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

Regulations are current to 2024-05-01 and last amended on 2024-04-01. Previous Versions

PART 1.1Territorial Formula Financing Payments (continued)

General (continued)

Calculation

 When calculating a territorial formula financing payment for a fiscal year under section 4.1 of the Act, the Minister shall use

  • (a) the information set out in the certificate that is submitted in the fiscal year preceding that for which the calculation is performed; and

  • (b) in the case of information that is not required to be set out in the certificate, the most recent data from the information source identified in these Regulations that is available as of December 1 of the fiscal year preceding that for which the calculation is performed.

  • SOR/2008-318, s. 17
  • SOR/2013-225, s. 26
  •  (1) When determining the revenue to be equalized from a revenue source for a fiscal year for the purpose of making a calculation referred to in section 29, the Minister may, if information that is necessary for that determination is incorrect, missing from the certificate or, in the case of information that is not required to be set out in the certificate, unavailable from the information source identified in these Regulations, estimate the revenue to be equalized on the basis of any information that is available to the Minister at the time of the calculation.

  • (2) When determining a revenue base for the purpose of making a calculation referred to in section 29, the Minister may, if information that is necessary for that determination is unavailable or incorrect, estimate the base using the following substitutions:

    • (a) if, when determining a revenue base referred to in paragraph 19(1)(a) for a fiscal year, information from T1 tax returns that are assessed or reassessed by the Canada Revenue Agency during the last three months of the calendar year that ends in the following fiscal year is not available for the purpose of calculating the simulated average revenue yield relating to personal income for the province or territory for the taxation year that ends in the fiscal year, the Minister may use in place of that yield the product of

      • (i) the simulated average revenue yield relating to personal income for the province or territory that is calculated in accordance with the method set out in subsection 21(2) on the basis of the T1 tax returns assessed or reassessed during the first nine months of the calendar year that ends in the following fiscal year, and

      • (ii) the average, over the taxation years that end in the three fiscal years immediately preceding the fiscal year, of a fraction

        • (A) whose numerator is the total federal income tax as determined by the micro-simulation model that is assessed or reassessed for the taxation year for individuals, not including trusts, in the province or territory during the calendar year following that taxation year, and

        • (B) whose denominator is the total federal income tax as determined by the micro-simulation model that is assessed or reassessed for the taxation year for individuals, not including trusts, in the province or territory during the first nine months of the calendar year following that taxation year;

    • (b) if, when determining a revenue base referred to in paragraph 19(1)(b) for a fiscal year, information from corporation tax returns that are assessed or reassessed by the Canada Revenue Agency during the last two or three months of the calendar year that ends in the following fiscal year is not available for the purpose of calculating the allocated corporation taxable income attributable to a province or territory for the fiscal year, the Minister may use in place of

      • (i) the corporations’ taxable income earned in the province or territory for their taxation years ending in the calendar year that ends in the fiscal year in respect of which they are eligible for a deduction under subsection 125(1) of the Income Tax Act, the income in respect of which they are eligible for a deduction as assessed or reassessed by the Canada Revenue Agency during the first nine months of the calendar year that ends in the following fiscal year,

      • (ii) the corporations’ taxable income earned in the province or territory for their taxation years ending in the calendar year that ends in the fiscal year, the income assessed or reassessed by the Canada Revenue Agency during the first 10 months of the calendar year that ends in the following fiscal year, and

      • (iii) the capital gains refunds payable to investment corporations and mutual fund corporations that constitute income earned in the province or territory for their taxation years ending in the calendar year that ends in the fiscal year, those refunds that are assessed or reassessed by the Canada Revenue Agency during the first 10 months of the calendar year that ends in the following fiscal year;

    • (c) if information that is necessary for determining a revenue base referred to in paragraph 19(1)(d) or (f) for a fiscal year is incorrect, missing from the certificate or, in the case of information that is not required to be set out in the certificate, unavailable from the information source identified in these Regulations, the Minister may replace the revenue base with the product of

      • (i) an estimate of the revenue base derived by substituting, in the calculation of the base, information for the most recent fiscal year or calendar year, as the case may be, for which the required information is set out in the certificate or is available from the identified information source, and

      • (ii) a fraction

        • (A) whose numerator is one plus a fraction whose numerator is the province or territory’s percentage of the population of all provinces and territories for the fiscal year for which the revenue base is being determined and whose denominator is that percentage for the fiscal year referred to in subparagraph (i) or, if that subparagraph refers to a calendar year, the fiscal year in which that calendar year ends, and

        • (B) whose denominator is two;

    • (d) if, when determining a revenue base referred to in paragraph 19(1)(g) for a fiscal year, information on the wages and salaries described in subparagraph (ii) of the description of F in that paragraph for the calendar year that ends in the fiscal year is missing from the certificate, the Minister may use in place of that information the product of the amount determined for that subparagraph for the most recent calendar year for which the information is provided in the certificate and a fraction

      • (i) whose numerator is the provincial or territorial government’s current expenditures, as determined by Statistics Canada for the purpose of its Provincial and Territorial Economic Accounts for the calendar year for which the wages and salaries information is missing from the certificate, and

      • (ii) whose denominator is the provincial or territorial government’s current expenditures, as determined by Statistics Canada for the purpose of its Provincial and Territorial Economic Accounts for the most recent calendar year for which the wages and salaries information is provided in the certificate;

    • (e) if, when determining a revenue base referred to in paragraph 19(1)(i) for a fiscal year, the expenditure and tax information required to calculate C, D and I for a province or territory for a calendar year is missing from the certificate, the Minister may use in place of C, D and I, respectively,

      • (i) the product of C as calculated for that province or territory for the most recent calendar year for which information is provided in the certificate and a fraction

        • (A) whose numerator is the C as calculated under these Regulations as they read on December 31, 2017 for the calendar year for which the information required to calculate C is missing from the certificate, and

        • (B) whose denominator is the C as calculated under these Regulations as they read on December 31, 2017 for the most recent calendar year for which the information required to calculate C is provided in the certificate;

      • (ii) the product of D as calculated for that province or territory for the most recent calendar year for which information is provided in the certificate and a fraction

        • (A) whose numerator is the D as calculated under these Regulations as they read on December 31, 2017, for the calendar year for which the information required to calculate D is missing from the certificate, and

        • (B) whose denominator is the D as calculated under these Regulations as they read on December 31, 2017, for the most recent calendar year for which the information required to calculate D is provided in the certificate,

      • (iii) the product of I as calculated for that province or territory for the most recent calendar year for which information is provided in the certificate and a fraction

        • (A) whose numerator is the I as calculated under these Regulations as they read on December 31, 2017 for the calendar year for which the information required to calculate I is missing from the certificate, and

        • (B) whose denominator is the I as calculated under these Regulations as they read on December 31, 2017 for the most recent calendar year for which the information required to calculate I is provided in the certificate, and;

    • (e.1) if, when determining a revenue base referred to in paragraph 19(1)(i) for a fiscal year, the expenditure and tax information required to calculate G for a province or territory for a calendar year is missing from the certificate, the Minister may use in place of G

      • (i) for the earliest of the calendar years for which the information necessary to calculate G is missing from the certificate, the product of G as calculated for that province or territory for the most recent calendar year for which information is provided in the certificate multiplied by one plus the average of the annual rates of growth of the provincial or territorial government’s current expenditures and non-profit institutions serving households’ final consumption expenditures, as determined by Statistics Canada for the purpose of its Provincial and Territorial Economic Accounts, for the calendar year for which the information required to calculate G is missing from the certificate, and

      • (ii) for any other calendar year for which the information required to calculate G is missing from the certificate, the result obtained under subparagraph (i) multiplied by one plus the sum of the annual averages of the annual rates of growth of the provincial or territorial government’s current expenditures and non-profit institutions serving households’ final consumption expenditures, as determined by Statistics Canada for the purpose of its Provincial and Territorial Economic Accounts, as determined for all calendar years for which the information required to calculate G is missing from the certificate;

    • (e.2) if, when determining a revenue base referred to in paragraph 19(1)(i) for a fiscal year, the expenditure and tax information required to calculate H for a province or territory for a calendar year is missing from the certificate, the Minister may use in place of H the product of H as calculated for that province or territory for the most recent calendar year for which information is provided in the certificate and a fraction

      • (i) whose numerator is the current dollar provincial or territorial gross domestic product at market prices for that province or territory, as determined by Statistics Canada for the purpose of its Provincial and Territorial Economic Accounts, for the calendar year for which the information required to calculate H is missing from the certificate, and

      • (ii) whose denominator is the current dollar provincial gross domestic product at market prices for that province or territory, as determined by Statistics Canada for the purpose of its Provincial and Territorial Economic Accounts, for the most recent calendar year for which the information required to calculate H is provided in the certificate;

    • (f) if, when determining a revenue base referred to in paragraph 19(1)(i) for a fiscal year, information on taxes on products, other than federal, provincial and territorial general sales taxes, is not available from Statistics Canada for the purpose of netting those taxes from household final consumption expenditures, capital expenditures for intellectual property products, capital expenditures for machinery and equipment or capital expenditures for non-residential structures in a province or territory, the Minister may use in place of that information

      • (i) in respect of household final consumption expenditures, the product, for each household final consumption expenditure category, of those expenditures in the province or territory for the fiscal year, net of federal, provincial and territorial general sales taxes, and a fraction

        • (A) whose numerator is the amount of taxes on products, other than federal, provincial and territorial general sales taxes, paid in relation to those expenditures for that category in the province or territory for the most recent fiscal year for which information on those taxes is available from Statistics Canada, and

        • (B) whose denominator is the expenditures for that category, net of federal, provincial and territorial general sales taxes, in the province or territory for that most recent fiscal year, and

      • (ii) in respect of each type of capital expenditure, the product, for each public education or non-profit entity category, of those expenditures in the province or territory for the fiscal year, net of federal, provincial and territorial general sales taxes, and a fraction

        • (A) whose numerator is the amount of taxes on products, other than federal, provincial and territorial general sales taxes, paid in relation to that type of capital expenditure by that category or sector in the province or territory for the most recent fiscal year for which information on those taxes is available from Statistics Canada, and

        • (B) whose denominator is the capital expenditures of that type by that category or sector, net of federal, provincial and territorial general sales taxes, in the province or territory for that most recent fiscal year; and

    • (g) if, in circumstances other than those described in paragraphs (a) to (f), information that is necessary for determining a revenue base for a fiscal year is incorrect, missing from the certificate or, in the case of information that is not required to be set out in the certificate, unavailable from the information source identified in these Regulations, the Minister may estimate the revenue base by substituting in the relevant calculations the information for the most recent fiscal, calendar, or taxation year, as the case may be, that is available in a certificate or from the identified source.

  • (3) If a revenue base for a fiscal year is estimated in accordance with subsection (2), the Minister may further adjust that estimate to take into account factors or trends that could change the provincial or territorial share of that revenue base between the earlier fiscal year from which information was used to estimate the base for the fiscal year and the fiscal year for which the revenue base is estimated.

  • (4) If the Minister is unable to estimate a revenue base in accordance with subsection (2), the Minister shall make an estimate on the basis of any information that is available to the Minister.

  • (5) If an aggregate of the revenues of two or more revenue sources is provided on a certificate under paragraph 28(3)(d), the Minister shall determine the portion of the aggregate that is to apply to each of those revenue sources.

  • SOR/2008-318, s. 17
  • SOR/2013-225, s. 27
  • SOR/2018-131, s. 17

Payments

 If the Minister determines that a territorial formula financing payment is to be made under the Act to a territory for a fiscal year, the Minister shall

  • (a) on the first working day in each of the first two months of the fiscal year, pay the territory 16% of the payment; and

  • (b) on the first working day of each following month, pay the territory 10% of the remaining amount of the payment.

  • SOR/2013-225, s. 28

PART 2Fiscal Stabilization Payments

 An application referred to in subsection 6(7) of the Act shall be signed by the province’s Minister of Finance or Treasurer and contain the following information:

  • (a) a statement that indicates the total amount of the provincial personal income taxes that are payable as the result of assessments or reassessments made in each of the calendar years that begin in the fiscal year and in the immediately preceding fiscal year, as determined in accordance with subsection 34(1), and the amount of each element referred to in that subsection that is used in determining that total amount;

  • (b) a statement that indicates the total amount of the provincial corporation income taxes that are payable as the result of assessments or reassessments made in each of the calendar years that begin in the fiscal year and in the immediately preceding fiscal year, as determined in accordance with subsection 34(1.1), and the amount of each element referred to in that subsection that is used in determining that total amount;

  • (c) a statement that indicates the total revenues of the province for the fiscal year and for the immediately preceding fiscal year from the revenue source described in subparagraph 7(1)(b)(ii);

  • (d) [Repealed, SOR/2023-45, s. 1]

  • (e) a statement of the total revenues of the province for the fiscal year and for the immediately preceding fiscal year from each of the revenue sources described in paragraphs 7(1)(c) to (y), (z.1) to (z.3) and (z.5);

  • (f) a statement that provides a further breakdown of the revenues from any of the revenue sources referred to in paragraphs (a) to (e) into component taxes, fees, levies, premiums or royalties if there was a change in the rates or structures at which those component taxes, fees, levies, premiums or royalties were levied during the fiscal year or during that part of the immediately preceding fiscal year after its first day;

  • (g) a statement that describes any change in the rates or structures at which a provincial tax, fee, levy, premium or royalty was levied during the fiscal year or during that part of the immediately preceding fiscal year after its first day and that indicates the effective date of the change;

  • (h) a statement that estimates the change in revenues in the fiscal year from the immediately preceding fiscal year from each of the changes described in the statement referred to in paragraph (g); and

  • (i) a statement that describes any change in the accounting practices in the public accounts of the province from those of the immediately preceding fiscal year.

  •  (1) The Minister shall make the adjustment for a fiscal year referred to in subsection 6(2) of the Act by

    • (a) adding, to the amount that would otherwise be determined, the decrease in the province’s revenues in the fiscal year that results from changes in the rates, or structures, of provincial taxes or other modes of raising the revenue of the province, including

      • (i) the termination of an existing tax, fee, levy, premium or royalty during the fiscal year or during the immediately preceding fiscal year,

      • (ii) a decrease, averaged over a year, in the rate of a tax, fee, levy, premium or royalty,

      • (iii) a change in the base to which the rate of a tax, levy, premium or royalty is applied and that results in a decrease in revenues, averaged over a year, derived from that base,

      • (iv) a change in the classification of taxpayers that results in a decrease in revenues, if the rate of a tax, fee, levy, premium or royalty varies according to an attribute of taxpayers, including the nature of their activity, the form of their business organization, the kind of ownership interest in their business or their age,

      • (v) an increase in deductions, credits or allowances, averaged over a year, that a taxpayer may claim in determining the amount of the tax, or the base to which the taxpayer’s tax rate is to be applied,

      • (vi) the adding, broadening or enlarging of exemptions, averaged over a year, from a tax, fee, levy, premium or royalty,

      • (vii) an increase in rebates, averaged over a year, for a tax, fee, levy, premium or royalty,

      • (viii) a decrease, averaged over a year, in the mark-up on goods or services that are sold to the public by the province or its agencies,

      • (ix) a decrease in the proportion of the profits remitted to the provincial government by its own enterprises, or

      • (x) a decrease in the charges for the rental or use of government property, including water power rentals;

    • (b) subtracting, from the amount that would otherwise be determined, the increase in the province’s revenues in the fiscal year that results from changes in the rates, or structures, of provincial taxes or other modes of raising the revenue of the province, including

      • (i) the introduction of a new tax, fee, levy, premium or royalty during the fiscal year or during the immediately preceding fiscal year,

      • (ii) an increase, averaged over a year, in the rate of a tax, fee, levy, premium or royalty,

      • (iii) a change in the base to which the rate of a tax, levy, premium or royalty is applied and that results in a increase in revenues, averaged over a year, derived from that base,

      • (iv) a change in the classification of taxpayers that results in a increase in revenues, if the rate of a tax, fee, levy, premium or royalty varies according to an attribute of taxpayers, including the nature of their activity, the form of their business organization, the kind of ownership interest in their business or their age,

      • (v) a decrease in deductions, credits or allowances, averaged over a year, that a taxpayer may claim in determining the amount of the tax, or the base to which the taxpayer’s tax rate is to be applied,

      • (vi) the removal, narrowing or restricting, of exemptions, averaged over a year, from a tax, fee, levy, premium or royalty,

      • (vii) a decrease in rebates, averaged over a year, for a tax, fee, levy, premium or royalty,

      • (viii) an increase, averaged over a year, in the mark-up on goods or services that are sold to the public by the province or its agencies,

      • (ix) an increase in the proportion of the profits remitted to the provincial government by its own enterprises, or

      • (x) an increase in the charges for the rental or use of government property, including water power rentals; and

    • (c) if there is an absence of indexation in the province’s personal income tax system, subtracting, from the amount that would otherwise be determined, the amount, if any, by which the revenues of the province in the fiscal year exceed what they would have been had the province’s personal income tax thresholds, basic personal amount and spouse or common law-partner amount that were not subject to an indexation provision referred to in subsection (3) each been adjusted by the percentage change in the Consumer Price Index for the province for the 12-month period ending on September 30 of the previous fiscal year over the preceding 12-month period, rounded to one decimal place, the digit at that first decimal place being increased by one if the digit at the second decimal place is 5 or more.

  • (2) A change that results from an indexation provision that has the effect of periodically changing the rate or structure of a tax, or other mode of raising the province’s revenue, as a consequence of a change in the level of prices in the economy as a whole or in the actual or deemed price of certain goods or services shall not be considered, for the purpose of paragraphs (1)(a) and (b), to be a change in the rate or in the structure of that tax or other mode.

  • (3) For the purpose of paragraph (1)(c) and paragraph 6(2)(b) of the Act, there is an absence of indexation in a provincial personal income tax system if at least one of the province’s personal income tax thresholds, the province’s basic personal amount or the province’s spouse or common-law partner amount is not subject to an indexation provision that has the effect of periodically changing the rate or structure of personal income tax as a consequence of a change in the level of prices in the economy as a whole or in the actual or deemed price of certain goods or services.

  • (4) For the purpose of paragraph (1)(c), the reference to the Consumer Price Index for a province for any 12-month period means the average of the Consumer Price Index (not seasonally adjusted) for that province, as published by Statistics Canada under the authority of the Statistics Act, for each month in that 12-month period.

 

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