Income Tax Act — I-3.3 120.4
Definitions 120.4 (1) The definitions in this subsection apply in this section. arm’s length capital , of a specified individual, means property of the individual if the property, or property for which it is a substitute, was not (a) acquired as income from, or a taxable capital gain or profit from the disposition of, another property that was derived directly or indirectly from a related business in respect of the specified individual; (b) borrowed by the specified individual under a loan or other indebtedness; or (c) transferred, directly or indirectly by any means whatever, to the specified individual from a person who was related to the specified individual (other than as a consequence of the death of a person). ( capital indépendant ) excluded amount , in respect of an individual for a taxation year, means an amount that is the individual’s income for the year from, or the individual’s taxable capital gain or profit for the year from the disposition of, a property to the extent that the amount (a) if the individual has not attained the age of 24 years before the year, is from a property that was acquired by, or for the benefit of, the individual as a consequence of the death of a person who is (i) a parent of the individual, or (ii) any person, if the individual is (A) enrolled as a full-time student during the year at a post-secondary educational institution (as defined in subsection 146.1(1)), or (B) an individual in respect of whom an amount may be deducted under section 118.3 in computing a taxpayer’s tax payable under this Part for the year; (b) is from a property acquired by the individual under a transfer described in subsection 160(4); (c) is a taxable capital gain that arises because of subsection 70(5); (d) is a taxable capital gain for the year from the disposition by the individual of property that is, at the time of the disposition, qualified farm or fishing property or qualified small business corporation shares (as those terms are defined in subsection 110.6(1)), unless the amount would be deemed to be a dividend under subsection 120.4(4) or (5) if this definition were read without reference to this paragraph; (e) if the individual has attained the age of 17 years before the year, is (i) not derived directly or indirectly from a related business in respect of the individual for the year, or (ii) derived directly or indirectly from an excluded business of the individual for the year; (f) if the individual has attained the age of 17 years but not the age of 24 years before the year, is (i) a safe harbour capital return of the individual, or (ii) a reasonable return in respect of the individual, having regard only to the contributions of arm’s length capital by the individual; or (g) if the individual has attained the age of 24 years before the year, is (i) income from, or a taxable capital gain from the disposition of, excluded shares of the individual, or (ii) a reasonable return in respect of the individual. ( montant exclu ) excluded business , of a specified individual for a taxation year, means a business if the specified individual is actively engaged on a regular, continuous and substantial basis in the activities of the business in either (a) the taxation year, except in respect of an amount described in paragraph (e) of the definition split income ; or (b) any five prior taxation years of the specified individual. ( entreprise exclue ) excluded shares , of a specified individual at any time, means shares of the capital stock of a corporation owned by the specified individual if (a) the following conditions are met: (i) less than 90% of the business income of the corporation for the last taxation year of the corporation that ends at or before that time (or, if no such taxation year exists, for the taxation year of the corporation that includes that time) was from the provision of services, and (ii) the corporation is not a professional corporation; (b) immediately before that time, the specified indiv