S-221
Third Session, Fortieth Parliament,
59 Elizabeth II, 2010
SENATE OF CANADA
BILL S-221
An Act to amend the Income Tax Act (carbon offset tax credit)
first reading, June 10, 2010
THE HONOURABLE SENATOR MITCHELL
3920726
SUMMARY
This enactment amends the Income Tax Act to provide for a new non-refundable tax credit for carbon offset purchases.
Available on the Parliament of Canada Web Site at the following address:http://www.parl.gc.ca
3rd Session, 40th Parliament,
59 Elizabeth II, 2010
senate of canada
BILL S-221
An Act to amend the Income Tax Act (carbon offset tax credit)
R.S., c. 1 (5th Supp.)
Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:
1. (1) The Income Tax Act is amended by adding the following after section 118.05:
Definitions
118.06 (1) The following definitions apply in this section.
“approved offset project”« projet de compensation approuvé »
“approved offset project” means an offset project that is approved, or that is of a type approved, by the Minister under subsection (3).
“carbon offset provider”« fournisseur de titres de compensation de carbone »
“carbon offset provider” means a person or entity designated by the Minister under subsection (3) as a carbon offset provider.
“eligible carbon offset purchase expense”« dépense admissible pour l’achat de titres de compensation de carbone »
“eligible carbon offset purchase expense” in respect of an individual means the amount that is paid to a carbon offset provider (other than a carbon offset provider with whom the individual does not deal at arm’s length) for the purpose of investing in one or more approved offset projects (other than an approved offset project that is managed, operated or owned by a person with whom the individual does not deal at arm’s length), but does not include an amount required to be paid under any enactment of Canada or of a province.
“offset project”« projet de compensation »
“offset project” means a project, program or enterprise that avoids, reduces, sequesters or displaces, or mitigates the effects of, carbon dioxide emissions.
Carbon offset tax credit
(2) For the purpose of computing the tax payable under this Part by an individual for a taxation year, there may be deducted the amount determined by the formula
A × B
where
A      is the appropriate percentage for the taxation year; and
B      is the total of all amounts each of which is an amount that is an eligible carbon offset purchase expense paid in the taxation year by the individual and that is evidenced by a receipt filed with the Minister.
Approval or designation by Minister
(3) The Minister may, for the purposes of this section,
(a) approve an offset project or a type of offset project, taking into account the prescribed criteria; and
(b) designate as a carbon offset provider any person or entity that, in the opinion of the Minister, is suitable to be so designated.
Revocation of approval or designation
(4) The Minister may, in writing, revoke the approval of an offset project or type of offset project or the designation of a carbon offset provider.
(2) Section 118.06 of the Act, as enacted by subsection (1), applies to the 2010 and subsequent taxation years.
2. (1) The portion of subsection 118.3(2) of the French version of the Act before paragraph (a) is replaced by the following:
Personne déficiente à charge
(2) L’excédent du montant déductible en application du paragraphe (1) dans le calcul de l’impôt payable en vertu de la présente partie pour une année d’imposition par une personne (sauf une personne à l’égard de laquelle l’époux ou le conjoint de fait déduit un montant pour l’année en application des articles 118 ou 118.8) qui réside au Canada à un moment donné de l’année et qui a le droit de déduire un montant pour l’année en application du paragraphe (1) sur l’impôt payable par cette personne en vertu de la présente partie pour l’année calculé avant toute déduction en application de la présente section — à l’exception des articles 118 à 118.06 et 118.7 — est déductible dans le calcul de l’impôt payable par un particulier en vertu de la présente partie pour l’année dans le cas où :
(2) Paragraph 118.3(2)(d) of the English version of the Act is replaced by the following:
(d) the amount of that person’s tax payable under this Part for the year computed before any deductions under this Division (other than under sections 118 to 118.06 and 118.7).
3. (1) The description of C in subsection 118.61(1) of the Act is replaced by the following:
C      is the lesser of the value of B and the amount that would be the individual’s tax payable under this Part for the year if no amount were deductible under this Division (other than an amount deductible under this section and any of sections 118 to 118.06, 118.3 and 118.7);
(2) Paragraph 118.61(2)(b) of the Act is replaced by the following:
(b) the amount that would be the individual’s tax payable under this Part for the year if no amount were deductible under this Division (other than an amount deductible under this section and any of sections 118 to 118.06, 118.3 and 118.7).
4. (1) Paragraph (a) of the description of C in section 118.8 of the Act is replaced by the following:
(a) the amount that would be the spouse’s or common-law partner’s tax payable under this Part for the year if no amount were deductible under this Division (other than an amount deductible under subsection 118(1) because of paragraph (c) of the description of B in that subsection, under subsection 118(10) or under any of sections 118.01 to 118.06, 118.3, 118.61 and 118.7).
(2) Subparagraph (b)(ii) of the description of C in section 118.8 of the Act is replaced by the following:
(ii) the amount that would be the spouse’s or common-law partner’s tax payable under this Part for the year if no amount were deductible under this Division (other than an amount deductible under any of sections 118 to 118.06, 118.3, 118.61 and 118.7).
5. The description of B in paragraph 118.81(a) of the Act is replaced by the following:
B      is the amount that would be the person’s tax payable under this Part for the year if no amount were deductible under this Division (other than an amount deductible under any of sections 118 to 118.06, 118.3, 118.61 and 118.7), and
6. Section 118.92 of the Act is replaced by the following:
Ordering of credits
118.92 In computing an individual’s tax payable under this Part, the following provisions shall be applied in the following order: subsections 118(1) and (2), section 118.7, subsections 118(3) and (10) and sections 118.01, 118.02, 118.03, 118.04, 118.05, 118.06, 118.3, 118.61, 118.5, 118.6, 118.9, 118.8, 118.2, 118.1, 118.62 and 121.
7. Section 118.94 of the Act is replaced by the following:
Tax payable by non-residents (credits restricted)
118.94 Sections 118 to 118.06 and 118.2, subsections 118.3(2) and (3) and sections 118.6, 118.8 and 118.9 do not apply for the purpose of computing the tax payable under this Part for a taxation year by an individual who at no time in the year is resident in Canada unless all or substantially all of the individual’s income for the year is included in computing the individual’s taxable income earned in Canada for the year.
8. Paragraph 127.531(a) of the Act is replaced by the following:
(a) an amount deducted under subsection 118(1), (2) or (10) or 118.3(1) or any of sections 118.01 to 118.06 and 118.5 to 118.7 in computing the individual’s tax payable for the year under this Part; or
9. Clause 128(2)(e)(iii)(A) of the Act is replaced by the following:
(A) under any of sections 118 to 118.06, 118.2, 118.3, 118.5, 118.6, 118.8 or 118.9,
10. Sections 2 to 9 apply to the 2010 and subsequent taxation years.
Published under authority of the Senate of CanadaAvailable from:Publishing and Depository ServicesPublic Works and Government Services Canada
Explanatory Notes
Income Tax Act
Clause 1: New.
Clause 2: Existing text of relevant portions of subsection 118.3(2):
(2) Where
. . . 
exceeds
(d) the amount of that person’s tax payable under this Part for the year computed before any deductions under this Division (other than under sections 118 to 118.05 and 118.7).
Clause 3: Existing text of relevant portions of section 118.61:
118.61 (1) In this section, an individual’s unused tuition, textbook and education tax credits at the end of a taxation year is the amount determined by the formula
A + (B - C) - (D + E)
where
. . .      
C      is the lesser of the value of B and the amount that would be the individual’s tax payable under this Part for the year if no amount were deductible under this Division (other than an amount deductible under this section and any of sections 118 to 118.05, 118.3 and 118.7);
. . .      
(2) For the purpose of computing an individual’s tax payable under this Part for a taxation year, there may be deducted the lesser of
. . . 
(b) the amount that would be the individual's tax payable under this Part for the year if no amount were deductible under this Division (other than an amount deductible under this section and any of sections 118 to 118.05, 118.3 and 118.7).
Clause 4: Existing text of relevant portions of section 118.8:
118.8 For the purpose of computing the tax payable under this Part for a taxation year by an individual who, at any time in the year, is a married person or a person who is in a common-law partnership (other than an individual who, by reason of a breakdown of their marriage or common-law partnership, is living separate and apart from the individual's spouse or common-law partner at the end of the year and for a period of 90 days commencing in the year), there may be deducted an amount determined by the formula
A + B - C
where
. . .      
C      is the amount, if any, by which
(a) the amount that would be the spouse's or common-law partner's tax payable under this Part for the year if no amount were deductible under this Division (other than an amount deductible under subsection 118(1) because of paragraph (c) of the description of B in that subsection, under subsection 118(10) or under any of sections 118.01 to 118.05, 118.3, 118.61 and 118.7). [sic]
exceeds
(b) the lesser of
. . .
(ii) the amount that would be the spouse's or common-law partner's tax payable under this Part for the year if no amount were deductible under this Division (other than an amount deductible under any of sections 118 to 118.05, 118.3, 118.61 and 118.7).
Clause 5: Existing text of relevant portions of section 118.81:
118.81 In this subdivision, the tuition, textbook and education tax credits transferred for a taxation year by a person to an individual is the lesser of
(a) the amount determined by the formula
A - B
where
. . .      
B      is the amount that would be the person's tax payable under this Part for the year if no amount were deductible under this Division (other than an amount deductible under any of sections 118 to 118.05, 118.3, 118.61 and 118.7), and
. . . 
Clause 6: Existing text of section 118.92:
118.92 In computing an individual’s tax payable under this Part, the following provisions shall be applied in the following order: subsections 118(1) and (2), section 118.7, subsections 118(3) and (10) and sections 118.01, 118.02, 118.03, 118.04, 118.05, 118.3, 118.61, 118.5, 118.6, 118.9, 118.8, 118.2, 118.1, 118.62 and 121.
Clause 7: Existing text of section 118.94:
118.94 Sections 118 to 118.05 and 118.2, subsections 118.3(2) and (3) and sections 118.6, 118.8 and 118.9 do not apply for the purpose of computing the tax payable under this Part for a taxation year by an individual who at no time in the year is resident in Canada unless all or substantially all of the individual’s income for the year is included in computing the individual’s taxable income earned in Canada for the year.
Clause 8: Existing text of relevant portions of section 127.531:
127.531 An individual’s basic minimum tax credit for a taxation year is the total of all amounts each of which is
(a) an amount deducted under subsection 118(1), (2) or (10) or 118.3(1) or any of sections 118.01 to 118.05 and 118.5 to 118.7 in computing the individual’s tax payable for the year under this Part; or
Clause 9: Existing text of relevant portions of subsection 128(2):
(2) Where an individual has become a bankrupt, the following rules are applicable:
. . . 
(e) where the individual was a bankrupt at any time in a calendar year the trustee shall, within 90 days from the end of the year, file a return with the Minister, in prescribed form, on behalf of the individual of the individual’s income for any taxation year occurring in the calendar year computed as if
. . . 
(iii) in computing the individual’s tax payable under this Part for that taxation year, no deduction were allowed
(A) under any of sections 118 to 118.05, 118.2, 118.3, 118.5, 118.6, 118.8 and 118.9,