907482nd Session, 41st Parliament,62-63 Elizabeth II, 2013-2014house of commons of canadaBILL C-43A second Act to implement certain provisions of the budget tabled in Parliament on February 11, 2014 and other measuresHer Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:SHORT TITLEShort title
1. This Act may be cited as the Economic Action Plan 2014 Act, No. 2.PART 1AMENDMENTS TO THE INCOME TAX ACT AND A RELATED TEXTR.S., c. 1 (5th Supp.)
Income Tax Act2. (1) Subparagraph (a)(i) of the description of B in subsection 12(10.2) of the Income Tax Act is replaced by the following:(i) deemed by subsection (10.4) or 104(5.1) or (14.1) (as it read for the taxpayer’s 2015 taxation year) to have been paid out of the taxpayer’s NISA Fund No. 2 before the particular time, or(2) Subsection (1) applies to the 2016 and subsequent taxation years.3. (1) Paragraph 14(1.01)(c) of the Act is replaced by the following:(c) if the eligible capital property is a qualified farm or fishing property (within the meaning assigned by subsection 110.6(1)) of the taxpayer at that time, the capital property deemed by paragraph (b) to have been disposed of by the taxpayer is deemed to be a qualified farm or fishing property of the taxpayer at that time.(2) Paragraph 14(1.02)(c) of the Act is replaced by the following:(c) if the eligible capital property is a qualified farm or fishing property (within the meaning assigned by subsection 110.6(1)) of the taxpayer at that time, the capital property deemed by paragraph (b) to have been disposed of by the taxpayer is deemed to be a qualified farm or fishing property of the taxpayer at that time.(3) The portion of subsection 14(1.1) of the Act before paragraph (a) is replaced by the following:Deemed taxable capital gain
(1.1) For the purposes of section 110.6 and paragraph 3(b) as it applies for the purposes of that section, an amount included under paragraph (1)(b) in computing a taxpayer’s income for a particular taxation year from a business is deemed to be a taxable capital gain of the taxpayer for the year from the disposition in the year of qualified farm or fishing property to the extent of the lesser of(4) The descriptions of A and B in paragraph 14(1.1)(b) of the Act are replaced by the following:Ais the amount by which the total of(i) 3/4 of the total of all amounts each of which is the taxpayer’s proceeds from a disposition in a preceding taxation year that began after 1987 and ended before February 28, 2000 of eligible capital property in respect of the business that, at the time of the disposition, was a qualified farm property (within the meaning assigned by subsection 110.6(1)) of the taxpayer,(ii) 2/3 of the total of all amounts each of which is the taxpayer’s proceeds from a disposition in the particular year or a preceding taxation year that ended after February 27, 2000 and before October 18, 2000 of eligible capital property in respect of the business that, at the time of the disposition, was a qualified farm property (within the meaning assigned by subsection 110.6(1)) of the taxpayer, and(iii) 1/2 of the total of all amounts each of which is the taxpayer’s proceeds from a disposition in the particular year or a preceding taxation year that ended after October 17, 2000 of eligible capital property in respect of the business that, at the time of the disposition, was a qualified farm property, a qualified fishing property or a qualified farm or fishing property (within the meaning assigned by subsection 110.6(1)) of the taxpayerexceeds the total of(iv) 3/4 of the total of all amounts each of which is(A) an eligible capital expenditure of the taxpayer in respect of the business that was made or incurred in respect of a property that was, at the time of disposition, a qualified farm property disposed of by the taxpayer in a preceding taxation year that began after 1987 and ended before February 28, 2000, or(B) an outlay or expense of the taxpayer that was not deductible in computing the taxpayer’s income and that was made or incurred for the purpose of making a disposition referred to in clause (A),(v) 2/3 of the total of all amounts each of which is(A) an eligible capital expenditure of the taxpayer in respect of the business that was made or incurred in respect of a property that was, at the time of disposition, a qualified farm property disposed of by the taxpayer in the particular year or a preceding taxation year that ended after February 27, 2000 and before October 18, 2000, or(B) an outlay or expense of the taxpayer that was not deductible in computing the taxpayer’s income and that was made or incurred for the purpose of making a disposition referred to in clause (A), and(vi) 1/2 of the total of all amounts each of which is(A) an eligible capital expenditure of the taxpayer in respect of the business that was made or incurred in respect of a property that was, at the time of disposition, a qualified farm property, a qualified fishing property or a qualified farm or fishing property disposed of by the taxpayer in the particular year or a preceding taxation year that ended after October 17, 2000, or(B) an outlay or expense of the taxpayer that was not deductible in computing the taxpayer’s income and that was made or incurred for the purpose of making a disposition referred to in clause (A), andBis the total of all amounts each of which is(i) that portion of an amount deemed by subparagraph (1)(a)(v) (as it applied in respect of the business to fiscal periods that began after 1987 and ended before February 23, 1994) to be a taxable capital gain of the taxpayer that can reasonably be attributed to a disposition of a property that was, at the time of disposition, a qualified farm property of the taxpayer, or(ii) an amount deemed by this section to be a taxable capital gain of the taxpayer for a taxation year preceding the partic-ular year from the disposition of a property that was, at the time of disposition, a qualified farm property, a qualified fishing property or a qualified farm or fishing property of the taxpayer.(5) Subsection 14(1.2) of the Act is repealed.(6) Subsections (1) to (5) apply to dispositions and transfers that occur in the 2014 and subsequent taxation years.4. (1) The portion of subsection 15(2.14) of the Act before paragraph (a) is replaced by the following:Partnerships
(2.14) For purposes of this subsection, subsection (2.11), section 17.1 and subsection 18(5),(2) Subsection (1) applies to taxation years that end after March 28, 2012, except that, if an election is made by a taxpayer under subsection 49(3) of the Jobs and Growth Act, 2012, subsection (1) does not apply to taxation years of the taxpayer that end before August 14, 2012.5. (1) Subsection 17(1) of the Act is replaced by the following:Amount owing by non-resident
17. (1) If this subsection applies to a corporation resident in Canada in respect of an amount owing to the corporation (in this subsection referred to as the “debt”), the corporation shall include in computing its income for a taxation year the amount determined by the formula A – BwhereAis the amount of interest that would be included in computing the corporation’s income for the year in respect of the debt if interest on the debt were computed at the prescribed rate for the period in the year during which the debt was outstanding; andBis the total of all amounts each of which is(a) an amount included in computing the corporation’s income for the year as, on account of, in lieu of or in satisfaction of, interest in respect of the debt,(b) an amount received or receivable by the corporation from a trust that is included in computing the corporation’s income for the year or a subsequent taxation year and that can reasonably be attributed to interest on the debt for the period in the year during which the debt was outstanding, or(c) an amount included in computing the corporation’s income for the year or a subsequent taxation year under subsection 91(1) that can reasonably be attributed to interest on an amount owing (in this paragraph referred to as the “original debt”) — or if the amount of the original debt exceeds the amount of the debt, a portion of the original debt that is equal to the amount of the debt — for the period in the year during which the debt was outstanding if(i) without the existence of the original debt, subsection (2) would not have deemed the debt to be owed by the non-resident person referred to in paragraph (1.1)(a),(ii) the original debt was owed by a non-resident person or a partnership each member of which is a non-resident person, and(iii) where subsection (11.2) applies to the original debt,(A) an amount determined under paragraph (11.2)(a) or (b) in respect of the original debt is an amount referred to in paragraph (2)(a), and because of the amount referred to in paragraph (2)(a), the debt is deemed to be owed by the non-resident person referred to in paragraph (1.1)(a), and(B) the original debt was owing by an intermediate lender to an initial lender or by an intended borrower to an intermediate lender (within the meanings of those terms assigned by subsection (11.2)).Amount owing by non-resident
(1.1) Subsection (1) applies to a corporation resident in Canada in respect of an amount owing to the corporation if, at any time in a taxation year of the corporation,(a) a non-resident person owes the amount to the corporation;(b) the amount has been or remains outstanding for more than a year; and(c) the amount that would be determined for B in subsection (1), if that subsection applied, for the year in respect of the amount owing is less than the amount of interest that would be included in computing the corporation’s income for the year in respect of the amount owing if that interest were computed at a reasonable rate for the period in the year during which the amount was outstanding.(2) The portion of paragraph 17(2)(b) of the Act before subparagraph (i) is replaced by the following:(b) it is reasonable to conclude that the amount or a portion of the amount became owing, or was permitted to remain owing, to the particular person or partnership because(3) The portion of subsection 17(2) of the Act after paragraph (b) is replaced by the following:the non-resident person is deemed at that time to owe to the corporation an amount equal to the amount, or the portion of the amount, as the case may be, owing to the particular person or partnership.(4) Subsection (1) applies to taxation years that begin after February 23, 1998.(5) Subsections (2) and (3) apply to taxation years that begin after July 12, 2013.6. (1) The portion of subsection 18(5) of the Act before the first definition is replaced by the following:Definitions
(5) Notwithstanding any other provision of this Act (other than subsection (5.1)), in this subsection and subsections (4) and (5.1) to (6.1),(2) Paragraph (b) of the definition “outstanding debts to specified non-residents” in subsection 18(5) of the Act is replaced by the following:(b) an amount outstanding at the particular time as or on account of a debt or other obligation(i) to pay an amount to(A) a non-resident insurance corporation to the extent that the obligation was, for the non-resident insurance corporation’s taxation year that included the particular time, designated insurance property in respect of an insurance business carried on in Canada through a permanent establishment as defined by regulation, or(B) an authorized foreign bank, if the bank uses or holds the obligation at the particular time in its Canadian banking business, or(ii) that is a debt obligation described in subparagraph (ii) of the description of A in paragraph 17.1(1)(b) to the extent that the proceeds of the debt obligation can reasonably be considered to directly or indirectly fund at the particular time, in whole or in part, a pertinent loan or indebtedness (as defined in subsection 212.3(11)) owing to the corporation or another corporation resident in Canada that does not, at the particular time, deal at arm’s length with the corporation;(3) Subsection 18(5) of the Act is amended by adding the following in alphabetical order:“security interest”
« garantie »
“security interest”, in respect of a property, means an interest in, or for civil law a right in, the property that secures payment of an obligation;“specified right”
« droit déterminé »
“specified right”, at any time in respect of a property, means a right to, at that time, mortgage, hypothecate, assign, pledge or in any way encumber the property to secure payment of an obligation — other than the particular debt or other obligation described in paragraph (6)(a) or a debt or other obligation described in subparagraph (6)(d)(ii) — or to use, invest, sell or otherwise dispose of, or in any way alienate, the property unless it is established by the taxpayer that all of the proceeds (net of costs, if any) received, or that would be received, from exercising the right must first be applied to reduce an amount described in subparagraph (6)(d)(i) or (ii);(4) Subsection 18(6) of the Act is replaced by the following:Back-to-back loan arrangement
(6) Subsection (6.1) applies at any time in respect of a taxpayer if at that time(a) the taxpayer has a particular amount outstanding as or on account of a particular debt or other obligation to pay an amount to a person (in this subsection and subsection (6.1) referred to as the “intermediary”);(b) the intermediary is neither(i) a person resident in Canada with whom the taxpayer does not deal at arm’s length, nor(ii) a person that is, in respect of the taxpayer, described in subparagraph (a)(i) of the definition “outstanding debts to specified non-residents” in subsection (5);(c) the intermediary or a person that does not deal at arm’s length with the intermediary(i) has an amount outstanding as or on account of a debt or other obligation to pay an amount to a particular non-resident person that is, in respect of the taxpayer, described in subparagraph (a)(i) of the definition “outstanding debts to specified non-residents” in subsection (5) that meets any of the following conditions (in this subsection and subsection (6.1) referred to as the “intermediary debt”):(A) recourse in respect of the debt or other obligation is limited in whole or in part, either immediately or in the future and either absolutely or contingently, to the particular debt or other obligation, or(B) it can reasonably be concluded that all or a portion of the particular amount became owing, or was permitted to remain owing, because(I) all or a portion of the debt or other obligation was entered into or was permitted to remain outstanding, or(II) the intermediary anticipated that all or a portion of the debt or other obligation would become owing or remain outstanding, or(ii) has a specified right in respect of a particular property that was granted directly or indirectly by a person that is, in respect of the taxpayer, a particular non-resident person described in subparagraph (a)(i) of the definition “outstanding debts to specified non-residents” in subsection (5) and(A) the existence of the specified right is required under the terms and conditions of the particular debt or other obligation, or(B) it can reasonably be concluded that all or a portion of the particular amount became owing, or was permitted to remain owing, because(I) the specified right was granted, or(II) the intermediary anticipated that the specified right would be granted; and(d) the total of all amounts — each of which is, in respect of the particular debt or other obligation, an amount outstanding as or on account of an intermediary debt or the fair market value of a particular property described in subparagraph (c)(ii) — is equal to at least 25% of the total of(i) the particular amount, and(ii) the total of all amounts each of which is an amount (other than the particular amount) that the taxpayer, or a person that does not deal at arm’s length with the taxpayer, has outstanding as or on account of a debt or other obligation to pay an amount to the intermediary under the agreement, or an agreement that is connected to the agreement, under which the particular debt or other obligation was entered into if(A) the intermediary is granted a secu-rity interest in respect of a property that is the intermediary debt or the particular property, as the case may be, and the security interest secures the payment of two or more debts or other obligations that include the debt or other obligation and the particular debt or other obligation, and(B) each security interest that secures the payment of a debt or other obligation referred to in clause (A) secures the payment of every debt or other obligation referred to in that clause.Back-to-back loan arrangement
(6.1) If this subsection applies at any time in respect of a taxpayer,(a) then for the purpose of applying subsections (4) and (5),(i) the portion of the particular amount, at that time, referred to in paragraph (6)(a) that is equal to the lesser of the following amounts is deemed to be an amount outstanding as or on account of a debt or other obligation to pay an amount to the particular non-resident person referred to in subparagraph (6)(c)(i) or (ii), as the case may be, and not to the intermediary:(A) the amount outstanding as or on account of the intermediary debt or the fair market value of the particular property referred to in subparagraph (6)(c)(ii), as the case may be, and(B) the proportion of the particular amount that the amount outstanding or the fair market value, as the case may be, is of the total of all amounts each of which is(I) an amount outstanding as or on account of an intermediary debt in respect of the particular debt or other obligation, owed to the particular non-resident or any other non-resident person that is, in respect of the taxpayer, described in the definition “outstanding debts to specified non-residents” in subsection (5), or(II) the fair market value of a partic-ular property referred to in subparagraph (6)(c)(ii) in respect of the particular debt or other obligation, and(ii) the portion of the interest paid or payable by the taxpayer, in respect of a period throughout which subparagraph (a)(i) applies, on the particular debt or other obligation referred to in paragraph (6)(a) that is equal to the amount determined by the following formula is deemed to be paid or payable by the taxpayer to the particular non-resident, and not to the intermediary, as interest for the period on the amount deemed by subparagraph (a)(i) to be outstanding to the particular non-resident: A × B/CwhereAis the interest paid or payable,Bis the average of all amounts each of which is an amount that is deemed by subparagraph (a)(i) to be outstanding to the particular non-resident at a time during the period, andCis the average of all amounts each of which is the particular amount outstanding at a time during the period; and(b) for the purposes of Part XIII and subject to subsections 214(16) and (17), interest deemed under subparagraph (a)(ii) to be paid or payable to the particular non-resident in respect of a period is, to the extent that the interest is not deductible in computing the income of the taxpayer for the year because of subsection 18(4), deemed to be paid or payable by the taxpayer to the particular non-resident, and not to the intermediary, in respect of the period.(5) The portion of subsection 18(7) of the Act before paragraph (a) is replaced by the following:Partnership debts and property
(7) For the purposes of this subsection, paragraph (4)(a), subsections (5) to (6.1) and paragraph 12(1)(l.1), each member of a partnership at any time is deemed at that time(6) Subsections (1) and (3) to (5) apply to taxation years that begin after 2014.(7) Subsection (2) applies to taxation years that end after March 28, 2012, except that, if an election is made by a taxpayer under subsection 49(3) of the Jobs and Growth Act, 2012, subsection (2) does not apply to taxation years of the taxpayer that end before August 14, 2012.7. (1) Paragraph 28(1)(g) of the Act is replaced by the following:(g) the total of all amounts each of which is an amount deducted for the year under paragraph 20(1)(a), (b) or (uu), subsection 20(16) or 24(1), section 30 or subsection 80.3(2), (4) or (4.1) in respect of the business,(2) Subsection (1) applies to the 2014 and subsequent taxation years.8. (1) Paragraph 34.1(1)(a) of the Act is replaced by the following:(a) an individual (other than a graduated rate estate) carries on a business in a taxation year,(2) Paragraph 34.1(2)(a) of the Act is replaced by the following:(a) an individual (other than a graduated rate estate) begins carrying on a business in a taxation year and not earlier than the beginning of the first fiscal period of the business that begins in the year and ends after the end of the year (in this subsection referred to as the “particular period”), and(3) Subsections (1) and (2) apply to the 2016 and subsequent taxation years.9. (1) Subparagraph 38(a.1)(ii) of the Act is replaced by the following:(ii) the disposition is deemed by section 70 to have occurred and the property is(A) a security described in subparagraph (i), and(B) the subject of a gift to which subsection 118.1(5.1) applies and that is made by the taxpayer’s graduated rate estate to a qualified donee, or(2) Subparagraph 38(a.2)(ii) of the Act is replaced by the following:(ii) the disposition is deemed by section 70 to have occurred and the property is(A) described in subparagraph (i), and(B) the subject of a gift to which subsection 118.1(5.1) applies and that is made by the taxpayer’s graduated rate estate to a qualified donee (other than a private foundation);(3) Subsections (1) and (2) apply to the 2016 and subsequent taxation years.10. (1) Subparagraph 39(1)(a)(i.1) of the Act is replaced by the following:(i.1) an object that the Canadian Cultural Property Export Review Board has determined meets the criteria set out in paragraphs 29(3)(b) and (c) of the Cultural Property Export and Import Act if(A) the disposition is to an institution or a public authority in Canada that was, at the time of the disposition, designated under subsection 32(2) of that Act either generally or for a specified purpose related to that object, or(B) the disposition is deemed by section 70 to have occurred and the object is the subject of a gift to which subsection 118.1(5.1) applies and that is made by the taxpayer’s graduated rate estate to an institution that would be described in clause (A) if the disposition were made at the time the estate makes the gift,(2) Subparagraph 39(1)(c)(vii) of the Act is replaced by the following:(vii) in the case of a share to which subparagraph (vi) applies and where the taxpayer is a trust referred to in paragraph 104(4)(a) or (a.4), the total of all amounts each of which is an amount received after 1971 or receivable at the time of the disposition by the settlor (within the meaning assigned by subsection 108(1)) or by the settlor’s spouse as a taxable dividend on the share or on any other share in respect of which it is a substituted share, and(3) Subparagraph 39(1)(c)(vii) of the Act, as enacted by subsection (2), is replaced by the following:(vii) in the case of a share to which subparagraph (vi) applies and where the taxpayer is a trust for which a day is to be, or has been, determined under paragraph 104(4)(a), or (a.4) by reference to a death or later death, as the case may be, the total of all amounts each of which is an amount received after 1971 or receivable at the time of the disposition, as a taxable dividend on the share or on any other share in respect of which it is a substituted share, by an individual whose death is that death or later death, as the case may be, or a spouse or common-law partner of the individual, and(4) Subsections (1) and (3) apply to the 2016 and subsequent taxation years.(5) Subsection (2) applies to the 2014 and 2015 taxation years.11. (1) Subparagraph 40(1.1)(c)(ii) of the Act is replaced by the following:(ii) a share of the capital stock of a family farm or fishing corporation of the taxpayer or an interest in a family farm or fishing partnership of the taxpayer (such a share or an interest having the meaning assigned by subsection 70(10)), or(2) Paragraph 40(1.1)(c) of the Act is amended by striking out “or” at the end of subparagraph (iii) and by repealing subparagraph (iv).(3) The portion of subsection 40(3.12) of the Act before paragraph (a) is replaced by the following:Deemed loss for certain partners
(3.12) If a corporation, an individual (other than a trust) or a graduated rate estate (each of which is referred to in this subsection as the “taxpayer”) is a member of a partnership at the end of a fiscal period of the partnership, the taxpayer is deemed to have a loss from the disposition at that time of the member’s interest in the partnership equal to the amount that the taxpayer elects in the taxpayer’s return of income under this Part for the taxation year that includes that time, not exceeding the lesser of(4) Subsections (1) and (2) apply to dispositions and transfers that occur in the 2014 and subsequent taxation years.(5) Subsection (3) applies to the 2016 and subsequent taxation years.12. (1) Subparagraph 69(1)(b)(ii) of the Act is replaced by the following:(ii) to any person by way of gift, or(2) Subsection (1) applies to the 2016 and subsequent taxation years.13. (1) Paragraph 70(9)(a) of the English version of the Act is replaced by the following:(a) the property was, before the death of the taxpayer, used principally in a farming or fishing business carried on in Canada in which the taxpayer, the spouse or common-law partner of the taxpayer or a child or parent of the taxpayer was actively engaged on a regular and continuous basis (or, in the case of property used in the operation of a woodlot, was engaged to the extent required by a prescribed forest management plan in respect of that woodlot);(2) Paragraph 70(9.1)(c) of the English version of the Act is replaced by the following:(c) the property is, immediately before the beneficiary’s death, land or a depreciable property of a prescribed class of the trust that was used in a farming or fishing business carried on in Canada;(3) Paragraph 70(9.2)(a) of the Act is replaced by the following:(a) the property was, immediately before the death of the taxpayer, a share of the capital stock of a family farm or fishing corporation of the taxpayer or an interest in a family farm or fishing partnership of the taxpayer;(4) The portion of subparagraph 70(9.21)(a)(ii) of the Act before clause (A) is replaced by the following:(ii) where the property is, immediately before the death of the taxpayer, a share of the capital stock of a family farm or fishing corporation of the taxpayer,(5) The portion of subparagraph 70(9.21)(b)(ii) of the Act before clause (A) is replaced by the following:(ii) subject to subparagraph (iii), where the property is, immediately before the taxpayer’s death, a share of the capital stock of a family farm or fishing corporation of the taxpayer or an interest in a family farm or fishing partnership of the taxpayer,(6) Paragraph 70(9.3)(a) of the Act is replaced by the following:(a) the property (or property for which the property was substituted) was transferred to the trust by the settlor and was, immediately before that transfer, a share of the capital stock of a family farm or fishing corporation of the settlor or an interest in a family farm or fishing partnership of the settlor;(7) Subparagraphs 70(9.3)(c)(i) and (ii) of the Act are replaced by the following:(i) a share of the capital stock of a Canadian corporation that would, immediately before that beneficiary’s death, be a share of the capital stock of a family farm or fishing corporation of the settlor, if the settlor owned the share at that time and paragraph (a) of the definition “share of the capital stock of a family farm or fishing corporation” in subsection (10) were read without the words “in which the individual, the individual’s spouse or common-law partner, a child of the individual or a parent of the individual was actively engaged on a regular and continuous basis (or, in the case of property used in the operation of a woodlot, was engaged to the extent required by a prescribed forest management plan in respect of that woodlot)”, or(8) Subparagraph 70(9.3)(c)(iii) of the Act is replaced by the following:(iii) a partnership interest in a partnership that carried on in Canada a farming or fishing business in which it used all or substantially all of the property;(9) The portion of subparagraph 70(9.31)(a)(ii) of the Act before clause (A) is replaced by the following:(ii) where the property is, immediately before the beneficiary’s death, a share described in subparagraph (9.3)(c)(i),(10) The portion of subparagraph 70(9.31)(b)(ii) of the Act before clause (A) is replaced by the following:(ii) subject to subparagraph (iii), where the property is, immediately before the beneficiary’s death, a share described in subparagraph (9.3)(c)(i) or a partnership interest described in subparagraph (9.3)(c)(iii),(11) Subsection 70(9.8) of the Act is replaced by the following:Leased farm or fishing property
(9.8) For the purposes of subsections (9) and 14(1), paragraph 20(1)(b), subsection 73(3) and paragraph (d) of the definition “qualified farm or fishing property” in subsection 110.6(1), a property of an individual is, at a particular time, deemed to be used by the individual in a farming or fishing business carried on in Canada if, at that particular time, the property is being used, principally in the course of carrying on a farming or fishing business in Canada, by(a) a corporation, a share of the capital stock of which is a share of the capital stock of a family farm or fishing corporation of the individual, the individual’s spouse or common-law partner, a child of the individual or a parent of the individual; or(b) a partnership, a partnership interest in which is an interest in a family farm or fishing partnership of the individual, the individual’s spouse or common-law partner, a child of the individual or a parent of the individual.(12) The definitions “interest in a family farm partnership”, “interest in a family fishing partnership”, “share of the capital stock of a family farm corporation” and “share of the capital stock of a family fishing corporation” in subsection 70(10) of the Act are repealed.(13) The definition “child” in subsection 70(10) of the Act is amended by striking out “and” at the end of paragraph (b) and by adding the following after that paragraph:(b.1) a person who was a child of the taxpayer immediately before the death of the person’s spouse or common-law partner, and(14) Subsection 70(10) of the Act is amended by adding the following in alphabetical order:“interest in a family farm or fishing partnership”
« participation dans une société de personnes agricole ou de pêche familiale »
“interest in a family farm or fishing partnership”, of an individual at any time, means a partnership interest owned by the individual at that time if, at that time, all or substantially all of the fair market value of the property of the partnership was attributable to(a) property that has been used principally in the course of carrying on a farming or fishing business in Canada in which the individual, the individual’s spouse or common-law partner, a child of the individual or a parent of the individual was actively engaged on a regular and continuous basis (or, in the case of property used in the operation of a woodlot, was engaged to the extent required by a prescribed forest management plan in respect of that woodlot), by(i) the partnership,(ii) a corporation, a share of the capital stock of which was a share of the capital stock of a family farm or fishing corporation of the individual, the individual’s spouse or common-law partner, a child of the individual or a parent of the individual,(iii) a partnership, a partnership interest in which was an interest in a family farm or fishing partnership of the individual, the individual’s spouse or common-law partner, a child of the individual or a parent of the individual, or(iv) the individual, the individual’s spouse or common-law partner, a child of the individual or a parent of the individual,(b) shares of the capital stock or indebtedness of one or more corporations of which all or substantially all of the fair market value of the property was attributable to property described in paragraph (d),(c) partnership interests or indebtedness of one or more partnerships of which all or substantially all of the fair market value of the property was attributable to property described in paragraph (d), or(d) properties described in any of paragraphs (a) to (c);“share of the capital stock of a family farm or fishing corporation”
« action du capital-actions d’une société agricole ou de pêche familiale »
“share of the capital stock of a family farm or fishing corporation”, of an individual at any time, means a share of the capital stock of a corporation owned by the individual at that time if, at that time, all or substantially all of the fair market value of the property owned by the corporation was attributable to(a) property that has been used principally in the course of carrying on a farming or fishing business in Canada in which the individual, the individual’s spouse or common-law partner, a child of the individual or a parent of the individual was actively engaged on a regular and continuous basis (or, in the case of property used in the operation of a woodlot, was engaged to the extent required by a prescribed forest management plan in respect of that woodlot), by(i) the corporation,(ii) a corporation, a share of the capital stock of which was a share of the capital stock of a family farm or fishing corporation of the individual, the individual’s spouse or common-law partner, a child of the individual or a parent of the individual,(iii) a corporation controlled by a corporation described in subparagraph (i) or (ii),(iv) a partnership, a partnership interest in which was an interest in a family farm or fishing partnership of the individual, the individual’s spouse or common-law partner, a child of the individual or a parent of the individual, or(v) the individual, the individual’s spouse or common-law partner, a child of the individual or a parent of the individual,(b) shares of the capital stock or indebtedness of one or more corporations of which all or substantially all of the fair market value of the property was attributable to property described in paragraph (d),(c) partnership interests or indebtedness of one or more partnerships of which all or substantially all of the fair market value of the property was attributable to property described in paragraph (d), or(d) properties described in any of paragraphs (a) to (c).(15) Subsection 70(12) of the Act is replaced by the following:Value of NISA
(12) For the purpose of the definition “share of the capital stock of a family farm or fishing corporation” in subsection (10), the fair market value of a net income stabilization account is deemed to be nil.(16) Subsections (1) to (10) and (12) to (15) are deemed to have come into force on January 1, 2014.(17) Subsection (11) applies to dispositions and transfers that occur in the 2014 and subsequent taxation years.14. (1) Paragraph 73(3)(a) of the English version of the Act is replaced by the following:(a) the property was, before the transfer, land in Canada or depreciable property in Canada of a prescribed class, of the taxpayer, or any eligible capital property in respect of a farming or fishing business carried on in Canada by the taxpayer;(2) Paragraph 73(3)(c) of the English version of the Act is replaced by the following:(c) the property has been used principally in a farming or fishing business in which the taxpayer, the taxpayer’s spouse or common-law partner, a child of the taxpayer or a parent of the taxpayer was actively engaged on a regular and continuous basis (or, in the case of property used in the operation of a woodlot, was engaged to the extent required by a prescribed forest management plan in respect of that woodlot).(3) Paragraph 73(4)(b) of the Act is replaced by the following:(b) the property was, immediately before the transfer, a share of the capital stock of a family farm or fishing corporation of the taxpayer or an interest in a family farm or fishing partnership of the taxpayer (as defined in subsection 70(10)).(4) The portion of paragraph 73(4.1)(a) of the Act before subparagraph (i) is replaced by the following:(a) subject to paragraph (c), where the property was, immediately before the transfer, a share of the capital stock of a family farm or fishing corporation of the taxpayer or an interest in a family farm or fishing partnership of the taxpayer, the taxpayer is deemed to have disposed of the property at the time of the transfer for proceeds of disposition equal to,(5) Paragraph 73(4.1)(b) of the Act is replaced by the following:(b) subject to paragraph (c), where the property is, immediately before the transfer, a share of the capital stock of a family farm or fishing corporation of the taxpayer or an interest in a family farm or fishing partnership of the taxpayer, the child is deemed to have acquired the property for an amount equal to the taxpayer’s proceeds of disposition in respect of the disposition of the property determined under paragraph (a);(6) The portion of paragraph 73(4.1)(c) of the Act before subparagraph (i) is replaced by the following:(c) where the property is, immediately before the transfer, an interest in a family farm or fishing partnership of the taxpayer (other than a partnership interest to which subsection 100(3) applies), the taxpayer receives no consideration in respect of the transfer of the property and the taxpayer elects, in the taxpayer’s return of income under this Part for the taxation year which includes the time of the transfer, to have this paragraph apply in respect of the transfer of the property,(7) Subsections (1) to (6) apply to transfers that occur in the 2014 and subsequent taxation years.15. (1) Subsection 80.03(8) of the Act is replaced by the following:Lifetime capital gains exemption
(8) If, as a consequence of the disposition at any time by an individual of a property that is a qualified farm or fishing property of the individual or a qualified small business corporation share of the individual (as defined in subsection 110.6(1)), the individual is deemed by subsection (2) to have a capital gain at that time from the disposition of another property, for the purposes of sections 3, 74.3 and 111, as they apply for the purposes of section 110.6, the other property is deemed to be a qualified farm or fishing property of the individual or a qualified small business corporation share of the individual, as the case may be.(2) Subsection (1) applies to dispositions that occur in the 2014 and subsequent taxation years.16. (1) Clause 80.04(6)(a)(ii)(B) of the Act is replaced by the following:(B) if the debtor is an individual (other than a trust) or a graduated rate estate, the day that is one year after the taxpayer’s filing-due date for the year;(2) Subsection (1) applies to the 2016 and subsequent taxation years.17. (1) The definition “breeding animals” in subsection 80.3(1) of the Act is replaced by the following:“breeding animals”
« animaux reproducteurs »
“breeding animals” means deer, elk and other similar grazing ungulates, bovine cattle, bison, goats, sheep and horses that are over 12 months of age and are kept for breeding;(2) Subsection 80.3(1) of the Act is amended by adding the following in alphabetical order:“breeding bees”
« abeilles reproductrices »
“breeding bees” means bees that are not used principally to pollinate plants in greenhouses and larvae of those bees;“breeding bee stock”
« stock d’abeilles reproductrices »
“breeding bee stock”, of a taxpayer at any time, means a reasonable estimate of the quantity of a taxpayer’s breeding bees held at that time in the course of carrying on a farming business using a unit of measurement that is accepted as an industry standard;(3) Section 80.3 of the Act is amended by adding the following after subsection (4):Income deferral
(4.1) If in a taxation year a taxpayer carries on a farming business in a region that is at any time in the year a prescribed drought region or a prescribed region of flood or excessive moisture and the taxpayer’s breeding bee stock at the end of the year in respect of the business does not exceed 85% of the taxpayer’s breeding bee stock at the beginning of the year in respect of the business, there may be deducted in computing the taxpayer’s income from the business for the year the amount that the taxpayer claims, not exceeding the amount, if any, determined by the formula (A – B) × CwhereAis the amount by which(a) the total of all amounts included in computing the taxpayer’s income from the business for the year in respect of the sale of breeding bees in the yearexceeds(b) the total of all amounts deducted under paragraph 20(1)(n) in computing the taxpayer’s income from the business for the year in respect of an amount referred to in paragraph (a);Bis the total of all amounts deducted in computing the taxpayer’s income from the business for the year in respect of the acquisition of breeding bees; andCis(a) 30% if the taxpayer’s breeding bee stock in respect of the business at the end of the year exceeds 70% of the taxpayer’s breeding bee stock in respect of the business at the beginning of the year, and(b) 90% if the taxpayer’s breeding bee stock in respect of the business at the end of the year does not exceed 70% of the taxpayer’s breeding bee stock in respect of the business at the beginning of the year.(4) The portion of subsection 80.3(5) of the Act before paragraph (b) is replaced by the following:Inclusion of deferred amount
(5) An amount deducted under subsection (4) or (4.1) in computing the income of a taxpayer for a particular taxation year from a farming business carried on in a region prescribed under those subsections may, to the extent that the taxpayer so elects, be included in computing the taxpayer’s income from the business for a taxation year ending after the particular taxation year, and is, except to the extent that the amount has been included under this subsection in computing the taxpayer’s income from the business for a preceding taxation year after the particular year, deemed to be income of the taxpayer from the business for the taxation year of the taxpayer that is the earliest of(a) the first taxation year beginning after the end of the period or series of continuous periods, as the case may be, for which the region is prescribed under those subsections,(5) The portion of subsection 80.3(6) of the Act before paragraph (a) is replaced by the following:Subsections (2), (4) and (4.1) not applicable
(6) Subsections (2), (4) and (4.1) do not apply to a taxpayer in respect of a farming business for a taxation year(6) Section 80.3 of the Act is amended by adding the following after subsection (6):Measuring breeding bee stock
(7) In applying subsection (4.1) in respect of a taxation year, the unit of measurement used for estimating the quantity of a taxpayer’s breeding bee stock held in the course of carrying on a farming business at the end of the year is to be the same as that used for the beginning of the year.(7) Subsections (1) to (6) apply to the 2014 and subsequent taxation years.18. (1) Paragraph 81(1)(c) of the Act is replaced by the following:Ship or aircraft of non-residents
(c) the income for the year of a non-resident person earned in Canada from international shipping or from the operation of aircraft in international traffic, if the country in which the person is resident grants substantially similar relief for the year to persons resident in Canada;(2) Subsection (1) applies to taxation years that begin after July 12, 2013.19. (1) Section 87 of the Act is amended by adding the following after subsection (8.2):Anti-avoidance
(8.3) Subsection (8) does not apply in respect of a taxpayer’s shares of the capital stock of a predecessor foreign corporation that are exchanged for or become, on a foreign merger, shares of the capital stock of the new foreign corporation or the foreign parent corporation, if(a) the new foreign corporation is, at the time that is immediately after the foreign merger, a foreign affiliate of the taxpayer;(b) shares of the capital stock of the new foreign corporation are, at that time, excluded property (as defined in subsection 95(1)) of another foreign affiliate of the taxpayer; and(c) the foreign merger is part of a transaction or event or a series of transactions or events that includes a disposition of shares of the capital stock of the new foreign corporation, or property substituted for the shares, to(i) a person (other than a foreign affiliate of the taxpayer in respect of which the taxpayer has a qualifying interest (within the meaning assigned by paragraph 95(2)(m)) at the time of the transaction or event or throughout the series, as the case may be) with whom the taxpayer was dealing at arm’s length immediately after the transaction, event or series, or(ii) a partnership a member of which is, immediately after the transaction, event or series, a person described in subparagraph (i).(2) Subsection (1) applies to foreign merg-ers that occur after July 12, 2013.20. (1) Subsection 90(8) of the Act is amended by striking out “and” at the end of paragraph (b), by adding “and” at the end of paragraph (c) and by adding the following after paragraph (c):(d) subject to subsection (8.1), an upstream deposit owing to an eligible bank affiliate.(2) Section 90 of the Act is amended by adding the following after subsection (8):Upstream deposit — eligible bank affiliate
(8.1) For the purposes of this section, if a taxpayer is an eligible Canadian bank and an eligible bank affiliate of the taxpayer is owed, at any time in a particular taxation year of the affiliate or the immediately preceding taxation year, an upstream deposit,(a) the affiliate is deemed to make a loan to the taxpayer immediately before the end of the particular year equal to the amount determined by the following formula, where all amounts referred to in the formula are to be determined using Canadian currency: A – B – CwhereAis 90% of the average of all amounts each of which is, in respect of a calendar month that ends in the particular year, the greatest total amount at any time in the month of the upstream deposits owing to the affiliate,Bis the lesser of(i) the amount, if any, by which the affiliate’s excess liquidity for the par-ticular year exceeds the average of all amounts each of which is, in respect of a calendar month that ends in the particular year, the greatest total amount at any time in the month of eligible Canadian indebtedness owing to the affiliate, and(ii) the amount determined for A, andCis the amount, if any, by which the amount determined for A for the immediately preceding year exceeds the amount determined for B for the immediately preceding year; and(b) if the formula in paragraph (a) would, in the absence of section 257, result in a negative amount for the particular year,(i) the taxpayer is deemed to repay immediately before the end of the partic-ular year — in an amount equal to the absolute value of the negative amount and in the order in which they arose — loans made by the affiliate under paragraph (a) in a prior taxation year and not previously repaid, and(ii) the repayment is deemed to not be part of a series of loans or other transactions and repayments.(3) Subsection 90(15) of the Act is amended by adding the following in alphabetical order:“eligible bank affiliate”
« filiale bancaire admissible »
“eligible bank affiliate” has the same meaning as in subsection 95(2.43).“eligible Canadian bank”
« banque canadienne admissible »
“eligible Canadian bank” has the same meaning as in subsection 95(2.43).“eligible Canadian indebtedness”
« dettes canadiennes admissibles »
“eligible Canadian indebtedness” has the same meaning as in subsection 95(2.43).“excess liquidity”
« liquidités excédentaires »
“excess liquidity” has the same meaning as in subsection 95(2.43).“upstream deposit”
« dépôt en amont »
“upstream deposit” has the same meaning as in subsection 95(2.43).(4) Subsections (1) to (3) apply in respect of taxation years of a foreign affiliate of a taxpayer that begin after February 27, 2014.21. (1) The portion of subsection 93.1(1) of the Act before paragraph (a) is replaced by the following:Shares held by partnership
93.1 (1) For the purpose of determining whether a non-resident corporation is a foreign affiliate of a corporation resident in Canada for the purposes of subsections (2) and 20(12), sections 93 and 113, paragraph 128.1(1)(d), (and any regulations made for the purposes of those provisions), section 95 (to the extent that it is applied for the purposes of those provisions), subsection 95(2.2) and section 126, if, based on the assumptions contained in paragraph 96(1)(c), at any time shares of a class of the capital stock of a corporation are owned by a partnership or are deemed under this subsection to be owned by a partnership, then each member of the partnership is deemed to own at that time the number of those shares that is equal to the proportion of all those shares that(2) The portion of subsection 93.1(1) of the Act before paragraph (a), as enacted by subsection (1), is replaced by the following:Shares held by partnership
93.1 (1) For the purpose of determining whether a non-resident corporation is a foreign affiliate of a corporation resident in Canada for the purposes of subsections (2), 20(12) and 39(2.1), sections 90, 93 and 113, paragraph 128.1(1)(d), (and any regulations made for the purposes of those provisions), section 95 (to the extent that it is applied for the purposes of those provisions), paragraph 95(2)(g.04), subsection 95(2.2) and section 126, if, based on the assumptions contained in paragraph 96(1)(c), at any time shares of a class of the capital stock of a corporation are owned by a partnership or are deemed under this subsection to be owned by a partnership, then each member of the partnership is deemed to own at that time the number of those shares that is equal to the proportion of all those shares that(3) The portion of subsection 93.1(1) of the Act before paragraph (a), as enacted by subsection (2), is replaced by the following:Shares held by partnership
93.1 (1) For the purpose of determining whether a non-resident corporation is a foreign affiliate of a corporation resident in Canada for the purposes of subsections (2), 20(12) and 39(2.1), sections 90, 93 and 113, paragraphs 128.1(1)(c.3) and (d), section 212.3 and subsection 219.1(2), (and any regulations made for the purposes of those provisions), section 95 (to the extent that it is applied for the purposes of those provisions), paragraph 95(2)(g.04), subsection 95(2.2) and section 126, if, based on the assumptions contained in paragraph 96(1)(c), at any time shares of a class of the capital stock of a corporation are owned by a partnership or are deemed under this subsection to be owned by a partnership, then each member of the partnership is deemed to own at that time the number of those shares that is equal to the proportion of all those shares that(4) The portion of subsection 93.1(1) of the Act before paragraph (a), as enacted by subsection (3), is replaced by the following:Shares held by partnership
93.1 (1) For the purpose of determining whether a non-resident corporation is a foreign affiliate of a corporation resident in Canada for the purposes of a specified provision, if, based on the assumptions contained in paragraph 96(1)(c), at any time shares of a class of the capital stock of a corporation are owned by a partnership or are deemed under this subsection to be owned by a partnership, then each member of the partnership is deemed to own at that time the number of those shares that is equal to the proportion of all those shares that(5) Section 93.1 of the Act is amended by adding the following after subsection (1):Specified provisions for subsection (1)
(1.1) For the purposes of subsection (1), the specified provisions are(a) subsections (2), (5), 20(12) and 39(2.1), sections 90, 93, 93.3 and 113, paragraphs 128.1(1)(c.3) and (d), section 212.3, subsection 219.1(2) and section 233.4;(b) section 95 to the extent that section is applied for the purposes of the provisions referred to in paragraph (a);(c) any regulations made for the purposes of the provisions referred to in paragraph (a); and(d) paragraph 95(2)(g.04), subsection 95(2.2) and section 126.(6) Paragraph 93.1(2)(a) of the Act is replaced by the following:(a) for the purposes of sections 93 and 113 and any regulations made for the purposes of those sections, each member of the partnership (other than another partnership) is deemed to have received the proportion of the partnership dividend that(i) the fair market value of the member’s interest held, directly or indirectly through one or more other partnerships, in the partnership at that timeis of(ii) the fair market value of all the interests in the partnership held directly by members of the partnership at that time;(7) Paragraph 93.1(3)(c) of the Act is replaced by the following:(c) subsections 39(2.1), 40(3.6) and 87(8.3).(8) Section 93.1 of the Act is amended by adding the following after subsection (3):Partnership deemed to be corporation
(4) For the purpose of applying clause 95(2)(a)(ii)(D) in respect of an amount paid or payable by a partnership to a foreign affiliate, of a taxpayer, that is a member of the partnership or to another foreign affiliate of the taxpayer,(a) if, at any time, all the members (in this subsection referred to as “member affiliates”) of the partnership are foreign affiliates of the taxpayer,(i) the partnership is deemed to be, at that time in respect of the taxpayer and the member affiliates, a non-resident corporation without share capital, and(ii) all the membership interests in the partnership are deemed to be, at that time, equity interests in the corporation held by the member affiliates; and(b) if, at any time, all the member affiliates are resident in a particular country and the partnership does not carry on business outside the particular country, the partnership is deemed to be, at that time, resident in the particular country.Computing FAPI in respect of partnership
(5) For the purpose of applying a relevant provision in respect of a foreign affiliate of a taxpayer resident in Canada, if at any time the taxpayer is a partnership of which a particular corporation resident in Canada, or a foreign affiliate of the particular corporation, is a member and if, based on the relevant assumptions, the particular corporation and the taxpayer would be related, then(a) a non-resident corporation that is, at that time, a foreign affiliate of the particular corporation is deemed to be, at that time, a foreign affiliate of the taxpayer; and(b) the taxpayer is deemed to have, at that time, a qualifying interest in respect of that foreign affiliate if the particular corporation has, at that time, a qualifying interest in respect of the non-resident corporation.Relevant provisions and assumptions
(6) For the purposes of subsection (5),(a) the relevant provisions are(i) paragraph (b) of the description of A in the definition “foreign accrual property income” in subsection 95(1),(ii) in determining whether a property of a foreign affiliate of a taxpayer is excluded property of the affiliate, the description of B in the definition “foreign accrual property income” in subsection 95(1),(iii) paragraphs 95(2)(a) and (g), and(iv) subsections 95(2.2) and (2.21); and(b) the relevant assumptions are that(i) the partnership is a non-resident corporation having capital stock of a single class divided into 100 issued shares that each have full voting rights, and(ii) each member of the partnership (other than another partnership) owns, at any time, the proportion of the issued shares of that class that(A) the fair market value of the member’s interest held, directly or indirectly through one or more partnerships, in the partnership at that timeis of(B) the fair market value of all the interests in the partnership held directly by members of the partnership at that time.(9) Subsection (1) applies to taxation years of a foreign affiliate of a taxpayer that end after 1999.(10) Subsection (2) is deemed to have come into force on August 20, 2011.(11) Subsection (3) is deemed to have come into force on March 29, 2012.(12) Subsections (4) and (5) are deemed to have come into force on July 12, 2013. However, if a taxpayer elects under subsection (15), then in respect of the taxpayer, subsections (4) and (5) are deemed to have come into force on January 1, 2010 and subsection 93.1(1.1) of the Act, as enacted by subsection (5), is to be read(a) in respect of any time that is after 2009 and before August 20, 2011 as follows:(1.1) For the purposes of subsection (1), the specified provisions are(a) subsections (2), (5) and 20(12), sections 93 and 113 and paragraph 128.1(1)(d);(b) section 95 to the extent that section is applied for the purposes of the provisions referred to in paragraph (a);(c) any regulations made for the purposes of the provisions referred to in paragraph (a); and(d) subsection 95(2.2) and section 126.(b) in respect of any time that is after August 19, 2011 and before March 29, 2012 as follows:(1.1) For the purposes of subsection (1), the specified provisions are(a) subsections (2), (5), 20(12) and 39(2.1), sections 90, 93 and 113 and paragraph 128.1(1)(d);(b) section 95 to the extent that section is applied for the purposes of the provisions referred to in paragraph (a);(c) any regulations made for the purposes of the provisions referred to in paragraph (a); and(d) paragraph 95(2)(g.04), subsection 95(2.2) and section 126.(c) in respect of any time that is after March 28, 2012 and before July 12, 2013 as follows:(1.1) For the purposes of subsection (1), the specified provisions are(a) subsections (2), (5), 20(12) and 39(2.1), sections 90, 93 and 113, paragraphs 128.1(1)(c.3) and (d), section 212.3 and subsection 219.1(2);(b) section 95 to the extent that section is applied for the purposes of the provisions referred to in paragraph (a);(c) any regulations made for the purposes of the provisions referred to in paragraph (a); and(d) paragraph 95(2)(g.04), subsection 95(2.2) and section 126.(13) Subsection (6) applies to dividends received after November 1999.(14) Subsection (7) and subsection 93.1(4) of the Act, as enacted by subsection (8), apply in respect of taxation years of a foreign affiliate of a taxpayer that end after July 12, 2013.(15) Subsections 93.1(5) and (6) of the Act, as enacted by subsection (8), apply in respect of taxation years of foreign affiliates of a taxpayer that end after July 12, 2013. However, if the taxpayer elects in writing under this subsection in respect of all its foreign affiliates and files the election with the Minister of National Revenue on or before the day that is the later of the day that an information return referred to in subsection 229(1) of the Income Tax Regulations is required (or would be required if the taxpayer were a Canadian partnership), pursuant to subsections 229(5) and (6) of the Income Tax Regulations, to be filed in respect of the fiscal period of the taxpayer that includes the day on which this Act receives royal assent and the day that is one year after the day on which this Act receives royal assent, then subsections 93.1(5) and (6) of the Act, as enacted by subsection (8), are deemed to have come into force on January 1, 2010.22. (1) The Act is amended by adding the following after section 93.1:Definitions
93.2 (1) The definitions in this subsection apply in this section.“equity interest”
« participation »
“equity interest”, in a non-resident corporation without share capital, means any right, whether absolute or contingent, conferred by the non-resident corporation to receive, either immediately or in the future, an amount that can reasonably be regarded as all or any part of the capital, revenue or income of the non-resident corporation, but does not include a right as creditor. “non-resident corporation without share capital”
« société non-résidente sans capital-actions »
“non-resident corporation without share capital” means a non-resident corporation that, determined without reference to this section, does not have capital divided into shares.Non-resident corporation without share capital
(2) For the purposes of this Act,(a) equity interests in a non-resident corporation without share capital that have identical rights and obligations, determined without reference to proportionate differences in all of those rights and obligations, are deemed to be shares of a separate class of the capital stock of the corporation;(b) the corporation is deemed to have 100 issued and outstanding shares of each class of its capital stock;(c) each person or partnership that holds, at any time, an equity interest in a particular class of the capital stock of the corporation is deemed to own, at that time, that number of shares of the particular class that is equal to the proportion of 100 that(i) the fair market value, at that time, of all the equity interests of the particular class held by the person or partnershipis of(ii) the fair market value, at that time, of all the equity interests of the particular class; and(d) shares of a particular class of the capital stock of the corporation are deemed to have rights and obligations that are the same as those of the corresponding equity interests.Non-resident corporation without share capital
(3) For the purposes of section 51, subsection 85.1(3), section 86 and paragraph 95(2)(c),(a) subject to paragraph (b), if at any time a taxpayer resident in Canada or a foreign affiliate of the taxpayer (in this subsection referred to as the “vendor”) disposes of capital property that is shares of the capital stock of a foreign affiliate of the taxpayer, or a debt obligation owing to the taxpayer by the affiliate, to — or exchanges the shares or debt for shares of the capital stock of — a non-resident corporation without share capital, that is immediately after that time a foreign affiliate of the taxpayer, in a manner that increases the fair market value of a class of shares of the capital stock of the non-resident corporation, the non-resident corporation is deemed to have issued, and the vendor is deemed to have received, new shares of the class as consideration in respect of the disposition or exchange; and(b) if the taxpayer elects under this paragraph and files the election in writing with the Minister on or before its filing-due date for the taxation year that includes the day on which the disposition or exchange occurs, paragraph (a) does not apply to the disposition or exchange.Definition of “Australian trust”
93.3 (1) In this section, “Australian trust”, at any time, means a trust in respect of which the following apply at that time:(a) in the absence of subsection (3), the trust would be described in paragraph (h) of the definition “exempt foreign trust” in subsection 94(1);(b) the trust is resident in Australia;(c) the interest of each beneficiary under the trust is described by reference to units of the trust; and(d) the liability of each beneficiary under the trust is limited by the operation of any law governing the trust.Conditions for subsection (3)
(2) Subsection (3) applies at any time to a taxpayer resident in Canada in respect of a trust if(a) a non-resident corporation is at that time beneficially interested in the trust;(b) the non-resident corporation is at that time a foreign affiliate of the taxpayer in respect of which the taxpayer has a qualifying interest;(c) the trust is at that time an Australian trust;(d) the total fair market value at that time of all fixed interests (in this section as defined in subsection 94(1)) of a class in the trust held by the non-resident corporation, or persons or partnerships that do not deal at arm’s length with the non-resident corporation, is at least 10% of the total fair market value at that time of all fixed interests of the class; and(e) unless the non-resident corporation first acquires a beneficial interest in the trust at that time, immediately before that time (referred to in this paragraph as the “preceding time”) subsection (3) applied(i) to the taxpayer in respect of the trust, or(ii) to a corporation resident in Canada, that at the preceding time did not deal at arm’s length with the taxpayer, in respect of the trust.Australian trusts
(3) If this subsection applies at any time to a taxpayer resident in Canada in respect of a trust, the following rules apply at that time for the specified purposes:(a) the trust is deemed to be a non-resident corporation that is resident in Australia and not to be a trust;(b) each particular class of fixed interests in the trust is deemed to be a separate class of 100 issued shares, of the capital stock of the non-resident corporation, that have the same attributes as the interests of the particular class;(c) each beneficiary under the trust is deemed to hold the number of shares of each separate class described in paragraph (b) equal to the proportion of 100 that the fair market value at that time of that beneficiary’s fixed interests in the corresponding particular class of fixed interests in the trust is of the fair market value at that time of all fixed interests in the particular class;(d) the non-resident corporation is deemed to be controlled by the taxpayer resident in Canada — a foreign affiliate of which is referred to in paragraph (2)(b) and is beneficially interested in the trust — that has the greatest equity percentage in the non-resident corporation;(e) a particular foreign affiliate of the taxpayer in which the taxpayer has a direct equity percentage (as defined in subsection 95(4)) at a particular time, and that is not a controlled foreign affiliate of the taxpayer at that time, is deemed to be a controlled foreign affiliate of the taxpayer at that time if, at that time,(i) the particular affiliate has an equity percentage (as defined in subsection 95(4)) in the foreign affiliate referred to in paragraph (2)(b), or(ii) the particular affiliate is the foreign affiliate referred to in paragraph (2)(b); and(f) section 94.2 does not apply to the taxpayer in respect of the trust.Specified purposes
(4) For the purposes of subsection (3), the specified purposes are(a) the determination, in respect of an interest in an Australian trust, of the Canadian tax results (as defined in subsection 261(1)) of the taxpayer resident in Canada referred to in subsection (3) for a taxation year in respect of shares of the capital stock of a foreign affiliate of the taxpayer;(b) the filing obligations of the taxpayer under section 233.4; and(c) if the taxpayer is a corporation resident in Canada, the application of section 212.3 in respect of an investment (as defined in subsection 212.3(10)) by the taxpayer.Mergers
(5) For the purposes of this section,(a) if there has been an amalgamation to which subsection 87(1) applies, the new corporation referred to in that subsection is deemed to be the same corporation as, and a continuation of, each predecessor corporation referred to in that subsection; and(b) if there has been a winding-up to which subsection 88(1) applies, the parent referred to in that subsection is deemed to be the same corporation as, and a continuation of, the subsidiary referred to in that subsection.(2) Section 93.2 of the Act, as enacted by subsection (1), applies in respect of taxation years of non-resident corporations that end after 1994 except that(a) if a taxpayer elects in writing under this subsection and files the election with the Minister of National Revenue on or before the day that is the later of the taxpayer’s filing-due date for the taxpayer’s taxation year that includes the day on which this Act receives royal assent and the day that is one year after the day on which this Act receives royal assent, then section 93.2 of the Act, as enacted by subsection (1), applies, in respect of the taxpayer, in respect of taxation years of non-resident corporations that end after July 12, 2013;(b) in respect of dispositions that occur before July 12, 2013, section 93.2 of the Act, as enacted by subsection (1), is to be read without reference to its subsection (3); and(c) in respect of dispositions that occur after July 11, 2013 and before October 10, 2014, the reference in paragraph 93.2(3)(b), as enacted by subsection (1), to the taxpayer’s “filing-due date” is to be read as the filing-due date for the taxpayer’s taxation year that includes the day on which this Act receives royal assent.(3) Section 93.3 of the Act, as enacted by subsection (1), is deemed to have come into force on July 12, 2013. However, if a corporation resident in Canada and each other corporation resident in Canada that, at any time after 2005 and before July 12, 2013, was both related to the corporation and had a foreign affiliate (determined as if the reference in paragraph (b) of the definition “equity percentage” in subsection 95(4) of the Act to “any corporation” were a reference to “any corporation other than a corporation resident in Canada”) that was beneficially interested in an Australian trust (as defined in subsection 93.3(1) of the Act, as enacted by subsection (1)), jointly elect in writing under this subsection and file the election with the Minister of National Revenue on or before the day that is one year after the day on which this Act receives royal assent, then in respect of each corporation that has elected under this subsection, section 93.3 of the Act, as enacted by subsection (1),(a) is deemed to have come into force on January 1, 2006; and(b) before July 12, 2013 is to be read as if it contained the following after subsection (5):(6) For the purpose of determining whether a non-resident corporation is a foreign affiliate of a corporation resident in Canada for the purposes of this section, if, based on the assumptions contained in paragraph 96(1)(c), at any time shares of a class of the capital stock of a corporation are owned by a partnership or are deemed under this subsection to be owned by a partnership, then each member of the partnership is deemed to own at that time the number of those shares that is equal to the proportion of all those shares that(a) the fair market value of the member’s interest in the partnership at that timeis of(b) the fair market value of all members’ interests in the partnership at that time.23. (1) The definitions “connected con-tributor” and “resident contributor” in subsection 94(1) of the Act are replaced by the following:“connected contributor”
« contribuant rattaché »
“connected contributor”, to a trust at a particular time, means a contributor to the trust at the particular time, other than a person all of whose contributions to the trust made at or before the particular time were made at a non-resident time of the person.“resident contributor”
« contribuant résident »
“resident contributor”, to a trust at any time, means a person that is, at that time, resident in Canada and a contributor to the trust, but — if the trust was created before 1960 by a person who was non-resident when the trust was created — does not include an individual (other than a trust) who has not, after 1959, made a contribution to the trust.(2) Paragraph 94(4)(b) of the Act is replaced by the following:(b) subsections (8.1) and (8.2), paragraph (14)(a), subsections 70(6) and 73(1), the definition “Canadian partnership” in subsection 102(1), paragraph 107.4(1)(c), the definition “qualified disability trust” in subsection 122(3) and paragraph (a) of the definition “mutual fund trust” in subsection 132(6);(3) Subparagraph 94(11)(b)(ii) of the Act is replaced by the following:(ii) would be deemed to be resident in Canada immediately before that time because of paragraph (3)(a) if this section, as it read in its application to the 2013 taxation year, were read without reference to paragraph (a) of the definition “connected contributor” in subsection (1) and paragraph (a) of the definition “resident contributor” in that subsection,(4) Subsections (1) and (3) apply to taxation years that end after February 10, 2014, except that those subsections do not apply in respect of a trust to taxation years that end before 2015 if the following conditions are satisfied:(a) no contributions are made to the trust after February 10, 2014 and before 2015; and(b) if the trust were to have a particular taxation year that ended after 2013 and before February 11, 2014,(i) the trust would be non-resident for the purpose of computing its income for the particular year, and(ii) if the definitions “connected contrib-utor” and “resident contributor” in subsection 94(1) of the Act were read for the particular year without reference to their paragraphs (a), the trust would be resident in Canada for the purpose of computing its income for the particular year.(5) Subsection (2) applies to the 2016 and subsequent taxation years.24. (1) The portion of subsection 94.2(1) of the Act before paragraph (a) is replaced by the following:Investments in non-resident commercial trusts
94.2 (1) Subsection (2) applies to a beneficiary under a trust, and to any particular person of which any such beneficiary is a controlled foreign affiliate, at any time if(2) Subsection (1) applies to taxation years that end after February 10, 2014, except that it does not apply in respect of a trust to taxation years that end before 2015 if the following conditions are satisfied:(a) no contributions are made to the trust after February 10, 2014 and before 2015; and(b) if the trust were to have a particular taxation year that ended after 2013 and before February 11, 2014,(i) the trust would be non-resident for the purpose of computing its income for the particular year, and(ii) if the definitions “connected contrib-utor” and “resident contributor” in subsection 94(1) of the Act were read for the particular year without reference to their paragraphs (a), the trust would be resident in Canada for the purpose of computing its income for the particular year.25. (1) The definition “foreign accrual tax” in subsection 95(1) of the Act is replaced by the following:“foreign accrual tax”
« impôt étranger accumulé »
“foreign accrual tax” applicable to any amount included under subsection 91(1) in computing a taxpayer’s income for a taxation year of the taxpayer in respect of a particular foreign affiliate of the taxpayer means, subject to subsection 91(4.1),(a) the portion of any income or profits tax that may reasonably be regarded as applicable to that amount and that is paid by(i) the particular affiliate,(ii) another foreign affiliate (in paragraph (b) referred to as the “shareholder affiliate”) of the taxpayer where(A) the other affiliate has an equity percentage in the particular affiliate,(B) the income or profits tax is paid to a country other than Canada, and(C) the other affiliate, and not the particular affiliate, is liable for that tax under the laws of that country, or(iii) another foreign affiliate of the taxpayer in respect of a dividend received, directly or indirectly, from the particular affiliate, if that other affiliate has an equity percentage in the particular affiliate, and(b) any amount prescribed in respect of the particular affiliate or the shareholder affiliate, as the case may be, to be foreign accrual tax applicable to that amount;(2) The definition “non-qualifying country” in subsection 95(1) of the Act is replaced by the following:“non-qualifying country”
« pays non admissible »
“non-qualifying country”, at any time, means a country or other jurisdiction(a) with which Canada neither has a tax treaty at that time nor has, before that time, signed an agreement that will, on coming into effect, be a tax treaty,(a.1) for which, if the time is after February 2014, the Convention on Mutual Administrative Assistance in Tax Matters — concluded at Strasbourg on January 25, 1988, as amended from time to time by a protocol, or other international instrument, as ratified by Canada — is at that time not in force and does not have effect,(b) with which Canada does not have a comprehensive tax information exchange agreement that is in force and has effect at that time, and(c) with which Canada has, more than 60 months before that time, either(i) begun negotiations for a comprehensive tax information exchange agreement (unless that time is before 2014 and Canada was, on March 19, 2007, in the course of negotiating a comprehensive tax information exchange agreement with that jurisdiction), or(ii) sought, by written invitation, to enter into negotiations for a comprehensive tax information exchange agreement (unless that time is before 2014 and Canada was, on March 19, 2007, in the course of negotiating a comprehensive tax information exchange agreement with that jurisdiction);(3) Paragraph (a) of the description of H in the definition “foreign accrual property income” in subsection 95(1) of the Act is replaced by the following:(a) if the affiliate was a member of a partnership at the end of the fiscal period of the partnership that ended in the year and the partnership received a dividend at a particular time in that fiscal period from a corporation that would be, if the reference in subsection 93.1(1) to “corporation resident in Canada” were a reference to “taxpayer resident in Canada”, a foreign affiliate of the taxpayer for the purposes of sections 93 and 113 at that particular time, then the portion of the amount of that dividend that is included in the value determined for A in respect of the affiliate for the year and that would be, if the reference in subsection 93.1(2) to “corporation resident in Canada” were a reference to “taxpayer resident in Canada”, deemed by paragraph 93.1(2)(a) to have been received by the affiliate for the purposes of sections 93 and 113, and(4) Section 95 of the Act is amended by adding the following after subsection (1):British Virgin Islands
(1.1) For the purposes of paragraph (b) of the definition “non-qualifying country” in subsection (1), the British Overseas Territory of the British Virgin Islands is deemed to have a comprehensive tax information exchange agreement with Canada that is in force and has effect after 2013 and before March 11, 2014.(5) Subparagraph 95(2)(a)(i) of the Act is replaced by the following:(i) the income or loss(A) is derived by the particular foreign affiliate from activities of the particular foreign affiliate, or of a particular partnership of which the particular foreign affiliate is a member, to the extent that the activities occur while the particular affiliate is a qualifying member of the particular partnership that can reasonably be considered to be directly related to active business activities carried on in a country other than Canada by(I) another foreign affiliate of the taxpayer in respect of which the taxpayer has a qualifying interest throughout the year,(II) a life insurance corporation that is resident in Canada throughout the year and that is1. the taxpayer,2. a person who controls the taxpayer,3. a person controlled by the taxpayer, or4. a person controlled by a person who controls the taxpayer,(III) the particular foreign affiliate or a partnership of which the particular foreign affiliate is a member, to the extent that the activities occur while the particular affiliate is a qualifying member of the partnership, or(IV) a partnership of which another foreign affiliate of the taxpayer, in respect of which the taxpayer has a qualifying interest throughout the year, is a member, to the extent that the activities occur while the other affiliate is a qualifying member of the partnership, and(B) if any of subclauses (A)(I), (II) and (IV) applies, would be included in computing the amount prescribed to be the earnings or loss, from an active business carried on in a country other than Canada, of(I) that other foreign affiliate referred to in subclause (A)(I) or (IV), if the income were earned by it, or(II) the life insurance corporation referred to in subclause (A)(II), if that life insurance corporation were a foreign affiliate of the taxpayer and the income were earned by it,(6) Clause 95(2)(a)(ii)(D) of the Act is amended by adding “and” at the end of subclause (III) and by replacing subclauses (IV) and (V) with the following:(IV) in respect of each of the second affiliate and the third affiliate, for each of their taxation years (each of which is referred to in this subclause as a “relevant taxation year”) that end in the year, either1. that affiliate is subject to income taxation in a country other than Canada in that relevant taxation year, or2. the members or shareholders of that affiliate (which, for the purposes of this sub-subclause, includes a person that has, directly or indirectly, an interest, or for civil law a right, in a share of the capital stock of, or in an equity interest in, the affiliate) at the end of that relevant taxation year are subject to income taxation in a country other than Canada on, in aggregate, all or substantially all of the income of that affiliate for that relevant taxation year in their taxation years in which that relevant taxation year ends,(7) The portion of subparagraph 95(2)(a.1)(ii) of the English version of the Act before clause (A) is replaced by the following:(ii) the property was not(8) Subparagraph 95(2)(a.1)(ii) of the Act is amended by striking out “nor” at the end of clause (A), by adding “or” at the end of clause (B) and by adding the following after clause (B):(C) an indebtedness, or a lease obligation, of a person resident in Canada or in respect of a business carried on in Canada, that was purchased and sold by the affiliate on its own account,(9) 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 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) or 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)) 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,(10) Subsection 95(2) of the Act is amended by adding the following after paragraph (a.2):(a.21) for the purposes of paragraph (a.2), one or more risks insured by a foreign affiliate of a taxpayer that, if this Act were read without reference to this paragraph, would not be risks in respect of a person, property or business described in any of subparagraphs (a.2)(i) to (iii) (in this paragraph referred to as the “foreign policy pool”) are deemed to be risks in respect of a person resident in Canada if(i) the affiliate, or a person or partnership that does not deal at arm’s length with the affiliate, enters into one or more agreements or arrangements in respect of the foreign policy pool,(ii) the affiliate’s risk of loss or opportunity for gain or profit in respect of the foreign policy pool, in combination with its risk of loss or opportunity for gain or profit in respect of the agreements or arrangements, can reasonably be considered to be — or could reasonably be considered to be if the affiliate had entered into the agreements or arrangements entered into by the person or partnership — determined, in whole or in part, by reference to one or more criteria in respect of one or more risks insured by another person or partnership (in this paragraph referred to as the “tracked policy pool”), which criteria are(A) the fair market value of the tracked policy pool,(B) the revenue, income, loss or cash flow from the tracked policy pool, or(C) any other similar criteria, and(iii) 10% or more of the tracked policy pool consists of risks in respect of a person, property or business described in any of subparagraphs (a.2)(i) to (iii);(a.22) if the conditions in paragraph (a.21) are satisfied in respect of a foreign affiliate of a taxpayer, or a foreign affiliate of another taxpayer if that other taxpayer does not deal at arm’s length with the taxpayer, and a particular foreign affiliate of the taxpayer, or a partnership of which the particular affiliate is a member, has entered into one or more agreements or arrangements described in that paragraph,(i) 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 to the extent that those activities can reasonably be considered to be performed for the purpose of obtaining the result described in subparagraph (a.21)(ii), and(ii) any income of the particular affiliate 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;(11) The portion of paragraph 95(2)(a.3) 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 derived directly or indirectly from indebtedness and lease obligations (other than excluded revenue or revenue that 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)) was derived directly or indirectly from indebtedness and lease obligations of non-resident persons with whom the affiliate deals at arm’s length and, where this paragraph applies to include income of the affiliate for the year in the income of the affiliate from a business other than an active business,(12) The portion of clause 95(2)(b)(ii)(B) of the Act before subclause (I) is replaced by the following:(B) a relevant person who does not deal at arm’s length with(13) Subparagraph 95(2)(l)(iv) of the Act is amended by striking out “or” at the end of clause (B), by adding “or” at the end of clause (C) and by adding the following after clause (C):(D) a partnership each member of which is a corporation described in any of clauses (A) to (C);(14) The portion of paragraph 95(2)(n) of the Act before subparagraph (i) is replaced by the following:(n) in applying paragraphs (a) and (g), paragraph (b) of the description of A in the formula in the definition “foreign accrual property income” in subsection (1), subsections (2.2), (2.21) and 93.1(5) and paragraph (d) of the definition “exempt earnings”, and paragraph (c) of the definition “exempt loss”, in subsection 5907(1) of the Income Tax Regulations, a non-resident corporation is deemed to be, at any time, a foreign affiliate of a particular corporation resident in Canada, and a foreign affiliate of the particular corporation in respect of which the particular corporation has a qualifying interest, if at that time(15) Subparagraph 95(2)(u)(i) of the Act, as it read immediately before it was repealed by subsection 70(21) of the Technical Tax Amendments Act, 2012, is replaced by the following:(i) the entity is deemed to be a member of the other partnership for the purposes of(A) subparagraph (ii),(B) applying the reference, in paragraph (a), to “a member” of a partnership,(C) paragraphs (a.1) to (b), (g.03), (j.1) to (k.1) and (o),(D) paragraphs (b) and (c) of the definition “investment business” in subsection (1),(E) the definition “taxable Canadian business” in subsection (1), and(F) subsection 93.1(2), and(16) Paragraph 95(2)(u) of the Act, as amended by subsection (15), is repealed.(17) Section 95 of the Act is amended by adding the following after subsection (2.1):Rule for definition “investment business”
(2.11) A taxpayer or a foreign affiliate of the taxpayer, as the case may be, is deemed not to have established that the conditions in subparagraph (a)(i) of the definition “investment business” in subsection (1) have been satisfied throughout a period in a particular taxation year of the affiliate unless(a) throughout the period the taxpayer is(i) a particular corporation resident in Canada(A) that is a bank listed in Schedule I to the Bank Act, a trust company, a credit union, an insurance corporation or a trader or dealer in securities or commodities that is a registered securities dealer, the business activities of which are subject to the supervision of a regulating authority such as the Superintendent of Financial Institutions, a similar regulating authority of a province or an authority of, or approved by, a province to regulate traders or dealers in securities or commodities, and(B) that is not a corporation the fair market value of any share of the capital stock of which is determined primarily by reference to one or more of the fair market value of, any revenue, income or cash flow from, any profits or gains from the disposition of, or any other similar criteria in respect of, property the fair market value of which is less than 90% of the fair market value of all of the property of the corporation,(ii) a corporation resident in Canada(A) of which(I) the particular corporation described in subparagraph (i) is a subsidiary controlled corporation, or(II) a corporation described in this subparagraph is a subsidiary wholly-owned corporation, and(B) that is not a corporation the fair market value of any share of the capital stock of which is determined primarily by reference to one or more of the fair market value of, any revenue, income or cash flow from, any profits or gains from the disposition of, or any other similar criteria in respect of, property the fair market value of which is less than 90% of the fair market value of all of the property of the corporation,(iii) a corporation resident in Canada each of the shares of the capital stock of which is owned by a corporation that is described in this subparagraph or in subparagraph (i) or (ii), or(iv) a partnership(A) each member of which is a corporation described in any of subparagraphs (i) to (iii), or another partnership described in this subparagraph, or(B) in respect of which the following conditions are satisfied:(I) the partnership is a registered securities dealer, the business activities of which are subject to the supervision of a regulating authority described in clause (a)(i)(A), and(II) the share of the total income or loss of the partnership of a majority-interest partner of the partnership that is either a corporation resident in Canada or a Canadian partnership —together with the share of each corporation resident in Canada that is affiliated with the majority-interest partner — is equal to all or substantially all of the total income or loss of the partnership; and(b) either(i) throughout the period the particular corporation described in subparagraph (a)(i) has, or is deemed for certain purposes to have, $2 billion or more of equity(A) if the particular corporation is a bank, under the Bank Act,(B) if the particular corporation is a trust company, under the Trust and Loan Companies Act, or(C) if the particular corporation is an insurance corporation, under the Insurance Companies Act, or(ii) more than 50% of the total of all amounts each of which is an amount of taxable capital employed in Canada (within the meaning assigned by Part I.3) of the taxpayer — or of a corporation resident in Canada that is affiliated with the taxpayer — for the taxation year of the taxpayer or of the affiliated corporation, as the case may be, that ends in the particular year is attributable to a business carried on in Canada, the activities of which are subject to the supervision of a regulating authority such as the Superintendent of Financial Institutions, a similar regulating authority of a province or an authority of, or approved by, a province to regulate traders or dealers in securities or commodities.(18) Section 95 of the Act is amended by adding the following after subsection (2.3):Application of paragraphs (2)(a.1) and (a.3)
(2.31) Paragraphs (2)(a.1) and (a.3) do not apply to a controlled foreign affiliate (for the purposes of section 17) of an eligible Canadian bank (as defined in subsection (2.43)) in respect of activities carried out to earn income from a property, other than a specified property of the affiliate, if(a) the affiliate sells the property, or performs services as an agent in relation to a purchase or sale of the property, and it is reasonable to conclude that the cost to any person of the property is relevant in computing the income from(i) a business carried on by the bank or a person resident in Canada with whom the bank does not deal at arm’s length, or(ii) a business carried on in Canada by a non-resident person with whom the bank does not deal at arm’s length;(b) the property has a readily available fair market value and(i) is listed on a recognized stock exchange,(ii) would be a mark-to-market property (as defined in subsection 142.2(1)) of the bank if it were owned by the bank, or(iii) is a debt obligation owing by the bank that would be a mark-to-market property (as defined in subsection 142.2(1)) of the affiliate if(A) the affiliate were the taxpayer referred to in that definition, and(B) the definition “specified debt obligation” in subsection 142.2(1) were read without reference to its paragraph (d);(c) the purchase and sale of the property by the affiliate, or services performed by the affiliate as agent in respect of the purchase or sale, are made(i) on terms and conditions that are substantially the same as the terms and conditions of similar purchases or sales of, or services performed in respect of the purchase or sale of, such property by persons dealing at arm’s length,(ii) in the course of a business(A) that regularly includes trading or dealing in securities principally with persons with whom the affiliate deals at arm’s length, and(B) that is principally carried on through a permanent establishment in a country other than Canada, and(iii) for the purpose of enabling the purchase or sale of the property by a particular person who deals at arm’s length with the affiliate and the bank; and(d) the affiliate is a foreign bank or a trader or dealer in securities and the activities of the business are regulated(i) under the laws of the country under whose laws the affiliate is governed and any of exists, was (unless the affiliate was continued in any jurisdiction) formed or organized, or was last continued, and under the laws of each country in which the business is carried on through a permanent establishment in that country,(ii) under the laws of the country (other than Canada) in which the business is principally carried on, or(iii) if the affiliate is related to a corporation, under the laws of the country under whose laws that related corporation is governed and any of exists, was (unless that related corporation was continued in any jurisdiction) formed or organized, or was last continued, if those regulating laws are recognized under the laws of the country in which the business is principally carried on and all those countries are members of the European Union.Definition of “specified property”
(2.32) For the purposes of subsection (2.31), “specified property”, of a foreign affiliate, means a property that is owned by the affiliate for more than 10 days and that is(a) a share of the capital stock of a corporation resident in Canada;(b) a property traded on a stock exchange located in Canada and not traded on a stock exchange located in the jurisdiction in which the affiliate is resident; or(c) a debt obligation(i) of a corporation resident in Canada,(ii) of a trust or partnership, units of which are traded on a stock exchange located in Canada, or(iii) of, or guaranteed by, the Government of Canada, the government of a province, an agent of a province, a municipality in Canada or a municipal or public body performing a function of government in Canada.(19) The portion of subsection 95(2.4) of the French version of the Act before subparagraph (a)(i) is replaced by the following:Application de l’alinéa (2)a.3)
(2.4) L’alinéa (2)a.3) ne s’applique pas à une société étrangère affiliée d’un contribuable pour ce qui est du revenu qu’elle tire directement ou indirectement de dettes, dans la mesure où, à la fois :a) elle a tiré ce revenu dans le cours des activités d’une entreprise menée principalement avec des personnes avec lesquelles elle n’a aucun lien de dépendance et qu’elle exploite à titre de banque étrangère, de société de fiducie, de caisse de crédit, de compagnie d’assurance ou de négociateur ou courtier en valeurs mobilières ou en marchandises, dont les activités sont régies par les lois des pays ci-après, selon le cas :(20) Paragraph 95(2.4)(b) of the Act is replaced by the following:(b) all the following conditions are satisfied:(i) the income is derived by the affiliate from trading or dealing in the indebtedness (which, for this purpose, consists of income from the actual trading or dealing in the indebtedness and interest earned by the affiliate during a short term holding period on indebtedness acquired by it for the purpose of the trading or dealing) directly or indirectly with persons (in this subsection referred to as “regular custom-ers”) that(A) deal at arm’s length with the affiliate, and(B) are resident, or carry on business through a permanent establishment, in a country other than Canada,(ii) the affiliate has a substantial market presence in the country, and(iii) one or more persons that deal at arm’s length with the affiliate and are resident, or carry on business through a permanent establishment, in the country(A) carry on a business(I) that competes in the country with the business of the affiliate, and(II) the activities of which are regulated under the laws of the country or, where the country is a member of the European Union, any country that is a member of the European Union, in the same manner as are the activities of the business of the affiliate, and(B) have a substantial market presence in the country,(21) Section 95 of the Act is amended by adding the following after subsection (2.42):Definitions —subsections (2.43) to (2.45)
(2.43) The following definitions apply in this subsection and subsections (2.44) and (2.45).“Canadian indebtedness”
« dettes canadiennes »
“Canadian indebtedness” means indebtedness (other than upstream deposits) owed by persons resident in Canada or in respect of businesses carried on in Canada.“eligible bank affiliate”
« filiale bancaire admissible »
“eligible bank affiliate”, of an eligible Canadian bank at any time, means a foreign bank that, at that time, is a controlled foreign affiliate (for the purposes of section 17) of the eligible Canadian bank and is described in subparagraph (a)(i) of the definition “investment business” in subsection (1).“eligible Canadian bank”
« banque canadienne admissible »
“eligible Canadian bank” means a bank listed in Schedule I to the Bank Act.“eligible Canadian indebtedness”
« dettes canadiennes admissibles »
“eligible Canadian indebtedness”, owing to an eligible bank affiliate of an eligible Canadian bank, means bonds, debentures, notes or similar obligations of the Government of Canada, the government of a province, an agent of a province, a municipality in Canada or a municipal or public body performing a function of government in Canada, that are owing to the affiliate, other than property in respect of which paragraph (2)(a.3) does not apply because of subsection (2.31).“eligible currency hedge”
« couverture de change admissible »
“eligible currency hedge”, of an eligible bank affiliate of an eligible Canadian bank, means an agreement that provides for the purchase, sale or exchange of currency and that(a) can reasonably be considered to have been made by the affiliate to reduce its risk of fluctuations in the value of currency with respect to eligible Canadian indebtedness and upstream deposits owing to the affiliate; and(b) cannot reasonably be considered to have been made by the affiliate to reduce its risk with respect to property other than eligible Canadian indebtedness and upstream deposits owing to the affiliate.“excess liquidity”
« liquidités excédentaires »
“excess liquidity”, of an eligible bank affiliate of an eligible Canadian bank for a taxation year of the affiliate, means the amount, if any, by which(a) the average of all amounts each of which is, in respect of a month that ends in the 12-month period that begins 60 days prior to the beginning of the year — or, if the affiliate was formed after the beginning of the period, in respect of a month that ends in the year — the amount of the affiliate’s relationship deposits for the month, expressed in the affiliate’s calculating currency for the year unless the context requires otherwise,exceeds(b) the average of all amounts each of which is, in respect of a month that ends in the period — or, if the affiliate was formed after the beginning of the period, in respect of a month that ends in the year — the amount of the affiliate’s organic assets for the month, expressed in the affiliate’s calculating currency for the year unless the context requires otherwise.“organic assets”
« actif organique »
“organic assets”, of an eligible bank affiliate of an eligible Canadian bank for a month, means the total of all amounts in respect of the affiliate each of which is(a) included in the amounts reported as loans in the assets section of the consolidated monthly balance sheet accepted by the Superintendent of Financial Institutions that is filed for the month by the bank, or another corporation resident in Canada that is related to the bank at the end of the month, or(b) an amount owing to the affiliate by a person that is related to the affiliate (other than an amount described in paragraph (a))but does not include the amount of an eligible Canadian indebtedness or upstream deposit owing to the affiliate.“qualifying indebtedness”
« dettes déterminées »
“qualifying indebtedness”, owing to an eligible bank affiliate of an eligible Canadian bank, means an upstream deposit owing to, or an eligible Canadian indebtedness of, the affiliate, to the extent that it can reasonably be considered that(a) the upstream deposit or the acquisition of eligible Canadian indebtedness, as the case may be, is funded by(i) property transferred or lent by a person other than the bank or a person resident in Canada that was not, at the time of the transfer or loan, dealing at arm’s length with the bank,(ii) a repayment of all or part of an upstream deposit owing to the affiliate, or(iii) the purchase of eligible Canadian indebtedness by the bank or a person resident in Canada that was not, at the time of the transfer or loan, dealing at arm’s length with the bank; and(b) the proceeds of the upstream deposit or the proceeds received by the vendor of the eligible Canadian indebtedness, as the case may be, are used for a purpose other than to fund a transfer or loan of property by the bank — or another person resident in Canada that was not, at the time of the transfer or loan, dealing at arm’s length with the bank — to the affiliate or another foreign affiliate of the bank or of the other person.“relationship deposits”
« dépôts apparentés »
“relationship deposits”, of an eligible bank affiliate of an eligible Canadian bank for a month, means the total of all amounts included in the amounts reported as demand and notice deposits, and fixed-term deposits in the liabilities section of the consolidated monthly balance sheet accepted by the Superintendent of Financial Institutions that is filed for the month by the bank, or another corporation resident in Canada that is related to the bank at the end of the month, that are deposits (other than of a temporary nature) of the affiliate made by a person who at the end of the month(a) deals at arm’s length with the affiliate; and(b) is not resident in Canada.“total specified indebtedness”
« dettes désignées totales »
“total specified indebtedness”, owing to an eligible bank affiliate of an eligible Canadian bank for a taxation year of the affiliate, means the average of all amounts each of which is, in respect of a month that ends in the year, the greatest total amount at any time in the month that is the total of all amounts each of which is(a) the amount of an upstream deposit owing to the affiliate;(b) the amount of an eligible Canadian indebtedness owing to the affiliate; or(c) the positive or negative fair market value of an eligible currency hedge of the affiliate.“upstream deposit”
« dépôt en amont »
“upstream deposit”, owing to an eligible bank affiliate of an eligible Canadian bank, means indebtedness owing by the bank to the affiliate.FAPI adjustment— eligible bank affiliate
(2.44) If a non-resident corporation (in this subsection referred to as the “affiliate”) is, throughout a taxation year of the affiliate, an eligible bank affiliate of an eligible Canadian bank, and the bank elects in writing under this subsection, in respect of the affiliate for the year, and files the election with the Minister on or before the filing-due date of the bank for the particular taxation year of the bank in which the year ends,(a) there is to be deducted in computing the amount determined for A in the definition “foreign accrual property income” in subsection (1) in respect of the affiliate for the year, the lesser of(i) the amount determined, without reference to this paragraph, for A in that definition in respect of the affiliate for the year, and(ii) the amount determined by the following formula, where each amount referred to in the formula is to be determined using Canadian currency: A – B – C – DwhereAis the total of all amounts each of which is the affiliate’s income for the year that is from a qualifying indebtedness owing to, or an eligible currency hedge of, the affiliate and that would, in the absence of this subsection, be included in computing the income of the affiliate from a business other than an active business of the affiliate,Bis the total of all amounts each of which is the affiliate’s loss for the year that is from a qualifying indebtedness owing to, or an eligible currency hedge of, the affiliate and that would, in the absence of this subsection, be deducted in computing the income of the affiliate from a business other than an active business of the affiliate,Cis the total of all amounts each of which is the amount, if any, by which an amount included in computing the amount determined for A or B in respect of an upstream deposit exceeds the amount that would be the affiliate’s income, or is less than the amount that would be the affiliate’s loss, as the case may be, for the year from the upstream deposit if the interest received or receivable by the affiliate in respect of the upstream deposit were computed at an interest rate equal to the lesser of(A) the rate of interest in respect of the upstream deposit, and(B) the benchmark rate of interest, acceptable to the Minister, that is(I) if the upstream deposit is denominated in a qualifying currency (as defined in subsection 261(1)), the average, for the year, of a daily interbank offered rate for loans denominated in that currency with a term to maturity of three months, or(II) in any other case, the average, for the year, of a daily rate for Canadian dollar denominated bankers’ acceptances with a term to maturity of three months, andDis the amount determined by the formula E × F/GwhereEis the amount, if any, by which the amount determined for A exceeds the total of the amounts determined for B and C,Fis the amount, if any, by which the total specified indebtedness owing to the affiliate for the year exceeds the affiliate’s excess liquidity for the year, andGis the total specified indebtedness owing to the affiliate for the year; and(b) there is to be included, in computing the income of the affiliate from an active business for the year, an amount equal to the proportion of the amount computed under the formula in subparagraph (a)(ii), computed as if each amount referred to in that formula were determined using the affiliate’s calculating currency, that the amount that is required to be deducted under paragraph (a) for the year is of the amount described in subparagraph (a)(ii).Investment business and excluded property
(2.45) If an election is made under subsection (2.44) in respect of an eligible bank affiliate of an eligible Canadian bank for a taxation year of the affiliate,(a) for the purposes of the definition “investment business” in subsection (1), the bank, and any other person resident in Canada that does not deal at arm’s length with the bank, are deemed to deal at arm’s length with the affiliate in respect of the making of upstream deposits, and acquisitions of Canadian indebtedness from the bank or the other person, by the affiliate in the course of a business carried on by the affiliate in the year if the affiliate’s excess liquidity for the year is at least 90% of the total specified indebtedness owing to the affiliate for the year; and(b) for the purposes of paragraph (b) of the definition “excluded property” in subsection (1),(i) the fair market value of each upstream deposit and Canadian indebtedness owing to, and eligible currency hedge of, the affiliate is deemed to be nil,(ii) at any particular time, the lesser of the following amounts is deemed to be the fair market value of a property of the affiliate that is excluded property at that particular time:(A) the total of all amounts each of which is the fair market value of an upstream deposit or Canadian indebtedness owing to, or an eligible currency hedge of, the affiliate, and(B) the amount, if any, by which(I) the affiliate’s relationship deposits for the calendar month that is two months prior to the particular time (or if the affiliate was formed less than two months prior to the particular time, for the calendar month that includes the particular time)exceeds(II) the amount of the affiliate’s organic assets for the calendar month that is two months prior to the particular time (or if the affiliate was formed less than two months prior to the particular time, for the calendar month that includes the particular time), and(iii) the amount, if any, by which the amount in clause (ii)(A) exceeds the amount in subparagraph (ii) is deemed to be the fair market value of a property of the eligible bank affiliate that is not excluded property at that time.(22) Paragraph (b) of the definition “excluded income” and “excluded revenue” in subsection 95(2.5) of the Act is replaced by the following:(b) derived directly or indirectly from a lease obligation of a person (other than the taxpayer or a person that does not deal at arm’s length with the taxpayer) resident in Canada relating to property used by the person in the course of carrying on a business through a permanent establishment outside Canada,(23) The definition “excluded income” and “excluded revenue” in subsection 95(2.5) of the Act is amended by striking out “or” at the end of paragraph (b), by adding “or” at the end of paragraph (c) and by adding the following after paragraph (c):(d) included in computing the affiliate’s income or loss from an active business for the year because of subparagraph (2)(a)(ii);(24) The definition “specified deposit” in subsection 95(2.5) of the Act is replaced by the following:“specified deposit”
« dépôt déterminé »
“specified deposit”, of a foreign affiliate of a taxpayer, means a deposit of the affiliate made with a permanent establishment in a country other than Canada of a prescribed financial institution resident in Canada if the income from the deposit is income of the affiliate for the year that would, in the absence of paragraph (2)(a.3), be income from an active business carried on by the affiliate in a country other than Canada, other than a business the principal purpose of which is to derive income from property (including any interest, dividends, rents, royalties or similar returns, or any substitutes for any of those) or profits from the disposition of investment property.(25) Section 95 of the Act is amended by adding the following after subsection (3):Application of paragraph (2)(b) — eligible Canadian bank
(3.01) Paragraph (2)(b) does not apply to a controlled foreign affiliate (for the purposes of section 17) of an eligible Canadian bank (as defined in subsection (2.43)) in respect of services performed in connection with the purchase or sale of a property described in paragraph (2.31)(b) if(a) the services have been performed by the affiliate(i) under terms and conditions that are substantially the same as the terms and conditions that would have been made between persons who deal at arm’s length with each other,(ii) in the course of a business(A) that regularly includes trading or dealing in securities principally with persons with whom the affiliate deals at arm’s length, and(B) that is principally carried on through a permanent establishment in a country other than Canada, and(iii) for the purpose of enabling the acquisition or disposition of the property by a person who, at the time of the acquisition or disposition, deals at arm’s length with the affiliate and the eligible Canadian bank; and(b) the affiliate is a foreign bank or a trader or dealer in securities and the activities of the business are regulated(i) under the laws of the country under whose laws the affiliate is governed and any of exists, was (unless the affiliate was continued in any jurisdiction) formed or organized, or was last continued, and under the laws of each country in which the business is carried on through a permanent establishment in that country,(ii) under the laws of the country (other than Canada) in which the business is principally carried on, or(iii) if the affiliate is related to a corporation, under the laws of the country under whose laws that related corporation is governed and any of exists, was (unless that related corporation was continued in any jurisdiction) formed or organized, or was last continued, if those regulating laws are recognized under the laws of the country in which the business is principally carried on and all those countries are members of the European Union.(26) Section 95 of the Act is amended by adding the following after subsection (3.01):Rules for clause (2)(b)(ii)(B)
(3.02) For the purposes of clause (2)(b)(ii)(B),(a) a relevant person is(i) a person resident in Canada, or(ii) a non-resident person if the non-resident person performs the services referred to in subparagraph (2)(b)(ii) in the course of a business (other than a treaty-protected business) carried on in Canada; and(b) any portion of a business carried on by a non-resident person that is carried on in Canada is deemed to be a business that is separate from any other portion of the business carried on by the person.(27) Section 95 of the Act is amended by adding the following after subsection (3.1):Contract manufacturing
(3.2) For the purposes of clause (2)(a.1)(ii)(A), property of a particular foreign affiliate of a taxpayer is deemed to have been manufactured by the particular affiliate in a particular country if the property is(a) developed and designed by the particular affiliate in the particular country in the course of an active business carried on by the particular affiliate in the particular country; and(b) manufactured, produced or processed outside the particular country by another foreign affiliate of the taxpayer, during a period throughout which the taxpayer has a qualifying interest in the other affiliate,(i) under a contract between the particular affiliate and the other affiliate, and(ii) in accordance with specifications provided by the particular affiliate.(28) Subsection (1) applies in respect of taxation years of a foreign affiliate of a taxpayer that end after 2010.(29) Subsections (2) and (4) are deemed to have come into force on January 1, 2014.(30) Subsection (3) applies in respect of taxation years of a foreign affiliate of a taxpayer that end after 2006.(31) Subsection (5) applies in respect of taxation years of a foreign affiliate of a taxpayer that begin after July 12, 2013. However, if the taxpayer elects in writing under this subsection in respect of all its foreign affiliates and files the election with the Minister of National Revenue on or before the day that is the later of the taxpayer’s filing-due date for the taxpayer’s taxation year that includes the day on which this Act receives royal assent and the day that is one year after the day on which this Act receives royal assent,(a) subsection (5) applies in respect of taxation years of all foreign affiliates of the taxpayer that end after 2007; and(b) subparagraph 95(2)(a)(i) of the Act, as enacted by subsection (5), is to be read as follows in respect of taxation years of foreign affiliates of the taxpayer that end after 2007 and begin before 2009:(i) the income or loss(A) is derived by the particular foreign affiliate from activities of the particular foreign affiliate, or of a particular partnership of which the particular foreign affiliate is a member, to the extent that the activities occur while the particular affiliate is a qualifying member of the particular partnership, that can reasonably be considered to be directly related to active business activities carried on in a country other than Canada by(I) another corporation1. that is a non-resident corporation to which the particular foreign affiliate and the taxpayer are related throughout the year, or2. that is another foreign affiliate of the taxpayer in respect of which the taxpayer has a qualifying interest throughout the year,(II) a life insurance corporation that is resident in Canada throughout the year and that is1. the taxpayer,2. a person who controls the taxpayer,3. a person controlled by the taxpayer, or4. a person controlled by a person who controls the taxpayer,(III) the particular foreign affiliate or a partnership of which the particular foreign affiliate is a member, to the extent that the activities occur while the particular affiliate is a qualifying member of the partnership, or(IV) a partnership of which another foreign affiliate of the taxpayer, in respect of which the taxpayer has a qualifying interest throughout the year, is a member, to the extent that the activities occur while the other affiliate is a qualifying member of the partnership, and(B) if any of subclauses (A)(I), (II) and (IV) applies, would be included in computing the amount prescribed to be the earnings or loss, from an active business carried on in a country other than Canada, of(I) that other foreign affiliate referred to in sub-subclause (A)(I)2 or subclause (A)(IV), if the income were earned by it, or(II) the non-resident corporation referred to in sub-subclause (A)(I)1 or the life insurance corporation referred to in subclause (A)(II), if that non-resident corporation or that life insurance corporation were a foreign affiliate of the taxpayer and the income were earned by it,(32) Subsection (6) applies in respect of taxation years of a foreign affiliate of a taxpayer that end after July 12, 2013.(33) Subsections (7) to (9), (11), (18) to (21), (24) and (25) apply in respect of taxation years of a foreign affiliate of a taxpayer that begin after October 2012.(34) Subsections (12) and (26) apply in respect of taxation years of a foreign affiliate of a taxpayer that begin after July 12, 2013. However, if a taxpayer elects in writing under this subsection in respect of all its foreign affiliates and files the election with the Minister of National Revenue on or before the day that is the later of the taxpayer’s filing-due date for the taxpayer’s taxation year that includes the day on which this Act receives royal assent and the day that is one year after the day on which this Act receives royal assent, then subsections (12) and (26) apply in respect of taxation years of all foreign affiliates of the taxpayer that begin after February 27, 2004.(35) Subsection (10) applies to taxation years of a taxpayer that begin after February 10, 2014.(36) Subsections (13) and (17) apply to taxation years of a taxpayer that begin after 2014.(37) Subsection (14) applies in respect of taxation years of a foreign affiliate of a taxpayer that end after July 12, 2013. However, if a taxpayer elects under subsection 21(15), subsection (14) applies in respect of taxation years of all foreign affiliates of the taxpayer that end after 2010.(38) Subsection (15) applies in respect of taxation years of a foreign affiliate of a taxpayer that end after 1999. However, if a taxpayer has not elected under paragraph 70(29)(b) of the Technical Tax Amendments Act, 2012, then subparagraph 95(2)(u)(i) of the Act, as enacted by subsection (15), is to be read as follows in respect of taxation years of the foreign affiliate that end after 1999 and begin before December 21, 2002:(i) the entity is deemed to be a member of the other partnership for the purposes of(A) subparagraph (ii),(B) applying the reference, in paragraph (a), to “a member” of a partnership,(C) paragraphs (a.1) to (b), (g.03) and (o),(D) paragraphs (b) and (c) of the definition “investment business” in subsection (1), and(E) subsection 93.1(2), and(39) Subsection (16) applies in respect of taxation years of a foreign affiliate of a taxpayer that end after August 19, 2011.(40) Subsection (22) applies in respect of taxation years of a foreign affiliate of a taxpayer that begin after July 12, 2013. However, if a taxpayer elects in writing under this subsection in respect of all its foreign affiliates and files the election with the Minister of National Revenue on or before the day that is the later of the taxpayer’s filing-due date for the taxpayer’s taxation year that includes the day on which this Act receives royal assent and the day that is one year after the day on which this Act receives royal assent, then subsection (22) applies in respect of taxation years of foreign affiliates of the taxpayer,(a) if the taxpayer has elected under subsection 73(17) of the Income Tax Amendments Act, 2000, that begin after 1994; or(b) in any other case, that begin after 1999.(41) Subsection (23) applies in respect of taxation years of a foreign affiliate of a taxpayer that end after February 27, 2004.(42) Subsection (27) applies in respect of taxation years of a foreign affiliate of a taxpayer that end after 2008.26. (1) Subsection 104(5.1) of the Act is replaced by the following:NISA Fund No. 2
(5.1) Every trust that holds an interest in a NISA Fund No. 2 that was transferred to it in circumstances to which paragraph 70(6.1)(b) applied is deemed, at the end of the day on which the spouse or common-law partner referred to in that paragraph dies, to have been paid an amount out of the fund equal to the balance at the end of that day in the fund so transferred.(2) Paragraph 104(6)(a.3) of the Act is replaced by the following:(a.3) in the case of a trust deemed by subsection 143(1) to exist in respect of a congregation that is a constituent part of a religious organization, such part of its income for the year as became payable in the year to a beneficiary;(3) Paragraph 104(6)(b) of the Act is replaced by the following:(b) in any other case, the amount that the trust claims not exceeding the amount, if any, determined by the formula A – BwhereA is the part of its income (determined without reference to this subsection and subsection (12)) for the year that became payable in the year to, or that was included under subsection 105(2) in computing the income of, a beneficiary, andB is(i) if the trust is a trust for which a day is to be determined under paragraph (4)(a) or (a.4) by reference to a death or later death, as the case may be, that has not occurred before the end of the year, the part of its income (determined without reference to this subsection and subsection (12)) for the year that became payable in the year to, or that was included under subsection 105(2) in computing the income of, a beneficiary (other than an individual whose death is that death or later death, as the case may be), and(ii) if the trust is a SIFT trust for the year, the amount, if any, by which(A) the amount determined for A for the trust for the yearexceeds(B) the amount, if any, by which the amount determined for A for the trust for the year exceeds its non-portfolio earnings for the year.(4) Section 104 of the Act is amended by adding the following after subsection (7.01):Limitation — amount claimed as gift
(7.02) No deduction may be made under subsection (6) in computing the income for a taxation year of an estate that arose on and as a consequence of an individual’s death in respect of a payment to the extent that the payment is a gift in respect of which an amount is deducted under section 118.1 for any taxation year in computing the individual’s tax payable under this Part.(5) Section 104 of the Act is amended by adding the following after subsection (13.2):Invalid designation
(13.3) Any designation made under subsection (13.1) or (13.2) by a trust in its return of income under this Part for a taxation year is invalid if the trust’s taxable income for the year, determined without reference to this subsection, is greater than nil.Death of beneficiary —spousal and similar trusts
(13.4) If an individual’s death occurs on a day in a particular taxation year of a trust and the death is the death or later death, as the case may be, referred to in paragraph (4)(a), (a.1) or (a.4) in respect of the trust,(a) the particular year is deemed to end at the end of that day, a new taxation year of the trust is deemed to begin immediately after that day and, for the purpose of determining the trust’s fiscal period after the new taxation year began, the trust is deemed not to have established a fiscal period before the new taxation year began;(b) the trust’s income (determined without reference to subsections (6) and (12)) for the particular year is, notwithstanding subsection (24), deemed(i) to have become payable in the year to the individual, and(ii) not(A) to have become payable to another beneficiary, or(B) to be included under subsection 105(2) in computing the individual’s income; and(c) in respect of the particular year(i) the references in paragraphs 150(1)(c) and (a) of the definition “balance-due day” in subsection 248(1) to “year” are to be read as “calendar year in which the year ends”, and(ii) the reference in subsection 204(2) of the Income Tax Regulations to “end of the taxation year” is to be read as “end of the calendar year in which the taxation year ends”.(6) Subsections 104(14.01) to (14.1) of the Act are repealed.(7) The portion of subsection 104(16) of the Act before paragraph (a) is replaced by the following:SIFT deemed dividend
(16) If an amount (in this subsection and section 122 referred to as the trust’s “non-deductible distributions amount” for the taxation year) is determined under subparagraph (ii) of the description of B in paragraph (6)(b) in respect of a SIFT trust for a taxation year(8) The portion of clause 104(21.2)(b)(ii)(A) of the Act before the formula is replaced by the following:(A) from a disposition of a capital property that is qualified farm or fishing property (as defined for the purpose of section 110.6) of the beneficiary equal to the amount determined by the formula(9) Subparagraph 104(21.2)(b)(ii) of the Act is amended by adding “and” before clause (B), by striking out “and” before clause (C) and by repealing clause (C).(10) The description of C in subparagraph 104(21.2)(b)(ii) of the Act is replaced by the following:Cis the amount, if any, that would be determined under paragraph 3(b) for the designation year in respect of the trust’s capital gains and capital losses if the only properties referred to in that paragraph were properties that, at the time they were disposed of, were qualified farm properties, qualified fishing properties or qualified farm or fishing properties of the trust,(11) The descriptions of E to I in subparagraph 104(21.2)(b)(ii) of the Act are replaced by the following:Eis the total of the amounts determined for C and F for the designation year in respect of the beneficiary, andFis the amount, if any, that would be determined under paragraph 3(b) for the designation year in respect of the trust’s capital gains and capital losses if the only properties referred to in that paragraph were properties that, at the time they were disposed of, were qualified small business corporation shares of the trust, other than qualified farm property, qualified fishing property or qualified farm or fishing property,(12) Subsections 104(21.21) to (21.24) of the Act are repealed.(13) The portion of subsection 104(23) of the Act before paragraph (c) is replaced by the following:Deceased beneficiary of graduated rate estate
(23) In the case of a trust that is a graduated rate estate,(14) Subsection 104(23) of the Act is amended by adding “and” at the end of paragraph (c), by striking out “and” at the end of paragraph (d) and by repealing paragraph (e).(15) The portion of subsection 104(27) of the Act before paragraph (a) is replaced by the following:Pension benefits
(27) If a trust, in a taxation year in which it is resident in Canada and is the graduated rate estate of an individual, receives a superannuation or pension benefit or a benefit out of or under a foreign retirement arrangement and designates, in its return of income for the year under this Part, an amount in respect of a beneficiary under the trust equal to the portion (in this subsection referred to as the “beneficiary’s share”) of the benefit that(16) Subparagraph 104(27)(c)(ii) of the Act is replaced by the following:(ii) the beneficiary was a spouse or common-law partner of the individual,(17) Subparagraph 104(27)(d)(i) of the Act is replaced by the following:(i) is a single amount (as defined in subsection 147.1(1)), other than an amount that relates to an actuarial surplus, paid by a registered pension plan to the trust as a consequence of the individual’s death and the individual was, at the time of death, a spouse or common-law partner of the beneficiary, or(18) Paragraph 104(27)(e) of the Act is replaced by the following:(e) where the benefit is a single amount (as defined in subsection 147.1(1)) paid by a registered pension plan to the trust as a consequence of the individual’s death,(i) if the beneficiary was, immediately before the death, a child or grandchild of the individual who, because of mental or physical infirmity, was financially dependent on the individual for support, the beneficiary’s share of the benefit (other than any portion of it that relates to an actuarial surplus) is deemed, for the purposes of paragraph 60(l), to be an amount from a registered pension plan included in computing the beneficiary’s income for the particular year as a payment described in clause 60(l)(v)(B.01), and(ii) if the beneficiary was, at the time of the death, under 18 years of age and a child or grandchild of the individual, the beneficiary’s share of the benefit (other than any portion of it that relates to an actuarial surplus) is deemed, for the purposes of paragraph 60(l), to be an amount from a registered pension plan included in computing the beneficiary’s income for the particular year as a payment described in subclause 60(l)(v)(B.1)(II).(19) Paragraphs 104(27.1)(a) and (b) of the Act are replaced by the following:(a) a trust, in a taxation year (in this subsection referred to as the “trust year”) in which it is resident in Canada and is the graduated rate estate of an individual, receives an amount from a deferred profit sharing plan as a consequence of the individual’s death,(b) the individual was an employee of an employer who participated in the plan on behalf of the individual, and(20) Paragraph 104(27.1)(e) of the Act is replaced by the following:(e) can reasonably be considered (having regard to all the circumstances including the terms and conditions of the trust arrangement) to be part of the amount that was included under subsection (13) in computing the income for a particular taxation year of a beneficiary under the trust who was, at the time of the death, the individual’s spouse or common-law partner, and(21) Subsection 104(28) of the Act is replaced by the following:Death benefit
(28) If the graduated rate estate of an individual receives an amount on or after the individual’s death in recognition of the individ-ual’s service in an office or employment, the portion of the amount that can reasonably be considered (having regard to all the circumstances including the terms and conditions of the trust arrangement) to be paid or payable at any time to a beneficiary under the estate is deemed(a) to be an amount received by the beneficiary at that time on or after the death in recognition of the individual’s service in an office or employment; and(b) except for purposes of this subsection, not to have been received by the estate.(22) Subsections (1) to (3), (5) to (7) and (13) to (21) apply to the 2016 and subsequent taxation years.(23) Subsection (4) applies to taxation years that end after August 28, 2014.(24) Subsections (8) to (12) apply to dispositions that occur in the 2014 and subsequent taxation years.27. (1) Paragraph 107.4(1)(j) of the Act is replaced by the following:(j) if the contributor is an amateur athlete trust, a cemetery care trust, an employee life and health trust, an employee trust, a trust deemed by subsection 143(1) to exist in respect of a congregation that is a constituent part of a religious organization, a related segregated fund trust (within the meaning assigned by paragraph 138.1(1)(a)), a trust described in paragraph 149(1)(o.4) or a trust governed by an eligible funeral arrangement, an employees profit sharing plan, a registered disability savings plan, a registered education savings plan, a registered supplementary unemployment benefit plan or a TFSA, the particular trust is the same type of trust.(2) Subsection (1) applies to the 2016 and subsequent taxation years.28. (1) The definitions “qualified farm property”, “qualified fishing property” and “qualified small business corporation share” in subsection 108(1) of the Act are repealed.(2) Paragraph (c) of the definition “trust” in subsection 108(1) of the Act is replaced by the following:(c) a trust deemed by subsection 143(1) to exist in respect of a congregation that is a constituent part of a religious organization,(3) The portion of paragraph 108(7)(b) of the Act before subparagraph (i) is replaced by the following:(b) if all the beneficial interests in a partic-ular trust acquired by way of the transfer, assignment or other disposition of property to the particular trust were acquired by(4) Subsection (1) applies to dispositions that occur in the 2014 and subsequent taxation years.(5) Subsections (2) and (3) apply to the 2016 and subsequent taxation years.29. (1) The portion of paragraph 110.1(1)(a) of the Act before the formula is replaced by the following:Charitable gifts
(a) the total of all amounts each of which is the eligible amount of a gift (other than a gift described in paragraph (c) or (d)) made by the corporation in the year or in any of the five preceding taxation years to a qualified donee, not exceeding the lesser of the corporation’s income for the year and the amount determined by the formula(2) Paragraph 110.1(1)(b) of the Act is repealed.(3) The portion of subparagraph 110.1(1)(d)(iii) of the Act before clause (A) is replaced by the following:(iii) the gift was made by the corporation in the year or in any of the 10 preceding taxation years to a qualified donee that is(4) Subsections (1) and (2) apply to the 2016 and subsequent taxation years.(5) Subsection (3) applies to gifts made after February 10, 2014.30. (1) The definitions “interest in a fam-ily farm partnership”, “interest in a family fishing partnership”, “qualified farm property”, “qualified fishing property”, “share of the capital stock of a family farm corporation” and “share of the capital stock of a family fishing corporation” in subsection 110.6(1) of the Act are repealed.(2) Paragraph (b) of the description of A in the definition “annual gains limit” in subsection 110.6(1) of the Act is replaced by the following:(b) the amount that would be determined in respect of the individual for the year under paragraph 3(b) in respect of capital gains and losses if the only properties referred to in that paragraph were properties that, at the time they were disposed of, were qualified farm properties, qualified fishing properties, qualified farm or fishing properties and qualified small business corporation shares, and(3) Subsection 110.6(1) is amended by adding the following in alphabetical order:“interest in a family farm or fishing partnership”
« participation dans une société de personnes agricole ou de pêche familiale »
“interest in a family farm or fishing partnership”, of an individual (other than a trust that is not a personal trust) at any time, means a partnership interest owned by the individual at that time if(a) throughout any 24-month period ending before that time, more than 50% of the fair market value of the property of the partnership was attributable to(i) property that was used principally in the course of carrying on a farming or fishing business in Canada in which the individual, a beneficiary referred to in clause (C) or a spouse, common-law partner, child or parent of the individual or of a beneficiary referred to in clause (C) was actively engaged on a regular and continuous basis, by(A) the partnership,(B) the individual,(C) if the individual is a personal trust, a beneficiary of the trust,(D) a spouse, common-law partner, child or parent of the individual or of a beneficiary referred to in clause (C),(E) a corporation, a share of the capital stock of which was a share of the capital stock of a family farm or fishing corporation of the individual, a beneficiary referred to in clause (C) or a spouse, common-law partner, child or parent of the individual or of a beneficiary referred to in clause (C), or(F) a partnership, a partnership interest in which was an interest in a family farm or fishing partnership of the individual, a beneficiary referred to in clause (C) or a spouse, common-law partner, child or parent of the individual or of a beneficiary referred to in clause (C),(ii) shares of the capital stock or indebtedness of one or more corporations of which all or substantially all of the fair market value of the property was attributable to properties described in subparagraph (iv),(iii) a partnership interest in or indebtedness of one or more partnerships of which all or substantially all of the fair market value of the property was attributable to properties described in subparagraph (iv), or(iv) properties described in any of subparagraphs (i) to (iii), and(b) at that time, all or substantially all of the fair market value of the property of the partnership was attributable to property described in subparagraph (a)(iv);“qualified farm or fishing property”
« bien agricole ou de pêche admissible »
“qualified farm or fishing property”, of an individual (other than a trust that is not a personal trust) at any time, means a property that is owned at that time by the individual, the spouse or common-law partner of the individual or a partnership, an interest in which is an interest in a family farm or fishing partnership of the individual or the individual’s spouse or common-law partner and that is(a) real or immovable property or a fishing vessel that was used in the course of carrying on a farming or fishing business in Canada by,(i) the individual,(ii) if the individual is a personal trust, a beneficiary of the trust that is entitled to receive directly from the trust any income or capital of the trust,(iii) a spouse, common-law partner, child or parent of an individual referred to in subparagraph (i) or (ii),(iv) a corporation, a share of the capital stock of which is a share of the capital stock of a family farm or fishing corporation of an individual referred to in any of subparagraphs (i) to (iii), or(v) a partnership, an interest in which is an interest in a family farm or fishing partnership of an individual referred to in any of subparagraphs (i) to (iii),(b) a share of the capital stock of a family farm or fishing corporation of the individual or the individual’s spouse or common-law partner,(c) an interest in a family farm or fishing partnership of the individual or the individ-ual’s spouse or common-law partner, or(d) an eligible capital property (which is deemed to include capital property to which paragraph 70(5.1)(b) or 73(3.1)(f) applies) used by a person or partnership referred to in any of subparagraphs (a)(i) to (v), or by a personal trust from which the individual acquired the property, in the course of carrying on a farming or fishing business in Canada;“share of the capital stock of a family farm or fishing corporation”
« action du capital-actions d’une société agricole ou de pêche familiale »
“share of the capital stock of a family farm or fishing corporation”, of an individual (other than a trust that is not a personal trust) at any time, means a share of the capital stock of a corporation owned by the individual at that time if(a) throughout any 24-month period ending before that time, more than 50% of the fair market value of the property owned by the corporation was attributable to(i) property that was used principally in the course of carrying on a farming or fishing business in Canada in which the individual, a beneficiary referred to in clause (C) or a spouse or common-law partner, child or parent of the individual or of a beneficiary referred to in clause (C), was actively engaged on a regular and continuous basis, by(A) the corporation,(B) the individual,(C) if the individual is a personal trust, a beneficiary of the trust,(D) a spouse, common-law partner, child or parent of the individual or of a beneficiary referred to in clause (C),(E) another corporation that is related to the corporation and of which a share of the capital stock was a share of the capital stock of a family farm or fishing corporation of the individual, a beneficiary referred to in clause (C) or a spouse, common-law partner, child or parent of the individual or of a beneficiary referred to in clause (C), or(F) a partnership, an interest in which was an interest in a family farm or fishing partnership of the individual, a beneficiary referred to in clause (C) or a spouse, common-law partner, child or parent of the individual or of such a beneficiary,(ii) shares of the capital stock or indebtedness of one or more corporations of which all or substantially all of the fair market value of the property was attributable to property described in subparagraph (iv),(iii) a partnership interest in or indebtedness of one or more partnerships of which all or substantially all of the fair market value of the property was attributable to properties described in subparagraph (iv), or(iv) properties described in any of subparagraphs (i) to (iii), and(b) at that time, all or substantially all of the fair market value of the property owned by the corporation was attributable to property described in subparagraph (a)(iv).(4) Subsections 110.6(1.1) and (1.2) of the Act are replaced by the following:Value of NISA
(1.1) For the purposes of the definitions “qualified small business corporation share” and “share of the capital stock of a family farm or fishing corporation” in subsection (1), the fair market value of a net income stabilization account is deemed to be nil.(5) The portion of subsection 110.6(1.3) of the Act before paragraph (c) is replaced by the following:Farming or fishing property— conditions
(1.3) For the purpose of applying the definition “qualified farm or fishing property”, in subsection (1), of an individual, at any time, a property owned at that time by the individual, the spouse or common-law partner of the individual, or a partnership, an interest in which is an interest in a family farm or fishing partnership of the individual or of the individ-ual’s spouse or common-law partner, will not be considered to have been used in the course of carrying on a farming or fishing business in Canada, unless(a) the following apply in respect of the property or property for which the property was substituted (in this paragraph referred to as “the property”),(i) the property was owned throughout the period of at least 24 months immediately preceding that time by one or more of(A) the individual, or a spouse, common-law partner, child or parent of the individual,(B) a partnership, an interest in which is an interest in a family farm or fishing partnership of the individual or of the individual’s spouse or common-law partner,(C) if the individual is a personal trust, the individual from whom the trust acquired the property or a spouse, common-law partner, child or parent of that individual, or(D) a personal trust from which the individual or a child or parent of the individual acquired the property, and(ii) either(A) in at least two years while the property was owned by one or more persons or partnerships referred to in subparagraph (i),(I) the gross revenue of a person (in this subclause referred to as the “operator”) referred to in subparagraph (i) from the farming or fishing business referred to in subclause (II) for the period during which the property was owned by a person or partnership described in subparagraph (i) exceeded the income of the operator from all other sources for that period, and(II) the property was used principally in a farming or fishing business carried on in Canada in which an individual referred to in subparagraph (i), or where the individual is a personal trust, a beneficiary of the trust, was actively engaged on a regular and continuous basis, or(B) throughout a period of at least 24 months while the property was owned by one or more persons or partnerships referred to in subparagraph (i), the property was used by a corporation referred to in subparagraph (a)(iv) of the definition “qualified farm or fishing property” in subsection (1) or by a partnership referred to in subparagraph (a)(v) of that definition in a farming or fishing business in which an individual referred to in any of subparagraphs (a)(i) to (iii) of that definition was actively engaged on a regular and continuous basis; or(6) Paragraph 110.6(1.3)(c) of the Act is replaced by the following:(c) if the property or property for which the property was substituted was last acquired by the individual or partnership before June 18, 1987 or after June 17, 1987 under an agreement in writing entered into before that date,(i) in the year the property was disposed of by the individual, the property was used principally in the course of carrying on the business of farming in Canada by(A) the individual, or a spouse, common-law partner, child or parent of the individual,(B) a beneficiary referred to in subparagraph (a)(ii) of the definition “qualified farm or fishing property” in subsection (1) or a spouse, common-law partner, child or parent of that beneficiary,(C) a corporation referred to in subparagraph (a)(iv) of the definition “qualified farm or fishing property” in subsection (1),(D) a partnership referred to in subparagraph (a)(v) of the definition “qualified farm or fishing property” in subsection (1), or(E) a personal trust from which the individual acquired the property, or(ii) in at least five years during which the property was owned by a person described in any of clauses (A) to (E), the property was used principally in the course of carrying on the business of farming in Canada by(A) the individual, or a spouse, common-law partner, child or parent of the individual,(B) a beneficiary referred to in subparagraph (a)(ii) of the definition “qualified farm or fishing property” in subsection (1) or a spouse, common-law partner, child or parent of that beneficiary,(C) a corporation referred to in subparagraph (a)(iv) of the definition “qualified farm or fishing property” in subsection (1),(D) a partnership referred to in subparagraph (a)(v) of the definition “qualified farm or fishing property” in subsection (1), or(E) a personal trust from which the individual acquired the property.(7) The portion of subsection 110.6(2) of the Act before paragraph (a) is replaced by the following:Capital gains deduction —qualified farm or fishing property
(2) In computing the taxable income for a taxation year of an individual (other than a trust) who was resident in Canada throughout the year and who disposed of qualified farm or fishing property in the year or a preceding taxation year (or who disposed of before 2014 property that was qualified farm property or qualified fishing property at the time of disposition), there may be deducted such amount as the individual may claim not exceeding the least of(8) Paragraph 110.6(2)(d) of the Act is replaced by the following:(d) the amount that would be determined in respect of the individual for the year under paragraph 3(b) in respect of capital gains and capital losses if the only properties referred to in that paragraph were properties that, at the time they were disposed of, were qualified farm properties, qualified fishing properties or qualified farm or fishing properties.(9) Paragraph 110.6(2.1)(d) of the Act is replaced by the following:(d) the amount that would be determined in respect of the individual for the year under paragraph 3(b) (to the extent that that amount is not included in computing the amount determined under paragraph (2)(d) in respect of the individual) in respect of capital gains and capital losses if the only properties referred to in paragraph 3(b) were qualified small business corporation shares of the individual.(10) Subsections 110.6(2.2) to (4) of the Act are replaced by the following:Maximum capital gains deduction
(4) Notwithstanding subsections (2) and (2.1), the total amount that may be deducted under this section in computing an individual’s income for a taxation year shall not exceed the amount determined by the formula in paragraph (2)(a) in respect of the individual for the year.(11) The portion of subsection 110.6(5) of the Act before paragraph (a) is replaced by the following:Deemed resident in Canada
(5) For the purposes of subsections (2) and (2.1), an individual is deemed to have been resident in Canada throughout a particular taxation year if(12) The portion of subsection 110.6(6) of the Act before paragraph (a) is replaced by the following:Failure to report capital gain
(6) Notwithstanding subsections (2) and (2.1), no amount may be deducted under this section in respect of a capital gain of an individual for a particular taxation year in computing the individual’s taxable income for the particular taxation year or any subsequent year, if(13) The portion of subsection 110.6(7) of the Act before paragraph (a) is replaced by the following:Deduction not permitted
(7) Notwithstanding subsections (2) and (2.1), no amount may be deducted under this section in computing an individual’s taxable income for a taxation year in respect of a capital gain of the individual for the taxation year if the capital gain is from a disposition of property which disposition is part of a series of transactions or events(14) Subsection 110.6(8) of the Act is replaced by the following:Deduction not permitted
(8) Notwithstanding subsections (2) and (2.1), if an individual has a capital gain for a taxation year from the disposition of a property and it can reasonably be concluded, having regard to all the circumstances, that a significant part of the capital gain is attributable to the fact that dividends were not paid on a share (other than a prescribed share) or that dividends paid on such a share in the taxation year or in any preceding taxation year were less than 90% of the average annual rate of return on that share for that year, no amount in respect of that capital gain shall be deducted under this section in computing the individual’s taxable income for the year.(15) Paragraph 110.6(12)(b) of the Act is replaced by the following:(b) the amount, if any, that would be determined in respect of the trust for that year under paragraph 3(b) in respect of capital gains and capital losses if the only properties referred to in that paragraph were properties that, at the time they were disposed of, were qualified farm or fishing properties, qualified small business corporation shares, qualified farm properties or qualified fishing properties, and(16) Subsection 110.6(12) of the Act, as amended by subsection (15), is repealed.(17) The portion of subsection 110.6(15) of the Act before paragraph (a) is replaced by the following:Value of assets of corporations
(15) For the purposes of the definitions “qualified small business corporation share” and “share of the capital stock of a family farm or fishing corporation” in subsection (1), the definition “share of the capital stock of a family farm or fishing corporation” in subsection 70(10) and the definition “small business corporation” in subsection 248(1),(18) The portion of subparagraph 110.6(15)(a)(ii) of the Act before clause (A) is replaced by the following:(ii) the total fair market value of assets —other than assets described in any of subparagraphs (c)(i) to (iii) of the definition “qualified small business corporation share” in subsection (1), any of subparagraphs (a)(i) to (iii) of the definition “share of the capital stock of a family farm or fishing corporation” in subsection (1) or any of paragraphs (a) to (c) of the definition “small business corporation” in subsection 248(1), as the case may be — of any of those corporations that are(19) The portion of paragraph 110.6(15)(b) of the Act after subparagraph (ii) is replaced by the following:except that this paragraph applies only in determining whether a share of the capital stock of another corporation with which the particular corporation is connected is a qualified small business corporation share or a share of the capital stock of a family farm or fishing corporation and in determining whether the other corporation is a small business corporation.(20) The portion of subsection 110.6(31) of the Act before the formula is replaced by the following:Reserve limit
(31) If an amount is included in an individ-ual’s income for a particular taxation year because of subparagraph 40(1)(a)(ii) in respect of a disposition of property in a preceding taxation year that, at the time of the disposition, is qualified farm or fishing property, a qualified small business corporation share, qualified farm property or qualified fishing property, the total of all amounts deductible by the individual for the particular year under this section is reduced by the amount, if any, determined by the formula(21) Subsections (1) to (15) and (17) to (20) apply to dispositions and transfers that occur in the 2014 and subsequent taxation years.(22) Subsection (16) applies to the 2016 and subsequent taxation years.31. (1) The portion of subparagraph 112(3.2)(a)(iii) of the Act before clause (A) is replaced by the following:(iii) if the trust is an individual’s graduated rate estate, the share was acquired as a consequence of the individual’s death and the disposition occurs during the trust’s first taxation year, 1/2 of the lesser of(2) Subsection (1) applies to the 2016 and subsequent taxation years.32. (1) The portion of the description of B in subsection 118.03(2) of the Act before the formula is replaced by the following:Bis the total of all amounts each of which is, in respect of a qualifying child of the individual for the taxation year, the lesser of $1,000 and the amount determined by the formula(2) Section 118.03 of the Act is repealed.(3) Subsection (1) applies to the 2014 taxation year.(4) Subsection (2) applies to the 2015 and subsequent taxation years.33. (1) The definition “qualifying child” in subsection 118.031(1) of the Act is replaced by the following:“qualifying child”
« enfant admissible »
“qualifying child” of an individual has the meaning assigned by subsection 122.8(1).(2) Subsection (1) applies to the 2015 and subsequent taxation years.34. (1) The definition “total Crown gifts” in subsection 118.1(1) of the Act is repealed.(2) The definition “total charitable gifts” in subsection 118.1(1) of the Act is replaced by the following:“total charitable gifts”
« total des dons de bienfaisance »
“total charitable gifts”, of an individual for a particular taxation year, means the total of all amounts each of which is the eligible amount — to the extent it is not otherwise included in determining an amount that is deducted under this section in computing any individual’s tax payable under this Part for any taxation year — of a gift (other than a gift any part of the eligible amount of which is included in the total cultural gifts or the total ecological gifts of any individual for any taxation year) that is made(a) to a qualified donee,(b) in a taxation year that is not a year for which an amount is deducted under subsection 110(2) in computing the individual’s taxable income, and(c) if the individual is(i) not a trust,(A) by the individual, or the individ-ual’s spouse or common-law partner, in the particular year or any of the five preceding taxation years,(B) by the individual in the year in which the individual dies if the particular year is the taxation year that precedes the taxation year in which the individual dies, or(C) by the individual’s graduated rate estate if subsection (5.1) applies to the gift and the particular year is the taxation year in which the individual dies or the preceding taxation year, or(ii) a trust(A) by the trust in the particular year or any of the five preceding taxation years, or(B) by the trust if the trust is a graduated rate estate, subsection (5.1) applies to the gift and the particular year is the taxation year in which the gift is made or a preceding taxation year of the estate;(3) The portion of the definition “total cultural gifts” in subsection 118.1(1) of the Act before paragraph (a) is replaced by the following:“total cultural gifts”
« total des dons de biens culturels »
“total cultural gifts”, of an individual for a particular taxation year, means the total of all amounts each of which is the eligible amount — to the extent it is not otherwise included in determining an amount that is deducted under this section in computing any individual’s tax payable under this Part for any taxation year — of a gift (4) The definition “total cultural gifts” in subsection 118.1(1) of the Act is amended by striking out “and” at the end of paragraph (a) and by replacing the portion after that paragraph with the following:(b) that is made to an institution or a public authority in Canada that is, at the time the gift is made, designated under subsection 32(2) of the Cultural Property Export and Import Act either generally or for a specified purpose related to that object, and(c) that is made(i) if the individual is not a trust,(A) by the individual, or the individ-ual’s spouse or common-law partner, in the particular year or any of the five preceding taxation years,(B) by the individual in the year in which the individual dies if the particular year is the taxation year that precedes the taxation year in which the individual dies, or(C) by the individual’s graduated rate estate if subsection (5.1) applies to the gift and the particular year is the taxation year in which the individual dies or the preceding taxation year, or(ii) if the individual is a trust,(A) by the trust in the particular year or any of the five preceding taxation years, or(B) by the trust if the trust is a graduated rate estate, subsection (5.1) applies to the gift and the particular year is the taxation year in which the gift is made or a preceding taxation year of the estate;(5) The portion of paragraph (c) of the definition “total ecological gifts” in subsection 118.1(1) of the Act before subparagraph (i) is replaced by the following:(c) the gift was made by the individual in the year or in any of the 10 preceding taxation years to a qualified donee that is(6) The definition “total ecological gifts” in subsection 118.1(1) of the Act, as amended by subsection (5), is replaced by the following:“total ecological gifts”
« total des dons de biens écosensibles »
“total ecological gifts”, of an individual for a particular taxation year, means the total of all amounts each of which is the eligible amount — to the extent it is not otherwise included in determining an amount that is deducted under this section in computing any individual’s tax payable under this Part for any taxation year — of a gift (other than a gift any part of the eligible amount of which is included in the total cultural gifts of any individual for any taxation year)(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 real servitude)(i) the fair market value of which is certified by the Minister of the Environment, and(ii) that is certified by that Minister, or by a person designated by that Minister, to be ecologically sensitive land, the conservation and protection of which is, in the opinion of that Minister or the designated person, important to the preservation of Canada’s environmental heritage,(b) that is made to a qualified donee that is(i) Her Majesty in right of Canada or of a province, a municipality in Canada or a municipal or public body performing a function of government in Canada, or(ii) a registered charity 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(c) that is made(i) if the individual is not a trust,(A) by the individual, or the individ-ual’s spouse or common-law partner, in the particular year or any of the five preceding taxation years,(B) by the individual in the year in which the individual dies if the particular year is the taxation year that precedes the taxation year in which the individual dies, or(C) by the individual’s graduated rate estate if subsection (5.1) applies to the gift and the particular year is the taxation year in which the individual dies or the preceding taxation year, or(ii) if the individual is a trust,(A) by the trust in the particular year or any of the 10 preceding taxation years, or(B) by the trust if the trust is a graduated rate estate, subsection (5.1) applies to the gift and the particular year is the taxation year in which the gift is made or a preceding taxation year of the estate;(7) Paragraph (b) of the definition “total gifts” in subsection 118.1(1) of the Act is repealed.(8) The portion of subsection 118.1(2) of the Act before paragraph (a) is replaced by the following:Proof of gift
(2) An eligible amount of a gift is not to be included in the total charitable gifts, total cultural gifts or total ecological gifts of an individual unless the making of the gift is evidenced by filing with the Minister(9) Subsection 118.1(2.1) of the Act is replaced by the following:Ordering of gifts
(2.1) For the purpose of determining an individual’s total charitable gifts, total cultural gifts and total ecological gifts for a taxation year, no amount in respect of a gift described in any of the definitions of those expressions and made in a particular taxation year is to be considered to have been included in determining an amount that was deducted under this section in computing the individual’s tax payable under this Part for a taxation year until amounts in respect of such gifts made in taxation years preceding the particular year that can be so considered are so considered.(10) Subsections 118.1(4) to (5.3) are replaced by the following:Gifts — deaths before 2016
(4) If an individual dies before 2016 and any of this subsection and subsections (5), (5.2), (5.3), (7) and (7.1) (as they read for the taxation year in which the death occurred) applied to deem the individual to have made a gift at a time before the death, then for the purposes of this section the gift is deemed not to have been made by any other taxpayer or at any other time.Gifts — deaths after 2015
(4.1) Subsection (5) applies to a gift if an estate arises on and as a consequence of the death after 2015 of an individual and the gift is(a) made by the individual by the individ-ual’s will;(b) deemed by subsection (5.2) to have been made in respect of the death; or(c) made by the estate.Gifts — deaths after 2015
(5) If this subsection applies to a gift, then for the purposes of the Act (other than subsections (4.1) and (5.2)) the gift is deemed to be made(a) by the estate referred to in subsection (4.1) and not by any other taxpayer; and(b) subject to subsection (13), at the time that the property that is the subject of the gift is transferred to the donee and not at any other time.Gifts by graduated rate estate
(5.1) This subsection applies to a gift made by the graduated rate estate of an individual if the individual’s death occurs after 2015 and either(a) the gift is deemed by subsection (5.2) to have been made in respect of the death, or(b) the subject of the gift is property that was acquired by the estate on and as a consequence of the death or is property that was substituted for that property.Deemed gifts — eligible transfers
(5.2) For the purposes of this section, money or a negotiable instrument transferred to a qualified donee is deemed to be property that is the subject of a gift, in respect of an individual’s death, made to the qualified donee, if the death occurs after 2015 and the transfer is(a) a transfer — other than a transfer the amount of which is not included in computing the income of the individual or the individual’s estate for any taxation year but would have been included in computing the income of the individual or the estate for a taxation year if the transfer had been made to the individual’s legal representative for the estate’s benefit and this Act were read without reference to subsection 70(3) — made(i) as a consequence of the death,(ii) solely because of the obligations under a life insurance policy under which, immediately before the death, the individ-ual’s life was insured, and the individual’s consent would have been required to change the recipient of the transfer, and(iii) from an insurer to a person that is the qualified donee and that was, immediately before the death, neither a policyholder under the policy nor an assignee of the individual’s interest under the policy; or(b) a transfer made(i) as a consequence of the death,(ii) solely because of the qualified donee’s interest or, for civil law a right, as a beneficiary under an arrangement (other than an arrangement of which a licensed annuities provider is the issuer or carrier)(A) that is a registered retirement savings plan or registered retirement income fund or that was, immediately before the death, a TFSA, and(B) under which the individual was, immediately before the death, the annuitant or holder, and(iii) from the arrangement to the qualified donee.(11) Subparagraphs 118.1(5.4)(a)(i) and (ii) of the Act are replaced by the following:(i) makes a gift at any time of capital property to a qualified donee, or(ii) who is non-resident, makes a gift at any time of real or immovable property situated in Canada to a prescribed donee who provides an undertaking, in a form satisfactory to the Minister, to the effect that the property will be held for use in the public interest; and(12) Subsections 118.1(7) and (7.1) of the Act are replaced by the following:Gift of art
(7) Subsection (7.1) applies to a gift made by an individual if the gift is described in the definition “total charitable gifts” or “total cultural gifts” in subsection (1) and the property that is the subject of the gift is a work of art that(a) was created by the individual and is in the individual’s inventory;(b) was acquired by the individual under circumstances where subsection 70(3) applies; or(c) if the individual is an estate that arose on and as a consequence of the death of a particular individual who created the work of art, was in the particular individual’s inventory immediately before the death.Gift of art
(7.1) If this subsection applies to a gift made by an individual, the following rules apply:(a) in the case of a gift described in the definition “total cultural gifts” in subsection (1),(i) if at the time the gift is made the fair market value of the work of art that is the subject of the gift exceeds its cost amount to the individual, the individual is deemed to receive at that time proceeds of disposition in respect of the work of art equal to the greater of its cost amount to the individual at that time and the amount of the advantage, if any, in respect of the gift, and(ii) if the individual is the graduated rate estate of a particular individual who created the work of art that is the subject of the gift and at the time immediately before the particular individual’s death the fair market value of the work of art exceeds its cost amount to the particular individual, the particular individual is deemed to receive at that time proceeds of disposition in respect of the work of art equal to the cost amount to the particular individual at that time and the estate is deemed to have acquired the work of art at a cost equal to those proceeds; and(b) in the case of a gift described in the definition “total charitable gifts” in subsection (1),(i) if at the time the gift is made the fair market value of the work of art that is the subject of the gift exceeds its cost amount to the individual, then the amount designated in the individual’s return of income under section 150 for the taxation year that includes that time is deemed to be(A) the individual’s proceeds of disposition in respect of the work of art, and(B) the fair market value of the work of art for the purposes of subsection 248(31),(ii) a designation under subparagraph (i) is of no effect to the extent that the amount designated(A) exceeds the fair market value of the work of art otherwise determined, or(B) is less than the greater of the amount of the advantage, if any, in respect of the gift, and the cost amount to the individual of the work of art,(iii) if the individual is the graduated rate estate of a particular individual who created the work of art that is the subject of the gift and at the time immediately before the particular individual’s death the fair market value of the work of art exceeds its cost amount to the particular individual,(A) the amount designated in the partic-ular individual’s return of income under section 150 for the taxation year that includes that time is deemed to be the value of the work of art at the time of the death, and(B) the estate is deemed to have acquired the work of art at a cost equal to that value, and(iv) a designation under subparagraph (iii) is of no effect to the extent that the amount designated(A) exceeds the fair market value of the work of art otherwise determined, or(B) is less than the cost amount to the particular individual of the work of art.(13) Subsection 118.1(10.1) of the Act is replaced by the following:Determination of fair market value
(10.1) For the purposes of this section, subparagraph 69(1)(b)(ii), subsection 70(5) and sections 110.1 and 207.31, if at any time the Canadian Cultural Property Export Review Board or the Minister of the Environment determines or redetermines an amount to be the fair market value of a property that is the subject of a gift described in paragraph 110.1(1)(a), or in the definition “total charitable gifts” in subsection (1), made by a taxpayer within the two-year period that begins at that time, an amount equal to the last amount so determined or redetermined within the period is deemed to be the fair market value of the gift at the time the gift was made and, subject to subsections (6), (7.1) and 110.1(3), to be the taxpayer’s proceeds of disposition of the gift.(14) The portion of subsection 118.1(13) of the Act before paragraph (a) is replaced by the following:Non-qualifying securities
(13) For the purposes of this section (other than this subsection), if at any particular time an individual makes a gift (including a gift that, but for this subsection, would be deemed by subsection (5) to be made at the particular time) of a non-qualifying security of the individual and the gift is not an excepted gift,(15) Paragraphs 118.1(13)(b) and (c) of the Act are replaced by the following:(b) if the security ceases to be a non-qualifying security of the individual at a subsequent time that is within 60 months after the particular time and the donee has not disposed of the security at or before the subsequent time, the individual is deemed to have made a gift to the donee of property at the subsequent time and the fair market value of that property is deemed to be the lesser of the fair market value of the security at the subsequent time and the fair market value of the security at the particular time that would, if this Act were read without reference to this subsection, have been included in calculating the individual’s total charitable gifts for a taxation year;(c) if the security is disposed of by the donee within 60 months after the particular time and paragraph (b) does not apply to the security, the individual is deemed to have made a gift to the donee of property at the time of the disposition and the fair market value of that property is deemed to be the lesser of the fair market value of any consideration (other than a non-qualifying security of any person) received by the donee for the disposition and the fair market value of the security at the particular time that would, if this Act were read without reference to this subsection, have been included in calculating the individ-ual’s total charitable gifts for a taxation year; and(16) Subsection 118.1(21) of the Act is replaced by the following:Options
(21) Subject to subsections (23) and (24), if an individual has granted an option to a qualified donee in a taxation year, no amount in respect of the option is to be included in computing the total charitable gifts, total cultural gifts or total ecological gifts in respect of any taxpayer for any taxation year.(17) Subsections (1) to (4) and (6) to (16) apply to the 2016 and subsequent taxation years.(18) Subsection (5) applies to gifts made after February 10, 2014.35. (1) The description of B in section 118.62 of the Act is replaced by the following:Bis the total of all amounts (other than any amount paid on account of or in satisfaction of a judgement) each of which is an amount of interest paid in the year (or in any of the five preceding taxation years that are after 1997, to the extent that it was not included in computing a deduction under this section for any other taxation year) by the individual or a person related to the individual on a loan made to, or other amount owing by, the individual under the Canada Student Loans Act, the Canada Student Financial Assistance Act, the Apprentice Loans Act or a law of a province governing the granting of financial assistance to students at the post-secondary school level.(2) Subsection (1) comes into force, or is deemed to have come into force, on the day on which Division 30 of Part 6 of the Economic Action Plan 2014 Act, No. 1 comes into force.36. (1) Section 118.92 of the Act is replaced by the following:Ordering of credits
118.92 In computing an individual’s tax payable under this Part, the following provisions shall be applied in the following order: subsections 118(1) and (2), section 118.7, subsections 118(3) and (10) and sections 118.01, 118.02, 118.031, 118.04, 118.05, 118.06, 118.07, 118.3, 118.61, 118.5, 118.6, 118.9, 118.8, 118.2, 118.1, 118.62 and 121.(2) Subsection (1) applies to the 2015 and subsequent taxation years.37. (1) Subparagraph (b)(ii) of the definition “split income” in subsection 120.4(1) of the Act is replaced by the following:(ii) can reasonably be considered to be income derived(A) from the provision of property or services by a partnership or trust to, or in support of, a business carried on by(I) a person who is related to the individual at any time in the year,(II) a corporation of which a person who is related to the individual is a specified shareholder at any time in the year, or(III) a professional corporation of which a person related to the individ-ual is a shareholder at any time in the year, or(B) from a business of, or the rental of property by, a particular partnership or trust, if a person who is related to the individual at any time in the year(I) is actively engaged on a regular basis in the activities of the particular partnership or trust related to earning income from a business or the rental of property, or(II) in the case of a particular partnership, has an interest in the particular partnership directly or indirectly through one or more other partnerships, or(2) The portion of paragraph (c) of the definition “split income” in subsection 120.4(1) of the Act before subparagraph (i) is replaced by the following:(c) a portion of an amount included because of the application of subsection 104(13) or 105(2) in respect of a trust (other than a mutual fund trust or a trust that is deemed to be in existence by subsection 143(1)) in computing the individual’s income for the year, to the extent that the portion(3) Subparagraph (c)(ii) of the definition “split income” in subsection 120.4(1) of the Act is amended by striking out “or” at the end of clause (B), by adding “or” at the end of clause (C) and by adding the following after clause (C):(D) to be income derived from a business of, or the rental of property by, a particular partnership or trust, if a person who is related to the individual at any time in the year is actively engaged on a regular basis in the activities of the particular partnership or trust related to earning income from a business or the rental of property.(4) Subsections (1) to (3) apply to the 2014 and subsequent taxation years.38. (1) The portion of subsection 122(1) of the Act before paragraph (a) is replaced by the following:Tax payable by trust
122. (1) Notwithstanding section 117, the tax payable under this Part for a taxation year by a trust (other than a graduated rate estate or qualified disability trust) is the total of(2) Subsection 122(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) if subsection (2) applies to the trust for the taxation year, the amount determined by the formula A – BwhereAis the amount that would be determined for B for the year if(i) the rate of tax payable under this Part by the trust for each taxation year referred to in the description of B were 29%, and(ii) the trust’s taxable income for a particular taxation year referred to in the description of B were reduced by the total of(A) the amount, if any, that was paid or distributed in satisfaction of all or part of an individual’s interest as a beneficiary under the trust if(I) the individual was an electing beneficiary of the trust for the particular year,(II) the payment or distribution can reasonably be considered to be made out of that taxable income, and(III) the payment or distribution was made in a taxation year referred to in the description of B,(B) the amount that is the portion of the tax payable under this Part by the trust for the particular year that can reasonably be considered to relate to the amount determined under clause (A), and(C) the amount that is the portion of the tax payable, under the law of the province in which the trust is resident for the particular year, that can reasonably be considered to relate to the amount determined under clause (A), andBis the total of all amounts each of which is the amount of tax payable under this Part by the trust for a taxation year that precedes the year if that preceding taxation year is(i) the later of(A) the first taxation year for which the trust was a qualified disability trust, and(B) the last taxation year, if any, for which subsection (2) applied to the trust, or(ii) a taxation year that ends after the taxation year described in subparagraph (i).(3) Subsections 122(1.1) and (2) of the Act are replaced by the following:Credits available to trusts
(1.1) No deduction may be made under this subdivision (other than section 118.1, 120.2 or 121) in computing the tax payable by a trust for a taxation year.Qualified disability trust — application of (1)(c)
(2) This subsection applies to a trust for a particular taxation year if the trust was a qualified disability trust for a preceding taxation year and(a) none of the beneficiaries under the trust at the end of the particular year was an electing beneficiary of the trust for a preceding year;(b) the particular year ended immediately before the trust ceased to be resident in Canada; or(c) an amount is paid or distributed in the particular year to a beneficiary under the trust in satisfaction of all or part of the beneficiary’s interest in the trust unless(i) the beneficiary is an electing beneficiary of the trust for the particular year or a preceding year,(ii) the amount is deducted under paragraph 104(6)(b) in computing the trust’s income for the particular year, or(iii) the amount is paid or distributed in satisfaction of a right to enforce payment of an amount that was deducted under paragraph 104(6)(b) in computing the trust’s income for a preceding year.(4) Subsection 122(3) of the Act is amended by adding the following in alphabetical order:“beneficiary”
« bénéficiaire »
“beneficiary”, under a trust, includes a person beneficially interested in the trust.“electing beneficiary”
« bénéficiaire optant »
“electing beneficiary”, for a taxation year of a qualified disability trust, means a beneficiary under the trust that for the year (a) makes an election described in clause (a)(iii)(A) of the definition “qualified disability trust” in this subsection; and(b) is described in paragraph (b) of that definition.“qualified disability trust”
« fiducie admissible pour personne handicapée »
“qualified disability trust”, for a taxation year (in this definition referred to as the “trust year”), means a trust, if(a) the trust(i) is, at the end of the trust year, a testamentary trust that arose on and as a consequence of a particular individual’s death,(ii) is resident in Canada for the trust year, and(iii) includes in its return of income under this Part for the trust year(A) an election, made jointly with one or more beneficiaries under the trust in prescribed form, to be a qualified disability trust for the trust year, and(B) the Social Insurance Number of each of those beneficiaries;(b) each of those beneficiaries is an individ-ual, named as a beneficiary by the particular individual in the instrument under which the trust was created,(i) in respect of whom paragraphs 118.3(1)(a) to (b) apply for the individual’s taxation year (in this definition referred to as the “beneficiary year”) in which the trust year ends, and(ii) who does not jointly elect with any other trust, for a taxation year of the other trust that ends in the beneficiary year, to be a qualified disability trust; and(c) subsection (2) does not apply to the trust for the trust year.(5) Subsections (1) to (4) apply to the 2016 and subsequent taxation years.39. (1) The Act is amended by adding the following after section 122.71:Subdivision a.3