Federal-Provincial Fiscal Arrangements Act

Marginal note:Maximum fiscal equalization payment

• 3.4 (1) The fiscal equalization payment that may be paid to a province for a fiscal year shall be reduced if the amount that may be paid to that province for that fiscal year in accordance with section 3.2 — or, in the case of British Columbia, the aggregate of the amounts that may be paid to that province for that fiscal year in accordance with sections 3.2 and 3.3 — would, if paid, result in that province having, in that fiscal year, a total per capita fiscal capacity that is greater than the per capita fiscal capacity of any province that would not receive a fiscal equalization payment for that fiscal year if the amount of that payment were determined by the formula set out in paragraph 3.2(1)(a).

• Marginal note:Computation of reduction

  (2) The reduction of the fiscal equalization payment with respect to a province under subsection (1) is equal to the amount determined by the formula

  (A - B) × C

  where

  A

  is the total per capita fiscal capacity of that province in that fiscal year;

  B

  is the per capita fiscal capacity of the province that has the lowest per capita fiscal capacity in that fiscal year and that would not receive a fiscal equalization payment for that fiscal year if the amount of that payment were determined by the formula set out in paragraph 3.2(1)(a); and

  C

  is the average annual population of that province for that fiscal year.

• Definition of per capita fiscal capacity

  (3) For the purposes of this section, per capita fiscal capacity means, in respect of a province for a fiscal year, the amount determined by the formula

  A + B

  where

  A

  and B have the same meaning as in the definition total per capita fiscal capacity in subsection 3.5(1).