In a previous blog entry,1 we provided comprehensive
commentary on the then-recently tabled Liquefied Natural Gas
Income Tax Act (the "Act"), the
foundational piece of legislation in the B.C. Government's
proposed liquefied natural gas ("LNG")
On November 27, 2014, the Act received royal assent and the
Province has since been in the process of crafting associated
regulations and amendments. The first of these, Bill 26 –
Liquefied Natural Gas Income Tax Amendment Act, 2015 (the
"Proposed Amendment"), was released on
March 25, 2015, and proposes a number of amendments to the Act,
including many relating to the Province's prior commitment to
set out enforcement and administration mechanisms for the Act by
spring 2015, as well as a welcome change to the new Natural Gas Tax
The Proposed Amendment also contains a number of clarifications
to the key defined terms in the Act – namely, "capital
investment property", "feedstock pipeline",
"feedstock spur pipeline", "liquefaction
activities", "LNG facility inlet meter", "LNG
facility", and "LNG plant".
McCarthy Tétrault's LNG Team would be happy to
discuss the Proposed Amendment with you and how it may impact you
in making LNG business and investment decisions in B.C.
Welcome change to the new Natural Gas Tax Credit
As noted in our previous blog entry, in order to incentivize
corporations to maintain a permanent establishment in B.C. with a
view to attracting new corporate income tax revenue to B.C., a new
Natural Gas Tax Credit has been created to allow qualifying
corporations to offset regular corporate income taxes arising under
the B.C. Income Tax Act. The Province initially
contemplated that this would be a credit equal to 0.5% of the
corporation's eligible cost of natural gas for the taxation
year, as determined under the Act.
In an effort to enable greater flexibility and responsiveness in
the face of global LNG pricing fluctuations, and to ensure the
long-term competitiveness of the Province's LNG tax regime, the
Proposed Amendment will allow the Province to increase the 0.5%
rate by regulation. It should be noted, however, that the credits
may still only be used insofar as they reduce the taxpayer's
B.C. corporate income tax to an amount equivalent to the amount
that would be payable if the B.C. general corporate income tax rate
were 8%. As the current general corporate income tax rate is 11%,
the credits therefore allow for a maximum effective reduction of
3%, and the Proposed Amendment does not currently contemplate an
adjustment to this cap.
The Province anticipates that regulations setting the Natural
Gas Tax Credit rate will be finalized later this year.
In addition to the above-noted change to the Natural Gas Tax
Credit, the Proposed Amendment contains a number of other proposed
technical and substantive changes to the Act, including:
as mentioned above, a number of
clarifications to the key defined terms used in the Act;
administrative and enforcement
provisions relating to registration and security, returns and
assessments, penalties, offences, appeals, and anti-avoidance
provisions regarding debt
forgiveness, bankruptcy, the treatment of trusts with exempt
beneficiaries, and transitional rules for partnerships during the
first taxation years; and
Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
In Bank of Montreal v Bumper Development Corporation Ltd, 2016 ABQB 363, the Alberta Court of Queen's Bench enforced the "immediate replacement" provision in the Canadian Association of Petroleum Landmen 2007 Operating Procedure...
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