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Bill C-63

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First Session, Forty-second Parliament,
64-65-66 Elizabeth II, 2015-2016-2017
STATUTES OF CANADA 2017
CHAPTER 33
A second Act to implement certain provisions of the budget tabled in Parliament on March 22, 2017 and other measures
ASSENTED TO
December 14, 2017
BILL C-63


RECOMMENDATION
Her Excellency the Governor General recommends to the House of Commons the appropriation of public revenue under the circumstances, in the manner and for the purposes set out in a measure entitled “A second Act to implement certain provisions of the budget tabled in Parliament on March 22, 2017 and other measures”.
SUMMARY
Part 1 implements certain income tax measures proposed in the March 22, 2017 budget by
(a)removing the classification of the costs of drilling a discovery well as “Canadian exploration expenses”;
(b)eliminating the ability for small oil and gas companies to reclassify up to $1 million of “Canadian development expenses” as “Canadian exploration expenses”;
(c)revising the anti-avoidance rules for registered education savings plans and registered disability savings plans;
(d)eliminating the use of billed-basis accounting by designated professionals;
(e)providing enhanced tax treatment for eligible geothermal energy equipment;
(f)extending the base erosion rules to foreign branches of Canadian insurers;
(g)clarifying who has factual control of a corporation for income tax purposes;
(h)introducing an election that would allow taxpayers to mark to market their eligible derivatives;
(i)introducing a specific anti-avoidance rule that targets straddle transactions;
(j)allowing tax-deferred mergers of switch corporations into multiple mutual fund trusts and allowing tax-deferred mergers of segregated funds; and
(k)enhancing the protection of ecologically sensitive land donated to conservation charities and broadening the types of donations permitted.
It also implements other income tax measures by
(a)closing loopholes surrounding the capital gains exemption on the sale of a principal residence;
(b)providing additional authority for certain tax purposes to nurse practitioners;
(c)ensuring that qualifying farmers and fishers selling to agricultural and fisheries cooperatives are eligible for the small business deduction;
(d)extending the types of reverse takeover transactions to which the corporate acquisition of control rules apply;
(e)improving the consistency of rules applicable for expenditures in respect of scientific research and experimental development;
(f)ensuring that the taxable income of federal credit unions is allocated among provinces and territories using the same allocation formula as applicable to the taxable income of banks;
(g)ensuring the appropriate application of Canada’s international tax rules; and
(h)improving the accuracy and consistency of the income tax legislation and regulations.
Part 2 implements certain goods and services tax/harmonized sales tax (GST/HST) measures confirmed in the March 22, 2017 budget by
(a)introducing clarifications and technical improvements to the GST/HST rules applicable to certain pension plans and financial institutions;
(b)revising the GST/HST rules applicable to pension plans so that they apply to pension plans that use master trusts or master corporations;
(c)revising and modernizing the GST/HST drop shipment rules to enhance the effectiveness of these rules and introduce technical improvements;
(d)clarifying the application of the GST/HST to supplies of municipal transit services to accommodate the modern ways in which those services are provided and paid for; and
(e)introducing housekeeping amendments to improve the accuracy and consistency of the GST/HST legislation.
It also implements a GST/HST measure announced on September 8, 2017 by revising the timing requirements for GST/HST rebate applications by public service bodies.
Part 3 amends the Excise Act to ensure that beer made from concentrate on the premises where it is consumed is taxed in a manner that is consistent with other beer products.
Part 4 amends the Federal-Provincial Fiscal Arrangements Act to allow the Minister of Finance on behalf of the Government of Canada, with the approval of the Governor in Council, to enter into coordinated cannabis taxation agreements with provincial governments. It also amends that Act to make related amendments.
Part 5 enacts and amends several Acts in order to implement various measures.
Division 1 of Part 5 amends the Bretton Woods and Related Agreements Act to update and clarify certain powers of the Minister of Finance in relation to the Bretton Woods institutions.
Division 2 of Part 5 enacts the Asian Infrastructure Investment Bank Agreement Act which provides the required authority for Canada to become a member of the Asian Infrastructure Investment Bank.
Division 3 of Part 5 provides for the transfer from the Minister of Finance to the Minister of Foreign Affairs of the responsibility for three international development financing agreements entered into between Her Majesty in Right of Canada and the International Finance Corporation.
Division 4 of Part 5 amends the Canada Deposit Insurance Corporation Act to clarify the treatment of, and protections for, eligible financial contracts in a bank resolution process. It also makes consequential amendments to the Payment Clearing and Settlement Act.
Division 5 of Part 5 amends the Bank of Canada Act to specify that the Bank of Canada may make loans or advances to members of the Canadian Payments Association that are secured by real property or immovables situated in Canada and to allow such loans and advances to be secured by way of an assignment or transfer of a right, title or interest in real property or immovables situated in Canada. It also amends the Canada Deposit Insurance Corporation Act to specify that the Bank of Canada and the Canada Deposit Insurance Corporation are exempt from stays even where obligations are secured by real property or immovables.
Division 6 of Part 5 amends the Payment Clearing and Settlement Act in order to expand and enhance the oversight powers of the Bank of Canada by further strengthening the Bank’s ability to identify and respond to risks to financial market infrastructures in a proactive and timely manner.
Division 7 of Part 5 amends the Northern Pipeline Act to permit the Northern Pipeline Agency to annually recover from any company with a certificate of public convenience and necessity issued under that Act an amount equal to the costs incurred by that Agency with respect to that company.
Division 8 of Part 5 amends the Canada Labour Code in order to, among other things,
(a)provide employees with a right to request flexible work arrangements from their employers;
(b)provide employees with a family responsibility leave for a maximum of three days, a leave for victims of family violence for a maximum of ten days and a leave for traditional Aboriginal practices for a maximum of five days; and
(c)modify certain provisions related to work schedules, overtime, annual vacation, general holidays and bereavement leave, in order to provide greater flexibility in work arrangements.
Division 9 of Part 5 amends the Economic Action Plan 2015 Act, No. 1 to repeal the paragraph 167(1.‍2)‍(b) of the Canada Labour Code that it enacts, and to amend the related regulation-making provisions accordingly.
Division 10 of Part 5 approves and implements the Canadian Free Trade Agreement entered into by the Government of Canada and the governments of each province and territory to reduce or eliminate barriers to the free movement of persons, goods, services and investments. It also makes related amendments to the Energy Efficiency Act in order to facilitate, with respect to energy-using products or classes of energy-using products, the harmonization of requirements set out in regulations with those of a jurisdiction. Finally, it makes consequential amendments to the Financial Administration Act, the Department of Public Works and Government Services Act and the Procurement Ombudsman Regulations and it repeals the Timber Marking Act and the Agreement on Internal Trade Implementation Act.
Division 11 of Part 5 amends the Judges Act
(a)to allow for the payment of annuities, in certain circumstances, to judges and their survivors and children, other than by way of grant of the Governor in Council;
(b)to authorize the payment of salaries to the new Associate Chief Justice of the Court of Queen’s Bench of Alberta; and
(c)to change the title of “senior judge” to “chief justice” for the superior trial courts of the territories.
It also makes consequential amendments to other Acts.
Division 12 of Part 5 amends the Business Development Bank of Canada Act to increase the maximum amount of the paid-in capital of the Business Development Bank of Canada.
Division 13 of Part 5 amends the Financial Administration Act to authorize, in an increased number of cases, the entering into of contracts or other arrangements that provide for a payment if there is a sufficient balance to discharge any debt that will be due under them during the fiscal year in which they are entered into.
Available on the House of Commons website at the following address:
www.ourcommons.ca


TABLE OF PROVISIONS
A second Act to implement certain provisions of the budget tabled in Parliament on March 22, 2017 and other measures
Short Title
1
Budget Implementation Act, 2017, No. 2
PART 1
Amendments to the Income Tax Act and to Related Legislation
2
PART 2
Amendments to the Excise Tax Act and to Related Legislation (GST/HST Measures)
106
PART 3
Excise Act
165
PART 4
Federal-Provincial Fiscal Arrangements Act
169
PART 5
Various Measures
DIVISION 1
Bretton Woods and Related Agreements Act
172
DIVISION 2
Asian Infrastructure Investment Bank Agreement Act
176
Enactment of Act
An Act to provide for the membership of Canada in the Asian Infrastructure Investment Bank
1
Asian Infrastructure Investment Bank Agreement Act
2
Definitions
3
Approval of Agreement
4
Acceptance of Agreement and implementation
5
Amendment to schedule
6
Depository
7
Payments out of Consolidated Revenue Fund — Initial subscription
DIVISION 3
International Development Financing Agreements
177
DIVISION 4
Canada Deposit Insurance Corporation Act
180
DIVISION 5
Bank of Canada Act
185
DIVISION 6
Payment Clearing and Settlement Act
188
DIVISION 7
Northern Pipeline Act
194
DIVISION 8
Canada Labour Code
195
DIVISION 9
Economic Action Plan 2015 Act, No. 1
217
DIVISION 10
Trade within Canada and Harmonization of Energy Efficiency Requirements
219
Enactment of Canadian Free Trade Agreement Implementation Act
An Act to implement the Canadian Free Trade Agreement
Short Title
1
Canadian Free Trade Agreement Implementation Act
Interpretation
2
Definitions
Purpose
3
Purpose
Her Majesty
4
Binding on Her Majesty
General
5
Prohibition of private cause of action — section 12 or 14
6
For greater certainty
Implementation of Agreement
Approval of Agreement
7
Agreement approved
Designation of Minister
8
Order designating Minister
Orders Made Under Chapter Ten of Agreement
9
Orders of Federal Court
10
Enforcement
11
Orders final and binding
Orders of Governor in Council
12
Orders: suspending benefits or imposing retaliatory measures
Committee on Internal Trade
13
Appointment of representative
14
Annual budget
Panels, Committees and Working Groups
15
Rosters
16
Representatives on committees and working groups
Appointments
17
Appointments
DIVISION 11
Judges Act
230
DIVISION 12
Business Development Bank of Canada Act
260
DIVISION 13
Financial Administration Act
261
SCHEDULE 


64-65-66 Elizabeth II
CHAPTER 33
A second Act to implement certain provisions of the budget tabled in Parliament on March 22, 2017 and other measures
[Assented to 14th December, 2017]
Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

Short Title

Short title
1This Act may be cited as the Budget Implementation Act, 2017, No. 2.
PART 1

Amendments to the Income Tax Act and to Related Legislation

R.‍S.‍, c. 1 (5th Supp.‍)

Income Tax Act

2(1)Subsection 10(14) of the Income Tax Act is repealed.
(2)Section 10 of the Act is amended by adding the following before subsection (15):
Work in progress — transitional
(14.‍1)If paragraph 34(a) applies in computing a taxpayer’s income from a business for the last taxation year of the taxpayer that begins before March 22, 2017, then
(a)for the purpose of computing the income of the taxpayer from the business, at the end of the first taxation year that begins after March 21, 2017,
(i)the amount of the cost of the taxpayer’s work in progress is deemed to be one-fifth of the amount of its cost determined without reference to this paragraph, and
(ii)the amount of the fair market value of the taxpayer’s work in progress is deemed to be one-fifth of the amount of its fair market value determined without reference to this paragraph;
(b)for the purpose of computing the income of the taxpayer from the business, at the end of the second taxation year that begins after March 21, 2017,
(i)the amount of the cost of the taxpayer’s work in progress is deemed to be two-fifths of the amount of its cost determined without reference to this paragraph, and
(ii)the amount of the fair market value of the taxpayer’s work in progress is deemed to be two-fifths of the amount of its fair market value determined without reference to this paragraph;
(c)for the purpose of computing the income of the taxpayer from the business, at the end of the third taxation year that begins after March 21, 2017,
(i)the amount of the cost of the taxpayer’s work in progress is deemed to be three-fifths of the amount of its cost determined without reference to this paragraph, and
(ii)the amount of the fair market value of the taxpayer’s work in progress is deemed to be three-fifths of the amount of its fair market value determined without reference to this paragraph; and
(d)for the purpose of computing the income of the taxpayer from the business, at the end of the fourth taxation year that begins after March 21, 2017,
(i)the amount of the cost of the taxpayer’s work in progress is deemed to be four-fifths of the amount of its cost determined without reference to this paragraph, and
(ii)the amount of the fair market value of the taxpayer’s work in progress is deemed to be four-fifths of the amount of its fair market value determined without reference to this paragraph.
(3)Subsection 10(14.‍1) of the Act, as enacted by subsection (2), is repealed.
(4)Subsections (1) and (3) come into force on January 1, 2024.
(5)Subsection (2) applies to taxation years ending after March 21, 2017.
3(1)The Act is amended by adding the following after section 10:
Mark-to-market election
10.‍1(1)Subsection (4) applies to a taxpayer in respect of a taxation year and subsequent taxation years if the taxpayer elects to have subsection (4) apply to the taxpayer and has filed that election in prescribed form on or before its filing-due date for the taxation year.
Revocation
(2)The Minister may, on application by the taxpayer in prescribed form, grant permission to the taxpayer to revoke its election under subsection (1). The revocation applies to each taxation year of the taxpayer that begins after the day on which the taxpayer is notified in writing that the Minister concurs with the revocation, on such terms and conditions as are specified by the Minister.
Subsequent election
(3)Notwithstanding subsection (1), if a taxpayer has, under subsection (2), revoked an election, any subsequent election under subsection (1) shall result in subsection (4) applying to the taxpayer in respect of each taxation year that begins after the day on which the prescribed form in respect of the subsequent election is filed by the taxpayer.
Application
(4)If this subsection applies to a taxpayer in respect of a taxation year,
(a)if the taxpayer is a financial institution (as defined in subsection 142.‍2(1)) in the taxation year, each eligible derivative held by the taxpayer at any time in the taxation year is, for the purpose of applying the provisions of this Act and with such modifications as the context requires, deemed to be mark-to-market property (as defined in subsection 142.‍2(1)) of the taxpayer for the taxation year; and
(b)in any other case, subsection (6) applies to the taxpayer in respect of each eligible derivative held by the taxpayer at the end of the taxation year.
Definition of eligible derivative
(5)For the purposes of this section, an eligible derivative, of a taxpayer for a taxation year, means a swap agreement, a forward purchase or sale agreement, a forward rate agreement, a futures agreement, an option agreement or a similar agreement, held at any time in the taxation year by the taxpayer, if
(a)the agreement is not a capital property, a Canadian resource property, a foreign resource property or an obligation on account of capital of the taxpayer;
(b)either
(i)the taxpayer has produced audited financial statements prepared in accordance with generally accepted accounting principles in respect of the taxation year, or
(ii)if the taxpayer has not produced audited financial statements described in subparagraph (i), the agreement has a readily ascertainable fair market value; and
(c)where the agreement is held by a financial institution (as defined in subsection 142.‍2(1)), the agreement is not a tracking property (as defined in subsection 142.‍2(1)), other than an excluded property (as defined in subsection 142.‍2(1)), of the financial institution.
Deemed disposition
(6)If this subsection applies to a taxpayer in respect of each eligible derivative held by the taxpayer at the end of a taxation year, for each eligible derivative held by the taxpayer at the end of the taxation year, the taxpayer is deemed
(a)to have disposed of the eligible derivative immediately before the end of the year and received proceeds or paid an amount, as the case may be, equal to its fair market value at the time of disposition; and
(b)to have reacquired, or reissued or renewed, the eligible derivative at the end of the year at an amount equal to the proceeds or the amount, as the case may be, determined under paragraph (a).
Election year — gains and losses
(7)If a taxpayer holds, at the beginning of its first taxation year in respect of which an election referred to in subsection (1) applies (in this subsection referred to as the “election year”), an eligible derivative and, in the taxation year immediately preceding the election year, the taxpayer did not compute its profit or loss in respect of that eligible derivative in accordance with a method of profit computation that produces a substantially similar effect to subsection (6), then
(a)the taxpayer is deemed
(i)to have disposed of the eligible derivative immediately before the beginning of the election year and received proceeds or paid an amount, as the case may be, equal to its fair market value at that time, and
(ii)to have reacquired, or reissued or renewed, the eligible derivative at the beginning of the election year at an amount equal to the proceeds or the amount, as the case may be, determined under subparagraph (i);
(b)the profit or loss that would arise (determined without reference to this paragraph) on the deemed disposition in subparagraph (a)‍(i)
(i)is deemed not to arise in the taxation year immediately preceding the election year, and
(ii)is deemed to arise in the taxation year in which the taxpayer disposes of the eligible derivative (otherwise than because of paragraphs (6)‍(a) or 142.‍5(2)‍(a)); and
(c)for the purpose of applying subsection 18(15) in respect of the disposition of the eligible derivative referred to in subparagraph (b)‍(ii), the profit or loss deemed to arise because of that subparagraph is included in determining the amount of the transferor’s loss, if any, from the disposition.
Default realization method
(8)If subsection (4) does not apply to a taxpayer referred to in paragraph (4)‍(b) in respect of a taxation year, a method of profit computation that produces a substantially similar effect to subsection (6) shall not be used for the purpose of computing the taxpayer’s income from a business or property in respect of a swap agreement, a forward purchase or sale agreement, a forward rate agreement, a futures agreement, an option agreement or a similar agreement for the taxation year.
Interpretation
(9)For the purposes of subsections (4) to (7), if an agreement that is an eligible derivative of a taxpayer is not a property of the taxpayer, the taxpayer is deemed
(a)to hold the eligible derivative at any time while the taxpayer is a party to the agreement; and
(b)to have disposed of the eligible derivative when it is settled or extinguished in respect of the taxpayer.
(2)Subsection (1) applies to taxation years that begin after March 21, 2017.
4(1)Subsection 12(1) of the Act is amended by adding the following after paragraph (d.‍1):
(d.‍2)any amount deducted under paragraph 20(1)‍(m.‍3) as a reserve in computing the taxpayer’s income for the immediately preceding taxation year;
(2)Subparagraphs 12(1)‍(z.‍7)‍(i) and (ii) of the Act are replaced by the following:
(i)if the taxpayer acquires a property under a derivative forward agreement in the year, the portion of the amount by which the fair market value of the property at the time it is acquired by the taxpayer exceeds the cost to the taxpayer of the property that is attributable to an underlying interest other than an underlying interest referred to in subparagraphs (b)‍(i) to (iii) of the definition derivative forward agreement in subsection 248(1), or
(ii)if the taxpayer disposes of a property under a derivative forward agreement in the year, the portion of the amount by which the proceeds of disposition (within the meaning assigned by subdivision c) of the property exceeds the fair market value of the property at the time the agreement is entered into by the taxpayer that is attributable to an underlying interest other than an underlying interest referred to in clauses (c)‍(i)‍(A) to (C) of the definition derivative forward agreement in subsection 248(1).
(3)Subsection (1) applies in respect of bonds issued after 2000.
(4)Subsection (2) applies to acquisitions and dispositions of property that occur after September 15, 2016.
5(1)Paragraph 18(12)‍(b) of the Act is replaced by the following:
(b)if the conditions set out in subparagraph (a)‍(i) or (ii) are met, the amount for the work space that is deductible in computing the individual’s income for the year from the business shall not exceed the individual’s income for the year from the business, computed without reference to the amount and section 34.‍1; and
(2)Paragraph 18(14)‍(c) of the Act is replaced by the following:
(c)the disposition is not a disposition that is deemed to have occurred by subsection 10.‍1(6) or (7), section 70, subsection 104(4), section 128.‍1, paragraph 132.‍2(3)‍(a) or (c) or subsection 138(11.‍3) or 149(10);
(3)Paragraph 18(14)‍(c) of the Act, as enacted by subsection (2), is replaced by the following:
(c)the disposition is not a disposition that is deemed to have occurred by subsection 10.‍1(6) or (7), section 70, subsection 104(4), section 128.‍1, paragraph 132.‍2(3)‍(a) or (c) or subsection 138(11.‍3) or 138.‍2(4) or 149(10);
(4)Section 18 of the Act is amended by adding the following after subsection (16):
Definitions
(17)The following definitions apply in this subsection and subsections (18) to (23).
offsetting position, in respect of a particular position of a person or partnership (in this definition referred to as the “holder”), means one or more positions that
(a)are held by
(i)the holder,
(ii)a person or partnership that does not deal at arm’s length with, or is affiliated with, the holder (in this subsection and subsections (20), (22) and (23) referred to as the “connected person”), or
(iii)for greater certainty, by any combination of the holder and one or more connected persons;
(b)have the effect, or would have the effect if each of the positions held by a connected person were held by the holder, of eliminating all or substantially all of the holder’s risk of loss and opportunity for gain or profit in respect of the particular position; and
(c)if held by a connected person, can reasonably be considered to have been held with the purpose of obtaining the effect described in paragraph (b). (position compensatoire)
position, of a person or partnership, means one or more properties, obligations or liabilities of the person or partnership, if
(a)each property, obligation or liability is
(i)a share in the capital stock of a corporation,
(ii)an interest in a partnership,
(iii)an interest in a trust,
(iv)a commodity,
(v)foreign currency,
(vi)a swap agreement, a forward purchase or sale agreement, a forward rate agreement, a futures agreement, an option agreement or a similar agreement,
(vii)a debt owed to or owing by the person or partnership that, at any time,
(A)is denominated in a foreign currency,
(B)would be described in paragraph 7000(1)‍(d) of the Income Tax Regulations if that paragraph were read without reference to the words “other than one described in paragraph (a), (b) or (c)”, or
(C)is convertible into or exchangeable for an interest, or for civil law a right, in any property that is described in any of subparagraphs (i) to (iv),
(viii)an obligation to transfer or return to another person or partnership a property identical to a particular property described in any of subparagraphs (i) to (vii) that was previously transferred or lent to the person or partnership by that other person or partnership, or
(ix)an interest, or for civil law a right, in any property that is described in any of subparagraphs (i) to (vii); and
(b)it is reasonable to conclude that, if there is more than one property, obligation or liability, each of them is held in connection with each other. (position)
successor position, in respect of a position (in this definition referred to as the “initial position”), means a particular position if
(a)the particular position is an offsetting position in respect of a second position;
(b)the second position was an offsetting position in respect of the initial position that was disposed of at a particular time; and
(c)the particular position was entered into during the period that begins 30 days before, and ends 30 days after, the particular time. (position remplaçante)
unrecognized loss, in respect of a position of a person or partnership at a particular time in a taxation year, means the loss, if any, that would be deductible in computing the income of the person or partnership for the year with respect to the position if it were disposed of immediately before the particular time at its fair market value at the time of disposition. (perte non constatée)
unrecognized profit, in respect of a position of a person or partnership at a particular time in a taxation year, means the profit, if any, that would be included in computing the income of the person or partnership for the year with respect to the position if it were disposed of immediately before the particular time at its fair market value at the time of disposition. (bénéfice non constaté)
Application of subsection (19)
(18)Subject to subsection (20), subsection (19) applies in respect of a disposition of a particular position by a person or partnership (in this subsection and subsections (19), (20) and (22) referred to as the “transferor”), if
(a)the disposition is not a disposition that is deemed to have occurred by section 70, subsection 104(4), section 128.‍1 or subsection 138(11.‍3) or 149(10);
(b)the transferor is not a financial institution (as defined in subsection 142.‍2(1)), a mutual fund corporation or a mutual fund trust; and
(c)the particular position was, immediately before the disposition, not a capital property, or an obligation or liability on account of capital, of the transferor.
Straddle losses
(19)If this subsection applies in respect of a disposition of a particular position by a transferor, the portion of the transferor’s loss, if any, from the disposition of the particular position that is deductible in computing the transferor’s income for a particular taxation year is the amount determined by the formula
A + B − C
where
A
is
(a)if the particular taxation year is the taxation year in which the disposition occurs, the amount of the loss determined without reference to this subsection (which is, for greater certainty, subject to subsection (15)), and
(b)in any other taxation year, nil;
B
is
(a)if the disposition occurred in a preceding taxation year, the amount determined for C in respect of the disposition for the immediately preceding taxation year, and
(b)in any other case, nil; and
C
is the lesser of
(a)the amount determined for A for the taxation year in which the disposition occurs, and
(b)the amount determined by the formula
D − (E + F)
where
D
is the total of all amounts each of which is the amount of unrecognized profit at the end of the particular taxation year in respect of
(i)the particular position,
(ii)positions that are offsetting positions in respect of the particular position (or would be, to the extent that there is no successor position in respect of the particular position, if the particular position continued to be held by the transferor),
(iii)successor positions in respect of the particular position (for this purpose, a successor position in respect of a position includes a successor position that is in respect of a successor position in respect of the position), and
(iv)positions that are offsetting positions in respect of any successor position referred to in subparagraph (iii) (or would be, if any such successor position continued to be held by the holder),
E
is the total of all amounts each of which is the amount of unrecognized loss at the end of the particular taxation year in respect of positions referred to in subparagraphs (i) to (iv) of the description of D, and
F
is the total of all amounts each of which is an amount determined by the formula
G − H
where
G
is the amount determined for A for the taxation year in which the disposition occurs in respect of any position that was disposed of prior to the disposition of the particular position, if
(i)the particular position was a successor position in respect of that position (for this purpose, a successor position in respect of a position includes a successor position that is in respect of a successor position in respect of the position), and
(ii)that position was
(A)an offsetting position in respect of the particular position,
(B)an offsetting position in respect of a position in respect of which the particular position was a successor position (for this purpose, a successor position in respect of a position includes a successor position that is in respect of a successor position in respect of the position), or
(C)the particular position, and
H
is the total of all amounts each of which is, in respect of a position described in G, an amount determined under the first formula in this subsection for the particular taxation year or a preceding taxation year.
Exceptions
(20)Subsection (19) does not apply in respect of a particular position of a transferor if
(a)it is the case that
(i)either the particular position, or the offsetting position in respect of the particular position, consists of
(A)commodities that the holder of the position manufactures, produces, grows, extracts or processes, or
(B)debt that the holder of the position incurs in the course of a business that consists of one or any combination of the activities described in clause (A), and
(ii)it can reasonably be considered that the position not described in subparagraph (i) — the particular position if the offsetting position is described in subparagraph (i) or the offsetting position if the particular position is described in that subparagraph — is held to reduce the risk, with respect to the position described in subparagraph (i), from
(A)in the case of a position described in clause (i)‍(A), price changes or fluctuations in the value of currency with respect to the goods described in clause (i)‍(A), or
(B)in the case of a position described in clause (i)‍(B), fluctuations in interest rates or in the value of currency with respect to the debt described in clause (i)‍(B);
(b)the transferor or a connected person (in this paragraph referred to as the “holder”) continues to hold a position — that would be an offsetting position in respect of the particular position if the particular position continued to be held by the transferor — throughout a 30-day period beginning on the date of disposition of the particular position, and at no time during the period
(i)is the holder’s risk of loss or opportunity for gain or profit with respect to the position reduced in any material respect by another position entered into or disposed of by the holder, or
(ii)would the holder’s risk of loss or opportunity for gain or profit with respect to the position be reduced in any material respect by another position entered into or disposed of by a connected person, if the other position were entered into or disposed of by the holder; or
(c)it can reasonably be considered that none of the main purposes of the series of transactions or events, or any of the transactions or events in the series, of which the holding of both the particular position and offsetting position are part, is to avoid, reduce or defer tax that would otherwise be payable under this Act.
Application
(21)For the purposes of subsections (17) to (23),
(a)if a position of a person or partnership is not a property of the person or partnership, the person or partnership is deemed
(i)to hold the position at any time while it is a position of the person or partnership, and
(ii)to have disposed of the position when the position is settled or extinguished in respect of the person or partnership;
(b)a disposition of a position is deemed to include a disposition of a portion of the position;
(c)a position held by one or more persons or partnerships referred to in paragraph (a) of the definition offsetting position in subsection (17) is deemed to be an offsetting position in respect of a particular position of a person or partnership if
(i)there is a high degree of negative correlation between changes in value of the position and the particular position, and
(ii)it can reasonably be considered that the principal purpose of the series of transactions or events, or any of the transactions in the series, of which the holding of both the position and the particular position are part, is to avoid, reduce or defer tax that would otherwise be payable under this Act; and
(d)one or more positions held by one or more persons or partnerships referred to in paragraph (a) of the definition offsetting position in subsection (17) are deemed to be a successor position in respect of a particular position of a person or partnership if
(i)a portion of the particular position was disposed of at a particular time,
(ii)the position is, or the positions include, as the case may be, a position that consists of the portion of the particular position that was not disposed of (in this paragraph referred to as the “remaining portion of the particular position”),
(iii)where there is more than one position, the position or positions that do not consist of the remaining portion of the particular position were entered into during the period that begins 30 days before, and ends 30 days after, the particular time,
(iv)the position is, or the positions taken together would be, as the case may be, an offsetting position in respect of a second position (within the meaning of the definition successor position in subsection (17)),
(v)the second position was an offsetting position in respect of the particular position, and
(vi)it can reasonably be considered that the principal purpose of the series of transactions or events, or any of the transactions in the series, of which the disposition of a portion of the particular position and the holding of one or more positions are part, is to avoid, reduce or defer tax that would otherwise be payable under this Act.
Different taxation years
(22)Subsection (23) applies if
(a)at any time in a particular taxation year of a transferor, a position referred to in any of subparagraphs (ii) to (iv) of the description of D in subsection (19) (in this subsection and subsection (23) referred to as the “gain position”) is held by a connected person;
(b)the connected person disposes of the gain position in the particular taxation year; and
(c)the taxation year of the connected person in which the disposition referred to in paragraph (b) occurs ends after the end of the particular taxation year.
Different taxation years
(23)If this subsection applies, for the purposes of the definition unrecognized profit in subsection (17) and subsection (19), the portion of the profit, if any, realized from the disposition of the gain position referred to in paragraph (22)‍(b) that is determined by the following formula is deemed to be unrecognized profit in respect of the gain position until the end of the taxation year of the connected person in which the disposition occurs:
A × B/C
where
A
is the amount of the profit otherwise determined;
B
is the number of days in the taxation year of the connected person in which the disposition referred to in paragraph (22)‍(b) occurs that are after the end of the particular taxation year; and
C
is the total number of days in the taxation year of the connected person in which the disposition referred to in paragraph (22)‍(b) occurs.
(5)Subsection (1) applies to the 2011 and subsequent taxation years.
(6)Subsection (2) applies to taxation years that begin after March 21, 2017.
(7)Subsection (3) applies to taxation years that begin after 2017.
(8)Subsection (4) applies in respect of a position (as defined in subsection 18(17) of the Act, as enacted by subsection (4)) of a person or partnership if
(a)the position is acquired, entered into, renewed or extended, or becomes owing, by the person or partnership after March 21, 2017; or
(b)an offsetting position (as defined in subsection 18(17) of the Act, as enacted by subsection (4)) in respect of the position is acquired, entered into, renewed or extended, or becomes owing, by the person or partnership or a connected person (within the meaning of subsection 18(17) of the Act, as enacted by subsection (4)) after March 21, 2017.
6(1)Subsection 20(1) of the Act is amended by adding the following after paragraph (m.‍2):
(m.‍3)the unamortized amount at the end of the year in respect of the amount that was received in excess of the principal amount of a bond (in this paragraph referred to as the “premium”) received by the issuer in the year, or a previous year, for issuing the bond (in this paragraph referred to as the “new bond”) if
(i)the terms of the new bond are identical to the terms of bonds previously issued by the taxpayer (in this paragraph referred to as the “old bonds”), except for the date of issuance and total principal amount of the bonds,
(ii)the old bonds were part of an issuance (in this paragraph referred to as the “original issuance”) of bonds by the taxpayer,
(iii)the interest rate on the old bonds was reasonable at the time of the original issuance,
(iv)the new bond is issued on the re-opening of the original issuance,
(v)the amount of the premium at the time of issuance of the new bond is reasonable, and
(vi)the amount of the premium has been included in the taxpayer’s income for the year or a previous taxation year;
(2)Clauses (i)‍(A) and (B) of the description of A in paragraph 20(1)‍(xx) of the Act are replaced by the following:
(A)if the taxpayer acquires a property under the agreement in the year or a preceding taxation year, the portion of the amount by which the cost to the taxpayer of the property exceeds the fair market value of the property at the time it is acquired by the taxpayer that is attributable to an underlying interest other than an underlying interest referred to in subparagraphs (b)‍(i) to (iii) of the definition derivative forward agreement in subsection 248(1), or
(B)if the taxpayer disposes of a property under the agreement in the year or a preceding taxation year, the portion of the amount by which the fair market value of the property at the time the agreement is entered into by the taxpayer exceeds the proceeds of disposition (within the meaning assigned by subdivision c) of the property that is attributable to an underlying interest other than an underlying interest referred to in clauses (c)‍(i)‍(A) to (C) of the definition derivative forward agreement in subsection 248(1), and
(3)Subsection (1) applies in respect of bonds issued after 2000.
(4)Subsection (2) applies in respect of acquisitions and dispositions of property that occur after September 15, 2016.
7(1)Paragraph 34(a) of the Act is replaced by the following:
(a)if the taxpayer so elects in the taxpayer’s return of income under this Part for the year and the year begins before March 22, 2017, there shall not be included any amount in respect of work in progress at the end of the year; and
(2)Section 34 of the Act, as amended by subsection (1), is repealed.
(3)Subsection (1) applies to taxation years ending after March 21, 2017.
(4)Subsection (2) comes into force on January 1, 2024.
8(1)Subclause 37(8)‍(a)‍(ii)‍(B)‍(II) of the English version of the Act is replaced by the following:
(II)an expenditure of a current nature for the prosecution of scientific research and experimental development in Canada directly undertaken on behalf of the taxpayer,
(2)Subsection 37(11) of the Act is replaced by the following:
Filing requirement
(11)A prescribed form must be filed by a taxpayer with the Minister in respect of any expenditure, that would be incurred by the taxpayer in a taxation year that begins after 1995 if this Act were read without reference to subsection 78(4), that is claimed by the taxpayer for the year as a deduction under this section, on or before the day that is 12 months after the taxpayer’s filing due-date for the taxation year, containing
(a)prescribed information in respect of the expenditure; and
(b)claim preparer information, as defined in subsection 162(5.‍3).
Failure to file
(11.‍1)Subject to subsection (12), if the prescribed information in respect of an expenditure referred to in paragraph (11)‍(a) is not contained in the form referred to in subsection (11), no amount in respect of the expenditure may be deducted under subsection (1).
(3)Subsection (1) applies in respect of expenditures incurred after September 16, 2016.
9(1)Clause 39(1)‍(c)‍(iv)‍(B) of the Act is replaced by the following:
(B)a bankrupt that was a small business corporation at the time it last became a bankrupt, or
(2)Subsection 39(2.‍1) of the Act is replaced by the following:
Upstream loan — transitional set-off
(2.‍1)If at any time a corporation resident in Canada or a partnership of which such a corporation is a member (such corporation or partnership referred to in this subsection and subsections (2.‍2) and (2.‍3) as the “borrowing party”) has received a loan from, or become indebted to, a creditor that is a foreign affiliate (referred to in this subsection and subsections (2.‍2) and (2.‍3) as a “creditor affiliate”) of a qualifying entity, or that is a partnership (referred to in this subsection and subsection (2.‍3) as a “creditor partnership”) of which such an affiliate is a member, and the loan or indebtedness is at a later time repaid, in whole or in part, then the amount of the borrowing party’s capital gain or capital loss determined, in the absence of this subsection, under subsection (2) in respect of the repayment, is to be reduced
(a)in the case of a capital gain
(i)if the creditor is a creditor affiliate, by an amount, not exceeding that capital gain, that is equal to twice the amount that would — in the absence of subparagraph 40(2)‍(g)‍(ii) and paragraph 95(2)‍(g.‍04) and on the assumption that the creditor affiliate’s capital loss in respect of the repayment of the loan or indebtedness were a capital gain of the creditor affiliate, the creditor affiliate had no other income, loss, capital gain or capital loss for any taxation year, and no other foreign affiliate of a qualifying entity had any income, loss, capital gain or capital loss for any taxation year — be the total of all amounts each of which is an amount that would be included in computing a qualifying entity’s income under subsection 91(1) for its taxation year that includes the last day of the taxation year of the creditor affiliate that includes the later time, or
(ii)if the creditor is a creditor partnership, by an amount, not exceeding that capital gain, that is equal to twice the amount that is the total of each amount, determined in respect of a particular member of the creditor partnership that is a foreign affiliate of a qualifying entity, that would — in the absence of subparagraph 40(2)‍(g)‍(ii) and paragraph 95(2)‍(g.‍04) and on the assumption that the creditor partnership’s capital loss in respect of the repayment of the loan or indebtedness were a capital gain of the creditor partnership, the particular member had no other income, loss, capital gain or capital loss for any taxation year, and no other foreign affiliate of a qualifying entity had any income, loss, capital gain or capital loss for any taxation year — be the total of all amounts each of which is an amount that would be included in computing a qualifying entity’s income under subsection 91(1) for its taxation year that includes the last day of the taxation year of the particular member that includes the last day of the creditor partnership’s fiscal period that includes that later time; and
(b)in the case of a capital loss
(i)if the creditor is a creditor affiliate, by an amount, not exceeding that capital loss, that is equal to twice the amount, in respect of the creditor affiliate’s capital gain in respect of the repayment of the loan or indebtedness, that would — in the absence of paragraph 95(2)‍(g.‍04) and on the assumption that the creditor affiliate had no other income, loss, capital gain or capital loss for any taxation year, and no other foreign affiliate of a qualifying entity had any income, loss, capital gain or capital loss for any taxation year — be the total of all amounts each of which is an amount that would be included in computing a qualifying entity’s income under subsection 91(1) for its taxation year that includes the last day of the taxation year of the creditor affiliate that includes the later time, or
(ii)if the creditor is a creditor partnership, by an amount, not exceeding that capital loss, that is equal to twice the amount, in respect of the creditor partnership’s capital gain in respect of the repayment of the loan or indebtedness, that is the total of each amount, determined in respect of a particular member of the creditor partnership that is a foreign affiliate of a qualifying entity, that would — in the absence of paragraph 95(2)‍(g.‍04) and on the assumption that the particular member had no other income, loss, capital gain or capital loss for any taxation year, and no other foreign affiliate of a qualifying entity had any income, loss, capital gain or capital loss for any taxation year — be the total of all amounts each of which is an amount that would be included in computing a qualifying entity’s income under subsection 91(1) for its taxation year that includes the last day of the taxation year of the particular member that includes the last day of the creditor partnership’s fiscal period that includes the later time.
Definition of qualifying entity
(2.‍2)For purposes of subsections (2.‍1) and (2.‍3), qualifying entity means
(a)in the case of a borrowing party that is a corporation,
(i)the borrowing party,
(ii)a corporation resident in Canada of which
(A)the borrowing party is a subsidiary wholly-owned corporation, or
(B)a corporation described in this paragraph is a subsidiary wholly-owned corporation,
(iii)a corporation resident in Canada
(A)each share of the capital stock of which is owned by
(I)the borrowing party, or
(II)a corporation that is described in this subparagraph or subparagraph (ii), or
(B)all or substantially all of the capital stock of which is owned by one or more corporations resident in Canada that are borrowing parties in respect of the creditor affiliate because of subsection 90(7), or
(iv)a partnership each member of which is
(A)a corporation described in any of subparagraphs (i) to (iii), or
(B)another partnership described in this subparagraph; and
(b)in the case of a borrowing party that is a partnership,
(i)the borrowing party,
(ii)if each member — determined as if each member of a partnership that is a member of another partnership is a member of that other partnership — of the borrowing party is either a particular corporation resident in Canada (in this paragraph referred to as the “parent”) or a corporation resident in Canada that is a subsidiary wholly-owned corporation, as defined in subsection 87(1.‍4), of the parent,
(A)the parent, or
(B)a corporation resident in Canada that is a subsidiary wholly-owned corporation, as defined in subsection 87(1.‍4), of the parent, or
(iii)a partnership each member of which is any of
(A)the borrowing party,
(B)a corporation described in subparagraph (ii), and
(C)another partnership described in this subparagraph.
Upstream loan — transitional set-off election
(2.‍3)Subsection (2.‍1) and paragraph 95(2)‍(g.‍04) do not apply in respect of a repayment, in whole or in part, of a loan or indebtedness if an election has been filed with the Minister before 2019 jointly by
(a)the borrowing party;
(b)if the creditor is a creditor affiliate, each qualifying entity of which the creditor affiliate is a foreign affiliate; and
(c)if the creditor is a creditor partnership, each qualifying entity of which a member of the creditor partnership is a foreign affiliate.
(3)Subsection (1) applies in respect of bankruptcies that occur after April 26, 1995.
(4)Subsection (2) applies in respect of portions of loans received and indebtedness incurred before August 20, 2011 that remain outstanding on August 19, 2011 and that are repaid, in whole or in part, before August 20, 2016.
10(1)The description of B in paragraph 40(2)‍(b) of the Act is replaced by the following:
B
is
(i)if the taxpayer was resident in Canada during the year that includes the acquisition date, one plus the number of taxation years that end after the acquisition date for which the property is the taxpayer’s principal residence and during which the taxpayer was resident in Canada, or
(ii)if it is not the case that the taxpayer was resident in Canada during the year that includes the acquisition date, the number of taxation years that end after the acquisition date for which the property was the taxpayer’s principal residence and during which the taxpayer was resident in Canada,
(2)Paragraphs 40(3)‍(d) and (e) of the Act are replaced by the following:
(d)for the purposes of section 93 and subsections 116(6) and (6.‍1), the property is deemed to have been disposed of by the taxpayer at that time, and
(e)for the purposes of subsection 2(3) and sections 110.‍6 and 150, the property is deemed to have been disposed of by the taxpayer in the year.
(3)Paragraph 40(3.‍1)‍(b) of the Act is replaced by the following:
(b)for the purposes of subsection 2(3), section 110.‍6, subsections 116(6) and (6.‍1) and section 150, the interest is deemed to have been disposed of by the member at that time.
(4)The portion of subsection 40(6) of the Act before paragraph (a) is replaced by the following:
Principal residence — property owned at end of 1981
(6)Subject to subsection (6.‍1), if a property was owned by a taxpayer, whether jointly with another person or otherwise, at the end of 1981 and continuously from the beginning of 1982 until disposed of by the taxpayer, the amount of the gain determined under paragraph (2)‍(b) in respect of the disposition shall not exceed the amount, if any, by which the total of
(5)Section 40 of the Act is amended by adding the following after subsection (6):
Principal residence — property owned at end of 2016
(6.‍1)If a trust owns property at the end of 2016, the trust is not in its first taxation year that begins after 2016 a trust described in subparagraph (c.‍1)‍(iii.‍1) of the definition principal residence in section 54, the trust disposes of the property after 2016, the disposition is the trust’s first disposition of the property after 2016 and the trust owns the property, whether jointly with another person or otherwise, continuously from the beginning of 2017 until the disposition,
(a)subsection (6) does not apply to the disposition; and
(b)the trust’s gain determined under paragraph (2)‍(b) in respect of the disposition is the amount, if any, determined by the formula
A + B − C
where
A
is the trust’s gain calculated in accordance with paragraph (2)‍(b) on the assumption that
(i)the trust disposed of the property on December 31, 2016 for proceeds of disposition equal to its fair market value on that date, and
(ii)paragraph (a) did not apply in respect of the disposition described in subparagraph (i),
B
is the trust’s gain in respect of the disposition calculated in accordance with paragraph (2)‍(b) on the assumption that
(i)the description of B in that paragraph is read without reference to “one plus”, and
(ii)the trust acquired the property on January 1, 2017 at a cost equal to its fair market value on December 31, 2016, and
C
is the amount, if any, by which the fair market value of the property on December 31, 2016 exceeds the proceeds of disposition of the property determined without reference to this subsection.
(6)Subsection (1) applies in respect of dispositions that occur after October 2, 2016.
(7)Subsections (2) and (3) apply in respect of gains from dispositions that occur after September 15, 2016.
11(1)The portion of subsection 43(2) of the Act before the formula in paragraph (a) is replaced by the following:
Ecological gifts
(2)For the purposes of subsection (1) and section 53, if at any time a taxpayer disposes of a covenant or an easement to which land is subject or, in the case of land in the Province of Quebec, a real or personal servitude, in circumstances where subsection 110.‍1(5) or 118.‍1(12) applies,
(a)the portion of the adjusted cost base to the taxpayer of the land immediately before the disposition that can reasonably be regarded as attributable to the covenant, easement or servitude, as the case may be, is deemed to be equal to the amount determined by the formula
(2)Subsection (1) applies in respect of gifts made after March 21, 2017.
12(1)Clause 53(2)‍(c)‍(i)‍(C) of the Act is replaced by the following:
(C)subsections 100(4), 112(3.‍1), (4), (4.‍2) as it read in its application to dispositions of property that occurred before April 27, 1995 and (5.‍2),
(2)Subsection (1) is deemed to have come into force on September 16, 2016.
13(1)Paragraph (c.‍1) of the definition principal residence in section 54 of the Act is amended by striking out “and” at the end of subparagraph (iii) and by adding the following after that subparagraph:
(iii.‍1)if the year begins after 2016, the trust is, in the year,
(A)a trust
(I)for which a day is to be determined under paragraph 104(4)‍(a), (a.‍1) or (a.‍4) by reference to the death or later death, as the case may be, that has not occurred before the beginning of the year, of an individual who is resident in Canada during the year, and
(II)a specified beneficiary of which for the year is the individual referred to in subclause (I),
(B)a trust
(I)that is a qualified disability trust (as defined in subsection 122(3)) for the year, and
(II)an electing beneficiary (in this clause, as defined in subsection 122(3)) of which for the year is
1resident in Canada during the year,
2a specified beneficiary of the trust for the year, and
3a spouse, common-law partner, former spouse or common-law partner or child of the settlor (in this subparagraph, as defined in subsection 108(1)) of the trust, or
(C)a trust
(I)a specified beneficiary of which for the year is an individual
1who is resident in Canada during the year,
2who has not attained 18 years of age before the end of the year, and
3a mother or father of whom is a settlor of the trust, and
(II)in respect of which either of the following conditions is met:
1no mother or father of the individual referred to in subclause (I) is alive at the beginning of the year, or
2the trust arose before the beginning of the year on and as a consequence of the death of a mother or father of the individual referred to in subclause (I), and
(2)Paragraph (c) of the definition superficial loss in section 54 of the Act is replaced by the following:
(c)a disposition deemed to have been made by subsection 45(1), section 48 as it read in its application before 1993, section 50 or 70, subsection 104(4), section 128.‍1, paragraph 132.‍2(3)‍(a) or (c), subsection 138(11.‍3) or 138.‍2(4) or 142.‍5(2), section 142.‍6 or any of subsections 144(4.‍1) and (4.‍2) and 149(10),
(3)Subsection (2) applies to taxation years that begin after 2017.
14(1)Paragraph 56(1)‍(z.‍3) of the Act is replaced by the following:
Pooled registered pension plan
(z.‍3)any amount required by section 147.‍5 to be included in computing the taxpayer’s income for the year other than an amount distributed under a PRPP as a return of all or a portion of a contribution to the plan to the extent that the amount
(i)is a payment described under clause 147.‍5(3)‍(d)‍(ii)‍(A) or (B), and
(ii)is not deducted in computing the taxpayer’s income for the year or a preceding taxation year; and
(2)Subsection (1) is deemed to have come into force on December 14, 2012.
15(1)Clause 56.‍4(7)‍(b)‍(ii)‍(A) of the Act is replaced by the following:
(A)under which the vendor or the vendor’s eligible corporation disposes of property (other than property described in clause (B) or subparagraph (i)) to the purchaser, or the purchaser’s eligible corporation, for consideration that is received or receivable by the vendor, or the vendor’s eligible corporation, as the case may be, or
(2)Subclause 56.‍4(7)‍(c)‍(i)‍(B)‍(I) of the Act is replaced by the following:
(I)under which the vendor or the vendor’s eligible corporation disposes of property (other than property described in subclause (II) or clause (A)) to the eligible individual, or the eligible individual’s corporation, for consideration that is received or receivable by the vendor, or the vendor’s eligible corporation, as the case may be, or
(3)Subparagraphs 56.‍4(7)‍(g)‍(i) and (ii) of the Act are replaced by the following:
(i)in the case of subparagraph (b)‍(i), the vendor, or the vendor’s eligible corporation, if it is required to include the goodwill amount in computing its income, and the purchaser, or the purchaser’s eligible corporation, if it incurs the expenditure that is the goodwill amount to the vendor or the vendor’s eligible corporation, as the case may be, or
(ii)in the case of clause (c)‍(i)‍(A), the vendor, or the vendor’s eligible corporation, if it is required to include the goodwill amount in computing its income, and the eligible individual, or the eligible individual’s eligible corporation, if it incurs the expenditure that is the goodwill amount to the vendor or the vendor’s eligible corporation, as the case may be.
(4)Subsections (1) to (3) apply in respect of restrictive covenants granted after September 15, 2016.
16(1)The definition eligible pension income in subsection 60.‍03(1) of the Act is amended by striking out “and” at the end of paragraph (a), by adding “and” at the end of paragraph (b) and by adding the following after paragraph (b):
(c)the lesser of
(i)the total of all amounts received by the individual in the year on account of a retirement income security benefit payable to the individual under Part 2 of the Canadian Forces Members and Veterans Re-establishment and Compensation Act, and
(ii)the amount, if any, by which the defined benefit limit (as defined in subsection 8500(1) of the Income Tax Regulations) for the year multiplied by 35 exceeds the total of the amounts determined under paragraphs (a) and (b). (revenu de pension déterminé)
(2)Subsection (1) applies to the 2015 and subsequent taxation years.
17(1)Subsection 62(2) of the Act is replaced by the following:
Moving expenses of students
(2)There may be deducted in computing a taxpayer’s income for a taxation year the amount, if any, that the taxpayer would be entitled to deduct under subsection (1) if the definition eligible relocation in subsection 248(1) were read without reference to subparagraph (a)‍(i) of that definition and if the word “both” in paragraph (c) of that definition were read as “either or both”.
(2)Subsection (1) applies to taxation years that end after October 2011.
18(1)The portion of clause (i)‍(B) of the description of C in paragraph 63(2)‍(b) of the Act before subclause (I) is replaced by the following:
(B)a person certified in writing by a medical doctor or a nurse practitioner to be a person who
(2)Subsection (1) applies in respect of certifications made after September 7, 2017.
19(1)Paragraph 66(12.‍601)‍(b) of the Act is replaced by the following:
(b)during the period beginning on the particular day the agreement was entered into and ending on the earlier of December 31, 2018 and the day that is 24 months after the end of the month that included that particular day, the corporation incurred Canadian development expenses (excluding expenses that are deemed by subsection (12.‍66) to have been incurred on December 31, 2018) described in paragraph (a) or (b) of the definition Canadian development expense in subsection 66.‍2(5) or that would be described in paragraph (f) of that definition if the words “paragraphs (a) to (e)” in that paragraph were read as “paragraphs (a) and (b)”,
(2)Subsection (1) comes into force on the day on which this Act receives royal assent except that, in its application in respect of agreements entered into after 2016 and before March 22, 2017, paragraph 66(12.‍601)‍(b) of the Act, as enacted by subsection (1), is to be read without reference to the phrase “the earlier of December 31, 2018 and”.
20Subparagraph (d)‍(i) of the definition Canadian exploration expense in subsection 66.‍1(6) of the Act is amended by striking out “and” at the end of clause (A), by adding “and” at the end of clause (B) and by adding the following after clause (B):
(C)the expense is incurred
(I)before 2021 (excluding an expense that is deemed by subsection 66(12.‍66) to have been incurred on December 31, 2020), if the expense is incurred in connection with an obligation that was committed to in writing (including a commitment to a government under the terms of a license or permit) by the taxpayer before March 22, 2017, or
(II)before 2019 (excluding an expense that is deemed by subsection 66(12.‍66) to have been incurred on December 31, 2018), in any other case,
21(1)Paragraph 75(3)‍(d) of the Act is replaced by the following:
(d)by a trust if
(i)the trust acquired the property, or other property for which the property is a substitute, from a particular individual,
(ii)the particular individual acquired the property or the other property, as the case may be, in respect of another individual as a consequence of the operation of subsection 122.‍61(1) or under section 4 of the Universal Child Care Benefit Act, and
(iii)the trust has no beneficiaries (as defined in subsection 108(1)) who may for any reason receive directly from the trust any of the income or capital of the trust other than individuals in respect of whom the particular individual acquired property as a consequence of the operation of a provision described in subparagraph (ii).
(2)Subsection (1) applies to taxation years that end after September 15, 2016.
22(1)Section 80.‍03 of the English version of the Act is amended by adding the following before subsection (2):
Definitions
80.‍03(1)In this section, commercial debt obligation, commercial obligation, distress preferred share, forgiven amount and person have the meanings assigned by subsection 80(1).
(2)Subsection (1) applies to taxation years that end after February 21, 1994.
23(1)Section 85 of the Act is amended by adding the following after subsection (1.‍11):
Eligible derivatives
(1.‍12)Notwithstanding subsection (1.‍1), an eligible derivative (as defined in subsection 10.‍1(5)) of a taxpayer to which subsection 10.‍1(6) applies is not an eligible property of the taxpayer in respect of a disposition by the taxpayer to a corporation.
(2)The portion of paragraph 85(2)‍(a) of the Act before subparagraph (i) is replaced by the following:
(a)a partnership has disposed, to a taxable Canadian corporation for consideration that includes shares of the corporation’s capital stock, of any partnership property (other than an eligible derivative, as defined in subsection 10.‍1(5), of the partnership if subsection 10.‍1(6) applies to the partnership) that was
(3)Subsections (1) and (2) apply to taxation years that begin after March 21, 2017.
24(1)Subsection 87(2) of the Act is amended by adding the following after paragraph (e.‍4):
(e.‍41)if subsection 10.‍1(6) applied to a predecessor corporation in its last taxation year, each eligible derivative (as defined in subsection 10.‍1(5)) of the predecessor corporation immediately before the end of its last taxation year is deemed to have been reacquired, or reissued or renewed, as the case may be, by the new corporation at its fair market value immediately before the amalgamation;
(e.‍42)for the purposes of subsection 10.‍1(7), the new corporation is deemed to be the same corporation as, and a continuation of, each predecessor corporation;
(2)Section 87 of the Act is amended by adding the following after subsection (8.‍3):
Taxable Canadian property — conditions for rollover
(8.‍4)Subsection (8.‍5) applies at any time if
(a)there is at that time a foreign merger of two or more predecessor foreign corporations (within the meaning assigned by subsection (8.‍1), if that subsection and subsection (8.‍2) were read without reference to the expression “otherwise than as a result of the distribution of property to one corporation on the winding-up of another corporation”) that were, immediately before that time,
(i)resident in the same country, and
(ii)related to each other (determined without reference to paragraph 251(5)‍(b));
(b)because of the foreign merger,
(i)a predecessor foreign corporation (referred to in this subsection and subsection (8.‍5) as the “disposing predecessor foreign corporation”) disposes of a property (referred to in this subsection and subsection (8.‍5) as the “subject property”) that is, at that time,
(A)a taxable Canadian property (other than treaty-protected property) of the disposing predecessor foreign corporation, and
(B)any of the following:
(I)a share of the capital stock of a corporation,
(II)an interest in a partnership, and
(III)an interest in a trust, and
(ii)the subject property becomes property of a corporation that is a new foreign corporation for the purposes of subsection (8.‍1);
(c)no shareholder (except any predecessor foreign corporation) that owned shares of the capital stock of a predecessor foreign corporation immediately before the foreign merger received consideration for the disposition of those shares on the foreign merger, other than shares of the capital stock of the new foreign corporation;
(d)if the subject property is a share of the capital stock of a corporation or an interest in a trust, the corporation or trust is not, at any time in the 24-month period beginning at that time, as part of a transaction or event, or series of transactions or events including the foreign merger, subject to a loss restriction event; and
(e)the new foreign corporation and the disposing predecessor foreign corporation jointly elect in writing under this paragraph in respect of the foreign merger and file the election with the Minister on or before the filing-due date of the disposing predecessor foreign corporation (or the date that would be its filing-due date, if subsection (8.‍5) did not apply in respect of the disposition of the subject property) for the taxation year that includes that time.
Foreign merger — taxable Canadian property rollover
(8.‍5)If this subsection applies at any time,
(a)if the subject property is an interest in a partnership,
(i)the disposing predecessor foreign corporation is deemed not to dispose of the subject property (other than for the purposes of subsection (8.‍4)), and
(ii)the new foreign corporation is deemed
(A)to have acquired the subject property at a cost equal to the cost of the subject property to the disposing predecessor foreign corporation, and
(B)to be the same corporation as, and a continuation of, the disposing predecessor foreign corporation in respect of the subject property; and
(b)if the subject property is a share of the capital stock of a corporation or an interest in a trust,
(i)the subject property is deemed to have been disposed of at that time by the disposing predecessor foreign corporation to the new foreign corporation (that is referred to in subparagraph (8.‍4)‍(b)‍(ii)) for proceeds of disposition equal to the adjusted cost base of the subject property to the disposing predecessor foreign corporation immediately before that time, and
(ii)the cost of the subject property to the new foreign corporation is deemed to be the amount that is deemed by subparagraph (i) to be the proceeds of disposition of the subject property.
(3)The portion of subsection 87(10) of the Act after paragraph (f) is replaced by the following:
the new share is deemed, for the purposes of subsection 116(6), the definitions qualified investment in subsections 146(1), 146.‍1(1), 146.‍3(1) and 146.‍4(1), in section 204 and in subsection 207.‍01(1), and the definition taxable Canadian property in subsection 248(1), to be listed on the exchange until the earliest time at which it is so redeemed, acquired or cancelled.
(4)Subsection (1) applies to taxation years that begin after March 21, 2017.
(5)Subsection (2) applies to foreign mergers that occur after September 15, 2016, except that an election referred to in paragraph 87(8.‍4)‍(e) of the Act, as enacted by subsection (2), is deemed to have been filed on a timely basis if it is filed on or before the day that is six months after the day on which this Act receives royal assent.
(6)Subsection (3) is deemed to have come into force on March 23, 2017.
25(1)The portion of paragraph 88(1)‍(e.‍2) of the Act before subparagraph (i) is replaced by the following:
(e.‍2)paragraphs 87(2)‍(c), (d.‍1), (e.‍1), (e.‍3), (g) to (l), (l.‍21) to (u), (x), (z.‍1), (z.‍2), (aa), (cc), (ll), (nn), (pp), (rr) and (tt) to (ww), subsection 87(6) and, subject to section 78, subsection 87(7) apply to the winding-up as if the references in those provisions to
(2)The portion of paragraph 88(1)‍(e.‍2) of the Act before subparagraph (i), as enacted by subsection (1), is replaced by the following:
(e.‍2)paragraphs 87(2)‍(c), (d.‍1), (e.‍1), (e.‍3), (e.‍42), (g) to (l), (l.‍21) to (u), (x), (z.‍1), (z.‍2), (aa), (cc), (ll), (nn), (pp), (rr) and (tt) to (ww), subsection 87(6) and, subject to section 78, subsection 87(7) apply to the winding-up as if the references in those provisions to
(3)Subsection 88(1) of the Act is amended by striking out “and” at the end of paragraph (h), by adding “and” at the end of paragraph (i) and by adding the following after paragraph (i):
(j)for the purposes of subsection 10.‍1(6), the subsidiary’s taxation year in which an eligible derivative (as defined in subsection 10.‍1(5)) was distributed to, or assumed by, the parent on the winding-up is deemed to have ended immediately before the time when the eligible derivative was distributed or assumed.
(4)Subsection (1) applies to taxation years that end after 2001.
(5)Subsections (2) and (3) apply to taxation years that begin after March 21, 2017.
26(1)The portion of paragraph (a) of the definition capital dividend account in subsection 89(1) of the Act before subparagraph (i) is replaced by the following:
(a)the amount, if any, by which the total of
(2)Paragraph (a) of the definition capital dividend account in subsection 89(1) of the Act is amended by adding “and” at the end of subparagraph (i) and by adding the following after that subparagraph:
(i.‍1)all amounts each of which is an amount in respect of a distribution made, in the period and after September 15, 2016, by a trust to the corporation in respect of capital gains of the trust equal to the lesser of
(A)the amount, if any, by which
(I)the amount of the distribution
exceeds
(II)the amount designated under subsection 104(21) by the trust in respect of the net taxable capital gains of the trust attributable to those capital gains, and
(B)the amount determined by the formula
A × B
where
A
is the fraction or whole number determined when 1 is subtracted from the reciprocal of the fraction under paragraph 38(a) applicable to the trust for the year, and
B
is the amount referred to in subclause (A)‍(II),
(3)The portion of paragraph (f) of the definition capital dividend account in subsection 89(1) of the Act before subparagraph (i) is replaced by the following:
(f)all amounts each of which is an amount in respect of a distribution made, in the period and before September 16, 2016, by a trust to the corporation in respect of capital gains of the trust equal to the lesser of
27(1)Section 90 of the Act is amended by adding the following after subsection (6):
Upstream loan continuity — reorganizations
(6.‍1)Subsection (6.‍11) applies at any time if
(a)immediately before that time, a person or partnership (referred to in this subsection and subsection (6.‍11) as the “original debtor”) owes an amount in respect of a loan or indebtedness (referred to in this subsection and subsection (6.‍11) as the “pre-transaction loan”) to another person or partnership (referred to in this subsection and subsection (6.‍11) as the “original creditor”);
(b)the pre-transaction loan was, at the time it was made or entered into, a loan or indebtedness that is described in subsection (6); and
(c)in the course of an amalgamation, a merger, a winding-up or a liquidation and dissolution,
(i)the amount owing in respect of the pre-transaction loan becomes owing at that time by another person or partnership (the amount owing after that time and the other person or partnership are referred to in subsection (6.‍11) as the “post-transaction loan payable” and the “new debtor”, respectively),
(ii)the amount owing in respect of the pre-transaction loan becomes owing at that time to another person or partnership (the amount owing after that time and the other person or partnership are referred to in subsection (6.‍11) as the “post-transaction loan receivable” and the “new creditor”, respectively), or
(iii)the taxpayer in respect of which the original debtor was a specified debtor at the time referred to in paragraph (b)
(A)ceases to exist, or
(B)merges with one or more corporations to form one corporate entity (referred to in subsection (6.‍11) as the “new corporation”).
Upstream loan continuity — reorganizations
(6.‍11)If this subsection applies at any time, for the purposes of subsections (6) and (7) to (15) and 39(2.‍1) and (2.‍2) and paragraph 95(2)‍(g.‍04),
(a)if the condition in subparagraph (6.‍1)‍(c)‍(i) is met,
(i)the post-transaction loan payable is deemed to be the same loan or indebtedness as the pre-transaction loan, and
(ii)the new debtor is deemed to be same debtor as, and a continuation of, the original debtor;
(b)if the condition in subparagraph (6.‍1)‍(c)‍(ii) is met,
(i)the post-transaction loan receivable is deemed to be the same loan or indebtedness as the pre-transaction loan, and
(ii)the new creditor is deemed to be same creditor as, and a continuation of, the original creditor;
(c)if the condition in clause (6.‍1)‍(c)‍(iii)‍(A) is met,
(i)subject to subparagraph (ii), each entity that held an equity interest in the taxpayer immediately before the winding-up (referred to in this paragraph as a “successor entity”) is deemed to be the same entity as, and a continuation of, the taxpayer, and
(ii)for the purposes of applying subsection (13) and the description of A in subsection (14), an amount is deemed, in respect of a loan or indebtedness, to have been included under subsection (6) in computing the income of each successor entity equal to
(A)if the taxpayer is a partnership, the amount that may reasonably be considered to be the successor entity’s share (determined in a manner consistent with the determination of the successor entity’s share of the income of the partnership under subsection 96(1) for the taxpayer’s final fiscal period) of the specified amount that was required to be included in computing the income of the taxpayer under subsection (6) in respect of the loan or indebtedness, and
(B)in any other case, the proportion of the specified amount included in computing the taxpayer’s income under subsection (6), in respect of the loan or indebtedness, that the fair market value of the successor entity’s equity interest in the taxpayer, immediately before the distribution of the taxpayer’s assets on the winding-up, is of the total fair market value of all equity interests in the taxpayer at that time; and
(d)if the condition in clause (6.‍1)‍(c)‍(iii)‍(B) is met, the new corporation is deemed to be the same corporation as, and a continuation of, the taxpayer.
(2)The portion of subsection 90(7) of the Act before paragraph (a) is replaced by the following:
Back-to-back loans
(7)For the purposes of this subsection and subsections (6), (8) to (15) and 39(2.‍1) and (2.‍2) and paragraph 95(2)‍(g.‍04), if at any time a person or partnership (referred to in this subsection as the “intermediate lender”) makes a loan to another person or partnership (in this subsection referred to as the “intended borrower”) because the intermediate lender received a loan from another person or partnership (in this subsection referred to as the “initial lender”)
(3)Subparagraph 90(9)‍(a)‍(ii) of the Act is replaced with the following:
(ii)the income of the corporation under subsection 91(5), in respect of the taxable surplus of a foreign affiliate of the corporation, unless the specified debtor is a person or partnership described in subclause (i)‍(D)‍(I) or (II);
(4)Paragraph (b) of the definition specified debtor in subsection 90(15) of the Act is replaced by the following:
(b)a person with which the taxpayer does not, at that time, deal at arm’s length, other than
(i)a non-resident corporation that is at that time a controlled foreign affiliate, within the meaning assigned by section 17, of the taxpayer, or
(ii)a non-resident corporation (other than a corporation that is described in subparagraph (i)) that is, at that time, a foreign affiliate of the taxpayer, if each share of the capital stock of the affiliate is owned at that time by any of
(A)the taxpayer,
(B)persons resident in Canada,
(C)non-resident persons that deal at arm’s length with the taxpayer,
(D)persons described in subparagraph (i),
(E)partnerships, each member of which is described in any of clauses (A) to (F), and
(F)a corporation each shareholder of which is described in any of clauses (A) to (F);
(5)Subsection (1) applies to transactions and events that occur after September 15, 2016. However, if a taxpayer files an election with the Minister before 2017, subsection (1) applies in respect of the taxpayer as of August 20, 2011.
(6)Subsection (2) applies in respect of loans received and indebtedness incurred after August 19, 2011. However, subsection 90(7) of the Act, as amended by subsection (2), also applies in respect of any portion of a particular loan received or a particular indebtedness incurred before August 20, 2011 that remains outstanding on August 19, 2014 as if that portion were a separate loan or indebtedness that was received or incurred, as the case may be, on August 20, 2014 in the same manner and on the same terms as the particular loan or indebtedness.
(7)Subsection (3) applies in respect of loans received and indebtedness incurred after August 19, 2011; however, subparagraph 90(9)‍(a)‍(ii) of the Act, as enacted by subsection (3), also applies in respect of any portion of a particular loan received or a particular indebtedness incurred before August 20, 2011 that remains outstanding on August 19, 2014 as if that portion were a separate loan or indebtedness that was received or incurred, as the case may be, on August 20, 2014 in the same manner and on the same terms as the particular loan or indebtedness. In respect of loans received and indebtedness incurred prior to September 16, 2016, subparagraph 90(9)‍(a)‍(ii) of the Act, as enacted by subsection (3), is to be read without reference to “unless the specified debtor is a person or partnership described in subclause (i)‍(D)‍(I) or (II)”.
(8)Subsection (4) applies in respect of loans received and indebtedness incurred after August 19, 2011 and in respect of any portion of a particular loan received or indebtedness incurred before August 20, 2011 that remained outstanding on August 19, 2014.
28(1)Section 91 of the Act is amended by adding the following after subsection (1):
Conditions for application of subsection (1.‍2)
(1.‍1)Subsection (1.‍2) applies at a particular time in respect of a particular foreign affiliate of a taxpayer resident in Canada if
(a)an amount would be included under subsection (1) in computing the income of the taxpayer, in respect of a share of the particular affiliate or another foreign affiliate of the taxpayer that has an equity percentage (as defined in subsection 95(4)) in the particular affiliate, for the taxation year of the particular affiliate (determined without reference to subsection (1.‍2)) that includes the particular time (referred to in this subsection and subsection (1.‍3) as the “ordinary taxation year” of the particular affiliate), if the ordinary taxation year of the particular affiliate ended at the particular time;
(b)immediately after the particular time, there is
(i)an acquisition of control of the taxpayer, or
(ii)a triggering event that can reasonably be considered to result in a change in the aggregate participating percentage of the taxpayer in respect of the particular affiliate for the ordinary taxation year of the particular affiliate;
(c)if subparagraph (b)‍(i) applies, all or a portion of an amount described in paragraph 95(2)‍(f) that accrued to the particular affiliate during the portion of the ordinary taxation year of the particular affiliate before the particular time is excluded in computing the income of another taxpayer because paragraph 95(2)‍(f.‍1) applies as a result of the taxpayer being, at a time before the acquisition of control, a designated acquired corporation of the other taxpayer; and
(d)if subparagraph (b)‍(ii) applies, none of the following is the case:
(i)the change referred to in that subparagraph
(A)is a decrease, and
(B)is equal to the total of all amounts each of which is the increase — that can reasonably be considered to result from the triggering event — in the aggregate participating percentage of another taxpayer, in respect of the particular affiliate for the ordinary taxation year of the particular affiliate, if the other taxpayer
(I)is a person resident in Canada, other than a person that is — or a trust, any of the beneficiaries under which is — by reason of a statutory provision, exempt from tax under this Part, and
(II)is related to the taxpayer,
1if the triggering event results from a winding-up of the taxpayer to which subsection 88(1) applies, at the particular time, and
2in any other case, immediately after the particular time,
(ii)the triggering event is on an amalgamation as defined in subsection 87(1),
(iii)the triggering event is an excluded acquisition or disposition, in respect of the ordinary taxation year of the particular affiliate, and
(iv)if one or more triggering events — all of which are described in subparagraph (b)‍(ii) and in respect of which none of the conditions in subparagraphs (i) to (iii) are satisfied — occur in the ordinary taxation year of the particular affiliate, the percentage determined by the following formula is not greater than 5%:
A — B
where
A
is the total of all amounts each of which is the decrease — which can reasonably be considered to result from a triggering event described in subparagraph (b)‍(ii) (other than a triggering event that satisfies the conditions in subparagraph (i) or (ii)) — in the aggregate participating percentage of the taxpayer in respect of the particular affiliate for the ordinary taxation year of the particular affiliate, and
B
is the total of all amounts each of which is the increase — which can reasonably be considered to result from a triggering event described in subparagraph (b)‍(ii) (other than a triggering event that satisfies the conditions in subparagraph (i) or (ii)) — in the aggregate participating percentage of the taxpayer in respect of the particular affiliate for the ordinary taxation year of the particular affiliate.
Deemed year-end
(1.‍2)If this subsection applies at a particular time in respect of a foreign affiliate of a particular taxpayer resident in Canada, then for the purposes of this section and section 92,
(a)in respect of the particular taxpayer and each connected person, or connected partnership, in respect of the particular taxpayer, the affiliate’s taxation year that would, in the absence of this subsection, have included the particular time is deemed to have ended at the time (referred to in this section as the “stub-period end time”) that is immediately before the particular time;
(b)if the affiliate is, immediately after the particular time, a foreign affiliate of the particular taxpayer or a connected person, or connected partnership, in respect of the particular taxpayer, the affiliate’s next taxation year after the stub-period end time is deemed, in respect of the particular taxpayer or the connected person or connected partnership, as the case may be, to begin immediately after the particular time; and
(c)in determining the foreign accrual property income of the affiliate for the taxation year referred to in paragraph (a) in respect of the particular taxpayer or a connected person or connected partnership, in respect of the particular taxpayer, all transactions or events that occur at the particular time are deemed to occur at the stub-period end time.
Definitions
(1.‍3)The following definitions apply in this subsection and subsections (1.‍1) and (1.‍2).
aggregate participating percentage, of a taxpayer in respect of a foreign affiliate of the taxpayer for a taxation year of the affiliate, means the total of all amounts, each of which is the participating percentage, in respect of the affiliate, of a share of the capital stock of a corporation that is owned by the taxpayer at the end of the taxation year. (pourcentage de participation total)
connected person, in respect of a particular taxpayer, means a person that — at or immediately after the particular time at which subsection (1.‍2) applies in respect of a foreign affiliate of the particular taxpayer — is resident in Canada and
(a)does not deal at arm’s length with the particular taxpayer; or
(b)deals at arm’s length with the particular taxpayer, if
(i)the foreign affiliate is a foreign affiliate of the person at the particular time, and
(ii)the aggregate participating percentage of the person in respect of the foreign affiliate for the affiliate’s ordinary taxation year may reasonably be considered to have increased as a result of the triggering event that gave rise to the application of subsection (1.‍2). (personne rattachée)
connected partnership, in respect of a particular taxpayer, means a partnership if, at or immediately after the particular time at which subsection (1.‍2) applies in respect of a foreign affiliate of the particular taxpayer,
(a)the particular taxpayer or a connected person in respect of the particular taxpayer is, directly or indirectly through one or more partnerships, a member of the partnership; or
(b)if paragraph (a) does not apply,
(i)the foreign affiliate is a foreign affiliate of the partnership at the particular time, and
(ii)the aggregate participating percentage of the partnership in respect of the foreign affiliate for the affiliate’s ordinary taxation year may reasonably be considered to have increased as a result of the triggering event that gave rise to the application of subsection (1.‍2). (société de personnes rattachée)
excluded acquisition or disposition, in respect of a taxation year of a foreign affiliate of a taxpayer, means an acquisition or disposition of an equity interest in a corporation, partnership or trust that can reasonably be considered to result in a change in the aggregate participating percentage of the taxpayer in respect of the affiliate for the taxation year of the affiliate, if
(a)the change is less than 1%; and
(b)it cannot reasonably be considered that one of the main reasons the acquisition or disposition occurs as a separate acquisition or disposition from one or more other acquisitions or dispositions is to avoid the application of subsection (1.‍2). (acquisition ou disposition exclue)
triggering event means
(a)an acquisition or disposition of an equity interest in a corporation, partnership or trust;
(b)a change in the terms or conditions of a share of the capital stock of a corporation or the rights as a member of a partnership or as a beneficiary under a trust; and
(c)a disposition or change of a right referred to in paragraph 95(6)‍(a). (événement déclencheur)
Election for application of subsection (1.‍2)
(1.‍4)If the conditions in subsection (1.‍1) are not met at a particular time in respect of a particular foreign affiliate of a taxpayer resident in Canada, subsection (1.‍2) applies in respect of the particular affiliate at that time if
(a)the conditions in paragraph (1.‍1)‍(a) are met in respect of the particular affiliate at the particular time;
(b)immediately after the particular time there is a disposition of shares of the capital stock of the particular affiliate or another foreign affiliate of the taxpayer that had an equity percentage (as defined in subsection 95(4)) in the particular affiliate by
(i)the taxpayer, or
(ii)a controlled foreign affiliate of the taxpayer; and
(c)the taxpayer and all specified corporations jointly elect in writing to apply subsection (1.‍2) in respect of the disposition and file the election with the Minister on or before the day that is the earliest filing-due date for all taxpayers making the election in respect of the taxation year in which the transaction to which the election relates occurred, and for this purpose, a specified corporation means a corporation that at or immediately after the particular time meets the following conditions:
(i)the corporation is resident in Canada,
(ii)the corporation does not deal at arm’s length with the taxpayer, and
(iii)the particular affiliate is a foreign affiliate of the corporation, or of a partnership of which the corporation is, directly or indirectly through one or more partnerships, a member.
Election for application of subsection (1.‍2)
(1.‍5)A particular taxpayer resident in Canada may elect, by filing with the Minister in prescribed manner a form containing prescribed information on or before the particular taxpayer’s filing-due date for its taxation year that includes a particular time, to have subsection (1.‍2) apply at the particular time in respect of a particular foreign affiliate of the particular taxpayer if
(a)immediately after the particular time, there is an acquisition or disposition of shares of the capital stock of a foreign affiliate of another taxpayer that results in a decrease to the surplus entitlement percentage of the other taxpayer in respect of the particular affiliate;
(b)as a result of the acquisition or disposition described in paragraph (a), subsection (1.‍2) applies to the other taxpayer resident in Canada in respect of the particular affiliate;
(c)the surplus entitlement percentage of the particular taxpayer in respect of the particular affiliate increases as a result of the acquisition or disposition described in paragraph (a);
(d)subsection (1.‍2) does not apply, in the absence of this subsection, to the particular taxpayer in respect of the acquisition or disposition; and
(e)the particular affiliate is a foreign affiliate of the particular taxpayer at the particular time.
(2)Subsection 91(1.‍5) of the Act, as enacted by subsection (1), is repealed.
(3)Subsection 91(4.‍5) of the Act is replaced by the following:
Exception — hybrid entities
(4.‍5)For the purposes of subparagraph (4.‍1)‍(a)‍(i), a specified owner in respect of the taxpayer is not to be considered, under the relevant foreign tax law, to own less than all of the shares of the capital stock of a corporation that are considered to be owned for the purposes of this Act solely because the specified owner or the corporation is not treated as a corporation under the relevant foreign tax law.
(4)Subsection (1) is deemed to have come into force on July 12, 2013, except that
(a)an election referred to in subsection 91(1.‍4) of the Act, as enacted by subsection (1), is deemed to have been filed by the particular taxpayer and all specified corporations (within the meaning assigned by subsection 91(1.‍4) of the Act) referred to in that subsection on a timely basis if the election is filed on or before the earliest filing-due date, for all taxpayers making the election, for the respective taxation year that includes the day on which this Act receives royal assent;
(b)an election referred to in subsection 91(1.‍5) of the Act, as enacted by subsection (1), is deemed to have been filed by the particular taxpayer referred to in that subsection on a timely basis if the election is filed on or before the filing-due date for the particular taxpayer for its taxation year that includes the day on which this Act receives royal assent;
(c)subject to paragraph (d), for the purpose of applying subsections 91(1.‍1) to (1.‍4) of the Act, as enacted by subsection (1), if the particular time referred to in subsection 91(1.‍1) of the Act, as enacted by subsection (1), is before September 8, 2017, those subsections are to be read as follows:
Conditions for application of subsection (1.‍2)
(1.‍1)Subsection (1.‍2) applies at a particular time in respect of a particular foreign affiliate of a taxpayer resident in Canada if
(a)an amount would be included under subsection (1) in computing the income of the taxpayer, in respect of a share of the particular affiliate or another foreign affiliate of the taxpayer that has an equity percentage (as defined in subsection 95(4)) in the particular affiliate, for the taxation year of the particular affiliate (determined without reference to subsection (1.‍2)) that includes the particular time, if that taxation year ended at the particular time; and
(b)immediately after the particular time, there is an acquisition or disposition of shares of the capital stock of a foreign affiliate of the taxpayer that results in a change to the surplus entitlement percentage of the taxpayer in respect of the particular affiliate (determined as if the taxpayer were a corporation resident in Canada), unless
(i)the change is a decrease in the surplus entitlement percentage of the taxpayer (determined as if the taxpayer were a corporation resident in Canada) in respect of the particular affiliate and, as a result of the acquisition or disposition, one or more taxpayers, each of which is a taxable Canadian corporation that does not deal at arm’s length with the taxpayer immediately after the particular time, have increases to their surplus entitlement percentages in respect of the particular affiliate that are, in total, equal to the reduction in the taxpayer’s surplus entitlement percentage in respect of the particular affiliate immediately after the particular time,
(ii)the acquisition or disposition is on an amalgamation as defined in subsection 87(1), or
(iii)if one or more such acquisitions or dispositions in respect of which the conditions in subparagraphs (i) and (ii) are not satisfied occur in a particular taxation year of the particular affiliate (determined without reference to this subsection and subsection (1.‍2)), the percentage determined by the following formula is not greater than 5%:
A – B
where
A
is the total of all amounts each of which is the decrease in the surplus entitlement percentage of the taxpayer in respect of the particular affiliate resulting from such acquisition or disposition in the particular year (other than an acquisition or disposition described in subparagraph (i) or (ii)), and
B
is the total of all amounts each of which is the increase in the surplus entitlement percentage of the taxpayer in respect of the particular affiliate resulting from such acquisition or disposition in the particular year (other than an acquisition from a person that does not deal at arm’s length with the taxpayer).
Deemed year-end
(1.‍2)If this subsection applies at a particular time in respect of a foreign affiliate of a particular taxpayer resident in Canada, then for the purposes of this section and section 92,
(a)in respect of the particular taxpayer and each corporation or partnership that is connected to the particular taxpayer, the affiliate’s taxation year that would, in the absence of this subsection, have included the particular time is deemed to have ended at the time (referred to in this section as the “stub-period end time”) that is immediately before the particular time;
(b)if the affiliate is, immediately after the particular time, a foreign affiliate of the particular taxpayer or a corporation or partnership that is connected to the particular taxpayer, the affiliate’s next taxation year after the stub-period end time is deemed, in respect of the taxpayer or the connected corporation or partnership, as the case may be, to begin immediately after the particular time; and
(c)in determining the foreign accrual property income of the affiliate for that taxation year in respect of the particular taxpayer or a corporation or partnership that is connected to the particular taxpayer, all transactions or events that occur at the particular time are deemed to occur at the stub-period end time.
Connected — meaning
(1.‍3)For the purposes of subsection (1.‍2),
(a)a corporation is connected to the particular taxpayer if, at or immediately after the particular time, it is resident in Canada and does not deal at arm’s length with the taxpayer; and
(b)a partnership is connected to the particular taxpayer if, at or immediately after the particular time, the particular taxpayer or a corporation described in paragraph (a) is, directly or indirectly through one or more partnerships, a member of the partnership.
Election for application of subsection (1.‍2)
(1.‍4)If the conditions in subsection (1.‍1) are not met at a particular time in respect of a particular foreign affiliate of a taxpayer resident in Canada, subsection (1.‍2) applies in respect of the particular affiliate at that time if
(a)the conditions in paragraph (1.‍1)‍(a) are met in respect of the particular affiliate at the particular time;
(b)immediately after the particular time there is a disposition of shares of the capital stock of the particular affiliate or another foreign affiliate of the taxpayer that had an equity percentage (as defined in subsection 95(4)) in the particular affiliate by
(i)the taxpayer, or
(ii)a controlled foreign affiliate of the taxpayer, if the shares are not excluded property of the controlled foreign affiliate immediately after the particular time; and
(c)the taxpayer and all specified corporations jointly elect, by filing with the Minister in prescribed manner a form containing prescribed information on or before the day that is the earliest filing-due date for all taxpayers making the election in respect of the taxation year in which the transaction to which the election relates occurred, and for this purpose, a specified corporation means a corporation that at or immediately after the particular time meets the following conditions:
(i)the corporation is resident in Canada,
(ii)the corporation does not deal at arm’s length with the taxpayer, and
(iii)the particular affiliate is a foreign affiliate of the corporation, or of a partnership of which the corporation is, directly or indirectly through one or more partnerships, a member.
(d)paragraph (c) does not apply in respect of a taxpayer if
(i)the taxpayer and all connected persons and connected partnerships (within the meanings assigned by subsection 91(1.‍3) of the Act, as enacted by this subsection) in respect of the taxpayer jointly elect in writing, and
(ii)the election is filed with the Minister by the later of the taxpayer’s filing-due date for its taxation year that includes September 8, 2017 and six months after the day on which this Act receives royal assent; and
(e)if paragraph (c) does not apply in respect of a taxpayer because of paragraph (d),
(i)section 91 of the Act, as amended by subsection (1), shall be read without reference to its subsection (1.‍5), and
(ii)subsection 91(1.‍1) of the Act, as enacted by subsection (1), shall be read without reference to its subparagraph (b)‍(i) and paragraph (c) in respect of any acquisition of control of the taxpayer that occurs before September 8, 2017.
(5)Subsection (2) applies to taxation years that begin after September 7, 2017.
(6)Subsection (3) applies in respect of the computation of foreign accrual tax applicable to an amount included in computing a taxpayer’s income under subsection 91(1), for a taxation year of the taxpayer that ends after October 24, 2012, in respect of a foreign affiliate of the taxpayer.
29(1)Clause 94(3)‍(b)‍(ii)‍(A) of the Act is replaced by the following:
(A)the trust’s income for the particular taxation year (other than income — not including dividends or interest — from sources in Canada) is deemed to be from sources in that country and not to be from any other source, and
(2)Subsection (1) applies to taxation years that end after September 15, 2016.
30(1)The definition trust company in subsection 95(1) of the Act is replaced by the following:
trust company includes a corporation that is resident in Canada and that is a loan company as defined in subsection 2(1) of the Canadian Payments Act.‍ (société de fiducie)
(2)The portion of paragraph 95(2)‍(a.‍1) of the Act after subparagraph (ii) and before subparagraph (iii) is replaced by the following:
unless more than 90% of the gross revenue of the affiliate for the year from the sale of property (other than a property the income from the sale of which is not included in computing the income from a business other than an active business of the affiliate under this paragraph because of subsection (2.‍31)) is derived from the sale of such property (other than a property described in subparagraph (ii) the cost of which to any person is a cost referred to in subparagraph (i)) to persons with whom the affiliate deals at arm’s length (which, for this purpose, includes a sale of property to a non-resident corporation with which the affiliate does not deal at arm’s length for sale to persons with whom the affiliate deals at arm’s length) and, where this paragraph applies to include income of the affiliate from the sale of property in the income of the affiliate from a business other than an active business,
(3)The portion of paragraph 95(2)‍(a.‍23) of the Act before subparagraph (i) is replaced by the following:
(a.‍23)for the purposes of paragraphs (a.‍2), (a.‍21) and (a.‍24), specified Canadian risk means a risk in respect of
(4)Subsection 95(2) of the Act is amended by adding the following after paragraph (a.‍23):
(a.‍24)for the purposes of paragraph (a.‍2),
(i)a risk is deemed to be a specified Canadian risk of a particular foreign affiliate of a taxpayer if
(A)as part of a transaction or series of transactions, the particular affiliate insured or reinsured the risk,
(B)the risk would not be a specified Canadian risk if this Act were read without reference to this paragraph, and
(C)it can reasonably be concluded that one of the purposes of the transaction or series of transactions was to avoid the application of any of paragraphs (a.‍2) to (a.‍22), and
(ii)if the particular affiliate — or a foreign affiliate of another taxpayer, if that other taxpayer or affiliate, or a partnership of which that other taxpayer or affiliate is a member, does not deal at arm’s length with the particular affiliate — enters into one or more agreements or arrangements in respect of the risk,
(A)activities performed in connection with those agreements or arrangements are deemed to be a separate business, other than an active business, carried on by the particular affiliate or other affiliate, as the case may be, and
(B)any income of the particular affiliate or other affiliate, as the case may be, from the business (including income that pertains to or is incident to the business) is deemed to be income from a business other than an active business;
(5)Paragraph 95(2)‍(f.‍13) of the Act is replaced by the following:
(f.‍13)where the calculating currency of a foreign affiliate of a taxpayer is a currency other than Canadian currency, the foreign affiliate shall determine the amount included in computing its foreign accrual property income, in respect of the taxpayer for a taxation year of the foreign affiliate, attributable to its capital gain or taxable capital gain, from the disposition of an excluded property in the taxation year, in Canadian currency by converting the amount of the capital gain, or taxable capital gain, otherwise determined under subparagraph (f.‍12)‍(i) using its calculating currency for the taxation year into Canadian currency using the rate of exchange quoted by the Bank of Canada on the day on which the disposition was made, or another rate of exchange that is acceptable to the Minister;
(6)Paragraph 95(2)‍(f.‍15) of the Act is replaced by the following:
(f.‍15)for the purposes of applying subparagraph (f)‍(i), the references in subsection 39(2) to “Canadian currency” are to be read as “the taxpayer’s calculating currency”
(i)in respect of a debt obligation owing by a foreign affiliate of a taxpayer, or a partnership of which the foreign affiliate is a member, that is a debt referred to in subparagraph (i)‍(i) or (ii), and
(ii)in respect of an agreement described in subparagraph (i)‍(iii) entered into by a foreign affiliate of a taxpayer, or a partnership of which the foreign affiliate is a member;
(7)Paragraph 95(2)‍(g.‍04) of the Act is replaced by the following:
(g.‍04)if at any time a corporation resident in Canada or a partnership of which such a corporation is a member (such corporation or partnership referred to in this paragraph as the “borrowing party”) has received a loan from, or become indebted to, a creditor that is a foreign affiliate (referred to in this paragraph as a “creditor affiliate”) of a qualifying entity (in this paragraph within the meaning assigned by subsection 39(2.‍2)), or that is a partnership (referred to in this paragraph as a “creditor partnership”) of which such an affiliate is a member, and the loan or indebtedness is at a later time repaid, in whole or in part, then the amount of the creditor affiliate’s or creditor partnership’s capital gain or capital loss, as the case may be, determined in the absence of this paragraph, in respect of the repayment, is to be reduced
(i)in the case of a capital loss
(A)if the creditor is a creditor affiliate, by an amount, not exceeding the amount of that capital loss so determined, that is determined by the formula
A/B
where
A
is the amount by which the borrowing party’s capital gain is reduced under paragraph 39(2.‍1)‍(a) in respect of that repayment, and
B
is the total of all participating percentages, determined at the end of the taxation year of the creditor affiliate that includes the later time, of shares of the capital stock of a foreign affiliate that are owned by qualifying entities and on which an amount would be included under subsection 91(1), on the assumptions that
(I)the capital loss of the creditor affiliate, determined in the absence of this paragraph, in respect of the repayment of the loan or indebtedness were a capital gain of the creditor affiliate, and
(II)neither the creditor affiliate nor any other foreign affiliate of a qualifying entity had any other income, gain or loss for any taxation year, and
(B)if the creditor is a creditor partnership, by an amount, not exceeding the capital loss so determined, that is equal to the amount determined by the formula
A/(B × C)
where
A
is the amount by which the borrowing party’s capital gain is reduced under paragraph 39(2.‍1)‍(a) in respect of that repayment,
B
is the proportion that the amount of the capital loss of the creditor partnership in respect of the repayment of the loan or indebtedness, determined in the absence of this paragraph, that would be included in the determination of the income, gain or loss of the members of the creditor partnership that are foreign affiliates of qualifying entities is of the amount of the capital loss so determined, and
C
is the total of all participating percentages, each of which is the participating percentage in respect of a share of the capital stock of a foreign affiliate of a qualifying entity, and that is owned by a qualifying entity, that is relevant in determining the amount that would be included in computing a qualifying entity’s income under subsection 91(1), on the assumptions that
(I)the capital loss of the creditor partnership, determined in the absence of this paragraph, in respect of the repayment of the loan or indebtedness were a capital gain of the creditor partnership, and
(II)neither the creditor partnership nor any foreign affiliate of a qualifying entity had any other income, gain or loss for any taxation year, and
(ii)in the case of a capital gain,
(A)if the creditor is a creditor affiliate, by an amount, not exceeding that capital gain so determined, that is equal to the amount determined by the formula
A/B
where
A
is the amount by which the borrowing party is required to reduce its capital loss under paragraph 39(2.‍1)‍(b) in respect of that repayment, and
B
is the total of all participating percentages, determined at the end of the taxation year of the creditor affiliate that includes the later time, of shares of the capital stock of a foreign affiliate that are owned by qualifying entities and on which an amount would be included under subsection 91(1), on the assumption that neither the creditor affiliate nor any foreign affiliate of a qualifying entity had any other income, gain or loss for any taxation year other than its capital gain, determined in the absence of this paragraph, in respect of the repayment of the loan or indebtedness, and
(B)if the creditor is a creditor partnership, by an amount, not exceeding the capital loss so determined, that is equal to the amount determined by the following formula
A/(B × C)
where
A
is the amount by which the borrowing party is required to reduce its capital loss under paragraph 39(2.‍1)‍(b) in respect of that repayment,
B
is the proportion that the amount of the capital gain of the creditor partnership in respect of the repayment of the loan or indebtedness, determined in the absence of this paragraph, that would be included in the determination of the income, gain or loss of the members of the creditor partnership that are foreign affiliates of qualifying entities is of the amount of the capital gain so determined, and
C
is the total of all participating percentages, each of which is the participating percentage in respect of a share of the capital stock of a foreign affiliate of a qualifying entity, and that is owned by a qualifying entity, that is relevant in determining the amount that would be included in computing a qualifying entity’s income under subsection 91(1), on the assumption that neither the creditor partnership nor any foreign affiliate of a qualifying entity had any other income, gain or loss for any taxation year;
(8)Subsection (1) is deemed to have come into force on October 24, 2001.
(9)Subsection (2) applies in respect of taxation years of a foreign affiliate of a taxpayer that end after October 2012.
(10)Subsections (3) and (4) apply to transactions that occur after March 21, 2017.
(11)Subsection (5) is deemed to have come into force on March 1, 2017.
(12)Subsection (6) applies in respect of taxation years of a foreign affiliate that begin after October 2, 2007.
(13)Subsection (7) applies in respect of portions of loans received and indebtedness incurred before August 20, 2011 that remain outstanding on August 19, 2011 and that are repaid, in whole or in part, before August 20, 2016.
31(1)The portion of subsection 96(3) of the Act before paragraph (a) is replaced by the following:
Agreement or election of partnership members
(3)If a taxpayer who was a member of a partnership at any time in a fiscal period has, for any purpose relevant to the computation of the taxpayer’s income from the partnership for the fiscal period, made or executed an agreement, designation or election under or in respect of the application of any of subsections 10.‍1(1), 13(4), (4.‍2) and (16), section 15.‍2, subsections 20(9) and 21(1) to (4), section 22, subsection 29(1), section 34, clause 37(8)‍(a)‍(ii)‍(B), subsections 44(1) and (6), 50(1) and 80(5) and (9) to (11), section 80.‍04, subsections 86.‍1(2), 88(3.‍1), (3.‍3) and (3.‍5) and 90(3), the definition relevant cost base in subsection 95(4) and subsections 97(2), 139.‍1(16) and (17) and 249.‍1(4) and (6) that, if this Act were read without reference to this subsection, would be a valid agreement, designation or election,
(2)Subsection (1) applies to taxation years that begin after March 21, 2017.
32(1)The portion of subsection 97(2) of the Act before paragraph (a) is replaced by the following:
(2)Notwithstanding any other provision of this Act other than subsections (3) and 13(21.‍2), where a taxpayer at any time disposes of any property (other than an eligible derivative, as defined in subsection 10.‍1(5), of the taxpayer if subsection 10.‍1(6) applies to the taxpayer) that is a capital property, Canadian resource property, foreign resource property or inventory of the taxpayer to a partnership that immediately after that time is a Canadian partnership of which the taxpayer is a member, if the taxpayer and all the other members of the partnership jointly so elect in prescribed form within the time referred to in subsection 96(4),
(2)Subsection (1) applies to taxation years that begin after March 21, 2017.
33(1)Section 98 of the Act is amended by adding the following after subsection (6):
Depreciable property — leasehold interests and options
(7)For the purposes of paragraphs (3)‍(c) and (5)‍(c), a leasehold interest in a depreciable property and an option to acquire a depreciable property are depreciable properties.
(2)Subsection (1) applies in respect of partnerships that cease to exist after September 15, 2016.
34(1)Paragraph 100(1)‍(a) of the Act is replaced by the following:
(a)1/2 of such portion of the taxpayer’s capital gain for the year from the disposition as may reasonably be regarded as attributable to increases in the value of any partnership property of the partnership that is capital property (other than depreciable property) held directly by the partnership or held indirectly by the partnership through one or more other partnerships, and
(2)Subsection (1) applies in respect of dispositions made after August 13, 2012.
35(1)The portion of subsection 104(4) of the Act before paragraph (a) is replaced by the following:
Deemed disposition by trust
(4)Every trust is, at the end of each of the following days, deemed to have disposed of each property of the trust (other than exempt property) that was capital property (other than depreciable property) or land included in the inventory of a business of the trust for proceeds equal to its fair market value (determined with reference to subsection 70(5.‍3)) at the end of that day and to have reacquired the property immediately after that day for an amount equal to that fair market value, and for the purposes of this Act those days are
(2)The portion of subsection 104(5.‍8) of the Act before paragraph (a) is replaced by the following:
Trust transfers
(5.‍8)Where capital property, land included in inventory, Canadian resource property or foreign resource property is transferred at a particular time by a trust (in this subsection referred to as the “transferor trust”) to another trust (in this subsection referred to as the “transferee trust”) in circumstances in which subsection 107(2) or 107.‍4(3) or paragraph (f) of the definition disposition in subsection 248(1) applies,
(3)Subsections (1) and (2) apply to taxation years that begin after 2016.
36(1)The portion of subsection 107(4.‍1) of the Act before paragraph (a) is replaced by the following:
Where subsection 75(2) applicable to trust
(4.‍1)Subsection (2.‍1) applies (and subsection (2) does not apply) in respect of a distribution of any property of a particular personal trust or prescribed trust (other than an excluded property of the particular trust) by the particular trust to a taxpayer who was a beneficiary under the particular trust where
(2)Subsection (1) applies to taxation years that begin after 2016.
37(1)The definition excluded property in subsection 108(1) of the Act is replaced by the following:
excluded property, of a trust, means property owned by the trust at, and distributed by the trust after, the end of 2016, if
(a)the trust is not in its first taxation year that begins after 2016 a trust described in subparagraph (c.‍1)‍(iii.‍1) of the definition principal residence in section 54, and
(b)the property is a property that would be the trust’s principal residence (as defined in section 54) for the taxation year in which the distribution occurs if
(i)that definition were read without reference to its subparagraph (c.‍1)‍(iii.‍1), and
(ii)the trust designated the property under that definition as its principal residence for the taxation year; (bien exclu)
(2)The portion of the definition eligible taxable capital gains in subsection 108(1) of the Act before paragraph (a) is replaced by the following:
eligible taxable capital gains, of a trust for a taxation year, means the lesser of
(3)Subsection 108(4) of the Act is replaced by the following:
Trust not disqualified
(4)For the purposes of the definition pre-1972 spousal trust in subsection (1), subparagraphs 70(6)‍(b)‍(ii) and (6.‍1)‍(b)‍(ii) and paragraphs 73(1.‍01)‍(c) and 104(4)‍(a), if a trust was created by a taxpayer whether by the taxpayer’s will or otherwise, no person is deemed to have received or otherwise obtained or to be entitled to receive or otherwise obtain the use of any income or capital of the trust solely because of
(a)the payment, or provision for payment, as the case may be, by the trust of
(i)any estate, legacy, succession or inheritance duty payable, in consequence of the death of the taxpayer, or a spouse or common-law partner of the taxpayer who is a beneficiary under the trust, in respect of any property of, or interest in, the trust, or
(ii)any income or profits tax payable by the trust in respect of any income of the trust; or
(b)the inhabiting at any time by an individual of a housing unit that is, or is in respect of, property that is owned at that time by the trust, if
(i)the property is described in the definition principal residence in section 54 in respect of the trust for the trust’s taxation year that includes that time, and
(ii)the individual is
(A)the taxpayer, or
(B)the taxpayer’s
(I)spouse or common-law partner,
(II)former spouse or common-law partner, or
(III)child.
(4)Subsections (1) and (3) apply to taxation years that begin after 2016.
38(1)The portion of paragraph 110(1)‍(d) of the Act before subparagraph (ii) is replaced by the following:
Employee options
(d)an amount equal to 1/2 of the amount of the benefit deemed by subsection 7(1) to have been received by the taxpayer in the year in respect of a security that a particular qualifying person has agreed after February 15, 1984 to sell or issue under an agreement, in respect of the transfer or other disposition of rights under the agreement or as a result of the death of the taxpayer because the taxpayer immediately before death owned a right to acquire the security under the agreement, if
(i)the security was acquired under the agreement
(A)by the taxpayer or a person not dealing at arm’s length with the taxpayer in circumstances described in paragraph 7(1)‍(c), or
(B)in the case of a benefit deemed by paragraph 7(1)‍(e) to have been received by the taxpayer, within the first taxation year of the graduated rate estate of the taxpayer, by
(I)the graduated rate estate of the taxpayer,
(II)a person who is a beneficiary (as defined in subsection 108(1)) under the graduated rate estate of the taxpayer, or
(III)a person in whom the rights of the taxpayer under the agreement have vested as a result of the death,
(i.‍1)the security
(A)is a prescribed share at the time of its sale or issue, as the case may be,
(B)would have been a prescribed share if it were issued or sold to the taxpayer at the time the taxpayer disposed of rights under the agreement,
(B.‍1)in the case of a benefit deemed by paragraph 7(1)‍(e) to have been received by the taxpayer, would have been a prescribed share if it were issued or sold to the taxpayer immediately before the death of the taxpayer,
(C)would have been a unit of a mutual fund trust at the time of its sale or issue if those units issued by the trust that were not identical to the security had not been issued,
(D)would have been a unit of a mutual fund trust if
(I)it were issued or sold to the taxpayer at the time the taxpayer disposed of rights under the agreement, and
(II)those units issued by the trust that were not identical to the security had not been issued, or
(E)in the case of a benefit deemed by paragraph 7(1)‍(e) to have been received by the taxpayer, would have been a unit of a mutual fund trust if
(I)it were issued or sold to the taxpayer immediately before the death of the taxpayer, and
(II)those units issued by the trust that were not identical to the security had not been issued,
(2)Paragraphs 110(1.‍1)‍(c) and (d) of the Act are replaced by the following:
(c)the particular qualifying person provides the taxpayer or, if the taxpayer is deceased, the graduated rate estate of the taxpayer, with evidence in writing of the election; and
(d)the taxpayer or, if the taxpayer is deceased, the graduated rate estate of the taxpayer, files the evidence with the Minister with the taxpayer’s return of income for the year in which a deduction under paragraph (1)‍(d) is claimed.
(3)Subsections (1) and (2) apply in respect of acquisitions of securities and transfers or dispositions of rights occurring after 4:00 pm Eastern Standard Time on March 4, 2010, except that for taxation years ending before 2016, the references to “graduated rate estate” in paragraphs 110(1)‍(d) and (1.‍1)‍(c) and (d) of the Act, as enacted by subsections (1) and (2), are to be read as “estate”.
39(1)The portion of paragraph 110.‍1(1)‍(d) of the Act before subparagraph (i) is replaced by the following:
Ecological gifts
(d)the total of all amounts each of which is the eligible amount of a gift of land (including a covenant or an easement to which land is subject or, in the case of land in the Province of Quebec, a personal servitude (the rights to which the land is subject and which has a term of not less than 100 years) or a real servitude) if
(2)Clauses 110.‍1(1)‍(d)‍(iii)‍(B) to (D) of the Act are replaced by the following:
(B)a municipality in Canada that is approved by that Minister or the designated person in respect of the gift,
(C)a municipal or public body performing a function of government in Canada that is approved by that Minister or the designated person in respect of the gift, or
(D)a registered charity (other than a private foundation) one of the main purposes of which is, in the opinion of that Minister, the conservation and protection of Canada’s environmental heritage, and that is approved by that Minister or the designated person in respect of the gift.
(3)The portion of paragraph 110.‍1(5)‍(b) of the Act before subparagraph (i) is replaced by the following:
(b)where the gift is a covenant or an easement to which land is subject or, in the case of land in the Province of Quebec, a real or personal servitude, the greater of
(4)Subsections (1) to (3) apply in respect of gifts made after March 21, 2017.
40(1)The definition exchange rate in subsection 111(8) of the Act is replaced by the following:
exchange rate, at any time in respect of a currency of a country other than Canada, means the rate of exchange between that currency and Canadian currency quoted by the Bank of Canada on the day that includes that time or, if that day is not a business day, on the day that immediately precedes that day, or a rate of exchange acceptable to the Minister; (taux de change)
(2)Subsection (1) is deemed to have come into force on March 1, 2017.
41(1)Section 112 of the Act is amended by adding the following after subsection (10):
Interest in a partnership — cost reduction
(11)In computing the cost to a taxpayer, at any time, of an interest in a partnership that is property (other than capital property) of the taxpayer, there is to be deducted an amount equal to the total of all amounts each of which is the taxpayer’s share of any loss of the partnership from the disposition by the partnership, or another partnership of which the partnership is directly or indirectly a member, of a share of the capital stock of a corporation (referred to in this subsection and subsection (12) as the “partnership loss”) in a fiscal period of the partnership that includes that time or a prior fiscal period, computed without reference to subsections (3.‍1), (4) and (5.‍2), to the extent that the taxpayer’s share of the partnership loss has not previously reduced the taxpayer’s cost of the interest in the partnership because of the application of this subsection.
Application
(12)For the purposes of subsection (11), if a taxpayer disposes of an interest in a partnership at any particular time, the taxpayer’s share of a partnership loss is to be computed as if
(a)the fiscal period of each partnership of which the taxpayer is directly or indirectly a member had ended immediately before the time that is immediately before the particular time;
(b)any share of the capital stock of a corporation that was property of a partnership referred to in paragraph (a) at the particular time had been disposed of by the relevant partnership immediately before the end of that fiscal period for proceeds equal to its fair market value at the particular time; and
(c)each member of a partnership referred to in paragraph (a) were allocated a share of any loss (computed without reference to subsections (3.‍1), (4) and (5.‍2)) in respect of dispositions described in paragraph (b) determined by reference to the member’s specified proportion for the fiscal period referred to in paragraph (a).
Application
(13)For the purposes of subsection (11), if a taxpayer (referred to as the “transferee” in this subsection) acquires an interest in a partnership at any time from another taxpayer (referred to as the “transferor” in this subsection), in computing the cost of the partnership interest to the transferee there is to be added an amount equal to the total of all amounts each of which is an amount deducted from the transferor’s cost of the partnership interest because of subsection (11), other than an amount to which subsection (3.‍1) would apply.
(2)Subsection (1) is deemed to have come into force on September 16, 2016.
42(1)The description of B in subsection 118(3) of the Act is replaced by the following:
B
is the lesser of
(a)$2,000, and
(b)the total of
(i)the eligible pension income of the individual for the taxation year, and
(ii)the total of all amounts received by the individual in the year on account of a retirement income security benefit payable to the individual under Part 2 of the Canadian Forces Members and Veterans Re-establishment and Compensation Act.
(2)Subsection (1) applies to the 2015 and subsequent taxation years.
43(1)The portion of paragraph (a) of the definition total ecological gifts in subsection 118.‍1(1) of the Act before subparagraph (i) is replaced by the following:
(a)of land (including a covenant or an easement to which land is subject or, in the case of land in the Province of Quebec, a personal servitude (the rights to which the land is subject and which has a term of not less than 100 years) or a real servitude)
(2)Subparagraphs (b)‍(i) and (ii) of the definition total ecological gifts in subsection 118.‍1(1) of the Act are replaced by the following:
(i)Her Majesty in right of Canada or of a province,
(i.‍1)a municipality in Canada, or a municipal or public body performing a function of government in Canada, that is approved by that Minister or the designated person in respect of the gift, or
(ii)a registered charity (other than a private foundation) one of the main purposes of which is, in the opinion of that Minister, the conservation and protection of Canada’s environmental heritage, and that is approved by that Minister or the designated person in respect of the gift, and
(3)Paragraph 118.‍1(20)‍(b) of the Act is replaced by the following:
(b)a credit union that is a shareholder or member of a body corporate or organization that is a central for the purposes of the Canadian Payments Act.
(4)Subsections (1) and (2) apply in respect of gifts made after March 21, 2017.
(5)Subsection (3) is deemed to have come into force on October 24, 2001.
44(1)Clauses 118.‍2(2)‍(l.‍9)‍(ii)‍(A) and (B) of the Act are replaced by the following:
(A)a medical doctor, a nurse practitioner or a psychologist, in the case of mental impairment, and
(B)a medical doctor, a nurse practitioner or an occupational therapist, in the case of a physical impairment,
(2)Clauses 118.‍2(2)‍(l.‍92)‍(ii)‍(A) and (B) of the Act are replaced by the following:
(A)a medical doctor, a nurse practitioner or a psychologist, in the case of mental impairment, or
(B)a medical doctor, a nurse practitioner or an occupational therapist, in the case of a physical impairment,
(3)Clauses 118.‍2(2)‍(l.‍92)‍(iii)‍(A) and (B) of the Act are replaced by the following:
(A)a medical doctor, a nurse practitioner or a psychologist, in the case of mental impairment, or
(B)a medical doctor, a nurse practitioner or an occupational therapist, in the case of a physical impairment, and
(4)Subsection 118.‍2(2) of the Act is amended by striking out “or” at the end of paragraph (t), by adding “or” at the end of paragraph (u) and by adding the following after paragraph (u):
(v)on behalf of the patient who is authorized to possess marihuana for medical purposes under the Marihuana for Medical Purposes Regulations or section 56 of the Controlled Drugs and Substances Act, for the cost of marihuana purchased from
(i)a licensed producer (as defined in subsection 1(1) of the Marihuana for Medical Purposes Regulations), in accordance with a medical document (as defined in subsection 1(1) of the Marihuana for Medical Purposes Regulations),
(ii)a health care practitioner (as defined in subsection 1(1) of the Marihuana for Medical Purposes Regulations) in the course of treatment for a medical condition,
(iii)a hospital, under subsection 65(2.‍1) of the Narcotics Control Regulations, or
(iv)an individual who possesses an exemption for cultivation or production under section 56 of the Controlled Drugs and Substances Act.
(5)Subsection 118.‍2(2) of the Act, as amended by subsection (4), is amended by adding “or” at the end of paragraph (t) and by replacing paragraphs (u) and (v) with the following:
(u)on behalf of the patient who is authorized to possess marihuana, marihuana plants or seeds, cannabis or cannabis oil for their own medical use under the Access to Cannabis for Medical Purposes Regulations or section 56 of the Controlled Drugs and Substances Act, for the cost of marihuana, marihuana plants or seeds, cannabis or cannabis oil purchased in accordance with the Access to Cannabis for Medical Purposes Regulations or section 56 of the Controlled Drugs and Substances Act.
(6)Subsections (1) to (3) apply in respect of expenses incurred after September 7, 2017.
(7)Subsection (4) is deemed to have come into force on June 7, 2013.
(8)Subsection (5) is deemed to have come into force on August 24, 2016.
45(1)Paragraph 118.‍6(3)‍(b) of the Act is replaced by the following:
(b)the individual has in the year a mental or physical impairment the effects of which on the individual have been certified in writing, to be such that the individual cannot reasonably be expected to be enrolled as a full-time student while so impaired, by a medical doctor, a nurse practitioner or, where the impairment is
(i)an impairment of sight, by a medical doctor, a nurse practitioner or an optometrist,
(i.‍1)a speech impairment, by a medical doctor, a nurse practitioner or a speech-language pathologist,
(ii)a hearing impairment, by a medical doctor, a nurse practitioner or an audiologist,
(iii)an impairment with respect to the individual’s ability in feeding or dressing themself, by a medical doctor, a nurse practitioner or an occupational therapist,
(iii.‍1)an impairment with respect to the individual’s ability in walking, by a medical doctor, a nurse practitioner, an occupational therapist or a physiotherapist, or
(iv)an impairment with respect to the individual’s ability in mental functions necessary for everyday life (within the meaning assigned by paragraph 118.‍4(1)‍(c.‍1)), by a medical doctor, a nurse practitioner or a psychologist.
(2)Subsection (1) applies in respect of certifications made after September 7, 2017.
46(1)The formula in paragraph 122(1)‍(c) of the Act is replaced by the following:
A − (B − C)
(2)Paragraph 122(1)‍(c) of the Act is amended by striking out “and” at the end of the description of A, by adding “and” at the end of the description of B and by adding the following after the description of B:
C
is the total of all amounts each of which is an amount determined for clause (ii)‍(B) of the description of A in determining the amount for A for the year.
(3)Subsections (1) and (2) apply to taxation years that end after September 15, 2016.
47(1)The formula in subparagraph (b)‍(i) of the description of A in subsection 122.‍51(2) of the Act is replaced by the following:
(0.‍25/C) × D
(2)Subsection (1) applies to the 2005 and subsequent taxation years.
48(1)The portion of subparagraph (a)‍(i) of the definition specified corporate income in subsection 125(7) of the Act before clause (A) is replaced by the following:
(i)the total of all amounts each of which is income (other than specified cooperative income) from an active business of the corporation for the year from the provision of services or property to a private corporation (directly or indirectly, in any manner whatever) if
(2)Subsection 125(7) of the Act is amended by adding the following in alphabetical order:
specified cooperative income, of a corporation (in this definition referred to as the “selling corporation”) for a taxation year, means income of the selling corporation (other than an amount included in the selling corporation’s income under subsection 135(7)) from the sale of the farming products or fishing catches of the selling corporation’s farming or fishing business to a corporation (in this definition referred to as the “purchasing corporation”) if
(a)the purchasing corporation deals at arm’s length with the selling corporation, and
(b)either
(i)the purchasing corporation would be a cooperative corporation, as defined in subsection 136(2), if the reference in paragraph (c) of that subsection to “business of farming” were read as “business of farming or fishing”, or
(ii)the following conditions are met:
(A)the selling corporation (or one of its shareholders) or a person who does not deal at arm’s length with the selling corporation (or one of its shareholders) holds a direct or indirect interest in a corporation that
(I)would be a cooperative corporation, as defined in subsection 136(2), if the reference in paragraph (c) of that subsection to “business of farming” were read as “business of farming or fishing”, and
(II)holds a direct or indirect interest in the purchasing corporation, and
(B)the income from the sale of the farming products or fishing catches would not be an amount described in subparagraph (a)‍(i) of the definition specified corporate income if
(I)the condition in subclause (A)‍(I) were not met, and
(II)that subparagraph were read without reference to “(other than specified cooperative income)”; (revenu de société coopérative déterminé)
(3)Subsections (1) and (2) apply to taxation years that begin after March 21, 2016.
49(1)Paragraph 126(4.‍4)‍(a) of the Act is replaced by the following:
(a)a disposition or acquisition of property deemed to be made by subsection 10(12) or (13) or 45(1), section 70, 128.‍1 or 132.‍2, subsections 138(11.‍3), 138.‍2(4) or 142.‍5(2), paragraph 142.‍6(1)‍(b) or subsections 142.‍6(1.‍1) or (1.‍2) or 149(10) is not a disposition or acquisition, as the case may be; and
(2)Subsection (1) applies to taxation years that begin after 2017.
50(1)The definition pre-production mining expenditure in subsection 127(9) of the English version of the Act is amended by adding “or” at the end of subparagraph (a)‍(i).
(2)Subparagraph (f.‍1)‍(i) of the definition specified percentage in subsection 127(9) of the Act is replaced by the following:
(i)a qualified expenditure of a taxpayer under any of subsections (18) to (20), for the qualified expenditure incurred
(A)before 2015, 20%, and
(B)after 2014, 15%,
(3)Subsection (1) is deemed to have come into force on March 21, 2013.
(4)Subsection (2) applies to repayments made after September 16, 2016.
51(1)Paragraph 129(1.‍1)‍(b) of the Act is replaced by the following:
(b)was a bankrupt at any time during that taxation year of the particular corporation.
(2)Subsection (1) applies in respect of bankruptcies that occur after April 26, 1995.
52(1)The definition qualifying exchange in subsection 132.‍2(1) of the Act is replaced by the following:
qualifying exchange means a transfer at any time (in this section referred to as the “transfer time”) if
(a)the transfer is a transfer of all or substantially all of the property (including an exchange of a unit of a mutual fund trust for another unit of that trust) of
(i)a mutual fund corporation (other than a SIFT wind-up corporation) to one or more mutual fund trusts, or
(ii)a mutual fund trust to a mutual fund trust;
(b)all or substantially all of the shares issued by the mutual fund corporation referred to in subparagraph (a)‍(i) or the first mutual fund trust referred to in subparagraph (a)‍(ii) (in this section referred to as the“transferor”) and outstanding immediately before the transfer time are within 60 days after the transfer time disposed of to the transferor;
(c)no person disposing of shares of the transferor to the transferor within that 60-day period (otherwise than pursuant to the exercise of a statutory right of dissent) receives any consideration for the shares other than units of one or more mutual fund trusts referred to in subparagraph (a)‍(i) or the second mutual fund trust referred to in subparagraph (a)‍(ii) (in this section referred to as a “transferee” and, together with the transferor, as the “funds”);
(d)if property of the transferor has been transferred to more than one transferee,
(i)all shares of each class of shares, that is recognized under securities legislation as or as part of an investment fund, of the transferor are disposed of to the transferor within 60 days after the transfer time, and
(ii)the units received in consideration for a particular share of a class of shares, that is recognized under securities legislation as or as part of an investment fund, of the transferor are units of the transferee to which all or substantially all of the assets that were allocated to that investment fund immediately before the transfer time were transferred; and
(e)the funds jointly so elect, by filing a prescribed form with the Minister on or before the election’s due date. (échange admissible)
(2)The portion of paragraph 132.‍2(3)‍(a) of the Act before subparagraph (i) is replaced by the following:
(a)each property of a fund, other than property disposed of by the transferor to a transferee at the transfer time and depreciable property, is deemed to have been disposed of, and to have been reacquired by the fund, at the first intervening time, for an amount equal to the lesser of
(3)Subsection 132.‍2(3) of the Act is amended by adding the following after paragraph (a):
(a.‍1)in respect of each property transferred by the transferor to a transferee, including an exchange of a unit of a transferee for another unit of that transferee, the transferor is deemed to have disposed of the property to the transferee, and to have received units of the transferee as consideration for the disposition of the property, at the transfer time;
(4)The portion of paragraph 132.‍2(3)‍(e) of the Act before subparagraph (i) is replaced by the following:
(e)except as provided in paragraph (m), the transferor’s cost of any particular property received by the transferor from a transferee as consideration for the disposition of the property is deemed to be
(5)Paragraph 132.‍2(3)‍(f) of the Act is replaced by the following:
(f)the transferor’s proceeds of disposition of any units of a transferee that were disposed of by the transferor at any particular time that is within 60 days after the transfer time in exchange for shares of the transferor, are deemed to be equal to the cost amount of the units to the transferor immediately before the particular time;
(6)The portion of paragraph 132.‍2(3)‍(g) of the Act before subparagraph (i) is replaced by the following:
(g)if, at any particular time that is within 60 days after the transfer time, a taxpayer disposes of shares of the transferor to the transferor in exchange for units of a transferee
(7)The portion of subparagraph 132.‍2(3)‍(g)‍(vi) of the Act before clause (A) is replaced by the following:
(vi)if the taxpayer is at the particular time affiliated with the transferor or the transferee,
(8)Paragraph 132.‍2(3)‍(h) of the Act is replaced by the following:
(h)where a share to which paragraph (g) applies would, if this Act were read without reference to this paragraph, cease to be a qualified investment (within the meaning assigned by subsection 146(1), 146.‍1(1), 146.‍3(1) or 146.‍4(1), section 204 or subsection 207.‍01(1)) as a consequence of the qualifying exchange, the share is deemed to be a qualified investment until the earlier of the day that is 60 days after the day that includes the transfer time and the time at which it is disposed of in accordance with paragraph (g);
(9)Paragraphs 132.‍2(3)‍(i) and (j) of the Act are replaced by the following:
(i)there shall be added to the amount determined under the description of A in the definition refundable capital gains tax on hand in subsection 132(4) in respect of a transferee for its taxation years that begin after the transfer time the amount determined by the formula
(A − B) × C/D
where
A
is the transferor’s refundable capital gains tax on hand (within the meaning assigned by subsection 131(6) or 132(4), as the case may be) at the end of its taxation year that includes the transfer time,
B
is the transferor’s capital gains refund (within the meaning assigned by paragraph 131(2)‍(a) or 132(1)‍(a), as the case may be) for that year,
C
is the total fair market value of property of the transferor disposed of to, net of liabilities assumed by, the transferee on the qualifying exchange, and
D
is the total fair market value of property of the transferor disposed of to, net of liabilities assumed by, all transferees on the qualifying exchange;
(j)no amount in respect of a non-capital loss, net capital loss, restricted farm loss, farm loss or limited partnership loss of a fund for a taxation year that began before the transfer time is deductible in computing the taxable income of any of the funds for a taxation year that begins after the transfer time;
(10)Paragraph 132.‍2(3)‍(l) of the Act is amended by striking out “and” at the end of subparagraph (i), by adding “and” at the end of subparagraph (ii) and by adding the following after subparagraph (ii):
(iii)for the purpose of subsection 131(1), a dividend that is made payable at a particular time after the acquisition time but within the 60-day period commencing immediately after the transfer time, and paid before the end of that period, by the transferor to taxpayers that held shares of a class of shares of the transferor, that was recognized under securities legislation as or as part of an investment fund, immediately before the transfer time is deemed to have become payable at the first intervening time if the transferor so elects in respect of the full amount of the dividend in prescribed manner on or before the day on which any part of the dividend was paid;
(11)Subparagraph 132.‍2(3)‍(m)‍(ii) of the Act is replaced by the following:
(ii)a transferee is deemed not to have acquired any property that was transferred to it on the qualifying exchange; and
(12)Paragraph 132.‍2(3)‍(m) of the Act is amended by striking out “and” at the end of subparagraph (i) and by adding the following after subparagraph (ii):
(iii)the amounts determined under the descriptions of A and B in the definition capital gains redemptions shall be determined as if the year ended immediately before the transfer time; and
(13)Paragraph 132.‍2(3)‍(n) of the Act is replaced by the following:
(n)except as provided in subparagraph (l)‍(i), the transferor is, notwithstanding subsections 131(8) and (8.‍01) and 132(6), deemed to be neither a mutual fund corporation nor a mutual fund trust for taxation years that begin after the transfer time.
(14)Clause 132.‍2(4)‍(b)‍(ii)‍(B) of the Act is replaced by the following:
(B)the amount that the transferor and the transferee agree on in respect of the property in their election, and
(15)Subsection 132.‍2(4) of the Act is amended by striking out “and” at the end of paragraph (a), by adding “and” at the end of paragraph (b) and by adding the following after paragraph (b):
(c)if the property is a unit of the transferee and the unit ceases to exist when the transferee acquires it (or, for greater certainty, when the transferee would but for that cessation have acquired it), paragraphs (a) and (b) do not apply to the transferee.
(16)Clause 132.‍2(5)‍(c)‍(ii)‍(B) of the Act is replaced by the following:
(B)the amount that the transferor and the transferee agree on in respect of the property in their election, and
(17)Subsection 132.‍2(7) of the Act is replaced by the following:
Amendment or revocation of election
(7)The Minister may, on joint application by the funds on or before the due date of an election referred to in paragraph (e) of the definition qualifying exchange in subsection (1), grant permission to amend or revoke the election.
(18)Subsections (1) to (7), (9) to (11) and (13) to (17) apply in respect of transfers that occur after March 21, 2017.
(19)Subsection (8) is deemed to have come into force on March 23, 2017.
(20)Subsection (12) applies in respect of qualifying exchanges where an election in respect of the qualifying exchange is filed or amended after September 7, 2017.
53(1)Section 138 of the Act is amended by adding the following after subsection (2):
Income — designated foreign insurance business
(2.‍1)If a life insurer resident in Canada has a designated foreign insurance business in a taxation year,
(a)for the purposes of computing the life insurer’s income or loss from carrying on an insurance business in Canada for that taxation year, the life insurer’s insurance business carried on in Canada is deemed to include the insurance of the specified Canadian risks that are insured as part of the designated foreign insurance business;
(b)if, in the immediately preceding taxation year, the designated foreign insurance business was not a designated foreign insurance business, for the purposes of paragraph (4)‍(a), subsection (9), the definition designated insurance property in subsection (12) and paragraphs 12(1)‍(d) to (e), the life insurer is deemed to have carried on the business in Canada in that immediately preceding year and to have claimed the maximum amounts to which it would have been entitled under paragraphs (3)‍(a) (other than under subparagraph (3)‍(a)‍(ii.‍1), (iii) or (v)), 20(1)‍(l) and (l.‍1) and 20(7)‍(c) in respect of those specified Canadian risks if that designated foreign insurance business had been a designated foreign insurance business in that immediately preceding year; and
(c)for the purposes of subparagraph (3)‍(a)‍(ii.‍1) and subsection 20(22),
(i)the life insurer is deemed to have carried on the business in Canada in that immediately preceding year, and
(ii)the amounts, if any, that would have been prescribed in respect of the insurer for the purposes of paragraphs (4)‍(b) and 12(1)‍(e.‍1) for that immediately preceding year in respect of the insurance policies in respect of those specified Canadian risks are deemed to have been included in computing its income for that year.
Insurance swaps
(2.‍2)For the purposes of this section, one or more risks insured by a life insurer resident in Canada, as part of an insurance business carried on in a country other than Canada, that would not be specified Canadian risks if this Act were read without reference to this subsection, are deemed to be specified Canadian risks if those risks would be deemed to be specified Canadian risks because of paragraph 95(2)‍(a.‍21) if the life insurer were a foreign affiliate of a taxpayer.
Insurance swaps
(2.‍3)Subsection (2.‍4) applies in respect of one or more agreements or arrangements if
(a)subsection (2.‍2) applies to deem one or more risks insured by a particular life insurer resident in Canada to be specified Canadian risks; and
(b)those agreements or arrangements are in respect of risks described in paragraph (a) and have been entered into by any of the following (in subsection (2.‍4), referred to as an “agreeing party”):
(i)the particular life insurer,
(ii)another life insurer resident in Canada that does not deal at arm’s length with the particular life insurer,
(iii)a partnership of which a life insurer described in subparagraph (i) or (ii) is a member,
(iv)a foreign affiliate of either the particular life insurer or a person that does not deal at arm’s length with the particular life insurer, and
(v)a partnership of which a foreign affiliate described in subparagraph (iv) is a member.
Insurance swaps
(2.‍4)If this subsection applies in respect of one or more agreements or arrangements,
(a)to the extent that activities performed in connection with those agreements or arrangements can reasonably be considered to be performed for the purpose of obtaining the result described in subparagraph 95(2)‍(a.‍21)‍(ii) (with any modifications that the circumstances require), those activities are deemed to be,
(i)if the agreeing party is a life insurer resident in Canada, or a partnership of which such a life insurer is a member, part of the life insurer’s insurance business carried on in Canada, and
(ii)if the agreeing party is a foreign affiliate of a taxpayer, or a partnership of which such an affiliate is a member, a separate business, other than an active business, carried on by the affiliate; and
(b)any income from those activities (including income that pertains to or is incident to those activities) is deemed to be,
(i)if the agreeing party is a life insurer resident in Canada, income from the life insurer’s insurance business carried on in Canada, and
(ii)if the agreeing party is a foreign affiliate of a taxpayer, income from the business, other than an active business.
Ceding of Canadian risks
(2.‍5)Any income of a life insurer resident in Canada for a taxation year, from its insurance business carried on in a country other than Canada, in respect of the ceding of specified Canadian risks that would, if the life insurer were a foreign affiliate of a taxpayer, be included in computing the life insurer’s income from a business, other than an active business, for the taxation year because of subparagraph 95(2)‍(a.‍2)‍(iii), is to be included in computing the life insurer’s income or loss for that taxation year from its insurance business carried on in Canada, except to the extent it is already included because of subsection (2.‍1), (2.‍2) or (2.‍4).
Anti-avoidance
(2.‍6)For the purposes of this section,
(a)a risk is deemed to be a specified Canadian risk that is insured as part of an insurance business carried on in Canada by a particular life insurer resident in Canada if
(i)the particular life insurer insured the risk as part of a transaction or series of transactions,
(ii)the risk would not be a specified Canadian risk if this Act were read without reference to this subsection, and
(iii)it can reasonably be concluded that one of the purposes of the transaction or series of transactions was to avoid
(A)having a designated foreign insurance business, or
(B)the application of any of subsections (2.‍1) to (2.‍5) to the risk; and
(b)if one or more agreements or arrangements in respect of the risk have been entered into by any of the persons or partnerships described in subparagraphs (2.‍3)‍(b)‍(i) to (v) (in this paragraph, referred to as an “agreeing party”),
(i)any activities performed in connection with those agreements or arrangements are deemed to be
(A)if the agreeing party is a life insurer resident in Canada, or a partnership of which such a life insurer is a member, part of the life insurer’s insurance business carried on in Canada, and
(B)if the agreeing party is a foreign affiliate of a taxpayer, or a partnership of which such an affiliate is a member, a separate business, other than an active business, carried on by the affiliate, and
(ii)any income from those activities (including income that pertains to or is incident to those activities) is deemed to be,
(A)if the agreeing party is a life insurer resident in Canada, income from the life insurer’s insurance business carried on in Canada, and
(B)if the agreeing party is a foreign affiliate of a taxpayer, income from the business, other than an active business.
(2)Paragraph 138(11.‍91)‍(d) of the Act is replaced by the following:
(d)for the purposes of paragraph (4)‍(a), subsection (9), the definition designated insurance property in subsection (12) and paragraphs 12(1)‍(d), (d.‍1) and (e), the insurer is deemed to have carried on the business in Canada in that preceding year and to have claimed the maximum amounts to which it would have been entitled under paragraphs (3)‍(a) (other than under subparagraph (3)‍(a)‍(ii.‍1), (iii) or (v)), 20(1)‍(l) and (l.‍1) and 20(7)‍(c) for that year,
(3)Subsection 138(12) of the Act is amended by adding the following in alphabetical order:
designated foreign insurance business, of a life insurer resident in Canada in a taxation year, means an insurance business that is carried on by the life insurer in a country other than Canada in the year unless more than 90% of the gross premium revenue from the business for the year from the insurance of risks (net of reinsurance ceded) is in respect of the insurance of risks (other than specified Canadian risks) of persons with whom the life insurer deals at arm’s length. (entreprise d’assurance étrangère désignée)
insurance, of a risk, includes the reinsurance of the risk. (assurance)
specified Canadian risk has the same meaning as in paragraph 95(2)‍(a.‍23). (risques canadiens déterminés)
(4)Subsections (1) to (3) apply to taxation years of a taxpayer that begin after March 21, 2017.
54(1)The portion of paragraph 138.‍1(1)‍(a) of the Act before subparagraph (i) is replaced by the following:
(a)a trust (in this section and section 138.‍2 referred to as the “related segregated fund trust”) is deemed to be created at the time that is the later of
(2)Paragraph 138.‍1(1)‍(f) of the Act is replaced by the following:
(f)the taxable income of the related segregated fund trust is deemed for the purposes of subsections 104(6), (13) and (24) to be an amount that has become payable in the year to the beneficiaries under the segregated fund trust and the amount therefor in respect of any particular beneficiary is equal to the amount determined by reference to the terms and conditions of the segregated fund policy;
(3)Section 138.‍1 of the Act is amended by adding the following after subsection (2):
Transition — pre-2018 non-capital losses
(2.‍1)For the purpose of determining the taxable income of a related segregated fund trust for a taxation year that begins after 2017, the non-capital losses of the related segregated fund trust that arise in a taxation year that begins before 2018 are deemed to be nil.
(4)Subsections (1) and (2) apply to taxation years that begin after 2017.
55(1)The Act is amended by adding the following after section 138.‍1:
Qualifying transfer of funds
138.‍2(1)For the purposes of this section, a qualifying transfer occurs at a particular time (in this section referred to as the “transfer time”) if
(a)all of the property that, immediately before the transfer time, was property of a related segregated fund trust has become, at the transfer time, the property of another related segregated fund trust (in this section referred to as the “transferor” and “transferee”, respectively, and collectively as the “funds”);
(b)every person that had an interest in the transferor immediately before the transfer time (in this section referred to as a “beneficiary”) has ceased to be a beneficiary of the transferor at the transfer time and has received no consideration for the interest other than an interest in the transferee;
(c)the trustee of the funds is a resident of Canada; and
(d)the trustee of the funds so elects, by filing a prescribed form with the Minister on or before the election’s due date.
General
(2)If there has been a qualifying transfer,
(a)the last taxation years of the funds that began before the transfer time are deemed to have ended at the transfer time and the next taxation year of the transferee is deemed to have begun immediately after the transfer time;
(b)no amount in respect of a non-capital loss, net capital loss, restricted farm loss, farm loss or limited partnership loss of a fund for a taxation year that began before the transfer time is deductible in computing the taxable income of the funds for a taxation year that begins after the transfer time;
(c)each beneficiary’s interest in the transferor is deemed to have been disposed of at the transfer time for proceeds of disposition, and each beneficiary’s interest in the transferee received in the qualifying transfer is deemed to have been acquired at a cost, equal to the cost amount to the beneficiary of the interest in the transferor immediately before the transfer time;
(d)any amount determined under subsection 138.‍1(6) in respect of a policyholder’s interest in the transferor is deemed
(i)to have been charged, transferred or paid in respect of the policyholder’s interest in the transferee that is acquired on the qualifying transfer, and
(ii)to not have been charged, transferred or paid in respect of the policyholder’s interest in the transferor; and
(e)subsections 138.‍1(4) and (5) do not apply in respect of any disposition of an interest in the transferor arising on the qualifying transfer.
Transferor – capital gains and losses
(3)In respect of a qualifying transfer, each property of the transferor held immediately before the transfer time is deemed to have been disposed of by the transferor immediately before the transfer time for proceeds of disposition, and to have been acquired by the transferee at the transfer time for a cost, equal to the lesser of
(a)the fair market value of the property immediately before the transfer time, and
(b)the greater of
(i)the cost amount of the property to the transferor immediately before the transfer time, and
(ii)the amount that is designated in respect of the property in the election in respect of the qualifying transfer.
Transferee – capital gains and losses
(4)In respect of a qualifying transfer, each property of the transferee held immediately before the transfer time is deemed to have been disposed of by the transferee immediately before the transfer time for proceeds of disposition, and to have been reacquired by the transferee at the transfer time for a cost, equal to the lesser of
(a)the fair market value of the property immediately before the transfer time, and
(b)the greater of
(i)the cost amount of the property to the transferee immediately before the transfer time, and
(ii)the amount that is designated in respect of the property in the election in respect of the qualifying transfer.
Loss limitation
(5)Subsection 138.‍1(3) does not apply to capital losses of a fund from the disposition of property on a qualifying transfer under subsection (3) or (4) to the extent that the amount of such capital losses exceeds the amount of capital gains of the fund from the disposition of property on the qualifying transfer under subsection (3) or (4), as the case may be.
Due date
(6)The due date of an election referred to in paragraph (1)‍(d) is the later of
(a)the day that is six months after the day that includes the transfer time, and
(b)a day that the Minister may specify.
(2)Subsection (1) comes into force, or is deemed to have come into force, on January 1, 2018.
56(1)Clause (b)‍(iii)‍(B) of the definition retirement savings plan in subsection 146(1) of the Act is replaced by the following:
(B)a credit union that is a shareholder or member of a body corporate referred to as a “central” for the purposes of the Canadian Payments Act,
(2)Subsection 146(21.‍2) of the Act is replaced by the following:
Specified pension plan — account
(21.‍2)For the purposes of paragraph (8.‍2)‍(b), subsection (8.‍21), paragraphs (16)‍(a) and (b) and 18(1)‍(u), subparagraph (a)‍(i) of the definition excluded right or interest in subsection 128.‍1(10), paragraph (b) of the definition excluded premium in subsection 146.‍01(1), paragraph (c) of the definition excluded premium in subsection 146.‍02(1), subsections 146.‍3(14) and 147(19), section 147.‍3 and paragraphs 147.‍5(21)‍(c) and 212(1)‍(j.‍1) and (m) and for the purposes of any regulations made under subsection 147.‍1(18), an individual’s account under a specified pension plan is deemed to be a registered retirement savings plan under which the individual is the annuitant.
(3)Subsection (1) is deemed to have come into force on October 24, 2001.
(4)Subsection (2) is deemed to have come into force on January 1, 2010, except that in its application before December 14, 2012, subsection 146(21.‍2) of the Act, as enacted by subsection (2), is to be read without reference to “147.‍5(21)‍(c) and”.
57(1)Paragraph (b) of the definition education savings plan in subsection 146.‍1(1) of the Act is replaced by the following:
(b)a person (in this definition referred to as the “promoter”)
(2)Subsection 146.‍1(1) of the Act is amended by adding the following in alphabetical order:
promoter, of an arrangement, means the person described as the promoter in the definition education savings plan; (promoteur)
(3)Paragraphs 146.‍1(2.‍1)‍(a) and (b) of the Act are repealed.
(4)Subsection 146.‍1(5) of the Act is replaced by the following:
Trust not taxable
(5)No tax is payable under this Part by a trust that is governed by a RESP on its taxable income for a taxation year, except that, if at any time in the taxation year, it holds one or more properties that are not qualified investments for the trust, tax is payable under this Part by the trust on the amount that would be its taxable income for the taxation year if it had no income or losses from sources other than those properties, and no capital gains or capital losses other than from dispositions of those properties, and for that purpose,
(a)income includes dividends described in section 83;
(b)the trust’s taxable capital gain or allowable capital loss from the disposition of a property is equal to its capital gain or capital loss, as the case may be, from the disposition; and
(c)the trust’s income shall be computed without reference to subsection 104(6).
(5)Subsection 146.‍1(7) of the Act is replaced by the following:
Educational assistance payments
(7)There shall be included in computing an individual’s income for a taxation year the total of all educational assistance payments paid out of registered education savings plans to or for the individual in the year that exceeds the total of all excluded amounts in respect of those plans and the individual for the year.
(6)Paragraph 146.‍1(7.‍1)‍(a) of the Act is replaced by the following:
(a)each accumulated income payment (other than an accumulated income payment made under subsection (1.‍2)) received in the year by the taxpayer under a registered education savings plan that exceeds the total of all excluded amounts in respect of those plans and the individual for the year; and
(7)Subsection 146.‍1(7.‍2) of the Act is replaced by the following:
Excluded amount
(7.‍2)An excluded amount in respect of a registered education savings plan is,
(a)for the purposes of subsection (7) and paragraph (7.‍1)‍(a), an amount in respect of which a subscriber pays a tax under section 207.‍05 in respect of the plan, or another plan for which the plan was substituted by the subscriber, that
(i)has not been waived, cancelled or refunded, and
(ii)has not reduced any other amount that would otherwise be included under subsections (7) or (7.‍1) in computing an individual’s income for the year or a preceding year; and
(b)for the purposes of paragraph (7.‍1)‍(b),
(i)any amount received under the plan,
(ii)any amount received in satisfaction of a right to a refund of payments under the plan, or
(iii)any amount received by a taxpayer under a decree, order or judgment of a competent tribunal, or under a written agreement, relating to a division of property between the taxpayer and the taxpayer’s spouse or common- law partner or former spouse or common-law partner in settlement of rights arising out of, or on the breakdown of, their marriage or common-law partnership.
(8)Subsections (1), (2) and (5) to (7) are deemed to have come into force on March 23, 2017.
(9)Subsections (3) and (4) apply in respect of
(a)any investment acquired after March 22, 2017; and
(b)any investment acquired before March 23, 2017 that ceases to be a qualified investment (as defined in subsection 146.‍1(1) of the Act) after March 22, 2017.
58(1)The portion of paragraph (d) of the definition contribution in subsection 146.‍4(1) of the Act before subparagraph (i) is replaced by the following:
(d)other than for the purposes of paragraphs (4)‍(f) to (h) and (n),
(2)The portion of subparagraph (a)‍(i) of the definition disability savings plan in subsection 146.‍4(1) of the Act before clause (A) is replaced by the following:
(i)a corporation (in this definition referred to as the “issuer”)
(3)The description of A in the definition specified maximum amount in subsection 146.‍4(1) of the Act is replaced by the following:
A
is 10% of the fair market value of the property held by the plan trust at the beginning of the calendar year (other than annuity contracts held by the plan trust that, at the beginning of the calendar year, are not described in paragraph (b) of the definition qualified investment), and
(4)Subparagraph (i) of the description of B in the definition specified maximum amount in subsection 146.‍4(1) of the Act is replaced by the following:
(i)a periodic payment under an annuity contract held by the plan trust at the beginning of the calendar year (other than an annuity contract described at the beginning of the calendar year in paragraph (b) of the definition qualified investment) that is paid to the plan trust in the calendar year, or
(5)The portion of the definition specified year in subsection 146.‍4(1) of the Act before paragraph (a) is replaced by the following:
specified year, for a disability savings plan of a beneficiary means the particular calendar year in which a medical doctor or a nurse practitioner licensed to practise under the laws of a province (or of the place where the beneficiary resides) certifies in writing that the beneficiary’s state of health is such that, in the professional opinion of the medical doctor or the nurse practitioner, the beneficiary is not likely to survive more than five years and
(6)Subsection 146.‍4(1) of the Act is amended by adding the following in alphabetical order:
issuer, of an arrangement, means the person described as the “issuer” in the definition disability savings plan. (émetteur)
qualified investment, for a trust governed by a RDSP, means
(a)an investment that would be described by any of paragraphs (a) to (d), (f) and (g) of the definition qualified investment in section 204 if the reference in that definition to “a trust governed by a deferred profit sharing plan or revoked plan” were read as a reference to “a trust governed by a RDSP” and if that definition were read without reference to the words “with the exception of excluded property in relation to the trust”;
(b)a contract for an annuity issued by a licensed annuities provider where
(i)the trust is the only person who, disregarding any subsequent transfer of the contract by the trust, is or may become entitled to any annuity payments under the contract, and
(ii)the holder of the contract has a right to surrender the contract at any time for an amount that would, if reasonable sales and administration charges were ignored, approximate the value of funds that could otherwise be applied to fund future periodic payments under the contract;
(c)a contract for an annuity issued by a licensed annuities provider where
(i)annual or more frequent periodic payments are or may be made under the contract to the holder of the contract,
(ii)the trust is the only person who, disregarding any subsequent transfer of the contract by the trust, is or may become entitled to any annuity payments under the contract,
(iii)neither the time nor the amount of any payment under the contract may vary because of the length of any life, other than the life of the beneficiary under the plan,
(iv)the day on which the periodic payments began or are to begin is not later than the end of the later of
(A)the year in which the beneficiary under the plan attains the age of 60 years, and
(B)the year following the year in which the contract was acquired by the trust,
(v)the periodic payments are payable for the life of the beneficiary under the plan and either there is no guaranteed period under the contract or there is a guaranteed period that does not exceed 15 years,
(vi)the periodic payments
(A)are equal, or
(B)are not equal solely because of one or more adjustments that would, if the contract were an annuity under a retirement savings plan, be in accordance with subparagraphs 146(3)‍(b)‍(iii) to (v) or that arise because of a uniform reduction in the entitlement to the periodic payments as a consequence of a partial surrender of rights to the periodic payments, and
(vii)the contract requires that, in the event the plan must be terminated in accordance with paragraph (4)‍(p), any amounts that would otherwise be payable after the termination be commuted into a single payment; and
(d)a prescribed investment. (placement admissible)
(7)Subsection 146.‍4(1.‍1) of the Act is replaced by the following:
Specified disability savings plan
(1.‍1)If, in respect of a beneficiary under a registered disability savings plan, a medical doctor or a nurse practitioner licensed to practise under the laws of a province (or of the place where the beneficiary resides) certifies in writing that the beneficiary’s state of health is such that, in the professional opinion of the medical doctor or the nurse practitioner, the beneficiary is not likely to survive more than five years, the holder of the plan elects in prescribed form and provides the election and the medical certification in respect of the beneficiary to the issuer of the plan, and the issuer notifies the specified Minister of the election in a manner and format acceptable to the specified Minister, then the plan becomes a specified disability savings plan at the time the notification is received by the specified Minister.
(8)Subparagraph 146.‍4(4)‍(f)‍(i) of the Act is replaced by the following:
(i)the beneficiary is not a DTC-eligible individual in respect of the taxation year that includes that time, unless the contribution is a specified RDSP payment in respect of the beneficiary and, at that time, there is a valid election referred to in subsection (4.‍1) in respect of the beneficiary, or
(9)The description of A in paragraph 146.‍4(4)‍(l) of the Act is replaced by the following:
A
is the fair market value of the property held by the plan trust at the beginning of the calendar year (other than annuity contracts held by the plan trust that, at the beginning of the calendar year, are not described in paragraph (b) of the definition qualified investment in subsection (1)),
(10)Subparagraph (i) of the description of D in paragraph 146.‍4(4)‍(l) of the Act is replaced by the following:
(i)a periodic payment under an annuity contract held by the plan trust at the beginning of the calendar year (other than an annuity contract described at the beginning of the calendar year in paragraph (b) of the definition qualified investment in subsection (1)) that is paid to the plan trust in the calendar year, or
(11)Paragraph 146.‍4(4.‍1)‍(a) of the Act is replaced by the following:
(a)a medical doctor or a nurse practitioner licensed to practise under the laws of a province certifies in writing that the nature of the beneficiary’s condition is such that, in the professional opinion of the medical doctor or the nurse practitioner, the beneficiary is likely to become a DTC-eligible individual for a future taxation year;
(12)The portion of paragraph 146.‍4(5)‍(b) of the Act before subparagraph (i) is replaced by the following:
(b)if the trust is not otherwise taxable under paragraph (a) on its taxable income for the year and, at any time in the year, it carries on one or more businesses or holds one or more properties that are not qualified investments for the trust, tax is payable under this Part by the trust on the amount that its taxable income for the year would be if it had no incomes or losses from sources other than those businesses and properties, and no capital gains or losses other than from dispositions of those properties, and for this purpose,
(13)Subsection 146.‍4(7) of the Act is replaced by the following:
Non-taxable portion of disability assistance payment
(7)The non-taxable portion of a disability assistance payment made at a particular time from a registered disability savings plan of a beneficiary is the lesser of the amount of the disability assistance payment and the amount determined by the formula
A × B/C + D
where
A
is the amount of the disability assistance payment;
B
is the amount, if any, by which
(a)the total of all amounts each of which is the amount of a contribution made before the particular time to any registered disability savings plan of the beneficiary
exceeds
(b)the total of all amounts each of which is the amount that would be the non-taxable portion of a disability assistance payment made before the particular time from any registered disability savings plan of the beneficiary, if the formula in this subsection were read without reference to the description of D;
C
is the amount by which the fair market value of the property held by the plan trust immediately before the payment exceeds the assistance holdback amount in relation to the plan; and
D
is the amount in respect of which a holder of the plan pays a tax under section 207.‍05 in respect of the plan, or another plan for which the plan was substituted by the holder, that
(a)has not been waived, cancelled or refunded; and
(b)has not otherwise been used in the year or a preceding year in computing the non-taxable portion of a disability assistance payment made from the plan or another plan for which the plan was substituted.
(14)Subsection 146.‍4(13) of the Act is amended by adding “and” at the end of paragraph (c) and by repealing paragraph (d).
(15)Subsections (1) to (4), (6), (9), (10) and (12) to (14) are deemed to have come into force on March 23, 2017.
(16)Subsections (5), (7) and (11) apply in respect of certifications made after September 7, 2017.
(17)Subsection (8) applies to the 2014 and subsequent taxation years.
59(1)Subparagraph 147.‍3(13.‍1)‍(a)‍(i) of the Act is replaced by the following:
(i)the total of all amounts each of which is an amount included under clause 56(1)‍(a)‍(i)‍(C), paragraph 56(1)‍(z.‍3), subsections 146(8), (8.‍3) or (12) or 146.‍3(5), (5.‍1) or (11) in computing the individual’s income for the year, to the extent that the amount is not a prescribed withdrawal,
(2)Subsection (1) is deemed to have come into force on January 1, 2010, except that in its application before December 14, 2012, subparagraph 147.‍3(13.‍1)‍(a)‍(i) of the Act, as enacted by subsection (1), is to be read without reference to “paragraph 56(1)‍(z.‍3)”.
60(1)Subsection 147.‍5(12) of the English version of the Act is replaced by the following:
Member’s account
(12)For the purposes of paragraph 18(1)‍(u), subparagraph (a)‍(i) of the definition excluded right or interest in subsection 128.‍1(10), paragraph 146(8.‍2)‍(b), subsection 146(8.‍21), paragraphs 146(16)‍(a) and (b), subparagraph 146(21)‍(a)‍(i), paragraph (b) of the definition excluded premium in subsection 146.‍01(1), paragraph (c) of the definition excluded premium in subsection 146.‍02(1), subsections 146.‍3(14) and 147(19) to (21), section 147.‍3 and paragraphs 212(1)‍(j.‍1) and (m), and of regulations made under subsection 147.‍1(18), a member’s account under a PRPP is deemed to be a registered retirement savings plan under which the member is the annuitant.
(2)Section 147.‍5 of the Act is amended by adding the following after subsection (32):
Contribution deemed not paid
(32.‍1)Where a member of a PRPP or a participating employer in relation to the PRPP has, at any time in a taxation year, received a distribution from the member’s account under the PRPP that is a return of a contribution described in clause 147.‍5(3)‍(d)‍(ii)‍(A) or (B), the contribution is deemed not to have been a contribution made by the member or the participating employer, as the case may be, to the PRPP to the extent that the contribution is not deducted in computing the taxpayer’s income for the year or a preceding taxation year.
(3)Subsections (1) and (2) are deemed to have come into force on December 14, 2012.
61(1)Paragraph 148(2)‍(e) of the Act is replaced by the following:
(e)a policyholder with an interest in a life insurance policy, issued after 2016, that gives rise to an entitlement (of the policyholder, beneficiary or assignee, as the case may be) to receive all or a portion of an excess described in subparagraph (iv) is deemed, at a particular time, to dispose of a part of the interest and to be entitled to receive proceeds of the disposition equal to that excess or portion, as the case may be, if
(i)the policy is an exempt policy,
(ii)a benefit on death (as defined in subsection 1401(3) of the Income Tax Regulations) under a coverage (as defined in section 310 of the Income Tax Regulations for the purposes of section 306 of the Income Tax Regulations) under the policy is paid at the particular time,
(iii)the payment results in the termination of the coverage but not the policy, and
(iv)the amount of the fund value benefit (as defined in subsection 1401(3) of the Income Tax Regulations) paid at the particular time in respect of the coverage exceeds the amount
(A)in the case where there is no policy anniversary (as defined in section 310 of the Income Tax Regulations) before the date of death of the individual whose life is insured under the coverage, that would be determined — on the policy anniversary that is on or that first follows that date of death and as though the coverage were not terminated — in respect of the coverage under subclause (A)‍(I) of the description of B in subparagraph 306(4)‍(a)‍(iii) of the Income Tax Regulations, and
(B)in any other case, that is determined — on the last policy anniversary before the date of the death of the individual whose life is insured under the coverage — in respect of the coverage under subclause (A)‍(I) of the description of B in subparagraph 306(4)‍(a)‍(iii) of the Income Tax Regulations as it applies for the purpose of subparagraph 306(1)‍(b)‍(ii) of the Income Tax Regulations.
(2)The portion of subsection 148(4.‍01) of the Act before paragraph (a) is replaced by the following:
Repayment of policy loan on partial surrender
(4.‍01)For the purposes of the definition adjusted cost basis in subsection (9) and paragraph 60(s), a particular amount is deemed to be a repayment made immediately before a particular time by a taxpayer in respect of a policy loan in respect of a life insurance policy if
(3)Paragraph 148(4.‍01)‍(b) of the Act is replaced by the following:
(b)the taxpayer disposes of a part of the taxpayer’s interest in the policy at the particular time;
(4)Subparagraph 148(4.‍01)‍(d)‍(ii) of the Act is replaced by the following:
(ii)described in subparagraph (i) of the description of C in paragraph (a) of the definition proceeds of the disposition in subsection (9); and
(5)Paragraph (b) of the description of E.‍1 in the definition adjusted cost basis in subsection 148(9) of the Act is replaced by the following:
(b)if the policy is issued after 2016 (and, in the case where the particular time at which the policy is issued is determined under subsection (11), the repayment is at or after the particular time), the portion of the loan applied, immediately after the loan, to pay a premium under the policy as provided for under the terms and conditions of the policy (except to the extent that the portion is described in subparagraph (i) of the description of C in paragraph (a) of the definition proceeds of the disposition in this subsection), and
(6)The portion of the description of O in the definition adjusted cost basis in subsection 148(9) of the Act before the formula is replaced by the following:
O
is, in the case of a policy that is issued after 2016 and is not an annuity contract, the total of all amounts each of which is — if a benefit on death (as defined in subsection 1401(3) of the Income Tax Regulations) under a coverage (as defined in section 310 of the Income Tax Regulations for the purposes of section 306 of the Income Tax Regulations) under the policy is paid before that time as a consequence of the death of an individual whose life is insured under the coverage (and, in the case where the particular time at which the policy is issued is determined under subsection (11), at or after the particular time) and the payment results in the termination of the coverage — the amount, if any, determined with respect to the coverage by the formula
(7)The portion of the definition adjusted cost basis in subsection 148(9) of the Act after the description of P is replaced by the following:
Q
is the amount of the fund value benefit (as defined in subsection 1401(3) of the Income Tax Regulations) under the policy paid in respect of the coverage (as defined in section 310 of the Income Tax Regulations for the purposes of section 306 of the Income Tax Regulations) on the termination,
R
is the total of all amounts — each of which is in respect of a coverage (as defined in subsection 1401(3) of the Income Tax Regulations) in respect of a specific life or two or more specific lives jointly insured under the coverage referred to in the description of O — that would be the present value, determined for the purposes of section 307 of the Income Tax Regulations, on the last policy anniversary (as defined in section 310 of the Income Tax Regulations) on or before the termination, of the fund value of the coverage (as defined in subsection 1401(3) of the Income Tax Regulations) if the fund value of the coverage on that policy anniversary were equal to the fund value of the coverage on the termination,
S
is the total of all amounts — each of which is in respect of a coverage (as defined in subsection 1401(3) of the Income Tax Regulations and referred to in this description as a “particular coverage”) in respect of a specific life or two or more specific lives jointly insured under the coverage referred to in the description of O — that would be determined, on that policy anniversary, for paragraph (a) of the description of C in the definition net premium reserve in subsection 1401(3) of the Income Tax Regulations in respect of the particular coverage, if the benefit on death under the particular coverage, and the fund value of the coverage (as defined in subsection 1401(3) of the Income Tax Regulations), on that policy anniversary were equal to the benefit on death under the particular coverage and the fund value of the coverage, as the case may be, on the termination,
T
is the amount that would be, on that policy anniversary, the net premium reserve (as defined in subsection 1401(3) of the Income Tax Regulations) in respect of the policy for the purposes of section 307 of the Income Tax Regulations, if the fund value benefit (as defined in subsection 1401(3) of the Income Tax Regulations) under the policy, the benefit on death under each coverage (as defined in subsection 1401(3) of the Income Tax Regulations) and the fund value of each coverage (as defined in subsection 1401(3) of the Income Tax Regulations) on that policy anniversary were equal to the fund value benefit, the benefit on death under each coverage and the fund value of each coverage, as the case may be, under the policy on the termination, and
U
is the amount, if any, determined under subsection (4) in respect of a disposition before that time of the interest because of paragraph (2)‍(e) in respect of the payment in respect of the fund value benefit under the policy paid in respect of the coverage (as defined in section 310 of the Income Tax Regulations for the purposes of section 306 of the Income Tax Regulations) on the termination; (coût de base rajusté)
(8)The portion of subsection 148(11) of the Act before paragraph (b) is replaced by the following:
Loss of grandfathering
(11)For the purposes of determining at and after a particular time whether a life insurance policy (other than an annuity contract) issued before 2017 is treated as issued after 2016 under this section (other than this subsection) and sections 306 (other than subsections (9) and (10)), 307, 308, 310, 1401 and 1403 of the Income Tax Regulations (except as they apply for the purposes of subsection 211.‍1(3)), the policy is deemed to be a policy issued at the particular time if the particular time is the first time after 2016 at which life insurance — in respect of a life, or two or more lives jointly insured, and in respect of which a particular schedule of premium or cost of insurance rates applies — is
(a)if the insurance is term insurance, converted to permanent life insurance within the policy; or
62(1)Subsection 152(4) of the Act is amended by adding the following after paragraph (b.‍2):
(b.‍3)the following conditions apply:
(i)the taxpayer, or a partnership of which the taxpayer is a member (directly or indirectly through one or more partnerships), disposes in the year of real or immovable property,
(ii)the taxpayer is not a real estate investment trust (as defined in subsection 122.‍1(1)) for the year,
(iii)if the disposition is by a corporation or partnership, the property is capital property of the corporation or partnership, as the case may be,
(iv)the disposition is not reported in
(A)if the disposition is by the taxpayer, the return of income of the taxpayer under this Part for the year, or
(B)if the disposition is by a partnership, the partnership’s return required to be filed for the year under section 229 of the Income Tax Regulations, and
(v)in the case that the disposition is not reported in the return described in clause (iv)‍(A) or (B) and the taxpayer subsequently reports the disposition by filing a prescribed form amending the taxpayer’s return of income under this Part for the year, the assessment, reassessment or additional assessment is made before the day that is three years after the day on which the prescribed form amending the return is filed;
(2)The portion of subsection 152(4.‍01) of the Act before paragraph (a) is replaced by the following:
Extended period assessment
(4.‍01)Notwithstanding subsections (4) and (5), an assessment, reassessment or additional assessment to which paragraph (4)‍(a), (b), (b.‍1), (b.‍3) or (c) applies in respect of a taxpayer for a taxation year may be made after the taxpayer’s normal reassessment period in respect of the year to the extent that, but only to the extent that, it can reasonably be regarded as relating to,
(3)Subsection 152(4.‍01) of the Act is amended by striking out “and” at the end of paragraph (a), by adding “and” at the end of paragraph (b) and by adding the following after paragraph (b):
(c)if paragraph (4)‍(b.‍3) applies to the assessment, reassessment or additional assessment, the disposition referred to in that paragraph.
(4)Subsections (1) to (3) apply to taxation years that end after October 2, 2016.
63(1)Paragraph 181.‍1(3)‍(b) of the Act is replaced by the following:
(b)that was a bankrupt at the end of the year;
(2)Subsection (1) applies in respect of bankruptcies that occur after April 26, 1995.
64(1)Paragraph 186.‍1(a) of the Act is replaced by the following:
(a)that was, at any time in the year, a bankrupt; or
(2)Subsection (1) applies in respect of bankruptcies that occur after April 26, 1995.
65(1)Paragraph (a) of the description of J in subsection 204.‍2(1.‍2) of the Act is replaced by the following:
(a)the total of all amounts each of which is an amount (other than the portion of it that reduces the amount on which tax is payable by the individual under subsection 204.‍1(1)) received by the individual in the year and before that time out of or under a pooled registered pension plan, a registered retirement savings plan, a registered retirement income fund or a specified pension plan and included in computing the individual’s income for the year
(2)Subsection (1) is deemed to have come into force on January 1, 2010, except that in its application before December 14, 2012, paragraph (a) of the description of J in subsection 204.‍2(1.‍2) of the Act, as enacted by subsection (1), is to be read without reference to “a pooled registered pension plan”.
66(1)Part XI of the Act is repealed.
(2)Subsection (1) applies to transactions and events occurring, income earned, capital gains accruing and investments acquired after March 22, 2017.
67(1)The heading of Part XI.‍01 of the Act is replaced by the following:
Taxes in Respect of Registered Plans
(2)Subsection (1) is deemed to have come into force on March 23, 2017.
68(1)The portion of subsection 207.‍01(1) of the Act before the first definition is replaced by the following:
Definitions
207.‍01(1)The following definitions and the definitions in subsections 146(1) (other than the definition benefit), 146.‍1(1), 146.‍2(1), 146.‍3(1) and 146.‍4(1) apply in this Part and Part XLIX of the Income Tax Regulations.
(2)The definition RRSP strip in subsection 207.‍01(1) of the Act is repealed.
(3)The definitions controlling individual, registered plan and transitional prohibited property in subsection 207.‍01(1) of the Act are replaced by the following:
controlling individual, of a registered plan, means
(a)the holder of a TFSA;
(b)a holder of a RDSP;
(c)a subscriber of a RESP; or
(d)the annuitant of a RRIF or RRSP. (particulier contrôlant)
registered plan means a RDSP, RESP, RRIF, RRSP or TFSA. (régime enregistré)
transitional prohibited property, at any time for a particular trust governed by a registered plan (other than a TFSA) of a controlling individual, means a property that is held by the particular trust at that time, that was held
(a)on March 22, 2011 by a trust governed by a RRIF or RRSP of the controlling individual and that was a prohibited investment for that trust on March 23, 2011; or
(b)on March 22, 2017 by a trust governed by a RDSP or RESP of the controlling individual and that was a prohibited investment for that trust on March 23, 2017. (bien interdit transitoire)
(4)Subparagraphs (a)‍(iii) and (iv) of the definition advantage in subsection 207.‍01(1) of the Act are replaced by the following:
(iii)a payment out of or under the registered plan in satisfaction of all or part of a beneficiary’s or controlling individual’s interest in the registered plan,
(iv)the payment or allocation of any amount to the registered plan by the issuer, carrier or promoter,
(iv.‍1)an amount paid under or because of the Canada Disability Savings Act, the Canada Education Savings Act or under a designated provincial program, and
(5)The portion of subparagraph (c)‍(ii) of the definition advantage in subsection 207.‍01(1) of the Act before clause (A) is replaced by the following:
(ii)in the case of a registered plan that is not a TFSA, an amount received by the controlling individual of the registered plan, or by a person who does not deal at arm’s length with the controlling individual (if it is reasonable to consider, having regard to all the circumstances, that the amount was paid in relation to, or would not have been paid but for, property held in connection with the registered plan) and the amount was paid as, on account or in lieu of, or in satisfaction of, a payment
(6)Paragraph (d) of the definition advantage in subsection 207.‍01(1) of the Act is replaced by the following:
(d)a registered plan strip in respect of the registered plan; and
(7)Paragraph (b) of the definition swap transaction in subsection 207.‍01(1) of the Act is replaced by the following:
(b)a payment into the registered plan that is
(i)a contribution, a premium or an amount transferred in accordance with paragraph 146.‍3(2)‍(f),
(ii)described in paragraph (a) or (b) of the definition contribution in subsection 146.‍1(1), or
(iii)described in any of paragraphs (a) to (d) of the definition contribution in subsection 146.‍4(1);
(8)Paragraph (d) of the definition swap transaction in subsection 207.‍01(1) of the Act is amended by striking out “or” at the end of subparagraph (i) and by adding the following after subparagraph (ii):
(iii)both registered plans are RDSPs, or
(iv)both registered plans are RESPs;
(9)Subsection 207.‍01(1) of the Act is amended by adding the following in alphabetical order:
registered plan strip, in respect of a registered plan that is not a TFSA, means the amount of a reduction in the fair market value of property held in connection with the registered plan, if the value is reduced as part of a transaction or event or a series of transactions or events one of the main purposes of which is to enable the controlling individual of the registered plan, or a person who does not deal at arm’s length with the controlling individual, to obtain a benefit in respect of property held in connection with the registered plan or to obtain a benefit as a result of the reduction, but does not include an amount that is
(a)included in the income of a person under section 146, 146.‍1, 146.‍3 or 146.‍4;
(b)an excluded withdrawal under section 146.‍01 or 146.‍02;
(c)described in subsection 146(16), 146.‍3(14.‍2) or 146.‍4(8);
(d)a distribution to a trust governed by a RESP under circumstances to which subparagraph 204.‍9(5)‍(c)‍(i) or (ii) applies;
(e)an accumulated income payment made to a RDSP under circumstances to which subsection 146.‍1(1.‍2) applies;
(f)a refund of payments under a RESP; or
(g)the non-taxable portion of a disability assistance payment made from a RDSP. (somme découlant d’un dépouillement de régime enregistré)
(10)Subsection 207.‍01(5) of the Act is replaced by the following:
Obligation of issuer
(5)The issuer, carrier or promoter of a registered plan shall exercise the care, diligence and skill of a reasonably prudent person to minimize the possibility that a trust governed by the registered plan holds a non-qualified investment.
(11)Subsection 207.‍01(7) of the Act is replaced by the following:
Adjusted cost base
(7)For the purpose of computing the adjusted cost base to a trust governed by a registered plan (other than a TFSA) of a property that is a transitional prohibited property for the trust, the cost to the trust of the property until the property is disposed of by the trust is deemed to be equal to the fair market value of the property,
(a)in the case of a RRIF or RRSP, at the end of March 22, 2011; and
(b)in the case of a RDSP or RESP, at the end of March 22, 2017.
(12)Paragraph 207.‍01(8)‍(a) of the Act is replaced by the following:
(a)the property would, in the absence of subsection (9), have ceased at any time (in this subsection and subsection (9) referred to as the “relevant time”) to be a prohibited investment for a trust governed by a registered plan (other than a TFSA) of a controlling individual;
(13)Paragraph 207.‍01(8)‍(c) of the Act is replaced by the following:
(c)in the case of a property held under a RRIF or RRSP, the controlling individual elected under subsection 207.‍05(4); and
(14)Subsection 207.‍01(9) of the Act is replaced by the following:
Prohibited investment status
(9)If this subsection applies in respect of a property, the property is deemed to be a prohibited investment at and after the relevant time for every trust governed by a registered plan (other than a TFSA) of the controlling individual referred to in paragraph (8)‍(a).
(15)Paragraph 207.‍01(12)‍(a) of the Act is replaced by the following:
(a)the property is acquired at any time (in this subsection and subsection (13) referred to as the “exchange time”) by a trust (in this section and subsection (13) referred to as the “exchanging trust”) governed by a registered plan (other than a TFSA) of a controlling individual in exchange for another property (in this subsection referred to as the “exchanged property”) in a transaction to which any of section 51, subsection 85(1) and sections 85.‍1, 86 and 87 apply;
(16)Paragraph 207.‍01(12)‍(d) of the Act is replaced by the following:
(d)in the case of a property held under a RRIF or RRSP, the controlling individual elected under subsection 207.‍05(4).
(17)Paragraphs 207.‍01(13)‍(a) and (b) of the Act are replaced by the following:
(a)other than for the purposes of subsection (7), the property is deemed to be, at and after the exchange time, a property,
(i)in the case of a trust governed by a RRIF or RRSP, that was
(A)held on March 22, 2011 by a trust governed by a RRIF or RRSP of the controlling individual referred to in subsection (12), and
(B)a prohibited investment for the trust on March 23, 2011, and
(ii)in the case of a trust governed by a RDSP or RESP, that was
(A)held on March 22, 2017 by a trust governed by a RDSP or RESP of the controlling individual referred to in subsection (12), and
(B)a prohibited investment for the trust on March 23, 2017; and
(b)if the property would, in the absence of this paragraph, not be a prohibited investment for the exchanging trust immediately after the exchange time, the property is deemed to be a prohibited investment at and after the exchange time for every trust governed by a registered plan (other than a TFSA) of the controlling individual.
(18)Subsections (1) to (6) and (9) apply to transactions and events occurring, income earned, capital gains accruing and investments acquired after March 22, 2017.
(19)Subsections (7) and (8) apply
(a)after 2021 in relation to transactions undertaken to remove a property from a RDSP or RESP if it is reasonable to conclude that tax would be payable under Part XI.‍01 of the Act if the property were retained in the RDSP or RESP;
(b)after 2027 in relation to transactions undertaken to remove a transitional prohibited property (as defined in subsection 207.‍01(1) of the Act, as amended by subsection (3)), from a RDSP or RESP if it is reasonable to conclude that tax would be payable under Part XI.‍01 of the Act if the property were retained in the RDSP or RESP; and
(c)in any other case, after June 2017.
(20)Subsections (10) to (17) are deemed to have come into force on March 23, 2017.
69(1)Subsection 207.‍04(3) of the Act is replaced by the following:
Both prohibited and non-qualified investment
(3)For the purposes of this section and subsections 146(10.‍1), 146.‍1(5), 146.‍2(6), 146.‍3(9), 146.‍4(5) and 207.‍01(6), if a trust governed by a registered plan holds property at any time that is, for the trust, both a prohibited investment and a non-qualified investment, the property is deemed at that time not to be a non-qualified investment, but remains a prohibited investment, for the trust.
(2)Section 207.‍04 of the Act is amended by adding the following after subsection (4):
Apportionment of refund
(5)If more than one person is entitled to a refund under subsection (4) for a calendar year in respect of the disposition of a property, the total of all amounts so refundable shall not exceed the amount that would be so refundable for the year to any one of those persons in respect of that disposition if that person were the only person entitled to a refund for the year under that subsection in respect of the disposition. If the persons cannot agree as to what portion of the refund each can so claim, the Minister may fix the portions.
Liability for tax
(6)Each person who is a holder of a RDSP or a subscriber of a RESP at the time that a tax is imposed under subsection (1) in connection with the plan is jointly and severally, or solidarily, liable to pay the tax.
(3)Subsections (1) and (2) are deemed to have come into force on March 23, 2017.
70(1)Paragraph 207.‍05(2)‍(c) of the Act is replaced by the following:
(c)in the case of a registered plan strip, the amount of the registered plan strip.
(2)Subsection 207.‍05(3) of the Act is replaced by the following:
Liability for tax
(3)Each controlling individual of a registered plan in connection with which a tax is imposed under subsection (1) is jointly and severally, or solidarily, liable to pay the tax except that, if the advantage is extended by the issuer, carrier or promoter of the registered plan or by a person with whom the issuer, carrier or promoter is not dealing at arm’s length, the issuer, carrier or promoter, and not the controlling individual, is liable to pay the tax.
(3)Subsections (1) and (2) are deemed to have come into force on March 23, 2017.
71(1)Section 207.‍07 of the Act is amended by adding the following after subsection (1):
Multiple holders or subscribers
(1.‍1)If two or more holders of a RDSP, or two or more subscribers of a RESP, are jointly and severally, or solidarily, liable with each other to pay a tax under this Part for a calendar year in connection with the plan,
(a)a payment by any of the holders, or any of the subscribers, on account of that tax liability shall to the extent of the payment discharge the joint liability; and
(b)a return filed by one of the holders, or one of the subscribers, as required by this Part for the year is deemed to have been filed by each other holder, or each other subscriber, in respect of the joint liability to which the return relates.
(2)Subsection (1) is deemed to have come into force on March 23, 2017.
72(1)Subsection 207.‍1(3) of the Act is repealed.
(2)Subsection (1) applies in respect of
(a)any investment acquired after March 22, 2017; and
(b)any investment acquired before March 23, 2017 that ceases to be a qualified investment (as defined in subsection 146.‍1(1) of the Act) after March 22, 2017.
73(1)Section 207.‍31 of the Act is replaced by the following:
Ecological gift — tax payable
207.‍31(1)A charity, municipality in Canada or municipal or public body performing a function of government in Canada (each of which is referred to in this section as the “recipient”) shall, in respect of a property, pay a tax under this Part in respect of a taxation year if
(a)at any time in the year, the recipient
(i)disposes of the property, or
(ii)in the opinion of the Minister of the Environment, or a person designated by that Minister, changes the use of the property;
(b)the property is described in paragraph 110.‍1(1)‍(d) or in the definition total ecological gifts in subsection 118.‍1(1); and
(c)the disposition or change is made without the authorization of the Minister of the Environment or a person designated by that Minister.
Ecological gift — amount of tax
(2)The amount of tax to be paid under subsection (1) is equal to 50% of the amount that would be determined for the purposes of section 110.‍1 or 118.‍1, if this Act were read without reference to subsections 110.‍1(3) and 118.‍1(6), to be the fair market value of the property referred to in subsection (1) if the property were given to the recipient immediately before the disposition or change referred to in paragraph (1)‍(a).
(2)Subsection (1) applies in respect of dispositions made, and changes of use that occur, after March 21, 2017