O. Reg. 172/02: PAYMENTS IN LIEU OF CORPORATE TAXES - MUNICIPAL ELECTRICITY UTILITIES

 

ontario regulation 172/02

made under the

electricity act, 1998

Made: June 20, 2002
Filed: June 21, 2002
Printed in The Ontario Gazette: July 6, 2002

Amending O. Reg. 162/01

(Payments in Lieu of Corporate Taxes —
Municipal Electricity Utilities)

Note: Ontario Regulation 162/01 has been amended by Ontario Regulation 123/02.

1. (1) Subsection 7 (2) of Ontario Regulation 162/01 is amended by striking out “subsection (1)” in the portion before clause (a) and substituting “subsection (1), (4) or (6)”.

(2) Section 7 of the Regulation is amended by adding the fol­lowing subsections:

(4) Despite subsection (1), if all of the conditions set out in subsection (5) are satisfied, each property that is transferred under a transfer by-law to a municipal electricity utility from a person (as defined in subsection 85 (1) of the Act) shall be deemed,

(a) to have been acquired by the utility from the person at the time the person last acquired the property;

(b) to have been acquired by the utility at a cost equal to the fair market value of the property on October 1, 2001; and

(c) to have been acquired by the utility from a person with whom the utility was not dealing at arm’s length.

(5) The following are the conditions referred to in subsection (4):

1. The utility must elect to have subsection (4) apply with respect to all the property described in subsection (4).

2. The election must be made in the form approved by the Minister.

3. The election must be made in the return filed by the utility under section 13 for the taxation year, if any, commencing on October 1, 2001.

4. For the purpose of calculating the amount payable by the utility under section 93 of the Act for the taxation year, if any, commencing on October 1, 2001 and for each subsequent taxation year, the utility must apply subsection 1102 (14) of the Federal Regulations in respect of all the property described in subsection (4), unless the utility opts not to apply subsection 1102 (14) and the Minister is satisfied that the non-application of subsection 1102 (14) would not result in a decrease in the amount otherwise payable under section 93 of the Act.

(6) Despite subsection (1), if all of the conditions set out in subsection (7) are satisfied, each property that is transferred to a municipal electricity utility from a person (as defined in subsection 85 (1) of the Act) who, at the time of the transfer, is a municipal corporation formed as a result of a statutory municipal amalgamation of two or more predecessor municipal corporations shall be deemed,

(a) to have been acquired by the utility from the predecessor municipal corporation that owned the property immediately before the statutory municipal amalgamation;

(b) to have been acquired by the utility at the time that the predecessor municipal corporation last acquired the property before the statutory municipal amalgamation;

(c) to have been acquired by the utility at a cost equal to the fair market value of the property on October 1, 2001; and

(d) to have been acquired by the utility from a person with whom the utility was not dealing at arm’s length.

(7) The following are the conditions referred to in subsection (6):

1. The property must have been owned by one of the predecessor municipal corporations immediately before the statutory municipal amalgamation.

2. The utility must elect to have subsection (6) apply with respect to all the property described in subsection (6) and does not elect to have subsection (4) apply with respect to the property.

3. The election must be made in the form approved by the Minister.

4. The election must be made in the return filed by the utility under section 13 for the taxation year, if any, commencing on October 1, 2001.

5. For the purpose of calculating the amount payable by the utility under section 93 of the Act for the taxation year, if any, commencing on October 1, 2001 and for each subsequent taxation year, the utility must apply subsection 1102 (14) of the Federal Regulations in respect of all the property described in subsection (6), unless the utility opts not to apply subsection 1102 (14) and the Minister is satisfied that the non-application of subsection 1102 (14) would not result in a decrease in the amount otherwise payable under section 93 of the Act.

(8) In subsections (6) and (7),

“statutory municipal amalgamation” means, in relation to two or more municipal corporations, an amalgamation which is required by an Act or is otherwise required by law.

(9) An election referred to in subsection (5) or (7) is effective for the first taxation year of the utility, if any, commencing on October 1, 2001 and for all subsequent taxation years.

(10) A utility cannot revoke an election referred to in subsection (5) or (7) unless the utility has the consent of the Minister of Finance to do so.

2. Paragraph 1 of subsection 8 (1) of the Regulation is revoked and the following substituted:

1. The utility shall be deemed to have deducted under section 20 of the Federal Act an amount determined as if the utility,

i. had always been a corporation subject to tax under that Act, and

ii. had claimed or deducted in its prior taxation year the maximum amounts that it would have been entitled to claim and deduct under that section as a reserve for that prior taxation year.

3. (1) Subsection 14 (2) of the Regulation is amended by striking out “for its first taxation year” in the portion before paragraph 1 and substituting “for its taxation year, if any, that commences on October 1, 2001”.

(2) Paragraph 4 of subsection 14 (2) of the Regulation is revoked and the following substituted:

4. If the amount payable by the utility under section 93 of the Act for the taxation year is less than $2,000,

i. after the deduction of any credits to which the utility would be entitled if it were a corporation subject to tax under the Federal Act, and

ii. after the deduction of any credits and tax that would be deemed under Division E of Part II of the Corporations Tax Act to be paid by the utility if it were a corporation subject to tax under the Corporations Tax Act,

the utility is not required to pay monthly instalments on account of the amount payable under section 93 of the Act, and may pay the total amount on or before the end of the third month after the end of the taxation year.

(3) Subsection 14 (3) of the Regulation is revoked and the fol­lowing substituted:

(3) Despite subsection (1), subclause 78 (2) (a) (iii) and paragraph 2 of subsection 78 (4.2) of the Corporations Tax Act do not apply to a municipal electricity utility in respect of amounts payable under section 93 of the Act for the taxation year, if any, of the utility commencing immediately after the end of its taxation year that commenced on October 1, 2001.

(4) In applying section 78 of the Corporations Tax Act for a taxation year, clauses 78 (4.3) (a), (5) (b), (5.1) (b) and (6) (a) of that Act shall be read as if they included a reference to each credit that is an amount deemed under Division E of Part I of the Federal Act to have been paid on account of a corporation’s tax payable under the Federal Act for the taxation year.

4. This Regulation shall be deemed to have come into force on October 1, 2001.

Janet Ecker

Minister of Finance

Dated on June 20, 2002.

27/02