Third Session, 46th

General Assembly

59 Elizabeth II,

BILL 9

AN ACT TO AMEND THE INCOME TAX

ACT, 2000 NO. 2

Received and Read the First Time ...................................................................................................

Second Reading .................................................................................................................................

Committee ............................................................................................................................................

Third Reading .....................................................................................................................................

Royal Assent ......................................................................................................................................

HONOURABLE THOMAS

W. MARSHALL, Q.C.

Minister of Finance

and President of Treasury Board

Ordered to be printed by

the Honourable House of Assembly

EXPLANATORY NOTES

This Bill would amend the Income Tax Act, 2000 to

reduce the personal income tax

rate from 12.8% to 12.5% in the second income bracket, and from 15.5% to 13.3%

in the third income bracket effective July 1, 2010;

increase the age amount in the non-refundable

tax credit reference from $3,482

(currently indexed to $3,681) to $5,000 effective July 1, 2010;

increase the dividend tax

credit for dividends from large corporations from 9.75% to 11.0% effective July

1, 2010, and to revise the provision so that there will no longer be automatic

changes in the provincial dividend tax credit rates consequent to changes in

federal tax parameters; and

reduce the small business

corporate income tax rate from 5% to 4% effective April 1, 2010.

A BILL

AN ACT TO AMEND THE INCOME TAX ACT, 2000

NO. 2

Analysis

S.7 R&S

Amount of tax payable

2. S.9 Amdt.

Personal credits

S.20 R&S

Dividend tax credit

S.40 Amdt.

Corporation tax

Commencement

Be it enacted by the Lieutenant-Governor and

House of Assembly in Legislative Session convened, as follows:

SNL2000 cI-1.1

as amended

Section 7 of the Income Tax Act, 2000 is repealed and the following substituted:

Amount of tax

payable

(1) The

tax payable under this Part for a taxation year by an individual on the

individual's taxable income or taxable income earned in Canada, in sections 6

to 33 referred to as the "taxable income" for the 2010 and subsequent

taxation years, is

(a) 7.7% of the taxable income if the taxable

income does not exceed $31,278;

(b) $2,408 plus 12.5% of the amount by which the

taxable income exceeds $31,278 and does not exceed $62,556; and

(c) $6,318 plus 13.3% of the amount by which the

taxable income exceeds $62,556.

(2) Notwithstanding

section 6.1, the amounts

expressed in subsection (1) shall not be adjusted as prescribed in that

section

before the 2011 taxation year.

2. (1) Subsection 9(2) of the Act is amended

by deleting the amount "$3,482" and substituting the amount "$5,000".

(2) Section 9 of the Act is amended by adding

immediately after subsection (4) the following:

(5) Notwithstanding

section 6.1, the amount of

$5,000 referred to in subsection (2) shall not be adjusted before the 2011

taxation year.

Section 20 of the Act is repealed and the

following substituted:

Dividend tax

credit

(1) For the purpose of computing the tax

payable under this Part for a taxation year by an individual who was resident

in the province on the last day of the taxation year, there may be deducted an

amount equal to the total of

(a) 5% of the total of the amount required under

paragraph 82(1)(

a) and subparagraph 82(1)(b)(

i) of the federal Act to be included

in computing the individual's income for the year; and

(b) 11% of the total of the amount required under

paragraph 82(1)(a.1) and subparagraph 82(1)(b)(ii) of the federal Act to be

included in computing the individual's income for the year.

(2) Subsection (1) shall only apply to a dividend

received on or after the coming into force of this section.

4. (1) Paragraph 40(3)(

a) of the Act is repealed

and the following substituted:

(a) 4% of an amount calculated by allocating to

the province, on the same basis as set out in the regulations made for the purpose

of the definition "taxable income earned in the year in a province"

in subsection 124(4) of the federal Act, a portion of the amount that is the

least of the amounts calculated under paragraphs 125(1)(a), (

b) and (

c) of the

federal Act and allowed for the purpose of subsection 125(1) of the federal Act

in respect of the corporation for the year; and

(2) Section 40 of the Act is amended by adding

immediately after subsection (3) the following:

(4) For the purpose of the 2010 and subsequent taxation

years, the rate prescribed in paragraph 40(3)(

a) shall apply to a corporation

whose fiscal period began on or after the date that paragraph came into force.

Commencement

(1) Sections 1, 2, and 3 of this Act shall

come into force on July 1, 2010.

(2) Section 4 of this Act shall be considered to

have come into force on April 1, 2010.

Earl G. Tucker, Queen's Printer