Federal-Provincial Fiscal Arrangements Regulations, 2007

33 (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.