ARCHIVED — Vol. 147, No. 7 — March 27, 2013
SOR/2013-38 March 8, 2013
Yukon Borrowing Limits Regulations
P.C. 2013-270 March 7, 2013
His Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to subsection 23(5) (see footnote a) of the Yukon Act (see footnote b), makes the annexed Yukon Borrowing Limits Regulations.
YUKON BORROWING LIMITS REGULATIONS
Definition of “government”
1. In these Regulations, “government” means the government reporting entity — as defined in the section dealing with the government reporting entity in the CICA Public Sector Accounting Handbook, as amended from time to time — of Yukon.
2. (1) Subject to subsection (2), for the purposes of subsections 23(2) and (4) of the Yukon Act, each of the following constitutes or is deemed to constitute borrowing:
- (a) an obligation incurred as a result of any loan of money received by the government, including a loan made by the issuance and sale of bonds, debentures, notes or any other evidence of indebtedness;
- (b) an obligation incurred as a result of any capital lease entered into by the government if the value of the obligation, determined in accordance with paragraph 3(b), exceeds the threshold for disclosure that is required in the Yukon Public Accounts;
- (c) a liability incurred as a result of any saleleaseback transaction entered into by the government if the government acquires a leased tangible capital asset and the value of the liability, determined in accordance with paragraph 3(c), exceeds the threshold for disclosure that is required in the Yukon Public Accounts; and
- (d) a contingent liability incurred as a result of any loan guarantee provided by the government.
Exclusion — obligation within government
(2) An obligation, liability or contingent liability incurred as a result of any transaction referred to in subsection (1) between any two parties within the government does not constitute or is deemed not to constitute borrowing.
VALUE OF BORROWING
Manner to determine value of borrowing
3. For the purposes of subsections 23(2) and (4) of the Yukon Act,
- (a) the value of the obligation incurred as a result of a loan referred to in paragraph 2(1)(a) is equal to the sum of any outstanding principal and any accrued interest — or the principal repayable at maturity in the case of a loan made by the issuance and sale of a discount bond — but excludes the amount of any custodial account that is outside the control of the government and in which money is deposited on a regular basis, as required by a loan agreement, for the repayment of the loan;
- (b) the value of the obligation incurred as a result of a capital lease referred to in paragraph 2(1)(b) is determined in accordance with the CICA Public Sector Accounting Handbook, as amended from time to time;
- (c) the value of the liability incurred as a result of a sale-leaseback transaction referred to in paragraph 2(1)(c) is determined in accordance with the CICA Public Sector Accounting Handbook, as amended from time to time; and
- (d) the value of the contingent liability incurred as a result of a loan guarantee referred to in paragraph 2(1)(d) is equal to the full amount of that contingent liability that is to be disclosed in the Yukon Public Accounts.
COMING INTO FORCE
S.C. 2012, c. 19
4. These Regulations come into force on the day on which Division 4 of Part 4 of the Jobs, Growth and Long-term Prosperity Act comes into force, but if they are registered after that day, they come into force on the day on which they are registered.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the regulations.)
Under the Northwest Territories Act, the Nunavut Act and the Yukon Act (the Acts), a territorial government may borrow up to a maximum amount of the aggregate of all its borrowings. This is commonly referred to as the territorial government’s borrowing limit.
Prior to the passage of the Jobs, Growth and Long-term Prosperity Act, the Acts stipulated that the territorial governments were permitted to borrow on the authorization of the Governor in Council, but did not define “borrowing.” This required the territorial governments and the federal government to interpret the meaning of “borrowing” in administering the statutes. With the growth in both the variety and sophistication of financing instruments and the scale of future projects in the territories, territorial governments require clarity in the rules governing the borrowing limit if they are to be able to develop fiscal plans that respect the Acts.
With the passage of the Jobs, Growth and Long-term Prosperity Act, the Acts each provide that the Governor in Council may make regulations that determine what constitutes borrowing for the purpose of the borrowing limit. This includes specifying which borrowers are subject to the limit, what instruments are considered borrowing and how those instruments are to be counted against the limit.
The Northwest Territories Borrowing Limits Regulations,the Nunavut Borrowing Limits Regulations,and the Yukon Borrowing Limits Regulations (the regulations) fully implement this legislative provision in order to modernize the governance of the three borrowing limits to ensure accurate reporting of borrowing obligations against the borrowing limits and consistency with reporting in the annual territorial consolidated financial statements. This modernization provides clarity to territorial governments as they develop their fiscal plans for the future.
The regulations define
- — that territorial governments’ borrowing consists of obligations resulting from loans of money received by that government or from any capital lease provided to that government exceeding the threshold for disclosure in the territorial accounts, liabilities resulting from sale-leaseback transactions entered into by that government in which the government acquires a leased capital asset and exceeding the threshold for disclosure, and contingent liabilities resulting from any loan guarantee provided by that government;
- —that territorial governments’ borrowing does not consist of any obligation, liability or contingent liability between any two parties within that government or any obligation as a result of any loan from the Canada Mortgage and Housing Corporation (CMHC) to the Northwest Territories Housing Corporation or the Nunavut Housing Corporation for which the CMHC provides funding to these housing corporations to reduce the related loan, and that is not disclosed in the Territorial Accounts;
- —that the borrowing limit will apply to territorial governments and all of the organizations that are controlled by the government as defined in the Canadian Institute of Chartered Accounts (CICA) Public Sector Accounting Handbook; and
- —that for the purpose of assessing compliance with the territorial borrowing limits, the manner of valuing borrowings shall represent the full value of the obligations incurred. The valuation of obligations under capital leases and liabilities under sale-leaseback transactions shall be consistent with the CICA Public Sector Accounting Handbook. Loan guarantees to third parties shall be valued at the value of the contingent liability that is to be disclosed in the annual consolidated financial statements of the territories.
The “One-for-One” Rule does not apply to this proposal as there is no change in the administrative burden to business.
Small business lens
The small business lens does not apply to this proposal as there are no private sector obligations.
The detailed approach in the regulations provides needed clarity to territorial governments when establishing their fiscal plans and modernizes the administration of the borrowing limit to account for commonly understood sources of borrowing and similar instruments.
The regulations do not affect the amount of the territorial borrowing limit for each territory. As currently established in the Acts, these limits will continue to be set by Order in Council. The regulations also does not affect the territorial governments’ exclusive responsibility for their own individual borrowing decisions, the expenditure of any funds borrowed, and the repayment of the borrowing.
The regulations are not expected to result in any material costs. Territorial governments will have an additional responsibility to monitor the borrowing transactions of all organizations that are controlled by them on a more frequent basis in order to ensure compliance with the regulations. Territories will continue to publicly disclose their position relative to their borrowing limit in their annual budget papers and in their annual consolidated financial statements, as audited by the Auditor General of Canada.
Consultations were held with territorial government officials on the specific content of the three regulations between July 2012 and January 2013. The outcome of these consultations is reflected in the regulations. Territorial officials identified no outstanding issues.
Implementation, enforcement and service standards
Territories will continue to publicly disclose their positions relative to their borrowing limits in their annual budget papers and in their annual consolidated financial statements, as audited by the Auditor General of Canada.
Federal-Provincial Relations Division
Federal-Provincial Relations and Social Policy Branch