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Crown Share Adjustment Payments Regulations (SOR/2012-113)

Regulations are current to 2019-12-03

Crown Share Adjustment Payment (continued)

Provincial Capital Loan Repayment

  •  (1) The provincial capital loan repayment is equal to the amount determined by the following formula:

    A × (B – C)

    where

    A
    is the Provincial Crown share;
    B
    is the gross revenue of the project for the year; and
    C
    is the sum, for the year, of project operating costs, project capital costs and the project royalties payable under the Offshore Petroleum Royalty Act.
  • (2) The provincial capital loan repayments shall be considered during the period beginning in the year in which the cash flow first becomes positive and ending in the year in which the sum of the repayments considered is equal to the cumulative cash flow, plus interest, from the conversion date until the year prior to the year in which cash flow first becomes positive. Any years of negative cash flow after this period shall not be considered for the purposes of determining Crown share adjustment payments.

  • (3) The interest referred to in subsection (2) shall be calculated annually using either

    • (a) the weighted average of the effective yield on all outstanding debt instruments, including promissory notes, issued by the Province during the year adjusted for the effect of any debt swap arrangements in effect during that year; or

    • (b) if the Province has issued no debt instruments in that year, the average of long-term Government of Canada benchmark bond yields for that year.

  • (4) In this section “cash flow” means the amount determined by the following formula:

    A × (B – C) – D2

    where

    A
    is the Provincial Crown share;
    B
    is gross revenue of the project for the year;
    C
    is equal to, for the purpose of
    • (a) the description of D in section 4, the sum, for the year, of the project operating and capital costs, and the project royalties payable under the Offshore Petroleum Royalty Act; and

    • (b) the description of D1 in subsection 6(2), the sum, for the year, of the project operating and capital costs, as specified in the development plan approved in respect of the project under section 143 of the Act and converted to current dollars using the forecasted Canadian GDP deflator in that year, and the project royalties that would be payable under the Offshore Petroleum Royalty Act; and

    D2
    is the income tax payable for the year.

Acquisition Payments

  •  (1) The acquisition payment for a year is equal to one half of the net revenue for the year.

  • (2) The net revenue is equal to the amount determined by the following formula:

    A × (B3 – C3)

    where

    A
    is the Provincial Crown share;
    B3
    is, for the purposes of
    • (a) the description of D in section 4, the gross revenues of the project for the year; and

    • (b) the description of D1 in subsection 6(2), the gross revenues of the project determined under section 8 for the year.

    C3
    is, for the purposes of
    • (a) the description of D in section 4, the sum, for the year, of the project operating and capital costs, and the project royalties payable under the Offshore Petroleum Royalty Act; and

    • (b) the description of D1 in subsection 6(2), the sum, for the year, of the project operating and capital costs, as specified in the development plan approved in respect of the project under section 143 of the Act and converted to current dollars using the forecasted Canadian GDP deflator in that year, and the project royalties that would be payable under the Offshore Petroleum Royalty Act.

  • (3) The acquisition payments shall be considered during the period beginning in the year in which the cumulative net revenue since the conversion date becomes positive and ending the year in which the sum of the acquisition payments considered is equal to the sum of the incentives — adjusted in accordance with the following formula — that were paid in respect of the project under the Petroleum Incentive Program Act, chapter 107 of the Statutes of Canada, 1980–81–82–83, from the conversion date, plus simple interest:

    2.5 × A × H × [1 + 0.01n]

    where

    A
    is the Provincial Crown share; and
    H
    is 25% of the eligible costs and expenses in respect of which an incentive was made under the Petroleum Incentive Program Act chapter 107 of the Statutes of Canada, 1980–81–82–83, and which have not already been considered in the calculation of a Crown share adjustment payment in respect of another project; and
    n
    is the number of months in the period beginning in the month following the month in which the incentive referred to in element H was made and ending in the month in which the conversion date falls.
  • (4) Simple interest shall be calculated annually based on the annual average of long-term Government of Canada benchmark bond yields.

Fiscal Incentives and other Benefits

  •  (1) For the purposes of paragraph 247(3)(b) of the Act, a copy of any proposed fiscal incentive or other benefit shall be provided to the Provincial Minister for approval.

  • (2) The Provincial Minister has 60 days from the date of reception of the copy of the proposed fiscal incentive or other benefit to approve it. However, the deadline may, on request, be extended by up to 30 days if circumstances beyond the control of the Provincial Minister justify the extension. If there is no response within the deadline, the Provincial Minister shall be considered to have given his or her approval.

 If the aggregate amount of fiscal incentives and other benefits for a project for a fiscal year is greater than the Crown share adjustment payment for the project for the year, the difference shall be included in the aggregate amount of fiscal incentives and other benefits for the following fiscal year.

Delay of Crown Share Adjustment Payment

 If the information referred to in subsection 5(1) or (2) is provided after June 30, the Crown share adjustment payment may be made after the deadline set out in subsection 247(4) of the Act.

Recovery of Overpayment

 The amount of any overpayment made for a fiscal year shall be subtracted from the Crown share adjustment payment for subsequent fiscal years until all of the overpayment has been recovered.

Payment of Underpayment

 If the Federal Minister determines that there has been an underpayment of any Crown share adjustment payment for a fiscal year, the amount of the underpayment shall be added to the Crown share adjustment payment for the fiscal year following the determination.

Coming into Force

 These Regulations come into force on the day on which they are registered.

 
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