Bill C-22

If you have any questions or comments regarding the accessibility of this publication, please contact us at accessible@parl.gc.ca.

PDF

Withholding and remittance of tax	215. (1) When a person pays, credits or provides, or is deemed to have paid, credited or provided, an amount on which an income tax is payable under this Part, or would be so payable if this Part were read without reference to subsection 216.1(1), the person shall, notwithstanding any agreement or law to the contrary, deduct or withhold from it the amount of the tax and forthwith remit that amount to the Receiver General on behalf of the non-resident person on account of the tax and shall submit with the remittance a statement in prescribed form.
	(2) Subsection 215(5) of the Act is replaced by the following:
Regulations reducing deduction or withholding	(5) The Governor in Council may make regulations in respect of any non-resident person or class of non-resident persons to whom any amount is paid or credited as, on account of, in lieu of payment of or in satisfaction of, any amount described in any of paragraphs 212(1)(h), (j) to (m) and (q) reducing the amount otherwise required by any of subsections (1) to (3) to be deducted or withheld from the amount so paid or credited.
	(3) Subsection (1) applies to amounts paid, credited or provided after 2000.
	(4) Subsection (2) applies after April 1997.
	175. (1) The Act is amended by adding the following after section 216:
Alternative re: acting services	216.1 (1) No tax is payable under this Part on any amount described in subsection 212(5.1) that is paid, credited or provided to a non-resident person in a taxation year if the person
	(a) files with the Minister, on or before the person's filing-due date for the year, a return of income under Part I for the year; and
	(b) elects in the return to have this section apply for the year.
Deemed Part I payment	(2) If in respect of a particular amount paid, credited or provided in a taxation year, a non-resident person has complied with paragraphs (1)(a) and (b), any amount deducted or withheld and remitted to the Receiver General on behalf of the person on account of tax under subsection 212(5.1) in respect of the particular amount is deemed to have been paid on account of the person's tax under Part I.
Deemed election and restriction	(3) Where a corporation payment (within the meaning assigned by subsection 212(5.2)) has been made to a non-resident corporation in respect of an actor and at any time the corporation makes an actor payment (within the meaning assigned by subsection 212(5.2)) to or for the benefit of the actor, if the corporation makes an election under subsection (1) for the taxation year in which the corporation payment is made, the actor is deemed to make an election under subsection (1) for the taxation year of the actor in which the corporation makes the actor payment.
	(2) Subsection (1) applies to the 2001 and subsequent taxation years.
	176. (1) The Act is amended by adding the following after section 218.1:
	PART XIII.1
	ADDITIONAL TAX ON AUTHORIZED FOREIGN BANKS
Branch interest tax	218.2 (1) Every authorized foreign bank shall pay a tax under this Part for each taxation year equal to 25% of its taxable interest expense for the year.
Taxable interest expense	(2) The taxable interest expense of an authorized foreign bank for a taxation year is 15% of the amount, if any, by which
	(a) the total of all amounts on account of interest that are deducted under section 20.2 in computing the bank's income for the year from its Canadian banking business
	exceeds
	(b) the total of all amounts that are included in paragraph (a) and that are in respect of a liability of the bank to another person or partnership.
Where tax not payable	(3) No tax is payable under this Part for a taxation year by an authorized foreign bank if
	(a) the bank is resident in a country with which Canada has a tax treaty at the end of the year; and
	(b) no tax similar to the tax under this Part would be payable in that country for the year by a bank resident in Canada carrying on business in that country during the year.
Rate limitation	(4) Notwithstanding any other provision of this Act, the reference in subsection (1) to 25% shall, in respect of a taxation year of an authorized foreign bank that is resident in a country with which Canada has a tax treaty on the last day of the year, be read as a reference to,
	(a) if the treaty specifies the maximum rate of tax that Canada may impose under this Part for the year on residents of that country, that rate;
	(b) if the treaty does not specify a maximum rate as described in paragraph (a) but does specify the maximum rate of tax that Canada may impose on a payment of interest in the year by a person resident in Canada to a related person resident in that country, that rate; and
	(c) in any other case, 25%.
Provisions applicable to Part	(5) Sections 150 to 152, 158, 159, 160.1 and 161 to 167 and Division J of Part I apply to this Part with any modifications that the circumstances require.
	(2) Subsection (1) applies to taxation years that end after June 27, 1999.
	177. (1) Paragraph 219(1)(b) of the Act is replaced by the following:
	(b) the amount deducted because of section 112 and paragraph 115(1)(e) in computing the corporation's base amount,
	(2) Paragraph 219(1)(d) of the Act is amended by replacing the reference to the expression ``1/3 of the amount'' with a reference to the expression ``the amount''.
	(3) Subsection 219(1.1) of the Act is replaced by the following:
Excluded gains	(1.1) For the purpose of subsection (1), the definition ``taxable Canadian property'' in subsection 248(1) shall be read without reference to paragraphs (a) and (c) to (k) of that definition and as if the only interests or options referred to in paragraph (l) of that definition were those in respect of property described in paragraph (b) of that definition.
	(4) Paragraph 219(2)(a) of the Act is repealed.
	(5) Subsection (1) applies to the 1998 and subsequent taxation years.
	(6) Subsection (2) applies to taxation years that end after February 27, 2000 except that, for such taxation years that ended before October 18, 2000, the reference in paragraph 219(1)(d) of the Act, as enacted by subsection (2), to the expression ``the amount'' shall be read as a reference to the expression ``1/2 of the amount''.
	(7) Subsection (3) applies after October 1, 1996.
	(8) Subsection (4) applies to taxation years that end after June 27, 1999.
	178. (1) Section 220 of the Act is amended by adding the following after subsection (4.4):
Security for departure tax	(4.5) If an individual who is deemed by subsection 128.1(4) to have disposed of a property (other than a right to a benefit under, or an interest in a trust governed by, an employee benefit plan) at any particular time in a taxation year (in this section referred to as the individual's ``emigration year'') elects, in prescribed manner on or before the individual's balance-due day for the emigration year, that this subsection and subsections (4.51) to (4.54) apply in respect of the emigration year,
	(a) the Minister shall, until the individual's balance-due day for a particular taxation year that begins after the particular time, accept adequate security furnished by or on behalf of the individual on or before the individual's balance-due day for the emigration year for the lesser of
	(i) the amount determined by the formula
	A - B - [((A - B)/A) x C]
	where
	A is the total amount of taxes under Parts I and I.1 that would be payable by the individual for the emigration year if the exclusion or deduction of each amount referred to in paragraph 161(7)(a) were not taken into account,
	B is the total amount of taxes under those Parts that would have been so payable if each property (other than a right to a benefit under, or an interest in a trust governed by, an employee benefit plan) deemed by subsection 128.1(4) to have been disposed of at the particular time, and that has not been subsequently disposed of before the beginning of the particular year, were not deemed by subsection 128.1(4) to have been disposed of by the individual at the particular time, and
	C is the total of all amounts deemed under this or any other Act to have been paid on account of the individual's tax under this Part for the emigration year, and
	(ii) if the particular year immediately follows the emigration year, the amount determined under subparagraph (i), and in any other case, the amount determined under this paragraph in respect of the individual for the taxation year that immediately precedes the particular year, and
	(b) except for the purposes of subsections 161(2), (4) and (4.01),
	(i) interest under this Act for any period that ends on the individual's balance-due day for the particular year and throughout which security is accepted by the Minister, and
	(ii) any penalty under this Act computed with reference to an individual's tax payable for the year that was, without reference to this paragraph, unpaid
	shall be computed as if the particular amount for which adequate security has been accepted under this subsection were an amount paid by the individual on account of the particular amount.
Deemed security	(4.51) If an individual (other than a trust) elects under subsection (4.5) that that subsection apply in respect of a taxation year, for the purposes of this subsection and subsections (4.5) and (4.52) to (4.54), the Minister is deemed to have accepted at any time after the election is made adequate security for a total amount of taxes payable under Parts I and I.1 by the individual for the emigration year equal to the lesser of
	(a) the total amount of those taxes that would be payable for the year by an inter vivos trust resident in Canada (other than a trust described in subsection 122(2)) the taxable income of which for the year is $50,000, and
	(b) the greatest amount for which the Minister is required to accept security furnished by or on behalf of the individual under subsection (4.5) at that time in respect of the emigration year,
	and that security is deemed to have been furnished by the individual before the individual's balance-due day for the emigration year.
Limit	(4.52) Notwithstanding subsections (4.5) and (4.51), the Minister is deemed at any time not to have accepted security under subsection (4.5) in respect of an individual's emigration year for any amount greater than the amount, if any, by which
	(a) the total amount of taxes that would be payable by the individual under Parts I and I.1 for the year if the exclusion or deduction of each amount referred to in paragraph 161(7)(a), in respect of which the day determined under paragraph 161(7)(b) is after that time, were not taken into account
	exceeds
	(b) the total amount of taxes that would be determined under paragraph (a) if this Act were read without reference to subsection 128.1(4).
Inadequate security	(4.53) Subject to subsection (4.7), if it is determined at any particular time that security accepted by the Minister under subsection (4.5) is not adequate to secure the particular amount for which it was furnished by or on behalf of an individual,
	(a) subject to a subsequent application of this subsection, the security shall be considered after the particular time to secure only the amount for which it is adequate security at the particular time;
	(b) the Minister shall notify the individual in writing of the determination and shall accept adequate security, for all or any part of the particular amount, furnished by or on behalf of the individual within 90 days after the day of notification; and
	(c) any security accepted in accordance with paragraph (b) is deemed to have been accepted by the Minister under subsection (4.5) on account of the particular amount at the particular time.
Extension of time	(4.54) If in the opinion of the Minister it would be just and equitable to do so, the Minister may at any time extend
	(a) the time for making an election under subsection (4.5);
	(b) the time for furnishing and accepting security under subsection (4.5); or
	(c) the 90-day period for the acceptance of security under paragraph (4.53)(b).
Security for tax on distributions of taxable Canadian property to non-resident beneficiaries	(4.6) Where
	(a) solely because of the application of subsection 107(5), paragraphs 107(2)(a) to (c) do not apply to a distribution by a trust in a particular taxation year (in this section referred to as the trust's ``distribution year'') of taxable Canadian property, and
	(b) the trust elects, in prescribed manner on or before the trust's balance-due day for the distribution year, that this subsection and subsections (4.61) to (4.63) apply in respect of the distribution year,
	the following rules apply:
	(c) the Minister shall, until the trust's balance-due day for a subsequent taxation year, accept adequate security furnished by or on behalf of the trust on or before the trust's balance-due day for the distribution year for the lesser of
	(i) the amount determined by the formula
	A - B - [((A - B)/A) x C]
	where
	A is the total amount of taxes under Parts I and I.1 that would be payable by the trust for the distribution year if the exclusion or deduction of each amount referred to in paragraph 161(7)(a) were not taken into account,
	B is the total amount of taxes under those Parts that would have been so payable if the rules in subsection 107(2) (other than the election referred to in that subsection) had applied to each disposition by the trust in the distribution year of property (other than property subsequently disposed of before the beginning of the subsequent year) to which paragraph (a) applies, and
	C is the total of all amounts deemed under this or any other Act to have been paid on account of the trust's tax under this Part for the distribution year, and
	(ii) where the subsequent year immediately follows the distribution year, the amount determined under subparagraph (i), and in any other case, the amount determined under this paragraph in respect of the trust for the taxation year that immediately precedes the subsequent year, and
	(d) except for the purposes of subsections 161(2), (4) and (4.01),
	(i) interest under this Act for any period that ends on the trust's balance-due day for the subsequent year and throughout which security is accepted by the Minister, and
	(ii) any penalty under this Act computed with reference to the trust's tax payable for the year that was, without reference to this paragraph, unpaid
	shall be computed as if the particular amount for which adequate security has been accepted under this subsection were an amount paid by the trust on account of the particular amount.
Limit	(4.61) Notwithstanding subsection (4.6), the Minister is deemed at any time not to have accepted security under that subsection in respect of a trust's distribution year for any amount greater than the amount, if any, by which
	(a) the total amount of taxes that would be payable by the trust under Parts I and I.1 for the year if the exclusion or deduction of each amount referred to in paragraph 161(7)(a), in respect of which the day determined under paragraph 161(7)(b) is after that time, were not taken into account
	exceeds

Bill C-22

PART XIII.1

ADDITIONAL TAX ON AUTHORIZED FOREIGN BANKS