount computed for the immediately preceding fiscal year by 1.035,

      E
      is the five-province per capita equalization standard for that fiscal year determined under subsection (3),
      F
      is the aggregate of the average annual per capita yield in that province for each revenue source for that fiscal year,
      G
      is the average annual population of that province for that fiscal year, and
      H
      is the aggregate of the amount for each of the provinces determined by the formula

      (I - J) × K

      where

      I
      is the five-province per capita equalization standard for that fiscal year determined under subsection (3),
      J
      is the aggregate of the average annual per capita yield in the province for each revenue source for that fiscal year, and
      K
      is the average annual population of the province for that fiscal year.
  • Marginal note:Clarification — paragraph (1)(a)

    (2) For the purposes of paragraph (1)(a), the Minister shall determine the per capita equalization standard for a fiscal year by computing the fiscal equalization amount for each province for that fiscal year in the manner described in that paragraph and shall, in making that determination, ensure that

    • (a) the amount determined by the following formula would be the same with respect to every province for which a fiscal equalization amount is greater than zero:

      A + (B / C)

      where

      A
      is the aggregate of the average annual per capita yield in that province for each revenue source for that fiscal year,
      B
      is the fiscal equalization amount for that province for that fiscal year, and
      C
      is the average annual population of that province for that fiscal year; and
    • (b) the aggregate of the fiscal equalization amounts for all provinces for which the fiscal equalization amount is greater than zero for that fiscal year would be equal to

      • (i) for the fiscal year beginning on April 1, 2006, the product obtained by multiplying $10,900,000,000 by 1.035, and

      • (ii) for each subsequent fiscal year, the product obtained by multiplying the amount computed for the immediately preceding fiscal year by 1.035.

  • Marginal note:Clarification — paragraph (1)(b)

    (3) For the purposes of paragraph (1)(b),

    • (a) the five-province per capita equalization standard for a fiscal year is the amount determined by the formula

      (A + B + C + D + E ) / F

      where

      A
      is the product of the average annual population of Ontario for that fiscal year and the aggregate of the average annual per capita yield for each revenue source in respect of Ontario for that fiscal year,
      B
      is the product of the average annual population of Quebec for that fiscal year and the aggregate of the average annual per capita yield for each revenue source in respect of Quebec for that fiscal year,
      C
      is the product of the average annual population of Manitoba for that fiscal year and the aggregate of the average annual per capita yield for each revenue source in respect of Manitoba for that fiscal year,
      D
      is the product of the average annual population of British Columbia for that fiscal year and the aggregate of the average annual per capita yield for each revenue source in respect of British Columbia for that fiscal year,
      E
      is the product of the average annual population of Saskatchewan for that fiscal year and the aggregate of the average annual per capita yield for each revenue source in respect of Saskatchewan for that fiscal year, and
      F
      is the aggregate of the average annual population for that fiscal year of Ontario, Quebec, Manitoba, British Columbia and Saskatchewan;
    • (b) if, for a province, the value determined for F in paragraph (1)(b) is greater than the value determined for E in that paragraph, the difference between those values in relation to that province is deemed to be zero; and

    • (c) if, for a province, the value determined for J in the description of H in paragraph (1)(b) is greater than the value determined for I in that description, the difference between those values in relation to that province is deemed to be zero.

  • Marginal note:Adjustment of revenue to be equalized

    (4) Subject to subsections (5) and (6), if, for a fiscal year, the fiscal equalization amount for a province determined under subsection (1) is greater than zero and that province has seventy per cent or more of the average annual revenue base for all of the provinces in that fiscal year in respect of a revenue source, the revenue to be equalized from that revenue source for all of the provinces for the purpose of determining the average annual per capita yield for each province for that revenue source for that fiscal year is an amount equal to seventy per cent of the revenue to be equalized as otherwise determined from that revenue source for all of the provinces for each of the three immediately preceding fiscal years.

  • Marginal note:Nova Scotia

    (5) For the purpose of calculating the additional fiscal equalization payment that may be paid to Nova Scotia under subsection 3.71(1),

    • (a) subsection (4) applies to Nova Scotia in respect of the revenue source referred to in paragraph (z.5) of the definition revenue source in subsection 3.9(1) only for those fiscal years in the period referred to in subsection 3.71(2) for which the application of subsection (4) would result in an increase in the amount calculated under paragraph 3.71(1)(a); and

    • (b) subsection (4) does not apply to Newfoundland and Labrador in respect of the revenue source referred to in paragraph (z.5) of the definition revenue source in subsection 3.9(1).

  • (6) [Repealed, 2013, c. 33, s. 117]

  • 2007, c. 35, s. 163
  • 2013, c. 33, s. 117
 
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