Archived - Notice of Ways and Means Motion to implement certain provisions of the budget tabled in Parliament on March 22, 2017 and other measures
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MINISTER OF FINANCE
That it is expedient to implement certain provisions of the budget tabled in Parliament on March 22, 2017 and other measures as follows:
Short Title
Short title
1 This Act may be cited as the Budget Implementation Act, 2017, No. 2.
PART 1
Amendments to the Income Tax Act and to Related Legislation
R.S., c. 1 (5th Supp.)
Income Tax Act
2 (1) Subsection 10(14) of the Income Tax Act is repealed.
(2) Section 10 of the Act is amended by adding the following before subsection (15):
Work in progress — transitional
(14.1) If paragraph 34(a) applies in computing a taxpayer's income from a business for the last taxation year of the taxpayer that begins before March 22, 2017, then
(a) for the purpose of computing the income of the taxpayer from the business, at the end of the first taxation year that begins after March 21, 2017,
(i) the amount of the cost of the taxpayer's work in progress is deemed to be one-fifth of the amount of its cost determined without reference to this paragraph, and
(ii) the amount of the fair market value of the taxpayer's work in progress is deemed to be one-fifth of the amount of its fair market value determined without reference to this paragraph;
(b) for the purpose of computing the income of the taxpayer from the business, at the end of the second taxation year that begins after March 21, 2017,
(i) the amount of the cost of the taxpayer's work in progress is deemed to be two-fifths of the amount of its cost determined without reference to this paragraph, and
(ii) the amount of the fair market value of the taxpayer's work in progress is deemed to be two-fifths of the amount of its fair market value determined without reference to this paragraph;
(c) for the purpose of computing the income of the taxpayer from the business, at the end of the third taxation year that begins after March 21, 2017,
(i) the amount of the cost of the taxpayer's work in progress is deemed to be three-fifths of the amount of its cost determined without reference to this paragraph, and
(ii) the amount of the fair market value of the taxpayer's work in progress is deemed to be three-fifths of the amount of its fair market value determined without reference to this paragraph; and
(d) for the purpose of computing the income of the taxpayer from the business, at the end of the fourth taxation year that begins after March 21, 2017,
(i) the amount of the cost of the taxpayer's work in progress is deemed to be four-fifths of the amount of its cost determined without reference to this paragraph, and
(ii) the amount of the fair market value of the taxpayer's work in progress is deemed to be four-fifths of the amount of its fair market value determined without reference to this paragraph.
(3) Subsection 10(14.1) of the Act, as enacted by subsection (2), is repealed.
(4) Subsections (1) and (3) come into force on January 1, 2024.
(5) Subsection (2) applies to taxation years ending after March 21, 2017.
3 (1) The Act is amended by adding the following after section 10:
Mark-to-market election
10.1 (1) Subsection (4) applies to a taxpayer in respect of a taxation year and subsequent taxation years if the taxpayer elects to have subsection (4) apply to the taxpayer and has filed that election in prescribed form on or before its filing-due date for the taxation year.
Revocation
(2) The Minister may, on application by the taxpayer in prescribed form, grant permission to the taxpayer to revoke its election under subsection (1). The revocation applies to each taxation year of the taxpayer that begins after the day on which the taxpayer is notified in writing that the Minister concurs with the revocation, on such terms and conditions as are specified by the Minister.
Subsequent election
(3) Notwithstanding subsection (1), if a taxpayer has, under subsection (2), revoked an election, any subsequent election under subsection (1) shall result in subsection (4) applying to the taxpayer in respect of each taxation year that begins after the day on which the prescribed form in respect of the subsequent election is filed by the taxpayer.
Application
(4) If this subsection applies to a taxpayer in respect of a taxation year,
(a) if the taxpayer is a financial institution (as defined in subsection 142.2(1)) in the taxation year, each eligible derivative held by the taxpayer at any time in the taxation year is, for the purpose of applying the provisions of this Act and with such modifications as the context requires, deemed to be mark-to-market property (as defined in subsection 142.2(1)) of the taxpayer for the taxation year; and
(b) in any other case, subsection (6) applies to the taxpayer in respect of each eligible derivative held by the taxpayer at the end of the taxation year.
Definition of eligible derivative
(5) For the purposes of this section, an eligible derivative, of a taxpayer for a taxation year, means a swap agreement, a forward purchase or sale agreement, a forward rate agreement, a futures agreement, an option agreement or a similar agreement, held at any time in the taxation year by the taxpayer, if
(a) the agreement is not a capital property, a Canadian resource property, a foreign resource property or an obligation on account of capital of the taxpayer;
(b) either
(i) the taxpayer has produced audited financial statements prepared in accordance with generally accepted accounting principles in respect of the taxation year, or
(ii) if the taxpayer has not produced audited financial statements described in subparagraph (i), the agreement has a readily ascertainable fair market value; and
(c) where the agreement is held by a financial institution (as defined in subsection 142.2(1)), the agreement is not a tracking property (as defined in subsection 142.2(1)), other than an excluded property (as defined in subsection 142.2(1)), of the financial institution.
Deemed disposition
(6) If this subsection applies to a taxpayer in respect of each eligible derivative held by the taxpayer at the end of a taxation year, for each eligible derivative held by the taxpayer at the end of the taxation year, the taxpayer is deemed
(a) to have disposed of the eligible derivative immediately before the end of the year and received proceeds or paid an amount, as the case may be, equal to its fair market value at the time of disposition; and
(b) to have reacquired, or reissued or renewed, the eligible derivative at the end of the year at an amount equal to the proceeds or the amount, as the case may be, determined under paragraph (a).
Election year — gains and losses
(7) If a taxpayer holds, at the beginning of its first taxation year in respect of which an election referred to in subsection (1) applies (in this subsection referred to as the "election year"), an eligible derivative and, in the taxation year immediately preceding the election year, the taxpayer did not compute its profit or loss in respect of that eligible derivative in accordance with a method of profit computation that produces a substantially similar effect to subsection (6), then
(a) the taxpayer is deemed
(i) to have disposed of the eligible derivative immediately before the beginning of the election year and received proceeds or paid an amount, as the case may be, equal to its fair market value at that time, and
(ii) to have reacquired, or reissued or renewed, the eligible derivative at the beginning of the election year at an amount equal to the proceeds or the amount, as the case may be, determined under subparagraph (i);
(b) the profit or loss that would arise (determined without reference to this paragraph) on the deemed disposition in subparagraph (a)(i)
(i) is deemed not to arise in the taxation year immediately preceding the election year, and
(ii) is deemed to arise in the taxation year in which the taxpayer disposes of the eligible derivative (otherwise than because of paragraphs (6)(a) or 142.5(2)(a)); and
(c) for the purpose of applying subsection 18(15) in respect of the disposition of the eligible derivative referred to in subparagraph (b)(ii), the profit or loss deemed to arise because of that subparagraph is included in determining the amount of the transferor's loss, if any, from the disposition.
Default realization method
(8) If subsection (4) does not apply to a taxpayer referred to in paragraph (4)(b) in respect of a taxation year, a method of profit computation that produces a substantially similar effect to subsection (6) shall not be used for the purpose of computing the taxpayer's income from a business or property in respect of a swap agreement, a forward purchase or sale agreement, a forward rate agreement, a futures agreement, an option agreement or a similar agreement for the taxation year.
Interpretation
(9) For the purposes of subsections (4) to (7), if an agreement that is an eligible derivative of a taxpayer is not a property of the taxpayer, the taxpayer is deemed
(a) to hold the eligible derivative at any time while the taxpayer is a party to the agreement; and
(b) to have disposed of the eligible derivative when it is settled or extinguished in respect of the taxpayer.
(2) Subsection (1) applies to taxation years that begin after March 21, 2017.
4 (1) Subsection 12(1) of the Act is amended by adding the following after paragraph (d.1):
(d.2) any amount deducted under paragraph 20(1)(m.3) as a reserve in computing the taxpayer's income for the immediately preceding taxation year;
(2) Subparagraphs 12(1)(z.7)(i) and (ii) of the Act are replaced by the following:
(i) if the taxpayer acquires a property under a derivative forward agreement in the year, the portion of the amount by which the fair market value of the property at the time it is acquired by the taxpayer exceeds the cost to the taxpayer of the property that is attributable to an underlying interest other than an underlying interest referred to in subparagraphs (b)(i) to (iii) of the definition derivative forward agreement in subsection 248(1), or
(ii) if the taxpayer disposes of a property under a derivative forward agreement in the year, the portion of the amount by which the proceeds of disposition (within the meaning assigned by subdivision c) of the property exceeds the fair market value of the property at the time the agreement is entered into by the taxpayer that is attributable to an underlying interest other than an underlying interest referred to in clauses (c)(i)(A) to (C) of the definition derivative forward agreement in subsection 248(1).
(3) Subsection (1) applies in respect of bonds issued after 2000.
(4) Subsection (2) applies to acquisitions and dispositions of property that occur after September 15, 2016.
5 (1) Paragraph 18(12)(b) of the Act is replaced by the following:
(b) if the conditions set out in subparagraph (a)(i) or (ii) are met, the amount for the work space that is deductible in computing the individual's income for the year from the business shall not exceed the individual's income for the year from the business, computed without reference to the amount and section 34.1; and
(2) Paragraph 18(14)(c) of the Act is replaced by the following:
(c) the disposition is not a disposition that is deemed to have occurred by subsection 10.1(6) or (7), section 70, subsection 104(4), section 128.1, paragraph 132.2(3)(a) or (c) or subsection 138(11.3) or 149(10);
(3) Paragraph 18(14)(c) of the Act, as enacted by subsection (2), is replaced by the following:
(c) the disposition is not a disposition that is deemed to have occurred by subsection 10.1(6) or (7), section 70, subsection 104(4), section 128.1, paragraph 132.2(3)(a) or (c) or subsection 138(11.3) or 138.2(4) or 149(10);
(4) Section 18 of the Act is amended by adding the following after subsection (16):
Definitions
(17) The following definitions apply in this subsection and subsections (18) to (23).
offsetting position, in respect of a particular position of a person or partnership (in this definition referred to as the "holder"), means one or more positions that
(a) are held by
(i) the holder,
(ii) a person or partnership that does not deal at arm's length with, or is affiliated with, the holder (in this subsection and subsections (20), (22) and (23) referred to as the "connected person"), or
(iii) for greater certainty, by any combination of the holder and one or more connected persons;
(b) have the effect, or would have the effect if each of the positions held by a connected person were held by the holder, of eliminating all or substantially all of the holder's risk of loss and opportunity for gain or profit in respect of the particular position; and
(c) if held by a connected person, can reasonably be considered to have been held with the purpose of obtaining the effect described in paragraph (b). (position compensatoire)
position, of a person or partnership, means one or more properties, obligations or liabilities of the person or partnership, if
(a) each property, obligation or liability is
(i) a share in the capital stock of a corporation,
(ii) an interest in a partnership,
(iii) an interest in a trust,
(iv) a commodity,
(v) foreign currency,
(vi) a swap agreement, a forward purchase or sale agreement, a forward rate agreement, a futures agreement, an option agreement or a similar agreement,
(vii) a debt owed to or owing by the person or partnership that, at any time,
(A) is denominated in a foreign currency,
(B) would be described in paragraph 7000(1)(d) of the Income Tax Regulations if that paragraph were read without reference to the words "other than one described in paragraph (a), (b) or (c)", or
(C) is convertible into or exchangeable for an interest, or for civil law a right, in any property that is described in any of subparagraphs (i) to (iv),
(viii) an obligation to transfer or return to another person or partnership a property identical to a particular property described in any of subparagraphs (i) to (vii) that was previously transferred or lent to the person or partnership by that other person or partnership, or
(ix) an interest, or for civil law a right, in any property that is described in any of subparagraphs (i) to (vii); and
(b) it is reasonable to conclude that, if there is more than one property, obligation or liability, each of them is held in connection with each other. (position)
successor position, in respect of a position (in this definition referred to as the "initial position"), means a particular position if
(a) the particular position is an offsetting position in respect of a second position;
(b) the second position was an offsetting position in respect of the initial position that was disposed of at a particular time; and
(c) the particular position was entered into during the period that begins 30 days before, and ends 30 days after, the particular time. (position remplaçante)
unrecognized loss, in respect of a position of a person or partnership at a particular time in a taxation year, means the loss, if any, that would be deductible in computing the income of the person or partnership for the year with respect to the position if it were disposed of immediately before the particular time at its fair market value at the time of disposition. (perte non constatée)
unrecognized profit, in respect of a position of a person or partnership at a particular time in a taxation year, means the profit, if any, that would be included in computing the income of the person or partnership for the year with respect to the position if it were disposed of immediately before the particular time at its fair market value at the time of disposition. (bénéfice non constaté)
Application of subsection (19)
(18) Subject to subsection (20), subsection (19) applies in respect of a disposition of a particular position by a person or partnership (in this subsection and subsections (19), (20) and (22) referred to as the "transferor"), if
(a) the disposition is not a disposition that is deemed to have occurred by section 70, subsection 104(4), section 128.1 or subsection 138(11.3) or 149(10);
(b) the transferor is not a financial institution (as defined in subsection 142.2(1)), a mutual fund corporation or a mutual fund trust; and
(c) the particular position was, immediately before the disposition, not a capital property, or an obligation or liability on account of capital, of the transferor.
Straddle losses
(19) If this subsection applies in respect of a disposition of a particular position by a transferor, the portion of the transferor's loss, if any, from the disposition of the particular position that is deductible in computing the transferor's income for a particular taxation year is the amount determined by the formula
A + B - C
where
A is
(a) if the particular taxation year is the taxation year in which the disposition occurs, the amount of the loss determined without reference to this subsection (which is, for greater certainty, subject to subsection (15)), and
(b) in any other taxation year, nil;
B is
(a) if the disposition occurred in a preceding taxation year, the amount determined for C in respect of the disposition for the immediately preceding taxation year, and
(b) in any other case, nil; and
C is the lesser of
(a) the amount determined for A for the taxation year in which the disposition occurs, and
(b) the amount determined by the formula
D - (E + F)
where
D is the total of all amounts each of which is the amount of unrecognized profit at the end of the particular taxation year in respect of
(i) the particular position,
(ii) positions that are offsetting positions in respect of the particular position (or would be, to the extent that there is no successor position in respect of the particular position, if the particular position continued to be held by the transferor),
(iii) successor positions in respect of the particular position (for this purpose, a successor position in respect of a position includes a successor position that is in respect of a successor position in respect of the position), and
(iv) positions that are offsetting positions in respect of any successor position referred to in subparagraph (iii) (or would be, if any such successor position continued to be held by the holder),
E is the total of all amounts each of which is the amount of unrecognized loss at the end of the particular taxation year in respect of positions referred to in subparagraphs (i) to (iv) of the description of D, and
F is the total of all amounts each of which is an amount determined by the formula
G - H
where
G is the amount determined for A for the taxation year in which the disposition occurs in respect of any position that was disposed of prior to the disposition of the particular position, if
(i) the particular position was a successor position in respect of that position (for this purpose, a successor position in respect of a position includes a successor position that is in respect of a successor position in respect of the position), and
(ii) that position was
(A) an offsetting position in respect of the particular position,
(B) an offsetting position in respect of a position in respect of which the particular position was a successor position (for this purpose, a successor position in respect of a position includes a successor position that is in respect of a successor position in respect of the position), or
(C) the particular position, and
H is the total of all amounts each of which is, in respect of a position described in G, an amount determined under the first formula in this subsection for the particular taxation year or a preceding taxation year.
Exceptions
(20) Subsection (19) does not apply in respect of a particular position of a transferor if
(a) it is the case that
(i) either the particular position, or the offsetting position in respect of the particular position, consists of
(A) commodities that the holder of the position manufactures, produces, grows, extracts or processes, or
(B) debt that the holder of the position incurs in the course of a business that consists of one or any combination of the activities described in clause (A), and
(ii) it can reasonably be considered that the position not described in subparagraph (i) — the particular position if the offsetting position is described in subparagraph (i) or the offsetting position if the particular position is described in that subparagraph — is held to reduce the risk, with respect to the position described in subparagraph (i), from
(A) in the case of a position described in clause (i)(A), price changes or fluctuations in the value of currency with respect to the goods described in clause (i)(A), or
(B) in the case of a position described in clause (i)(B), fluctuations in interest rates or in the value of currency with respect to the debt described in clause (i)(B);
(b) the transferor or a connected person (in this paragraph referred to as the "holder") continues to hold a position — that would be an offsetting position in respect of the particular position if the particular position continued to be held by the transferor — throughout a 30-day period beginning on the date of disposition of the particular position, and at no time during the period
(i) is the holder's risk of loss or opportunity for gain or profit with respect to the position reduced in any material respect by another position entered into or disposed of by the holder, or
(ii) would the holder's risk of loss or opportunity for gain or profit with respect to the position be reduced in any material respect by another position entered into or disposed of by a connected person, if the other position were entered into or disposed of by the holder; or
(c) it can reasonably be considered that none of the main purposes of the series of transactions or events, or any of the transactions or events in the series, of which the holding of both the particular position and offsetting position are part, is to avoid, reduce or defer tax that would otherwise be payable under this Act.
Application
(21) For the purposes of subsections (17) to (23),
(a) if a position of a person or partnership is not a property of the person or partnership, the person or partnership is deemed
(i) to hold the position at any time while it is a position of the person or partnership, and
(ii) to have disposed of the position when the position is settled or extinguished in respect of the person or partnership;
(b) a disposition of a position is deemed to include a disposition of a portion of the position;
(c) a position held by one or more persons or partnerships referred to in paragraph (a) of the definition offsetting position in subsection (17) is deemed to be an offsetting position in respect of a particular position of a person or partnership if
(i) there is a high degree of negative correlation between changes in value of the position and the particular position, and
(ii) it can reasonably be considered that the principal purpose of the series of transactions or events, or any of the transactions in the series, of which the holding of both the position and the particular position are part, is to avoid, reduce or defer tax that would otherwise be payable under this Act; and
(d) one or more positions held by one or more persons or partnerships referred to in paragraph (a) of the definition offsetting position in subsection (17) are deemed to be a successor position in respect of a particular position of a person or partnership if
(i) a portion of the particular position was disposed of at a particular time,
(ii) the position is, or the positions include, as the case may be, a position that consists of the portion of the particular position that was not disposed of (in this paragraph referred to as the "remaining portion of the particular position"),
(iii) where there is more than one position, the position or positions that do not consist of the remaining portion of the particular position were entered into during the period that begins 30 days before, and ends 30 days after, the particular time,
(iv) the position is, or the positions taken together would be, as the case may be, an offsetting position in respect of a second position (within the meaning of the definition successor position in subsection (17)),
(v) the second position was an offsetting position in respect of the particular position, and
(vi) it can reasonably be considered that the principal purpose of the series of transactions or events, or any of the transactions in the series, of which the disposition of a portion of the particular position and the holding of one or more positions are part, is to avoid, reduce or defer tax that would otherwise be payable under this Act.
Different taxation years
(22) Subsection (23) applies if
(a) at any time in a particular taxation year of a transferor, a position referred to in any of subparagraphs (ii) to (iv) of the description of D in subsection (19) (in this subsection and subsection (23) referred to as the "gain position") is held by a connected person;
(b) the connected person disposes of the gain position in the particular taxation year; and
(c) the taxation year of the connected person in which the disposition referred to in paragraph (b) occurs ends after the end of the particular taxation year.
Different taxation years
(23) If this subsection applies, for the purposes of the definition unrecognized profit in subsection (17) and subsection (19), the portion of the profit, if any, realized from the disposition of the gain position referred to in paragraph (22)(b) that is determined by the following formula is deemed to be unrecognized profit in respect of the gain position until the end of the taxation year of the connected person in which the disposition occurs:
A × B/C
where
A is the amount of the profit otherwise determined;
B is the number of days in the taxation year of the connected person in which the disposition referred to in paragraph (22)(b) occurs that are after the end of the particular taxation year; and
C is the total number of days in the taxation year of the connected person in which the disposition referred to in paragraph (22)(b) occurs.
(5) Subsection (1) applies to the 2011 and subsequent taxation years.
(6) Subsection (2) applies to taxation years that begin after March 21, 2017.
(7) Subsection (3) applies to taxation years that begin after 2017.
(8) Subsection (4) applies in respect of a position (as defined in subsection 18(17) of the Act, as enacted by subsection (4)) of a person or partnership if
(a) the position is acquired, entered into, renewed or extended, or becomes owing, by the person or partnership after March 21, 2017; or
(b) an offsetting position (as defined in subsection 18(17) of the Act, as enacted by subsection (4)) in respect of the position is acquired, entered into, renewed or extended, or becomes owing, by the person or partnership or a connected person (within the meaning of subsection 18(17) of the Act, as enacted by subsection (4)) after March 21, 2017.
6 (1) Subsection 20(1) of the Act is amended by adding the following after paragraph (m.2):
(m.3) the unamortized amount at the end of the year in respect of the amount that was received in excess of the principal amount of a bond (in this paragraph referred to as the "premium") received by the issuer in the year, or a previous year, for issuing the bond (in this paragraph referred to as the "new bond") if
(i) the terms of the new bond are identical to the terms of bonds previously issued by the taxpayer (in this paragraph referred to as the "old bonds"), except for the date of issuance and total principal amount of the bonds,
(ii) the old bonds were part of an issuance (in this paragraph referred to as the "original issuance") of bonds by the taxpayer,
(iii) the interest rate on the old bonds was reasonable at the time of the original issuance,
(iv) the new bond is issued on the re-opening of the original issuance,
(v) the amount of the premium at the time of issuance of the new bond is reasonable, and
(vi) the amount of the premium has been included in the taxpayer's income for the year or a previous taxation year;
(2) Clauses (i)(A) and (B) of the description of A in paragraph 20(1)(xx) of the Act are replaced by the following:
(A) if the taxpayer acquires a property under the agreement in the year or a preceding taxation year, the portion of the amount by which the cost to the taxpayer of the property exceeds the fair market value of the property at the time it is acquired by the taxpayer that is attributable to an underlying interest other than an underlying interest referred to in subparagraphs (b)(i) to (iii) of the definition derivative forward agreement in subsection 248(1), or
(B) if the taxpayer disposes of a property under the agreement in the year or a preceding taxation year, the portion of the amount by which the fair market value of the property at the time the agreement is entered into by the taxpayer exceeds the proceeds of disposition (within the meaning assigned by subdivision c) of the property that is attributable to an underlying interest other than an underlying interest referred to in clauses (c)(i)(A) to (C) of the definition derivative forward agreement in subsection 248(1), and
(3) Subsection (1) applies in respect of bonds issued after 2000.
(4) Subsection (2) applies in respect of acquisitions and dispositions of property that occur after September 15, 2016.
7 (1) Paragraph 34(a) of the Act is replaced by the following:
(a) if the taxpayer so elects in the taxpayer's return of income under this Part for the year and the year begins before March 22, 2017, there shall not be included any amount in respect of work in progress at the end of the year; and
(2) Section 34 of the Act, as amended by subsection (1), is repealed.
(3) Subsection (1) applies to taxation years ending after March 21, 2017.
(4) Subsection (2) comes into force on January 1, 2024.
8 (1) Subclause 37(8)(a)(ii)(B)(II) of the English version of the Act is replaced by the following:
(II) an expenditure of a current nature for the prosecution of scientific research and experimental development in Canada directly undertaken on behalf of the taxpayer,
(2) Subsection 37(11) of the Act is replaced by the following:
Filing requirement
(11) A prescribed form must be filed by a taxpayer with the Minister in respect of any expenditure, that would be incurred by the taxpayer in a taxation year that begins after 1995 if this Act were read without reference to subsection 78(4), that is claimed by the taxpayer for the year as a deduction under this section, on or before the day that is 12 months after the taxpayer's filing due-date for the taxation year, containing
(a) prescribed information in respect of the expenditure; and
(b) claim preparer information, as defined in subsection 162(5.3).
Failure to file
(11.1) Subject to subsection (12), if the prescribed information in respect of an expenditure referred to in paragraph (11)(a) is not contained in the form referred to in subsection (11), no amount in respect of the expenditure may be deducted under subsection (1).
(3) Subsection (1) applies in respect of expenditures incurred after September 16, 2016.
9 (1) Clause 39(1)(c)(iv)(B) of the Act is replaced by the following:
(B) a bankrupt that was a small business corporation at the time it last became a bankrupt, or
(2) Subsection 39(2.1) of the Act is replaced by the following:
Upstream loan — transitional set-off
(2.1) If at any time a corporation resident in Canada or a partnership of which such a corporation is a member (such corporation or partnership referred to in this subsection and subsections (2.2) and (2.3) as the "borrowing party") has received a loan from, or become indebted to, a creditor that is a foreign affiliate (referred to in this subsection and subsections (2.2) and (2.3) as a "creditor affiliate") of a qualifying entity, or that is a partnership (referred to in this subsection and subsection (2.3) as a "creditor partnership") of which such an affiliate is a member, and the loan or indebtedness is at a later time repaid, in whole or in part, then the amount of the borrowing party's capital gain or capital loss determined, in the absence of this subsection, under subsection (2) in respect of the repayment, is to be reduced
(a) in the case of a capital gain
(i) if the creditor is a creditor affiliate, by an amount, not exceeding that capital gain, that is equal to twice the amount that would — in the absence of subparagraph 40(2)(g)(ii) and paragraph 95(2)(g.04) and on the assumption that the creditor affiliate's capital loss in respect of the repayment of the loan or indebtedness were a capital gain of the creditor affiliate, the creditor affiliate had no other income, loss, capital gain or capital loss for any taxation year, and no other foreign affiliate of a qualifying entity had any income, loss, capital gain or capital loss for any taxation year — be the total of all amounts each of which is an amount that would be included in computing a qualifying entity's income under subsection 91(1) for its taxation year that includes the last day of the taxation year of the creditor affiliate that includes the later time, or
(ii) if the creditor is a creditor partnership, by an amount, not exceeding that capital gain, that is equal to twice the amount that is the total of each amount, determined in respect of a particular member of the creditor partnership that is a foreign affiliate of a qualifying entity, that would — in the absence of subparagraph 40(2)(g)(ii) and paragraph 95(2)(g.04) and on the assumption that the creditor partnership's capital loss in respect of the repayment of the loan or indebtedness were a capital gain of the creditor partnership, the particular member had no other income, loss, capital gain or capital loss for any taxation year, and no other foreign affiliate of a qualifying entity had any income, loss, capital gain or capital loss for any taxation year — be the total of all amounts each of which is an amount that would be included in computing a qualifying entity's income under subsection 91(1) for its taxation year that includes the last day of the taxation year of the particular member that includes the last day of the creditor partnership's fiscal period that includes that later time; and
(b) in the case of a capital loss
(i) if the creditor is a creditor affiliate, by an amount, not exceeding that capital loss, that is equal to twice the amount, in respect of the creditor affiliate's capital gain in respect of the repayment of the loan or indebtedness, that would — in the absence of paragraph 95(2)(g.04) and on the assumption that the creditor affiliate had no other income, loss, capital gain or capital loss for any taxation year, and no other foreign affiliate of a qualifying entity had any income, loss, capital gain or capital loss for any taxation year — be the total of all amounts each of which is an amount that would be included in computing a qualifying entity's income under subsection 91(1) for its taxation year that includes the last day of the taxation year of the creditor affiliate that includes the later time, or
(ii) if the creditor is a creditor partnership, by an amount, not exceeding that capital loss, that is equal to twice the amount, in respect of the creditor partnership's capital gain in respect of the repayment of the loan or indebtedness, that is the total of each amount, determined in respect of a particular member of the creditor partnership that is a foreign affiliate of a qualifying entity, that would — in the absence of paragraph 95(2)(g.04) and on the assumption that the particular member had no other income, loss, capital gain or capital loss for any taxation year, and no other foreign affiliate of a qualifying entity had any income, loss, capital gain or capital loss for any taxation year — be the total of all amounts each of which is an amount that would be included in computing a qualifying entity's income under subsection 91(1) for its taxation year that includes the last day of the taxation year of the particular member that includes the last day of the creditor partnership's fiscal period that includes the later time.
Definition of qualifying entity
(2.2) For purposes of subsections (2.1) and (2.3), qualifying entity means
(a) in the case of a borrowing party that is a corporation,
(i) the borrowing party,
(ii) a corporation resident in Canada of which
(A) the borrowing party is a subsidiary wholly-owned corporation, or
(B) a corporation described in this paragraph is a subsidiary wholly-owned corporation,
(iii) a corporation resident in Canada
(A) each share of the capital stock of which is owned by
(I) the borrowing party, or
(II) a corporation that is described in this subparagraph or subparagraph (ii), or
(B) all or substantially all of the capital stock of which is owned by one or more corporations resident in Canada that are borrowing parties in respect of the creditor affiliate because of subsection 90(7), or
(iv) a partnership each member of which is
(A) a corporation described in any of subparagraphs (i) to (iii), or
(B) another partnership described in this subparagraph; and
(b) in the case of a borrowing party that is a partnership,
(i) the borrowing party,
(ii) if each member — determined as if each member of a partnership that is a member of another partnership is a member of that other partnership — of the borrowing party is either a particular corporation resident in Canada (in this paragraph referred to as the "parent") or a corporation resident in Canada that is a subsidiary wholly-owned corporation, as defined in subsection 87(1.4), of the parent,
(A) the parent, or
(B) a corporation resident in Canada that is a subsidiary wholly-owned corporation, as defined in subsection 87(1.4), of the parent, or
(iii) a partnership each member of which is any of
(A) the borrowing party,
(B) a corporation described in subparagraph (ii), and
(C) another partnership described in this subparagraph.
Upstream loan — transitional set-off election
(2.3) Subsection (2.1) and paragraph 95(2)(g.04) do not apply in respect of a repayment, in whole or in part, of a loan or indebtedness if an election has been filed with the Minister before 2019 jointly by
(a) the borrowing party;
(b) if the creditor is a creditor affiliate, each qualifying entity of which the creditor affiliate is a foreign affiliate; and
(c) if the creditor is a creditor partnership, each qualifying entity of which a member of the creditor partnership is a foreign affiliate.
(3) Subsection (1) applies in respect of bankruptcies that occur after April 26, 1995.
(4) Subsection (2) applies in respect of portions of loans received and indebtedness incurred before August 20, 2011 that remain outstanding on August 19, 2011 and that are repaid, in whole or in part, before August 20, 2016.
10 (1) The description of B in paragraph 40(2)(b) of the Act is replaced by the following:
B is
(i) if the taxpayer was resident in Canada during the year that includes the acquisition date, one plus the number of taxation years that end after the acquisition date for which the property is the taxpayer's principal residence and during which the taxpayer was resident in Canada, or
(ii) if it is not the case that the taxpayer was resident in Canada during the year that includes the acquisition date, the number of taxation years that end after the acquisition date for which the property was the taxpayer's principal residence and during which the taxpayer was resident in Canada,
(2) Paragraphs 40(3)(d) and (e) of the Act are replaced by the following:
(d) for the purposes of section 93 and subsections 116(6) and (6.1), the property is deemed to have been disposed of by the taxpayer at that time, and
(e) for the purposes of subsection 2(3) and sections 110.6 and 150, the property is deemed to have been disposed of by the taxpayer in the year.
(3) Paragraph 40(3.1)(b) of the Act is replaced by the following:
(b) for the purposes of subsection 2(3), section 110.6, subsections 116(6) and (6.1) and section 150, the interest is deemed to have been disposed of by the member at that time.
(4) The portion of subsection 40(6) of the Act before paragraph (a) is replaced by the following:
Principal residence — property owned at end of 1981
(6) Subject to subsection (6.1), if a property was owned by a taxpayer, whether jointly with another person or otherwise, at the end of 1981 and continuously from the beginning of 1982 until disposed of by the taxpayer, the amount of the gain determined under paragraph (2)(b) in respect of the disposition shall not exceed the amount, if any, by which the total of
(5) Section 40 of the Act is amended by adding the following after subsection (6):
Principal residence — property owned at end of 2016
(6.1) If a trust owns property at the end of 2016, the trust is not in its first taxation year that begins after 2016 a trust described in subparagraph (c.1)(iii.1) of the definition principal residence in section 54, the trust disposes of the property after 2016, the disposition is the trust's first disposition of the property after 2016 and the trust owns the property, whether jointly with another person or otherwise, continuously from the beginning of 2017 until the disposition,
(a) subsection (6) does not apply to the disposition; and
(b) the trust's gain determined under paragraph (2)(b) in respect of the disposition is the amount, if any, determined by the formula
A + B - C
where
A is the trust's gain calculated in accordance with paragraph (2)(b) on the assumption that
(i) the trust disposed of the property on December 31, 2016 for proceeds of disposition equal to its fair market value on that date, and
(ii) paragraph (a) did not apply in respect of the disposition described in subparagraph (i),
B is the trust's gain in respect of the disposition calculated in accordance with paragraph (2)(b) on the assumption that
(i) the description of B in that paragraph is read without reference to "one plus", and
(ii) the trust acquired the property on January 1, 2017 at a cost equal to its fair market value on December 31, 2016, and
C is the amount, if any, by which the fair market value of the property on December 31, 2016 exceeds the proceeds of disposition of the property determined without reference to this subsection.
(6) Subsection (1) applies in respect of dispositions that occur after October 2, 2016.
(7) Subsections (2) and (3) apply in respect of gains from dispositions that occur after September 15, 2016.
11 (1) The portion of subsection 43(2) of the Act before the formula in paragraph (a) is replaced by the following:
Ecological gifts
(2) For the purposes of subsection (1) and section 53, if at any time a taxpayer disposes of a covenant or an easement to which land is subject or, in the case of land in the Province of Quebec, a real or personal servitude, in circumstances where subsection 110.1(5) or 118.1(12) applies,
(a) the portion of the adjusted cost base to the taxpayer of the land immediately before the disposition that can reasonably be regarded as attributable to the covenant, easement or servitude, as the case may be, is deemed to be equal to the amount determined by the formula
(2) Subsection (1) applies in respect of gifts made after March 21, 2017.
12 (1) Clause 53(2)(c)(i)(C) of the Act is replaced by the following:
(C) subsections 100(4), 112(3.1), (4), (4.2) as it read in its application to dispositions of property that occurred before April 27, 1995 and (5.2),
(2) Subsection (1) is deemed to have come into force on September 16, 2016.
13 (1) Paragraph (c.1) of the definition principal residence in section 54 of the Act is amended by striking out "and" at the end of subparagraph (iii) and by adding the following after that subparagraph:
(iii.1) if the year begins after 2016, the trust is, in the year,
(A) a trust
(I) for which a day is to be determined under paragraph 104(4)(a), (a.1) or (a.4) by reference to the death or later death, as the case may be, that has not occurred before the beginning of the year, of an individual who is resident in Canada during the year, and
(II) a specified beneficiary of which for the year is the individual referred to in subclause (I),
(B) a trust
(I) that is a qualified disability trust (as defined in subsection 122(3)) for the year, and
(II) an electing beneficiary (in this clause, as defined in subsection 122(3)) of which for the year is
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, or
(C) a trust
(I) a specified beneficiary of which for the year is an individual
1 who is resident in Canada during the year,
2 who has not attained 18 years of age before the end of the year, and
3 a mother or father of whom is a settlor of the trust, and
(II) in respect of which either of the following conditions is met:
1 no mother or father of the individual referred to in subclause (I) is alive at the beginning of the year, or
2 the trust arose before the beginning of the year on and as a consequence of the death of a mother or father of the individual referred to in subclause (I), and
(2) Paragraph (c) of the definition superficial loss in section 54 of the Act is replaced by the following:
(c) a disposition deemed to have been made by subsection 45(1), section 48 as it read in its application before 1993, section 50 or 70, subsection 104(4), section 128.1, paragraph 132.2(3)(a) or (c), subsection 138(11.3) or 138.2(4) or 142.5(2), section 142.6 or any of subsections 144(4.1) and (4.2) and 149(10),
(3) Subsection (2) applies to taxation years that begin after 2017.
14 (1) Paragraph 56(1)(z.3) of the Act is replaced by the following:
Pooled registered pension plan
(z.3) any amount required by section 147.5 to be included in computing the taxpayer's income for the year other than an amount distributed under a PRPP as a return of all or a portion of a contribution to the plan to the extent that the amount
(i) is a payment described under clause 147.5(3)(d)(ii)(A) or (B), and
(ii) is not deducted in computing the taxpayer's income for the year or a preceding taxation year; and
(2) Subsection (1) is deemed to have come into force on December 14, 2012.
15 (1) Clause 56.4(7)(b)(ii)(A) of the Act is replaced by the following:
(A) under which the vendor or the vendor's eligible corporation disposes of property (other than property described in clause (B) or subparagraph (i)) to the purchaser, or the purchaser's eligible corporation, for consideration that is received or receivable by the vendor, or the vendor's eligible corporation, as the case may be, or
(2) Subclause 56.4(7)(c)(i)(B)(I) of the Act is replaced by the following:
(I) under which the vendor or the vendor's eligible corporation disposes of property (other than property described in subclause (II) or clause (A)) to the eligible individual, or the eligible individual's corporation, for consideration that is received or receivable by the vendor, or the vendor's eligible corporation, as the case may be, or
(3) Subparagraphs 56.4(7)(g)(i) and (ii) of the Act are replaced by the following:
(i) in the case of subparagraph (b)(i), the vendor, or the vendor's eligible corporation, if it is required to include the goodwill amount in computing its income, and the purchaser, or the purchaser's eligible corporation, if it incurs the expenditure that is the goodwill amount to the vendor or the vendor's eligible corporation, as the case may be, or
(ii) in the case of clause (c)(i)(A), the vendor, or the vendor's eligible corporation, if it is required to include the goodwill amount in computing its income, and the eligible individual, or the eligible individual's eligible corporation, if it incurs the expenditure that is the goodwill amount to the vendor or the vendor's eligible corporation, as the case may be.
(4) Subsections (1) to (3) apply in respect of restrictive covenants granted after September 15, 2016.
16 (1) The definition eligible pension income in subsection 60.03(1) of the Act is amended by striking out "and" at the end of paragraph (a), by adding "and" at the end of paragraph (b) and by adding the following after paragraph (b):
(c) the lesser of
(i) the total of all amounts received by the individual in the year on account of a retirement income security benefit payable to the individual under Part 2 of the Canadian Forces Members and Veterans Re-establishment and Compensation Act, and
(ii) the amount, if any, by which the defined benefit limit (as defined in subsection 8500(1) of the Income Tax Regulations) for the year multiplied by 35 exceeds the total of the amounts determined under paragraphs (a) and (b). (revenu de pension déterminé)
(2) Subsection (1) applies to the 2015 and subsequent taxation years.
17 (1) Subsection 62(2) of the Act is replaced by the following:
Moving expenses of students
(2) There may be deducted in computing a taxpayer's income for a taxation year the amount, if any, that the taxpayer would be entitled to deduct under subsection (1) if the definition eligible relocation in subsection 248(1) were read without reference to subparagraph (a)(i) of that definition and if the word "both" in paragraph (c) of that definition were read as "either or both".
(2) Subsection (1) applies to taxation years that end after October 2011.
18 (1) The portion of clause (i)(B) of the description of C in paragraph 63(2)(b) of the Act before subclause (I) is replaced by the following:
(B) a person certified in writing by a medical doctor or a nurse practitioner to be a person who
(2) Subsection (1) applies in respect of certifications made after September 7, 2017.
19 (1) Paragraph 66(12.601)(b) of the Act is replaced by the following:
(b) during the period beginning on the particular day the agreement was entered into and ending on the earlier of December 31, 2018 and the day that is 24 months after the end of the month that included that particular day, the corporation incurred Canadian development expenses (excluding expenses that are deemed by subsection (12.66) to have been incurred on December 31, 2018) described in paragraph (a) or (b) of the definition Canadian development expense in subsection 66.2(5) or that would be described in paragraph (f) of that definition if the words "paragraphs (a) to (e)" in that paragraph were read as "paragraphs (a) and (b)",
(2) Subsection (1) comes into force on the day on which this Act receives royal assent except that, in its application in respect of agreements entered into after 2016 and before March 22, 2017, paragraph 66(12.601)(b) of the Act, as enacted by subsection (1), is to be read without reference to the phrase "the earlier of December 31, 2018 and".
20 Subparagraph (d)(i) of the definition Canadian exploration expense in subsection 66.1(6) of the Act is amended by striking out "and" at the end of clause (A), by adding "and" at the end of clause (B) and by adding the following after clause (B):
(C) the expense is incurred
(I) before 2021 (excluding an expense that is deemed by subsection 66(12.66) to have been incurred on December 31, 2020), if the expense is incurred in connection with an obligation that was committed to in writing (including a commitment to a government under the terms of a license or permit) by the taxpayer before March 22, 2017, or
(II) before 2019 (excluding an expense that is deemed by subsection 66(12.66) to have been incurred on December 31, 2018), in any other case,
21 (1) Paragraph 75(3)(d) of the Act is replaced by the following:
(d) by a trust if
(i) the trust acquired the property, or other property for which the property is a substitute, from a particular individual,
(ii) the particular individual acquired the property or the other property, as the case may be, in respect of another individual as a consequence of the operation of subsection 122.61(1) or under section 4 of the Universal Child Care Benefit Act, and
(iii) the trust has no beneficiaries (as defined in subsection 108(1)) who may for any reason receive directly from the trust any of the income or capital of the trust other than individuals in respect of whom the particular individual acquired property as a consequence of the operation of a provision described in subparagraph (ii).
(2) Subsection (1) applies to taxation years that end after September 15, 2016.
22 (1) Section 80.03 of the English version of the Act is amended by adding the following before subsection (2):
Definitions
80.03 (1) In this section, commercial debt obligation, commercial obligation, distress preferred share, forgiven amount and person have the meanings assigned by subsection 80(1).
(2) Subsection (1) applies to taxation years that end after February 21, 1994.
23 (1) Section 85 of the Act is amended by adding the following after subsection (1.11):
Eligible derivatives
(1.12) Notwithstanding subsection (1.1), an eligible derivative (as defined in subsection 10.1(5)) of a taxpayer to which subsection 10.1(6) applies is not an eligible property of the taxpayer in respect of a disposition by the taxpayer to a corporation.
(2) The portion of paragraph 85(2)(a) of the Act before subparagraph (i) is replaced by the following:
(a) a partnership has disposed, to a taxable Canadian corporation for consideration that includes shares of the corporation's capital stock, of any partnership property (other than an eligible derivative, as defined in subsection 10.1(5), of the partnership if subsection 10.1(6) applies to the partnership) that was
(3) Subsections (1) and (2) apply to taxation years that begin after March 21, 2017.
24 (1) Subsection 87(2) of the Act is amended by adding the following after paragraph (e.4):
(e.41) if subsection 10.1(6) applied to a predecessor corporation in its last taxation year, each eligible derivative (as defined in subsection 10.1(5)) of the predecessor corporation immediately before the end of its last taxation year is deemed to have been reacquired, or reissued or renewed, as the case may be, by the new corporation at its fair market value immediately before the amalgamation;
(e.42) for the purposes of subsection 10.1(7), the new corporation is deemed to be the same corporation as, and a continuation of, each predecessor corporation;
(2) Section 87 of the Act is amended by adding the following after subsection (8.3):
Taxable Canadian property — conditions for rollover
(8.4) Subsection (8.5) applies at any time if
(a) there is at that time a foreign merger of two or more predecessor foreign corporations (within the meaning assigned by subsection (8.1), if that subsection and subsection (8.2) were read without reference to the expression "otherwise than as a result of the distribution of property to one corporation on the winding-up of another corporation") that were, immediately before that time,
(i) resident in the same country, and
(ii) related to each other (determined without reference to paragraph 251(5)(b));
(b) because of the foreign merger,
(i) a predecessor foreign corporation (referred to in this subsection and subsection (8.5) as the "disposing predecessor foreign corporation") disposes of a property (referred to in this subsection and subsection (8.5) as the "subject property") that is, at that time,
(A) a taxable Canadian property (other than treaty-protected property) of the disposing predecessor foreign corporation, and
(B) any of the following:
(I) a share of the capital stock of a corporation,
(II) an interest in a partnership, and
(III) an interest in a trust, and
(ii) the subject property becomes property of a corporation that is a new foreign corporation for the purposes of subsection (8.1);
(c) no shareholder (except any predecessor foreign corporation) that owned shares of the capital stock of a predecessor foreign corporation immediately before the foreign merger received consideration for the disposition of those shares on the foreign merger, other than shares of the capital stock of the new foreign corporation;
(d) if the subject property is a share of the capital stock of a corporation or an interest in a trust, the corporation or trust is not, at any time in the 24-month period beginning at that time, as part of a transaction or event, or series of transactions or events including the foreign merger, subject to a loss restriction event; and
(e) the new foreign corporation and the disposing predecessor foreign corporation jointly elect in writing under this paragraph in respect of the foreign merger and file the election with the Minister on or before the filing-due date of the disposing predecessor foreign corporation (or the date that would be its filing-due date, if subsection (8.5) did not apply in respect of the disposition of the subject property) for the taxation year that includes that time.
Foreign merger — taxable Canadian property rollover
(8.5) If this subsection applies at any time,
(a) if the subject property is an interest in a partnership,
(i) the disposing predecessor foreign corporation is deemed not to dispose of the subject property (other than for the purposes of subsection (8.4)), and
(ii) the new foreign corporation is deemed
(A) to have acquired the subject property at a cost equal to the cost of the subject property to the disposing predecessor foreign corporation, and
(B) to be the same corporation as, and a continuation of, the disposing predecessor foreign corporation in respect of the subject property; and
(b) if the subject property is a share of the capital stock of a corporation or an interest in a trust,
(i) the subject property is deemed to have been disposed of at that time by the disposing predecessor foreign corporation to the new foreign corporation (that is referred to in subparagraph (8.4)(b)(ii)) for proceeds of disposition equal to the adjusted cost base of the subject property to the disposing predecessor foreign corporation immediately before that time, and
(ii) the cost of the subject property to the new foreign corporation is deemed to be the amount that is deemed by subparagraph (i) to be the proceeds of disposition of the subject property.
(3) The portion of subsection 87(10) of the Act after paragraph (f) is replaced by the following:
the new share is deemed, for the purposes of subsection 116(6), the definitions qualified investment in subsections 146(1), 146.1(1), 146.3(1) and 146.4(1), in section 204 and in subsection 207.01(1), and the definition taxable Canadian property in subsection 248(1), to be listed on the exchange until the earliest time at which it is so redeemed, acquired or cancelled.
(4) Subsection (1) applies to taxation years that begin after March 21, 2017.
(5) Subsection (2) applies to foreign mergers that occur after September 15, 2016, except that an election referred to in paragraph 87(8.4)(e) of the Act, as enacted by subsection (2), is deemed to have been filed on a timely basis if it is filed on or before the day that is six months after the day on which this Act receives royal assent.
(6) Subsection (3) is deemed to have come into force on March 23, 2017.
25 (1) The portion of paragraph 88(1)(e.2) of the Act before subparagraph (i) is replaced by the following:
(e.2) paragraphs 87(2)(c), (d.1), (e.1), (e.3), (g) to (l), (l.21) to (u), (x), (z.1), (z.2), (aa), (cc), (ll), (nn), (pp), (rr) and (tt) to (ww), subsection 87(6) and, subject to section 78, subsection 87(7) apply to the winding-up as if the references in those provisions to
(2) The portion of paragraph 88(1)(e.2) of the Act before subparagraph (i), as enacted by subsection (1), is replaced by the following:
(e.2) paragraphs 87(2)(c), (d.1), (e.1), (e.3), (e.42), (g) to (l), (l.21) to (u), (x), (z.1), (z.2), (aa), (cc), (ll), (nn), (pp), (rr) and (tt) to (ww), subsection 87(6) and, subject to section 78, subsection 87(7) apply to the winding-up as if the references in those provisions to
(3) Subsection 88(1) of the Act is amended by striking out "and" at the end of paragraph (h), by adding "and" at the end of paragraph (i) and by adding the following after paragraph (i):
(j) for the purposes of subsection 10.1(6), the subsidiary's taxation year in which an eligible derivative (as defined in subsection 10.1(5)) was distributed to, or assumed by, the parent on the winding-up is deemed to have ended immediately before the time when the eligible derivative was distributed or assumed.
(4) Subsection (1) applies to taxation years that end after 2001.
(5) Subsections (2) and (3) apply to taxation years that begin after March 21, 2017.
26 (1) The portion of paragraph (a) of the definition capital dividend account in subsection 89(1) of the Act before subparagraph (i) is replaced by the following:
(a) the amount, if any, by which the total of
(2) Paragraph (a) of the definition capital dividend account in subsection 89(1) of the Act is amended by adding "and" at the end of subparagraph (i) and by adding the following after that subparagraph:
(i.1) all amounts each of which is an amount in respect of a distribution made, in the period and after September 15, 2016, by a trust to the corporation in respect of capital gains of the trust equal to the lesser of
(A) the amount, if any, by which
(I) the amount of the distribution
exceeds
(II) the amount designated under subsection 104(21) by the trust in respect of the net taxable capital gains of the trust attributable to those capital gains, and
(B) the amount determined by the formula
A × B
where
A is the fraction or whole number determined when 1 is subtracted from the reciprocal of the fraction under paragraph 38(a) applicable to the trust for the year, and
B is the amount referred to in subclause (A)(II),
(3) The portion of paragraph (f) of the definition capital dividend account in subsection 89(1) of the Act before subparagraph (i) is replaced by the following:
(f) all amounts each of which is an amount in respect of a distribution made, in the period and before September 16, 2016, by a trust to the corporation in respect of capital gains of the trust equal to the lesser of
27 (1) Section 90 of the Act is amended by adding the following after subsection (6):
Upstream loan continuity — reorganizations
(6.1) Subsection (6.11) applies at any time if
(a) immediately before that time, a person or partnership (referred to in this subsection and subsection (6.11) as the "original debtor") owes an amount in respect of a loan or indebtedness (referred to in this subsection and subsection (6.11) as the "pre-transaction loan") to another person or partnership (referred to in this subsection and subsection (6.11) as the "original creditor");
(b) the pre-transaction loan was, at the time it was made or entered into, a loan or indebtedness that is described in subsection (6); and
(c) in the course of an amalgamation, a merger, a winding-up or a liquidation and dissolution,
(i) the amount owing in respect of the pre-transaction loan becomes owing at that time by another person or partnership (the amount owing after that time and the other person or partnership are referred to in subsection (6.11) as the "post-transaction loan payable" and the "new debtor", respectively),
(ii) the amount owing in respect of the pre-transaction loan becomes owing at that time to another person or partnership (the amount owing after that time and the other person or partnership are referred to in subsection (6.11) as the "post-transaction loan receivable" and the "new creditor", respectively), or
(iii) the taxpayer in respect of which the original debtor was a specified debtor at the time referred to in paragraph (b)
(A) ceases to exist, or
(B) merges with one or more corporations to form one corporate entity (referred to in subsection (6.11) as the "new corporation").
Upstream loan continuity — reorganizations
(6.11) If this subsection applies at any time, for the purposes of subsections (6) and (7) to (15) and 39(2.1) and (2.2) and paragraph 95(2)(g.04),
(a) if the condition in subparagraph (6.1)(c)(i) is met,
(i) the post-transaction loan payable is deemed to be the same loan or indebtedness as the pre-transaction loan, and
(ii) the new debtor is deemed to be same debtor as, and a continuation of, the original debtor;
(b) if the condition in subparagraph (6.1)(c)(ii) is met,
(i) the post-transaction loan receivable is deemed to be the same loan or indebtedness as the pre-transaction loan, and
(ii) the new creditor is deemed to be same creditor as, and a continuation of, the original creditor;
(c) if the condition in clause (6.1)(c)(iii)(A) is met,
(i) subject to subparagraph (ii), each entity that held an equity interest in the taxpayer immediately before the winding-up (referred to in this paragraph as a "successor entity") is deemed to be the same entity as, and a continuation of, the taxpayer, and
(ii) for the purposes of applying subsection (13) and the description of A in subsection (14), an amount is deemed, in respect of a loan or indebtedness, to have been included under subsection (6) in computing the income of each successor entity equal to
(A) if the taxpayer is a partnership, the amount that may reasonably be considered to be the successor entity's share (determined in a manner consistent with the determination of the successor entity's share of the income of the partnership under subsection 96(1) for the taxpayer's final fiscal period) of the specified amount that was required to be included in computing the income of the taxpayer under subsection (6) in respect of the loan or indebtedness, and
(B) in any other case, the proportion of the specified amount included in computing the taxpayer's income under subsection (6), in respect of the loan or indebtedness, that the fair market value of the successor entity's equity interest in the taxpayer, immediately before the distribution of the taxpayer's assets on the winding-up, is of the total fair market value of all equity interests in the taxpayer at that time; and
(d) if the condition in clause (6.1)(c)(iii)(B) is met, the new corporation is deemed to be the same corporation as, and a continuation of, the taxpayer.
(2) The portion of subsection 90(7) of the Act before paragraph (a) is replaced by the following:
Back-to-back loans
(7) For the purposes of this subsection and subsections (6), (8) to (15) and 39(2.1) and (2.2) and paragraph 95(2)(g.04), if at any time a person or partnership (referred to in this subsection as the "intermediate lender") makes a loan to another person or partnership (in this subsection referred to as the "intended borrower") because the intermediate lender received a loan from another person or partnership (in this subsection referred to as the "initial lender")
(3) Subparagraph 90(9)(a)(ii) of the Act is replaced with the following:
(ii) the income of the corporation under subsection 91(5), in respect of the taxable surplus of a foreign affiliate of the corporation, unless the specified debtor is a person or partnership described in subclause (i)(D)(I) or (II);
(4) Paragraph (b) of the definition specified debtor in subsection 90(15) of the Act is replaced by the following:
(b) a person with which the taxpayer does not, at that time, deal at arm's length, other than
(i) a non-resident corporation that is at that time a controlled foreign affiliate, within the meaning assigned by section 17, of the taxpayer, or
(ii) a non-resident corporation (other than a corporation that is described in subparagraph (i)) that is, at that time, a foreign affiliate of the taxpayer, if each share of the capital stock of the affiliate is owned at that time by any of
(A) the taxpayer,
(B) persons resident in Canada,
(C) non-resident persons that deal at arm's length with the taxpayer,
(D) persons described in subparagraph (i),
(E) partnerships, each member of which is described in any of clauses (A) to (F), and
(F) a corporation each shareholder of which is described in any of clauses (A) to (F);
(5) Subsection (1) applies to transactions and events that occur after September 15, 2016. However, if a taxpayer files an election with the Minister before 2017, subsection (1) applies in respect of the taxpayer as of August 20, 2011.
(6) Subsection (2) applies in respect of loans received and indebtedness incurred after August 19, 2011. However, subsection 90(7) of the Act, as amended by subsection (2), also applies in respect of any portion of a particular loan received or a particular indebtedness incurred before August 20, 2011 that remains outstanding on August 19, 2014 as if that portion were a separate loan or indebtedness that was received or incurred, as the case may be, on August 20, 2014 in the same manner and on the same terms as the particular loan or indebtedness.
(7) Subsection (3) applies in respect of loans received and indebtedness incurred after August 19, 2011; however, subparagraph 90(9)(a)(ii) of the Act, as enacted by subsection (3), also applies in respect of any portion of a particular loan received or a particular indebtedness incurred before August 20, 2011 that remains outstanding on August 19, 2014 as if that portion were a separate loan or indebtedness that was received or incurred, as the case may be, on August 20, 2014 in the same manner and on the same terms as the particular loan or indebtedness. In respect of loans received and indebtedness incurred prior to September 16, 2016, subparagraph 90(9)(a)(ii) of the Act, as enacted by subsection (3), is to be read without reference to "unless the specified debtor is a person or partnership described in subclause (i)(D)(I) or (II)".
(8) Subsection (4) applies in respect of loans received and indebtedness incurred after August 19, 2011 and in respect of any portion of a particular loan received or indebtedness incurred before August 20, 2011 that remained outstanding on August 19, 2014.
28 (1) Section 91 of the Act is amended by adding the following after subsection (1):
Conditions for application of subsection (1.2)
(1.1) Subsection (1.2) applies at a particular time in respect of a particular foreign affiliate of a taxpayer resident in Canada if
(a) an amount would be included under subsection (1) in computing the income of the taxpayer, in respect of a share of the particular affiliate or another foreign affiliate of the taxpayer that has an equity percentage (as defined in subsection 95(4)) in the particular affiliate, for the taxation year of the particular affiliate (determined without reference to subsection (1.2)) that includes the particular time (referred to in this subsection and subsection (1.3) as the "ordinary taxation year" of the particular affiliate), if the ordinary taxation year of the particular affiliate ended at the particular time;
(b) immediately after the particular time, there is
(i) an acquisition of control of the taxpayer, or
(ii) a triggering event that can reasonably be considered to result in a change in the aggregate participating percentage of the taxpayer in respect of the particular affiliate for the ordinary taxation year of the particular affiliate;
(c) if subparagraph (b)(i) applies, all or a portion of an amount described in paragraph 95(2)(f) that accrued to the particular affiliate during the portion of the ordinary taxation year of the particular affiliate before the particular time is excluded in computing the income of another taxpayer because paragraph 95(2)(f.1) applies as a result of the taxpayer being, at a time before the acquisition of control, a designated acquired corporation of the other taxpayer; and
(d) if subparagraph (b)(ii) applies, none of the following is the case:
(i) the change referred to in that subparagraph
(A) is a decrease, and
(B) is equal to the total of all amounts each of which is the increase — that can reasonably be considered to result from the triggering event — in the aggregate participating percentage of another taxpayer, in respect of the particular affiliate for the ordinary taxation year of the particular affiliate, if the other taxpayer
(I) is a person resident in Canada, other than a person that is — or a trust, any of the beneficiaries under which is — by reason of a statutory provision, exempt from tax under this Part, and
(II) is related to the taxpayer,
1 if the triggering event results from a winding-up of the taxpayer to which subsection 88(1) applies, at the particular time, and
2 in any other case, immediately after the particular time,
(ii) the triggering event is on an amalgamation as defined in subsection 87(1),
(iii) the triggering event is an excluded acquisition or disposition, in respect of the ordinary taxation year of the particular affiliate, and
(iv) if one or more triggering events — all of which are described in subparagraph (b)(ii) and in respect of which none of the conditions in subparagraphs (i) to (iii) are satisfied — occur in the ordinary taxation year of the particular affiliate, the percentage determined by the following formula is not greater than 5%:
A — B
where
A is the total of all amounts each of which is the decrease — which can reasonably be considered to result from a triggering event described in subparagraph (b)(ii) (other than a triggering event that satisfies the conditions in subparagraph (i) or (ii)) — in the aggregate participating percentage of the taxpayer in respect of the particular affiliate for the ordinary taxation year of the particular affiliate, and
B is the total of all amounts each of which is the increase — which can reasonably be considered to result from a triggering event described in subparagraph (b)(ii) (other than a triggering event that satisfies the conditions in subparagraph (i) or (ii)) — in the aggregate participating percentage of the taxpayer in respect of the particular affiliate for the ordinary taxation year of the particular affiliate.
Deemed year-end
(1.2) If this subsection applies at a particular time in respect of a foreign affiliate of a particular taxpayer resident in Canada, then for the purposes of this section and section 92,
(a) in respect of the particular taxpayer and each connected person, or connected partnership, in respect of the particular taxpayer, the affiliate's taxation year that would, in the absence of this subsection, have included the particular time is deemed to have ended at the time (referred to in this section as the "stub-period end time") that is immediately before the particular time;
(b) if the affiliate is, immediately after the particular time, a foreign affiliate of the particular taxpayer or a connected person, or connected partnership, in respect of the particular taxpayer, the affiliate's next taxation year after the stub-period end time is deemed, in respect of the particular taxpayer or the connected person or connected partnership, as the case may be, to begin immediately after the particular time; and
(c) in determining the foreign accrual property income of the affiliate for the taxation year referred to in paragraph (a) in respect of the particular taxpayer or a connected person or connected partnership, in respect of the particular taxpayer, all transactions or events that occur at the particular time are deemed to occur at the stub-period end time.
Definitions
(1.3) The following definitions apply in this subsection and subsections (1.1) and (1.2).
aggregate participating percentage, of a taxpayer in respect of a foreign affiliate of the taxpayer for a taxation year of the affiliate, means the total of all amounts, each of which is the participating percentage, in respect of the affiliate, of a share of the capital stock of a corporation that is owned by the taxpayer at the end of the taxation year. (pourcentage de participation total)
connected person, in respect of a particular taxpayer, means a person that — at or immediately after the particular time at which subsection (1.2) applies in respect of a foreign affiliate of the particular taxpayer — is resident in Canada and
(a) does not deal at arm's length with the particular taxpayer; or
(b) deals at arm's length with the particular taxpayer, if
(i) the foreign affiliate is a foreign affiliate of the person at the particular time, and
(ii) the aggregate participating percentage of the person in respect of the foreign affiliate for the affiliate's ordinary taxation year may reasonably be considered to have increased as a result of the triggering event that gave rise to the application of subsection (1.2). (personne rattachée)
connected partnership, in respect of a particular taxpayer, means a partnership if, at or immediately after the particular time at which subsection (1.2) applies in respect of a foreign affiliate of the particular taxpayer,
(a) the particular taxpayer or a connected person in respect of the particular taxpayer is, directly or indirectly through one or more partnerships, a member of the partnership; or
(b) if paragraph (a) does not apply,
(i) the foreign affiliate is a foreign affiliate of the partnership at the particular time, and
(ii) the aggregate participating percentage of the partnership in respect of the foreign affiliate for the affiliate's ordinary taxation year may reasonably be considered to have increased as a result of the triggering event that gave rise to the application of subsection (1.2). (société de personnes rattachée)
excluded acquisition or disposition, in respect of a taxation year of a foreign affiliate of a taxpayer, means an acquisition or disposition of an equity interest in a corporation, partnership or trust that can reasonably be considered to result in a change in the aggregate participating percentage of the taxpayer in respect of the affiliate for the taxation year of the affiliate, if
(a) the change is less than 1%; and
(b) it cannot reasonably be considered that one of the main reasons the acquisition or disposition occurs as a separate acquisition or disposition from one or more other acquisitions or dispositions is to avoid the application of subsection (1.2). (acquisition ou disposition exclue)
triggering event means
(a) an acquisition or disposition of an equity interest in a corporation, partnership or trust;
(b) a change in the terms or conditions of a share of the capital stock of a corporation or the rights as a member of a partnership or as a beneficiary under a trust; and
(c) a disposition or change of a right referred to in paragraph 95(6)(a). (événement déclencheur)
Election for application of subsection (1.2)
(1.4) If the conditions in subsection (1.1) are not met at a particular time in respect of a particular foreign affiliate of a taxpayer resident in Canada, subsection (1.2) applies in respect of the particular affiliate at that time if
(a) the conditions in paragraph (1.1)(a) are met in respect of the particular affiliate at the particular time;
(b) immediately after the particular time there is a disposition of shares of the capital stock of the particular affiliate or another foreign affiliate of the taxpayer that had an equity percentage (as defined in subsection 95(4)) in the particular affiliate by
(i) the taxpayer, or
(ii) a controlled foreign affiliate of the taxpayer; and
(c) the taxpayer and all specified corporations jointly elect in writing to apply subsection (1.2) in respect of the disposition and file the election with the Minister on or before the day that is the earliest filing-due date for all taxpayers making the election in respect of the taxation year in which the transaction to which the election relates occurred, and for this purpose, a specified corporation means a corporation that at or immediately after the particular time meets the following conditions:
(i) the corporation is resident in Canada,
(ii) the corporation does not deal at arm's length with the taxpayer, and
(iii) the particular affiliate is a foreign affiliate of the corporation, or of a partnership of which the corporation is, directly or indirectly through one or more partnerships, a member.
Election for application of subsection (1.2)
(1.5) A particular taxpayer resident in Canada may elect, by filing with the Minister in prescribed manner a form containing prescribed information on or before the particular taxpayer's filing-due date for its taxation year that includes a particular time, to have subsection (1.2) apply at the particular time in respect of a particular foreign affiliate of the particular taxpayer if
(a) immediately after the particular time, there is an acquisition or disposition of shares of the capital stock of a foreign affiliate of another taxpayer that results in a decrease to the surplus entitlement percentage of the other taxpayer in respect of the particular affiliate;
(b) as a result of the acquisition or disposition described in paragraph (a), subsection (1.2) applies to the other taxpayer resident in Canada in respect of the particular affiliate;
(c) the surplus entitlement percentage of the particular taxpayer in respect of the particular affiliate increases as a result of the acquisition or disposition described in paragraph (a);
(d) subsection (1.2) does not apply, in the absence of this subsection, to the particular taxpayer in respect of the acquisition or disposition; and
(e) the particular affiliate is a foreign affiliate of the particular taxpayer at the particular time.
(2) Subsection 91(1.5) of the Act, as enacted by subsection (1), is repealed.
(3) Subsection 91(4.5) of the Act is replaced by the following:
Exception — hybrid entities
(4.5) For the purposes of subparagraph (4.1)(a)(i), a specified owner in respect of the taxpayer is not to be considered, under the relevant foreign tax law, to own less than all of the shares of the capital stock of a corporation that are considered to be owned for the purposes of this Act solely because the specified owner or the corporation is not treated as a corporation under the relevant foreign tax law.
(4) Subsection (1) is deemed to have come into force on July 12, 2013, except that
(a) an election referred to in subsection 91(1.4) of the Act, as enacted by subsection (1), is deemed to have been filed by the particular taxpayer and all specified corporations (within the meaning assigned by subsection 91(1.4) of the Act) referred to in that subsection on a timely basis if the election is filed on or before the earliest filing-due date, for all taxpayers making the election, for the respective taxation year that includes the day on which this Act receives royal assent;
(b) an election referred to in subsection 91(1.5) of the Act, as enacted by subsection (1), is deemed to have been filed by the particular taxpayer referred to in that subsection on a timely basis if the election is filed on or before the filing-due date for the particular taxpayer for its taxation year that includes the day on which this Act receives royal assent;
(c) subject to paragraph (d), for the purpose of applying subsections 91(1.1) to (1.4) of the Act, as enacted by subsection (1), if the particular time referred to in subsection 91(1.1) of the Act, as enacted by subsection (1), is before September 8, 2017, those subsections are to be read as follows:
Conditions for application of subsection (1.2)
(1.1) Subsection (1.2) applies at a particular time in respect of a particular foreign affiliate of a taxpayer resident in Canada if
(a) an amount would be included under subsection (1) in computing the income of the taxpayer, in respect of a share of the particular affiliate or another foreign affiliate of the taxpayer that has an equity percentage (as defined in subsection 95(4)) in the particular affiliate, for the taxation year of the particular affiliate (determined without reference to subsection (1.2)) that includes the particular time, if that taxation year ended at the particular time; and
(b) immediately after the particular time, there is an acquisition or disposition of shares of the capital stock of a foreign affiliate of the taxpayer that results in a change to the surplus entitlement percentage of the taxpayer in respect of the particular affiliate (determined as if the taxpayer were a corporation resident in Canada), unless
(i) the change is a decrease in the surplus entitlement percentage of the taxpayer (determined as if the taxpayer were a corporation resident in Canada) in respect of the particular affiliate and, as a result of the acquisition or disposition, one or more taxpayers, each of which is a taxable Canadian corporation that does not deal at arm's length with the taxpayer immediately after the particular time, have increases to their surplus entitlement percentages in respect of the particular affiliate that are, in total, equal to the reduction in the taxpayer's surplus entitlement percentage in respect of the particular affiliate immediately after the particular time,
(ii) the acquisition or disposition is on an amalgamation as defined in subsection 87(1), or
(iii) if one or more such acquisitions or dispositions in respect of which the conditions in subparagraphs (i) and (ii) are not satisfied occur in a particular taxation year of the particular affiliate (determined without reference to this subsection and subsection (1.2)), the percentage determined by the following formula is not greater than 5%:
A – B
where
A is the total of all amounts each of which is the decrease in the surplus entitlement percentage of the taxpayer in respect of the particular affiliate resulting from such acquisition or disposition in the particular year (other than an acquisition or disposition described in subparagraph (i) or (ii)), and
B is the total of all amounts each of which is the increase in the surplus entitlement percentage of the taxpayer in respect of the particular affiliate resulting from such acquisition or disposition in the particular year (other than an acquisition from a person that does not deal at arm's length with the taxpayer).
Deemed year-end
(1.2) If this subsection applies at a particular time in respect of a foreign affiliate of a particular taxpayer resident in Canada, then for the purposes of this section and section 92,
(a) in respect of the particular taxpayer and each corporation or partnership that is connected to the particular taxpayer, the affiliate's taxation year that would, in the absence of this subsection, have included the particular time is deemed to have ended at the time (referred to in this section as the "stub-period end time") that is immediately before the particular time;
(b) if the affiliate is, immediately after the particular time, a foreign affiliate of the particular taxpayer or a corporation or partnership that is connected to the particular taxpayer, the affiliate's next taxation year after the stub-period end time is deemed, in respect of the taxpayer or the connected corporation or partnership, as the case may be, to begin immediately after the particular time; and
(c) in determining the foreign accrual property income of the affiliate for that taxation year in respect of the particular taxpayer or a corporation or partnership that is connected to the particular taxpayer, all transactions or events that occur at the particular time are deemed to occur at the stub-period end time.
Connected — meaning
(1.3) For the purposes of subsection (1.2),
(a) a corporation is connected to the particular taxpayer if, at or immediately after the particular time, it is resident in Canada and does not deal at arm's length with the taxpayer; and
(b) a partnership is connected to the particular taxpayer if, at or immediately after the particular time, the particular taxpayer or a corporation described in paragraph (a) is, directly or indirectly through one or more partnerships, a member of the partnership.
Election for application of subsection (1.2)
(1.4) If the conditions in subsection (1.1) are not met at a particular time in respect of a particular foreign affiliate of a taxpayer resident in Canada, subsection (1.2) applies in respect of the particular affiliate at that time if
(a) the conditions in paragraph (1.1)(a) are met in respect of the particular affiliate at the particular time;
(b) immediately after the particular time there is a disposition of shares of the capital stock of the particular affiliate or another foreign affiliate of the taxpayer that had an equity percentage (as defined in subsection 95(4)) in the particular affiliate by
(i) the taxpayer, or
(ii) a controlled foreign affiliate of the taxpayer, if the shares are not excluded property of the controlled foreign affiliate immediately after the particular time; and
(c) the taxpayer and all specified corporations jointly elect, by filing with the Minister in prescribed manner a form containing prescribed information on or before the day that is the earliest filing-due date for all taxpayers making the election in respect of the taxation year in which the transaction to which the election relates occurred, and for this purpose, a specified corporation means a corporation that at or immediately after the particular time meets the following conditions:
(i) the corporation is resident in Canada,
(ii) the corporation does not deal at arm's length with the taxpayer, and
(iii) the particular affiliate is a foreign affiliate of the corporation, or of a partnership of which the corporation is, directly or indirectly through one or more partnerships, a member.
(d) paragraph (c) does not apply in respect of a taxpayer if
(i) the taxpayer and all connected persons and connected partnerships (within the meanings assigned by subsection 91(1.3) of the Act, as enacted by this subsection) in respect of the taxpayer jointly elect in writing, and
(ii) the election is filed with the Minister by the later of the taxpayer's filing-due date for its taxation year that includes September 8, 2017 and six months after the day on which this Act receives royal assent; and
(e) if paragraph (c) does not apply in respect of a taxpayer because of paragraph (d),
(i) section 91 of the Act, as amended by subsection (1), shall be read without reference to its subsection (1.5), and
(ii) subsection 91(1.1) of the Act, as enacted by subsection (1), shall be read without reference to its subparagraph (b)(i) and paragraph (c) in respect of any acquisition of control of the taxpayer that occurs before September 8, 2017.
(5) Subsection (2) applies to taxation years that begin after September 7, 2017.
(6) Subsection (3) applies in respect of the computation of foreign accrual tax applicable to an amount included in computing a taxpayer's income under subsection 91(1), for a taxation year of the taxpayer that ends after October 24, 2012, in respect of a foreign affiliate of the taxpayer.
29 (1) Clause 94(3)(b)(ii)(A) of the Act is replaced by the following:
(A) the trust's income for the particular taxation year (other than income — not including dividends or interest — from sources in Canada) is deemed to be from sources in that country and not to be from any other source, and
(2) Subsection (1) applies to taxation years that end after September 15, 2016.
30 (1) The definition trust company in subsection 95(1) of the Act is replaced by the following:
trust company includes a corporation that is resident in Canada and that is a loan company as defined in subsection 2(1) of the Canadian Payments Act. (société de fiducie)
(2) The portion of paragraph 95(2)(a.1) of the Act after subparagraph (ii) and before subparagraph (iii) is replaced by the following:
unless more than 90% of the gross revenue of the affiliate for the year from the sale of property (other than a property the income from the sale of which is not included in computing the income from a business other than an active business of the affiliate under this paragraph because of subsection (2.31)) is derived from the sale of such property (other than a property described in subparagraph (ii) the cost of which to any person is a cost referred to in subparagraph (i)) to persons with whom the affiliate deals at arm's length (which, for this purpose, includes a sale of property to a non-resident corporation with which the affiliate does not deal at arm's length for sale to persons with whom the affiliate deals at arm's length) and, where this paragraph applies to include income of the affiliate from the sale of property in the income of the affiliate from a business other than an active business,
(3) The portion of paragraph 95(2)(a.23) of the Act before subparagraph (i) is replaced by the following:
(a.23) for the purposes of paragraphs (a.2), (a.21) and (a.24), specified Canadian risk means a risk in respect of
(4) Subsection 95(2) of the Act is amended by adding the following after paragraph (a.23):
(a.24) for the purposes of paragraph (a.2),
(i) a risk is deemed to be a specified Canadian risk of a particular foreign affiliate of a taxpayer if
(A) as part of a transaction or series of transactions, the particular affiliate insured or reinsured the risk,
(B) the risk would not be a specified Canadian risk if this Act were read without reference to this paragraph, and
(C) it can reasonably be concluded that one of the purposes of the transaction or series of transactions was to avoid the application of any of paragraphs (a.2) to (a.22), and
(ii) if the particular affiliate — or a foreign affiliate of another taxpayer, if that other taxpayer or affiliate, or a partnership of which that other taxpayer or affiliate is a member, does not deal at arm's length with the particular affiliate — enters into one or more agreements or arrangements in respect of the risk,
(A) activities performed in connection with those agreements or arrangements are deemed to be a separate business, other than an active business, carried on by the particular affiliate or other affiliate, as the case may be, and
(B) any income of the particular affiliate or other affiliate, as the case may be, from the business (including income that pertains to or is incident to the business) is deemed to be income from a business other than an active business;
(5) Paragraph 95(2)(f.13) of the Act is replaced by the following:
(f.13) where the calculating currency of a foreign affiliate of a taxpayer is a currency other than Canadian currency, the foreign affiliate shall determine the amount included in computing its foreign accrual property income, in respect of the taxpayer for a taxation year of the foreign affiliate, attributable to its capital gain or taxable capital gain, from the disposition of an excluded property in the taxation year, in Canadian currency by converting the amount of the capital gain, or taxable capital gain, otherwise determined under subparagraph (f.12)(i) using its calculating currency for the taxation year into Canadian currency using the rate of exchange quoted by the Bank of Canada on the day on which the disposition was made, or another rate of exchange that is acceptable to the Minister;
(6) Paragraph 95(2)(f.15) of the Act is replaced by the following:
(f.15) for the purposes of applying subparagraph (f)(i), the references in subsection 39(2) to "Canadian currency" are to be read as "the taxpayer's calculating currency"
(i) in respect of a debt obligation owing by a foreign affiliate of a taxpayer, or a partnership of which the foreign affiliate is a member, that is a debt referred to in subparagraph (i)(i) or (ii), and
(ii) in respect of an agreement described in subparagraph (i)(iii) entered into by a foreign affiliate of a taxpayer, or a partnership of which the foreign affiliate is a member;
(7) Paragraph 95(2)(g.04) of the Act is replaced by the following:
(g.04) if at any time a corporation resident in Canada or a partnership of which such a corporation is a member (such corporation or partnership referred to in this paragraph as the "borrowing party") has received a loan from, or become indebted to, a creditor that is a foreign affiliate (referred to in this paragraph as a "creditor affiliate") of a qualifying entity (in this paragraph within the meaning assigned by subsection 39(2.2)), or that is a partnership (referred to in this paragraph as a "creditor partnership") of which such an affiliate is a member, and the loan or indebtedness is at a later time repaid, in whole or in part, then the amount of the creditor affiliate's or creditor partnership's capital gain or capital loss, as the case may be, determined in the absence of this paragraph, in respect of the repayment, is to be reduced
(i) in the case of a capital loss
(A) if the creditor is a creditor affiliate, by an amount, not exceeding the amount of that capital loss so determined, that is determined by the formula
A/B
where
A is the amount by which the borrowing party's capital gain is reduced under paragraph 39(2.1)(a) in respect of that repayment, and
B is the total of all participating percentages, determined at the end of the taxation year of the creditor affiliate that includes the later time, of shares of the capital stock of a foreign affiliate that are owned by qualifying entities and on which an amount would be included under subsection 91(1), on the assumptions that
(I) the capital loss of the creditor affiliate, determined in the absence of this paragraph, in respect of the repayment of the loan or indebtedness were a capital gain of the creditor affiliate, and
(II) neither the creditor affiliate nor any other foreign affiliate of a qualifying entity had any other income, gain or loss for any taxation year, and
(B) if the creditor is a creditor partnership, by an amount, not exceeding the capital loss so determined, that is equal to the amount determined by the formula
A/(B × C)
where
A is the amount by which the borrowing party's capital gain is reduced under paragraph 39(2.1)(a) in respect of that repayment,
B is the proportion that the amount of the capital loss of the creditor partnership in respect of the repayment of the loan or indebtedness, determined in the absence of this paragraph, that would be included in the determination of the income, gain or loss of the members of the creditor partnership that are foreign affiliates of qualifying entities is of the amount of the capital loss so determined, and
C is the total of all participating percentages, each of which is the participating percentage in respect of a share of the capital stock of a foreign affiliate of a qualifying entity, and that is owned by a qualifying entity, that is relevant in determining the amount that would be included in computing a qualifying entity's income under subsection 91(1), on the assumptions that
(I) the capital loss of the creditor partnership, determined in the absence of this paragraph, in respect of the repayment of the loan or indebtedness were a capital gain of the creditor partnership, and
(II) neither the creditor partnership nor any foreign affiliate of a qualifying entity had any other income, gain or loss for any taxation year, and
(ii) in the case of a capital gain,
(A) if the creditor is a creditor affiliate, by an amount, not exceeding that capital gain so determined, that is equal to the amount determined by the formula
A/B
where
A is the amount by which the borrowing party is required to reduce its capital loss under paragraph 39(2.1)(b) in respect of that repayment, and
B is the total of all participating percentages, determined at the end of the taxation year of the creditor affiliate that includes the later time, of shares of the capital stock of a foreign affiliate that are owned by qualifying entities and on which an amount would be included under subsection 91(1), on the assumption that neither the creditor affiliate nor any foreign affiliate of a qualifying entity had any other income, gain or loss for any taxation year other than its capital gain, determined in the absence of this paragraph, in respect of the repayment of the loan or indebtedness, and
(B) if the creditor is a creditor partnership, by an amount, not exceeding the capital loss so determined, that is equal to the amount determined by the following formula
A/(B × C)
where
A is the amount by which the borrowing party is required to reduce its capital loss under paragraph 39(2.1)(b) in respect of that repayment,
B is the proportion that the amount of the capital gain of the creditor partnership in respect of the repayment of the loan or indebtedness, determined in the absence of this paragraph, that would be included in the determination of the income, gain or loss of the members of the creditor partnership that are foreign affiliates of qualifying entities is of the amount of the capital gain so determined, and
C is the total of all participating percentages, each of which is the participating percentage in respect of a share of the capital stock of a foreign affiliate of a qualifying entity, and that is owned by a qualifying entity, that is relevant in determining the amount that would be included in computing a qualifying entity's income under subsection 91(1), on the assumption that neither the creditor partnership nor any foreign affiliate of a qualifying entity had any other income, gain or loss for any taxation year;
(8) Subsection (1) is deemed to have come into force on October 24, 2001.
(9) Subsection (2) applies in respect of taxation years of a foreign affiliate of a taxpayer that end after October 2012.
(10) Subsections (3) and (4) apply to transactions that occur after March 21, 2017.
(11) Subsection (5) is deemed to have come into force on March 1, 2017.
(12) Subsection (6) applies in respect of taxation years of a foreign affiliate that begin after October 2, 2007.
(13) Subsection (7) applies in respect of portions of loans received and indebtedness incurred before August 20, 2011 that remain outstanding on August 19, 2011 and that are repaid, in whole or in part, before August 20, 2016.
31 (1) The portion of subsection 96(3) of the Act before paragraph (a) is replaced by the following:
Agreement or election of partnership members
(3) If a taxpayer who was a member of a partnership at any time in a fiscal period has, for any purpose relevant to the computation of the taxpayer's income from the partnership for the fiscal period, made or executed an agreement, designation or election under or in respect of the application of any of subsections 10.1(1), 13(4), (4.2) and (16), section 15.2, subsections 20(9) and 21(1) to (4), section 22, subsection 29(1), section 34, clause 37(8)(a)(ii)(B), subsections 44(1) and (6), 50(1) and 80(5) and (9) to (11), section 80.04, subsections 86.1(2), 88(3.1), (3.3) and (3.5) and 90(3), the definition relevant cost base in subsection 95(4) and subsections 97(2), 139.1(16) and (17) and 249.1(4) and (6) that, if this Act were read without reference to this subsection, would be a valid agreement, designation or election,
(2) Subsection (1) applies to taxation years that begin after March 21, 2017.
32 (1) The portion of subsection 97(2) of the Act before paragraph (a) is replaced by the following:
(2) Notwithstanding any other provision of this Act other than subsections (3) and 13(21.2), where a taxpayer at any time disposes of any property (other than an eligible derivative, as defined in subsection 10.1(5), of the taxpayer if subsection 10.1(6) applies to the taxpayer) that is a capital property, Canadian resource property, foreign resource property or inventory of the taxpayer to a partnership that immediately after that time is a Canadian partnership of which the taxpayer is a member, if the taxpayer and all the other members of the partnership jointly so elect in prescribed form within the time referred to in subsection 96(4),
(2) Subsection (1) applies to taxation years that begin after March 21, 2017.
33 (1) Section 98 of the Act is amended by adding the following after subsection (6):
Depreciable property — leasehold interests and options
(7) For the purposes of paragraphs (3)(c) and (5)(c), a leasehold interest in a depreciable property and an option to acquire a depreciable property are depreciable properties.
(2) Subsection (1) applies in respect of partnerships that cease to exist after September 15, 2016.
34 (1) Paragraph 100(1)(a) of the Act is replaced by the following:
(a) 1/2 of such portion of the taxpayer's capital gain for the year from the disposition as may reasonably be regarded as attributable to increases in the value of any partnership property of the partnership that is capital property (other than depreciable property) held directly by the partnership or held indirectly by the partnership through one or more other partnerships, and
(2) Subsection (1) applies in respect of dispositions made after August 13, 2012.
35 (1) The portion of subsection 104(4) of the Act before paragraph (a) is replaced by the following:
Deemed disposition by trust
(4) Every trust is, at the end of each of the following days, deemed to have disposed of each property of the trust (other than exempt property) that was capital property (other than depreciable property) or land included in the inventory of a business of the trust for proceeds equal to its fair market value (determined with reference to subsection 70(5.3)) at the end of that day and to have reacquired the property immediately after that day for an amount equal to that fair market value, and for the purposes of this Act those days are
(2) The portion of subsection 104(5.8) of the Act before paragraph (a) is replaced by the following:
Trust transfers
(5.8) Where capital property, land included in inventory, Canadian resource property or foreign resource property is transferred at a particular time by a trust (in this subsection referred to as the "transferor trust") to another trust (in this subsection referred to as the "transferee trust") in circumstances in which subsection 107(2) or 107.4(3) or paragraph (f) of the definition disposition in subsection 248(1) applies,
(3) Subsections (1) and (2) apply to taxation years that begin after 2016.
36 (1) The portion of subsection 107(4.1) of the Act before paragraph (a) is replaced by the following:
Where subsection 75(2) applicable to trust
(4.1) Subsection (2.1) applies (and subsection (2) does not apply) in respect of a distribution of any property of a particular personal trust or prescribed trust (other than an excluded property of the particular trust) by the particular trust to a taxpayer who was a beneficiary under the particular trust where
(2) Subsection (1) applies to taxation years that begin after 2016.
37 (1) The definition excluded property in subsection 108(1) of the Act is replaced by the following:
excluded property, of a trust, means property owned by the trust at, and distributed by the trust after, the end of 2016, if
(a) the trust is not in its first taxation year that begins after 2016 a trust described in subparagraph (c.1)(iii.1) of the definition principal residence in section 54, and
(b) the property is a property that would be the trust's principal residence (as defined in section 54) for the taxation year in which the distribution occurs if
(i) that definition were read without reference to its subparagraph (c.1)(iii.1), and
(ii) the trust designated the property under that definition as its principal residence for the taxation year; (bien exclu)
(2) The portion of the definition eligible taxable capital gains in subsection 108(1) of the Act before paragraph (a) is replaced by the following:
eligible taxable capital gains, of a trust for a taxation year, means the lesser of
(3) Subsection 108(4) of the Act is replaced by the following:
Trust not disqualified
(4) For the purposes of the definition pre-1972 spousal trust in subsection (1), subparagraphs 70(6)(b)(ii) and (6.1)(b)(ii) and paragraphs 73(1.01)(c) and 104(4)(a), if a trust was created by a taxpayer whether by the taxpayer's will or otherwise, no person is deemed to have received or otherwise obtained or to be entitled to receive or otherwise obtain the use of any income or capital of the trust solely because of
(a) the payment, or provision for payment, as the case may be, by the trust of
(i) any estate, legacy, succession or inheritance duty payable, in consequence of the death of the taxpayer, or a spouse or common-law partner of the taxpayer who is a beneficiary under the trust, in respect of any property of, or interest in, the trust, or
(ii) any income or profits tax payable by the trust in respect of any income of the trust; or
(b) the inhabiting at any time by an individual of a housing unit that is, or is in respect of, property that is owned at that time by the trust, if
(i) the property is described in the definition principal residence in section 54 in respect of the trust for the trust's taxation year that includes that time, and
(ii) the individual is
(A) the taxpayer, or
(B) the taxpayer's
(I) spouse or common-law partner,
(II) former spouse or common-law partner, or
(III) child.
(4) Subsections (1) and (3) apply to taxation years that begin after 2016.
38 (1) The portion of paragraph 110(1)(d) of the Act before subparagraph (ii) is replaced by the following:
Employee options
(d) an amount equal to 1/2 of the amount of the benefit deemed by subsection 7(1) to have been received by the taxpayer in the year in respect of a security that a particular qualifying person has agreed after February 15, 1984 to sell or issue under an agreement, in respect of the transfer or other disposition of rights under the agreement or as a result of the death of the taxpayer because the taxpayer immediately before death owned a right to acquire the security under the agreement, if
(i) the security was acquired under the agreement
(A) by the taxpayer or a person not dealing at arm's length with the taxpayer in circumstances described in paragraph 7(1)(c), or
(B) in the case of a benefit deemed by paragraph 7(1)(e) to have been received by the taxpayer, within the first taxation year of the graduated rate estate of the taxpayer, by
(I) the graduated rate estate of the taxpayer,
(II) a person who is a beneficiary (as defined in subsection 108(1)) under the graduated rate estate of the taxpayer, or
(III) a person in whom the rights of the taxpayer under the agreement have vested as a result of the death,
(i.1) the security
(A) is a prescribed share at the time of its sale or issue, as the case may be,
(B) would have been a prescribed share if it were issued or sold to the taxpayer at the time the taxpayer disposed of rights under the agreement,
(B.1) in the case of a benefit deemed by paragraph 7(1)(e) to have been received by the taxpayer, would have been a prescribed share if it were issued or sold to the taxpayer immediately before the death of the taxpayer,
(C) would have been a unit of a mutual fund trust at the time of its sale or issue if those units issued by the trust that were not identical to the security had not been issued,
(D) would have been a unit of a mutual fund trust if
(I) it were issued or sold to the taxpayer at the time the taxpayer disposed of rights under the agreement, and
(II) those units issued by the trust that were not identical to the security had not been issued, or
(E) in the case of a benefit deemed by paragraph 7(1)(e) to have been received by the taxpayer, would have been a unit of a mutual fund trust if
(I) it were issued or sold to the taxpayer immediately before the death of the taxpayer, and
(II) those units issued by the trust that were not identical to the security had not been issued,
(2) Paragraphs 110(1.1)(c) and (d) of the Act are replaced by the following:
(c) the particular qualifying person provides the taxpayer or, if the taxpayer is deceased, the graduated rate estate of the taxpayer, with evidence in writing of the election; and
(d) the taxpayer or, if the taxpayer is deceased, the graduated rate estate of the taxpayer, files the evidence with the Minister with the taxpayer's return of income for the year in which a deduction under paragraph (1)(d) is claimed.
(3) Subsections (1) and (2) apply in respect of acquisitions of securities and transfers or dispositions of rights occurring after 4:00 pm Eastern Standard Time on March 4, 2010, except that for taxation years ending before 2016, the references to "graduated rate estate" in paragraphs 110(1)(d) and (1.1)(c) and (d) of the Act, as enacted by subsections (1) and (2), are to be read as "estate".
39 (1) The portion of paragraph 110.1(1)(d) of the Act before subparagraph (i) is replaced by the following:
Ecological gifts
(d) the total of all amounts each of which is the eligible amount of a gift of land (including a covenant or an easement to which land is subject or, in the case of land in the Province of Quebec, a personal servitude (the rights to which the land is subject and which has a term of not less than 100 years) or a real servitude) if
(2) Clauses 110.1(1)(d)(iii)(B) to (D) of the Act are replaced by the following:
(B) a municipality in Canada that is approved by that Minister or the designated person in respect of the gift,
(C) a municipal or public body performing a function of government in Canada that is approved by that Minister or the designated person in respect of the gift, or
(D) a registered charity (other than a private foundation) one of the main purposes of which is, in the opinion of that Minister, the conservation and protection of Canada's environmental heritage, and that is approved by that Minister or the designated person in respect of the gift.
(3) The portion of paragraph 110.1(5)(b) of the Act before subparagraph (i) is replaced by the following:
(b) where the gift is a covenant or an easement to which land is subject or, in the case of land in the Province of Quebec, a real or personal servitude, the greater of
(4) Subsections (1) to (3) apply in respect of gifts made after March 21, 2017.
40 (1) The definition exchange rate in subsection 111(8) of the Act is replaced by the following:
exchange rate, at any time in respect of a currency of a country other than Canada, means the rate of exchange between that currency and Canadian currency quoted by the Bank of Canada on the day that includes that time or, if that day is not a business day, on the day that immediately precedes that day, or a rate of exchange acceptable to the Minister; (taux de change)
(2) Subsection (1) is deemed to have come into force on March 1, 2017.
41 (1) Section 112 of the Act is amended by adding the following after subsection (10):
Interest in a partnership — cost reduction
(11) In computing the cost to a taxpayer, at any time, of an interest in a partnership that is property (other than capital property) of the taxpayer, there is to be deducted an amount equal to the total of all amounts each of which is the taxpayer's share of any loss of the partnership from the disposition by the partnership, or another partnership of which the partnership is directly or indirectly a member, of a share of the capital stock of a corporation (referred to in this subsection and subsection (12) as the "partnership loss") in a fiscal period of the partnership that includes that time or a prior fiscal period, computed without reference to subsections (3.1), (4) and (5.2), to the extent that the taxpayer's share of the partnership loss has not previously reduced the taxpayer's cost of the interest in the partnership because of the application of this subsection.
Application
(12) For the purposes of subsection (11), if a taxpayer disposes of an interest in a partnership at any particular time, the taxpayer's share of a partnership loss is to be computed as if
(a) the fiscal period of each partnership of which the taxpayer is directly or indirectly a member had ended immediately before the time that is immediately before the particular time;
(b) any share of the capital stock of a corporation that was property of a partnership referred to in paragraph (a) at the particular time had been disposed of by the relevant partnership immediately before the end of that fiscal period for proceeds equal to its fair market value at the particular time; and
(c) each member of a partnership referred to in paragraph (a) were allocated a share of any loss (computed without reference to subsections (3.1), (4) and (5.2)) in respect of dispositions described in paragraph (b) determined by reference to the member's specified proportion for the fiscal period referred to in paragraph (a).
Application
(13) For the purposes of subsection (11), if a taxpayer (referred to as the "transferee" in this subsection) acquires an interest in a partnership at any time from another taxpayer (referred to as the "transferor" in this subsection), in computing the cost of the partnership interest to the transferee there is to be added an amount equal to the total of all amounts each of which is an amount deducted from the transferor's cost of the partnership interest because of subsection (11), other than an amount to which subsection (3.1) would apply.
(2) Subsection (1) is deemed to have come into force on September 16, 2016.
42 (1) The description of B in subsection 118(3) of the Act is replaced by the following:
B is the lesser of
(a) $2,000, and
(b) the total of
(i) the eligible pension income of the individual for the taxation year, and
(ii) the total of all amounts received by the individual in the year on account of a retirement income security benefit payable to the individual under Part 2 of the Canadian Forces Members and Veterans Re-establishment and Compensation Act.
(2) Subsection (1) applies to the 2015 and subsequent taxation years.
43 (1) The portion of paragraph (a) of the definition total ecological gifts in subsection 118.1(1) of the Act before subparagraph (i) is replaced by the following:
(a) of land (including a covenant or an easement to which land is subject or, in the case of land in the Province of Quebec, a personal servitude (the rights to which the land is subject and which has a term of not less than 100 years) or a real servitude)
(2) Subparagraphs (b)(i) and (ii) of the definition total ecological gifts in subsection 118.1(1) of the Act are replaced by the following:
(i) Her Majesty in right of Canada or of a province,
(i.1) a municipality in Canada, or a municipal or public body performing a function of government in Canada, that is approved by that Minister or the designated person in respect of the gift, or
(ii) a registered charity (other than a private foundation) one of the main purposes of which is, in the opinion of that Minister, the conservation and protection of Canada's environmental heritage, and that is approved by that Minister or the designated person in respect of the gift, and
(3) Paragraph 118.1(20)(b) of the Act is replaced by the following:
(b) a credit union that is a shareholder or member of a body corporate or organization that is a central for the purposes of the Canadian Payments Act.
(4) Subsections (1) and (2) apply in respect of gifts made after March 21, 2017.
(5) Subsection (3) is deemed to have come into force on October 24, 2001.
44 (1) Clauses 118.2(2)(l.9)(ii)(A) and (B) of the Act are replaced by the following:
(A) a medical doctor, a nurse practitioner or a psychologist, in the case of mental impairment, and
(B) a medical doctor, a nurse practitioner or an occupational therapist, in the case of a physical impairment,
(2) Clauses 118.2(2)(l.92)(ii)(A) and (B) of the Act are replaced by the following:
(A) a medical doctor, a nurse practitioner or a psychologist, in the case of mental impairment, or
(B) a medical doctor, a nurse practitioner or an occupational therapist, in the case of a physical impairment,
(3) Clauses 118.2(2)(l.92)(iii)(A) and (B) of the Act are replaced by the following:
(A) a medical doctor, a nurse practitioner or a psychologist, in the case of mental impairment, or
(B) a medical doctor, a nurse practitioner or an occupational therapist, in the case of a physical impairment, and
(4) Subsection 118.2(2) of the Act is amended by striking out "or" at the end of paragraph (t), by adding "or" at the end of paragraph (u) and by adding the following after paragraph (u):
(v) on behalf of the patient who is authorized to possess marihuana for medical purposes under the Marihuana for Medical Purposes Regulations or section 56 of the Controlled Drugs and Substances Act, for the cost of marihuana purchased from
(i) a licensed producer (as defined in subsection 1(1) of the Marihuana for Medical Purposes Regulations), in accordance with a medical document (as defined in subsection 1(1) of the Marihuana for Medical Purposes Regulations),
(ii) a health care practitioner (as defined in subsection 1(1) of the Marihuana for Medical Purposes Regulations) in the course of treatment for a medical condition,
(iii) a hospital, under subsection 65(2.1) of the Narcotics Control Regulations, or
(iv) an individual who possesses an exemption for cultivation or production under section 56 of the Controlled Drugs and Substances Act.
(5) Subsection 118.2(2) of the Act, as amended by subsection (4), is amended by adding "or" at the end of paragraph (t) and by replacing paragraphs (u) and (v) with the following:
(u) on behalf of the patient who is authorized to possess marihuana, marihuana plants or seeds, cannabis or cannabis oil for their own medical use under the Access to Cannabis for Medical Purposes Regulations or section 56 of the Controlled Drugs and Substances Act, for the cost of marihuana, marihuana plants or seeds, cannabis or cannabis oil purchased in accordance with the Access to Cannabis for Medical Purposes Regulations or section 56 of the Controlled Drugs and Substances Act.
(6) Subsections (1) to (3) apply in respect of expenses incurred after September 7, 2017.
(7) Subsection (4) is deemed to have come into force on June 7, 2013.
(8) Subsection (5) is deemed to have come into force on August 24, 2016.
45 (1) Paragraph 118.6(3)(b) of the Act is replaced by the following:
(b) the individual has in the year a mental or physical impairment the effects of which on the individual have been certified in writing, to be such that the individual cannot reasonably be expected to be enrolled as a full-time student while so impaired, by a medical doctor, a nurse practitioner or, where the impairment is
(i) an impairment of sight, by a medical doctor, a nurse practitioner or an optometrist,
(i.1) a speech impairment, by a medical doctor, a nurse practitioner or a speech-language pathologist,
(ii) a hearing impairment, by a medical doctor, a nurse practitioner or an audiologist,
(iii) an impairment with respect to the individual's ability in feeding or dressing themself, by a medical doctor, a nurse practitioner or an occupational therapist,
(iii.1) an impairment with respect to the individual's ability in walking, by a medical doctor, a nurse practitioner, an occupational therapist or a physiotherapist, or
(iv) an impairment with respect to the individual's ability in mental functions necessary for everyday life (within the meaning assigned by paragraph 118.4(1)(c.1)), by a medical doctor, a nurse practitioner or a psychologist.
(2) Subsection (1) applies in respect of certifications made after September 7, 2017.
46 (1) The formula in paragraph 122(1)(c) of the Act is replaced by the following:
A - (B - C)
(2) Paragraph 122(1)(c) of the Act is amended by striking out "and" at the end of the description of A, by adding "and" at the end of the description of B and by adding the following after the description of B:
C is the total of all amounts each of which is an amount determined for clause (ii)(B) of the description of A in determining the amount for A for the year.
(3) Subsections (1) and (2) apply to taxation years that end after September 15, 2016.
47 (1) The formula in subparagraph (b)(i) of the description of A in subsection 122.51(2) of the Act is replaced by the following:
(0.25/C) × D
(2) Subsection (1) applies to the 2005 and subsequent taxation years.
48 (1) The portion of subparagraph (a)(i) of the definition specified corporate income in subsection 125(7) of the Act before clause (A) is replaced by the following:
(i) the total of all amounts each of which is income (other than specified cooperative income) from an active business of the corporation for the year from the provision of services or property to a private corporation (directly or indirectly, in any manner whatever) if
(2) Subsection 125(7) of the Act is amended by adding the following in alphabetical order:
specified cooperative income, of a corporation (in this definition referred to as the "selling corporation") for a taxation year, means income of the selling corporation (other than an amount included in the selling corporation's income under subsection 135(7)) from the sale of the farming products or fishing catches of the selling corporation's farming or fishing business to a corporation (in this definition referred to as the "purchasing corporation") if
(a) the purchasing corporation deals at arm's length with the selling corporation, and
(b) either
(i) the purchasing corporation would be a cooperative corporation, as defined in subsection 136(2), if the reference in paragraph (c) of that subsection to "business of farming" were read as "business of farming or fishing", or
(ii) the following conditions are met:
(A) the selling corporation (or one of its shareholders) or a person who does not deal at arm's length with the selling corporation (or one of its shareholders) holds a direct or indirect interest in a corporation that
(I) would be a cooperative corporation, as defined in subsection 136(2), if the reference in paragraph (c) of that subsection to "business of farming" were read as "business of farming or fishing", and
(II) holds a direct or indirect interest in the purchasing corporation, and
(B) the income from the sale of the farming products or fishing catches would not be an amount described in subparagraph (a)(i) of the definition specified corporate income if
(I) the condition in subclause (A)(I) were not met, and
(II) that subparagraph were read without reference to "(other than specified cooperative income)"; (revenu de société coopérative déterminé)
(3) Subsections (1) and (2) apply to taxation years that begin after March 21, 2016.
49 (1) Paragraph 126(4.4)(a) of the Act is replaced by the following:
(a) a disposition or acquisition of property deemed to be made by subsection 10(12) or (13) or 45(1), section 70, 128.1 or 132.2, subsections 138(11.3), 138.2(4) or 142.5(2), paragraph 142.6(1)(b) or subsections 142.6(1.1) or (1.2) or 149(10) is not a disposition or acquisition, as the case may be; and
(2) Subsection (1) applies to taxation years that begin after 2017.
50 (1) The definition pre-production mining expenditure in subsection 127(9) of the English version of the Act is amended by adding "or" at the end of subparagraph (a)(i).
(2) Subparagraph (f.1)(i) of the definition specified percentage in subsection 127(9) of the Act is replaced by the following:
(i) a qualified expenditure of a taxpayer under any of subsections (18) to (20), for the qualified expenditure incurred
(A) before 2015, 20%, and
(B) after 2014, 15%,
(3) Subsection (1) is deemed to have come into force on March 21, 2013.
(4) Subsection (2) applies to repayments made after September 16, 2016.
51 (1) Paragraph 129(1.1)(b) of the Act is replaced by the following:
(b) was a bankrupt at any time during that taxation year of the particular corporation.
(2) Subsection (1) applies in respect of bankruptcies that occur after April 26, 1995.
52 (1) The definition qualifying exchange in subsection 132.2(1) of the Act is replaced by the following:
qualifying exchange means a transfer at any time (in this section referred to as the "transfer time") if
(a) the transfer is a transfer of all or substantially all of the property (including an exchange of a unit of a mutual fund trust for another unit of that trust) of
(i) a mutual fund corporation (other than a SIFT wind-up corporation) to one or more mutual fund trusts, or
(ii) a mutual fund trust to a mutual fund trust;
(b) all or substantially all of the shares issued by the mutual fund corporation referred to in subparagraph (a)(i) or the first mutual fund trust referred to in subparagraph (a)(ii) (in this section referred to as the"transferor") and outstanding immediately before the transfer time are within 60 days after the transfer time disposed of to the transferor;
(c) no person disposing of shares of the transferor to the transferor within that 60-day period (otherwise than pursuant to the exercise of a statutory right of dissent) receives any consideration for the shares other than units of one or more mutual fund trusts referred to in subparagraph (a)(i) or the second mutual fund trust referred to in subparagraph (a)(ii) (in this section referred to as a "transferee" and, together with the transferor, as the "funds");
(d) if property of the transferor has been transferred to more than one transferee,
(i) all shares of each class of shares, that is recognized under securities legislation as or as part of an investment fund, of the transferor are disposed of to the transferor within 60 days after the transfer time, and
(ii) the units received in consideration for a particular share of a class of shares, that is recognized under securities legislation as or as part of an investment fund, of the transferor are units of the transferee to which all or substantially all of the assets that were allocated to that investment fund immediately before the transfer time were transferred; and
(e) the funds jointly so elect, by filing a prescribed form with the Minister on or before the election's due date. (échange admissible)
(2) The portion of paragraph 132.2(3)(a) of the Act before subparagraph (i) is replaced by the following:
(a) each property of a fund, other than property disposed of by the transferor to a transferee at the transfer time and depreciable property, is deemed to have been disposed of, and to have been reacquired by the fund, at the first intervening time, for an amount equal to the lesser of
(3) Subsection 132.2(3) of the Act is amended by adding the following after paragraph (a):
(a.1) in respect of each property transferred by the transferor to a transferee, including an exchange of a unit of a transferee for another unit of that transferee, the transferor is deemed to have disposed of the property to the transferee, and to have received units of the transferee as consideration for the disposition of the property, at the transfer time;
(4) The portion of paragraph 132.2(3)(e) of the Act before subparagraph (i) is replaced by the following:
(e) except as provided in paragraph (m), the transferor's cost of any particular property received by the transferor from a transferee as consideration for the disposition of the property is deemed to be
(5) Paragraph 132.2(3)(f) of the Act is replaced by the following:
(f) the transferor's proceeds of disposition of any units of a transferee that were disposed of by the transferor at any particular time that is within 60 days after the transfer time in exchange for shares of the transferor, are deemed to be equal to the cost amount of the units to the transferor immediately before the particular time;
(6) The portion of paragraph 132.2(3)(g) of the Act before subparagraph (i) is replaced by the following:
(g) if, at any particular time that is within 60 days after the transfer time, a taxpayer disposes of shares of the transferor to the transferor in exchange for units of a transferee
(7) The portion of subparagraph 132.2(3)(g)(vi) of the Act before clause (A) is replaced by the following:
(vi) if the taxpayer is at the particular time affiliated with the transferor or the transferee,
(8) Paragraph 132.2(3)(h) of the Act is replaced by the following:
(h) where a share to which paragraph (g) applies would, if this Act were read without reference to this paragraph, cease to be a qualified investment (within the meaning assigned by subsection 146(1), 146.1(1), 146.3(1) or 146.4(1), section 204 or subsection 207.01(1)) as a consequence of the qualifying exchange, the share is deemed to be a qualified investment until the earlier of the day that is 60 days after the day that includes the transfer time and the time at which it is disposed of in accordance with paragraph (g);
(9) Paragraphs 132.2(3)(i) and (j) of the Act are replaced by the following:
(i) there shall be added to the amount determined under the description of A in the definition refundable capital gains tax on hand in subsection 132(4) in respect of a transferee for its taxation years that begin after the transfer time the amount determined by the formula
(A - B) × C/D
where
A is the transferor's refundable capital gains tax on hand (within the meaning assigned by subsection 131(6) or 132(4), as the case may be) at the end of its taxation year that includes the transfer time,
B is the transferor's capital gains refund (within the meaning assigned by paragraph 131(2)(a) or 132(1)(a), as the case may be) for that year,
C is the total fair market value of property of the transferor disposed of to, net of liabilities assumed by, the transferee on the qualifying exchange, and
D is the total fair market value of property of the transferor disposed of to, net of liabilities assumed by, all transferees on the qualifying exchange;
(j) no amount in respect of a non-capital loss, net capital loss, restricted farm loss, farm loss or limited partnership loss of a fund for a taxation year that began before the transfer time is deductible in computing the taxable income of any of the funds for a taxation year that begins after the transfer time;
(10) Paragraph 132.2(3)(l) of the Act is amended by striking out "and" at the end of subparagraph (i), by adding "and" at the end of subparagraph (ii) and by adding the following after subparagraph (ii):
(iii) for the purpose of subsection 131(1), a dividend that is made payable at a particular time after the acquisition time but within the 60-day period commencing immediately after the transfer time, and paid before the end of that period, by the transferor to taxpayers that held shares of a class of shares of the transferor, that was recognized under securities legislation as or as part of an investment fund, immediately before the transfer time is deemed to have become payable at the first intervening time if the transferor so elects in respect of the full amount of the dividend in prescribed manner on or before the day on which any part of the dividend was paid;
(11) Subparagraph 132.2(3)(m)(ii) of the Act is replaced by the following:
(ii) a transferee is deemed not to have acquired any property that was transferred to it on the qualifying exchange; and
(12) Paragraph 132.2(3)(m) of the Act is amended by striking out "and" at the end of subparagraph (i) and by adding the following after subparagraph (ii):
(iii) the amounts determined under the descriptions of A and B in the definition capital gains redemptions shall be determined as if the year ended immediately before the transfer time; and
(13) Paragraph 132.2(3)(n) of the Act is replaced by the following:
(n) except as provided in subparagraph (l)(i), the transferor is, notwithstanding subsections 131(8) and (8.01) and 132(6), deemed to be neither a mutual fund corporation nor a mutual fund trust for taxation years that begin after the transfer time.
(14) Clause 132.2(4)(b)(ii)(B) of the Act is replaced by the following:
(B) the amount that the transferor and the transferee agree on in respect of the property in their election, and
(15) Subsection 132.2(4) of the Act is amended by striking out "and" at the end of paragraph (a), by adding "and" at the end of paragraph (b) and by adding the following after paragraph (b):
(c) if the property is a unit of the transferee and the unit ceases to exist when the transferee acquires it (or, for greater certainty, when the transferee would but for that cessation have acquired it), paragraphs (a) and (b) do not apply to the transferee.
(16) Clause 132.2(5)(c)(ii)(B) of the Act is replaced by the following:
(B) the amount that the transferor and the transferee agree on in respect of the property in their election, and
(17) Subsection 132.2(7) of the Act is replaced by the following:
Amendment or revocation of election
(7) The Minister may, on joint application by the funds on or before the due date of an election referred to in paragraph (e) of the definition qualifying exchange in subsection (1), grant permission to amend or revoke the election.
(18) Subsections (1) to (7), (9) to (11) and (13) to (17) apply in respect of transfers that occur after March 21, 2017.
(19) Subsection (8) is deemed to have come into force on March 23, 2017.
(20) Subsection (12) applies in respect of qualifying exchanges where an election in respect of the qualifying exchange is filed or amended after September 7, 2017.
53 (1) Section 138 of the Act is amended by adding the following after subsection (2):
Income — designated foreign insurance business
(2.1) If a life insurer resident in Canada has a designated foreign insurance business in a taxation year,
(a) for the purposes of computing the life insurer's income or loss from carrying on an insurance business in Canada for that taxation year, the life insurer's insurance business carried on in Canada is deemed to include the insurance of the specified Canadian risks that are insured as part of the designated foreign insurance business;
(b) if, in the immediately preceding taxation year, the designated foreign insurance business was not a designated foreign insurance business, for the purposes of paragraph (4)(a), subsection (9), the definition designated insurance property in subsection (12) and paragraphs 12(1)(d) to (e), the life insurer is deemed to have carried on the business in Canada in that immediately preceding year and to have claimed the maximum amounts to which it would have been entitled under paragraphs (3)(a) (other than under subparagraph (3)(a)(ii.1), (iii) or (v)), 20(1)(l) and (l.1) and 20(7)(c) in respect of those specified Canadian risks if that designated foreign insurance business had been a designated foreign insurance business in that immediately preceding year; and
(c) for the purposes of subparagraph (3)(a)(ii.1) and subsection 20(22),
(i) the life insurer is deemed to have carried on the business in Canada in that immediately preceding year, and
(ii) the amounts, if any, that would have been prescribed in respect of the insurer for the purposes of paragraphs (4)(b) and 12(1)(e.1) for that immediately preceding year in respect of the insurance policies in respect of those specified Canadian risks are deemed to have been included in computing its income for that year.
Insurance swaps
(2.2) For the purposes of this section, one or more risks insured by a life insurer resident in Canada, as part of an insurance business carried on in a country other than Canada, that would not be specified Canadian risks if this Act were read without reference to this subsection, are deemed to be specified Canadian risks if those risks would be deemed to be specified Canadian risks because of paragraph 95(2)(a.21) if the life insurer were a foreign affiliate of a taxpayer.
Insurance swaps
(2.3) Subsection (2.4) applies in respect of one or more agreements or arrangements if
(a) subsection (2.2) applies to deem one or more risks insured by a particular life insurer resident in Canada to be specified Canadian risks; and
(b) those agreements or arrangements are in respect of risks described in paragraph (a) and have been entered into by any of the following (in subsection (2.4), referred to as an "agreeing party"):
(i) the particular life insurer,
(ii) another life insurer resident in Canada that does not deal at arm's length with the particular life insurer,
(iii) a partnership of which a life insurer described in subparagraph (i) or (ii) is a member,
(iv) a foreign affiliate of either the particular life insurer or a person that does not deal at arm's length with the particular life insurer, and
(v) a partnership of which a foreign affiliate described in subparagraph (iv) is a member.
Insurance swaps
(2.4) If this subsection applies in respect of one or more agreements or arrangements,
(a) to the extent that activities performed in connection with those agreements or arrangements can reasonably be considered to be performed for the purpose of obtaining the result described in subparagraph 95(2)(a.21)(ii) (with any modifications that the circumstances require), those activities are deemed to be,
(i) if the agreeing party is a life insurer resident in Canada, or a partnership of which such a life insurer is a member, part of the life insurer's insurance business carried on in Canada, and
(ii) if the agreeing party is a foreign affiliate of a taxpayer, or a partnership of which such an affiliate is a member, a separate business, other than an active business, carried on by the affiliate; and
(b) any income from those activities (including income that pertains to or is incident to those activities) is deemed to be,
(i) if the agreeing party is a life insurer resident in Canada, income from the life insurer's insurance business carried on in Canada, and
(ii) if the agreeing party is a foreign affiliate of a taxpayer, income from the business, other than an active business.
Ceding of Canadian risks
(2.5) Any income of a life insurer resident in Canada for a taxation year, from its insurance business carried on in a country other than Canada, in respect of the ceding of specified Canadian risks that would, if the life insurer were a foreign affiliate of a taxpayer, be included in computing the life insurer's income from a business, other than an active business, for the taxation year because of subparagraph 95(2)(a.2)(iii), is to be included in computing the life insurer's income or loss for that taxation year from its insurance business carried on in Canada, except to the extent it is already included because of subsection (2.1), (2.2) or (2.4).
Anti-avoidance
(2.6) For the purposes of this section,
(a) a risk is deemed to be a specified Canadian risk that is insured as part of an insurance business carried on in Canada by a particular life insurer resident in Canada if
(i) the particular life insurer insured the risk as part of a transaction or series of transactions,
(ii) the risk would not be a specified Canadian risk if this Act were read without reference to this subsection, and
(iii) it can reasonably be concluded that one of the purposes of the transaction or series of transactions was to avoid
(A) having a designated foreign insurance business, or
(B) the application of any of subsections (2.1) to (2.5) to the risk; and
(b) if one or more agreements or arrangements in respect of the risk have been entered into by any of the persons or partnerships described in subparagraphs (2.3)(b)(i) to (v) (in this paragraph, referred to as an "agreeing party"),
(i) any activities performed in connection with those agreements or arrangements are deemed to be
(A) if the agreeing party is a life insurer resident in Canada, or a partnership of which such a life insurer is a member, part of the life insurer's insurance business carried on in Canada, and
(B) if the agreeing party is a foreign affiliate of a taxpayer, or a partnership of which such an affiliate is a member, a separate business, other than an active business, carried on by the affiliate, and
(ii) any income from those activities (including income that pertains to or is incident to those activities) is deemed to be,
(A) if the agreeing party is a life insurer resident in Canada, income from the life insurer's insurance business carried on in Canada, and
(B) if the agreeing party is a foreign affiliate of a taxpayer, income from the business, other than an active business.
(2) Paragraph 138(11.91)(d) of the Act is replaced by the following:
(d) for the purposes of paragraph (4)(a), subsection (9), the definition designated insurance property in subsection (12) and paragraphs 12(1)(d), (d.1) and (e), the insurer is deemed to have carried on the business in Canada in that preceding year and to have claimed the maximum amounts to which it would have been entitled under paragraphs (3)(a) (other than under subparagraph (3)(a)(ii.1), (iii) or (v)), 20(1)(l) and (l.1) and 20(7)(c) for that year,
(3) Subsection 138(12) of the Act is amended by adding the following in alphabetical order:
designated foreign insurance business, of a life insurer resident in Canada in a taxation year, means an insurance business that is carried on by the life insurer in a country other than Canada in the year unless more than 90% of the gross premium revenue from the business for the year from the insurance of risks (net of reinsurance ceded) is in respect of the insurance of risks (other than specified Canadian risks) of persons with whom the life insurer deals at arm's length. (entreprise d'assurance étrangère désignée)
insurance, of a risk, includes the reinsurance of the risk. (assurance)
specified Canadian risk has the same meaning as in paragraph 95(2)(a.23). (risques canadiens déterminés)
(4) Subsections (1) to (3) apply to taxation years of a taxpayer that begin after March 21, 2017.
54 (1) The portion of paragraph 138.1(1)(a) of the Act before subparagraph (i) is replaced by the following:
(a) a trust (in this section and section 138.2 referred to as the "related segregated fund trust") is deemed to be created at the time that is the later of
(2) Paragraph 138.1(1)(f) of the Act is replaced by the following:
(f) the taxable income of the related segregated fund trust is deemed for the purposes of subsections 104(6), (13) and (24) to be an amount that has become payable in the year to the beneficiaries under the segregated fund trust and the amount therefor in respect of any particular beneficiary is equal to the amount determined by reference to the terms and conditions of the segregated fund policy;
(3) Section 138.1 of the Act is amended by adding the following after subsection (2):
Transition — pre-2018 non-capital losses
(2.1) For the purpose of determining the taxable income of a related segregated fund trust for a taxation year that begins after 2017, the non-capital losses of the related segregated fund trust that arise in a taxation year that begins before 2018 are deemed to be nil.
(4) Subsections (1) and (2) apply to taxation years that begin after 2017.
55 (1) The Act is amended by adding the following after section 138.1:
Qualifying transfer of funds
138.2 (1) For the purposes of this section, a qualifying transfer occurs at a particular time (in this section referred to as the "transfer time") if
(a) all of the property that, immediately before the transfer time, was property of a related segregated fund trust has become, at the transfer time, the property of another related segregated fund trust (in this section referred to as the "transferor" and "transferee", respectively, and collectively as the "funds");
(b) every person that had an interest in the transferor immediately before the transfer time (in this section referred to as a "beneficiary") has ceased to be a beneficiary of the transferor at the transfer time and has received no consideration for the interest other than an interest in the transferee;
(c) the trustee of the funds is a resident of Canada; and
(d) the trustee of the funds so elects, by filing a prescribed form with the Minister on or before the election's due date.
General
(2) If there has been a qualifying transfer,
(a) the last taxation years of the funds that began before the transfer time are deemed to have ended at the transfer time and the next taxation year of the transferee is deemed to have begun immediately after the transfer time;
(b) no amount in respect of a non-capital loss, net capital loss, restricted farm loss, farm loss or limited partnership loss of a fund for a taxation year that began before the transfer time is deductible in computing the taxable income of the funds for a taxation year that begins after the transfer time;
(c) each beneficiary's interest in the transferor is deemed to have been disposed of at the transfer time for proceeds of disposition, and each beneficiary's interest in the transferee received in the qualifying transfer is deemed to have been acquired at a cost, equal to the cost amount to the beneficiary of the interest in the transferor immediately before the transfer time;
(d) any amount determined under subsection 138.1(6) in respect of a policyholder's interest in the transferor is deemed
(i) to have been charged, transferred or paid in respect of the policyholder's interest in the transferee that is acquired on the qualifying transfer, and
(ii) to not have been charged, transferred or paid in respect of the policyholder's interest in the transferor; and
(e) subsections 138.1(4) and (5) do not apply in respect of any disposition of an interest in the transferor arising on the qualifying transfer.
Transferor – capital gains and losses
(3) In respect of a qualifying transfer, each property of the transferor held immediately before the transfer time is deemed to have been disposed of by the transferor immediately before the transfer time for proceeds of disposition, and to have been acquired by the transferee at the transfer time for a cost, equal to the lesser of
(a) the fair market value of the property immediately before the transfer time, and
(b) the greater of
(i) the cost amount of the property to the transferor immediately before the transfer time, and
(ii) the amount that is designated in respect of the property in the election in respect of the qualifying transfer.
Transferee – capital gains and losses
(4) In respect of a qualifying transfer, each property of the transferee held immediately before the transfer time is deemed to have been disposed of by the transferee immediately before the transfer time for proceeds of disposition, and to have been reacquired by the transferee at the transfer time for a cost, equal to the lesser of
(a) the fair market value of the property immediately before the transfer time, and
(b) the greater of
(i) the cost amount of the property to the transferee immediately before the transfer time, and
(ii) the amount that is designated in respect of the property in the election in respect of the qualifying transfer.
Loss limitation
(5) Subsection 138.1(3) does not apply to capital losses of a fund from the disposition of property on a qualifying transfer under subsection (3) or (4) to the extent that the amount of such capital losses exceeds the amount of capital gains of the fund from the disposition of property on the qualifying transfer under subsection (3) or (4), as the case may be.
Due date
(6) The due date of an election referred to in paragraph (1)(d) is the later of
(a) the day that is six months after the day that includes the transfer time, and
(b) a day that the Minister may specify.
(2) Subsection (1) comes into force, or is deemed to have come into force, on January 1, 2018.
56 (1) Clause (b)(iii)(B) of the definition retirement savings plan in subsection 146(1) of the Act is replaced by the following:
(B) a credit union that is a shareholder or member of a body corporate referred to as a "central" for the purposes of the Canadian Payments Act,
(2) Subsection 146(21.2) of the Act is replaced by the following:
Specified pension plan — account
(21.2) For the purposes of paragraph (8.2)(b), subsection (8.21), paragraphs (16)(a) and (b) and 18(1)(u), subparagraph (a)(i) of the definition excluded right or interest in subsection 128.1(10), paragraph (b) of the definition excluded premium in subsection 146.01(1), paragraph (c) of the definition excluded premium in subsection 146.02(1), subsections 146.3(14) and 147(19), section 147.3 and paragraphs 147.5(21)(c) and 212(1)(j.1) and (m) and for the purposes of any regulations made under subsection 147.1(18), an individual's account under a specified pension plan is deemed to be a registered retirement savings plan under which the individual is the annuitant.
(3) Subsection (1) is deemed to have come into force on October 24, 2001.
(4) Subsection (2) is deemed to have come into force on January 1, 2010, except that in its application before December 14, 2012, subsection 146(21.2) of the Act, as enacted by subsection (2), is to be read without reference to "147.5(21)(c) and".
57 (1) Paragraph (b) of the definition education savings plan in subsection 146.1(1) of the Act is replaced by the following:
(b) a person (in this definition referred to as the "promoter")
(2) Subsection 146.1(1) of the Act is amended by adding the following in alphabetical order:
promoter, of an arrangement, means the person described as the promoter in the definition education savings plan; (promoteur)
(3) Paragraphs 146.1(2.1)(a) and (b) of the Act are repealed.
(4) Subsection 146.1(5) of the Act is replaced by the following:
Trust not taxable
(5) No tax is payable under this Part by a trust that is governed by a RESP on its taxable income for a taxation year, except that, if at any time in the taxation year, it holds one or more properties that are not qualified investments for the trust, tax is payable under this Part by the trust on the amount that would be its taxable income for the taxation year if it had no income or losses from sources other than those properties, and no capital gains or capital losses other than from dispositions of those properties, and for that purpose,
(a) income includes dividends described in section 83;
(b) the trust's taxable capital gain or allowable capital loss from the disposition of a property is equal to its capital gain or capital loss, as the case may be, from the disposition; and
(c) the trust's income shall be computed without reference to subsection 104(6).
(5) Subsection 146.1(7) of the Act is replaced by the following:
Educational assistance payments
(7) There shall be included in computing an individual's income for a taxation year the total of all educational assistance payments paid out of registered education savings plans to or for the individual in the year that exceeds the total of all excluded amounts in respect of those plans and the individual for the year.
(6) Paragraph 146.1(7.1)(a) of the Act is replaced by the following:
(a) each accumulated income payment (other than an accumulated income payment made under subsection (1.2)) received in the year by the taxpayer under a registered education savings plan that exceeds the total of all excluded amounts in respect of those plans and the individual for the year; and
(7) Subsection 146.1(7.2) of the Act is replaced by the following:
Excluded amount
(7.2) An excluded amount in respect of a registered education savings plan is,
(a) for the purposes of subsection (7) and paragraph (7.1)(a), an amount in respect of which a subscriber pays a tax under section 207.05 in respect of the plan, or another plan for which the plan was substituted by the subscriber, that
(i) has not been waived, cancelled or refunded, and
(ii) has not reduced any other amount that would otherwise be included under subsections (7) or (7.1) in computing an individual's income for the year or a preceding year; and
(b) for the purposes of paragraph (7.1)(b),
(i) any amount received under the plan,
(ii) any amount received in satisfaction of a right to a refund of payments under the plan, or
(iii) any amount received by a taxpayer under a decree, order or judgment of a competent tribunal, or under a written agreement, relating to a division of property between the taxpayer and the taxpayer's spouse or common- law partner or former spouse or common-law partner in settlement of rights arising out of, or on the breakdown of, their marriage or common-law partnership.
(8) Subsections (1), (2) and (5) to (7) are deemed to have come into force on March 23, 2017.
(9) Subsections (3) and (4) apply in respect of
(a) any investment acquired after March 22, 2017; and
(b) any investment acquired before March 23, 2017 that ceases to be a qualified investment (as defined in subsection 146.1(1) of the Act) after March 22, 2017.
58 (1) The portion of paragraph (d) of the definition contribution in subsection 146.4(1) of the Act before subparagraph (i) is replaced by the following:
(d) other than for the purposes of paragraphs (4)(f) to (h) and (n),
(2) The portion of subparagraph (a)(i) of the definition disability savings plan in subsection 146.4(1) of the Act before clause (A) is replaced by the following:
(i) a corporation (in this definition referred to as the "issuer")
(3) The description of A in the definition specified maximum amount in subsection 146.4(1) of the Act is replaced by the following:
A is 10% of the fair market value of the property held by the plan trust at the beginning of the calendar year (other than annuity contracts held by the plan trust that, at the beginning of the calendar year, are not described in paragraph (b) of the definition qualified investment), and
(4) Subparagraph (i) of the description of B in the definition specified maximum amount in subsection 146.4(1) of the Act is replaced by the following:
(i) a periodic payment under an annuity contract held by the plan trust at the beginning of the calendar year (other than an annuity contract described at the beginning of the calendar year in paragraph (b) of the definition qualified investment) that is paid to the plan trust in the calendar year, or
(5) The portion of the definition specified year in subsection 146.4(1) of the Act before paragraph (a) is replaced by the following:
specified year, for a disability savings plan of a beneficiary means the particular calendar year in which a medical doctor or a nurse practitioner licensed to practise under the laws of a province (or of the place where the beneficiary resides) certifies in writing that the beneficiary's state of health is such that, in the professional opinion of the medical doctor or the nurse practitioner, the beneficiary is not likely to survive more than five years and
(6) Subsection 146.4(1) of the Act is amended by adding the following in alphabetical order:
issuer, of an arrangement, means the person described as the "issuer" in the definition disability savings plan. (émetteur)
qualified investment, for a trust governed by a RDSP, means
(a) an investment that would be described by any of paragraphs (a) to (d), (f) and (g) of the definition qualified investment in section 204 if the reference in that definition to "a trust governed by a deferred profit sharing plan or revoked plan" were read as a reference to "a trust governed by a RDSP" and if that definition were read without reference to the words "with the exception of excluded property in relation to the trust";
(b) a contract for an annuity issued by a licensed annuities provider where
(i) the trust is the only person who, disregarding any subsequent transfer of the contract by the trust, is or may become entitled to any annuity payments under the contract, and
(ii) the holder of the contract has a right to surrender the contract at any time for an amount that would, if reasonable sales and administration charges were ignored, approximate the value of funds that could otherwise be applied to fund future periodic payments under the contract;
(c) a contract for an annuity issued by a licensed annuities provider where
(i) annual or more frequent periodic payments are or may be made under the contract to the holder of the contract,
(ii) the trust is the only person who, disregarding any subsequent transfer of the contract by the trust, is or may become entitled to any annuity payments under the contract,
(iii) neither the time nor the amount of any payment under the contract may vary because of the length of any life, other than the life of the beneficiary under the plan,
(iv) the day on which the periodic payments began or are to begin is not later than the end of the later of
(A) the year in which the beneficiary under the plan attains the age of 60 years, and
(B) the year following the year in which the contract was acquired by the trust,
(v) the periodic payments are payable for the life of the beneficiary under the plan and either there is no guaranteed period under the contract or there is a guaranteed period that does not exceed 15 years,
(vi) the periodic payments
(A) are equal, or
(B) are not equal solely because of one or more adjustments that would, if the contract were an annuity under a retirement savings plan, be in accordance with subparagraphs 146(3)(b)(iii) to (v) or that arise because of a uniform reduction in the entitlement to the periodic payments as a consequence of a partial surrender of rights to the periodic payments, and
(vii) the contract requires that, in the event the plan must be terminated in accordance with paragraph (4)(p), any amounts that would otherwise be payable after the termination be commuted into a single payment; and
(d) a prescribed investment. (placement admissible)
(7) Subsection 146.4(1.1) of the Act is replaced by the following:
Specified disability savings plan
(1.1) If, in respect of a beneficiary under a registered disability savings plan, a medical doctor or a nurse practitioner licensed to practise under the laws of a province (or of the place where the beneficiary resides) certifies in writing that the beneficiary's state of health is such that, in the professional opinion of the medical doctor or the nurse practitioner, the beneficiary is not likely to survive more than five years, the holder of the plan elects in prescribed form and provides the election and the medical certification in respect of the beneficiary to the issuer of the plan, and the issuer notifies the specified Minister of the election in a manner and format acceptable to the specified Minister, then the plan becomes a specified disability savings plan at the time the notification is received by the specified Minister.
(8) Subparagraph 146.4(4)(f)(i) of the Act is replaced by the following:
(i) the beneficiary is not a DTC-eligible individual in respect of the taxation year that includes that time, unless the contribution is a specified RDSP payment in respect of the beneficiary and, at that time, there is a valid election referred to in subsection (4.1) in respect of the beneficiary, or
(9) The description of A in paragraph 146.4(4)(l) of the Act is replaced by the following:
A is the fair market value of the property held by the plan trust at the beginning of the calendar year (other than annuity contracts held by the plan trust that, at the beginning of the calendar year, are not described in paragraph (b) of the definition qualified investment in subsection (1)),
(10) Subparagraph (i) of the description of D in paragraph 146.4(4)(l) of the Act is replaced by the following:
(i) a periodic payment under an annuity contract held by the plan trust at the beginning of the calendar year (other than an annuity contract described at the beginning of the calendar year in paragraph (b) of the definition qualified investment in subsection (1)) that is paid to the plan trust in the calendar year, or
(11) Paragraph 146.4(4.1)(a) of the Act is replaced by the following:
(a) a medical doctor or a nurse practitioner licensed to practise under the laws of a province certifies in writing that the nature of the beneficiary's condition is such that, in the professional opinion of the medical doctor or the nurse practitioner, the beneficiary is likely to become a DTC-eligible individual for a future taxation year;
(12) The portion of paragraph 146.4(5)(b) of the Act before subparagraph (i) is replaced by the following:
(b) if the trust is not otherwise taxable under paragraph (a) on its taxable income for the year and, at any time in the year, it carries on one or more businesses or holds one or more properties that are not qualified investments for the trust, tax is payable under this Part by the trust on the amount that its taxable income for the year would be if it had no incomes or losses from sources other than those businesses and properties, and no capital gains or losses other than from dispositions of those properties, and for this purpose,
(13) Subsection 146.4(7) of the Act is replaced by the following:
Non-taxable portion of disability assistance payment
(7) The non-taxable portion of a disability assistance payment made at a particular time from a registered disability savings plan of a beneficiary is the lesser of the amount of the disability assistance payment and the amount determined by the formula
A × B/C + D
where
A is the amount of the disability assistance payment;
B is the amount, if any, by which
(a) the total of all amounts each of which is the amount of a contribution made before the particular time to any registered disability savings plan of the beneficiary
exceeds
(b) the total of all amounts each of which is the amount that would be the non-taxable portion of a disability assistance payment made before the particular time from any registered disability savings plan of the beneficiary, if the formula in this subsection were read without reference to the description of D;
C is the amount by which the fair market value of the property held by the plan trust immediately before the payment exceeds the assistance holdback amount in relation to the plan; and
D is the amount in respect of which a holder of the plan pays a tax under section 207.05 in respect of the plan, or another plan for which the plan was substituted by the holder, that
(a) has not been waived, cancelled or refunded; and
(b) has not otherwise been used in the year or a preceding year in computing the non-taxable portion of a disability assistance payment made from the plan or another plan for which the plan was substituted.
(14) Subsection 146.4(13) of the Act is amended by adding "and" at the end of paragraph (c) and by repealing paragraph (d).
(15) Subsections (1) to (4), (6), (9), (10) and (12) to (14) are deemed to have come into force on March 23, 2017.
(16) Subsections (5), (7) and (11) apply in respect of certifications made after September 7, 2017.
(17) Subsection (8) applies to the 2014 and subsequent taxation years.
59 (1) Subparagraph 147.3(13.1)(a)(i) of the Act is replaced by the following:
(i) the total of all amounts each of which is an amount included under clause 56(1)(a)(i)(C), paragraph 56(1)(z.3), subsections 146(8), (8.3) or (12) or 146.3(5), (5.1) or (11) in computing the individual's income for the year, to the extent that the amount is not a prescribed withdrawal,
(2) Subsection (1) is deemed to have come into force on January 1, 2010, except that in its application before December 14, 2012, subparagraph 147.3(13.1)(a)(i) of the Act, as enacted by subsection (1), is to be read without reference to "paragraph 56(1)(z.3)".
60 (1) Subsection 147.5(12) of the English version of the Act is replaced by the following:
Member's account
(12) For the purposes of paragraph 18(1)(u), subparagraph (a)(i) of the definition excluded right or interest in subsection 128.1(10), paragraph 146(8.2)(b), subsection 146(8.21), paragraphs 146(16)(a) and (b), subparagraph 146(21)(a)(i), paragraph (b) of the definition excluded premium in subsection 146.01(1), paragraph (c) of the definition excluded premium in subsection 146.02(1), subsections 146.3(14) and 147(19) to (21), section 147.3 and paragraphs 212(1)(j.1) and (m), and of regulations made under subsection 147.1(18), a member's account under a PRPP is deemed to be a registered retirement savings plan under which the member is the annuitant.
(2) Section 147.5 of the Act is amended by adding the following after subsection (32):
Contribution deemed not paid
(32.1) Where a member of a PRPP or a participating employer in relation to the PRPP has, at any time in a taxation year, received a distribution from the member's account under the PRPP that is a return of a contribution described in clause 147.5(3)(d)(ii)(A) or (B), the contribution is deemed not to have been a contribution made by the member or the participating employer, as the case may be, to the PRPP to the extent that the contribution is not deducted in computing the taxpayer's income for the year or a preceding taxation year.
(3) Subsections (1) and (2) are deemed to have come into force on December 14, 2012.
61 (1) Paragraph 148(2)(e) of the Act is replaced by the following:
(e) a policyholder with an interest in a life insurance policy, issued after 2016, that gives rise to an entitlement (of the policyholder, beneficiary or assignee, as the case may be) to receive all or a portion of an excess described in subparagraph (iv) is deemed, at a particular time, to dispose of a part of the interest and to be entitled to receive proceeds of the disposition equal to that excess or portion, as the case may be, if
(i) the policy is an exempt policy,
(ii) a benefit on death (as defined in subsection 1401(3) of the Income Tax Regulations) under a coverage (as defined in section 310 of the Income Tax Regulations for the purposes of section 306 of the Income Tax Regulations) under the policy is paid at the particular time,
(iii) the payment results in the termination of the coverage but not the policy, and
(iv) the amount of the fund value benefit (as defined in subsection 1401(3) of the Income Tax Regulations) paid at the particular time in respect of the coverage exceeds the amount
(A) in the case where there is no policy anniversary (as defined in section 310 of the Income Tax Regulations) before the date of death of the individual whose life is insured under the coverage, that would be determined — on the policy anniversary that is on or that first follows that date of death and as though the coverage were not terminated — in respect of the coverage under subclause (A)(I) of the description of B in subparagraph 306(4)(a)(iii) of the Income Tax Regulations, and
(B) in any other case, that is determined — on the last policy anniversary before the date of the death of the individual whose life is insured under the coverage — in respect of the coverage under subclause (A)(I) of the description of B in subparagraph 306(4)(a)(iii) of the Income Tax Regulations as it applies for the purpose of subparagraph 306(1)(b)(ii) of the Income Tax Regulations.
(2) The portion of subsection 148(4.01) of the Act before paragraph (a) is replaced by the following:
Repayment of policy loan on partial surrender
(4.01) For the purposes of the definition adjusted cost basis in subsection (9) and paragraph 60(s), a particular amount is deemed to be a repayment made immediately before a particular time by a taxpayer in respect of a policy loan in respect of a life insurance policy if
(3) Paragraph 148(4.01)(b) of the Act is replaced by the following:
(b) the taxpayer disposes of a part of the taxpayer's interest in the policy at the particular time;
(4) Subparagraph 148(4.01)(d)(ii) of the Act is replaced by the following:
(ii) described in subparagraph (i) of the description of C in paragraph (a) of the definition proceeds of the disposition in subsection (9); and
(5) Paragraph (b) of the description of E.1 in the definition adjusted cost basis in subsection 148(9) of the Act is replaced by the following:
(b) if the policy is issued after 2016 (and, in the case where the particular time at which the policy is issued is determined under subsection (11), the repayment is at or after the particular time), the portion of the loan applied, immediately after the loan, to pay a premium under the policy as provided for under the terms and conditions of the policy (except to the extent that the portion is described in subparagraph (i) of the description of C in paragraph (a) of the definition proceeds of the disposition in this subsection), and
(6) The portion of the description of O in the definition adjusted cost basis in subsection 148(9) of the Act before the formula is replaced by the following:
O is, in the case of a policy that is issued after 2016 and is not an annuity contract, the total of all amounts each of which is — if a benefit on death (as defined in subsection 1401(3) of the Income Tax Regulations) under a coverage (as defined in section 310 of the Income Tax Regulations for the purposes of section 306 of the Income Tax Regulations) under the policy is paid before that time as a consequence of the death of an individual whose life is insured under the coverage (and, in the case where the particular time at which the policy is issued is determined under subsection (11), at or after the particular time) and the payment results in the termination of the coverage — the amount, if any, determined with respect to the coverage by the formula
(7) The portion of the definition adjusted cost basis in subsection 148(9) of the Act after the description of P is replaced by the following:
Q is the amount of the fund value benefit (as defined in subsection 1401(3) of the Income Tax Regulations) under the policy paid in respect of the coverage (as defined in section 310 of the Income Tax Regulations for the purposes of section 306 of the Income Tax Regulations) on the termination,
R is the total of all amounts — each of which is in respect of a coverage (as defined in subsection 1401(3) of the Income Tax Regulations) in respect of a specific life or two or more specific lives jointly insured under the coverage referred to in the description of O — that would be the present value, determined for the purposes of section 307 of the Income Tax Regulations, on the last policy anniversary (as defined in section 310 of the Income Tax Regulations) on or before the termination, of the fund value of the coverage (as defined in subsection 1401(3) of the Income Tax Regulations) if the fund value of the coverage on that policy anniversary were equal to the fund value of the coverage on the termination,
S is the total of all amounts — each of which is in respect of a coverage (as defined in subsection 1401(3) of the Income Tax Regulations and referred to in this description as a "particular coverage") in respect of a specific life or two or more specific lives jointly insured under the coverage referred to in the description of O — that would be determined, on that policy anniversary, for paragraph (a) of the description of C in the definition net premium reserve in subsection 1401(3) of the Income Tax Regulations in respect of the particular coverage, if the benefit on death under the particular coverage, and the fund value of the coverage (as defined in subsection 1401(3) of the Income Tax Regulations), on that policy anniversary were equal to the benefit on death under the particular coverage and the fund value of the coverage, as the case may be, on the termination,
T is the amount that would be, on that policy anniversary, the net premium reserve (as defined in subsection 1401(3) of the Income Tax Regulations) in respect of the policy for the purposes of section 307 of the Income Tax Regulations, if the fund value benefit (as defined in subsection 1401(3) of the Income Tax Regulations) under the policy, the benefit on death under each coverage (as defined in subsection 1401(3) of the Income Tax Regulations) and the fund value of each coverage (as defined in subsection 1401(3) of the Income Tax Regulations) on that policy anniversary were equal to the fund value benefit, the benefit on death under each coverage and the fund value of each coverage, as the case may be, under the policy on the termination, and
U is the amount, if any, determined under subsection (4) in respect of a disposition before that time of the interest because of paragraph (2)(e) in respect of the payment in respect of the fund value benefit under the policy paid in respect of the coverage (as defined in section 310 of the Income Tax Regulations for the purposes of section 306 of the Income Tax Regulations) on the termination; (coût de base rajusté)
(8) The portion of subsection 148(11) of the Act before paragraph (b) is replaced by the following:
Loss of grandfathering
(11) For the purposes of determining at and after a particular time whether a life insurance policy (other than an annuity contract) issued before 2017 is treated as issued after 2016 under this section (other than this subsection) and sections 306 (other than subsections (9) and (10)), 307, 308, 310, 1401 and 1403 of the Income Tax Regulations (except as they apply for the purposes of subsection 211.1(3)), the policy is deemed to be a policy issued at the particular time if the particular time is the first time after 2016 at which life insurance — in respect of a life, or two or more lives jointly insured, and in respect of which a particular schedule of premium or cost of insurance rates applies — is
(a) if the insurance is term insurance, converted to permanent life insurance within the policy; or
62 (1) Subsection 152(4) of the Act is amended by adding the following after paragraph (b.2):
(b.3) the following conditions apply:
(i) the taxpayer, or a partnership of which the taxpayer is a member (directly or indirectly through one or more partnerships), disposes in the year of real or immovable property,
(ii) the taxpayer is not a real estate investment trust (as defined in subsection 122.1(1)) for the year,
(iii) if the disposition is by a corporation or partnership, the property is capital property of the corporation or partnership, as the case may be,
(iv) the disposition is not reported in
(A) if the disposition is by the taxpayer, the return of income of the taxpayer under this Part for the year, or
(B) if the disposition is by a partnership, the partnership's return required to be filed for the year under section 229 of the Income Tax Regulations, and
(v) in the case that the disposition is not reported in the return described in clause (iv)(A) or (B) and the taxpayer subsequently reports the disposition by filing a prescribed form amending the taxpayer's return of income under this Part for the year, the assessment, reassessment or additional assessment is made before the day that is three years after the day on which the prescribed form amending the return is filed;
(2) The portion of subsection 152(4.01) of the Act before paragraph (a) is replaced by the following:
Extended period assessment
(4.01) Notwithstanding subsections (4) and (5), an assessment, reassessment or additional assessment to which paragraph (4)(a), (b), (b.1), (b.3) or (c) applies in respect of a taxpayer for a taxation year may be made after the taxpayer's normal reassessment period in respect of the year to the extent that, but only to the extent that, it can reasonably be regarded as relating to,
(3) Subsection 152(4.01) of the Act is amended by striking out "and" at the end of paragraph (a), by adding "and" at the end of paragraph (b) and by adding the following after paragraph (b):
(c) if paragraph (4)(b.3) applies to the assessment, reassessment or additional assessment, the disposition referred to in that paragraph.
(4) Subsections (1) to (3) apply to taxation years that end after October 2, 2016.
63 (1) Paragraph 181.1(3)(b) of the Act is replaced by the following:
(b) that was a bankrupt at the end of the year;
(2) Subsection (1) applies in respect of bankruptcies that occur after April 26, 1995.
64 (1) Paragraph 186.1(a) of the Act is replaced by the following:
(a) that was, at any time in the year, a bankrupt; or
(2) Subsection (1) applies in respect of bankruptcies that occur after April 26, 1995.
65 (1) Paragraph (a) of the description of J in subsection 204.2(1.2) of the Act is replaced by the following:
(a) the total of all amounts each of which is an amount (other than the portion of it that reduces the amount on which tax is payable by the individual under subsection 204.1(1)) received by the individual in the year and before that time out of or under a pooled registered pension plan, a registered retirement savings plan, a registered retirement income fund or a specified pension plan and included in computing the individual's income for the year
(2) Subsection (1) is deemed to have come into force on January 1, 2010, except that in its application before December 14, 2012, paragraph (a) of the description of J in subsection 204.2(1.2) of the Act, as enacted by subsection (1), is to be read without reference to "a pooled registered pension plan".
66 (1) Part XI of the Act is repealed.
(2) Subsection (1) applies to transactions and events occurring, income earned, capital gains accruing and investments acquired after March 22, 2017.
67 (1) The heading of Part XI.01 of the Act is replaced by the following:
Taxes in Respect of Registered Plans
(2) Subsection (1) is deemed to have come into force on March 23, 2017.
68 (1) The portion of subsection 207.01(1) of the Act before the first definition is replaced by the following:
Definitions
207.01 (1) The following definitions and the definitions in subsections 146(1) (other than the definition benefit), 146.1(1), 146.2(1), 146.3(1) and 146.4(1) apply in this Part and Part XLIX of the Income Tax Regulations.
(2) The definition RRSP strip in subsection 207.01(1) of the Act is repealed.
(3) The definitions controlling individual, registered plan and transitional prohibited property in subsection 207.01(1) of the Act are replaced by the following:
controlling individual, of a registered plan, means
(a) the holder of a TFSA;
(b) a holder of a RDSP;
(c) a subscriber of a RESP; or
(d) the annuitant of a RRIF or RRSP. (particulier contrôlant)
registered plan means a RDSP, RESP, RRIF, RRSP or TFSA. (régime enregistré)
transitional prohibited property, at any time for a particular trust governed by a registered plan (other than a TFSA) of a controlling individual, means a property that is held by the particular trust at that time, that was held
(a) on March 22, 2011 by a trust governed by a RRIF or RRSP of the controlling individual and that was a prohibited investment for that trust on March 23, 2011; or
(b) on March 22, 2017 by a trust governed by a RDSP or RESP of the controlling individual and that was a prohibited investment for that trust on March 23, 2017. (bien interdit transitoire)
(4) Subparagraphs (a)(iii) and (iv) of the definition advantage in subsection 207.01(1) of the Act are replaced by the following:
(iii) a payment out of or under the registered plan in satisfaction of all or part of a beneficiary's or controlling individual's interest in the registered plan,
(iv) the payment or allocation of any amount to the registered plan by the issuer, carrier or promoter,
(iv.1) an amount paid under or because of the Canada Disability Savings Act, the Canada Education Savings Act or under a designated provincial program, and
(5) The portion of subparagraph (c)(ii) of the definition advantage in subsection 207.01(1) of the Act before clause (A) is replaced by the following:
(ii) in the case of a registered plan that is not a TFSA, an amount received by the controlling individual of the registered plan, or by a person who does not deal at arm's length with the controlling individual (if it is reasonable to consider, having regard to all the circumstances, that the amount was paid in relation to, or would not have been paid but for, property held in connection with the registered plan) and the amount was paid as, on account or in lieu of, or in satisfaction of, a payment
(6) Paragraph (d) of the definition advantage in subsection 207.01(1) of the Act is replaced by the following:
(d) a registered plan strip in respect of the registered plan; and
(7) Paragraph (b) of the definition swap transaction in subsection 207.01(1) of the Act is replaced by the following:
(b) a payment into the registered plan that is
(i) a contribution, a premium or an amount transferred in accordance with paragraph 146.3(2)(f),
(ii) described in paragraph (a) or (b) of the definition contribution in subsection 146.1(1), or
(iii) described in any of paragraphs (a) to (d) of the definition contribution in subsection 146.4(1);
(8) Paragraph (d) of the definition swap transaction in subsection 207.01(1) of the Act is amended by striking out "or" at the end of subparagraph (i) and by adding the following after subparagraph (ii):
(iii) both registered plans are RDSPs, or
(iv) both registered plans are RESPs;
(9) Subsection 207.01(1) of the Act is amended by adding the following in alphabetical order:
registered plan strip, in respect of a registered plan that is not a TFSA, means the amount of a reduction in the fair market value of property held in connection with the registered plan, if the value is reduced as part of a transaction or event or a series of transactions or events one of the main purposes of which is to enable the controlling individual of the registered plan, or a person who does not deal at arm's length with the controlling individual, to obtain a benefit in respect of property held in connection with the registered plan or to obtain a benefit as a result of the reduction, but does not include an amount that is
(a) included in the income of a person under section 146, 146.1, 146.3 or 146.4;
(b) an excluded withdrawal under section 146.01 or 146.02;
(c) described in subsection 146(16), 146.3(14.2) or 146.4(8);
(d) a distribution to a trust governed by a RESP under circumstances to which subparagraph 204.9(5)(c)(i) or (ii) applies;
(e) an accumulated income payment made to a RDSP under circumstances to which subsection 146.1(1.2) applies;
(f) a refund of payments under a RESP; or
(g) the non-taxable portion of a disability assistance payment made from a RDSP. (somme découlant d'un dépouillement de régime enregistré)
(10) Subsection 207.01(5) of the Act is replaced by the following:
Obligation of issuer
(5) The issuer, carrier or promoter of a registered plan shall exercise the care, diligence and skill of a reasonably prudent person to minimize the possibility that a trust governed by the registered plan holds a non-qualified investment.
(11) Subsection 207.01(7) of the Act is replaced by the following:
Adjusted cost base
(7) For the purpose of computing the adjusted cost base to a trust governed by a registered plan (other than a TFSA) of a property that is a transitional prohibited property for the trust, the cost to the trust of the property until the property is disposed of by the trust is deemed to be equal to the fair market value of the property,
(a) in the case of a RRIF or RRSP, at the end of March 22, 2011; and
(b) in the case of a RDSP or RESP, at the end of March 22, 2017.
(12) Paragraph 207.01(8)(a) of the Act is replaced by the following:
(a) the property would, in the absence of subsection (9), have ceased at any time (in this subsection and subsection (9) referred to as the "relevant time") to be a prohibited investment for a trust governed by a registered plan (other than a TFSA) of a controlling individual;
(13) Paragraph 207.01(8)(c) of the Act is replaced by the following:
(c) in the case of a property held under a RRIF or RRSP, the controlling individual elected under subsection 207.05(4); and
(14) Subsection 207.01(9) of the Act is replaced by the following:
Prohibited investment status
(9) If this subsection applies in respect of a property, the property is deemed to be a prohibited investment at and after the relevant time for every trust governed by a registered plan (other than a TFSA) of the controlling individual referred to in paragraph (8)(a).
(15) Paragraph 207.01(12)(a) of the Act is replaced by the following:
(a) the property is acquired at any time (in this subsection and subsection (13) referred to as the "exchange time") by a trust (in this section and subsection (13) referred to as the "exchanging trust") governed by a registered plan (other than a TFSA) of a controlling individual in exchange for another property (in this subsection referred to as the "exchanged property") in a transaction to which any of section 51, subsection 85(1) and sections 85.1, 86 and 87 apply;
(16) Paragraph 207.01(12)(d) of the Act is replaced by the following:
(d) in the case of a property held under a RRIF or RRSP, the controlling individual elected under subsection 207.05(4).
(17) Paragraphs 207.01(13)(a) and (b) of the Act are replaced by the following:
(a) other than for the purposes of subsection (7), the property is deemed to be, at and after the exchange time, a property,
(i) in the case of a trust governed by a RRIF or RRSP, that was
(A) held on March 22, 2011 by a trust governed by a RRIF or RRSP of the controlling individual referred to in subsection (12), and
(B) a prohibited investment for the trust on March 23, 2011, and
(ii) in the case of a trust governed by a RDSP or RESP, that was
(A) held on March 22, 2017 by a trust governed by a RDSP or RESP of the controlling individual referred to in subsection (12), and
(B) a prohibited investment for the trust on March 23, 2017; and
(b) if the property would, in the absence of this paragraph, not be a prohibited investment for the exchanging trust immediately after the exchange time, the property is deemed to be a prohibited investment at and after the exchange time for every trust governed by a registered plan (other than a TFSA) of the controlling individual.
(18) Subsections (1) to (6) and (9) apply to transactions and events occurring, income earned, capital gains accruing and investments acquired after March 22, 2017.
(19) Subsections (7) and (8) apply
(a) after 2021 in relation to transactions undertaken to remove a property from a RDSP or RESP if it is reasonable to conclude that tax would be payable under Part XI.01 of the Act if the property were retained in the RDSP or RESP;
(b) after 2027 in relation to transactions undertaken to remove a transitional prohibited property (as defined in subsection 207.01(1) of the Act, as amended by subsection (3)), from a RDSP or RESP if it is reasonable to conclude that tax would be payable under Part XI.01 of the Act if the property were retained in the RDSP or RESP; and
(c) in any other case, after June 2017.
(20) Subsections (10) to (17) are deemed to have come into force on March 23, 2017.
69 (1) Subsection 207.04(3) of the Act is replaced by the following:
Both prohibited and non-qualified investment
(3) For the purposes of this section and subsections 146(10.1), 146.1(5), 146.2(6), 146.3(9), 146.4(5) and 207.01(6), if a trust governed by a registered plan holds property at any time that is, for the trust, both a prohibited investment and a non-qualified investment, the property is deemed at that time not to be a non-qualified investment, but remains a prohibited investment, for the trust.
(2) Section 207.04 of the Act is amended by adding the following after subsection (4):
Apportionment of refund
(5) If more than one person is entitled to a refund under subsection (4) for a calendar year in respect of the disposition of a property, the total of all amounts so refundable shall not exceed the amount that would be so refundable for the year to any one of those persons in respect of that disposition if that person were the only person entitled to a refund for the year under that subsection in respect of the disposition. If the persons cannot agree as to what portion of the refund each can so claim, the Minister may fix the portions.
Liability for tax
(6) Each person who is a holder of a RDSP or a subscriber of a RESP at the time that a tax is imposed under subsection (1) in connection with the plan is jointly and severally, or solidarily, liable to pay the tax.
(3) Subsections (1) and (2) are deemed to have come into force on March 23, 2017.
70 (1) Paragraph 207.05(2)(c) of the Act is replaced by the following:
(c) in the case of a registered plan strip, the amount of the registered plan strip.
(2) Subsection 207.05(3) of the Act is replaced by the following:
Liability for tax
(3) Each controlling individual of a registered plan in connection with which a tax is imposed under subsection (1) is jointly and severally, or solidarily, liable to pay the tax except that, if the advantage is extended by the issuer, carrier or promoter of the registered plan or by a person with whom the issuer, carrier or promoter is not dealing at arm's length, the issuer, carrier or promoter, and not the controlling individual, is liable to pay the tax.
(3) Subsections (1) and (2) are deemed to have come into force on March 23, 2017.
71 (1) Section 207.07 of the Act is amended by adding the following after subsection (1):
Multiple holders or subscribers
(1.1) If two or more holders of a RDSP, or two or more subscribers of a RESP, are jointly and severally, or solidarily, liable with each other to pay a tax under this Part for a calendar year in connection with the plan,
(a) a payment by any of the holders, or any of the subscribers, on account of that tax liability shall to the extent of the payment discharge the joint liability; and
(b) a return filed by one of the holders, or one of the subscribers, as required by this Part for the year is deemed to have been filed by each other holder, or each other subscriber, in respect of the joint liability to which the return relates.
(2) Subsection (1) is deemed to have come into force on March 23, 2017.
72 (1) Subsection 207.1(3) of the Act is repealed.
(2) Subsection (1) applies in respect of
(a) any investment acquired after March 22, 2017; and
(b) any investment acquired before March 23, 2017 that ceases to be a qualified investment (as defined in subsection 146.1(1) of the Act) after March 22, 2017.
73 (1) Section 207.31 of the Act is replaced by the following:
207.31
Ecological gift — tax payable
(1) A charity, municipality in Canada or municipal or public body performing a function of government in Canada (each of which is referred to in this section as the "recipient") shall, in respect of a property, pay a tax under this Part in respect of a taxation year if
(a) at any time in the year, the recipient
(i) disposes of the property, or
(ii) in the opinion of the Minister of the Environment, or a person designated by that Minister, changes the use of the property;
(b) the property is described in paragraph 110.1(1)(d) or in the definition total ecological gifts in subsection 118.1(1); and
(c) the disposition or change is made without the authorization of the Minister of the Environment or a person designated by that Minister.
Ecological gift — amount of tax
(2) The amount of tax to be paid under subsection (1) is equal to 50% of the amount that would be determined for the purposes of section 110.1 or 118.1, if this Act were read without reference to subsections 110.1(3) and 118.1(6), to be the fair market value of the property referred to in subsection (1) if the property were given to the recipient immediately before the disposition or change referred to in paragraph (1)(a).
(2) Subsection (1) applies in respect of dispositions made, and changes of use that occur, after March 21, 2017.
74 (1) The portion of subparagraph 212(1)(h)(iii.1) of the Act before clause (A) is replaced by the following:
(iii.1) the portion of the payment that is transferred by the payer on behalf of the non-resident person, pursuant to an authorization in prescribed form, to a pooled registered pension plan, registered pension plan, registered retirement savings plan, registered retirement income fund or specified pension plan and that
(2) Subsection (1) is deemed to have come into force on January 1, 2010, except that in its application before December 14, 2012, the portion of subparagraph 212(1)(h)(iii.1) of the Act before clause (A), as enacted by subsection (1), is to be read without reference to "pooled registered pension plan".
75 (1) Paragraph 212.3(1)(a) of the Act is replaced by the following:
(a) the subject corporation is immediately after the investment time, or becomes as part of a transaction or event or series of transactions or events that includes the making of the investment, a foreign affiliate of
(i) the CRIC, or
(ii) a corporation that does not deal at arm's length with the CRIC (if the condition in this paragraph is satisfied because of this subparagraph and not because of subparagraph (i), such a corporation is referred to in paragraph (b) as an "other Canadian corporation");
(2) The portion of paragraph 212.3(1)(b) of the Act before subparagraph (ii) is replaced by the following:
(b) the CRIC or an other Canadian corporation is immediately after the investment time, or becomes after the investment time and as part of a transaction or event or series of transactions or events that includes the making of the investment, controlled by a non-resident corporation (in this section referred to as the "parent"), and any of the following conditions is satisfied:
(i) if, at the investment time, the parent owned all shares of the capital stock of the CRIC and the other Canadian corporation, if applicable, that are owned — determined without reference to paragraph (25)(b) in the case of partnerships referred to in this subparagraph and as if all rights referred to in paragraph 251(5)(b), of the parent, each person that does not deal at arm's length with the parent and all of those partnerships, were immediate and absolute and the parent and each of the other persons and partnerships had exercised those rights at the investment time — by the parent, persons that are not dealing at arm's length with the parent and partnerships of which the parent or a non-resident person that is not dealing at arm's length with the parent is a member (other than a limited partner within the meaning assigned by subsection 96(2.4)), the parent would own shares of the capital stock of the CRIC or the other Canadian corporation that
(A) give the holders of those shares 25% or more of all of the votes that could be cast at any annual meeting of the shareholders in respect of all shares of the capital stock of the CRIC or the other Canadian corporation, as the case may be, or
(B) have a fair market value of 25% or more of the fair market value of all of the issued and outstanding shares of the capital stock of the CRIC or the other Canadian corporation, as the case may be,
(3) Section 212.3 of the Act is amended by adding the following after subsection (7):
Election to not reduce deemed dividend
(7.1) Subsection (7) does not apply in respect of an investment made by a CRIC if
(a) the investment was made after March 28, 2012 and before August 16, 2013;
(b) at the investment time, each share of the capital stock of the CRIC, and each qualifying substitute corporation in respect of the CRIC, that was not owned by the parent was owned by persons or partnerships with which the parent did not deal at arm's length; and
(c) the CRIC files an election with the Minister before 2017 to have this subsection apply in respect of the investment.
(4) Subsections (1) and (2) apply in respect of transactions or events that occur after September 15, 2016. For this purpose, a portion of a particular amount owing by, or debt obligation of, a subject corporation is deemed to be a separate amount owing or debt obligation that became owing or was acquired, as the case may be, on January 1, 2017 in the same manner and on the same terms as the particular amount owing or debt obligation, if
(a) subsection 212.3(2) of the Act would not apply in respect of the separate amount owing or debt obligation absent the application of subsections (1) and (2);
(b) the particular amount owing or debt obligation became owing to, or was acquired by, a CRIC
(i) after March 28, 2012 and before September 16, 2016, or
(ii) before March 29, 2012, if its maturity date was extended after March 28, 2012 and before September 16, 2016; and
(c) the portion is the amount outstanding in respect of the particular amount owing or debt obligation on January 1, 2017.
(5) Subsection (3) is deemed to have come into force on March 29, 2012.
76 (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 that paragraph:
(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 after October 2, 2016.
77 (1) Paragraph (b) of the definition derivative forward agreement in subsection 248(1) of the Act is amended by striking out "or" at the end of subparagraph (i), by replacing "and" at the end of subparagraph (ii) with "or" and by adding the following after subparagraph (ii):
(iii) an underlying interest that relates to a purchase of currency, if it can reasonably be considered that the purchase is agreed to by the taxpayer in order to reduce its risk of fluctuations in the value of the currency in which a purchase or sale by the taxpayer of a capital property is denominated, in which an obligation that is a capital property of the taxpayer is denominated or from which a capital property of the taxpayer derives its value, and
(2) Subparagraph (c)(i) of the definition derivative forward agreement in subsection 248(1) of the Act is amended by striking out "or" at the end of clause (A), by replacing "and" at the end of clause (B) with "or" and by adding the following after clause (B):
(C) an underlying interest that relates to a sale of currency, if it can reasonably be considered that the sale is agreed to by the taxpayer in order to reduce its risk of fluctuations in the value of the currency in which a purchase or sale by the taxpayer of a capital property is denominated, in which an obligation that is a capital property of the taxpayer is denominated or from which a capital property of the taxpayer derives its value, and
(3) Subsections (1) and (2) are deemed to have come into force on March 21, 2013.
78 (1) Section 249.1 of the Act is amended by adding the following after subsection (9):
When subsection (9) ceases to apply
(9.1) If paragraph (1)(c) did not apply to end the fiscal period of a partnership on December 31 of a calendar year (in this subsection referred to as the "preceding year") because subsection (9) applies to the partnership, and to each other partnership described in relation to the partnership by any of subparagraphs (1)(c)(ii) to (iv), (in this subsection referred to collectively as the "aligned multi-tier partnerships" and each individually as an "aligned multi-tier partnership"),
(a) subsection (9) ceases to apply — for the purpose of applying paragraph (1)(c) to each of the aligned multi-tier partnerships — in the calendar year following the preceding year (in this subsection referred to as the "current year") if another partnership (in this subsection referred to as the "new partnership") becomes in the current year a member of any of the aligned multi-tier partnerships, or any of the aligned multi-tier partnerships becomes in the current year a member of the new partnership, unless
(i) the fiscal period of the new partnership, and each other partnership described in relation to the new partnership by any of subparagraphs (1)(c)(ii) to (iv), ends in the current year on the same day as the fiscal period of each of the aligned multi-tier partnerships, and
(ii) each member (other than a partnership) of each aligned multi-tier partnership — or a subsidiary wholly-owned corporation of such a member — has been a member of the aligned multi-tier partnership from the end of the last fiscal period ending in the preceding year until the time at which the new partnership becomes a member of an aligned multi-tier partnership, or any of the aligned multi-tier partnerships becomes a member of the new partnership, as the case may be; and
(b) if paragraph (a) does not apply because the conditions in subparagraphs (a)(i) and (ii) are met, the new partnership is deemed — for the purpose of applying paragraph (1)(c) to each of the aligned multi-tier partnerships and the new partnership in the current year and subsequent years — to have made the multi-tier alignment election referred to in subsection (9).
(2) Subsection (1) applies to fiscal periods of partnerships that end after March 2014.
79 (1) Section 256 of the Act is amended by adding the following after subsection (5.1):
Factual control — interpretation
(5.11) For the purposes of the Act, the determination of whether a taxpayer has, in respect of a corporation, any direct or indirect influence that, if exercised, would result in control in fact of the corporation, shall
(a) take into consideration all factors that are relevant in the circumstances; and
(b) not be limited to, and the relevant factors need not include, whether the taxpayer has a legally enforceable right or ability to effect a change in the board of directors of the corporation, or its powers, or to exercise influence over the shareholder or shareholders who have that right or ability.
(2) Subsection 256(7) of the Act is amended by adding the following after paragraph (c.1):
(c.2) subject to paragraph (a), if, at any particular time, as part of a series of transactions or events, two or more persons acquire shares of a corporation (in this paragraph referred to as the "acquiring corporation") in exchange for or upon a redemption or surrender of interests in, or as a consequence of a distribution from, a partnership or trust, control of the acquiring corporation and of each corporation controlled by it immediately before the particular time is deemed to have been acquired by a person or group of persons at the particular time unless
(i) in respect of each of the corporations, a person affiliated with the partnership or trust owned immediately before the particular time shares of the particular corporation having a total fair market value of more than 50% of the fair market value of all the issued and outstanding shares of the particular corporation immediately before the particular time,
(ii) if all the securities (in this subparagraph as defined in subsection 122.1(1)) of the acquiring corporation that were acquired at or before the particular time as part of the series were acquired by one person, the person would
(A) not at the particular time control the acquiring corporation, and
(B) have at the particular time acquired securities of the acquiring corporation having a fair market value of not more than 50% of the fair market value of all the issued and outstanding shares of the acquiring corporation, or
(iii) paragraph (c.1) applies, or this paragraph or paragraph (c.1) previously applied, to deem an acquisition of control of the acquiring corporation upon an acquisition of shares that was part of the same series of transactions or events;
(3) Subsection (1) applies to taxation years that begin after March 21, 2017.
(4) Subsection (2) applies to transactions completed after September 15, 2016, other than transactions the parties to which are obligated to complete pursuant to the terms of an agreement in writing between the parties entered into before September 16, 2016. However, for this purpose, the parties to a transaction shall be considered not to be obligated to complete the transaction if one or more of those parties may be excused from completing the transaction as a result of amendments to the Act.
80 (1) The definition designated provisions in subsection 259(5) of the Act is replaced by the following:
designated provisions means sections 146 and 146.1 to 146.4 and Parts X, XI.01 and XI.1, as they apply in respect of investments that are not qualified investments for a trust, and Part X.2; (dispositions désignées)
(2) Subsection (1) is deemed to have come into force on March 23, 2017.
81 (1) The definition relevant spot rate in subsection 261(1) of the Act is replaced by the following:
relevant spot rate, for a particular day, means, in respect of a conversion of an amount from a particular currency to another currency,
(a) if the particular currency or the other currency is Canadian currency, the rate quoted by the Bank of Canada on the particular day (or, if the Bank of Canada ordinarily quotes such a rate, but there is no such rate quoted for the particular day, the closest preceding day for which such a rate is quoted) for the exchange of the particular currency for the other currency, or, in applying paragraphs (2)(b) and (5)(c), another rate of exchange that is acceptable to the Minister; and
(b) if neither the particular currency nor the other currency is Canadian currency, the rate — calculated by reference to the rates quoted by the Bank of Canada on the particular day (or, if the Bank of Canada ordinarily quotes such rates, but either of such rates is not quoted for the particular day, the closest preceding day for which both such rates are quoted) for the exchange of Canadian currency for each of those currencies — for the exchange of the particular currency for the other currency, or, in applying paragraphs (2)(b) and (5)(c), another rate of exchange that is acceptable to the Minister. (taux de change au comptant)
(2) Subparagraph 261(5)(h)(ii) of the Act is replaced by the following:
(ii) the reference in paragraph 95(2)(f.13) to "the rate of exchange quoted by the Bank of Canada on" is to be read, in respect of the foreign affiliate and the taxation year, and with such modifications as the context requires, as a reference to "the relevant spot rate for".
(3) Subsections (1) and (2) are deemed to have come into force on March 1, 2017.
2013, c. 40
Economic Action Plan 2013 Act, No. 2
82 If an individual has filed the election referred to in subsection 60(4) of the Economic Action Plan 2013 Act, No. 2, as and when allowed under that subsection, then for the individual
(a) the reference in paragraph 60(4)(a) of that Act to "2006" is to be read as "2003"; and
(b) the references in paragraph 60(4)(b) of that Act to "2005" and "2006" are to be read as "2002" and "2003", respectively.
C.R.C., c. 945
Income Tax Regulations
83 (1) Subsection 221(2) of the Income Tax Regulations is replaced by the following:
(2) Where in any taxation year a reporting person (other than a registered investment) claims that a share of its capital stock issued by it, or an interest as a beneficiary under it, is a qualified investment under section 146, 146.1, 146.3, 146.4, 204 or 207.01 of the Act, the reporting person shall, in respect of the year and within 90 days after the end of the year, make an information return in prescribed form.
(2) Subsection (1) is deemed to have come into force on March 23, 2017.
84 (1) The Regulations are amended by adding the following after section 221:
222 The issuer of a RDSP, or the promoter of a RESP, that governs a trust shall notify the holders of the RDSP, or subscribers of the RESP, in prescribed form and manner before March of a calendar year if, at any time during the preceding calendar year,
(a) the trust acquires or disposes of property that is a not a qualified investment for the trust; or
(b) property held by the trust becomes or ceases to be a qualified investment for the trust.
(2) Subsection (1) is deemed to have come into force on March 23, 2017.
85 (1) The portion of paragraph 306(3)(a) of the Regulations before subparagraph (i) is replaced by the following:
(a) in the case of a life insurance policy issued before 2017, a separate exemption test policy is deemed, subject to subsection (7), to be issued in respect of the life insurance policy
(2) The portion of subparagraph 306(3)(a)(ii) of the Regulations before clause (A) is replaced by the following:
(ii) on each policy anniversary of the life insurance policy on which
(3) The portion of paragraph 306(3)(b) of the Regulations before clause (i)(A) is replaced by the following:
(b) in the case of a life insurance policy issued after 2016, a separate exemption test policy is deemed, subject to subsection (7), to be issued in respect of each coverage under the life insurance policy
(i) on the date of
(4) The portion of subparagraph 306(3)(b)(ii) of the Regulations before clause (A) is replaced by the following:
(ii) on each policy anniversary of the life insurance policy on which
(5) The portion of subparagraph 306(3)(b)(iii) of the Regulations before clause (A) is replaced by the following:
(iii) on each policy anniversary of the life insurance policy — except to the extent that another exemption test policy has been issued on that date under this subparagraph in respect of a coverage under the life insurance policy — on which
(6) The portion of subsection 306(4) of the Regulations before paragraph (a) is replaced by the following:
(4) For the purpose of determining whether the condition in paragraph (1)(a) is met on a policy anniversary of a life insurance policy, each exemption test policy issued in respect of the life insurance policy, or in respect of a coverage under the life insurance policy, is deemed
(7) The portion of subsection 306(5) of the Regulations before paragraph (a) is replaced by the following:
(5) For the purpose of determining the amount of a benefit on death under an exemption test policy,
(8) Paragraph 306(6)(b) of the Regulations is replaced by the following:
(b) the accumulating fund (computed without regard to any amount payable in respect of a policy loan) in respect of the policy at that time exceeds 250% of
(i) in the case where the particular time at which the policy is issued is determined under subsection 148(11) of the Act and the policy's third preceding policy anniversary is before the particular time, the accumulating fund (computed without regard to any amount payable in respect of a policy loan and as though the policy were issued after 2016) in respect of the policy on that third preceding policy anniversary, and
(ii) in any other case, the accumulating fund (computed without regard to any amount payable in respect of a policy loan) in respect of the policy on its third preceding policy anniversary; and
(9) Subparagraph 306(7)(a)(ii) of the Regulations is replaced by the following:
(ii) the date on which it was deemed by subsection (3) or (10), as the case may be, to be issued (determined immediately before that time); and
(10) Subsection 306(10) of the Regulations is replaced by the following:
(10) Notwithstanding subsections (3) and (4), if a life insurance policy is issued for any purpose at a particular time determined under subsection 148(11) of the Act, then for the purposes of applying this section (other than this subsection and subsection (9)) and section 307 in respect of the life insurance policy at and after the particular time,
(a) in respect of each coverage issued before the particular time under the life insurance policy, a separate exemption test policy is deemed to be issued in respect of a coverage under the life insurance policy
(i) on the date of issue of the life insurance policy, and
(ii) on each policy anniversary that ends before the particular time of the life insurance policy on which
(A) the amount of the benefit on death under the life insurance policy
exceeds
(B) 108% of the amount of the benefit on death under the life insurance policy on the later of the life insurance policy's date of issue and the date of the life insurance policy's preceding policy anniversary, if any;
(b) in respect of each coverage issued before the particular time under the life insurance policy, subsection (3) does not apply to deem an exemption test policy to be issued in respect of the policy, or in respect of a coverage under the policy, at any time before the particular time;
(c) in respect of each exemption test policy the date of issuance of which is determined under subparagraph (a)(i), the references in subparagraph (4)(a)(iii) and paragraph (5)(b) to "subparagraph (3)(b)(i)" are to be read as references to "subparagraph (10)(a)(i)";
(d) in respect of each exemption test policy the date of issuance of which is determined under subparagraph (a)(ii), subparagraph (4)(a)(iv) is to be read as follows:
(iv) if the date on which the exemption test policy is issued is determined by subparagraph (10)(a)(ii) at a time before a particular time, the portion of the amount – that amount being the amount that would be determined, at the time immediately before the particular time, under subparagraph (a)(ii), if the exemption test policy were issued in respect of the policy on the same date as the date determined for it under subparagraph (10)(a)(ii) – that can be reasonably allocated to the coverage in the circumstances (and for these purposes, an allocation is considered not to be reasonable if the total of the amounts determined for A and B in subparagraph (a)(iii) is less than the amount determined for C in that subparagraph in respect of the exemption test policy the date of issuance of which is determined under subparagraph (10)(a)(i) in respect of the coverage), and
and
(e) in applying paragraph (5)(b), the reference in that paragraph to "any time" is to be read as "any time at or after the particular time referred to in subsection (10) in respect of the life insurance policy".
86 (1) The portion of subsection 404(1) of the French version of the Regulations before paragraph (a) is replaced by the following :
404 (1) Malgré les paragraphes 402(3) et (4), le montant de revenu imposable qu'une banque est réputée avoir gagné au cours d'une année d'imposition dans une province où elle avait un établissement stable correspond au tiers du total des sommes suivantes :
(2) Paragraphs 404(1)(a) and (b) of the Regulations are replaced by the following:
(a) the proportion of its taxable income for the year that the total of the salaries and wages paid in the year by the bank to employees of its permanent establishment in the province is of the total of all salaries and wages paid in the year by the bank; and
(b) twice the proportion of its taxable income for the year that the total amount of loans and deposits of its permanent establishment in the province for the year is of the total amount of all loans and deposits of the bank for the year.
(3) Subsections 404(2) and (3) of the Regulations are replaced by the following:
(2) For the purposes of subsection (1), the amount of loans for a taxation year is 1/12 of the total of the amounts outstanding, on the loans made by the bank, at the close of business on the last day of each month in the year.
(3) For the purposes of subsection (1), the amount of deposits for a taxation year is 1/12 of the total of the amounts on deposit with the bank at the close of business on the last day of each month in the year.
(4) Subsections (1) to (3) are deemed to have come into force on September 16, 2016.
87 (1) The Regulations are amended by adding the following after section 404:
404.1 (1) Notwithstanding subsections 402(3) and (4), the amount of taxable income that is deemed to have been earned by a federal credit union in a taxation year in a province in which it had a permanent establishment is 1/3 of the total of
(a) the proportion of its taxable income for the year that the total of the salaries and wages paid in the year by the federal credit union to employees of its permanent establishment in the province is of the total of all salaries and wages paid in the year by the federal credit union, and
(b) twice the proportion of its taxable income for the year that the total amount of loans and deposits of its permanent establishment in the province for the year is of the total amount of all loans and deposits of the federal credit union for the year.
(2) For the purposes of subsection (1), the amount of loans for a taxation year is 1/12 of the total of the amounts outstanding, on the loans made by the federal credit union, at the close of business on the last day of each month in the year.
(3) For the purposes of subsection (1), the amount of deposits for a taxation year is 1/12 of the total of the amounts on deposit with the federal credit union at the close of business on the last day of each month in the year.
(4) For the purposes of subsections (2) and (3), loans and deposits do not include bonds, stocks, debentures, items in transit and deposits in favour of Her Majesty in right of Canada.
(2) Subsection (1) is deemed to have come into force on September 16, 2016.
88 (1) The portion of section 412 of the Regulations before paragraph (a) is replaced by the following:
412 If part of the business of a corporation for a taxation year, other than a corporation described in any of sections 403, 404, 404.1, 405, 406, 407, 408, 409, 410 and 411, consisted of operations normally conducted by a corporation described in one of those sections, the corporation and the Minister may agree to determine the amount of taxable income deemed to have been earned in the year in a particular province to be the total of the amounts computed
(2) Subsection (1) is deemed to have come into force on September 16, 2016.
89 (1) Paragraph 600(b) of the Regulations is replaced by the following:
(b) subsections 13(4), (7.4) and (29), 20(24), 44(1) and (6), 45(2) and (3), 50(1), 53(2.1), 56.4(13), 70(6.2), (9.01), (9.11), (9.21) and (9.31), 72(2), 73(1), 80.1(1), 82(3), 83(2), 91(1.4), 104(14), 107(2.001), 143(2), 146.01(7), 146.02(7), 164(6) and (6.1), 184(3), 251.2(6) and 256(9) of the Act;
(2) Subsection (1) is deemed to have come into force on July 12, 2013.
90 (1) Sections 806 and 806.1 of the Regulations are replaced by the following:
806 For the purposes of paragraph (c) of the definition fully exempt interest in subsection 212(3) of the Act, the Bank for International Settlements and the European Bank for Reconstruction and Development are prescribed.
(2) Subsection (1) is deemed to have come into force on January 1, 2008.
91 (1) Paragraph 1104(17)(a) of the Regulations is replaced by the following:
(a) the property is included in Class 43.1 because of its subparagraph (c)(i) or is described in any of subparagraphs d(vii) to (ix), (xi), (xiii), (xiv) and (xvi) of Class 43.1 and paragraph (a) of Class 43.2; and
(2) Subsection (1) applies in respect of property acquired for use after March 21, 2017 that has not been used or acquired for use before March 22, 2017.
92 (1) Paragraph 1219(1)(f) of the Regulations is replaced by the following:
(f) for the drilling or completion of a well for the project, other than
(i) a well that is, or can reasonably be expected to be, used for the installation of underground piping that is included in paragraph (d) of Class 43.1 or paragraph (b) of Class 43.2 in Schedule II, or
(ii) a well referred to in paragraph (h);
(2) Subsection 1219(1) of the Regulations is amended by adding "or" at the end of paragraph (g) and by adding the following after that paragraph:
(h) if at least 50% of the depreciable property to be used in the project, determined by reference to its capital cost, is described in subparagraph (d)(vii) of Class 43.1,
(i) for the drilling of a well, or
(ii) solely for the purpose of determining the extent and quality of a geothermal resource.
(3) Subparagraphs 1219(2)(b)(iv) and (v) of the Regulations are replaced by the following:
(iv) included in the capital cost of property that, but for this section, would be depreciable property (other than property that would be included in Class 14.1 of Schedule II), except as provided by paragraph (1)(b), (d), (e), (f), (g) or (h),
(v) included in the capital cost of property that, but for this section, would be property included in Class 14.1 of Schedule II, except as provided by any of paragraphs (1)(a) to (e) or subparagraph (h)(ii),
(4) Clause 1219(2)(b)(xi)(A) of the Regulations is replaced by the following:
(A) the construction, renovation or alteration of the property, except as provided by paragraph (1)(b), (f), (g) or (h), or
(5) Section 1219 of the Regulations is amended by adding the following after subsection (4):
(5) A Canadian renewable and conservation expense does not include an expense incurred by a taxpayer at any time that is in respect of a geothermal project
(a) that at that time is described in paragraph (1)(h); and
(b) in respect of which the taxpayer is not at that time in compliance with the requirements of all environmental laws, by-laws and regulations of
(i) Canada,
(ii) a province or a municipality in Canada, or
(iii) a municipal or public body performing a function of government in Canada.
(6) Subsections (1) to (5) apply in respect of expenses incurred after March 21, 2017.
93 The portion of paragraph 1401(5)(b) of the Regulations before subparagraph (i) is replaced by the following:
(b) if the policy is issued before 2017 and at a particular time after 2016 life insurance — in respect of a life, or two or more lives jointly insured, and in respect of which a particular schedule of premium or cost of insurance rates applies — is added to the policy or is term insurance that is converted into permanent life insurance within the policy, then that insurance is deemed to be a separate life insurance policy issued at the particular time unless
94 The definitions official receipt and other recipient of a gift in section 3500 of the Regulations are replaced by the following:
official receipt means a receipt for the purposes of paragraph 110.1(2)(a) or 118.1(2)(a) of the Act, containing information required by section 3501 or 3502; (reçu officiel)
other recipient of a gift means a person, to whom a gift is made by a taxpayer, referred to in any of paragraph 110.1(1)(c), subparagraph 110.1(2.1)(a)(ii) and paragraphs (a) and (d) of the definition qualified donee in subsection 149.1(1) of the Act; (autre bénéficiaire d'un don)
95 (1) The portion of subsection 4900(1) of the Regulations before paragraph (a) is replaced by the following:
4900 (1) For the purposes of paragraph (d) of the definition qualified investment in subsection 146(1) of the Act, paragraph (e) of the definition qualified investment in subsection 146.1(1) of the Act, paragraph (c) of the definition qualified investment in subsection 146.3(1) of the Act, paragraph (d) of the definition qualified investment in subsection 146.4(1) of the Act, paragraph (h) of the definition qualified investment in section 204 of the Act and paragraph (c) of the definition qualified investment in subsection 207.01(1) of the Act, each of the following investments is prescribed as a qualified investment for a plan trust at a particular time if at that time it is
(2) The portion of paragraph 4900(1)(g) of the Regulations before subparagraph (i) is replaced by the following:
(g) a bond, debenture, note or similar obligation (in this paragraph referred to as the "obligation") issued by, or a deposit with, a credit union that has not at any time during the calendar year in which the particular time occurs granted any benefit or privilege to a person who is a connected person under the governing plan of the plan trust, as a result of the ownership by
(3) Subsection 4900(5) of the Regulations is replaced by the following:
(5) For the purposes of paragraph (e) of the definition qualified investment in subsection 146.1(1) of the Act, paragraph (d) of the definition qualified investment in subsection 146.4(1) of the Act and paragraph (c) of the definition qualified investment in subsection 207.01(1) of the Act, a property is prescribed as a qualified investment for a trust governed by a registered disability savings plan, a registered education savings plan or a TFSA at any time if at that time the property is an interest in a trust or a share of the capital stock of a corporation that was a registered investment for a trust governed by a registered retirement savings plan during the calendar year in which that time occurs or during the preceding year.
(4) The portion of subsection 4900(6) of the Regulations before paragraph (b) is replaced by the following:
(6) Subject to subsection (9), for the purposes of paragraph (d) of the definition qualified investment in subsection 146(1) of the Act, paragraph (e) of the definition qualified investment in subsection 146.1(1) of the Act and paragraph (c) of the definition qualified investment in subsection 146.3(1) of the Act, a property is prescribed as a qualified investment for a trust governed by a registered retirement savings plan, a registered education savings plan and a registered retirement income fund at any time if at that time the property is not a prohibited investment for the trust and is
(a) a share of the capital stock of an eligible corporation (as defined in subsection 5100(1));
(5) Subsection 4900(8) of the Regulations is repealed.
(6) Subsections 4900(12) and (13) of the Regulations are repealed.
(7) The portion of subsection 4900(14) of the Regulations before paragraph (a) is replaced by the following:
(14) For the purposes of paragraph (d) of the definition qualified investment in subsection 146(1) of the Act, paragraph (e) of the definition qualified investment in subsection 146.1(1) of the Act, paragraph (c) of the definition qualified investment in subsection 146.3(1) of the Act and paragraph (c) of the definition qualified investment in subsection 207.01(1) of the Act, a property is prescribed as a qualified investment for a trust governed by a RESP, RRIF, RRSP or TFSA at any time if, at the time the property was acquired by the trust, the property
(8) Subparagraph 4900(14)(a)(iii) of the Regulations is replaced by the following:
(iii) a qualifying share in respect of a specified cooperative corporation and the RESP, RRIF, RRSP or TFSA; and
(9) Subsection 4900(15) of the Regulations is replaced by the following:
(15) For the purposes of the definition prohibited investment in subsection 207.01(1) of the Act, property that is a qualified investment for a trust governed by a RESP, RRIF, RRSP or TFSA solely because of subsection (14) is prescribed property for the trust at any time if, at that time, the property is not described in any of subparagraphs (14)(a)(i) to (iii).
(10) Subsections (1) and (3) are deemed to have come into force on March 23, 2017.
(11) Subsections (2) and (4) to (9) apply in respect of
(a) any investment acquired after March 22, 2017; and
(b) any investment acquired before March 23, 2017 that ceases to be a qualified investment (as defined in subsection 146.1(1) of the Act) after March 22, 2017.
96 Section 5600 of the Regulations is amended by striking out "and" at the end of paragraph (h), by adding "and" at the end of paragraph (i) and by adding the following after paragraph (i):
(j) the distribution by BHP Billiton Limited, on May 24, 2015 to its common shareholders, of common shares of South32 Limited.
97 (1) Subsection 5907(1.07) of the Regulations is replaced by the following:
(1.07) For the purposes of paragraph (1.03)(a), a specified owner in respect of the particular corporation is not to be considered, under the relevant foreign tax law, to own less than all of the shares of the capital stock of another corporation that are considered to be owned for the purposes of the Act solely because the specified owner or the other corporation is not treated as a corporation under the relevant foreign tax law.
(2) Subsection 5907(8) of the Regulations is replaced by the following:
(8) For the purposes of computing the various amounts referred to in this section,
(a) the first taxation year of a foreign affiliate, of a corporation resident in Canada, that is formed as a result of a foreign merger (within the meaning assigned by subsection 87(8.1) of the Act) is deemed to have commenced at the time of the merger, and a taxation year of a predecessor corporation (within the meaning assigned by subsection 5905(3)) that would otherwise have ended after that time is deemed to have ended immediately before that time; and
(b) if subsection 91(1.2) of the Act applies at any particular time in respect of a foreign affiliate of a corporation, the various amounts are to be computed, in respect of attributed amounts for the stub period in respect of the particular time, as if
(i) the affiliate's taxation year that would have included the particular time ended at the stub-period end time in respect of the particular time, and
(ii) all transactions or events, giving rise to attributed amounts, that occurred at the particular time, occurred at the stub-period end time in respect of the particular time.
(8.1) The following definitions apply in paragraph 5907(8)(b).
attributed amounts, for a stub period, in respect of a particular time referred to in paragraph (8)(b), of a foreign affiliate of a corporation, means
(a) the amounts of any income, gain or loss of the affiliate for the stub period that are relevant in determining amounts that are to be included or may be deducted under section 91 of the Act in respect of the affiliate for the particular stub period, in computing the income of the corporation;
(b) any portion of the affiliate's capital gain or capital loss – from a disposition, in the stub period or at the particular time referred to in paragraph (8)(b), of a property that is not an excluded property – that is not described in paragraph (a); and
(c) any income or profits tax paid to the government of a country, in respect of amounts described in paragraph (a) or (b). (sommes attribuées)
stub period, in respect of a particular time at which subsection 91(1.2) of the Act applies in respect of a foreign affiliate of a corporation, means a period that ends at the stub-period end time in respect of the particular time and begins immediately after the later of
(a) the last time, if any, before the particular time that subsection 91(1.2) applied in respect of the affiliate, and
(b) the end of the affiliate's last taxation year before the particular time. (période tampon)
stub-period end time, in respect of a particular time at which subsection 91(1.2) of the Act applies in respect of a foreign affiliate of a corporation, means the time that is immediately before the particular time. (fin de la période tampon)
(3) Subsection (1) applies to income or profits tax paid, and amounts referred to in subsections 5907(1.1) and (1.2) of the Regulations, in respect of the income of a foreign affiliate of a corporation for taxation years of the foreign affiliate that end in taxation years of the corporation that end after October 24, 2012.
(4) Subsection (2) is deemed to have come into force on July 12, 2013, except that if at any time in the period that begins on July 12, 2013 and ends on September 7, 2017, subsection 91(1.2) of the Act (as enacted by subsection 28(1)), applies in respect of a taxpayer, and the taxpayer and all corporations that are connected persons (within the meaning assigned by paragraph (a) of the definition connected person in subsection 91(1.3) of the Act (as enacted by subsection 28(1))) to the taxpayer at the time file with the Minister an election in prescribed manner on or before the earliest of the filing-due date of the taxpayer and those corporations for their taxation year that includes the day on which this Act receives royal assent, for the taxpayer and those corporations, subsection (2) is deemed to have come into force on September 8, 2017 and not on July 12, 2013.
98 (1) The portion of subsection 6204(1) of the Regulations before paragraph (a) is replaced by the following:
6204 (1) For the purposes of subparagraph 110(1)(d)(i.1) of the Act, a share is a prescribed share of the capital stock of a corporation at the time of its sale or issue, as the case may be, if, at that time,
(2) Subsection (1) applies in respect of acquisitions of securities and transfers or dispositions of rights that occur after 4:00 pm Eastern Standard Time on March 4, 2010.
99 (1) Section 6503 of the Regulations is replaced by the following:
6503 For the purposes of paragraphs 60(j.02) to (j.04) of the Act, subsection 41(5) of the Canadian Forces Superannuation Act, subsections 39(7) and 42(8) of the Public Service Superannuation Act and subsection 24(6) of the Royal Canadian Mounted Police Superannuation Act are prescribed.
(2) Subsection (1) applies in respect of repayments made after March 2007.
100 (1) Section 7300 of the Regulations is amended by striking out "or" at the end of paragraph (c) and by adding the following after that paragraph:
(c.1) an amount that is the portion of a student loan forgiven under a provincial program that would be a prescribed amount because of paragraph (c) if section 11.1 of the Canada Student Loans Act or 9.2 of the Canada Student Financial Assistance Act applied to loans under that program; or
(2) Subsection (1) is deemed to have come into force on January 1, 2013.
101 (1) Subparagraph 8302(4)(b)(i) of the Regulations is replaced by the following:
(i) the election may be made only if the life expectancy of the individual is significantly shorter than normal and has been so certified in writing by a medical doctor or a nurse practitioner licensed to practise under the laws of a province or of the place where the individual resides, and
(2) Subsection (1) applies in respect of certifications made after September 7, 2017.
102 (1) Clause 8503(3)(a)(v)(A) of the Regulations is replaced by the following:
(A) both
(I) subparagraph (v.1) does not apply, and
(II) benefits that are attributable to employment of the member with a former employer accrued to the member under a defined benefit provision of another registered pension plan, or
(2) Paragraph 8503(3)(a) of the Regulations is amended by adding the following after subparagraph (v):
(v.1) a portion — determined by reference to the proportion of property that has been transferred, as described in clause (B) — of a period in respect of which
(A) benefits that are attributable to employment of the member with a former employer accrued to the member under a defined benefit provision of another registered pension plan, and
(B) pursuant to the Pension Benefits Standards Act, 1985 or a similar law of a province, a portion of property held in connection with the benefits described in clause (A) has been transferred to the provision and the balance of property is required to be transferred to the provision at a later date,
(3) Paragraphs 8503(4)(e) and (f) of the Regulations are replaced by the following:
(e) where additional lifetime retirement benefits are provided under the provision to a member because the member is totally and permanently disabled, the additional benefits are not paid before the plan administrator has received from a medical doctor or a nurse practitioner who is licensed to practise under the laws of a province or of the place where the member resides a written report providing the information on the medical condition of the member taken into account by the administrator in determining that the member is totally and permanently disabled; and
(f) where lifetime retirement benefits are provided under the provision to a member in respect of a period of disability of the member, the benefits, to the extent that they would not be in accordance with paragraph (3)(a) if that paragraph were read without reference to subparagraph (iv) thereof, are not paid before the plan administrator has received from a medical doctor or a nurse practitioner who is licensed to practise under the laws of a province or of the place where the member resides a written report providing the information on the medical condition of the member taken into account by the administrator in determining that the period is a period of disability.
(4) Subsections (1) and (2) apply in respect of transfers of property that occur after 2012.
(5) Subsection (3) applies in respect of reports made after September 7, 2017.
103 (1) Clause 8517(6)(b)(ii)(A) of the Regulations is replaced by the following:
(A) the election may be made only if the life expectancy of the person is significantly shorter than normal and has been so certified in writing by a medical doctor or a nurse practitioner licensed to practise under the laws of a province or of the place where the person resides, and
(2) Subsection (1) applies in respect of certifications made after September 7, 2017.
104 (1) Subparagraph (d)(iv) of Class 43.1 in Schedule II to the Regulations is replaced by the following:
(iv) heat recovery equipment used by the taxpayer, or by a lessee of the taxpayer, primarily for the purpose of conserving energy, reducing the requirement to acquire energy or extracting heat for sale, by extracting for reuse thermal waste that is generated directly in an industrial process (other than an industrial process that generates or processes electrical energy), including such equipment that consists of heat exchange equipment, compressors used to upgrade low pressure steam, vapour or gas, waste heat boilers and other ancillary equipment such as control panels, fans, instruments or pumps, but not including property that is employed in re-using the recovered heat (such as property that is part of the internal heating or cooling system of a building or electrical generating equipment), is a building or is equipment that recovers heat primarily for use for heating water in a swimming pool,
(2) Subparagraph (d)(vii) of Class 43.1 in Schedule II to the Regulations is replaced by the following:
(vii) equipment used by the taxpayer, or by a lessee of the taxpayer, primarily for the purpose of generating electrical energy or heat energy, or both electrical and heat energy, solely from geothermal energy, including such equipment that consists of piping (including above or below ground piping and the cost of completing a well (including the wellhead and production string), or trenching, for the purpose of installing that piping), pumps, heat exchangers, steam separators, electrical generating equipment and ancillary equipment used to collect the geothermal heat, but not including buildings, distribution equipment, equipment used to heat water for use in a swimming pool, equipment described in subclause (i)(A)(II), property otherwise included in Class 10 and property that would be included in Class 17 if that Class were read without reference to its paragraph (a.1),
(3) Clause (d)(xv)(B) of Class 43.1 in Schedule II to the Regulations is replaced by the following:
(B) is part of a district energy system that uses thermal energy that is primarily supplied by equipment that is described in subparagraphs (i), (iv), (vii) or (ix) or would be described in those subparagraphs if owned by the taxpayer, and
(4) Subsection (1) applies to property acquired after March 3, 2010.
(5) Subsections (2) and (3) apply in respect of property acquired for use after March 21, 2017 that has not been used or acquired for use before March 22, 2017.
SOR/2011-188
Regulations Amending the Income Tax Regulations (Omnibus, No. 3)
105 The reference in subsection 29(14) of the Regulations Amending the Income Tax Regulations (Omnibus, No. 3) to "1984" is deemed to have always been a reference to "1994".
PART 2
Amendments to the Excise Tax Act and to Related Legislation (GST/HST Measures)
R.S., c. E-15
Excise Tax Act
106 (1) The definition Agency in subsection 123(1) of the Excise Tax Act is repealed.
(2) The definition credit union in subsection 123(1) of the Act is replaced by the following:
credit union has the meaning assigned by subsection 137(6) of the Income Tax Act and includes a corporation described in paragraph (a) of the definition deposit insurance corporation in subsection 137.1(5) of that Act; (caisse de crédit)
(3) The definition coopérative in subsection 123(1) of the French version of the Act is replaced by the following:
coopérative S'entend d'une coopérative d'habitation ou de toute autre société coopérative, au sens du paragraphe 136(2) de la Loi de l'impôt sur le revenu. (cooperative corporation)
(4) Paragraph (a) of the definition pension entity in subsection 123(1) of the Act is replaced by the following:
(a) a trust governed by the pension plan,
(5) Paragraph (a) of the definition pension plan in subsection 123(1) of the Act is replaced by the following:
(a) that governs a trust,
(6) Subsection 123(1) of the Act is amended by adding the following in alphabetical order:
master pension entity of a pension plan means a person that is not a pension entity of the pension plan and that is
(a) a corporation described in paragraph 149(1)(o.2) of the Income Tax Act, one or more shares of which are owned by a pension entity of the pension plan, or
(b) a trust prescribed to be a master trust for the purposes of paragraph 149(1)(o.4) of the Income Tax Act, one or more units of which are owned by a pension entity of the pension plan; (entité de gestion principale)
master pension factor means, in respect of a pension plan for a fiscal year of a master pension entity, the amount (expressed as a percentage) determined by the formula
A/B
where
A is the total value, on the first day of the fiscal year, of the units or shares of the master pension entity that are held by pension entities of the pension plan on that day, and
B is the total value, on the first day of the fiscal year, of the units or shares of the master pension entity; (facteur d'entité de gestion principale)
(7) Subsections (2) and (3) are deemed to have come into force on March 1, 1994.
(8) Subsections (4) and (5) are deemed to have come into force on July 23, 2016.
(9) The definition master pension entity in subsection 123(1) of the Act, as enacted by subsection (6), is deemed to have come into force on September 23, 2009.
(10) The definition master pension factor in subsection 123(1) of the Act, as enacted by subsection (6), is deemed to have come into force on July 22, 2016.
107 (1) The Act is amended by adding the following after section 130:
Arrangements deemed to be trusts
130.1 If an arrangement is deemed to be a trust under paragraph 248(3)(b) or (c) of the Income Tax Act, the following rules apply for the purposes of this Part:
(a) the arrangement is deemed to be a trust;
(b) property subject to rights and obligations under the arrangement is deemed to be held in trust and not otherwise;
(c) in the case of an arrangement referred to in paragraph 248(3)(b) of that Act, a person that has a right (whether immediate or future and whether absolute or contingent) to receive all or part of the income or capital in respect of property that is referred to in that paragraph is deemed to be beneficially interested in the trust; and
(d) in the case of an arrangement referred to in paragraph 248(3)(c) of that Act, any property contributed at any time to the arrangement by an annuitant, a holder or a subscriber of the arrangement, as the case may be, is deemed to have been transferred, at that time, to the trust by the contributor.
(2) Subsection (1) is deemed to have come into force on July 23, 2016.
108 (1) The portion of subsection 141.01(1.2) of the French version of the Act before paragraph (a) is replaced by the following:
Primes et subventions
(1.2) Pour l'application du présent article, le montant d'aide — prime, subvention, prêt à remboursement conditionnel ou autre montant semblable — qu'un inscrit reçoit d'une des personnes suivantes et qui n'est pas la contrepartie d'une fourniture, mais qu'il est raisonnable de considérer comme étant accordé en vue de financer une activité de l'inscrit comportant la réalisation de fournitures taxables sans contrepartie, est réputé être la contrepartie de ces fournitures :
(2) The portion of subsection 141.01(4) of the French version of the Act before paragraph (a) is replaced by the following:
Fournitures gratuites
(4) Lorsqu'un fournisseur effectue, dans le cadre de son initiative, la fourniture taxable (appelée « fourniture gratuite » au présent paragraphe) d'un bien ou d'un service sans contrepartie ou pour une contrepartie symbolique et qu'il est raisonnable de considérer que la fourniture gratuite a pour objet notamment de faciliter, de favoriser ou de promouvoir soit une initiative, soit l'acquisition, la consommation ou l'utilisation d'autres biens ou services par une autre personne, les présomptions suivantes s'appliquent :
(3) Subsections 141.01(6) and (7) of the French version of the Act are replaced by the following:
Présomption de faits ou de circonstances
(6) Lorsqu'une présomption de faits ou de circonstances prévue par une disposition de la présente partie, sauf les paragraphes (2) à (4), s'applique à la condition qu'un bien ou un service soit, ou ait été, consommé ou utilisé, ou acquis, importé ou transféré dans une province participante pour consommation ou utilisation, dans une certaine mesure dans le cadre des activités, commerciales ou autres, d'une personne, ou hors de ce cadre, cette mesure est déterminée en conformité avec les paragraphes (2) ou (3) en vue d'établir si la condition est remplie. Toutefois, si cette condition est ainsi remplie et que les autres conditions d'application de la disposition sont réunies, la présomption prévue par cette disposition s'applique malgré les paragraphes (2) et (3).
Exception
(7) Les dispositions de la présente partie portant que la contrepartie d'une fourniture est réputée ne pas en être une, qu'une fourniture est réputée effectuée sans contrepartie ou qu'une personne est réputée ne pas avoir effectué une fourniture ne s'appliquent pas aux paragraphes (1) à (4).
109 (1) Paragraph 149(5)(a) of the Act is amended by adding the following after subparagraph (iv):
(iv.1) a TFSA,
(2) Paragraph 149(5)(a) of the Act is amended by adding the following after subparagraph (vi):
(vi.1) a registered disability savings plan,
(3) Subparagraph 149(5)(a)(xi) of the Act is repealed.
(4) Paragraphs 149(5)(b) to (e) of the French version of the Act are replaced by the following:
b) la société de placement, au sens de cette loi;
c) la société de placement hypothécaire, au sens de cette loi;
d) la société de placement à capital variable, au sens de cette loi;
e) la société de placement appartenant à des non-résidents, au sens de cette loi;
(5) Paragraph 149(5)(g) of the Act is replaced by the following:
(g) a prescribed person or a person of a prescribed class.
(6) Subsections (1) to (3) and (5) apply in respect of any taxation year of a person that begins after July 22, 2016.
(7) Subsection (4) is deemed to have come into force on March 1, 1994.
110 Subsection 155(1) of the French version of the Act is replaced by the following:
Fourniture entre personnes ayant un lien de dépendance
155 (1) Pour l'application de la présente partie, les règles ci-après s'appliquent lorsque la fourniture d'un bien ou d'un service est effectuée entre personnes ayant entre elles un lien de dépendance, sans contrepartie ou pour une contrepartie inférieure à la juste valeur marchande du bien ou du service au moment de la fourniture, et que l'acquéreur n'est pas un inscrit qui acquiert le bien ou le service pour le consommer, l'utiliser ou le fournir exclusivement dans le cadre de ses activités commerciales :
a) si la fourniture est effectuée sans contrepartie, la fourniture est réputée être effectuée pour une contrepartie, payée au moment de la fourniture, égale à la juste valeur marchande du bien ou du service à ce moment;
b) si la fourniture est effectuée pour une contrepartie, la valeur de la contrepartie est réputée égale à la juste valeur marchande du bien ou du service au moment de la fourniture.
111 (1) Section 157 of the Act is amended by adding the following after subsection (2):
Election for nil consideration — master pension entity
(2.1) A person that is a participating employer of a pension plan and a master pension entity of the pension plan may jointly make an election in respect of taxable supplies made by the person to the master pension entity if
A ≥ 90%
where
A is the total of all percentages, each of which is a master pension factor in respect of a pension plan of which the person is a participating employer for the fiscal year of the master pension entity that includes the day on which the election becomes effective.
Effect of subsection (2.1) election
(2.2) For the purposes of this Part, every taxable supply made by a participating employer to a master pension entity at a time when a joint election made under subsection (2.1) by the participating employer and the master pension entity is in effect is deemed to have been made for no consideration.
(2) Subsection 157(4) of the Act is replaced by the following:
Non-application of subsection (2.2)
(3.1) Subsection (2.2) does not apply to
(a) a supply deemed under section 172.1 to have been made;
(b) a supply of property or a service that is not acquired by a master pension entity of a pension plan for consumption, use or supply by the master pension entity in the course of pension activities (as defined in subsection 172.1(1)) in respect of the pension plan;
(c) a supply made by a participating employer of a pension plan to a master pension entity of the pension plan of all or part of property or a service if, at the time the participating employer acquires the property or service, the master pension entity is a master pension entity of one or more pension plans of which the participating employer is a selected qualifying employer;
(d) a supply made by a participating employer of a pension plan to a master pension entity of the pension plan of property or a service if, at the time the participating employer consumes or uses an employer resource (as defined in subsection 172.1(1)) of the participating employer for the purpose of making the supply, the master pension entity is a master pension entity of one or more pension plans of which the participating employer is a selected qualifying employer; or
(e) a supply made in prescribed circumstances or made by a prescribed person.
Joint revocation
(4) The persons that have jointly made an election under subsection (2) or (2.1) may jointly revoke the election.
(3) The portion of subsection 157(5) of the Act before paragraph (a) is replaced by the following:
Form of election and revocation
(5) An election under subsection (2) or (2.1) and a revocation of an election under subsection (4) must
(4) Subsections 157(6) to (10) of the Act are replaced by the following:
Cessation
(6) An election made jointly under subsection (2) or (2.1) by a person that is a participating employer of a pension plan and by another person that is a pension entity of the pension plan or a master pension entity of the pension plan ceases to have effect on the earliest of
(a) the day on which the person ceases to be a participating employer of the pension plan,
(b) the day on which the other person ceases to be a pension entity of the pension plan or a master pension entity of the pension plan, as the case may be,
(c) the day on which a joint revocation of the election under subsection (4) becomes effective,
(d) the day specified in a notice of revocation of the election sent to the person under subsection (9), and
(e) in the case of an election under subsection (2.1), the first day of a fiscal year of the other person for which
A < 90%
where
A is the total of all percentages, each of which is a master pension factor in respect of a pension plan of which the person is a participating employer for the fiscal year.
Notice of intent
(7) If an election made jointly under subsection (2) or (2.1) by a participating employer of a pension plan and by a pension entity of the pension plan or a master pension entity of the pension plan is in effect at any time in a fiscal year of the participating employer and if the participating employer fails to account for, as and when required under this Part, any tax deemed to have been collected by the participating employer on the last day of the fiscal year under any of subsections 172.1(5) to (6.1) in respect of the pension plan, the Minister may send a notice in writing (in this section referred to as a "notice of intent") to the participating employer and to the pension entity or the master pension entity, as the case may be, that the Minister proposes to revoke the election as of the first day of the fiscal year.
Representations to Minister
(8) Upon receipt of a notice of intent, a participating employer must establish to the satisfaction of the Minister that the participating employer did not fail to account for, as and when required under this Part, tax deemed to have been collected by the participating employer under any of subsections 172.1(5) to (6.1) in respect of the pension plan.
Notice of revocation
(9) If, after 60 days after the day on which the notice of intent was sent by the Minister to the participating employer, the Minister is not satisfied that the participating employer did not fail to account for, as and when required under this Part, tax deemed to have been collected by the participating employer on the last day of a particular fiscal year under any of subsections 172.1(5) to (6.1) in respect of the pension plan, the Minister may send a notice in writing (in this section referred to as a "notice of revocation") to the participating employer and to the pension entity or master pension entity with which the participating employer made the election that the election is revoked as of the day specified in the notice of revocation, and that day is not to be earlier than the day specified in the notice of intent and must be the first day of any particular fiscal year.
Revocation — effect
(10) For the purposes of this Part, an election under subsection (2) or (2.1) that has been revoked by the Minister under subsection (9) is deemed never to have been in effect on any day on or after the day specified in the notice of revocation.
(5) Subsections (1) to (4) apply in respect of supplies made after July 21, 2016, other than
(a) a supply made by a person of all or part of property or a service, if the person acquired the property or service before the first fiscal year of the person that begins after July 21, 2016; and
(b) a supply made by a person of property or a service, if the person, before the first fiscal year of the person that begins after July 21, 2016, consumes or uses an employer resource, as defined in subsection 172.1(1) of the Act, of the person for the purpose of making the supply.
112 The portion of subsection 167(1.1) of the French version of the Act before paragraph (a) is replaced by the following:
Effet du choix
(1.1) Dans le cas où un fournisseur et un acquéreur font conjointement le choix prévu au paragraphe (1) et que ce dernier, s'il est un inscrit, présente le choix au ministre au plus tard le jour où il est tenu de produire aux termes de la section V la déclaration visant sa première période de déclaration au cours de laquelle une taxe serait, sans le présent paragraphe, devenue payable relativement à la fourniture d'un bien ou d'un service effectuée aux termes de la convention portant sur la fourniture de l'entreprise ou de la partie d'entreprise visée par le choix, ou à la date ultérieure fixée par le ministre sur demande de l'acquéreur, les règles suivantes s'appliquent :
113 Subsection 168(9) of the French version of the Act is replaced by the following:
Dépôt
(9) Pour l'application du présent article, un dépôt (sauf celui afférent à une enveloppe ou un contenant auxquels l'article 137 s'applique), remboursable ou non, versé au titre d'une fourniture n'est considéré comme la contrepartie payée à ce titre que lorsque le fournisseur le considère ainsi.
114 (1) The portion of subsection 172.1(1) of the Act before the first definition is replaced by the following:
Definitions
172.1 (1) The following definitions apply in this section and in section 172.2.
(2) The definition excluded activity in subsection 172.1(1) of the Act is replaced by the following:
excluded activity, in respect of a pension plan, means an activity undertaken exclusively
(a) for compliance by a participating employer of the pension plan as an issuer, or prospective issuer, of securities with reporting requirements under a law of Canada or of a province in respect of the regulation of securities;
(b) for evaluating the feasibility or financial impact on a participating employer of the pension plan of establishing, altering or winding-up the pension plan, other than an activity that relates to the preparation of an actuarial report in respect of the plan required under a law of Canada or of a province;
(c) for evaluating the financial impact of the pension plan on the assets and liabilities of a participating employer of the pension plan;
(d) for negotiating changes to the benefits under the pension plan with a union or similar organization of employees;
(e) if the pension plan is a pooled registered pension plan, for compliance by a participating employer of the pension plan as a PRPP administrator of the pension plan with requirements under the Pooled Registered Pension Plans Act or a similar law of a province, provided the activity is undertaken exclusively for the purpose of making a taxable supply of a service to a pension entity of the pension plan that is to be made
(i) for consideration that is not less than the fair market value of the service, and
(ii) at a time when no election under subsection 157(2) made jointly by the participating employer and the pension entity is in effect; or
(f) in relation to a part of the pension plan that is a defined contribution pension plan or that is a defined benefits pension plan, if no pension entity of the pension plan administers that part of the pension plan or holds assets in respect of that part of the pension plan; or
(g) for prescribed purposes. (activité exclue)
(3) Paragraphs (a) and (b) of the definition pension activity in subsection 172.1(1) of the Act are replaced by the following:
(a) the establishment, management or administration of the pension plan or of a pension entity or master pension entity of the pension plan; or
(b) the management or administration of assets in respect of the pension plan, including assets held by a pension entity or master pension entity of the pension plan. (activité de pension)
(4) Paragraphs (a) to (c) of the definition specified supply in subsection 172.1(1) of the Act are replaced by the following:
(a) a taxable supply deemed to have been made under subsection (5) or (5.1) of all or part of property or a service that the participating employer acquired for the purpose of making a supply of all or part of the property or service to a pension entity or master pension entity of the pension plan;
(b) a taxable supply deemed to have been made under subsection (6) or (6.1) of an employer resource of the participating employer that the participating employer consumed or used for the purpose of making a supply of property or a service to a pension entity or master pension entity of the pension plan; or
(c) a taxable supply deemed to have been made under subsection (7) or (7.1) of an employer resource of the participating employer that the participating employer consumed or used in the course of pension activities in respect of the pension plan. (fourniture déterminée)
(5) Subsection 172.1(1) of the Act is amended by adding the following in alphabetical order:
defined benefits pension plan means the part of a pension plan that is in respect of benefits under the plan that are determined in accordance with a formula set forth in the plan and under which the employer contributions are not determined in accordance with a formula set forth in the plan. (régime de pension à prestations déterminées)
defined contribution pension plan means the part of a pension plan that is not a defined benefits pension plan. (régime de pension à cotisations déterminées)
master pension group in respect of a particular person and another person means the group of one or more pension plans that consists of every pension plan that meets the following conditions:
(a) the particular person is a participating employer of the pension plan; and
(b) the other person is a master pension entity of the pension plan. (groupe de pension principal)
specified resource means property or a service that is acquired by a person for the purpose of making a supply of all or part of the property or service to a pension entity or a master pension entity of a pension plan of which the person is a participating employer. (ressource déterminée)
(6) Paragraph 172.1(2)(a) of the Act is replaced by the following:
(a) for each pension entity and master pension entity of the pension plan, no tax would become payable under this Part in respect of the supply if
(i) the supply were made by the other person to the pension entity or to the master pension entity, as the case may be, and not to the particular person, and
(ii) the pension entity or the master pension entity, as the case may be, and the other person were dealing at arm's length; and
(7) The portion of subsection 172.1(4) of the Act before paragraph (a) is replaced by the following:
Specified pension entity
(4) For the purposes of this section, if a person is a participating employer of a pension plan and the pension plan has,
(8) The portion of subsection 172.1(5) of the Act before paragraph (a) is replaced by the following:
Acquisition for supply to pension entity
(5) If a person is both a registrant and a participating employer of a pension plan at any time in a particular fiscal year of the person and is not a selected qualifying employer of the pension plan at that time, if the person acquires at that time a specified resource for the purpose of making a supply of all or part of the specified resource to a pension entity of the pension plan for consumption, use or supply by the pension entity in the course of pension activities in respect of the pension plan and if the specified resource is not an excluded resource of the person in respect of the pension plan, the following rules apply:
(9) Subparagraph 172.1(5)(d)(ii) of the Act is replaced by the following:
(ii) to have paid tax in respect of that supply on that day equal to the amount determined by the formula
A - B
where
A is
(A) if the pension entity is a selected listed financial institution on that day, the amount determined for A in paragraph (c), and
(B) in any other case, the amount of tax determined under paragraph (c), and
B is the total of all amounts, each of which is a part of the amount determined for A
(A) that is not included in determining the person's net tax for the reporting period that includes the last day of the particular fiscal year, or
(B) that the person has recovered or is entitled to recover by way of rebate, refund or remission, or otherwise, under this or any other Act of Parliament, and
(10) Section 172.1 of the Act is amended by adding the following after subsection (5):
Acquisition for supply to master pension entity
(5.1) If a person that is a registrant acquires at any time in a particular fiscal year of the person a specified resource for the purpose of making a supply of all or part of the specified resource to a master pension entity for consumption, use or supply by the master pension entity in the course of pension activities in respect of any pension plan that is in the master pension group in respect of the person and the master pension entity at that time, if the person is not at that time a selected qualifying employer of any pension plan in the master pension group and if it is not the case that the specified resource is an excluded resource of the person in respect of any pension plan in the master pension group, the following rules apply:
(a) for the purposes of this Part, the person is deemed to have made a taxable supply of the specified resource or part on the last day of the particular fiscal year;
(b) for the purposes of this Part, tax in respect of the taxable supply is deemed to have become payable on the last day of the particular fiscal year and the person is deemed to have collected that tax on that day;
(c) for the purposes of this Part, the tax referred to in paragraph (b) is deemed to be equal to the total of all amounts, each of which is determined for each pension plan in the master pension group by the formula
A + B
where
A is the amount determined by the formula
C × D × E
where
C is the fair market value of the specified resource or part at the time it was acquired by the person,
D is the rate set out in subsection 165(1), and
E is the master pension factor in respect of the pension plan for the fiscal year of the master pension entity that includes the last day of the particular fiscal year, and
B is the total of all amounts, each of which is determined for a participating province by the following formula
F × G × H
where
F is the amount determined for C,
G is the provincial factor in respect of the pension plan and the participating province for the particular fiscal year, and
H is the master pension factor determined for E; and
(d) for each pension plan in the master pension group, the specified pension entity of the pension plan is deemed for the purpose of determining an input tax credit of the specified pension entity under this Part and for the purposes of sections 232.01, 232.02 and 261.01,
(i) to have received a supply of the specified resource or part on the last day of the particular fiscal year,
(ii) to have paid tax in respect of that supply on that day equal to the amount determined by the formula
A - B
where
A is
(A) if the specified pension entity is a selected listed financial institution on that day, the amount determined for the pension plan under the description of A in paragraph (c), and
(B) in any other case, the amount of tax determined for the pension plan under paragraph (c), and
B is the total of all amounts, each of which is a part of the amount determined for A
(A) that is not included in determining the person's net tax for the reporting period that includes the last day of the particular fiscal year, or
(B) that the person has recovered or is entitled to recover by way of rebate, refund or remission, or otherwise, under this or any other Act of Parliament, and
(iii) to have acquired the specified resource or part for consumption, use or supply in the course of its commercial activities to the same extent that the specified resource or part was acquired by the person for the purpose of making a supply of the specified resource or part to the master pension entity for consumption, use or supply by the master pension entity in the course of pension activities of the master pension entity that are commercial activities of the master pension entity.
(11) Subparagraph 172.1(6)(d)(ii) of the Act is replaced by the following:
(ii) to have paid tax in respect of that supply on that day equal to the amount determined by the formula
A - B
where
A is
(A) if the pension entity is a selected listed financial institution on that day, the amount determined for A in paragraph (c), and
(B) in any other case, the amount of tax determined under paragraph (c), and
B is the total of all amounts, each of which is a part of the amount determined for A
(A) that is not included in determining the person's net tax for the reporting period that includes the last day of the particular fiscal year, or
(B) that the person has recovered or is entitled to recover by way of rebate, refund or remission, or otherwise, under this or any other Act of Parliament, and
(12) Section 172.1 of the Act is amended by adding the following after subsection (6):
Employer resource for supply to master pension entity
(6.1) If a person that is a registrant consumes or uses at any time in a particular fiscal year of the person an employer resource of the person for the purpose of making a supply of property or a service (in this subsection referred to as the "pension supply") to a master pension entity for consumption, use or supply by the master pension entity in the course of pension activities in respect of any pension plan that is in the master pension group in respect of the person and the master pension entity at that time, if the person is not at that time a selected qualifying employer of any pension plan in the master pension group and if it is not the case that the employer resource is an excluded resource of the person in respect of any pension plan in the master pension group, the following rules apply:
(a) for the purposes of this Part, the person is deemed to have made a taxable supply of the employer resource (in this subsection referred to as the "employer resource supply") on the last day of the particular fiscal year;
(b) for the purposes of this Part, tax in respect of the employer resource supply is deemed to have become payable on the last day of the particular fiscal year and the person is deemed to have collected that tax on that day;
(c) for the purposes of this Part, the tax referred to in paragraph (b) is deemed to be equal to the total of all amounts, each of which is determined for each pension plan in the master pension group by the formula
A + B
where
A is the amount determined by the formula
C × D × E
where
C is
(i) if the employer resource was consumed by the person during the particular fiscal year for the purpose of making the pension supply, the product obtained when the fair market value of the employer resource at the time the person began consuming it in the particular fiscal year is multiplied by the extent to which that consumption (expressed as a percentage of the total consumption of the employer resource by the person during the particular fiscal year) occurred when the person was both a registrant and a participating employer of the pension plan, or
(ii) otherwise, the product obtained when the fair market value of the use of the employer resource during the particular fiscal year as determined on the last day of the particular fiscal year is multiplied by the extent to which the employer resource was used during the particular fiscal year (expressed as a percentage of the total use of the employer resource by the person during the particular fiscal year) for the purpose of making the pension supply when the person was both a registrant and a participating employer of the pension plan,
D is the rate set out in subsection 165(1), and
E is the master pension factor in respect of the pension plan for the fiscal year of the master pension entity that includes the last day of the particular fiscal year, and
B is the total of all amounts, each of which is determined for a participating province by the following formula
F × G × H
where
F is the amount determined for C,
G is the provincial factor in respect of the pension plan and the participating province for the particular fiscal year, and
H is the master pension factor determined for E; and
(d) for each pension plan in the master pension group, the specified pension entity of the pension plan is deemed for the purpose of determining an input tax credit of the specified pension entity under this Part and for the purposes of sections 232.01, 232.02 and 261.01,
(i) to have received a supply of the employer resource on the last day of the particular fiscal year,
(ii) to have paid tax in respect of that supply on that day equal to the amount determined by the formula
A - B
where
A is
(A) if the specified pension entity is a selected listed financial institution on that day, the amount determined for the pension plan under the description of A in paragraph (c), and
(B) in any other case, the amount of tax determined for the pension plan under paragraph (c), and
B is the total of all amounts, each of which is a part of the amount determined for A
(A) that is not included in determining the person's net tax for the reporting period that includes the last day of the particular fiscal year, or
(B) that the person has recovered or is entitled to recover by way of rebate, refund or remission, or otherwise, under this or any other Act of Parliament, and
(iii) to have acquired the employer resource for consumption, use or supply in the course of its commercial activities to the same extent that the property or service supplied in the pension supply was acquired by the master pension entity for consumption, use or supply by the master pension entity in the course of pension activities of the master pension entity that are commercial activities of the master pension entity.
(13) The portion of subsection 172.1(7) of the Act before paragraph (a) is replaced by the following:
Employer resource other than for supply — pension entity
(7) If a person is both a registrant and a participating employer of a pension plan at any time in a particular fiscal year of the person and is not a qualifying employer of the pension plan at that time, if the person consumes or uses at that time an employer resource of the person in the course of pension activities in respect of the pension plan (other than the establishment, management or administration of a master pension entity of the pension plan and the management or administration of assets in respect of the pension plan that are held by a master pension entity of the pension plan), if the employer resource is not an excluded resource of the person in respect of the pension plan and if subsection (6) does not apply to that consumption or use, the following rules apply:
(14) The portion of subsection 172.1(7) of the Act before paragraph (a), as enacted by subsection (13), is replaced by the following:
Employer resource other than for supply — pension entity
(7) If a person is both a registrant and a participating employer of a pension plan at any time in a particular fiscal year of the person and is not a qualifying employer of the pension plan at that time, if the person consumes or uses at that time an employer resource of the person in the course of pension activities in respect of the pension plan, if the employer resource is not an excluded resource of the person in respect of the pension plan and if none of subsections (6), (6.1) and (7.1) applies to that consumption or use, the following rules apply:
(15) Paragraph 172.1(7)(d) of the Act is replaced by the following:
(d) for the purposes of determining, under section 261.01, an eligible amount of the specified pension entity of the pension plan in respect of the person for the particular fiscal year, the specified pension entity is deemed to have paid tax on the last day of the particular fiscal year equal to the amount determined by the formula
A - B
where
A is
(i) if the specified pension entity is a selected listed financial institution on that day, the amount determined for A in paragraph (c), and
(ii) in any other case, the amount of tax determined under paragraph (c), and
B is the total of all amounts, each of which is a part of the amount determined for A
(i) that is not included in determining the person's net tax for the reporting period that includes the last day of the particular fiscal year, or
(ii) that the person has recovered or is entitled to recover by way of rebate, refund or remission, or otherwise, under this or any other Act of Parliament.
(16) Subsection 172.1(8) of the Act is replaced by the following:
Employer resource other than for supply — master pension entity
(7.1) If a person that is a registrant consumes or uses at any time in a particular fiscal year of the person an employer resource of the person in the course of pension activities in respect of one or more pension plans that are in the master pension group in respect of the person and a master pension entity at that time, if the person is not at that time a qualifying employer of any pension plan in the master pension group, if it is not the case that the employer resource is an excluded resource of the person in respect of any pension plan in the master pension group, if the pension activities relate exclusively to the establishment, management or administration of the master pension entity or the management or administration of assets held by the master pension entity and if neither of subsections (6) and (6.1) applies to that consumption or use, the following rules apply:
(a) for the purposes of this Part, the person is deemed to have made a taxable supply of the employer resource (in this subsection referred to as the "employer resource supply") on the last day of the particular fiscal year;
(b) for the purposes of this Part, tax in respect of the employer resource supply is deemed to have become payable on the last day of the particular fiscal year and the person is deemed to have collected that tax on that day;
(c) for the purposes of this Part, the tax referred to in paragraph (b) is deemed to be equal to the total of all amounts, each of which is determined for each particular pension plan in the master pension group by the formula
A + B
where
A is the amount determined by the formula
C × D × E
where
C is
(i) if the employer resource was consumed by the person during the particular fiscal year in the course of those pension activities, the product obtained when the fair market value of the employer resource at the time the person began consuming it in the particular fiscal year is multiplied by the extent to which that consumption (expressed as a percentage of the total consumption of the employer resource by the person during the particular fiscal year) occurred when the person was both a registrant and a participating employer of any pension plan in the master pension group, or
(ii) otherwise, the product obtained when the fair market value of the use of the employer resource during the particular fiscal year as determined on the last day of the particular fiscal year is multiplied by the extent to which the employer resource was used during the particular fiscal year (expressed as a percentage of the total use of the employer resource by the person during the particular fiscal year) in the course of those pension activities when the employer was both a registrant and a participating employer of any pension plan in the master pension group,
D is the rate set out in subsection 165(1), and
E is the master pension factor in respect of the particular pension plan for the fiscal year of the master pension entity that includes the last day of the particular fiscal year, and
B is the total of all amounts, each of which is determined for a participating province by the following formula
F × G × H
where
F is the amount determined for C,
G is the provincial factor in respect of the particular pension plan and the participating province for the particular fiscal year, and
H is the master pension factor determined for E; and
(d) for each pension plan in the master pension group, the specified pension entity of the pension plan is deemed — for the purposes of determining, under section 261.01, an eligible amount of the specified pension entity of the pension plan in respect of the person for the particular fiscal year — to have paid tax on the last day of the particular fiscal year equal to the amount determined by the formula
A - B
where
A is
(i) if the specified pension entity is a selected listed financial institution on that day, the amount determined for the pension plan under the description of A in paragraph (c), and
(ii) in any other case, the amount of tax determined for the pension plan under paragraph (c), and
B is the total of all amounts, each of which is a part of the amount determined for A
(i) that is not included in determining the person's net tax for the reporting period that includes the last day of the particular fiscal year, or
(ii) that the person has recovered or is entitled to recover by way of rebate, refund or remission, or otherwise, under this or any other Act of Parliament.
Provision of information to pension entity
(8) If any of subsections (5) to (7.1) applies in respect of a person that is a participating employer of a pension plan, the person shall, in prescribed form and in a manner satisfactory to the Minister, provide prescribed information to the pension entity of the pension plan that is deemed to have paid tax under that subsection.
Provision of information by master pension entity
(8.1) A master pension entity of a pension plan shall, in a manner satisfactory to the Minister, provide the master pension factor in respect of the pension plan for a fiscal year of the master pension entity, and any other information that the Minister may specify, to each participating employer of the pension plan on or before the day that is 30 days after the first day of the fiscal year.
(17) The portion of subsection 172.1(9) of the Act before the formula is replaced by the following:
Selected qualifying employer
(9) For the purposes of this section, a particular participating employer of a pension plan is a selected qualifying employer of the pension plan for a particular fiscal year of the particular participating employer if no election under subsection 157(2) made jointly by the particular participating employer and a pension entity of the pension plan is in effect in the particular fiscal year, if no election under subsection 157(2.1) made jointly by the particular participating employer and a master pension entity of the pension plan is in effect in the particular fiscal year, if the particular participating employer did not become a participating employer of the pension plan in the particular fiscal year, if the amount determined for A in the following formula is less than $5,000 and if the amount (expressed as a percentage) determined by the following formula is less than 10%:
(18) Paragraphs (a) to (f) of the description of A in subsection 172.1(9) of the Act are replaced by the following:
(a) an amount of tax deemed to have been collected under any of subsections (5) to (7.1) by the particular participating employer in respect of a specified supply of the particular participating employer to the pension plan during the fiscal year (in this subsection referred to as the "preceding fiscal year") of the particular participating employer preceding the particular fiscal year less the amount, if any, determined for B under paragraph (c) of whichever of those subsections is applicable in determining that amount of tax,
(b) if the particular participating employer is a selected qualifying employer of the pension plan for the preceding fiscal year, an amount of tax that would have been deemed to have been collected under any of subsections (5) to (6.1) by the particular participating employer during the preceding fiscal year in respect of a supply that would have been deemed to have been made under whichever of those subsections is applicable and that would be a specified supply of the particular participating employer to the pension plan, if the particular participating employer were not a selected qualifying employer, less the amount, if any, that would be determined for B under paragraph (c) of whichever of those subsections is applicable in determining that amount of tax,
(c) if the particular participating employer is a qualifying employer of the pension plan for the preceding fiscal year, an amount of tax that would have been deemed to have been collected under subsection (7) or (7.1) by the particular participating employer during the preceding fiscal year in respect of a supply that would have been deemed to have been made under whichever of those subsections is applicable and that would be a specified supply of the particular participating employer to the pension plan, if the particular participating employer were not a qualifying employer, less the amount, if any, that would be determined for B under paragraph (c) of whichever of those subsections is applicable in determining that amount of tax,
(d) an amount of tax deemed to have been collected under any of subsections (5) to (7.1) by another participating employer of the pension plan in respect of a specified supply of the other participating employer to the pension plan during a fiscal year of the other participating employer that ends in the preceding fiscal year, provided that the other participating employer is related at any time in the preceding fiscal year to the particular participating employer, less the amount, if any, determined for B under paragraph (c) of whichever of those subsections is applicable in determining that amount of tax,
(e) an amount of tax that would have been deemed to have been collected under any of subsections (5) to (6.1) by another participating employer of the pension plan during a fiscal year of the other participating employer that ends in the preceding fiscal year in respect of a supply that would have been deemed to have been made under whichever of those subsections is applicable and that would be a specified supply of the other participating employer to the pension plan if the other participating employer were not a selected qualifying employer, provided that the other participating employer is related at any time in the preceding fiscal year to the particular participating employer and is a selected qualifying employer of the pension plan for that fiscal year of the other participating employer, less the amount, if any, that would be determined for B under paragraph (c) of whichever of those subsections is applicable in determining that amount of tax, or
(f) an amount of tax that would have been deemed to have been collected under subsection (7) or (7.1) by another participating employer of the pension plan during a fiscal year of the other participating employer that ends in the preceding fiscal year in respect of a supply that would have been deemed to have been made under whichever of those subsections is applicable and that would be a specified supply of the other participating employer to the pension plan if the other participating employer were not a qualifying employer, provided that the other participating employer is related at any time in the preceding fiscal year to the particular participating employer and is a qualifying employer of the pension plan for that fiscal year of the other participating employer, less the amount, if any, that would be determined for B under paragraph (c) of whichever of those subsections is applicable in determining that amount of tax;
(19) Paragraph (b) of the description of B in subsection 172.1(9) of the Act is replaced by the following:
(b) an amount of tax deemed to have been collected under any of subsections (5) to (7.1) by a participating employer of the pension plan, including the particular participating employer, during a fiscal year of the participating employer that ends in the preceding fiscal year in respect of a specified supply of the participating employer to the pension plan less the amount, if any, determined for B under paragraph (c) of whichever of those subsections is applicable in determining that amount of tax, or
(20) Paragraph (b) of the description of C in subsection 172.1(9) of the Act is replaced by the following:
(b) a recoverable amount (as defined in subsection 261.01(1)) of a pension entity of the pension plan in respect of a claim period ending in a fiscal year of the pension entity that ends in the preceding fiscal year but only to the extent that the recoverable amount is in respect of an amount determined for A under paragraph (c) of whichever of subsections (5) to (7.1) is applicable in determining an amount of tax deemed to have been paid by the pension entity under this section for the purposes of section 261.01.
(21) Paragraphs (a) to (d) of the description of A in subsection 172.1(10) of the Act are replaced by the following:
(a) an amount of tax deemed to have been collected under subsection (7) or (7.1) by the particular participating employer in respect of a specified supply of the particular participating employer to the pension plan during the fiscal year (in this subsection referred to as the "preceding fiscal year") of the particular participating employer preceding the particular fiscal year less the amount, if any, determined for B under paragraph (c) of whichever of those subsections is applicable in determining that amount of tax,
(b) if the particular participating employer is a qualifying employer of the pension plan for the preceding fiscal year, an amount of tax that would have been deemed to have been collected under subsection (7) or (7.1) by the particular participating employer during the preceding fiscal year in respect of a supply that would have been deemed to have been made under whichever of those subsections is applicable and that would be a specified supply of the particular participating employer to the pension plan, if the particular participating employer were not a qualifying employer, less the amount, if any, that would be determined for B under paragraph (c) of whichever of those subsections is applicable in determining that amount of tax,
(c) an amount of tax deemed to have been collected under subsection (7) or (7.1) by another participating employer of the pension plan in respect of a specified supply of the other participating employer to the pension plan during a fiscal year of the other participating employer that ends in the preceding fiscal year, provided that the other participating employer is related at any time in the preceding fiscal year to the particular participating employer, less the amount, if any, determined for B under paragraph (c) of whichever of those subsections is applicable in determining that amount of tax, or
(d) an amount of tax that would have been deemed to have been collected under subsection (7) or (7.1) by another participating employer of the pension plan during a fiscal year of the other participating employer that ends in the preceding fiscal year in respect of a supply that would have been deemed to have been made under whichever of those subsections is applicable and that would be a specified supply of the other participating employer to the pension plan if the other participating employer were not a qualifying employer, provided that the other participating employer is related at any time in the preceding fiscal year to the particular participating employer and is a qualifying employer of the pension plan for that fiscal year of the other participating employer, less the amount, if any, that would be determined for B under paragraph (c) of whichever of those subsections is applicable in determining that amount of tax;
(22) Paragraph (b) of the description of B in subsection 172.1(10) of the Act is replaced by the following:
(b) an amount of tax deemed to have been collected under any of subsections (5) to (7.1) by a participating employer of the pension plan, including the particular participating employer, during a fiscal year of the participating employer that ends in the preceding fiscal year in respect of a specified supply of the participating employer to the pension plan less the amount, if any, determined for B under paragraph (c) of whichever of those subsections is applicable in determining that amount of tax, or
(23) Paragraph (b) of the description of C in subsection 172.1(10) of the Act is replaced by the following:
(b) a recoverable amount (as defined in subsection 261.01(1)) of a pension entity of the pension plan in respect of a claim period ending in a fiscal year of the pension entity that ends in the preceding fiscal year but only to the extent that the recoverable amount is in respect of an amount determined for A under paragraph (c) of whichever of subsections (5) to (7.1) is applicable in determining an amount of tax deemed to have been paid by the pension entity under this section for the purposes of section 261.01.
(24) Paragraphs 172.1(12)(b) and (c) of the Act are replaced by the following:
(b) any amount of tax deemed to have been collected under any of subsections (5) to (7.1) by a predecessor, or that would have been deemed to have been collected under any of those subsections if the predecessor were neither a selected qualifying employer nor a qualifying employer, at any time during the period of 365 days preceding the first fiscal year of the new corporation is deemed to have been collected under the same subsection by the new corporation, and not by a predecessor, on the last day of the prior fiscal year of the new corporation;
(c) any specified supply of a predecessor to the pension plan in respect of a taxable supply deemed to have been made under any of subsections (5) to (7.1), or that would have been deemed to have been made under any of those subsections if the predecessor were neither a selected qualifying employer nor a qualifying employer, at any time during the period of 365 days preceding the first fiscal year of the new corporation is deemed to be a specified supply of the new corporation to the pension plan and not of the predecessor; and
(25) Subsections (1), (3) and (4) and the definitions master pension group and specified resource, as enacted by subsection (5), are deemed to have come into force on July 22, 2016.
(26) Subsection (2) and the definitions defined benefits pension plan and defined contribution pension plan, as enacted by subsection (5), apply in respect of any fiscal year of a person that begins after July 22, 2016.
(27) Subsections (6) to (8), (10), (12), (14) and (16) to (24) apply in respect of any fiscal year of a person that begins after July 21, 2016.
(28) Subsections (9) and (11) are deemed to have come into force on September 23, 2009, but do not apply
(a) for the purposes of determining an input tax credit of a pension entity if the input tax credit is claimed in a return under Division V of Part IX of the Act for a reporting period of the pension entity that is filed on or before July 22, 2016;
(b) in respect of a tax adjustment note issued under subsection 232.01(3) or 232.02(2) of the Act on or before July 22, 2016; and
(c) for the purposes of determining the pension rebate amount, as defined in subsection 261.01(1) of the Act, of a pension entity for a claim period of the pension entity if
(i) an application for a rebate under subsection 261.01(2) of the Act for the claim period is filed on or before July 22, 2016, or
(ii) an election made under subsection 261.01(9) of the Act for the claim period is filed on or before July 22, 2016.
(29) Subsection (13) applies in respect of any fiscal year of a person that begins after September 22, 2009 but before July 22, 2016.
(30) Subsection (15) is deemed to have come into force on September 23, 2009, but does not apply for the purposes of determining the pension rebate amount, as defined in subsection 261.01(1) of the Act, of a specified pension entity for a claim period of the specified pension entity if
(a) an application for a rebate under subsection 261.01(2) of the Act for the claim period is filed on or before July 22, 2016; or
(b) an election made under subsection 261.01(9) of the Act for the claim period is filed on or before July 22, 2016.
(31) If, in assessing under section 296 of the Act the net tax for a reporting period of a person that is a participating employer of a pension plan, an amount was included in determining the net tax for the reporting period as an amount of tax in respect of an employer resource, as defined in subsection 172.1(1) of the Act, that was deemed to have been collected on a particular day in the reporting period by the person under paragraph 172.1(7)(b) of the Act and if, as a result of the application of subsection 172.1(7) of the Act, as amended by subsection (13), the amount is not deemed to have been collected by the person under that paragraph, then the person is entitled until the day that is one year after the day on which this Act receives royal assent to request in writing that the Minister of National Revenue make an assessment, reassessment or additional assessment for the purpose of taking into account that the amount is not deemed to have been collected by the particular person under that paragraph and, on receipt of the request and with all due dispatch,
(a) the Minister must consider the request;
(b) the Minister must under section 296 of the Act assess, reassess or make an additional assessment of the net tax for the reporting period, and of any interest, penalty or other obligation of the person, solely for the purpose of taking into account that the amount is not deemed to have been collected by the person under paragraph 172.1(7)(b) of the Act;
(c) if a pension entity of the pension plan makes an election under subsection 261.01(5), (6) or (9) of the Act with a qualifying employer of the pension plan for the claim period (as those terms are defined in subsection 261.01(1) of the Act) of the pension entity that includes the particular day, if the qualifying employer deducts, in determining its net tax for a reporting period, an amount as all or part of a particular amount in respect of the employer resource that was deemed to have been paid by the pension entity under paragraph 172.1(7)(d) of the Act and if, as a result of the application of subsection 172.1(7) of the Act, as amended by subsection (13), the particular amount is not deemed to have been paid by the pension entity under that paragraph, then the Minister must under section 296 of the Act assess, reassess or make an additional assessment of the net tax for the reporting period, and of any interest, penalty or other obligation of the qualifying employer, solely for the purpose of taking into account that the particular amount is not deemed to have been paid by the pension entity under that paragraph; and
(d) if, in assessing under section 297 of the Act the amount of a rebate under subsection 261.01(2) of the Act for a claim period (as defined in subsection 261.01(1) of the Act) of a pension entity, a particular amount was included in determining the pension rebate amount (as defined in subsection 261.01(1) of the Act) for the claim period as an amount in respect of the employer resource that was deemed to have been paid by the pension entity under paragraph 172.1(7)(d) and if, as a result of the application of subsection 172.1(7) of the Act, as amended by subsection (13), the particular amount is not deemed to have been paid by the pension entity under that paragraph, then the Minister must under sections 296 and 297 of the Act assess, reassess or make an additional assessment of the rebate, and of any interest, penalty or other obligation of the pension entity, solely for the purpose of taking into account that the particular amount was not deemed to have been paid by the pension entity under that paragraph.
115 (1) The Act is amended by adding the following after section 172.1:
Excluded amount
172.2 (1) For the purposes of this section, an excluded amount of a master pension entity is an amount of tax that
(a) is deemed to have been paid by the master pension entity under this Part (other than section 191);
(b) became payable, or was paid without having become payable, by the master pension entity at a time when it was entitled to claim a rebate under section 259; or
(c) is payable under subsection 165(1), or is deemed under section 191 to have been paid, by the master pension entity in respect of a taxable supply to the master pension entity of a residential complex, an addition to a residential complex or land if, in respect of that supply, the master pension entity is entitled to claim a rebate under section 256.2 or would be so entitled after paying the tax payable in respect of that supply.
Designated pension entity
(2) For the purposes of this section,
(a) if a person is a master pension entity of a pension plan having, at any time, only one pension entity, that pension entity is, at that time, the designated pension entity of the pension plan in respect of the person; and
(b) if a person is a master pension entity of a pension plan having, at any time, two or more pension entities and if an election made jointly under subsection (4) by the person and one of those pension entities is in effect at that time, that pension entity is, at that time, the designated pension entity of the pension plan in respect of the person.
Tax deemed paid by designated pension entity — section 261.01
(3) For the purposes of section 261.01, if a particular amount of tax becomes payable, or is paid without having become payable, by a master pension entity of one or more pension plans at any time in a fiscal year of the master pension entity and if the particular amount of tax is not an excluded amount of the master pension entity, then, for each of those pension plans, the designated pension entity of the pension plan at that time in respect of the master pension entity is deemed to have paid at that time an amount of tax equal to the amount determined by the formula
A × B
where
A is
(a) if the designated pension entity is a selected listed financial institution and the particular amount of tax is payable under any of subsection 165(2), sections 212.1 and 218.1 and Division IV.1, zero, and
(b) in any other case, the amount determined by the formula
A1 - A2
where
A1 is the particular amount of tax, and
A2 is the total of all amounts, each of which is included in the particular amount of tax and is
(i) an input tax credit that the master pension entity is entitled to claim in respect of the particular amount of tax,
(ii) an amount for which it can reasonably be regarded that the master pension entity has obtained or is entitled to obtain a rebate, refund or remission under any other section of this Act or under any other Act of Parliament, or
(iii) an amount that can reasonably be regarded as being included in an amount adjusted, refunded or credited to or in favour of the master pension entity for which a credit note referred to in subsection 232(3) has been received by the master pension entity or a debit note referred to in that subsection has been issued by the master pension entity; and
B is the master pension factor in respect of the pension plan for the fiscal year of the master pension entity that includes that time.
Designated pension entity election
(4) A master pension entity of a pension plan having two or more pension entities may jointly elect with one of those pension entities, in prescribed form containing prescribed information, to have that pension entity be, while the election is in effect, the designated pension entity of the pension plan in respect of the master pension entity for the purposes of this section.
Effective period of election
(5) An election made under subsection (4) by a particular person that is a master pension entity of a pension plan and by another person that is a pension entity of the pension plan becomes effective on the day set out in the election and ceases to have effect on the earliest of
(a) the day on which the particular person ceases to be a master pension entity of the pension plan,
(b) the day on which the other person ceases to be a pension entity of the pension plan,
(c) the day on which an election made under subsection (4) by the particular person and by a third person that is a pension entity of the pension plan becomes effective, and
(d) the day specified in a revocation of the election made under subsection (6).
Revocation
(6) A master pension entity and a pension entity that have jointly made an election under subsection (4) may jointly revoke the election, in prescribed form containing prescribed information, effective on the day specified in the revocation.
(2) Subsection (1) applies in respect of amounts of tax that become payable, or that are paid without having become payable, by a person after July 21, 2016.
116 Paragraph 178(18)(c) of the French version of the Act is replaced by the following:
c) la fourniture est effectuée sans contrepartie ou pour une contrepartie inférieure à la juste valeur marchande du bien ou du service,
117 Subparagraphs 178.3(4)(b)(ii) and (iii) of the French version of the Act are replaced by the following:
(ii) fournit le produit à une personne autre qu'un entrepreneur indépendant du démarcheur pour une contrepartie non symbolique mais inférieure à son prix de vente au détail suggéré au moment donné et sur laquelle est calculée la taxe payée par la personne,
(iii) fournit le produit à une personne autre qu'un entrepreneur indépendant du démarcheur sans contrepartie ou pour une contrepartie symbolique ou réserve le produit pour sa consommation ou son utilisation personnelles;
118 Subparagraphs 178.4(4)(b)(ii) and (iii) of the French version of the Act are replaced by the following:
(ii) fournit le produit à une personne autre qu'un entrepreneur indépendant du démarcheur pour une contrepartie non symbolique mais inférieure à son prix de vente au détail suggéré au moment donné et sur laquelle est calculée la taxe payée par la personne,
(iii) fournit le produit à une personne autre qu'un entrepreneur indépendant du démarcheur sans contrepartie ou pour une contrepartie symbolique ou réserve le produit pour sa consommation ou son utilisation personnelles;
119 Paragraph 178.5(8)(a) of the French version of the Act is replaced by the following:
a) la fourniture est effectuée sans contrepartie ou pour une contrepartie inférieure à la juste valeur marchande du bien ou du service;
120 Paragraph 178.6(5)(d) of the English version of the Act is replaced by the following:
(d) despite paragraph (c), the person and the ultimate recipient are jointly and severally, or solidarily, liable for the payment of the tax in respect of the supply made by the original supplier; and
121 (1) Subparagraph 179(1)(a)(i) of the Act is replaced by the following:
(i) makes a taxable supply in Canada of tangible personal property by way of sale, or a taxable supply in Canada of a service of manufacturing or producing tangible personal property, to the non-resident person, or acquires physical possession of tangible personal property (other than property of a person that is resident in Canada) for the purpose of making a taxable supply in Canada of a commercial service in respect of the property to the non-resident person, and
(2) Paragraph 179(1)(c) of the Act is replaced by the following:
(c) the registrant is deemed to have made a taxable supply in Canada of the property to the non-resident person and the non-resident person is deemed to have received that supply from the registrant,
(3) Subparagraph 179(2)(a)(i) of the Act is replaced by the following:
(i) makes a taxable supply in Canada of tangible personal property by way of sale, or a taxable supply in Canada of a service of manufacturing or producing tangible personal property, to the non-resident person, or acquires physical possession of tangible personal property (other than property of a person that is resident in Canada) for the purpose of making a taxable supply in Canada of a commercial service in respect of the property to the non-resident person, and
(4) Subsection 179(2) of the Act is amended by striking out "and" at the end of paragraph (b) and by replacing paragraph (c) with the following:
(b.1) the consignee is acquiring physical possession of the property
(i) as the recipient of a taxable supply of the property made by any non-resident person that is not registered under Subdivision D of Division V,
(ii) for the purpose of making a taxable supply in Canada of a service of manufacturing or producing other tangible personal property to any non-resident person that is not registered under Subdivision D of Division V and is not a consumer of the service, if the property
(A) is incorporated or transformed into, attached to, or combined or assembled with, the other tangible personal property in the manufacture or production of the other tangible personal property, or
(B) is directly consumed or expended in the manufacture or production of the other tangible personal property,
(iii) if the property is not property of a person that is resident in Canada, for the purpose of making a taxable supply in Canada of a commercial service in respect of the property to any non-resident person that is not registered under Subdivision D of Division V and is not a consumer of the commercial service, or
(iv) for the purpose of making a taxable supply in Canada of a commercial service in respect of other tangible personal property (other than property of a person that is resident in Canada) to any non-resident person that is not registered under Subdivision D of Division V and is not a consumer of the commercial service, if the property
(A) is incorporated into, attached to, or combined or assembled with, the other tangible personal property in the provision of the commercial service, or
(B) is directly consumed or expended in the provision of the commercial service, and
(c) the consignee gives to the registrant, and the registrant retains, a certificate that
(i) states the consignee's name and registration number assigned under section 241,
(ii) acknowledges that the consignee is acquiring physical possession of the property as the recipient of a supply referred to in subparagraph (b.1)(i) or for a purpose referred to in any of subparagraphs (b.1)(ii) to (iv), and
(iii) acknowledges that the consignee, on taking physical possession of the property, is assuming liability to pay or remit any amount that is or may become payable or remittable by the consignee
(A) under Division IV in respect of the property, or
(B) under this Part in respect of a supply, deemed under paragraph (1)(c) to have been made by the consignee, of the property or of the other tangible personal property referred to in either of subparagraphs (b.1)(ii) or (iv),
(5) Section 179 of the Act is amended by adding the following after subsection (2):
Exception — certificate of registered owner
(2.1) For the purposes of this Part, if
(a) a registrant, under an agreement between the registrant and a non-resident person that is not registered under Subdivision D of Division V,
(i) makes a taxable supply in Canada of tangible personal property by way of sale to the non-resident person,
(ii) makes a taxable supply in Canada of a service of manufacturing or producing tangible personal property to the non-resident person, or
(iii) acquires physical possession of tangible personal property (other than property of a person that is resident in Canada) for the purpose of making a taxable supply in Canada of a commercial service in respect of the property to the non-resident person,
(b) under the agreement, the registrant causes, at a particular time, physical possession of the property to be transferred, at a place in Canada, to a third person (in this subsection referred to as the "consignee"),
(c) the non-resident person is not a consumer of the property or service supplied by the registrant under the agreement,
(d) a particular person (other than the registrant) that is registered under Subdivision D of Division V makes a taxable supply of the property to the consignee,
(e) the consignee is acquiring physical possession of the property at the particular time as the recipient of the taxable supply referred to in paragraph (d), and
(f) the registrant retains a certificate that
(i) is given to the registrant by the particular person, or by the consignee provided that the consignee is registered under Subdivision D of Division V,
(ii) states the particular person's name and registration number assigned under section 241, and
(iii) if the certificate is given by the consignee, states the consignee's name and registration number assigned under section 241,
subsection (1) does not apply to a supply referred to in paragraph (a) and, except in the case of a supply of a service of shipping the property, any supply made by the registrant and referred to in that paragraph is deemed to have been made outside Canada.
(6) Paragraphs 179(2.1)(d) to (f) of the Act, as enacted by subsection (5), are replaced by the following:
(d) the consignee is not entitled, under subsection (2), to give to the registrant a certificate described in paragraph (2)(c) in respect of the transfer of physical possession of the property to the consignee,
(e) either
(i) the property is, immediately after the particular time, property of a particular person that is registered under Subdivision D of Division V and that is neither the registrant nor the consignee, and the registrant retains a certificate that
(A) is given to the registrant by the particular person,
(B) states the particular person's name and registration number assigned under section 241,
(C) acknowledges that the property is, immediately after the particular time, property of the particular person, and
(D) if the property was acquired by the particular person by way of sale from a non-resident person that is not registered under Subdivision D of Division V, acknowledges that the particular person is assuming liability to pay any amount that is or may become payable by the particular person under Division IV in respect of the property, or
(ii) a particular person, other than the registrant, that is registered under Subdivision D of Division V makes a taxable supply by way of sale of the property to the consignee before the particular time, the consignee is acquiring physical possession of the property at the particular time as the recipient of that taxable supply, and the registrant retains a certificate that
(A) is given to the registrant by the particular person, or by the consignee provided that the consignee is registered under Subdivision D of Division V,
(B) states the particular person's name and registration number assigned under section 241,
(C) if the certificate is given by the consignee, states the consignee's name and registration number assigned under section 241, and
(D) acknowledges that the particular person made a taxable supply by way of sale of the property to the consignee before the particular time and that the consignee acquired physical possession of the property at the particular time as the recipient of that taxable supply, and
(f) if subparagraph (a)(i) applies, the property is delivered or made available to the particular person referred to in subparagraph (e)(i) or (ii), as the case may be, after the property is delivered or made available to the non-resident person under the agreement,
(7) Subparagraph 179(3)(a)(iii) of the Act is replaced by the following:
(iii) acquires physical possession of tangible personal property (other than property of a person that is resident in Canada) for the purpose of making a taxable supply in Canada of a commercial service in respect of the property to the non-resident person,
(8) The portion of subsection 179(4) of the Act before paragraph (a) is replaced by the following:
Retention of possession
(4) For the purposes of this section, section 180 and the definition imported taxable supply in section 217, if
(9) Subparagraph 179(4)(b)(i) of the English version of the Act is replaced by the following:
(i) transferring physical possession of the property to the non-resident person, a person (in this subsection referred to as a "subsequent purchaser") that subsequently acquires ownership of the property or a person designated by the non-resident person or a subsequent purchaser,
(10) Subparagraph 179(4)(b)(ii) of the Act is replaced by the following:
(ii) making a taxable supply in Canada of a commercial service in respect of the property to the non-resident person or a subsequent purchaser, or
(11) Paragraphs 179(4)(c) and (d) of the Act are replaced by the following:
(c) if the particular registrant so retains physical possession of the property after that time,
(i) the particular registrant is deemed to have, under the agreement referred to in paragraph (a), caused at that time physical possession of the property to be transferred, at a place in Canada, to another person that is a registrant,
(ii) the other person referred to in subparagraph (i) is deemed to have given to the particular registrant a certificate described in paragraph (2)(c) in respect of that transfer of physical possession of the property,
(iii) if subparagraph (b)(i) or (ii) applies, the particular registrant is deemed
(A) except if clause (B) applies, to have acquired, at that time, physical possession of the property, under the agreement referred to in paragraph (a), for the purpose of making a taxable supply in Canada to the non-resident person of a commercial service in respect of the property that is not a storage service, or
(B) if subparagraph (b)(ii) applies and the supply referred to in that subparagraph is to be made to the non-resident person, or to a non-resident subsequent purchaser that is not registered under Subdivision D of Division V and is not a consumer of the commercial service referred to in that subparagraph, to have acquired, at that time, physical possession of the property, under the agreement for that supply, for the purpose referred to in that subparagraph, and
(iv) if subparagraph (b)(iii) applies,
(A) the particular registrant is deemed to have acquired physical possession of the property, as the recipient of the supply under the agreement referred to in that subparagraph, from another person that is a registrant and that has made a supply in Canada of the property by way of sale to a non-resident person,
(B) that acquisition of physical possession of the property is deemed to have occurred at the time when, and at the place where, the property is delivered or made available to the particular registrant under the agreement referred to in that subparagraph, and
(C) the particular registrant is deemed to have given to the other person referred to in clause (A) a certificate described in paragraph (2)(c) in respect of that acquisition of physical possession of the property, and
(d) if another registrant so retains physical possession of the property after that time,
(i) if subparagraph (b)(i) or (ii) applies,
(A) the particular registrant is deemed to have, under the agreement referred to in paragraph (a), caused at that time physical possession of the property to be transferred at a place in Canada to the other registrant, and
(B) the other registrant is deemed
(I) except if subclause (II) applies, to have acquired, at that time, physical possession of the property, under an agreement between the other registrant and the non-resident person, for the purpose of making a taxable supply in Canada to the non-resident person of a commercial service in respect of the property that is not a storage service, or
(II) if subparagraph (b)(ii) applies and the supply referred to in that subparagraph is to be made to the non-resident person, or to a non-resident subsequent purchaser that is not registered under Subdivision D of Division V and is not a consumer of the commercial service referred to in that subparagraph, to have acquired, at that time, physical possession of the property, under the agreement for that supply, for the purpose referred to in that subparagraph, and
(ii) if subparagraph (b)(iii) applies,
(A) the particular registrant is deemed to have, under the agreement referred to in paragraph (a), caused physical possession of the property to be transferred to the other registrant,
(B) the other registrant is deemed to have acquired physical possession of the property from the particular registrant as the recipient of the supply under the agreement referred to in that subparagraph, and
(C) the particular registrant is deemed to have caused that transfer, and the other registrant is deemed to have so acquired physical possession of the property, at the time when, and at the place where, the property is delivered or made available to the other registrant under the agreement referred to in that subparagraph.
(12) The portion of subsection 179(5) of the Act before paragraph (a) is replaced by the following:
Transfer of possession to bailee
(5) For the purposes of this section, section 180 and the definition imported taxable supply in section 217, if a registrant at any time transfers physical possession of tangible personal property to a bailee solely for the purpose of storing or shipping the property and either
(13) The portion of subsection 179(6) of the Act before paragraph (a) is replaced by the following:
Goods transferred to bailee by non-resident
(6) For the purposes of this section, section 180 and the definition imported taxable supply in section 217, if a non-resident person that is not registered under Subdivision D of Division V transfers physical possession of tangible personal property to a bailee that is a registrant for the sole purpose of storing or shipping the property and the bailee
(14) Section 179 of the Act, as amended by subsections (1) to (13), is replaced by the following:
Drop shipment — deemed supply
179 (1) For the purposes of this Part, if
(a) a registrant
(i) makes a taxable supply in Canada of particular tangible personal property by way of sale to a non-resident person that is not registered under Subdivision D of Division V,
(ii) makes a taxable supply in Canada of a service of manufacturing or producing particular tangible personal property to a non-resident person that is not registered under Subdivision D of Division V,
(iii) acquires physical possession of particular tangible personal property (other than property of a person that is resident in Canada) for the purpose of making a taxable supply in Canada of a commercial service in respect of the particular property to a non-resident person that is not registered under Subdivision D of Division V, or
(iv) acquires — as the recipient of a supply of particular tangible personal property made by way of lease, licence or similar arrangement by a non-resident person that is not registered under Subdivision D of Division V — physical possession of the particular property and either
(A) gives a certificate described in paragraph (2)(d) in respect of that acquisition of physical possession of the particular property, or
(B) claims an input tax credit in respect of tax that is deemed to have been paid or payable by the registrant under subsection 178.8(2) or paragraph 180(d) in respect of the particular property,
(b) the registrant, at a particular time, causes physical possession of the particular property to be transferred, at a place in Canada, to a third person (in this subsection referred to as the "consignee") or to the non-resident person, and
(c) the non-resident person is not a consumer of the particular property,
the following rules apply:
(d) the registrant is deemed to have made a particular taxable supply in Canada of the particular property to the non-resident person and the non-resident person is deemed to have received the particular taxable supply from the registrant,
(e) if the transfer of physical possession of the particular property occurs at a place in a participating province, the particular taxable supply is deemed to have been made in that province,
(f) the particular taxable supply is deemed to have been made for consideration, that becomes due and is paid at the particular time, equal to
(i) except if subparagraph (ii) applies, the fair market value of the particular property at the particular time, and
(ii) if the registrant has caused physical possession of the particular property to be transferred to a consignee that is acquiring physical possession of the particular property as the recipient of a supply made by the non-resident person by way of sale for no consideration, nil, and
(g) the registrant is deemed not to have made the taxable supply referred to in any of subparagraphs (a)(i) to (iii) in respect of the particular property to the non-resident person, unless that supply is a supply of a service of storing the particular property.
Exception — certificate of registered consignee
(2) For the purposes of this Part, if
(a) paragraphs (1)(a) to (c) apply to
(i) a taxable supply in respect of particular tangible personal property that is made by a registrant and is referred to in any of subparagraphs (1)(a)(i) to (iii), or
(ii) an acquisition by a registrant of physical possession of particular tangible personal property that is referred to in subparagraph (1)(a)(iv),
(b) the transfer referred to in paragraph (1)(b) of physical possession of the particular property is to a person (in this subsection referred to as the "consignee") that is registered under Subdivision D of Division V,
(c) the consignee is acquiring physical possession of the particular property
(i) as the recipient of a taxable supply of the particular property made by a non-resident person that is not registered under Subdivision D of Division V,
(ii) for the purpose of making a taxable supply in Canada of a service of manufacturing or producing other tangible personal property to a non-resident person that is not registered under Subdivision D of Division V and is not a consumer of the other property, if the particular property
(A) is incorporated or transformed into, attached to, or combined or assembled with, the other property in the manufacture or production of the other property, or
(B) is directly consumed or expended in the manufacture or production of the other property,
(iii) if the particular property is not property of a person that is resident in Canada, for the purpose of making a taxable supply in Canada of a commercial service in respect of the particular property to a non-resident person that is not registered under Subdivision D of Division V and is not a consumer of the particular property, or
(iv) for the purpose of making a taxable supply in Canada of a commercial service in respect of other tangible personal property (other than property of a person that is resident in Canada) to a non-resident person that is not registered under Subdivision D of Division V and is not a consumer of the other property, if the particular property
(A) is incorporated into, attached to, or combined or assembled with, the other property in the provision of the commercial service, or
(B) is directly consumed or expended in the provision of the commercial service, and
(d) the consignee gives to the registrant, and the registrant retains, a certificate that
(i) states the consignee's name and registration number assigned under section 241,
(ii) acknowledges that the consignee is acquiring physical possession of the particular property as the recipient of a supply referred to in subparagraph (c)(i) or for a purpose referred to in any of subparagraphs (c)(ii) to (iv), and
(iii) acknowledges that the consignee is assuming liability to pay or remit any amount that is or may become payable or remittable by the consignee
(A) under Division IV in respect of the particular property, or
(B) under this Part in respect of a supply, deemed under paragraph (1)(d) to have been made by the consignee, of the particular property or of the other property referred to in either of subparagraphs (c)(ii) or (iv),
the following rules apply:
(e) paragraphs (1)(d) to (g) do not apply to the taxable supply referred to in subparagraph (a)(i) or the acquisition referred to in subparagraph (a)(ii), as the case may be, and
(f) if subparagraph (a)(i) applies, the taxable supply referred to in that subparagraph is deemed to have been made outside Canada.
Exception — certificate of registered owner
(3) For the purposes of this Part, if
(a) paragraphs (1)(a) to (c) apply to
(i) a taxable supply in respect of particular tangible personal property that is made by a registrant and is referred to in any of subparagraphs (1)(a)(i) to (iii), or
(ii) an acquisition by a registrant of physical possession of particular tangible personal property that is referred to in subparagraph (1)(a)(iv),
(b) the transfer referred to in paragraph (1)(b) of physical possession of the particular property is to a person (in this subsection referred to as the "consignee") that is not entitled, under subsection (2), to give to the registrant a certificate described in paragraph (2)(d) in respect of that transfer,
(c) either
(i) the particular property is, immediately after the particular time referred to in paragraph (1)(b), property of a particular person that is registered under Subdivision D of Division V and that is neither the registrant nor the consignee, and the registrant retains a certificate that
(A) is given to the registrant by the particular person,
(B) states the particular person's name and registration number assigned under section 241,
(C) acknowledges that the particular property is, immediately after the particular time, property of the particular person, and
(D) if the particular property was acquired by the particular person by way of sale from a non-resident person that is not registered under Subdivision D of Division V, acknowledges that the particular person is assuming liability to pay any amount that is or may become payable by the particular person under Division IV in respect of the particular property, or
(ii) a particular person, other than the registrant, that is registered under Subdivision D of Division V makes a taxable supply by way of sale of the particular property to the consignee before the particular time, the consignee is acquiring physical possession of the particular property at the particular time as the recipient of that taxable supply, and the registrant retains a certificate that
(A) is given to the registrant by the particular person, or by the consignee provided that the consignee is registered under Subdivision D of Division V,
(B) states the particular person's name and registration number assigned under section 241,
(C) if the certificate is given by the consignee, states the consignee's name and registration number assigned under section 241, and
(D) acknowledges that the particular person made a taxable supply by way of sale of the particular property to the consignee before the particular time and that the consignee acquired physical possession of the particular property at the particular time as the recipient of that taxable supply, and
(d) if subparagraph (1)(a)(i) applies, the property is delivered or made available to the particular person referred to in subparagraph (c)(i) or (ii), as the case may be, after the property is delivered or made available to the non-resident person referred to in subparagraph (1)(a)(i) under the agreement for the taxable supply referred to in that subparagraph,
the following rules apply:
(e) paragraphs (1)(d) to (g) do not apply to the taxable supply referred to in subparagraph (a)(i) or the acquisition referred to in subparagraph (a)(ii), as the case may be, and
(f) if subparagraph (a)(i) applies, the taxable supply referred to in that subparagraph is deemed to have been made outside Canada.
Exception — export
(4) For the purposes of this Part, if
(a) paragraphs (1)(a) and (c) apply to
(i) a taxable supply in respect of particular tangible personal property that is made by a registrant and is referred to in any of subparagraphs (1)(a)(i) to (iii), or
(ii) an acquisition by a registrant of physical possession of particular tangible personal property that is referred to in subparagraph (1)(a)(iv), and
(b) either
(i) the registrant
(A) causes physical possession of the particular property to be transferred at a place outside Canada,
(B) ships the particular property to a destination outside Canada that is specified in the contract for carriage of the particular property,
(C) causes physical possession of the particular property to be transferred to a common carrier or consignee that has been retained to ship the particular property to a destination outside Canada, or
(D) sends the particular property by mail or courier to an address outside Canada, or
(ii) the following conditions are met:
(A) the registrant causes physical possession of the particular property to be transferred at a place in Canada to a person (referred to in this subparagraph as the "exporter") for export,
(B) after that transfer, the exporter exports the particular property as soon as is reasonable having regard to the circumstances surrounding the exportation and, if applicable, the normal business practices of the exporter and of the owner of the particular property,
(C) the particular property has not been acquired by any owner of the particular property for consumuption use or supply in Canada at any time after that transfer and before the property is exported,
(D) after that transfer but before the particular property is exported, the particular property is not further processed, transformed or altered except to the extent reasonably necessary or incidental to its transportation, and
(E) the registrant maintains evidence satisfactory to the Minister of the exportation of the particular property or, if the exporter is authorized under subsection 221.1(2), the exporter provides the registrant with a certificate in which the exporter certifies that the particular property will be exported in the circumstances described in clauses (B) to (D),
the following rules apply:
(c) paragraphs (1)(d) to (g) do not apply to the taxable supply referred to in subparagraph (a)(i) or the acquisition referred to in subparagraph (a)(ii), as the case may be, and
(d) if subparagraph (a)(i) applies, the taxable supply referred to in that subparagraph is deemed to have been made outside Canada.
Retention of possession
(5) If
(a) a particular registrant makes a particular taxable supply in Canada of particular tangible personal property by way of sale to a particular non-resident person that is not registered under Subdivision D of Division V and is not a consumer of the particular property, and
(b) the particular registrant or another registrant has physical possession of the particular property at the particular time at which the particular property is delivered or made available to the particular non-resident person under the agreement for the particular taxable supply and retains physical possession of the particular property after the particular time
(i) solely for the purpose of transferring physical possession of the particular property to the particular non-resident person, a person (in this subsection referred to as a "subsequent purchaser") that subsequently acquires ownership of the particular property or a person designated by the particular non-resident person or a subsequent purchaser,
(ii) for the purpose of making another taxable supply in Canada of a commercial service in respect of the particular property to the particular non-resident person or a subsequent purchaser,
(iii) for the purpose of making another taxable supply in Canada of a service of manufacturing or producing other tangible personal property to the particular non-resident person or to another non-resident person that is not registered under Subdivision D of Division V, if the particular non-resident person or the other non-resident person, as the case may be, is not a consumer of the other property and if the particular property
(A) is incorporated or transformed into, attached to, or combined or assembled with, the other property in the manufacture or production of the other property, or
(B) is directly consumed or expended in the manufacture or production of the other property,
(iv) for the purpose of making another taxable supply in Canada of a commercial service in respect of other tangible personal property (other than property of a person that is resident in Canada) to the particular non-resident person or to another non-resident person that is not registered under Subdivision D of Division V, if the particular non-resident person or the other non-resident person, as the case may be, is not a consumer of the other property and if the particular property
(A) is incorporated into, attached to, or combined or assembled with, the other property in the provision of the commercial service, or
(B) is directly consumed or expended in the provision of the commercial service, or
(v) if subsection (9) does not apply in respect of the particular taxable supply, as the recipient of another supply of the particular property made by the particular non-resident person, by a subsequent purchaser or by a lessee or sub-lessee of a subsequent purchaser,
the following rules apply:
(c) if the particular registrant has physical possession of the particular property at the particular time,
(i) for the purposes of this Part, the particular taxable supply is deemed to have been made outside of Canada,
(ii) if any of subparagraphs (b)(i) to (iv) applies, the particular registrant is deemed for the purposes of this section
(A) except if clause (B) applies, to have acquired, at the particular time, physical possession of the particular property for the purpose of making a taxable supply in Canada to the particular non-resident person of a commercial service in respect of the particular property that is not a storage service, or
(B) if subparagraph (b)(ii) applies and the other taxable supply referred to in that subparagraph is to be made to the particular non-resident person or to a non-resident subsequent purchaser that is not registered under Subdivision D of Division V and is not a consumer of the particular property or if subparagraph (b)(iii) or (iv) applies, to have acquired, at the particular time, physical possession of the particular property for the purpose referred to in whichever of subparagraphs (b)(ii) to (iv) applies, and
(iii) if subparagraph (b)(v) applies, for the purposes of this section and the definition imported taxable supply in section 217,
(A) the particular registrant is deemed to have acquired physical possession of the particular property, as the recipient of the other supply referred to in that subparagraph, from another person that is a registrant,
(B) that acquisition of physical possession of the particular property is deemed to have occurred at the time when, and at the place where, the particular property is delivered or made available to the particular registrant under the agreement for that other supply, and
(C) the particular registrant is deemed to have given to the other person referred to in clause (A) a certificate described in paragraph (2)(d) in respect of that acquisition of physical possession of the particular property, and
(d) if another registrant has physical possession of the particular property at the particular time, for the purposes of this section and the definition imported taxable supply in section 217,
(i) if subparagraph (b)(i) applies and the other registrant gives to the particular registrant a certificate that contains the information set out in paragraph (2)(d) in respect of the particular property,
(A) the particular registrant is deemed to have caused, at the particular time, physical possession of the particular property to be transferred at a place in Canada to the other registrant,
(B) the other registrant is deemed to have acquired, at the particular time, physical possession of the particular property for the purpose of making a taxable supply in Canada to the particular non-resident person of a commercial service in respect of the particular property that is not a storage service, and
(C) the certificate is deemed to be a certificate described in paragraph (2)(d) in respect of the transfer referred to in clause (A) and the acquisition referred to in clause (B),
(ii) if any of subparagraphs (b)(ii) to (iv) applies,
(A) the particular registrant is deemed to have caused physical possession of the particular property to be transferred at a place in Canada to the other registrant,
(B) the other registrant is deemed to have acquired physical possession of the particular property from the particular registrant for the purpose referred to in whichever of those subparagraphs applies, and
(C) the particular registrant is deemed to have caused that transfer, and the other registrant is deemed to have so acquired physical possession of the particular property, at
(I) except if subclause (II) applies, the particular time, or
(II) if subparagraph (b)(ii) applies and the other taxable supply referred to in that subparagraph is to be made to a subsequent purchaser that is registered under Subdivision D of Division V, the time at which the particular property is delivered or made available to the subsequent purchaser, and
(iii) if subparagraph (b)(v) applies,
(A) the particular registrant is deemed to have caused physical possession of the particular property to be transferred to the other registrant,
(B) the other registrant is deemed to have acquired physical possession of the particular property from the particular registrant as the recipient of the other supply referred to in that subparagraph, and
(C) the particular registrant is deemed to have caused that transfer, and the other registrant is deemed to have so acquired physical possession of the particular property, at the time when, and at the place where, the particular property is delivered or made available to the other registrant under the agreement for that other supply.
Transfer of possession to bailee
(6) For the purposes of this section, section 180 and the definition imported taxable supply in section 217, if a registrant at a particular time transfers physical possession of tangible personal property to a bailee solely for the purpose of storing or shipping the property and if the bailee does not, at or before the particular time, give to the registrant a certificate described in paragraph (2)(d) in respect of the transfer of physical possession of the property, the following rules apply:
(a) if, under the agreement with the bailee for storing or shipping the property, the bailee is required to transfer physical possession of the property to another person, other than the registrant, that is named at the particular time in the agreement,
(i) the registrant is deemed not to have caused physical possession of the property to be transferred to the bailee and the bailee is deemed not to have acquired physical possession of the property,
(ii) the registrant is deemed to have caused physical possession of the property to be transferred to the other person at the particular time and at the place where physical possession of the property is transferred to the other person by the bailee,
(iii) the other person is deemed to have acquired physical possession of the property from the registrant for the purpose for which the other person is acquiring physical possession of the property from the bailee, and
(iv) that acquisition of physical possession of the property is deemed to have occurred at the particular time and at the place where physical possession of the property is transferred to the other person by the bailee; and
(b) if, under the agreement with the bailee for storing or shipping the property, the bailee is required to transfer physical possession of the property to the registrant or to another person (in this paragraph referred to as the "consignee") that is to be identified after the particular time,
(i) the registrant is deemed to retain physical possession of the property, and the bailee is deemed not to have acquired physical possession of the property, throughout the period beginning at the particular time and ending at another time that is the earliest of
(A) the time at which the bailee transfers physical possession of the property to the registrant,
(B) the time at which the registrant gives to the consignee sufficient documentation to enable the consignee to require the bailee to transfer physical possession of the property to the consignee,
(C) the time at which the registrant directs the bailee in writing to transfer physical possession of the property to the consignee,
(D) the time at which the bailee transfers physical possession of the property to the consignee, and
(E) if the bailee is acquiring physical possession of the property for the purpose of storing the property, the time at which the bailee gives to the registrant a certificate that contains the information set out in paragraph (2)(d) in respect of the property, and
(ii) if the other time referred to in subparagraph (i) is
(A) described in any of clauses (i)(B) to (D),
(I) the registrant is deemed to have caused physical possession of the property to be transferred to the consignee at the other time and at the place where physical possession of the property is transferred to the consignee by the bailee,
(II) the consignee is deemed to have acquired physical possession of the property from the registrant for the purpose for which the consignee is acquiring physical possession of the property from the bailee, and
(III) that acquisition of physical possession of the property is deemed to have occurred at the other time and at the place where physical possession of the property is transferred to the consignee by the bailee, or
(B) described in clause (i)(E),
(I) the transfer of physical possession of the property by the registrant to the bailee, and the acquisition of physical possession of the property by the bailee from the registrant, are deemed to have occurred at the other time and not at the particular time, and
(II) the certificate referred to in that clause is deemed to be a certificate described in paragraph (2)(d) in respect of that transfer and that acquisition.
Goods transferred to bailee by non-resident
(7) For the purposes of this section, section 180 and the definition imported taxable supply in section 217, if a non-resident person that is not registered under Subdivision D of Division V transfers physical possession of tangible personal property to a bailee that is a registrant for the sole purpose of storing or shipping the property and if the bailee either is a carrier that is acquiring physical possession of the property for the sole purpose of shipping the property or does not claim an input tax credit in respect of the property, the bailee is deemed not to have acquired physical possession of the property.
Beginning of lease from unregistered non-resident
(8) For the purposes of this section and the definition imported taxable supply in section 217, if
(a) a registrant (in this subsection referred to as the "lessee")
(i) is the recipient of a particular taxable supply of tangible personal property made by way of lease, licence or similar arrangement by a particular non-resident person that is not registered under Subdivision D of Division V, and
(ii) is not deemed under clause (9)(c)(ii)(A) or subparagraph (9)(d)(ii) to have acquired physical possession of the property as the recipient of the particular taxable supply,
(b) either
(i) immediately before the particular time at which the property is delivered or made available to the lessee under the agreement for the particular taxable supply, another registrant has possession or use of the property as the recipient of another taxable supply of the property made by way of lease, licence or similar arrangement by the particular non-resident person or by another non-resident person that is not registered under Subdivision D of Division V, or
(ii) the following conditions are met:
(A) subparagraph (i) does not apply,
(B) another registrant has physical possession of the property immediately after the particular time, and
(C) the lessee did not have possession or use of the property immediately before the particular time as the recipient of another taxable supply of the property made by way of lease, licence or similar arrangement by the particular non-resident person or by another non-resident person that is not registered under Subdivision D of Division V, and
(c) it is not the case that a person that is a registrant acquired physical possession of the property before the particular time for the purpose of making a taxable supply in Canada of a commercial service in respect of the property to the particular non-resident person or to another non-resident person that is not registered under Subdivision D of Division V and continues to retain physical possession of the property until a time that is after the particular time,
the following rules apply:
(d) the other registrant referred to in subparagraph (b)(i) or (ii), as the case may be, is deemed to have caused physical possession of the property to be transferred to the lessee at the particular time and at the place where the property is delivered or made available to the lessee under the agreement for the particular taxable supply,
(e) the lessee is deemed to have acquired physical possession of the property from the other registrant as the recipient of the particular taxable supply, and
(f) that acquisition of physical possession of the property is deemed to have occurred at the particular time and at the place where the property is delivered or made available to the lessee under the agreement for the particular taxable supply.
Lease subsequent to sale
(9) If
(a) a particular registrant makes a particular taxable supply in Canada of tangible personal property by way of sale to a particular non-resident person that is not registered under Subdivision D of Division V and is not a consumer of the property, and
(b) at the particular time at which the property is delivered or made available to the particular non-resident person under the agreement for the particular taxable supply, the particular registrant or another registrant is, or is intended to be, the recipient of another supply of the property made by way of lease, licence or similar arrangement by the particular non-resident person or by another non-resident person that is not registered under Subdivision D of Division V,
the following rules apply:
(c) if the particular registrant is, or is intended to be, at the particular time the recipient of the other supply,
(i) for the purposes of this Part, the particular taxable supply is deemed to have been made outside of Canada,
(ii) for the purposes of this section and the definition imported taxable supply in section 217,
(A) the particular registrant is deemed to have acquired physical possession of the property, as the recipient of the other supply, from another person that is a registrant,
(B) that acquisition of physical possession of the property is deemed to have occurred at the time when, and at the place where, the property is delivered or made available to the particular registrant under the agreement for the other supply, and
(C) the particular registrant is deemed to have given to the other person referred to in clause (A) a certificate described in paragraph (2)(d) in respect of that acquisition of physical possession of the property, and
(d) if another registrant is, or is intended to be, at the particular time the recipient of the other supply, for the purposes of this section and the definition imported taxable supply in section 217,
(i) the particular registrant is deemed to have caused physical possession of the property to be transferred to the other registrant,
(ii) the other registrant is deemed to have acquired physical possession of the property, as the recipient of the other supply, from the particular registrant, and
(iii) the particular registrant is deemed to have caused that transfer, and the other registrant is deemed to have so acquired physical possession of the property, at the time when, and at the place where, the property is delivered or made available to the other registrant under the agreement for the other supply.
Deemed possession during lease
(10) For the purposes of this section and the definition imported taxable supply in section 217, if a registrant (in this subsection referred to as the "lessee") acquires — as the recipient of a particular taxable supply of tangible personal property made by way of lease, licence or similar arrangement by a particular non-resident person that is not registered under Subdivision D of Division V — physical possession of the property at a particular time and either
(a) gives a certificate described in paragraph (2)(d) in respect of that acquisition of physical possession of the property, or
(b) claims an input tax credit in respect of tax that is deemed to have been paid or payable by the lessee under subsection 178.8(2) or paragraph 180(d) in respect of the property,
the lessee is deemed to retain physical possession of the property at all times throughout the period that begins at the particular time and ends at the earliest of
(c) the time at which the lessee causes physical possession of the property to be transferred to another registrant that
(i) is acquiring physical possession of the property for the purpose of making a taxable supply in Canada of a commercial service in respect of the property to the particular non-resident person or to another non-resident person that is not registered under Subdivision D of Division V, and
(ii) retains physical possession of the property during a part of the period during which possession or use of the property is provided to the lessee under the arrangement,
(d) the time at which the lessee causes physical possession of the property to be transferred to the particular non-resident person or to another non-resident person that is not registered under Subdivision D of Division V, and
(e) the time at which the lessee causes physical possession of the property to be transferred to a person that is not referred to in paragraph (c) or (d), if that time is not included in
(i) the period during which possession or use of the property is provided to the lessee under the arrangement, or
(ii) another period during which the lessee has possession or use of the property as the recipient of another taxable supply of the property made by way of lease, licence or similar arrangement by the particular non-resident person or by another non-resident person that is not registered under Subdivision D of Division V.
Possession by service provider during lease
(11) For the purposes of this section and the definition imported taxable supply in section 217, if
(a) a registrant (in this subsection referred to as the "lessee") is the recipient of a particular taxable supply of tangible personal property made by way of lease, licence or similar arrangement by a particular non-resident person that is not registered under Subdivision D of Division V,
(b) another registrant acquires physical possession of the property at a particular time for the purpose of making a taxable supply in Canada of a commercial service in respect of the property to the particular non-resident person or to another non-resident person that is not registered under Subdivision D of Division V, and
(c) the other registrant retains physical possession of the property during a part of the particular period during which possession or use of the property is provided to the lessee under the arrangement,
the following rules apply:
(d) if a third person other than the lessee causes physical possession of the property to be transferred to the other registrant at the particular time, if the particular time is during the particular period and if the third person is not a registrant that acquires and retains physical possession of the property in the circumstances described in paragraphs (b) and (c),
(i) the third person is deemed not to have caused that transfer of physical possession of the property, and
(ii) the lessee is deemed to have caused, at the particular time, physical possession of the property to be transferred to the other registrant at the place where the other registrant acquires physical possession of the property, and
(e) if the other registrant causes, at a later time that is after the particular time but during the particular period, physical possession of the property to be transferred at a particular place to a third person other than the lessee and the third person is not a registrant that acquires and retains physical possession of the property in the circumstances described in paragraphs (b) and (c),
(i) the other registrant is deemed to have caused, at the later time, physical possession of the property to be transferred to the lessee at the particular place,
(ii) the lessee is deemed to have acquired physical possession of the property as the recipient of the particular taxable supply at the later time and at the place where the property is delivered or made available to the lessee under the arrangement, and
(iii) the other registrant is deemed not to have caused physical possession of the property to be transferred to the third person, and the third person is deemed not to have acquired physical possession of the property.
End of lease period
(12) For the purposes of this section and the definition imported taxable supply in section 217, if
(a) a registrant (in this subsection referred to as the "lessee") is the recipient of a particular taxable supply of tangible personal property made by way of lease, licence or similar arrangement by a particular non-resident person that is not registered under Subdivision D of Division V,
(b) a particular person other than the lessee has physical possession of the property immediately after the particular time that is at the end of the period during which possession or use of the property is provided to the lessee under the arrangement,
(c) if the particular person is a registrant, the particular person did not acquire physical possession of the property before the particular time for the purpose of making a taxable supply in Canada of a commercial service in respect of the property to the particular non-resident person or to another non-resident person that is not registered under Subdivision D of Division V,
(d) the lessee does not retain possession or use of the property after the particular time as the recipient of a taxable supply of the property made by way of lease, licence or similar arrangement by the particular non-resident person or by another non-resident person that is not registered under Subdivision D of Division V, and
(e) another registrant does not have possession or use of the property immediately after the particular time as the recipient of a taxable supply of the property made by way of lease, licence or similar arrangement by the particular non-resident person or by another non-resident person that is not registered under Subdivision D of Division V,
the following rules apply:
(f) the lessee is deemed to have caused, at the particular time, physical possession of the property to be transferred to the particular person at the place where the particular person has physical possession of the property immediately after the particular time,
(g) if the particular person is a registrant and has physical possession of the property immediately after the particular time as the recipient of a supply referred to in subparagraph (2)(c)(i), the particular person is deemed to have acquired, at the particular time and at the place referred to in paragraph (f), physical possession of the property as the recipient of that supply, and
(h) if the particular person is a registrant and has physical possession of the property immediately after the particular time for the purpose of making a supply referred to in any of subparagraphs (2)(c)(ii) to (iv), the particular person is deemed to have acquired, at the particular time and at the place referred to in paragraph (f), physical possession of the property for that purpose.
Use of railway rolling stock
(13) For the purpose of clause (4)(b)(ii)(C), if the only use of railway rolling stock after physical possession of it is transferred as described in that clause and before it is next exported is for the purpose of transporting tangible personal property or passengers in the course of that exportation and that exportation occurs within 60 days after the day on which the transfer takes place, that use of the rolling stock is deemed to take place entirely outside Canada.
(15) Subsections (1) to (3), (6) to (8), (12) and (13) apply in respect of supplies made after July 22, 2016.
(16) Subsections (4) and (9) to (11) apply in respect of
(a) supplies made after July 22, 2016; and
(b) supplies made before July 23, 2016 in respect of which, before that day, an amount was charged, collected or remitted as or on account of tax under Part IX of the Act.
(17) Subsection (5) applies in respect of supplies made before July 23, 2016 in respect of which no amount is charged, collected or remitted as or on account of tax under Part IX of the Act.
(18) Subsection (14) applies in respect of supplies made after the day on which this Act receives royal assent.
122 (1) Subparagraph 180(a)(ii) of the Act is replaced by the following:
(ii) if the particular person is a registrant, causes physical possession of tangible personal property (other than property of a person that is resident in Canada) to be transferred in Canada to the particular person in circumstances in which the particular person is acquiring physical possession of the property for the purpose of making a taxable supply in Canada of a commercial service in respect of the property to the non-resident person,
(2) Subsection (1) applies in respect of supplies made after July 22, 2016.
123 (1) Paragraph 183(1)(b) of the French version of the Act is replaced by the following:
b) pour l'application de la présente partie, sauf les articles 193 et 257, cette fourniture est réputée avoir été effectuée sans contrepartie;
(2) Paragraph 183(10.1)(d) of the French version of the Act is replaced by the following:
d) le rachat du bien est réputé en être une fourniture par vente effectuée sans contrepartie par l'acquéreur de la première fourniture au profit du débiteur;
124 Paragraph 184(1)(b) of the French version of the Act is replaced by the following:
b) pour l'application de la présente partie, sauf les articles 193 et 257, cette fourniture est réputée avoir été effectuée sans contrepartie;
125 (1) Paragraph (b) of the definition imported taxable supply in section 217 of the Act is replaced by the following:
(b) a taxable supply (other than a zero-rated or prescribed supply) of tangible personal property made by a non-resident person that is not registered under Subdivision D of Division V to a recipient that is a registrant if
(i) the recipient gives to another registrant a certificate described in paragraph 179(2)(d) in respect of an acquisition of physical possession of the property by the recipient, and
(ii) the recipient is not acquiring the property for consumption, use or supply exclusively in the course of its commercial activities or the property is a passenger vehicle that the recipient is acquiring for use in Canada as capital property in its commercial activities and that has a capital cost to the recipient exceeding the amount deemed under paragraph 13(7)(g) or (h) of the Income Tax Act to be the capital cost of the vehicle to the recipient for the purposes of section 13 of that Act;
(2) The definition imported taxable supply in section 217 of the Act is amended by adding the following after paragraph (b):
(b.01) a taxable supply (other than a zero-rated or prescribed supply) of tangible personal property made by way of sale by a non-resident person that is not registered under Subdivision D of Division V to a recipient that is a registrant if
(i) the recipient gives to another registrant a certificate described in subparagraph 179(2.1)(e)(i) in respect of an acquisition of physical possession of the property by a third person, and
(ii) the recipient is not acquiring the property for consumption, use or supply exclusively in the course of its commercial activities or the property is a passenger vehicle that the recipient is acquiring for use in Canada as capital property in its commercial activities and that has a capital cost to the recipient exceeding the amount deemed under paragraph 13(7)(g) or (h) of the Income Tax Act to be the capital cost of the vehicle to the recipient for the purposes of section 13 of that Act;
(3) Subparagraph (b.01)(i) of the definition imported taxable supply in section 217 of the Act, as enacted by subsection (2), is replaced by the following:
(i) the recipient gives to another registrant a certificate described in subparagraph 179(3)(c)(i) in respect of an acquisition of physical possession of the property by a third person, and
(4) Paragraph (b.1) of the definition imported taxable supply in section 217 of the Act is replaced by the following:
(b.1) a taxable supply (other than a zero-rated or prescribed supply) of tangible personal property made by way of sale at a particular time by a non-resident person that is not registered under Subdivision D of Division V to a recipient that is a registrant if
(i) the recipient acquires physical possession of the property as the recipient of another supply of the property made by way of lease, licence or similar arrangement and either
(A) gives to another registrant a certificate described in paragraph 179(2)(d) in respect of that acquisition of physical possession of the property, or
(B) claims an input tax credit in respect of tax that is deemed to have been paid or payable by the recipient under subsection 178.8(2) or paragraph 180(d) in respect of the property, and
(ii) the recipient is not acquiring, as the recipient of the taxable supply, the property for consumption, use or supply exclusively in the course of its commercial activities or the property is a passenger vehicle that the recipient is acquiring for use in Canada as capital property in its commercial activities and that has a capital cost to the recipient exceeding the amount deemed under paragraph 13(7)(g) or (h) of the Income Tax Act to be the capital cost of the vehicle to the recipient for the purposes of section 13 of that Act;
(5) Paragraph (f) of the definition permitted deduction in section 217 of the English version of the Act is replaced by the following:
(f) qualifying compensation of an employee of the qualifying taxpayer that is paid in the specified year by the qualifying taxpayer if the employee was primarily in Canada while performing the employee's duties during the specified year;
(6) Subsections (1), (3) and (4) apply in respect of supplies made after the day on which this Act receives royal assent.
(7) Subsection (2) applies in respect of supplies made after July 22, 2016.
126 (1) The portion of subsection 217.1(6) of the Act before paragraph (a) is replaced by the following:
Qualifying rule for credits and rebates
(6) If an amount (in this subsection referred to as a "qualifying expenditure") of qualifying consideration, or of an external charge, of a qualifying taxpayer in respect of an outlay made, or expense incurred, outside Canada is greater than zero and, during a reporting period of the qualifying taxpayer during which the qualifying taxpayer is a registrant, tax under section 218.01 or subsection 218.1(1.2) in respect of the qualifying expenditure becomes payable by the qualifying taxpayer or is paid by the qualifying taxpayer without having become payable, the following rules apply for the purpose of determining an input tax credit or an eligible amount, as defined in subsection 261.01(1), of the qualifying taxpayer:
(2) The portion of subsection 217.1(7) of the Act before paragraph (a) is replaced by the following:
Qualifying rule for credits and rebates — internal charge
(7) If tax (in this subsection referred to as "internal tax") under section 218.01 or subsection 218.1(1.2) in respect of an internal charge becomes payable by a qualifying taxpayer, or is paid by the qualifying taxpayer without having become payable, and the internal charge is determined based in whole or in part on the inclusion of an outlay made, or an expense incurred, outside Canada by the qualifying taxpayer, the following rules apply for the purpose of determining an input tax credit or an eligible amount, as defined in subsection 261.01(1), of the qualifying taxpayer:
(3) Subsections (1) and (2) apply in respect of any claim period of a person, as defined in subsection 259(1) of the Act, that begins after September 22, 2009.
(4) If, in assessing under section 297 of the Act a rebate under subsection 261.01(2) of the Act for a claim period of a pension entity, one or more particular amounts were not included as eligible amounts, as defined in subsection 261.01(1) of the Act, for the claim period in determining the amount of the rebate and, as a result of the application of subsections (1) and (2), those particular amounts are eligible amounts for the claim period, the pension entity is entitled until the day that is one year after the day on which this Act receives royal assent to request in writing that the Minister of National Revenue make an assessment, reassessment or additional assessment for the purpose of taking into account that those particular amounts are eligible amounts for the claim period and, on receipt of the request, the Minister must with all due dispatch
(a) consider the request; and
(b) under sections 296 and 297 of the Act assess, reassess or make an additional assessment of the rebate under subsection 261.01(2) of the Act for the claim period, and of any interest, penalty or other obligation of the person, solely for the purpose of taking into account that the particular amounts are eligible amounts for the claim period.
(5) If, in assessing under section 296 of the Act the net tax for a reporting period of a qualifying employer, as defined in subsection 261.01(1) of the Act, of a pension plan that includes the day on which an election — made jointly under subsection 261.01(5), (6) or (9) of the Act by the qualifying employer and a pension entity of the pension plan — is filed with the Minister of National Revenue, an amount was not deducted under any of subsections 261.01(5), (6) and (9) of the Act and, as a result of the application of subsections (1) and (2), the amount may be deducted under any of subsections 261.01(5), (6) and (9) of the Act in determining the net tax for the reporting period, the qualifying employer is entitled until the day that is one year after the day on which this Act receives royal assent to request in writing that the Minister of National Revenue make an assessment, reassessment or additional assessment for the purpose of taking into account that the amount may be deducted under any of subsections 261.01(5), (6) and (9) of the Act in determining the net tax for the reporting period and, on receipt of the request, the Minister must with all due dispatch
(a) consider the request; and
(b) under section 296 of the Act assess, reassess or make an additional assessment of the net tax for the reporting period, and of any interest, penalty or other obligation of the qualifying employer, solely for the purpose of taking into account that the amount may be deducted under any of subsections 261.01(5), (6) and (9) of the Act in determining the net tax for the reporting period.
127 (1) The portion of paragraph 218.1(1)(a) of the Act before the formula is replaced by the following:
(a) every person that is resident in a participating province and is the recipient of an imported taxable supply that is a supply of intangible personal property or a service that is acquired by the person for consumption, use or supply in participating provinces to an extent that is prescribed must, for each time an amount of consideration for the supply becomes due or is paid without having become due and for each participating province, pay to Her Majesty in right of Canada, in addition to the tax imposed by section 218, tax equal to the amount determined by the formula
(2) The description of C in paragraph 218.1(1)(a) of the Act is replaced by the following:
C is the extent (expressed as a percentage) to which the person acquired the property or service for consumption, use or supply in the participating province; and
(3) Subparagraph 218.1(1)(b)(ii) of the Act is replaced by the following:
(ii) is the recipient of a supply, included in any of paragraphs (b.01) to (b.3) of the definition imported taxable supply in section 217, of property that is delivered or made available to the person in a particular participating province and is either resident in that province or is a registrant, or
(4) Clause (B) of the description of C in paragraph 218.1(1)(b) of the Act is replaced by the following:
(B) in any other case, the extent (expressed as a percentage) to which the person acquired the property for consumption, use or supply in the particular participating province.
(5) The description of A2 in the description of A in paragraph 218.1(1.2)(a) of the Act is replaced by the following:
A2 is the extent (expressed as a percentage) to which the internal charge is attributable to outlays or expenses that were made or incurred to consume, use or supply the whole or part of property or of a qualifying service, in respect of which the internal charge is attributable, in carrying on, engaging in or conducting an activity of the qualifying taxpayer in the particular participating province, and
(6) The description of B2 in the description of B in paragraph 218.1(1.2)(a) of the Act is replaced by the following:
B2 is the extent (expressed as a percentage) to which the whole or part of the outlay or expense, which corresponds to the external charge, was made or incurred to consume, use or supply the whole or part of property or of a qualifying service, in respect of which the external charge is attributable, in carrying on, engaging in or conducting an activity of the qualifying taxpayer in the particular participating province; and
(7) The description of D in paragraph 218.1(1.2)(b) of the Act is replaced by the following:
D is the extent (expressed as a percentage) to which the whole or part of the outlay or expense, which corresponds to the qualifying consideration, was made or incurred to consume, use or supply the whole or part of property or of a qualifying service, in respect of which the qualifying consideration is attributable, in carrying on, engaging in or conducting an activity of the qualifying taxpayer in the particular participating province.
(8) Subsections (1) to (4) apply in respect of any supply made after July 22, 2016.
(9) Subsections (5) to (7) apply in respect of any specified year of a person that ends after July 22, 2016.
128 (1) Subsection 220.05(3.1) of the Act is amended by striking out "or" at the end of paragraph (a) and by replacing paragraph (b) with the following:
(b) the amount determined for the pension plan under the description of B in paragraph 172.1(5.1)(c) in respect of a supply of the same property that is deemed to have been made by the participating employer under paragraph 172.1(5.1)(a) is greater than zero;
(c) the amount determined for B in paragraph 172.1(6)(c) in respect of every supply deemed to have been made under paragraph 172.1(6)(a) of an employer resource (as defined in subsection 172.1(1)) consumed or used for the purpose of making the particular supply is greater than zero; or
(d) the amount determined for the pension plan under the description of B in paragraph 172.1(6.1)(c) in respect of every supply deemed to have been made under paragraph 172.1(6.1)(a) of an employer resource (as defined in subsection 172.1(1)) consumed or used for the purpose of making the particular supply is greater than zero.
(2) Subsection (1) is deemed to have come into force on July 22, 2016.
129 (1) Subsection 220.08(1) of the Act is replaced by the following:
Tax in participating province
220.08 (1) Subject to this Part, every person that is resident in a participating province and is the recipient of a taxable supply made in a particular province of intangible personal property or a service that is acquired by the person for consumption, use or supply in whole or in part in any participating province that is not the particular province must pay to Her Majesty in right of Canada, each time an amount of consideration for the supply becomes due or is paid without having become due, tax equal to the amount determined in prescribed manner.
(2) Subsection 220.08(3.1) of the Act is amended by striking out "or" at the end of paragraph (a) and by replacing paragraph (b) with the following:
(b) the amount determined for the pension plan under the description of B in paragraph 172.1(5.1)(c) in respect of a supply of the same property or service that is deemed to have been made by the participating employer under paragraph 172.1(5.1)(a) is greater than zero;
(c) the amount determined for B in paragraph 172.1(6)(c) in respect of every supply deemed to have been made under paragraph 172.1(6)(a) of an employer resource (as defined in subsection 172.1(1)) consumed or used for the purpose of making the particular supply is greater than zero; or
(d) the amount determined for the pension plan under the description of B in paragraph 172.1(6.1)(c) in respect of every supply deemed to have been made under paragraph 172.1(6.1)(a) of an employer resource (as defined in subsection 172.1(1)) consumed or used for the purpose of making the particular supply is greater than zero.
(3) Subsection (1) applies in respect of any supply made after July 22, 2016.
(4) Subsection (2) is deemed to have come into force on July 22, 2016.
130 (1) The description of B in subsection 225.1(2) of the Act is amended by adding the following after paragraph (b):
(b.1) 60% of the total of all amounts that may be deducted by the charity under paragraph 232.01(5)(a) or 232.02(4)(a) in determining the net tax for the particular reporting period and that are claimed in the return under this Division filed for that reporting period,
(2) Subsection (1) applies in respect of any reporting period of a person that ends after September 22, 2009.
(3) If, in assessing under section 296 of the Act the net tax for a reporting period of a charity, an amount was not included in the total for B in subsection 225.1(2) of the Act and, as a result of the application of subsection (1), the amount is to be included in paragraph (b.1) of the description of B in subsection 225.1(2) of the Act in determining the net tax for the reporting period, the charity is entitled until the day that is one year after the day on which this Act receives royal assent to request in writing that the Minister of National Revenue make an assessment, reassessment or additional assessment for the purpose of taking into account that the amount is to be included in that paragraph in determining the net tax for the reporting period and, on receipt of the request, the Minister must with all due dispatch
(a) consider the request; and
(b) under section 296 of the Act assess, reassess or make an additional assessment of the net tax for the reporting period, and of any interest, penalty or other obligation of the charity, solely for the purpose of taking into account that the amount is to be included in paragraph (b.1) of the description of B in subsection 225.1(2) of the Act in determining the net tax for the reporting period.
131 (1) Paragraph (c) of the description of A in subsection 225.2(2) of the Act is replaced by the following:
(c) all amounts each of which is an amount, in respect of a supply made during the particular reporting period of property or a service to which the financial institution and another person have elected to have this paragraph apply, equal to tax calculated at the rate set out in subsection 165(1) on the cost to the other person of supplying the property or service to the financial institution excluding any remuneration to employees of the other person, the cost of financial services and tax under this Part;
(2) Paragraph (c) of the description of A in subsection 225.2(2) of the Act, as enacted by subsection (1), is replaced by the following:
(c) all amounts each of which is an amount — in respect of a supply of property or a service that is made during the particular reporting period by another person to the financial institution and to which the financial institution has elected to have this paragraph apply — equal to tax calculated at the rate set out in subsection 165(1) on the cost to the other person of supplying the property or service to the financial institution excluding any remuneration to employees of the other person, the cost of financial services and tax under this Part;
(3) Paragraph (b) of the description of F in subsection 225.2(2) of the Act is replaced by the following:
(b) all amounts each of which is an amount — in respect of a supply of property or a service that is made during the particular reporting period by another person to the financial institution and to which the financial institution has elected to have paragraph (c) of the description of A apply — equal to tax payable by the other person under any of subsection 165(2), sections 212.1 and 218.1 and Division IV.1 that is included in the cost to the other person of supplying the property or service to the financial institution; and
(4) Subsections 225.2(4) and (5) of the Act are replaced by the following:
Election
(4) If a person, other than a prescribed person or a person of a prescribed class, and a selected listed financial institution have made jointly an election under section 150, the financial institution may make an election, in prescribed form containing prescribed information, to have paragraph (c) of the description of A in subsection (2) apply to every supply to which subsection 150(1) applies that is made by the person to the financial institution at a time the election made under this subsection is in effect.
(5) The portion of subsection 225.2(6) of the Act before paragraph (a) is replaced by the following:
Effective period of election
(6) An election made under subsection (4) by a selected listed financial institution in respect of supplies made by a person to the financial institution shall be effective for the period beginning on the day specified in the election and ending on the earliest of
(6) Paragraph 225.2(6)(b) of the Act is replaced by the following:
(b) the day specified in a revocation of the election made under subsection (6.1),
(7) Section 225.2 of the Act is amended by adding the following after subsection (6):
Revocation
(6.1) A selected listed financial institution that has made an election under subsection (4) may revoke the election, in prescribed form containing prescribed information, effective on the day specified in the revocation, which day is at least 365 days after the day on which the election becomes effective.
Notice of election
(6.2) If a particular selected listed financial institution has made an election under subsection (4) in respect of supplies made by another selected listed financial institution to the particular financial institution, the particular financial institution shall, in a manner satisfactory to the Minister,
(a) notify the other financial institution of the election and of the day it becomes effective on or before that day or any later day that the Minister may allow; and
(b) if the election ceases to be effective, notify the other financial institution of the day that the election ceases to be effective on or before that day or any later day that the Minister may allow.
(8) Subsection (1) applies in respect of any reporting period of a person that ends after June 2010.
(9) Subsections (2) to (5) and subsection 225.2(6.2) of the Act, as enacted by subsection (7), apply in respect of any election made under subsection 225.2(4) of the Act that becomes effective after the day on which this Act receives royal assent.
(10) Subsection (6) and subsection 225.2(6.1) of the Act, as enacted by subsection (7), apply in respect of any revocation that becomes effective after the day on which this Act receives royal assent.
132 (1) Subsection 232.01(3) of the Act is replaced by the following:
Tax adjustment note — subsections 172.1(5) and (5.1)
(3) A person may, on a particular day, issue to a pension entity of a pension plan a note (in this section referred to as a "tax adjustment note") in respect of all or part of a specified resource, specifying an amount determined in accordance with paragraph (4)(a) (in this section referred to as the "federal component amount" of the tax adjustment note) and an amount determined in accordance with paragraph (4)(b) (in this section referred to as the "provincial component amount" of the tax adjustment note), if
(a) the person is deemed under paragraph 172.1(5)(b) or (5.1)(b) to have collected tax, on or before the particular day, in respect of a taxable supply of the specified resource or part deemed to have been made by the person under paragraph 172.1(5)(a) or (5.1)(a);
(b) a supply of the specified resource or part is deemed to have been received by the pension entity under subparagraph 172.1(5)(d)(i) or (5.1)(d)(i) and tax in respect of that supply is deemed to have been paid under subparagraph 172.1(5)(d)(ii) or (5.1)(d)(ii) by the pension entity; and
(c) an amount of tax becomes payable, or is paid without having become payable, on or before the particular day to the person (otherwise than by the operation of section 172.1) in respect of a taxable supply of the specified resource or part
(i) by the pension entity, if the taxable supply referred to in paragraph (a) is deemed to have been made under paragraph 172.1(5)(a), or
(ii) by a master pension entity of the pension plan, if the taxable supply referred to in paragraph (a) is deemed to have been made under paragraph 172.1(5.1)(a).
(2) The description of A in paragraph 232.01(4)(a) of the Act is replaced by the following:
A is
(i) if the taxable supply referred to in paragraph (3)(a) is deemed to have been made under paragraph 172.1(5)(a), the lesser of
(A) the amount determined for A in paragraph 172.1(5)(c) in respect of the specified resource or part, and
(B) the total of all amounts, each of which is an amount of tax under subsection 165(1) that became payable, or was paid without having become payable, to the person (otherwise than by the operation of section 172.1) by the pension entity in respect of a taxable supply of the specified resource or part on or before the particular day, and
(ii) if the taxable supply referred to in paragraph (3)(a) is deemed to have been made under paragraph 172.1(5.1)(a), the lesser of
(A) the amount determined for the pension plan under the description of A in paragraph 172.1(5.1)(c) in respect of the specified resource or part, and
(B) the amount determined by the formula
A1 × A2
where
A1 is the total of all amounts, each of which is an amount of tax under subsection 165(1) that became payable, or was paid without having become payable, to the person (otherwise than by the operation of section 172.1) by the master pension entity referred to in subparagraph (3)(c)(ii) in respect of a taxable supply of the specified resource or part on or before the particular day, and
A2 is the master pension factor in respect of the pension plan for the fiscal year of the master pension entity that includes the particular day, and
(3) The description of C in paragraph 232.01(4)(b) of the Act is replaced by the following:
C is
(i) if the taxable supply referred to in paragraph (3)(a) is deemed to have been made under paragraph 172.1(5)(a), the lesser of
(A) the amount determined for B in paragraph 172.1(5)(c) in respect of the specified resource or part, and
(B) the total of all amounts, each of which is an amount of tax under subsection 165(2) that became payable, or was paid without having become payable, to the person (otherwise than by the operation of section 172.1) by the pension entity in respect of a taxable supply of the specified resource or part on or before the particular day, and
(ii) if the taxable supply referred to in paragraph (3)(a) is deemed to have been made under paragraph 172.1(5.1)(a), the lesser of
(A) the amount determined for the pension plan under the description of B in paragraph 172.1(5.1)(c) in respect of the specified resource or part, and
(B) the amount determined by the formula and
C1 × C2
where
C1 is the total of all amounts, each of which is an amount of tax under subsection 165(2) that became payable, or was paid without having become payable, to the person (otherwise than by the operation of section 172.1) by the master pension entity referred to in subparagraph (3)(c)(ii) in respect of a taxable supply of the specified resource or part on or before the particular day, and
C2 is the master pension factor in respect of the pension plan for the fiscal year of the master pension entity that includes the particular day, and
(4) The portion of subsection 232.01(5) of the Act before paragraph (a) is replaced by the following:
Effect of tax adjustment note
(5) If a person issues a tax adjustment note to a pension entity under subsection (3) in respect of all or part of a specified resource, a supply of the specified resource or part is deemed to have been received by the pension entity under subparagraph 172.1(5)(d)(i) or (5.1)(d)(i) and tax (in this subsection referred to as "deemed tax") in respect of that supply is deemed to have been paid on a particular day under subparagraph 172.1(5)(d)(ii) or (5.1)(d)(ii) by the pension entity, the following rules apply:
(5) The portion of paragraph 232.01(5)(c) of the Act before the formula is replaced by the following:
(c) if any part of the amount of the deemed tax is included in the determination of the pension rebate amount of the pension entity for a particular claim period of the pension entity, the pension entity shall pay to the Receiver General — on or before the last day of its claim period that immediately follows its claim period that includes the day on which the tax adjustment note is issued — the amount determined by the formula
(6) The portion of paragraph 232.01(5)(c) of the Act before the description of A, as amended by subsection (5), is replaced by the following:
(c) if any part of the amount of the deemed tax is included in the determination of the pension rebate amount of the pension entity for a particular claim period of the pension entity, the pension entity shall pay to the Receiver General — on or before the day that is the later of the day on which the application for the rebate is filed and the day that is the last day of its claim period that immediately follows its claim period that includes the day on which the tax adjustment note is issued — the amount determined by the formula
A × B × (C/D) × (E/F)
where
(7) The descriptions of E and F in paragraph 232.01(5)(c) of the Act are replaced by the following:
E is the amount of the rebate determined for the pension entity under subsection 261.01(2) for the particular claim period, and
F is the pension rebate amount of the pension entity for the particular claim period; and
(8) The portion of paragraph 232.01(5)(d) of the Act before the formula is replaced by the following:
(d) if any part of the amount of the deemed tax is included in the determination of the pension rebate amount of the pension entity for a claim period of the pension entity and if the pension entity makes an election for the claim period under any of subsections 261.01(5), (6) or (9) jointly with all participating employers of the pension plan that are, for the calendar year that includes the last day of the claim period, qualifying employers of the pension plan, each of those participating employers shall add, in determining its net tax for its reporting period that includes the day on which the tax adjustment note is issued, the amount determined by the formula
(9) The portion of paragraph 232.01(5)(d) of the Act before the formula, as enacted by subsection (8), is replaced by the following:
(d) if any part of the amount of the deemed tax is included in the determination of the pension rebate amount of the pension entity for a claim period of the pension entity and if the pension entity makes an election for the claim period under any of subsections 261.01(5), (6) or (9) jointly with all participating employers of the pension plan that are, for the calendar year that includes the last day of the claim period, qualifying employers of the pension plan, each of those participating employers shall add, in determining its net tax for its reporting period that includes the day that is the later of the day on which the tax adjustment note is issued and the day on which the election is filed with the Minister, the amount determined by the formula
(10) The description of F in paragraph 232.01(5)(d) of the Act is replaced by the following:
F is the pension rebate amount of the pension entity for the claim period.
(11) Subsections (1) to (4) are deemed to have come into force on July 22, 2016.
(12) Subsection (5) applies in respect of any claim period that begins after September 22, 2009 and ends before July 23, 2016.
(13) Subsections (6) and (7) apply in respect of any claim period that ends after July 22, 2016.
(14) Subsection (8) applies in respect of any reporting period of a person for which the return under Division V of Part IX of the Act is filed after September 22, 2009 but only if the return was required under that Division to be filed on or before a day that is before July 23, 2016.
(15) Subsections (9) and (10) apply in respect of any reporting period of a person for which the return under Division V of Part IX of the Act is filed after July 22, 2016 or is required under that Division to be filed on or before a day that is after July 22, 2016.
(16) If a particular amount was assessed under section 296 of the Act as an amount payable under paragraph 232.01(5)(c) of the Act by a pension entity of a pension plan in respect of a tax adjustment note issued to the pension entity, if an eligible amount (as defined in subsection 261.01(1) of the Act) of the pension entity for a particular claim period (as defined in subsection 259(1) of the Act) of the pension entity was included in the determination of the particular amount, if the eligible amount is not included in the determination of the pension rebate amount (as defined in subsection 261.01(1) of the Act) of the pension entity for the particular claim period and if July 23, 2016 is after the last day of the claim period of the pension entity that immediately follows the claim period of the pension entity that includes the day on which the tax adjustment note is issued, then the pension entity is entitled until the day that is one year after the day on which this Act receives royal assent to request in writing that the Minister of National Revenue make an assessment, reassessment or additional assessment for the purpose of taking into account that the eligible amount is not an amount payable under paragraph 232.01(5)(c) of the Act, as amended by subsection (5), and, on receipt of the request and with all due dispatch,
(a) the Minister must consider the request; and
(b) the Minister must under section 296 of the Act assess, reassess or make an additional assessment of the particular amount, and of any interest, penalty or other obligation of the pension entity, solely for the purpose of taking into account that the eligible amount is not an amount payable under that paragraph 232.01(5)(c).
(17) If a particular amount was assessed under section 296 of the Act as an amount payable under paragraph 232.01(5)(d) of the Act by a participating employer of a pension plan in respect of a tax adjustment note that was issued to a pension entity of the pension plan, if an eligible amount (as defined in subsection 261.01(1) of the Act) of the pension entity for a particular claim period (as defined in subsection 259(1) of the Act) of the pension entity was included in the determination of the particular amount, if the eligible amount is not included in the determination of the pension rebate amount (as defined in subsection 261.01(1) of the Act) of the pension entity for the particular claim period and if July 23, 2016 is after the day on which the return is filed under Division V of Part IX of the Act for the reporting period of the participating employer that includes the day on which the tax adjustment note is issued, then the participating employer is entitled until the day that is one year after the day on which this Act receives royal assent to request in writing that the Minister of National Revenue make an assessment, reassessment or additional assessment for the purpose of taking into account that the eligible amount is not an amount payable under paragraph 232.01(5)(d) of the Act, as amended by subsection (8), and, on receipt of the request and with all due dispatch,
(a) the Minister must consider the request; and
(b) the Minister must under section 296 of the Act assess, reassess or make an additional assessment of the particular amount, and of any interest, penalty or other obligation of the participating employer, solely for the purpose of taking into account that the eligible amount is not an amount payable under that paragraph 232.01(5)(d).
133 (1) Subsection 232.02(2) of the Act is replaced by the following:
Tax adjustment note — subsections 172.1(6) and (6.1)
(2) A person may, on a particular day, issue to a pension entity of a pension plan a note (in this section referred to as a "tax adjustment note") in respect of employer resources consumed or used for the purpose of making a supply (in this section referred to as the "actual pension supply") of property or a service to the pension entity or to a master pension entity of the pension plan, specifying an amount determined in accordance with paragraph (3)(a) (in this section referred to as the "federal component amount" of the tax adjustment note) and an amount determined in accordance with paragraph (3)(b) (in this section referred to as the "provincial component amount" of the tax adjustment note), if
(a) the person is deemed under paragraph 172.1(6)(b) or (6.1)(b) to have collected tax, on or before the particular day, in respect of one or more taxable supplies, deemed to have been made by the person under paragraph 172.1(6)(a) or (6.1)(a), of the employer resources;
(b) a supply of each of those employer resources is deemed to have been received by the pension entity under subparagraph 172.1(6)(d)(i) or (6.1)(d)(i) and tax in respect of each of those supplies is deemed to have been paid under subparagraph 172.1(6)(d)(ii) or (6.1)(d)(ii) by the pension entity; and
(c) an amount of tax becomes payable, or is paid without having become payable, on or before the particular day, to the person (otherwise than by the operation of section 172.1) in respect of the actual pension supply
(i) by the pension entity, if the taxable supplies referred to in paragraph (a) are deemed to have been made under paragraph 172.1(6)(a), or,
(ii) by the master pension entity, if the taxable supplies referred to in paragraph (a) are deemed to have been made under paragraph 172.1(6.1)(a).
(2) The description of A in paragraph 232.02(3)(a) of the Act is replaced by the following:
A is
(i) if the taxable supplies referred to in paragraph (2)(a) are deemed to have been made under paragraph 172.1(6)(a), the lesser of
(A) the total of all amounts, each of which is an amount determined for A in paragraph 172.1(6)(c) in determining an amount of tax that is in respect of one of those employer resources and that is deemed under paragraph 172.1(6)(b) to have become payable and to have been collected on or before the particular day, and
(B) the total of all amounts, each of which is an amount of tax under subsection 165(1) that became payable, or was paid without having become payable, to the person (otherwise than by the operation of section 172.1) by the pension entity in respect of the actual pension supply on or before the particular day, and
(ii) if the taxable supplies referred to in paragraph (2)(a) are deemed to have been made under paragraph 172.1(6.1)(a), the lesser of
(A) the total of all amounts, each of which is an amount determined for the pension plan under the description of A in paragraph 172.1(6.1)(c) in determining an amount of tax that is in respect of one of those employer resources and that is deemed under paragraph 172.1(6.1)(b) to have become payable and to have been collected on or before the particular day, and
(B) the amount determined by the formula
A1 × A2
where
A1 is the total of all amounts, each of which is an amount of tax under subsection 165(1) that became payable, or was paid without having become payable, to the person (otherwise than by the operation of section 172.1) by the master pension entity referred to in subsection (2) in respect of the actual pension supply on or before the particular day, and
A2 is the master pension factor in respect of the pension plan for the fiscal year of the master pension entity that includes the particular day, and
(3) The description of C in paragraph 232.02(3)(b) of the Act is replaced by the following:
C is
(i) if the taxable supplies referred to in paragraph (2)(a) are deemed to have been made under paragraph 172.1(6)(a), the lesser of
(A) the total of all amounts, each of which is an amount determined for B in paragraph 172.1(6)(c) in determining an amount of tax that is in respect of one of those employer resources and that is deemed under paragraph 172.1(6)(b) to have become payable and to have been collected on or before the particular day, and
(B) the total of all amounts, each of which is an amount of tax under subsection 165(2) that became payable, or was paid without having become payable, to the person (otherwise than by the operation of section 172.1) by the pension entity in respect of the actual pension supply on or before the particular day, and
(ii) if the taxable supplies referred to in paragraph (2)(a) are deemed to have been made under paragraph 172.1(6.1)(a), the lesser of
(A) the total of all amounts, each of which is an amount determined for the pension plan under the description of B in paragraph 172.1(6.1)(c) in determining an amount of tax that is in respect of one of those employer resources and that is deemed under paragraph 172.1(6.1)(b) to have become payable and to have been collected on or before the particular day, and
(B) the amount determined by the formula
C1 × C2
where
C1 is the total of all amounts, each of which is an amount of tax under subsection 165(2) that became payable, or was paid without having become payable, to the person (otherwise than by the operation of section 172.1) by the master pension entity referred to in subsection (2) in respect of the actual pension supply on or before the particular day, and
C2 is the master pension factor in respect of the pension plan for the fiscal year of the master pension entity that includes the particular day, and
(4) The portion of subsection 232.02(4) of the Act before paragraph (a) is replaced by the following:
Effect of tax adjustment note
(4) If a person issues a tax adjustment note to a pension entity under subsection (2) in respect of particular employer resources consumed or used for the purpose of making an actual pension supply, a supply of each of those particular employer resources (each of which in this subsection is referred to as a "particular supply") is deemed to have been received by the pension entity under subparagraph 172.1(6)(d)(i) or (6.1)(d)(i) and tax (in this subsection referred to as "deemed tax") in respect of each of the particular supplies is deemed to have been paid under subparagraph 172.1(6)(d)(ii) or (6.1)(d)(ii) by the pension entity, the following rules apply:
(5) The portion of paragraph 232.02(4)(c) of the Act before the formula is replaced by the following:
(c) for each particular claim period of the pension entity for which any part of an amount of deemed tax in respect of a particular supply is included in the determination of the pension rebate amount of the pension entity, the pension entity shall pay to the Receiver General — on or before the last day of its claim period that immediately follows its claim period that includes the day on which the tax adjustment note is issued — the amount determined by the formula
(6) The portion of paragraph 232.02(4)(c) of the Act before the description of A, as amended by subsection (5), is replaced by the following:
(c) for each particular claim period of the pension entity for which any part of an amount of deemed tax in respect of a particular supply is included in the determination of the pension rebate amount of the pension entity, the pension entity shall pay to the Receiver General — on or before the day that is the later of the day on which the application for the rebate is filed and the day that is the last day of its claim period that immediately follows its claim period that includes the day on which the tax adjustment note is issued — the amount determined by the formula
A × B × (C/D) × (E/F)
where
(7) The descriptions of E and F in paragraph 232.02(4)(c) of the Act are replaced by the following:
E is the amount of the rebate determined for the pension entity under subsection 261.01(2) for the particular claim period, and
F is the pension rebate amount of the pension entity for the particular claim period; and
(8) The portion of paragraph 232.02(4)(d) of the Act before the formula is replaced by the following:
(d) for each claim period of the pension entity for which any part of an amount of deemed tax in respect of a particular supply is included in the determination of the pension rebate amount of the pension entity and for which an election under any of subsections 261.01(5), (6) or (9) is made jointly by the pension entity and all participating employers of the pension plan that are, for the calendar year that includes the last day of the claim period, qualifying employers of the pension plan, each of those participating employers shall add, in determining its net tax for its reporting period that includes the day on which the tax adjustment note is issued, the amount determined by the formula
(9) The portion of paragraph 232.02(4)(d) of the Act before the formula, as enacted by subsection (8), is replaced by the following:
(d) for each claim period of the pension entity for which any part of an amount of deemed tax in respect of a particular supply is included in the determination of the pension rebate amount of the pension entity and for which an election under any of subsections 261.01(5), (6) or (9) is made jointly by the pension entity and all participating employers of the pension plan that are, for the calendar year that includes the last day of the claim period, qualifying employers of the pension plan, each of those participating employers shall add, in determining its net tax for its reporting period that includes the day that is the later of the day on which the tax adjustment note is issued and the day on which the election is filed with the Minister, the amount determined by the formula
(10) The description of F in paragraph 232.02(4)(d) of the Act is replaced by the following:
F is the pension rebate amount of the pension entity for the claim period.
(11) Subsections (1) to (4) are deemed to have come into force on July 22, 2016.
(12) Subsection (5) applies in respect of any claim period that begins after September 22, 2009 and ends before July 23, 2016.
(13) Subsections (6) and (7) apply in respect of any claim period that ends after July 22, 2016.
(14) Subsection (8) applies in respect of any reporting period of a person for which the return under Division V of Part IX of the Act is filed after September 22, 2009 but only if the return is required under that Division to be filed on or before a day that is before July 23, 2016.
(15) Subsections (9) and (10) apply in respect of any reporting period of a person for which the return under Division V of Part IX of the Act is filed after July 22, 2016 or is required under that Division to be filed on or before a day that is after July 22, 2016.
(16) If a particular amount was assessed under section 296 of the Act as an amount payable under paragraph 232.02(4)(c) of the Act by a pension entity of a pension plan in respect of a tax adjustment note issued to the pension entity, if an eligible amount (as defined in subsection 261.01(1) of the Act) of the pension entity for a particular claim period (as defined in subsection 259(1) of the Act) of the pension entity was included in the determination of the particular amount, if the eligible amount is not included in the determination of the pension rebate amount (as defined in subsection 261.01(1) of the Act) of the pension entity for the particular claim period and if July 23, 2016 is after the last day of the claim period of the pension entity that immediately follows the claim period of the pension entity that includes the day on which the tax adjustment note is issued, then the pension entity is entitled until the day that is one year after the day on which this Act receives royal assent to request in writing that the Minister of National Revenue make an assessment, reassessment or additional assessment for the purpose of taking into account that the eligible amount is not an amount payable under paragraph 232.02(4)(c) of the Act, as amended by subsection (5), and, on receipt of the request and with all due dispatch,
(a) the Minister must consider the request; and
(b) the Minister must under section 296 of the Act assess, reassess or make an additional assessment of the particular amount, and of any interest, penalty or other obligation of the pension entity, solely for the purpose of taking into account that the eligible amount is not an amount payable under that paragraph 232.02(4)(c).
(17) If a particular amount was assessed under section 296 of the Act as an amount payable under paragraph 232.02(4)(d) of the Act by a participating employer of a pension plan in respect of a tax adjustment note that was issued to a pension entity of the pension plan, if an eligible amount (as defined in subsection 261.01(1) of the Act) of the pension entity for a particular claim period (as defined in subsection 259(1) of the Act) of the pension entity was included in the determination of the particular amount, if the eligible amount is not included in the determination of the pension rebate amount (as defined in subsection 261.01(1) of the Act) of the pension entity for the particular claim period and if July 23, 2016 is after the day on which the return is filed under Division V of Part IX of the Act for the reporting period of the participating employer that includes the day on which the tax adjustment note is issued, then the participating employer is entitled until the day that is one year after the day on which this Act receives royal assent to request in writing that the Minister of National Revenue make an assessment, reassessment or additional assessment for the purpose of taking into account that the eligible amount is not an amount payable under paragraph 232.02(4)(d) of the Act, as amended by subsection (8), and, on receipt of the request and with all due dispatch,
(a) the Minister must consider the request; and
(b) the Minister must under section 296 of the Act assess, reassess or make an additional assessment of the particular amount, and of any interest, penalty or other obligation of the participating employer, solely for the purpose of taking into account that the eligible amount is not an amount payable under that paragraph 232.02(4)(d).
134 (1) The portion of subsection 235(1) of the French version of the Act before the formula is replaced by the following:
Taxe nette en cas de location de voiture de tourisme
235 (1) Lorsque la taxe relative aux fournitures d'une voiture de tourisme, effectuées aux termes d'un bail, devient payable par un inscrit, ou est payée par lui sans être devenue payable, au cours de son année d'imposition, et que le total de la contrepartie des fournitures qui serait déductible dans le calcul du revenu de l'inscrit pour l'année pour l'application de la Loi de l'impôt sur le revenu s'il était un contribuable aux termes de cette loi et s'il n'était pas tenu compte de l'article 67.3 de cette loi, excède le montant, relatif à cette contrepartie, qui serait déductible dans le calcul du revenu de l'inscrit pour l'année pour l'application de cette loi s'il était un contribuable aux termes de cette loi et s'il n'était pas tenu compte de l'élément B des formules figurant aux alinéas 7307(1)b) et (3)b) du Règlement de l'impôt sur le revenu, le montant obtenu par la formule ci-après est ajouté dans le calcul de la taxe nette de l'inscrit pour la période de déclaration indiquée :
(2) Subsection (1) applies in respect of reporting periods that end after November 27, 2006 and in respect of any reporting period that ends on or before that day unless
(a) an amount was added pursuant to section 235 of the Act in determining the net tax for the reporting period;
(b) the amount was determined on the basis that the capital cost of the passenger vehicle for the purposes of the Income Tax Act included federal and provincial sales tax; and
(c) the return for the reporting period was filed under Division V of Part IX of the Act on or before that day.
135 Subsection 252.41(3) of the English version of the Act is replaced by the following:
Joint and several liability
(3) If, under subsection (2), a supplier pays to, or credits in favour of, a person an amount on account of a rebate and the supplier knows or ought to know that the person is not entitled to the rebate or that the amount paid or credited exceeds the rebate to which the person is entitled, the supplier and the person are jointly and severally, or solidarily, liable to pay to the Receiver General under section 264 the amount that was paid or credited on account of the rebate or the excess amount, as the case may be.
136 Paragraph 252.5(c) of the English version of the Act is replaced by the following:
(c) if, at the particular time, the registrant knows or ought to know that the person does not satisfy the eligibility condition or that the amount paid or credited exceeds the rebate to which the person is entitled, the registrant and the person are jointly and severally, or solidarily, liable to pay to the Receiver General under section 264 the amount or excess amount, as the case may be, as if it had been paid at the particular time as a rebate under this Division to the registrant and the person, and
137 Subsection 254(6) of the English version of the Act is replaced by the following:
Joint and several liability
(6) If the builder of a single unit residential complex or a residential condominium unit pays or credits a rebate to or in favour of an individual under subsection (4) and the builder knows or ought to know that the individual is not entitled to the rebate or that the amount paid or credited exceeds the rebate to which the individual is entitled, the builder and the individual are jointly and severally, or solidarily, liable to pay the amount of the rebate or excess to the Receiver General under section 264.
138 Subsection 254.1(6) of the English version of the Act is replaced by the following:
Joint and several liability
(6) If the builder of a residential complex pays or credits a rebate under subsection (4) and the builder knows or ought to know that the individual is not entitled to the rebate or that the amount paid or credited exceeds the rebate to which the individual is entitled, the builder and the individual are jointly and severally, or solidarily, liable to pay the amount of the rebate or excess to the Receiver General under section 264.
139 (1) Subsection 259 of the Act is amended by adding the following after subsection (6):
Application for rebate — subsequent claim period
(6.1) If a rebate under this section in respect of property or a service for a particular claim period of a person is not claimed in an application for the particular claim period, the rebate may be claimed by the person in an application for a subsequent claim period of the person if the following conditions are met:
(a) the rebate has not been claimed in any application for any claim period of the person;
(b) the application for the subsequent claim period is filed by the person within two years after
(i) if the person is a registrant, the day on or before which the person is required to file the return under Division V for the particular claim period, and
(ii) if the person is not a registrant, the day that is three months after the last day of the particular claim period;
(c) the person does not, at any time throughout the period (in this subsection referred to as the "specified period") beginning on the first day of the particular claim period and ending on the last day of the subsequent claim period, become or cease to be
(i) a charity,
(ii) a public institution,
(iii) a qualifying non-profit organization,
(iv) a person designated to be a municipality, or
(v) one of the bodies described in paragraphs (a) to (g) of the definition selected public service body in subsection (1); and
(d) throughout the specified period, the percentages — being the specified percentage, the specified provincial percentage or any other percentage specified in this section or in a regulation made under this Part that applies for the purposes of this section — that would be applicable in determining the amount of a rebate under this section in respect of the property or service, if tax in respect of the property or service had become payable and had been paid by the person on each day in the specified period, remain constant.
(2) Subsection (1) applies in respect of subsequent claim periods that end after September 8, 2017.
140 (1) Paragraph (b) of the definition eligible amount in subsection 261.01(1) of the Act is replaced by the following:
(b) is deemed to have been paid by the pension entity under section 172.1 or 172.2 during the claim period. (montant admissible)
(2) The description of B in the definition pension rebate amount in subsection 261.01(1) of the Act is replaced by the following:
B is the amount determined by the formula
G + H
where
G is the total of all amounts, each of which is an eligible amount of the pension entity for the claim period that is described in paragraph (a) of the definition eligible amount, and
H is
(i) if an application for a rebate under subsection (2) for the claim period is filed in accordance with subsection (3), the total amount indicated on the application under subsection (3.1),
(ii) if an election made under subsection (9) for the claim period is filed in accordance with subsection (10), the total amount indicated on the election in accordance with paragraph (10)(c), or
(iii) in any other case, zero. (montant de remboursement de pension)
(3) Section 261.01 of the Act is amended by adding the following after subsection (3):
Application for rebate — pension rebate amount election
(3.1) An application for a rebate under subsection (2) for a claim period of a pension entity shall indicate the total of all amounts, each of which is an eligible amount of the pension entity for the claim period
(a) that is described in paragraph (b) of the definition eligible amount in subsection (1); and
(b) that the pension entity elects to include in the determination of the pension rebate amount of the pension entity for the claim period.
(4) Paragraph 261.01(8)(b) of the Act is replaced by the following:
(b) be filed by the pension entity with the Minister in prescribed manner
(i) at the same time the application for the rebate under subsection (2) for the claim period is filed by the pension entity, and
(ii) within two years after the day that is
(A) if the pension entity is a registrant, the day on or before which the pension entity is required to file a return under Division V for the claim period, and
(B) in any other case, the last day of the claim period;
(5) Subsection 261.01(10) 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) indicate the total of all amounts, each of which is an eligible amount of the pension entity for the claim period
(i) that is described in paragraph (b) of the definition eligible amount in subsection (1), and
(ii) that the pension entity elects to include in the determination of the pension rebate amount of the pension entity for the claim period.
(6) Subsection (1) is deemed to have come into force on July 22, 2016.
(7) Subsections (2), (3) and (5) apply in respect of any claim period of a pension entity beginning after September 22, 2009.
(8) Subsection (4) applies in respect of any election made under subsection 261.01(5) or (6) of the Act other than an election that is filed before July 23, 2016.
141 Subsection 261.31(7) of the English version of the Act is replaced by the following:
Joint and several liability
(7) If an insurer, in determining its net tax for a reporting period, deducts an amount under subsection 234(5) that the insurer paid or credited to a segregated fund of the insurer on account of a rebate under subsection (2) and the insurer knows or ought to know that the segregated fund is not entitled to the rebate or that the amount paid or credited exceeds the rebate to which the segregated fund is entitled, the insurer and the segregated fund are jointly and severally, or solidarily, liable to pay the amount of the rebate or excess to the Receiver General under section 264.
142 (1) The portion of paragraph 266(2)(d) of the English version of the Act before subparagraph (i) is replaced by the following:
(d) the person and the receiver are jointly and severally, or solidarily, liable for the payment or remittance of all amounts that become payable or remittable by the person under this Part before or during the period during which the receiver is acting as receiver of the person to the extent that the amounts can reasonably be considered to relate to the relevant assets of the receiver or to the businesses, properties, affairs or assets of the person that would have been the relevant assets of the receiver if the receiver had been acting as receiver of the person at the time the amounts became payable or remittable, as the case may be, except that
(2) Subparagraph 266(2)(d)(iii) of the Act is replaced by the following:
(iii) the payment or remittance by the person or the receiver of an amount in respect of the liability shall discharge their liability to the extent of that amount;
143 (1) The portion of subsection 267.1(3) of the English version of the Act before paragraph (a) is replaced by the following:
Joint and several liability
(3) A trustee of a trust is jointly and severally, or solidarily, liable with the trust and each of the other trustees, if any, for the payment or remittance of all amounts that become payable or remittable by the trust under this Part before or during the period during which the trustee acts as trustee of the trust except that
(2) Paragraph 267.1(3)(b) of the Act is replaced by the following:
(b) the payment or remittance by the trust or the trustee of an amount in respect of the liability discharges their liability to the extent of that amount.
144 (1) The portion of subsection 272.1(5) of the English version of the Act before paragraph (a) is replaced by the following:
Joint and several liability
(5) A partnership and each member or former member (each of which is referred to in this subsection as the "member") of the partnership (other than a member who is a limited partner and is not a general partner) are jointly and severally, or solidarily, liable for
(2) Subparagraph 272.1(5)(a)(ii) of the Act is replaced by the following:
(ii) the payment or remittance by the partnership or by any member thereof of an amount in respect of the liability discharges their liability to the extent of that amount; and
145 Subsection 273.1(6) of the French version of the Act is replaced by the following:
Opérations entre personnes ayant un lien de dépendance
(6) Lorsqu'il s'agit de déterminer le pourcentage de recettes d'exportation d'une personne donnée ou l'un des montants prévus aux paragraphes (2) à (5) relativement à des stocks finis d'une personne donnée ou à des produits de clients qui la concernent, dans le cas où une fourniture est effectuée sans contrepartie ou pour une contrepartie inférieure à la juste valeur marchande entre la personne donnée et une autre personne avec laquelle elle a un lien de dépendance et où tout ou partie de la contrepartie de la fourniture serait incluse dans le calcul du revenu tiré d'une entreprise de la personne donnée pour une année, la fourniture est réputée avoir été effectuée pour une contrepartie égale à la juste valeur marchande, et cette contrepartie est réputée être incluse dans le calcul du revenu en question.
146 The portion of subsection 289(3) of the Act before paragraph (a) is replaced by the following:
Judicial authorization
(3) A judge of the Federal Court may, on application by the Minister and subject to any conditions that the judge considers appropriate, authorize the Minister to impose on a third party a requirement under subsection (1) relating to an unnamed person or more than one unnamed person (in this subsection referred to as the "group") if the judge is satisfied by information on oath that
147 (1) Paragraph 296(1)(d) of the Act is replaced by the following:
(d) any amount payable by a person under any of paragraphs 228(2.1)(b) and (2.3)(d), section 230.1 and paragraphs 232.01(5)(c) and 232.02(4)(c), and
(2) Subsection (1) is deemed to have come into force on September 23, 2009.
148 (1) Paragraph 298(1)(a.1) of the Act is replaced by the following:
(a.1) in the case of an assessment of an amount payable under paragraph 228(2.1)(b) or (2.3)(d), 232.01(5)(c) or 232.02(4)(c) that a person is required to pay on or before a day, more than four years after that day;
(2) Subsection (1) is deemed to have come into force on September 23, 2009.
149 Subparagraph 304(5)(b)(iv) of the French version of the Act is repealed.
150 (1) The portion of subsection 324(1) of the English version of the Act before paragraph (a) is replaced by the following:
Compliance by unincorporated bodies
324 (1) If any amount is required to be paid or remitted or any other thing is required to be done by or under this Part or the regulations made under this Part by a person (in this section referred to as the "body") that is not an individual, corporation, partnership, trust or estate, it shall be the joint and several, or solidary, liability and responsibility of
(2) Paragraphs 324(3)(a) to (c) of the English version of the Act are replaced by the following:
(a) include any amount that the body was liable to pay or remit before the day the person became jointly and severally, or solidarily, liable;
(b) include any amount that the body became liable to pay or remit after the day the person ceased to be jointly and severally, or solidarily, liable; or
(c) be made more than two years after the day the person ceased to be jointly and severally, or solidarily, liable unless the person was grossly negligent in the carrying out of any duty or obligation imposed on the body by or under this Part or made, or participated in, assented to or acquiesced in the making of, a false statement or omission in a return, application, form, certificate, statement, invoice or answer made by the body.
151 (1) The portion of subsection 325(1) of the English version of the Act after paragraph (c) and before paragraph (d) is replaced by the following:
the transferee and transferor are jointly and severally, or solidarily, liable to pay under this Part an amount equal to the lesser of
(2) Subsection 325(2) of the French version of the Act is replaced by the following:
Cotisation
(2) Le ministre peut, en tout temps, établir une cotisation à l'égard d'un cessionnaire pour tout montant payable en application du présent article. Dès lors, les articles 296 à 311 s'appliquent, compte tenu des adaptations de circonstance.
(3) The portion of subsection 325(3) of the Act before paragraph (b) is replaced by the following:
Discharge of liability
(3) If a transferor and transferee have, by reason of subsection (1), become jointly and severally, or solidarily, liable in respect of part or all of the liability of the transferor under this Part, the following rules apply:
(a) a payment by the transferee on account of the transferee's liability shall, to the extent of the payment, discharge their liability; and
(4) Paragraph 325(3)(b) of the English version of the Act is replaced by the following:
(b) a payment by the transferor on account of the transferor's liability only discharges the transferee's liability to the extent that the payment operates to reduce the transferor's liability to an amount less than the amount in respect of which the transferee was, by subsection (1), made jointly and severally, or solidarily, liable.
152 (1) Subsections 335(6) and (7) of the Act are replaced by the following:
Proof of no appeal
(6) An affidavit of an officer of the Canada Revenue Agency or the Canada Border Services Agency, sworn before a commissioner or other person authorized to take affidavits, setting out that the officer has charge of the appropriate records and has knowledge of the practice of the Canada Revenue Agency or the Canada Border Services Agency, as the case may be, and that an examination of the records shows that a notice of assessment was mailed or otherwise sent to a person on a particular day under this Part and that, after careful examination and search of the records, the officer has been unable to find that a notice of objection or of appeal from the assessment, as the case may be, was received within the time allowed, is evidence of the statements contained in the affidavit.
Presumption
(7) If evidence is offered under this section by an affidavit from which it appears that the person making the affidavit is an officer of the Canada Revenue Agency or the Canada Border Services Agency, as the case may be, it is not necessary to prove the signature of the person or that the person is such an officer, nor is it necessary to prove the signature or official character of the person before whom the affidavit was sworn.
(2) Subsection 335(10) of the Act is replaced by the following:
Mailing or sending date
(10) For the purposes of this Part, if any notice or demand that the Minister is required or authorized under this Part to send to a person is mailed, or sent electronically, to the person, the day of mailing or sending, as the case may be, shall be presumed to be the date of the notice or demand.
(3) Subsection 335(10.1) of the French version of the Act is replaced by the following:
Date d'envoi d'un avis électronique
(10.1) Pour l'application de la présente partie, tout avis ou autre communication concernant une personne qui est rendu disponible sous une forme électronique pouvant être lue ou perçue par une personne ou par un système informatique ou un dispositif semblable est présumé être envoyé à la personne, et être reçu par elle, à la date où un message électronique est envoyé — à l'adresse électronique la plus récente que la personne a fournie avant cette date au ministre pour l'application du présent paragraphe — pour l'informer qu'un avis ou une autre communication nécessitant son attention immédiate se trouve dans son compte électronique sécurisé. Un avis ou une autre communication est considéré comme étant rendu disponible s'il est affiché par le ministre sur le compte électronique sécurisé de la personne et si celle-ci a donné son autorisation pour que des avis ou d'autres communications soient rendus disponibles de cette manière et n'a pas retiré cette autorisation avant cette date selon les modalités fixées par le ministre.
153 (1) The definitions municipal transit service and transit authority in section 1 of Part VI of Schedule V to the Act are replaced by the following:
municipal transit service means a public passenger transportation service (other than a charter service or a service that is part of a tour), or a right that exclusively entitles an individual to use the service, that is supplied by a transit authority;
transit authority means an entity that meets the following conditions:
(a) the entity is
(i) a division, department or agency of a government, municipality or school authority, the primary purpose of which is to supply public passenger transportation services, or
(ii) a non-profit organization that
(A) receives funding from a government, municipality or school authority to support the supply of public passenger transportation services, or
(B) is established and operated for the purpose of providing public passenger transportation services to individuals with a disability, and
(b) all or substantially all of the supplies made by the entity are
(i) supplies of public passenger transportation services provided within a particular municipality and its environs, or
(ii) supplies of rights for individuals to use public passenger transportation services referred to in subparagraph (i);
(2) Subsection (1) applies to
(a) any supply made after July 22, 2016; and
(b) any supply made on or before July 22, 2016 unless, on or before that day, an amount was charged, collected or remitted in respect of the supply as or on account of tax under Part IX of the Act.
154 Paragraphs 20(f) to (i) of Part VI of Schedule V to the French version of the Act are replaced by the following:
f) la fourniture de services qui consistent à donner des renseignements en vertu de la Loi sur la protection des renseignements personnels, de la Loi sur l'accès à l'information ou d'une loi provinciale semblable;
g) la fourniture de services de police ou d'incendie effectuée au profit d'un gouvernement ou d'une municipalité, ou d'une commission ou autre organisme établi par ceux-ci;
h) la fourniture de services de collecte des ordures, y compris les matières recyclables;
i) la fourniture d'un droit de laisser des ordures à un lieu destiné à les recevoir.
155 (1) Section 24 of Part VI of Schedule V to the Act is replaced by the following:
24 A supply (other than a supply made to a transit authority) of
(a) a municipal transit service;
(b) a right that exclusively entitles an individual to use a public passenger transportation service (other than a charter service or a service that is part of a tour) that is operated by a transit authority;
(c) a public passenger transportation service designated by the Minister to be a municipal transit service; or
(d) a right that exclusively entitles an individual to use a public passenger transportation service referred to in paragraph (c).
24.1 A supply made to a particular transit authority of intangible personal property that is a right evidenced by a ticket, pass, voucher, or other similar physical or electronic media, if
(a) the property exclusively entitles an individual to use a public passenger transportation service (other than a charter service or a service that is part of a tour) that is operated by another transit authority, or to use a public passenger transportation service designated by the Minister to be a municipal transit service under paragraph 24(c), and the particular transit authority acquires the property exclusively for the purpose of making a supply of the property; or
(b) the property exclusively entitles an individual to use a public passenger transportation service (other than a charter service or a service that is part of a tour) that is operated by the particular transit authority and the particular transit authority previously supplied the property.
(2) Subsection (1) applies to
(a) any supply made after July 22, 2016; and
(b) any supply made on or before July 22, 2016 unless, on or before that day, an amount was charged, collected or remitted in respect of the supply as or on account of tax under Part IX of the Act.
156 Section 26 of Part VI of Schedule V to the French version of the Act is replaced by the following:
26 Une fourniture, effectuée par un organisme à but non lucratif constitué principalement au profit d'une organisation syndicale, au profit d'un des organismes suivants ou une fourniture effectuée par un de ceux-ci au profit d'un tel organisme à but non lucratif :
a) un syndicat, une association ou un organisme, visé aux alinéas 189a) à c) de la loi, qui est membre de l'organisme à but non lucratif ou y est affilié;
b) un autre organisme à but non lucratif constitué principalement au profit d'une organisation syndicale.
157 Paragraph 3(b) of Schedule VII to the French version of the Act is replaced by the following:
b) sont importés par une chambre de commerce, une association municipale, une association d'automobilistes ou un organisme semblable auxquels ils ont été fournis sans contrepartie, mis à part les frais d'expédition et de manutention.
158 Sections 5 and 5.1 of Schedule VII to the French version of the Act are replaced by the following:
5 Les produits importés par une personne, qui lui sont fournis par une personne non-résidente sans contrepartie, mis à part les frais de manutention et d'expédition, et qui sont des pièces de rechange ou des biens de remplacement visés par une garantie.
5.1 Les produits importés dans l'unique but de remplir une obligation, prévue par une garantie, de réparer ou de remplacer les produits défectueux, à condition que les produits de remplacement soient fournis sans contrepartie, mis à part les frais d'expédition et de manutention, et exportés sans être consommés ou utilisés au Canada, sauf dans la mesure qu'il est raisonnable de considérer comme nécessaire ou accessoire à leur transport.
159 Paragraph 12(b) of Part I of Schedule X to the French version of the Act is replaced by the following:
b) par une chambre de commerce, une association municipale, une association d'automobilistes ou un organisme semblable auxquels ils ont été fournis sans contrepartie, mis à part les frais de manutention et d'expédition.
160 Section 14 of Part I of Schedule X to the French version of the Act is replaced by the following:
14 Les biens transférés dans une province participante par une personne, qui lui sont fournis sans contrepartie, mis à part les frais de manutention et d'expédition, et qui sont des pièces de rechange ou des biens de remplacement visés par une garantie.
161 The Act is amended by replacing "Agency" with "Canada Revenue Agency" in the following provisions:
(a) subsection 276(1);
(b) subsection 291(1);
(c) subparagraph 295(5)(d)(ix);
(d) subsection 303(3);
(e) subsection 332(1); and
(f) subsections 335(1) to (5) and (14).
162 The French version of the Act is amended by replacing "mandataire désigné" with "mandataire de la Couronne désigné" in the following provisions:
(a) the definition mandataire désigné in subsection 123(1);
(b) clause 200(4)(a)(i)(A);
(c) subsection 209(2); and
(d) paragraph 273(1.1)(a).
SOR/91-37; SOR/2010-152, s. 3
Public Service Body Rebate (GST/HST) Regulations
163 Section 2.1 of the French version of the Public Service Body Rebate (GST/HST) Regulations is amended by replacing "mandataire déterminé" with "mandataire de la Couronne désigné".
SOR/99-175
Specified Crown Agents (GST/HST) Regulations
164 The French version of the Specified Crown Agents (GST/HST) Regulations is amended by replacing "mandataire désigné" and "mandataires désignés" with "mandataire de la Couronne désigné" and "mandataires de la Couronne désignés", respectively, in the following provisions:
(a) the title; and
(b) section 1 and the heading before it.
PART 3
R.S., c. E-14
Excise Act
165 (1) The Excise Act is amended by adding the following after section 1.1:
Non-application — transformation of beer concentrate
1.2 (1) This Act does not apply to the transformation, by dilution or hydration, of beer concentrate into beer for consumption as a beverage on the premises where it is transformed if the transformation is done in a manner approved by the Minister.
Meaning of beer
(2) For the purposes of subsection (1), beer means a product that would be beer or malt liquor, as defined in section 4, if that definition were read without reference to its paragraph (b).
(2) Subsection (1) is deemed to have come into force on June 5, 2017.
166 (1) The definition beer or malt liquor in section 4 of the Act is replaced by the following:
beer or malt liquor means any product (other than wine, as defined in section 2 of the Excise Act, 2001) that is
(a) a fermented liquor that is brewed in whole or in part from malt, grain or any saccharine matter without any process of distillation and that has an alcoholic strength not in excess of 11.9% absolute ethyl alcohol by volume, or
(b) beer concentrate; (bière ou liqueur de malt)
(2) Section 4 of the Act is amended by adding the following in alphabetical order:
beer concentrate means any product
(a) that has an alcoholic strength in excess of 11.9% absolute ethyl alcohol by volume,
(b) that is either
(i) made by dehydrating a fermented liquor (other than wine, as defined in section 2 of the Excise Act, 2001) that is brewed in whole or in part from malt, grain or any saccharine matter without any process of distillation and that has an alcoholic strength not in excess of 11.9% absolute ethyl alcohol by volume, or
(ii) intended, before being offered for consumption as a beverage, to be transformed by dilution or hydration into a fermented liquor (other than wine, as defined in section 2 of the Excise Act, 2001) that has an alcoholic strength not in excess of 11.9% absolute ethyl alcohol by volume, if the production of the product
(A) involves in whole or in part brewing malt, grain or any saccharine matter, and
(B) does not involve any process of distillation,
(c) that is not intended or marketed for consumption as a beverage without further transformation on the premises where it is to be consumed as a beverage, and
(d) for which the manner of the further transformation is approved by the Minister; (concentré de bière)
(3) Subsections (1) and (2) are deemed to have come into force on June 5, 2017.
167 (1) Subsection 170(1) of the Act is replaced by the following:
Duties — beer or malt liquor
170 (1) There shall be imposed, levied and collected on every hectolitre of beer or malt liquor, other than beer concentrate, the duties of excise set out in Part II of the schedule, which duties shall be paid to the collector as provided in this Act.
Duties — beer concentrate
(1.1) There shall be imposed, levied and collected, and paid to the collector as provided in this Act, on beer concentrate the duties of excise determined by the following formula:
A × B × C
where
A is the quantity in litres of beer concentrate,
B is the maximum quantity, determined in hectolitres, of any particular beer product that can be transformed in a manner approved by the Minister from a litre of that beer concentrate, and
C is the rate of duties of excise set out in Part II of the schedule that is applicable in respect of a hectolitre of that particular beer product.
(2) Subsection (1) is deemed to have come into force on June 5, 2017.
168 (1) Section 170.1 of the Act is amended by adding the following after subsection (1):
Exclusion — beer concentrate
(1.1) Despite subsection (1), the duties of excise set out in Part II.1 of the schedule do not apply to beer concentrate or beer transformed from beer concentrate and that beer concentrate or beer transformed from beer concentrate does not count toward the determination under subsection (1) of the first 75,000 hectolitres of beer and malt liquor brewed in Canada per year.
(2) Subsection (1) is deemed to have come into force on June 5, 2017.
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