A new act to promote shipbuilding in Canada, cited as the Shipbuilding Act (Bill C-213), has passed a second reading on March 31st 2000 and is now going to be debated by the Finance Committee of the Canadian House of Commons. The Act is intended to make Canadian shipyards more competitive.
This will be achieved through establishment of a program whereby a maximum of 87.5% of the money borrowed by a company from financial institutions to purchase a commercial ship that will be built in a shipyard located in Canada:
- is guaranteed by the federal government in the event of default in the repayment of the loan
- bears a rate of interest comparable to that available for loans from financial institutions to large and financially strong corporations, and
- is repayable on terms comparable to those usually granted by financial institutions to large and financially strong corporations for the repayment of their loans.
Amendments of the Income Tax Act and the Income Tax Regulations will improve the tax treatment of lease financing for the purchase of a ship built in a Canadian shipyard. Amendments will also allow a refundable tax credit for a portion of the costs relating to the construction or refit of a commercial ship in a shipyard located in Canada or the conversion of a ship in such a shipyard:
- to the shipowner for the construction of a Canadian ship, or
- to the shipyard owner for the construction of a foreign ship.