BILL 7 – 2003
INCOME TAX AMENDMENT ACT, 2003

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

1 Section 25.1 of the Income Tax Act, R.S.B.C. 1996, c. 215, is amended

(a) in subsection (1) in the definition of "excluded expense" by adding "or" at the end of paragraph (f.2) and by repealing paragraph (g),

(b) in subsection (1) in paragraph (b) of the definition of "qualified mining exploration expense" by striking out "August 1, 2003" and substituting "August 1, 2006",

(c) by repealing subsection (2) and substituting the following:

(2) Subject to subsection (3), an eligible taxpayer may claim a mining exploration tax credit for a taxation year equal to the total of

(a) the amount determined under subsection (4), and

(b) the amount equal to the total of all amounts each of which is an appropriate portion determined under subsection (4.1) in respect of a partnership of which the taxpayer was a member in the taxation year as provided for in that subsection. ,

(d) in subsection (4) by striking out "The amount of the tax credit that may be claimed by an eligible taxpayer for a taxation year under this section is" and substituting "An eligible taxpayer may claim for a taxation year", and

(e) by adding the following subsections:

(4.1) If in a taxation year an eligible taxpayer is a member of a partnership, other than a specified member as defined in section 248 (1) of the federal Act, the eligible taxpayer may claim for the taxation year the appropriate portion of 20% of the amount by which

(a) the total of the qualified mining exploration expenses incurred by the partnership for its taxation year ending in the taxation year of the taxpayer

exceeds

(b) all amounts of assistance that can reasonably be considered to be in respect of amounts included in the total referred to in paragraph (a) and that, on or before the filing-due date for the taxation year of the partnership,

(i) the partnership has received or is entitled to receive or can reasonably be expected to receive,

(ii) have not been repaid under a legal obligation to do so, and

(iii) have not otherwise reduced the total referred to in paragraph (a).

(4.2) For the purpose of determining the amount under subsection (4.1) in respect of a partnership,

(a) in subsection (1), in the definitions of "assistance", "excluded expense" and "qualified mining exploration expense", the references to "taxpayer" must be read as "partnership",

(b) in subsection (1), in the definition of "qualified mining exploration expense",

(i) the reference to "July 31, 1998" in paragraph (b) must be read as "March 31, 2003", and

(ii) the phrase "another person" must be read as "another person other than an eligible taxpayer that is a member of the partnership", and

(c) the amount is determined as if

(i) the partnership were a person,

(ii) its fiscal period were its taxation year, and

(iii) its filing-due date were its filing-due date for the year if it were a corporation.

(4.3) For the purposes of this section, the appropriate portion is that portion that may reasonably be considered to be the eligible taxpayer's share of 20% of the amount determined under subsection (4.1).

2 Section 42 (2) (c) (ii) is amended by striking out "section 25.1 (4)," and substituting "section 25.1,".

3 Section 79 (1) is amended

(a) in the definition of "accredited production" by adding the following paragraph:

(a.1) despite paragraph (a), greater than nil, in the case of a production, all or substantially all of which consists of prescribed digital animation or visual effects, that is an episode, or a pilot for an episode, with a running time of less than 30 minutes, , and

(b) in paragraph (a) of the definition of "accredited qualified BC labour expenditure" by striking out "or each" and substituting "and for each".

4 Sections 79 (2) (a), 85 (1) (a) and 87 (1) are amended by striking out "section 80, 81 or 82" and substituting "sections 80 to 82".

5 Sections 79 (2) (b), 85 (1) (b) and 87.1 (1) are amended by striking out "section 82.1" and substituting "sections 82.1 to 82.3".

6 Section 80 (1) (a) (iii) is amended by striking out "April 1, 2003" and substituting "April 1, 2008".

7 The following sections are added:

Regional tax credit if principal photography begins after March 31, 2003

81.1 (1) A corporation is eligible for a regional tax credit for a taxation year in respect of an eligible production if

(a) the corporation is eligible for, and has made or is making an application in accordance with section 85 for, a tax credit in relation to the production under section 80,

(b) principal photography of the production begins after March 31, 2003,

(c) principal photography of the production, or, in the case of a production that is intended for television broadcast as a series and that comprises a cycle of at least 3 episodes, principal photography of at least 3 of those episodes (the "qualifying episodes"), is done in British Columbia outside of the designated Vancouver area

(i) for at least 5 days, and

(ii) during more than 50% of the total number of days during which principal photography of the production or the qualifying episodes, as the case may be, is done in British Columbia,

(d) the corporation has obtained a valid eligibility certificate issued to it under section 86 in respect of the production and the claimed tax credit, and

(e) the corporation makes application for the regional tax credit in accordance with section 85.

(2) The amount of the tax credit that may be claimed by a qualifying corporation under this section is,

(a) subject to paragraph (b), 12.5% of the amount determined by the formula

where

QLE is the corporation's qualified BC labour expenditure for the taxation year in respect of the production,

RD is the number of days during which principal photography of the production is done in British Columbia outside of the designated Vancouver area, and

TD is the number of days during which principal photography of the production is done in British Columbia, or

(b) for a film or video production referred to in subsection (1) (c) that is intended for television broadcast as a series, 12.5% of the amount determined by the formula

where

QLE is the corporation's qualified BC labour expenditure for the taxation year in respect of the qualifying episodes referred to in subsection (1) (c),

RD is the number of days during which principal photography of the qualifying episodes is done in British Columbia outside of the designated Vancouver area, and

TD is the number of days during which principal photography of the qualifying episodes is done in British Columbia.

(3) For the purpose of determining the amount of the tax credit under subsection (2), the references to "March 31, 1998" in the definition of "BC labour expenditure" in section 79 (1) must be read as "December 31, 2002".

Digital animation or visual effects tax credit

81.2 (1) A corporation is eligible for a digital animation or visual effects tax credit for a taxation year in respect of an eligible production if

(a) the corporation is eligible for, and has made or is making an application in accordance with section 85 for, a tax credit in relation to the production under section 80,

(b) principal photography of the production begins after March 31, 2003,

(c) the corporation has obtained a valid eligibility certificate issued to it under section 86 in respect of the production and the claimed tax credit, and

(d) the corporation makes application for the digital animation or visual effects tax credit in accordance with section 85.

(2) The amount of the tax credit that may be claimed by a qualifying corporation under this section in respect of an eligible production is 15% of the amount determined by the formula

ALE – (TA + PA + ARE)

where

ALE means the total of the corporation's BC labour expenditure for the taxation year and for each of the preceding taxation years directly attributable to prescribed digital animation or visual effects activities for the production,

TA means the total of all amounts of assistance that can reasonably be considered to be in respect of ALE that, at the time of filing of the corporation's return of income for the taxation year,

(a) the corporation or any other person or partnership has received, is entitled to receive or can reasonably be expected to receive,

(b) has not been repaid under a legal obligation to do so, and

(c) has not otherwise reduced ALE,

PA means the total of all amounts determined by this formula in respect of the production for each of the preceding taxation years before the end of which principal photography of the production began, and

ARE means the total of the expenditures directly attributable to the production

(a) that are included in ALE, and

(b) for which reimbursement is to be or has been provided to the corporation, as a parent within the meaning of paragraph (c) of the definition of "BC labour expenditure", in respect of the production under an agreement referred to in that paragraph.

(3) For the purpose of determining the amount of the tax credit under subsection (2), the references to "March 31, 1998" in the definition of "BC labour expenditure" in section 79 (1) must be read as "December 31, 2002".

8 Section 82.1 is amended

(a) in subsection (1) by striking out "Subject to subsections (3) and (4), a corporation" and substituting "A corporation",

(b) in subsection (1) (c) by adding "and the claimed tax credit" after "production", and

(c) by repealing subsections (3) and (4).

9 Section 82.1 (1) (a) (iii) is amended by striking out "June 1, 2003" and substituting "June 1, 2008".

10 The following sections are added:

Regional production services tax credit

82.2 (1) A corporation is eligible for a regional production services tax credit for a taxation year in respect of an accredited production if

(a) the corporation is eligible for, and has made or is making an application in accordance with section 85 for, a tax credit in relation to the production under section 82.1,

(b) principal photography of the production begins after March 31, 2003,

(c) principal photography of the production is done in British Columbia outside of the designated Vancouver area

(i) for at least 5 days, and

(ii) during more than 50% of the total number of days during which principal photography of the production is done in British Columbia,

(d) the corporation has obtained an accreditation certificate issued under section 87.1 in respect of the production and the claimed tax credit, and

(e) the corporation makes application for the regional production services tax credit in accordance with section 85.

(2) The amount of the tax credit that may be claimed by an accredited production corporation under this section is 6% of the amount determined by the formula

where

AQLE is the corporation's accredited qualified BC labour expenditure for the taxation year in respect of the accredited production,

RD is the number of days during which principal photography of the production is done in British Columbia outside of the designated Vancouver area, and

TD is the number of days during which principal photography of the production is done in British Columbia.

(3) For the purpose of determining the amount of the tax credit under subsection (2), the references to "March 31, 1998" in the definition of "BC labour expenditure" in section 79 (1) must be read as "December 31, 2002".

Digital animation or visual effects production services tax credit

82.3 (1) A corporation is eligible for a digital animation or visual effects production services tax credit for a taxation year in respect of an accredited production if

(a) the corporation is eligible for, and has made or is making an application in accordance with section 85 for, a tax credit in relation to the production under section 82.1,

(b) principal photography for the production begins after March 31, 2003,

(c) the corporation has obtained an accreditation certificate issued under section 87.1 in respect of the production and the claimed tax credit, and

(d) the corporation makes application for the digital animation or visual effects production services tax credit in accordance with section 85.

(2) The amount of the tax credit that may be claimed by an accredited production corporation under this section is 15% of the amount of the corporation's accredited qualified BC labour expenditure for the taxation year directly attributable to prescribed digital animation or visual effects activities for the accredited production.

(3) For the purpose of determining the amount of the tax credit under subsection (2), the references to "March 31, 1998" in the definition of "BC labour expenditure" in section 79 (1) must be read as "December 31, 2002".

May not claim both accredited production and eligible production credits

83.1 (1) A corporation may not claim a tax credit in respect of the same production

(a) under one or more of sections 80 to 82, if an amount is deemed to have been paid under section 84 in relation to a tax credit under one or more of sections 82.1 to 82.3 in respect of the production, or

(b) under one or more of sections 82.1 to 82.3, if an amount is deemed to have been paid under section 84 in relation to a tax credit under one or more of sections 80 to 82 in respect of the production.

(2) Without limiting subsection (1), if an amount is deemed to have been paid under section 84 in relation to a tax credit under one or more of sections 80 to 82 in respect of any or all of the episodes of a cycle referred to in section 79 (2) (a), no tax credit may be claimed under one or more of sections 82.1 to 82.3 in respect of any episode of that cycle.

11 The following Part is added:

Part 8 -- Book Publishing Tax Credit

Definitions and interpretation

111 (1) In this Part:

"BC book publishing corporation", for a taxation year, means a corporation that

(a) is a Canadian-controlled corporation throughout the taxation year, and

(b) is a book publishing corporation that carries out its business primarily through a permanent establishment in British Columbia as determined by the regulations,

but does not include a corporation that

(c) is exempt from tax under section 27,

(d) is controlled directly or indirectly in any manner by one or more persons, all or part of whose taxable income is exempt from tax under section 27 of this Act or under Part I of the federal Act, or

(e) is of a type or class of corporation prescribed by regulation;

"book publishing corporation" means a corporation whose principal business is book publishing, and that

(a) enters into contractual agreements with authors and copyright holders,

(b) offers books for retail sale, and

(c) bears the financial risks associated with carrying on the business of publishing, or is related to a Canadian-controlled corporation that bears the financial risks associated with carrying on the business;

"BPIDP contribution" means a contribution paid under the Aid to Publishers component of the Book Publishing Industry Development Program, administered by the Department of Canadian Heritage, after March 31, 2002 and before April 1, 2007;

"Canadian-controlled corporation" means a corporation that is Canadian-controlled within the meaning of sections 26 to 28 of the Investment Canada Act;

"related" has the same meaning as in section 251 of the federal Act.

(2) In applying sections 26 to 28 of the Investment Canada Act for the purposes of this Part, those sections are to be read without reference to the "Director", and as though a reference to the "Minister" were to the "Provincial minister".

Book publishing tax credit

112 (1) A corporation is eligible for the book publishing tax credit for a taxation year ending after September 30, 2002 if

(a) the corporation is, throughout the taxation year in respect of which the tax credit is being claimed, a BC book publishing corporation,

(b) the corporation received a BPIDP contribution in the taxation year in respect of which the tax credit is being claimed, and

(c) the corporation applies for the tax credit in accordance with section 114.

(2) The amount of the book publishing tax credit that may be claimed by an eligible corporation is 90% of the BPIDP contribution for the taxation year.

Deemed payment

113 A corporation that has claimed and is eligible for a tax credit under this Part for a taxation year is deemed to have paid, at the time referred to in section 157 (1) (b) of the federal Act, as that section relates to that taxation year, the amount of that credit on account of its tax payable under this Act.

Filing requirements

114 (1) An eligible corporation that wishes to claim a tax credit under this Part in respect of a taxation year must file, with the return of income filed by the corporation under section 29 for that taxation year, an application for the tax credit in the form, and containing the information, required by the Commissioner of Income Tax.

(2) An eligible corporation is not entitled to a tax credit under this Part in relation to its book publishing tax credit in a taxation year unless, within 18 months after the end of the taxation year, the corporation files the form containing the information required under subsection (1).

Power to make regulations

115 Regulations made for the purposes of this Part may be made retroactive to a date on or after October 1, 2002 and if made retroactively are deemed to have come into force on the date specified in the regulation.

Commencement

12 (1) Section 1, except for paragraph (b) of that section, and sections 2 to 5, 7, 8 and 10 come into force on April 1, 2003.

(2) Section 11 is deemed to have come into force on October 1, 2002 and is retroactive to the extent necessary to give it effect on and after that date.