| Copyright (c) Queen's Printer, Victoria, British Columbia, Canada | Licence Disclaimer |
|
B.C. Reg. 440/88 |
Deposited November 4, 1988 |
| This archived regulation consolidation is current to December 3, 2004 and includes changes enacted and in force by that date. For the most current information, click here. |
International Financial Business (Tax Refund) Act
[includes amendments up to B.C. Reg. 103/2000]
|
Contents |
|||
1 (1) In this regulation "Act" means the International Financial Business (Tax Refund) Act.
(2) For the purpose of the definitions of "eligible employee" and "specialist" in the Act,
(a) an individual performs duties that are primarily devoted to the international business of a registered financial institution if 70% of the individual's working time is spent on undertaking its international financial activities, and
(b) "duties" does not include any clerical or secretarial functions.
[am. B.C. Reg. 547/95, s. (a).]
2 (1) For the purposes of paragraphs (a) and (b) of the definition of "international financial activity" in the Act, the following are prescribed classes of business:
(a) any other international financial business of any registered financial institution;
(b) an international banking centre business within the meaning of section 33.1 of the Income Tax Act (Canada)1;
(c) an international financial business within the meaning of Title VII.11 of the Taxation Act (Quebec).
(2) For the purposes of paragraph (f) of the definition of "international financial activity" in the Act, "prescribed risks" means any risks that fall within any class of insurance within the meaning of the Insurance Act, except life, sickness or accident insurance.
(3) For the purposes of paragraph (m) of the definition of "international financial activity" in the Act, the following are designated as international financial activities:
(a) borrowing from non-residents or from persons carrying on businesses that come within a class of business prescribed under subsection (1);
(b) making deposits in any currency with non-residents or with persons carrying on businesses that come within a class of business prescribed under subsection (1);
(c) a financial activity permitted under Canadian law that is conducted exclusively with non-residents and from which the registered financial institution earns fee income.
(4) For the purposes of paragraph (c) of the definition of "financial institution" in the Act, each of the following is a prescribed class of corporation:
(a) any corporation that is registered under the Securities Act as an adviser;
(b) any corporation that is not required to be registered under the Securities Act and whose business is primarily providing investment counselling services and portfolio management services in relation to corporate finance.
[am. B.C. Reg. 99/91.]
3 An applicant for registration under the Act shall provide the superintendent with the following:
(a) a list of the international financial activities that the applicant proposes to carry on;
(b) the location of the applicant's proposed international financial office or offices;
(c) a copy of the applicant's audited financial statements for the most recent fiscal year preceding the date of application;
(d) a copy of the applicant's most recent interim financial statements;
(e) any other information requested by the superintendent.
4 (1) Where only a part of the business carried on by a registered financial institution is international financial business, the registered financial institution shall prepare financial statements including, at least, a balance sheet, an income statement and notes to the financial statements for the international financial business as though that business were carried on by a separate financial reporting entity operating as part of the registered financial institution.
(2) The financial statements required under subsection (1) shall be prepared in accordance with the accounting principles and policies followed by the registered financial institution in the preparation of its annual financial statements.
(3) The financial statements required under subsection (1) shall
(a) identify interest revenue separate from other revenue, and
(b) identify interest expense separate from other expenses.
(4) The notes to the financial statements required under subsection (1) shall disclose how the registered financial institution's revenue, expenses, assets and liabilities have been allocated between its international financial business and its other business.
(5) For the purposes of the financial statements required under subsection (1) the income or loss from operations of an international financial business is the revenue derived from the carrying on of an international financial business less any expenses that may reasonably be regarded as incurred for the purpose of earning that revenue.
(6) Without limiting the generality of subsection (5), where the international financial office is a branch or other similar office of a registered financial institution, the expenses shall include a reasonable allocation of the costs associated with maintaining that branch or other office, including overhead and indirect costs.
5 (1) Subject to subsection (6), the financial statements relating to an international financial business shall be reported on annually by one of the auditors of the registered financial institution.
(2) The auditor's report shall be addressed to the chief financial officer of the registered financial institution.
(3) The auditor of a registered financial institution shall, in the auditor's report, provide
(a) an opinion that
(i) the stated revenue of the international financial business is appropriately derived from international financial activities that the registered financial institution was authorized to undertake in its international financial business, and
(ii) the direct expenses of the international financial business are fairly presented and complete,
(b) where only a part of the business carried on by a registered financial institution is international financial business, a report that nothing has come to his attention to indicate that the indirect expenses of the registered financial business have not been reasonably allocated to the international financial business, and
(c) a report that nothing has come to his attention to indicate that the financial statements for the international financial business are not prepared in accordance with the accounting principles and policies followed by the registered financial institution in the preparation of its annual financial statements.
(4) If the auditor of the registered financial institution is unable to provide the opinions and reports required under subsection (3), he shall so indicate in the auditor's report.
(5) In preparing the auditor's report, the auditor shall apply a limit of materiality that is reasonable for the international financial business.
(6) An auditor's report is not required in respect of a year if the registered financial institution
(a) will not claim a tax refund for that year, and
(b) has no specialist or eligible employee in its employ during that year.
[am. B.C. Reg. 150/94, s. 1.]
6 (1) A registered financial institution shall, within 90 days of the end of each fiscal year, provide the superintendent with an annual report consisting of the following:
(a) its audited financial statements;
(b) the financial statements relating to its international financial business, if an auditor's report is required under section 5;
(c) the auditor's report, if one is required under section 5;
(d) if an auditor's report is not required under section 5, written notice, in a form acceptable to the superintendent, stating that an auditor's report will not be included and stating the reasons;
(e) any other information requested by the superintendent.
(2) The filing of an annual report under subsection (1) is a condition of registration.
(3) The superintendent may, at any time, grant an extension to the time limit referred to in subsection (1) if, in his opinion, the extension would be fair in the circumstances.
[am. B.C. Reg. 150/94, s. 2.]
7 (1) The following requirements are prescribed with respect to specialists and eligible employees:
(a) specialists and eligible employees must be employees of the registered financial institution;
(b) at the time it designates an eligible employee or specialist, the registered financial institution must notify the superintendent in writing in a form specified by the superintendent;
(c) a specialist may not be a specialist for more than 2 years.
(2) A registered financial institution shall provide the superintendent with any information requested by the superintendent concerning an individual that the registered financial institution has designated as a specialist or an eligible employee.
[am. B.C. Regs. 207/92; 547/95, s. (b).]
8 A registered financial institution shall, within 90 days of the end of a calendar year, provide the commissioner with
(a) a list of all individuals who were designated as specialists by the registered financial institution during the calendar year, and a schedule indicating the period or periods during the year within which each individual was a specialist,
(b) a statement certifying that each individual listed as a specialist under paragraph (a) satisfied the requirements of the definition of "specialist" in the Act during the period or periods within which the individual was a specialist,
(c) a list of all individuals who were designated as eligible employees for the calendar year, and a schedule indicating the period or periods during the year within which each individual was an eligible employee,
(d) a statement certifying that each individual listed as an eligible employee under paragraph (c) satisfied the requirements of the definition of "eligible employee" in the Act during the period or periods that the individual was an eligible employee,
(e) the information contained in the federal T4 supplementary form pertaining to each eligible employee and specialist of the registered financial institution during the calendar year, and a schedule indicating the allocation of the amounts shown on the federal T4 supplementary form for each specialist and eligible employee between the periods during the year, if any, when each individual was and was not a specialist or eligible employee, and
(f) any other information requested by the commissioner.
9 (1) A return of claim for a specialist shall include the following information:
(a) a copy of the signed T1 income tax return and all supporting documentation filed by the specialist with Revenue Canada (Taxation) for the applicable taxation year;
(b) a copy of the notice of assessment or reassessment as issued by Revenue Canada (Taxation) for the applicable taxation year.
(2) Subject to subsection (3), the tax refund amount for a taxation year for a specialist who is in receipt of income from a registered financial institution shall be the lesser of
(a) the amount of tax assessed and paid by the individual for the taxation year under the Income Tax Act, and
(b) the amount determined in accordance with the following formula:
| IFBI | x PIT |
|
|
|
| TI |
| where | |
| "IFBI" |
is the amount of employment income from a registered financial institution, as reported under section 8 (e), that was earned during the period or periods during the year when the individual was a specialist and which has been reported by the individual and assessed under the Income Tax Act for the taxation year; |
| "PIT" |
is the amount of tax assessed and paid for the taxation year under the Income Tax Act after application of all tax credits to which the individual was eligible; |
| "TI" |
is the amount of total income as reported on line 150 of the individual's T1 income tax return that has been filed for the taxation year and assessed under the Income Tax Act. |
(3) If the tax refund amount calculated in subsection (2) would otherwise be negative, the tax refund amount shall be deemed to be zero.
10 (1) A return of claim for an eligible employee shall include the following information:
(a) a copy of the signed T1 income tax return and all supporting documentation filed by the eligible employee with Revenue Canada (Taxation) for the applicable taxation year;
(b) a copy of the notice of assessment or reassessment as issued by Revenue Canada (Taxation) for the applicable taxation year.
(2) Subject to subsection (3), the tax refund amount for a taxation year for an eligible employee who is in receipt of income from a registered financial institution shall be the smallest of the following amounts:
(a) 30% of the amount of tax assessed and paid by the individual for the taxation year under the Income Tax Act;
(b) $10 000;
(c) the amount determined in accordance with the following formula:
| 0.3 x | IFBI | x PIT |
|
|
||
| TI |
|
|
where |
|
"IFBI" |
is the amount of employment income from a registered financial institution, |
|
"PIT" |
is the amount of tax assessed and paid for the taxation year under the Income |
|
"TI" |
is the amount of total income as reported on line 150 of the individual's T1 |
[am. B.C. Reg. 458/92.]
11 A return of claim for a registered financial institution shall include the following information:
(a) a copy of the T2 corporate tax return and all supporting documentation filed by the registered financial institution with Revenue Canada (Taxation) for the applicable taxation year;
(b) a copy of the notice of assessment or reassessment as issued by Revenue Canada (Taxation) for the applicable taxation year;
(c) a copy of the annual report required under section 6.
12 (1) In this section:
"adjusted IFB income" means, in relation to a registered financial institution for a taxation year, the positive or negative amount determined in accordance with the following formula:
IFBI – AF
|
where |
|||
|
IFBI |
= |
the IFB taxable income of the financial institution for the taxation year; |
|
|
AF |
= |
the greater of |
|
|
(a) | zero, and |
|
| (b) |
the amount determined in accordance with the following formula: |
||
(0.65 x interest revenue) – interest expense;
"adjusted small business income" means, in relation to a registered financial institution for a taxation year, whichever of the following is applicable:
(a) if its federal taxable income for the taxation year is zero, zero;
(b) if paragraph (a) does not apply, the positive or negative amount determined in accordance with the following formula:
(AI ÷ FTI) x SBA
|
|
where |
|
AI = |
the adjusted IFB income for the taxation year; |
|
FTI = |
the financial institution's federal taxable income for the taxation year; |
|
SBA = |
the amount that is subject to the small business deduction under |
"cumulative IFB tax" means the aggregate of IFB tax for the taxation year and IFB tax for all preceding taxation years;
"federal taxable income" means, in relation to a registered financial institution for a taxation year, its taxable income for the taxation year calculated in accordance with the Income Tax Act (Canada);
"IFB tax" means, in relation to a registered financial institution for a taxation year, whichever of the following is applicable:
(a) if its federal taxable income for the taxation year is zero, zero;
(b) if the amount calculated for the taxation year under paragraph (c) or (d), as applicable, is negative, zero;
(c) if neither paragraph (a) or (b) applies, in the case of a taxation year that begins before April 1, 2000, the amount determined in accordance with the following formula:
AI x CTR
|
where |
||
|
AI |
= |
the adjusted IFB income for the taxation year; |
|
CTR |
= |
the percentage established by section 14 (2) [corporate tax rate] |
(d) if neither paragraph (a) or (b) applies, in the case of a taxation year that begins on or after April 1, 2000,
(i) for a registered financial institution that is not eligible to claim the small business deduction under section 125 of the Income Tax Act (Canada) for the taxation year, the amount determined in accordance with the formula under paragraph (c), and
(ii) for a registered financial institution that is eligible to claim the small business deduction under section 125 of the Income Tax Act (Canada) for the taxation year, the amount determined in accordance with the following formula:
(ASBI x SBTR) + [(AI – ASBI) x CTR]
|
where |
||
|
ASBI |
= |
the adjusted small business income for the taxation year; |
|
SBTR |
= |
the percentage established by section 16 (1) (a) |
|
AI |
= |
the adjusted IFB income for the taxation year; |
|
CTR |
= |
the percentage established by section 14 (2) |
"IFB taxable income" means, in relation to a registered financial institution for a taxation year,
(a) the amount of its federal taxable income for the taxation year
less
(b) the amount that would be its federal taxable income for the taxation year if income or loss from operations of the registered financial institution's international financial business in British Columbia were excluded in determining that amount;
"interest expense" means the amount of interest expense for the applicable taxation year shown on the financial statements of the registered financial institution's international financial business;
"interest revenue" means the amount of interest revenue for the applicable taxation year shown on the financial statements of the registered financial institution's international financial business.
(2) For the purposes of this section, IFB tax is deemed to be zero for all taxation years before registration of the financial institution under the Act.
(3) For the purposes of paragraph (b) of the definition of "IFB taxable income", the income or loss from the international financial business must be calculated in accordance with the Income Tax Act (Canada) and be derived from the financial statements required by section 4.
(4) Subject to subsection (5), the tax refund amount payable to a financial institution with respect to a taxation year is the lesser of
(a) the amount by which the cumulative IFB tax for the taxation year exceeds the aggregate of IFB tax refund amounts paid or payable for all preceding taxation years, and
(b) the amount of tax assessed and paid under the Income Tax Act for the taxation year.
(5) The amount determined under subsection (4) is deemed to be zero if it would otherwise be negative.
(6) If income or loss from international banking activity is excluded from the calculation of taxable income under section 33.1 of the Income Tax Act (Canada), the income or loss must also be excluded for the purposes of all calculations required by this section.
[en. B.C. Reg. 103/2000.]
12.1 (1) In this section each of the following terms has the same meaning as in section 12 (1):
(a) "cumulative IFB tax";
(b) "interest expense";
(c) "interest revenue".
(2) A registered financial institution may elect to repay a tax refund paid in respect of a loan recorded on the books of its international financial office.
(3) To elect to repay a refund, a registered financial institution shall
(a) notify the commissioner in writing, and
(b) provide the commissioner with any information necessary for calculating the amount referred to in subsection (4).
(4) Where a registered financial institution elects to repay a tax refund paid in respect of a loan, the cumulative IFB Tax for the registered financial institution shall be adjusted by subtracting the cumulative loan refund repayment.
(5) The cumulative loan refund repayment is determined
(a) by calculating, for the taxation year in which the commissioner is notified under subsection (3) up to the date of notification and for each preceding taxation year in which the loan was recorded on the books of the registered financial institution, the difference between
(i) the interest revenue for the loan for the taxation year, and
(ii) the interest expense for the loan for the taxation year, calculated by multiplying the average principal amount of the loan for the taxation year by the average rate of interest expense for the registered financial institution for the taxation year,
(b) by multiplying the difference obtained for each taxation year under paragraph (a) by the percentage in section 14 (2) of the Income Tax Act for that year to obtain the loan repayment refund for that taxation year, and
(c) by adding all loan repayment refunds obtained under paragraph (b).
(6) Where, as a result of adjusting the cumulative IFB Tax under subsection (4), the cumulative IFB tax is a negative amount,
(a) the registered financial institution shall, within 60 days after being served with notice under section 11 (2) of the Act, pay to the Minister of Finance and Corporate Relations an amount equal to the lesser of
(i) the negative amount, or
(ii) the cumulative loan refund repayment determined under subsection (5), and
(b) the cumulative IFB tax shall be further adjusted by adding the amount paid under paragraph (a).
[en. B.C. Reg. 98/91.]
13 (1) Subject to subsection (2), where under the Act and this regulation a tax refund amount is payable to a claimant, the tax refund amount shall include interest at rates prescribed under section 27 (1) (c) of the Financial Administration Act, for the period
(a) beginning on the day that the claimant files with the commissioner
(i) the information required under section 9 (1), 10 (1) or 11, as the case may be, or
(ii) the information required under section 9 (1) (a), 10 (1) (a) or 11 (a) and (c), as the case may be, and
(b) ending on the day that the tax refund amount is mailed to the claimant.
(2) If the claimant does not file with the commissioner a copy of the notice of assessment or reassessment referred to in section 9 (1) (b), 10 (1) (b) or 11 (b), as the case may be, within 45 days of Revenue Canada's (Taxation) assessment date, interest under subsection (1) shall be calculated beginning on the day that the claimant files a copy of the notice of assessment or reassessment.
14 (1) The fee for initial application for registration under the Act is $5 000 and must be paid at the time of application.
(2) No fee is payable in respect of specialists or eligible employees.
[Provisions of the International Financial Business (Tax Refund) Act, R.S.B.C. 1996, c. 235, relevant to the enactment of this regulation: sections 5 and 23]
|
|
|
| 1. | refers to this Act as it was November 4, 1988 when this regulation came into force. |
Copyright (c) 2004: Queen's Printer, Victoria, British Columbia, Canada