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Vol. 141, No. 33 — August 18, 2007 Interest Rates (Air Travellers Security Charge Act) RegulationsStatutory authority Air Travellers Security Charge Act Sponsoring department Department of Finance REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Regulations.) Description Prescribed interest rate The Air Travellers Security Charge Act (the "Act") imposes a charge on every person who acquires from a designated air carrier an air transportation service between two listed airports. Designated air carriers are responsible for collecting and remitting the charge, not later than the last day of the first month after each fiscal month of the air carrier. Where an air carrier fails to pay an amount to the Receiver General, as and when required under the Act (or where the Minister of National Revenue owes an amount to a person), compound interest is payable at the "prescribed rate." The purpose of the proposed Interest Rates (Air Travellers Security Charge Act) Regulations (the "Regulations") is twofold: • Firstly, they establish the rate of interest that is applicable on amounts owing under the Act; and • Secondly, they harmonize the rate of interest applicable on amounts owing under the Act after March 31, 2007, with those applicable under other taxation statutes, such as the Income Tax Act, the non-GST portion of the Excise Tax Act and the Excise Act, 2001 (the "other Acts"). Establishment of the rate of interest Under the Regulations, the prescribed rate of interest in effect during any quarter that begins after March 31, 2002, and that ends before April 1, 2007, is the rate (expressed as a percentage per month and rounded to the nearest one tenth of a percentage or, if the percentage is equidistant from two consecutive multiples of one tenth of a percentage, to the higher of them) determined by the formula A/12 where A is the simple arithmetic mean of all amounts, each of which is the average equivalent yield (expressed as a percentage per year) of Government of Canada Treasury bills that mature approximately three months after their date of issue and that were sold at auctions of Government of Canada Treasury bills during the first month of the immediately preceding quarter. Harmonization with other taxation statutes In the federal budget tabled in the House of Commons on May 2, 2006, the Government of Canada proposed to complete the implementation of Standardized Accounting (an initiative aimed at simplifying tax compliance by businesses) by harmonizing, among others, provisions concerning the amount of interest and penalty payable on amounts owing under the Act with similar provisions under the other Acts. At the time of Budget 2006, there were two fundamental differences between the interest and penalty provisions of the Act and the other Acts: • The Act imposed a 6% penalty per year on amounts owed by a person to Her Majesty while, in similar circumstances, the other Acts impose none; and • Compared to the Act, the prescribed interest rate of the other Acts was 4% higher in the case of amounts owed by a person to Her Majesty, and 2% higher in the case of amounts owed by the Minister to a person. The Budget Implementation Act, 2006, which received Royal Assent on June 22, 2006, repealed the 6% penalty payable on amounts owed by a person to Her Majesty under the Act, effective April 1, 2007. The proposed Regulations complement the legislative changes in the Budget Implementation Act, 2006 and are necessary to harmonize the prescribed rate of interest of the Act with those of the other Acts. Under the Regulations, the rate of interest applicable on amounts owed under the Act after March 31, 2007, is the basic rate plus 4% in the case of amounts owed to Her Majesty, or plus 2% in the case of amounts payable by the Minister. The basic rate is established quarterly and is the simple arithmetic mean, expressed as a percentage per year and rounded to the next whole percentage, of all amounts each of which is the average equivalent yield, expressed as a percentage per year, of Government of Canada Treasury bills that mature approximately three months after their date of issue and that are sold at auctions of Government of Canada Treasury bills during the first month of the preceding quarter. The Regulations are deemed to have come into force on April 1, 2002. Alternatives No alternatives to the Regulations were appropriate, since legislation specifically provides for the rate of interest to be prescribed by regulation. Strategic environmental assessment A strategic environmental assessment has been conducted, and there are no important environmental effects associated with the Regulations. Consultation A draft of the proposed regulations establishing the rate of interest on amounts owing under the Act was published in Appendix A of the Explanatory Notes Relating to the Air Travellers Security Charge on February 5, 2002. The proposed changes to the rate of interest consequential to Standardized Accounting initiatives have been announced in the federal budget tabled in the House of Commons on May 2, 2006. No written submissions or comments were received with respect to any of these publications.
Geoff Trueman
Notice is hereby given that the Governor in Council, pursuant to subsection 84(1) and paragraph 84(2)(d) of the Air Travellers Security Charge Act (see footnote a), proposes to make the annexed Interest Rates (Air Travellers Security Charge Act) Regulations. Interested persons may make representations concerning the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Geoff Trueman, Chief, Air Travellers Security Charge, Sales Tax Division, Tax Policy Branch, Department of Finance, L'Esplanade Laurier, 16th Floor, East Tower, 140 O'Connor Street, Ottawa, Ontario, Canada K1A 0G5. Ottawa, July 30, 2007
MARY O'NEILL
[33-1-o] S.C. 2002, c. 9, s. 5
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