C-457
First Session, Thirty-ninth Parliament,
55-56 Elizabeth II, 2006-2007
HOUSE OF COMMONS OF CANADA
BILL C-457
An Act to amend the Income Tax Act (interest rates on debts owed) and to make a consequential amendment to the Income Tax Regulations
first reading, June 12, 2007
Mr. Pallister
391571
SUMMARY
This enactment provides for the rates of interest to be paid in certain circumstances when money is owed to the Receiver General or to the taxpayer.
Also available on the Parliament of Canada Web Site at the following address:http://www.parl.gc.ca
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1st Session, 39th Parliament,
55-56 Elizabeth II, 2006-2007
house of commons of canada
BILL C-457
An Act to amend the Income Tax Act (interest rates on debts owed) and to make a consequential amendment to the Income Tax Regulations
Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:
R.S., c. 1 (5th Supp.)
INCOME TAX ACT
1. The Income Tax Act is amended by adding the following after section 227:
Rate of interest — quarterly
227.01 (1) Subject to subsection (2), for the purposes of
(a) every provision of this Act that requires interest at a prescribed rate to be paid to the Receiver General, the prescribed rate in effect during any particular quarter is the total of
(i) the rate that is the simple arithmetic mean, expressed as a percentage per year and rounded to the next higher whole percentage where the mean is not a whole percentage, of all amounts each of which is the average equivalent yield, expressed as a percentage per year, of Government of Canada Treasury Bills that mature approximately three months after their date of issue and that are sold at auctions of Government of Canada Treasury Bills during the first month of the quarter preceding the particular quarter, and
(ii) 4%;
(b) every provision of this Act that requires interest at a prescribed rate to be paid or applied on an amount payable by the Minister to a taxpayer, the prescribed rate in effect during any particular quarter is the total of
(i) the rate determined under subparagraph (a)(i) in respect of the particular quarter, and
(ii) 4%; and
(c) every other provision of this Act in which reference is made to a prescribed rate of interest or to interest at a prescribed rate, the prescribed rate in effect during any particular quarter is the rate determined under subparagraph (a)(i) in respect of the particular quarter.
Rate of interest — monthly
(2) For the purposes of paragraph 16.1(1)(d) of this Act and subsection 1100(1.1) of the Income Tax Regulations, the interest rate in effect during any month is the rate that is one percentage point greater than the rate that was, during the month before the immediately preceding month, the average yield, expressed as a percentage per year rounded to two decimal points, prevailing on all outstanding domestic Canadian-dollar Government of Canada bonds on the last Wednesday of that month with a remaining term to maturity of over 10 years, as first published by the Bank of Canada.
2. Paragraph (b) of the definition “prescribed” in section 248 of the Act is replaced by the following:
(b) in any other case, prescribed by this Act or by regulation or determined in accordance with rules prescribed by regulation;
C.R.C., c. 945
INCOME TAX REGULATIONS
3. Clause 1100(1.1)(a)(i)(B) of the Income Tax Regulations is replaced by the following :
(B) interest had been charged on the principal amount of the loan outstanding from 
time to time at the rate, determined in accordance with section 227.01 of the Act,
in effect at the earlier of
(I) the time, if any, before the time referred to in subclause (II), at which the 
taxpayer last entered into an agreement to lease the property, and
(II) the time that the property last became a specified leasing property
(or, where a particular lease provides that the amount paid or payable by the 
lessee of the property for the use of, or the right to use, the property varies 
according to prevailing interest rates in effect from time to time, and the taxpayer 
so elects, in respect of all of the property that is the subject of the particular lease, 
in the taxpayer's return of income under Part I of the Act for the taxation year of 
the taxpayer in which the particular lease was entered into, the rate determined in 
accordance with section 227.01 of the Act that is in effect at the 
beginning of the period for which the interest is being calculated), compounded 
semi-annually not in advance, and
4. The description of “A” in section 2410 of the Regulations is replaced by the following:
A      is the average annual rate of interest determined by reference to rates of interest prescribed in section 227.01 of the Act for the months or portion thereof in the period;
5. Sections 4301 and 4302 of the Regulations are repealed.
Published under authority of the Speaker of the House of CommonsAvailable from:Publishing and Depository ServicesPublic Works and Government Services Canada