Archived - Notice of Ways and Means Motion to amend the Income Tax Act
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That it is expedient to amend the Income Tax Act as follows:
1. (1) The description of B in paragraph 40(2)(b) of the Income Tax Act is replaced by the following:
B is
(i) if the taxpayer was resident in Canada during the year that includes the acquisition date, one plus the number of taxation years that end after the acquisition date for which the property is the taxpayer's principal residence and during which the taxpayer was resident in Canada, or
(ii) if it is not the case that the taxpayer was resident in Canada during the year that includes the acquisition date, the number of taxation years that end after the acquisition date for which the property was the taxpayer's principal residence and during which the taxpayer was resident in Canada,
(2) The portion of subsection 40(6) of the Act before paragraph (a) is replaced by the following:
Principal residence - property owned at end of 1981
(6) Subject to subsection (6.1), if a property was owned by a taxpayer, whether jointly with another person or otherwise, at the end of 1981 and continuously from the beginning of 1982 until disposed of by the taxpayer, the amount of the gain determined under paragraph (2)(b) in respect of the disposition shall not exceed the amount, if any, by which the total of
(3) Section 40 of the Act is amended by adding the following after subsection (6):
Principal residence - property owned at end of 2016
(6.1) If a trust owns property at the end of 2016, the trust is not in its first taxation year that begins after 2016 a trust described in subparagraph (c.1)(iii.1) of the definition principal residence in section 54, the trust disposes of the property after 2016, the disposition is the trust's first disposition of the property after 2016 and the trust owns the property, whether jointly with another person or otherwise, continuously from the beginning of 2017 until the disposition,
(a) subsection (6) does not apply to the disposition; and
(b) the trust's gain determined under paragraph (2)(b) in respect of the disposition is the amount, if any, determined by the formula
A + B − C
where
A is the trust's gain calculated in accordance with paragraph (2)(b) on the assumption that
(i) the trust disposed of the property on December 31, 2016 for proceeds of disposition equal to its fair market value on that date, and
(ii) paragraph (a) did not apply in respect of the disposition described in subparagraph (i),
B is the trust's gain in respect of the disposition calculated in accordance with paragraph (2)(b) on the assumption that
(i) the description of B in that paragraph is read without reference to "one plus", and
(ii) the trust acquired the property on January 1, 2017 at a cost equal to its proceeds of disposition determined under the description of A, and
C is the amount, if any, by which the fair market value described in subparagraph (i) of the description of A exceeds the proceeds of disposition of the property determined without reference to this subsection.
(4) Subsection (1) applies in respect of dispositions that occur on or after ANNOUNCEMENT DATE.
2. Paragraph (c.1) of the definition principal residence in section 54 of the Act is amended by striking out "and" at the end of subparagraph (iii) and by adding the following after subparagraph (iii):
(iii.1) if the year begins after 2016, the trust is, in the year,
(A) a trust
(I) for which a day is to be determined under paragraph 104(4)(a), (a.1) or (a.4) by reference to the death or later death, as the case may be, that has not occurred before the beginning of the year, of an individual who is resident in Canada during the year,
(II) a specified beneficiary of which for the year is the individual referred to in subclause (I), and
(III) in the case that the trust acquires the property on or after ANNOUNCEMENT DATE, the terms of which provide the individual referred to in subclause (I) with a right to the use and enjoyment of the housing unit as a residence throughout the period in the year in which the trust owns the property,
(B) a trust
(I) that is a qualified disability trust (as defined in subsection 122(3)) for the year,
(II) an electing beneficiary (in this clause, as defined in subsection 122(3)) of which for the year is
1 resident in Canada during the year,
2 a specified beneficiary of the trust for the year, and
3 a spouse, common-law partner, former spouse or common-law partner or child of the settlor (in this subparagraph, as defined in subsection 108(1)) of the trust, and
(III) in the case that the trust acquires the property on or after ANNOUNCEMENT DATE, the terms of which provide that electing beneficiary with a right to the use and enjoyment of the housing unit as a residence throughout the period in the year in which the trust owns the property, or
(C) a trust
(I) a specified beneficiary of which for the year is an individual
1 whose parents are not alive at the beginning of the year,
2 one of whose parents is a settlor of the trust,
3 who has not attained 18 years of age before the end of the year, and
4 who is resident in Canada during the year, and
(II) in the case that the trust acquires the property on or after ANNOUNCEMENT DATE, the terms of which provide the individual referred to in subclause (I) with a right to the use and enjoyment of the housing unit as a residence throughout the period in the year in which the trust owns the property, and
3 Subsection 107(4.1) of the Act is amended by adding the following after paragraph (a):
(a.1) in the case that the distribution is in a taxation year of the trust that begins after 2016, the trust owned the property at the end of 2016 and the trust is not in its first taxation year that begins after 2016 a trust described in subparagraph (c.1)(iii.1) of the definition principal residence in section 54, the property is not a property that would be the trust's principal residence (as defined in section 54) for the taxation year in which the distribution occurs if
(i) that definition were read without reference to its subparagraph (c.1)(iii.1), and
(ii) the trust designated the property under that definition as its principal residence for the taxation year;
4 (1) Subsection 108(4) of the Act is replaced by the following:
Trust not disqualified
(4) For the purposes of the definition pre-1972 spousal trust in subsection (1), subparagraphs 70(6)(b)(ii) and (6.1)(b)(ii) and paragraphs 73(1.01)(c) and 104(4)(a), if a trust was created by a taxpayer whether by the taxpayer's will or otherwise, no person is deemed to have received or otherwise obtained or to be entitled to receive or otherwise obtain the use of any income or capital of the trust solely because of
(a) the payment, or provision for payment, as the case may be, by the trust of
(i) any estate, legacy, succession or inheritance duty payable, in consequence of the death of the taxpayer, or a spouse or common-law partner of the taxpayer who is a beneficiary under the trust, in respect of any property of, or interest in, the trust, or
(ii) any income or profits tax payable by the trust in respect of any income of the trust; or
(b) the inhabiting at any time by an individual of a housing unit that is, or is in respect of, property that is owned at that time by the trust, if
(i) the property is described in the definition principal residence in section 54 in respect of the trust for the trust's taxation year that includes that time, and
(ii) the individual is
(A) the taxpayer, or
(B) the taxpayer's
(I) spouse or common-law partner,
(II) former spouse or common-law partner, or
(III) child.
(2) Subsection (1) applies to taxation years that begin after 2016.
5 (1) Subsection 152(4) of the Act is amended by adding the following after paragraph (b.2):
(b.3) the following conditions apply:
(i) the taxpayer, or a partnership of which the taxpayer is a member (directly or indirectly through one or more partnerships), disposes in the year of real or immovable property,
(ii) the taxpayer is not a real estate investment trust (as defined in subsection 122.1(1)) for the year,
(iii) if the disposition is by a corporation or partnership, the property is capital property of the corporation or partnership, as the case may be,
(iv) the disposition is not reported in
(A) if the disposition is by the taxpayer, the return of income of the taxpayer under this Part for the year, or
(B) if the disposition is by a partnership, the partnership's return required to be filed for the year under section 229 of the Income Tax Regulations, and
(v) in the case that the disposition is not reported in the return described in clause (iv)(A) or (B) and the taxpayer or partnership, as the case may be, subsequently amends the return to report the disposition, the assessment, reassessment or additional assessment is made before the day that is three years after the day on which the amended return (or a prescribed form amending the return) is filed;
(2) The portion of subsection 152(4.01) of the Act before paragraph (a) is replaced by the following:
Extended period assessment
(4.01) Notwithstanding subsections (4) and (5), an assessment, reassessment or additional assessment to which paragraph (4)(a), (b), (b.1), (b.3) or (c) applies in respect of a taxpayer for a taxation year may be made after the taxpayer's normal reassessment period in respect of the year to the extent that, but only to the extent that, it can reasonably be regarded as relating to,
(3) Subsection 152(4.01) of the Act is amended by striking out "and" at the end of paragraph (a), by adding "and" at the end of paragraph (b) and by adding the following after paragraph (b):
(c) if paragraph (4)(b.3) applies to the assessment, reassessment or additional assessment, the disposition referred to in that paragraph.
(4) Subsections (1) to (3) apply to taxation years that end on or after ANNOUNCEMENT DATE.
6 (1) Subsection 220(3.21) of the Act is amended by striking out "and" at the end of paragraph (a) and by adding the following after paragraph (a):
(a.1) a designation is deemed to be an election under a prescribed provision of this Act if the designation is made under the definition principal residence in section 54; and
(2) Subsection (1) applies to taxation years that end on or after ANNOUNCEMENT DATE.
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