Income Tax Act — I-3.3 74.5
ear. Idem (4) No amount shall be included in computing the income of an individual under subsection 74.4(2) in respect of a designated person in respect of the individual who is the spouse or common-law partner of the individual for any period throughout which the individual is living separate and apart from the designated person by reason of a breakdown of their marriage or common-law partnership. Definition of designated person (5) For the purposes of this section, designated person , in respect of an individual, means a person (a) who is the spouse or common-law partner of the individual; or (b) who is under 18 years of age and who (i) does not deal with the individual at arm’s length, or (ii) is the niece or nephew of the individual. Back to back loans and transfers (6) Where an individual has lent or transferred property (a) to another person and that property, or property substituted therefor, is lent or transferred by any person (in this subsection referred to as a “third party”) directly or indirectly to or for the benefit of a specified person with respect to the individual, or (b) to another person on condition that property be lent or transferred by any person (in this subsection referred to as a “third party”) directly or indirectly to or for the benefit of a specified person with respect to the individual, the following rules apply: (c) for the purposes of sections 74.1, 74.2, 74.3 and 74.4, the property lent or transferred by the third party shall be deemed to have been lent or transferred, as the case may be, by the individual to or for the benefit of the specified person, and (d) for the purposes of subsection 74.5(1), the consideration received by the third party for the transfer of the property shall be deemed to have been received by the individual. Guarantees (7) Where an individual is obligated, either absolutely or contingently, to effect any undertaking including any guarantee, covenant or agreement given to ensure the repayment, in whole or in part, of a loan made by any person (in this subsection referred to as the “third party”) directly or indirectly to or for the benefit of a specified person with respect to the individual or the payment, in whole or in part, of any interest payable in respect of the loan, the following rules apply: (a) for the purposes of sections 74.1, 74.2, 74.3 and 74.4, the property lent by the third party shall be deemed to have been lent by the individual to or for the benefit of the specified person; and (b) for the purposes of paragraphs 74.5(2)(b) and (c), the amount of interest that is paid in respect of the loan shall be deemed not to include any amount paid by the individual to the third party as interest on the loan. Definition of specified person (8) For the purposes of subsections 74.5(6) and (7), specified person , with respect to an individual, means (a) a designated person in respect of the individual; or (b) a corporation, other than a small business corporation, of which a designated person in respect of the individual would have been a specified shareholder if the definition specified shareholder in subsection 248(1) were read without reference to paragraphs (a) and (d) of that definition. Transfers or loans to a trust (9) Where a taxpayer has lent or transferred property, either directly or indirectly, by means of a trust or by any other means whatever, to a trust in which another taxpayer is beneficially interested, the taxpayer shall, for the purposes of this section and sections 74.1 to 74.4, be deemed to have lent or transferred the property, as the case may be, to or for the benefit of the other taxpayer. (10) [Repealed, 1994, c. 7, Sch. VIII, s. 30] Artificial transactions (11) Notwithstanding any other provision of this Act, sections 74.1 to 74.4 do not apply to a transfer or loan of property where it may reasonably be concluded that one of the main reasons for the transfer or loan was to reduce the amount of tax that would, but for this subsection, be