Second Session, Thirty-ninth Parliament,
56 Elizabeth II, 2007
STATUTES OF CANADA 2007CHAPTER 35
An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007 and to implement certain provisions of the economic statement tabled in Parliament on October 30, 2007
ASSENTED TO
14th DECEMBER, 2007
BILL C-28
RECOMMENDATION
Her Excellency the Governor General recommends to the House of Commons the appropriation of public revenue under the circumstances, in the manner and for the purposes set out in a measure entitled “An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007 and to implement certain provisions of the economic statement tabled in Parliament on October 30, 2007”.
SUMMARY
Part 1 implements goods and services tax and harmonized sales tax (GST/HST) measures proposed in the March 19, 2007 Budget but not included in the Budget Implementation Act, 2007, which received Royal Assent on June 22, 2007. Specifically, the Excise Tax Act is amended to
(a) increase the percentage of available input tax credits for GST/HST paid on meal expenses of truck drivers from 50% to 80% over five years beginning with expenses incurred on or after March 19, 2007;
(b) increase the GST/HST annual filing threshold from $500,000 in taxable supplies to $1,500,000 and the annual remittance threshold from $1,500 to $3,000, both effective for fiscal years that begin after 2007;
(c) increase the GST/HST 48-hour travellers’ exemption from $200 to $400 effective in respect of travellers returning to Canada on or after March 20, 2007; and
(d) implement changes to the rules governing self-assessment under Division IV of Part IX of the Excise Tax Act to ensure that GST/HST applies appropriately in respect of intangible personal property acquired on a zero-rated basis and consumed in furthering domestic activities, applicable to supplies made after March 19, 2007.
Part 2 amends the non-GST portion of the Excise Tax Act to implement measures announced in the March 19, 2007 Budget. Specifically, the excise tax exemptions for renewable fuels, including ethanol and bio-diesel, are repealed, effective April 1, 2008.
Part 3 implements income tax measures proposed in the March 19, 2007 Budget but not included in the Budget Implementation Act, 2007, which received Royal Assent on June 22, 2007. In particular, it
(a) introduces a new Working Income Tax Benefit;
(b) eliminates income tax on elementary and secondary school scholarships;
(c) eliminates capital gains tax on donations of publicly-listed securities to private foundations;
(d) enhances the child fitness tax credit;
(e) expands the scope of the public transit tax credit;
(f) increases the lifetime capital gains exemption to $750,000;
(g) increases the deductible percentage of meal expenses for long-haul truck drivers;
(h) provides tax relief in respect of the 2010 Winter Olympic and Paralympic Games;
(i) allows for phased-retirement options for pension plans;
(j) extends the mineral exploration tax credit;
(k) enhances tax benefits for donations of medicine to the developing world;
(l) streamlines the process for prescribed stock exchanges;
(m) introduces an investment tax credit for child care spaces;
(n) introduces a new withholding tax exemption with respect to certain cross-border interest payments;
(o) prevents double deductions of interest expense on borrowed money used to finance foreign affiliates (the Anti-Tax-Haven Initiative);
(p) eases tax remittance and filing requirements for small business;
(q) introduces a mechanism to accommodate functional currency reporting;
(r) provides certain tobacco processors that do not manufacture tobacco products with relief from the Tobacco Manufacturers’ Surtax; and
(s) provides authority for regulations requiring the disclosure by publicly traded trusts and partnerships of information enabling investment managers to prepare the tax information slips that they are required to issue to investors on a timely basis.
Part 4 implements the disability savings measures proposed in the March 19, 2007 Budget. The measures are intended to support long-term savings through registered disability savings plans to provide for the financial security of persons with severe and prolonged impairments in physical or mental functions. Part 4 contains amendments to the Income Tax Act to allow for the creation of registered disability savings plans. It also enacts the Canada Disability Savings Act. That Act provides for the payment of Canada Disability Savings Grants in relation to contributions made to those plans. The amount of grant is increased for persons of lower and middle income. It also provides for the payment of Canada Disability Savings Bonds in respect of persons of low income.
Part 5 implements measures that provide for payments to be made to provinces as a financial incentive for them to eliminate taxes on capital under certain circumstances.
Part 6 enacts the Bank for International Settlements (Immunity) Act.
Part 7 amends the Pension Benefits Standards Act, 1985 to permit phased retirement arrangements in federally regulated pension plans by allowing an employer to simultaneously pay a partial pension to an employee and provide further pension benefit accruals to the employee. These amendments are consistent with amendments to the Income Tax Regulations to permit phased retirement.
Part 8 authorizes payments to be made out of the Consolidated Revenue Fund for the purpose of Canada’s contribution to the Advance Market Commitment.
Part 9 amends the Canada Oil and Gas Operations Act to authorize the National Energy Board to regulate traffic, tolls and tariffs in relation to oil and gas pipelines regulated under that Act.
Part 10 amends the Farm Income Protection Act to allow financial institutions to hold contributions under a net income stabilization account program.
Part 11 amends the Federal-Provincial Fiscal Arrangements Act to provide for an additional fiscal equalization payment that may be paid to Nova Scotia and Newfoundland and Labrador. This Part also specifies the time and manner in which the calculation of fiscal equalization payments will be made and it amends that Act’s regulation-making authority. In addition, this Part makes consequential amendments to other Acts.
Part 12 amends the Canada Education Savings Act to clarify the authority of the Minister of Human Resources and Social Development to collect, on behalf of the Canada Revenue Agency, any information that the Canada Revenue Agency requires for purposes of administering the registered education savings plan tax provisions.
Part 13 authorizes payments to be made out of the Consolidated Revenue Fund to an entity, designated by the Minister of Finance, to facilitate public-private partnership projects.
Part 14 implements tax measures proposed in the October 30, 2007 Economic Statement. With respect to income tax measures, it
(a) reduces the general corporate income tax rate;
(b) accelerates the tax reduction for small businesses;
(c) reduces the lowest personal income tax rate, which automatically reduces the rate used to calculate non-refundable tax credits and the alternative minimum tax; and
(d) increases the basic personal amount and the amount upon which the spouse or common-law partner and wholly dependent relative credits are calculated.
Part 14 also amends the Excise Tax Act to implement, effective January 1, 2008, the reduction in the goods and services tax (GST) and the federal component of the harmonized sales tax (HST) from 6% to 5%. That Act is amended to provide transitional rules for determining the GST/HST rate applicable to transactions that straddle the January 1, 2008, implementation date, including transitional rebates in respect of the sale of residential complexes where transfer of ownership and possession both take place on or after January 1, 2008, pursuant to a written agreement entered into on or before October 30, 2007. The Excise Act, 2001 is also amended to increase excise duties on tobacco products to offset the impact of the GST/HST rate reduction. The Air Travellers Security Charge Act is also amended to ensure that rates for domestic and transborder air travel reflect the impact of the GST/HST rate reduction. Those amendments generally apply as of January 1, 2008.
Also available on the Parliament of Canada Web Site at the following address:http://www.parl.gc.ca
TABLE OF PROVISIONS
AN ACT TO IMPLEMENT CERTAIN PROVISIONS OF THE BUDGET TABLED IN PARLIAMENT ON MARCH 19, 2007 AND TO IMPLEMENT CERTAIN PROVISIONS OF THE ECONOMIC STATEMENT TABLED IN PARLIAMENT ON OCTOBER 30, 2007
SHORT TITLE
1.       Budget and Economic Statement Implementation Act, 2007
PART 1
AMENDMENTS IN RESPECT OF THE GOODS AND SERVICES TAX/HARMONIZED SALES TAX
2-7.       Excise Tax Act
PART 2
AMENDMENT RELATING TO EXCISE TAX ON RENEWABLE FUELS
8.       Excise Tax Act
PART 3
AMENDMENTS RELATING TO INCOME TAX
Income Tax Act
9-68.       Amendments
Income Tax Application Rules
69.       Amendment
Income Tax Conventions Interpretation Act
70.       Amendment
Income Tax Regulations
71-89.       Amendments
Canada Pension Plan Regulations
90.       Amendment
Insurable Earnings and Collection of Premiums Regulations
91.       Amendment
Coordinating Amendments
92-100.       Bill C-10
PART 4
DISABILITY SAVINGS
Amendments Relating To Income Tax
Income Tax Act
101-124.       Amendments
Income Tax Regulations
125-127.       Amendments
Consequential Amendments
128.       Employment Insurance Act
129.       Old Age Security Act
Coordinating Amendments
130-134.       Bill C-10
Application
135.       Application
Canada Disability Savings Act
Enactment of Act
136.       Enactment of Act
AN ACT TO ENCOURAGE SAVINGS FOR PERSONS WITH DISABILITIES
SHORT TITLE
1.       Canada Disability Savings Act
INTERPRETATION
2.       Definitions
PURPOSE
3.       Purpose
MINISTER
4.       Designation of Minister
5.       Informing Canadians
PAYMENTS
6.       Canada Disability Savings Grants
7.       Canada Disability Savings Bonds
8.       Payment
9.       Interest
10.       Payments out of CRF
11.       Waiver
GENERAL
12.       Debt due to Her Majesty
13.       Deduction and set-off by the Minister
14.       Limitation or prescription period
15.       Collection of information
16.       Notification by Minister of National Revenue
17.       Regulations
Consequential Amendment to the Children’s Special Allowances Act
137.       Amendment
Coming into Force
138.       Order in council
PART 5
INCENTIVE FOR PROVINCES TO ELIMINATE TAXES ON CAPITAL
139.       Federal-Provincial Fiscal Arrangements Act
PART 6
BANK FOR INTERNATIONAL SETTLEMENTS (IMMUNITY) ACT
140.       Enactment of Act
AN ACT TO PROVIDE IMMUNITY TO THE BANK FOR INTERNATIONAL SETTLEMENTS FROM GOVERNMENT MEASURES AND FROM CIVIL JUDICIAL PROCESS
1.       Bank for International Settlements (Immunity) Act
2.       Immunity — government measures
3.       Immunity — judicial process
4.       Non-application of sections 2 and 3
PART 7
PHASED RETIREMENT — AMENDMENTS OTHER THAN THOSE CONCERNING INCOME TAX
Pension Benefits Standards Act, 1985
141-142.       Amendments
Coming into Force
143.       Order in Council
PART 8
ADVANCE MARKET COMMITMENT
144.       Payments
PART 9
OIL AND GAS OPERATIONS IN CANADA
Canada Oil and Gas Operations Act
145-150.       Amendments
Consequential Amendments
151.       Canada Petroleum Resources Act
152-153.       National Energy Board Act
PART 10
AMENDMENTS TO THE FARM INCOME PROTECTION ACT
154-160.       Amendments
PART 11
FEDERAL-PROVINCIAL FISCAL ARRANGEMENTS
Amendments to the Federal-Provincial Fiscal Arrangements Act
161-168.       Amendments
Amendments to the Budget Implementation Act, 2007
169-171.       Amendments
Consequential Amendment to the Canada-Newfoundland Atlantic Accord Implementation Act
172.       Amendment
Transitional Provisions
173.       Calculation re fiscal year 2008-2009
174.       Effect of election by Newfoundland and Labrador — fiscal year 2007-2008
Coming into Force
175.       Newfoundland and Labrador
PART 12
AMENDMENTS TO THE CANADA EDUCATION SAVINGS ACT
176-177.       Amendments
PART 13
PUBLIC-PRIVATE PARTNERSHIPS
178.       Payments
PART 14
TAX AMENDMENTS TO IMPLEMENT THE 2007 ECONOMIC STATEMENT
Amendments Relating to Income Tax
179-182.       Income Tax Act
Amendments to Implement the GST/HST Rate Reduction
183-195.       Excise Tax Act
Related Amendments as a Result of the GST/HST Rate Reduction
Air Travellers Security Charge Act
196.       Amendments
Excise Act, 2001
197-208.       Amendments
209.       Application
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56 ELIZABETH II
——————
CHAPTER 35
An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007 and to implement certain provisions of the economic statement tabled in Parliament on October 30, 2007
[Assented to 14th December, 2007]
Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:
SHORT TITLE
Short title
1. This Act may be cited as the Budget and Economic Statement Implementation Act, 2007.
PART 1
AMENDMENTS IN RESPECT OF THE GOODS AND SERVICES TAX/HARMONIZED SALES TAX
R.S., c. E-15
Excise Tax Act
2. (1) Section 217 of the Excise Tax Act is amended by adding the following after paragraph (c):
(c.1) a taxable supply made in Canada of intangible personal property that is a zero-rated supply only because it is included in section 10 or 10.1 of Part V of Schedule VI, other than
(i) a supply that is made to a consumer of the property, or
(ii) a supply of intangible personal property that is acquired for consumption, use or supply exclusively in the course of commercial activities of the recipient of the supply or activities that are engaged in exclusively outside Canada by the recipient of the supply and that are not part of a business or adventure or concern in the nature of trade engaged in by that recipient in Canada,
(2) Subsection (1) applies to supplies made after March 19, 2007.
2001, c. 15, s. 8(1)
3. (1) Paragraph 218.1(1)(d) of the Act is replaced by the following:
(d) every person who is the recipient of a supply that is included in any of paragraphs 217(c.1), (d) or (e) and that is made in a particular participating province
(2) Subsection (1) applies to supplies made after March 19, 2007.
2000, c. 30, s. 64(1)
4. (1) Paragraph 236(1)(b) of the Act is replaced by the following:
(b) one or both of the following situations apply:
(i) subsection 67.1(1) of the Income Tax Act applies, or would apply, if the person were a taxpayer under that Act, to all of the composite amount or that part of it that is, for the purposes of that Act, an amount (other than an amount to which subsection 67.1(1.1) of that Act applies) paid or payable in respect of the human consumption of food or beverages or the enjoyment of entertainment and section 67.1 of that Act deems the composite amount or that part to be 50% of a particular amount,
(ii) subsection 67.1(1.1) of that Act applies, or would apply, if the person were a taxpayer under that Act, to all of the composite amount or that part of it that is, for the purposes of that Act, an amount paid or payable in respect of the consumption of food or beverages by a long-haul truck driver during the driver’s eligible travel period (as those terms are defined in section 67.1 of that Act), and section 67.1 of that Act deems the composite amount or that part to be a percentage of a specified particular amount, and
2000, c. 30, s. 64(1)
(2) The formula and its descriptions in subsection 236(1) of the Act are replaced by the following:
[50% × (A/B) × C] + [40% × (D/B) × C]
where
A      is
(i) in the case where subparagraph (b)(i) applies, the particular amount, and
(ii) in any other case, zero,
B      is the composite amount,
C      is the input tax credit, and
D      is
(i) in the case where subparagraph (b)(ii) applies, the specified particular amount, and
(ii) in any other case, zero.
(3) The formula in subsection 236(1) of the Act, as enacted by subsection (2), is replaced by the following:
[50% × (A/B) × C] + [35% × (D/B) × C]
(4) The formula in subsection 236(1) of the Act, as enacted by subsection (3), is replaced by the following:
[50% × (A/B) × C] + [30% × (D/B) × C]
(5) The formula in subsection 236(1) of the Act, as enacted by subsection (4), is replaced by the following:
[50% × (A/B) × C] + [25% × (D/B) × C]
(6) The formula in subsection 236(1) of the Act, as enacted by subsection (5), is replaced by the following:
[50% × (A/B) × C] + [20% × (D/B) × C]
(7) Subsection (1) applies to
(a) amounts in respect of a supply of food, beverages or entertainment if tax under Part IX of the Act in respect of the supply becomes payable, or is paid without having become payable, after March 19, 2007 and no allowance or reimbursement is paid in respect of the supply; and
(b) amounts paid after March 19, 2007 as an allowance or reimbursement in respect of a supply of food, beverages or entertainment.
(8) Subsection (2) applies to
(a) amounts in respect of a supply of food, beverages or entertainment if tax under Part IX of the Act in respect of the supply becomes payable, or is paid without having become payable, after March 19, 2007 and before 2008 and no allowance or reimbursement is paid in respect of the supply; and
(b) amounts paid after March 19, 2007 and before 2008 as an allowance or reimbursement in respect of a supply of food, beverages or entertainment.
(9) Subsection (3) applies to
(a) amounts in respect of a supply of food, beverages or entertainment if tax under Part IX of the Act in respect of the supply becomes payable, or is paid without having become payable, in 2008 and no allowance or reimbursement is paid in respect of the supply; and
(b) amounts paid in 2008 as an allowance or reimbursement in respect of a supply of food, beverages or entertainment.
(10) Subsection (4) applies to
(a) amounts in respect of a supply of food, beverages or entertainment if tax under Part IX of the Act in respect of the supply becomes payable, or is paid without having become payable, in 2009 and no allowance or reimbursement is paid in respect of the supply; and
(b) amounts paid in 2009 as an allowance or reimbursement in respect of a supply of food, beverages or entertainment.
(11) Subsection (5) applies to
(a) amounts in respect of a supply of food, beverages or entertainment if tax under Part IX of the Act in respect of the supply becomes payable, or is paid without having become payable, in 2010 and no allowance or reimbursement is paid in respect of the supply; and
(b) amounts paid in 2010 as an allowance or reimbursement in respect of a supply of food, beverages or entertainment.
(12) Subsection (6) applies to
(a) amounts in respect of a supply of food, beverages or entertainment if tax under Part IX of the Act in respect of the supply becomes payable, or is paid without having become payable, after 2010 and no allowance or reimbursement is paid in respect of the supply; and
(b) amounts paid after 2010 as an allowance or reimbursement in respect of a supply of food, beverages or entertainment.
1993, c. 27, s. 98(3)
5. (1) Subsection 237(3) of the Act is replaced by the following:
Minimum instalment base
(3) For the purposes of subsection (1), if a registrant’s instalment base for a reporting period is less than $3,000, it is deemed to be nil.
(2) Subsection (1) applies to reporting periods beginning after 2007.
1997, c. 10, s. 57(1)
6. (1) Subsection 248(1) of the Act is replaced by the following:
Election for fiscal years
248. (1) A registrant that is a charity on the first day of a fiscal year of the registrant or whose threshold amount for a fiscal year does not exceed $1,500,000 may make an election to have reporting periods that are fiscal years of the registrant, to take effect on the first day of that fiscal year.
1997, c. 10, s. 57(2)
(2) Paragraphs 248(2)(b) and (c) of the Act are replaced by the following:
(b) if the person is not a charity and the threshold amount of the person for the second or third fiscal quarter of the person in a fiscal year of the person exceeds $1,500,000, the beginning of the first fiscal quarter of the person for which the threshold amount exceeds that amount, and
(c) if the person is not a charity and the threshold amount of the person for a fiscal year of the person exceeds $1,500,000, the beginning of that fiscal year.
(3) Subsections (1) and (2) apply to fiscal years beginning after 2007.
7. (1) Schedule VII to the Act is amended by adding the following after section 1.1:
1.2 For the purposes of section 1, subsection 140(2) of the Customs Tariff does not apply in respect of the reference to heading 98.04.
(2) Subsection (1) is deemed to have come into force on January 1, 1998.
PART 2
AMENDMENT RELATING TO EXCISE TAX ON RENEWABLE FUELS
R.S., c. E-15
Excise Tax Act
1993, c. 25, s. 56; 2003, c. 15, ss. 61(1) and 62(1)
8. (1) Sections 23.4 and 23.5 of the Excise Tax Act are repealed.
(2) Subsection (1) comes into force, or is deemed to have come into force, on April 1, 2008.
PART 3
AMENDMENTS RELATING TO INCOME TAX
R.S., c. 1 (5th Supp.)
Income Tax Act
9. (1) Paragraph (a) of the description of B in subsection 12(10.2) of the Income Tax Act is replaced by the following:
(a) the total of all amounts each of which is
(i) deemed by subsection (10.4) or 104(5.1) or (14.1) to have been paid out of the taxpayer’s NISA Fund No. 2 before the particular time, or
(ii) deemed by subsection 70(5.4) or 73(5) to have been paid out of another person’s NISA Fund No. 2 on being transferred to the taxpayer’s NISA Fund No. 2 before the particular time,
(2) Section 12 of the Act is amended by adding the following after subsection (10.3):
Acquisition of control — corporate NISA Fund No. 2
(10.4) For the purpose of subsection (10.2), if at any time there is an acquisition of control of a corporation, the balance of the corporation’s NISA Fund No. 2, if any, at that time is deemed to be paid out to the corporation immediately before that time.
(3) Subsections (1) and (2) apply to the balance in a NISA Fund No. 2 to the extent that that balance consists of contributions made to the fund, and amounts earned on those contributions, in the 2008 and subsequent taxation years.
10. (1) The portion of subsection 17(8) of the Act before paragraph (a) is replaced by the following:
Exception
(8) Subsection (1) does not apply to a corporation resident in Canada for a taxation year of the corporation in respect of an amount owing to the corporation by a non-resident person if the non-resident person is a controlled foreign affiliate of the corporation throughout the period in the year during which the amount is owing to the extent that it is established that the amount owing
(2) Section 17 of the Act is amended by adding the following after subsection (8):
Borrowed money
(8.1) Subsection (8.2) applies in respect of money (referred to in this subsection and in subsection (8.2) as “new borrowings”) that a controlled foreign affiliate of a particular corporation resident in Canada has borrowed from the particular corporation to the extent that the affiliate has used the new borrowings
(a) to repay money (referred to in this subsection and in subsection (8.2) as “previous borrowings”) previously borrowed from any person or partnership, if
(i) the previous borrowings became owing after the last time at which the affiliate became a controlled foreign affiliate of the particular corporation, and
(ii) the previous borrowings were, at all times after they became owing, used for a purpose described in subparagraph (8)(a)(i) or (ii); or
(b) to pay an amount owing (referred to in this subsection and in subsection (8.2) as the “unpaid purchase price”) by the affiliate for property previously acquired from any person or partnership, if
(i) the property was acquired, and the unpaid purchase price became owing, by the affiliate after the last time at which it became a controlled foreign affiliate of the particular corporation,
(ii) the unpaid purchase price is in respect of the property, and
(iii) throughout the period that began when the unpaid purchase price became owing by the affiliate and ended when the unpaid purchase price was so paid, the property had been used principally to earn income described in clause (8)(a)(i)(A) or (B).
Deemed use
(8.2) To the extent that this subsection applies in respect of new borrowings, the new borrowings are, for the purpose of subsection (8), deemed to have been used for the purpose for which the proceeds from the previous borrowings were used or were deemed by this subsection to have been used, or to acquire the property in respect of which the unpaid purchase price was payable, as the case may be.
(3) The definition “controlled foreign affiliate” in subsection 17(15) of the Act is replaced by the following:
“controlled foreign affiliate”« société étrangère affiliée contrôlée »
“controlled foreign affiliate”, at any time, of a taxpayer resident in Canada, means a corporation that would, at that time, be a controlled foreign affiliate of the taxpayer within the meaning assigned by the definition “controlled foreign affiliate” in subsection 95(1) if the word “or” were added at the end of paragraph (a) of that definition and
(a) subparagraph (b)(ii) of that definition were read as “all of the shares of the capital stock of the foreign affiliate that are owned at that time by persons resident in Canada who do not deal at arm’s length with the taxpayer,”; and
(b) subparagraph (b)(iv) of that definition were read as “all of the shares of the capital stock of the foreign affiliate that are owned at that time by persons resident in Canada who do not deal at arm’s length with any relevant Canadian shareholder;”.
(4) Subsections (1) and (2) apply to taxation years that begin after February 23, 1998 and, notwithstanding subsections 152(4) to (5) of the Act, any assessment of the taxpayer’s tax, interest and penalties payable under the Act for any taxation year that begins after February 23, 1998 and ends before October 2, 2007 shall be made that is necessary to take subsections (1) and (2) into account.
(5) Subsection (3) applies to taxation years, of a foreign affiliate of a taxpayer, that begin after February 23, 1998, except that, in applying the definition “controlled foreign affiliate”, in subsection 17(15) of the Act, as enacted by subsection (3),
(a) for taxation years, of a foreign affiliate of a taxpayer, that begin after 2002 and on or before February 27, 2004, that definition is to be read as follows:
“controlled foreign affiliate” has the meaning that would be assigned by the definition “controlled foreign affiliate” in subsection 95(1) for taxation years, of a foreign affiliate of a taxpayer, that begin after 2002 and on or before February 27, 2004, if the word “or” were added at the end of paragraph (a) of that definition and
(a) subparagraph (b)(ii) of that definition were read as “all of the shares of the capital stock of the foreign affiliate that are owned at that time by persons resident in Canada who do not deal at arm’s length with the taxpayer,”; and
(b) subparagraph (b)(iv) of that definition were read as “all of the shares of the capital stock of the foreign affiliate that are owned at that time by persons resident in Canada who do not deal at arm’s length with any relevant Canadian shareholder;”.
(b) for taxation years, of a foreign affiliate of a taxpayer, that begin after February 23, 1998 and before 2003, that definition is to be read as follows:
“controlled foreign affiliate” has the meaning that would be assigned by the definition “controlled foreign affiliate” in subsection 95(1) for taxation years, of a foreign affiliate of a taxpayer, that begin after February 23, 1998 and before 2003, if subparagraph (b)(iii) of that definition were read as “each share of the capital stock of a corporation that is owned at that time by the taxpayer and each share of the capital stock of a corporation that is owned at that time by any person resident in Canada with whom the taxpayer does not deal at arm’s length.”.
11. (1) Subsection 18(9) of the Act is amended by striking out the word “and” at the end of paragraph (d), by adding the word “and” at the end of paragraph (e) and by adding the following after paragraph (e):
(f) for the purpose of the definition “eligible child care space expenditure” in subsection 127(9), the portion of an expenditure (other than for the acquisition of depreciable property) that is made or incurred by a taxpayer in a taxation year and that would, but for paragraph (a), have been deductible under this Act in computing the taxpayer’s income for the year, is deemed
(i) not to be made or incurred by the taxpayer in the year, and
(ii) to be made or incurred by the taxpayer in the subsequent taxation year to which the expenditure can reasonably be considered to relate.
(2) Subsection (1) applies to expenses incurred on or after March 19, 2007.
12. (1) The Act is amended by adding the following after section 18.1:
Definitions
18.2 (1) The following definitions apply in this section.
“aggregate double-dip income”« revenu total résultant d’un cumul de déductions »
“aggregate double-dip income”, of a particular corporation for a taxation year in respect of an inter-affiliate loan, means the total of the double-dip exempt earnings amount and the double-dip taxable earnings amount of the particular corporation for the taxation year in respect of the inter-affiliate loan.
“double-dip exempt earnings amount”« montant des gains exonérés résultant d’un cumul de déductions »
“double-dip exempt earnings amount”, of a particular corporation for a taxation year in respect of an inter-affiliate loan owing to a foreign affiliate (referred to in this definition as the “earning foreign affiliate”) of the particular corporation or of a corporation that does not deal at arm’s length with the particular corporation, means the total of all amounts each of which is the amount, in respect of a share (referred to in this definition as the “specified share”) of the capital stock of a particular foreign affiliate of the particular corporation or of a corporation that does not deal at arm’s length with the particular corporation, determined by the formula 
A × [B - (C × D)]
where
A      is the participating percentage of the specified share in respect of the earning foreign affiliate at the end of a taxation year of the earning foreign affiliate that ends in the taxation year of the particular corporation;
B      is the amount of the re-characterized exempt earnings income of the earning foreign affiliate in respect of the inter-affiliate loan for the taxation year of the earning foreign affiliate;
C      is the foreign accrual tax applicable to the amount determined under the description of B; and
D      is the relevant tax factor of the particular corporation for the taxation year of the particular corporation.
“double-dip taxable earnings amount”« montant des gains imposables résultant d’un cumul de déductions »
“double-dip taxable earnings amount” of a particular corporation for a taxation year in respect of an inter-affiliate loan owing to a foreign affiliate (referred to in this definition as the “earning foreign affiliate”), of the particular corporation or of a corporation that does not deal at arm’s length with the particular corporation, means the total of all amounts each of which is the amount, in respect of a share (referred to in this definition as the “specified share”) of the capital stock of a particular foreign affiliate of the particular corporation or of a corporation that does not deal at arm’s length with the particular corporation, determined by the formula
A × [B - (C × D)]
where
A      is the participating percentage of the specified share in respect of the earning foreign affiliate at the end of a taxation year of the earning foreign affiliate that ends in the taxation year of the particular corporation;
B      is the amount of the re-characterized taxable earnings income of the earning foreign affiliate in respect of the inter-affiliate loan for the taxation year of the earning foreign affiliate;
C      is the foreign accrual tax applicable to the amount determined under the description of B; and
D      is the relevant tax factor of the particular corporation for the taxation year of the particular corporation.
“foreign accrual tax”« impôt étranger accumulé »
“foreign accrual tax” applicable to an amount of re-characterized income of a foreign affiliate (referred to in this definition as the “earning foreign affiliate”), of a particular corporation or of a corporation that does not deal at arm’s length with the particular corporation, for a taxation year in respect of an inter-affiliate loan owing to the earning foreign affiliate means the total of
(a) the amount equal to that portion of any foreign income or profit taxes that was paid by the earning foreign affiliate or any other foreign affiliate, of the particular corporation or of a corporation that does not deal at arm’s length with the particular corporation, that can reasonably be regarded as applicable to the re-characterized income, and
(b) the amount that would, if the re-characterized income were an amount included in computing the particular corporation’s income under subsection 91(1) in respect of the earning foreign affiliate, be prescribed in respect of the earning foreign affiliate to be foreign accrual tax that is applicable to the re-characterized income for the purpose of the definition “foreign accrual tax” in subsection 95(1).
“inter-affiliate loan”« prêt entre sociétés affiliées »
“inter-affiliate loan” in respect of a particular corporation for a taxation year means a debt that is owing to a foreign affiliate of the particular corporation or of a corporation that does not deal at arm’s length with the particular corporation or to a partnership of which such a foreign affiliate is a member, if the income that the foreign affiliate derives in a taxation year from the interest paid or payable in respect of the debt is re-characterized income of the foreign affiliate for the taxation year.
“participating percentage”« pourcentage de participation »
“participating percentage” of a share (referred to in this definition as the “specified share”) of the capital stock of a particular foreign affiliate of a particular corporation or of a corporation that does not deal at arm’s length with the particular corporation, held by the particular corporation at the end of a particular taxation year of a non-resident corporation (referred to in this definition as the “earning foreign affiliate”) that ends in the particular corporation’s taxation year, which earning foreign affiliate was, at the end of the particular taxation year, a foreign affiliate of the particular corporation or of a corporation that does not deal at arm’s length with the particular corporation, means the percentage that would, if the earning foreign affiliate were a controlled foreign affiliate of the particular corporation, be determined under subparagraph (b)(i) or (ii) of the definition “participating percentage” in subsection 95(1) in respect of the specified share in respect of the earning foreign affiliate at the end of the particular taxation year.
“re-characterized income”« revenu redéfini »
“re-characterized income” of a foreign affiliate of a corporation for a taxation year in respect of a debt owing to the foreign affiliate means the total of the re-characterized exempt earnings income and the re-characterized taxable earnings income of the foreign affiliate for the taxation year from the debt.
“re-characterized exempt earnings income”« montant des gains exonérés redéfinis »
“re-characterized exempt earnings income” of a foreign affiliate of a corporation for a taxation year in respect of a debt owing to the foreign affiliate means that portion of the income of the foreign affiliate for the taxation year from the debt that is included
(a) under subparagraph 95(2)(a)(ii) in computing the income from an active business of the foreign affiliate for the taxation year, or that would be so included if the income were income from property; and
(b) in computing the amount prescribed to be the exempt earnings of the foreign affiliate for the taxation year.
“re-characterized taxable earnings income”« montant des gains imposables redéfinis »
“re-characterized taxable earnings income” of a foreign affiliate of a corporation for a taxation year in respect of a debt owing to the foreign affiliate means that portion of the income of the foreign affiliate for the taxation year from the debt that is included
(a) under subparagraph 95(2)(a)(ii) in computing the income from an active business of the foreign affiliate for the taxation year, or that would be so included if the income were income from property; and
(b) in computing the amount prescribed to be the taxable earnings of the foreign affiliate for the taxation year.
“taxable earnings base adjustment”« montant de rajustement des gains imposables »
“taxable earnings base adjustment” of a partic-ular corporation for a taxation year in respect of a share (referred to in this definition as the “specified share”) of a particular foreign affiliate of the particular corporation or of a corporation that does not deal at arm’s length with the particular corporation and in respect of an inter-affiliate loan owing to a foreign affiliate of the particular corporation or of a corporation that does not deal at arm’s length with the particular corporation, means the amount determined by the formula
A × B/C
where
A      is the amount of interest deduction denied under subsection (2) in respect of the particular corporation in respect of interest relating to the inter-affiliate loan for the taxation year;
B      is the amount determined to be the double-dip taxable earnings amount of the particular corporation in respect of the inter-affiliate loan that can be attributed to the specified share for the taxation year; and
C      is the aggregate double-dip income of the particular corporation in respect of the inter-affiliate loan for the taxation year.
Double-dip interest not deductible
(2) Notwithstanding any other provision of this Act, in computing the income of a corporation for a taxation year, no amount may be deducted in respect of the corporation’s specified financing expense in respect of an inter-affiliate loan for the taxation year, except to the extent that that specified financing expense exceeds the corporation’s aggregate double-dip income for the taxation year in respect of that inter-affiliate loan.
Specified financing expense
(3) A particular corporation’s specified financing expense in respect of an inter-affiliate loan for a taxation year, is the amount, if any, by which
(a) the total of all amounts of interest paid or payable in the taxation year by the particular corporation on, and other costs referred to in paragraph 20(1)(e) deductible in computing the particular corporation’s income for the taxation year in respect of,
(i) borrowed money, to the extent that it is reasonable to consider that the borrowed money is used, in that taxation year, directly or indirectly, for the purpose of funding, in whole or in part, the inter-affiliate loan, and
(ii) an amount payable for property where it is reasonable to consider that the property, or property substituted for it (or, where the property or property substituted for it is a share of the capital stock of a corporation, property of the corporation or of a person related to the corporation, or property substituted for such property) is used, directly or indirectly, for the purpose of funding, in whole or in part, the inter-affiliate loan,
exceeds
(b) if the particular corporation has subsequently loaned the property referred to in paragraph (a), the total of all amounts that are, in respect of that subsequent loan, included in computing the income of the particular corporation for the taxation year and that relate to the period or periods of use referred to in that paragraph.
Aggregate double-dip income — related parties
(4) Subsection (5) applies to a corporation (referred to in this subsection and subsections (5) to (7) as the “debtor corporation”) and another corporation in respect of a particular taxation year of the debtor corporation and an inter-affiliate loan if
(a) the debtor corporation’s specified financing expense for the particular taxation year in respect of the inter-affiliate loan exceeds the debtor corporation’s aggregate double-dip income for the particular taxation year in respect of the inter-affiliate loan;
(b) the other corporation’s aggregate double-dip income for a taxation year in respect of the inter-affiliate loan exceeds the other corporation’s specified financing expense for that taxation year in respect of the inter-affiliate loan;
(c) the other corporation’s taxation year referred to in paragraph (b) ends in the particular taxation year; and
(d) at the end of the particular taxation year, the other corporation and the debtor corporation are related.
Deemed effects
(5) If this subsection applies to a debtor corporation and another corporation in respect of a particular taxation year of the debtor corporation and an inter-affiliate loan,
(a) the lesser of the excess determined under paragraph (4)(b) in respect of the other corporation and the excess determined under paragraph (4)(a) in respect of the debtor corporation is deemed to be included in the aggregate double-dip income of the debtor corporation in respect of the inter-affiliate loan and not to be included in the aggregate double-dip income of the other corporation;
(b) this subsection shall not apply to any other corporation in respect of the amount determined under paragraph (a); and
(c) for the purpose of determining the taxable earnings base adjustment of the other corporation, the amount determined under paragraph (a) is deemed to be
(i) an amount of interest deduction denied to it under subsection (2) in respect of interest relating to the inter-affiliate loan for its taxation year referred to in paragraph 4(b), and
(ii) an amount that is included in the aggregate double-dip income in respect of the inter-affiliate loan for its taxation year referred to in paragraph 4(b).
Allocation by debtor corporation
(6) If subsections (4) and (5) apply to more than one other corporation in respect of a debtor corporation and an inter-affiliate loan, the debtor corporation may allocate the excess double-dip incomes of the other corporations against the specified financing expense of the debtor corporation.
Allocation by Minister
(7) If a debtor corporation is entitled to make an allocation under subsection (6) but fails to do so, or does so in a manner that allows an excess to remain under subparagraph (4)(a) in respect of the debtor corporation and an excess to remain under subparagraph (4)(b) in respect of one or more other corporations, the Minister may allocate the excess double-dip incomes of the other corporations against the specified financing expense of the debtor corporation.
Inter-affiliate loans — exceptions
(8) A debt that would, at any time, otherwise be an inter-affiliate loan in respect of a corporation for a taxation year of a particular foreign affiliate is not an inter-affiliate loan at that time, if
(a) it is the case that
(i) another foreign affiliate, of the corporation or a corporation that does not deal at arm’s length with the corporation, owes the debt,
(ii) the particular foreign affiliate and the other foreign affiliate are, at the end of their taxation years that include that time, resident in the same country, and
(iii) the particular foreign affiliate and the other foreign affiliate determine their income, for income tax purposes under the income tax laws of that country, on a consolidated or combined basis; or
(b) it is the case that
(i) the corporation is a taxpayer described in paragraph 95(2)(l)(iv),
(ii) the particular foreign affiliate holds the debt, and the other foreign affiliate owes the debt, in the ordinary course of businesses that are described in subparagraph (a)(i) of the definition “investment business” in subsection 95(1) and conducted principally with persons with which those affiliates deal at arm’s length, and
(iii) the terms and conditions of the debt are substantially the same as the terms and conditions of similar debt entered into between persons dealing at arm’s length.
Partnership rules
(9) If a partnership that holds, directly or indirectly, a share of the capital stock of a specified corporation in respect of the partnership has borrowed money or become liable for an amount payable (in this subsection referred to as the “partnership indebtedness”) the interest in respect of which is deductible under paragraph 20(1)(c),
(a) there shall be added to the income of each corporation or partnership that is a member of the partnership, an amount equal to the member’s specified proportion of the interest and other borrowing costs referred to in paragraph 20(1)(e) that are deductible in computing the partnership’s income in respect of that member’s specified proportion of the partnership indebtedness;
(b) for the purpose of this section and paragraphs 20(1)(c) and (e), an amount equal to the amount added to the member’s income by paragraph (a) shall be deemed to be an amount of interest or other borrowing cost, as the case may be, that is deductible by the member; and
(c) the member shall be deemed to have incurred its specified proportion of the partnership indebtedness and to use the proceeds or property acquired in respect of that indebtedness in the same manner as the partnership.
Interpretation
(10) For the purpose of subsection (9),
(a) a specified corporation in respect of a partnership means a corporation that is, for the purpose of section 95,
(i) a foreign affiliate of a member of the partnership,
(ii) a foreign affiliate of a person with whom the partnership does not deal at arm’s length, or
(iii) a foreign affiliate of a person that does not deal at arm’s length with a member of the partnership; and
(b) the specified proportion of a member of a partnership for a fiscal period of the partnership means the proportion that the member’s share of the total income or loss of the partnership for the partnership’s fiscal period is of the partnership’s total income or loss for that period and, for the purpose of this definition, where that income or loss for a period is nil, that proportion shall be computed as if the partnership had income for that period in the amount of $1,000,000.
(2) Subsection (1) applies in respect of interest and other borrowing costs paid or payable in respect of a period or periods that begin after 2011.
13. (1) The portion of paragraph (e) of the definition “Canadian newspaper” in subsection 19(5) of the Act before clause (iii)(C) is replaced by the following:
(e) a corporation
(i) that is incorporated under the laws of Canada or a province,
(ii) of which the chairperson or other presiding officer and at least 3/4 of the directors or other similar officers are Canadian citizens, and
(iii) that, if it is a corporation having share capital, is
(A) a public corporation a class or classes of shares of the capital stock of which are listed on a designated stock exchange in Canada, other than a corporation controlled by citizens or subjects of a country other than Canada, or
(B) a corporation of which at least 3/4 of the shares having full voting rights under all circumstances, and shares having a fair market value in total of at least 3/4 of the fair market value of all of the issued shares of the corporation, are beneficially owned by Canadian citizens or by public corporations a class or classes of shares of the capital stock of which are listed on a designated stock exchange in Canada, other than a public corporation controlled by citizens or subjects of a country other than Canada,
and, for the purposes of clause (B), where shares of a class of the capital stock of a corporation are owned, or deemed by this definition to be owned, at any time by another corporation (in this definition referred to as the “holding corporation”), other than a public corporation a class or classes of shares of the capital stock of which are listed on a designated stock exchange in Canada, each shareholder of the holding corporation shall be deemed to own at that time that proportion of the number of such shares of that class that
(2) Subsection (1) applies on and after the day on which this Act is assented to.
14. (1) Subsection 20(1) of the Act is amended by adding the following after paragraph (nn):
Recapture of investment tax credits — child care space amount
(nn.1) total of all amounts (other than an amount in respect of a disposition of a depreciable property) added because of subsection 127(27.1) or (28.1) to the taxpayer’s tax otherwise payable under this Part for any preceding taxation year;
(2) Subsection 20(3) of the Act is replaced by the following:
Borrowed money
(3) For greater certainty, if a taxpayer uses borrowed money to repay money previously borrowed, or to pay an amount payable for property described in subparagraph (1)(c)(ii) previously acquired (which previously borrowed money or amount payable in respect of previously acquired property is, in this subsection, referred to as the “previous indebtedness”), subject to subsection 20.1(6), for the purposes of paragraphs (1)(c), (e) and (e.1), section 18.2, subsections 20.1(1) and (2), section 21 and subparagraph 95(2)(a)(ii), and for the purpose of paragraph 20(1)(k) of the Income Tax Act, Chapter 148 of the Revised Statutes of Canada, 1952, the borrowed money is deemed to be used for the purpose for which the previous indebtedness was used or incurred, or was deemed by this subsection to have been used or incurred.
(3) Subsection (1) applies on and after March 19, 2007.
(4) Subsection (2) applies in respect of interest paid or payable in respect of a period or periods that begin after 2011.
15. (1) Subparagraph 38(a.1)(i) of the Act is replaced by the following:
(i) the disposition is the making of a gift to a qualified donee of a share, debt obligation or right listed on a designated stock exchange, a share of the capital stock of a mutual fund corporation, a unit of a mutual fund trust, an interest in a related segregated fund trust (within the meaning assigned by paragraph 138.1(1)(a)) or a prescribed debt obligation, or
(2) Subsection (1) applies in respect of gifts made on or after March 19, 2007, except that, in its application before the day on which this Act is assented to, the reference to “designated stock exchange” in subparagraph 38(a.1)(i) of the Act, as enacted by subsection (1), shall be read as a reference to “prescribed stock exchange”.
16. (1) Paragraph 53(1)(e) of the Act is amended by striking out the word “and” at the end of subparagraph (xii), by adding the word “and” at the end of subparagraph (xiii) and by adding the following after subparagraph (xiii):
(xiv) the total of all amounts each of which is the amount of the taxpayer’s taxable earnings base adjustment (within the meaning assigned by subsection 18.2(1)) in respect of an interest in the partnership for a taxation year that ended before that time;
(2) Paragraph 53(2)(c) of the Act is amended by striking out the word “and” at the end of subparagraph (xi), by adding the word “and” at the end of subparagraph (xii) and by adding the following after subparagraph (xii):
(xiii) the lesser of
(A) the total of all amounts each of which is the amount of a dividend that is included in computing the income of the taxpayer under section 93.1 in respect of the partnership for a taxation year that ended before that time, and
(B) the total of all amounts each of which is
(I) an amount deducted by the taxpayer under subsection 91(5.2) for a taxation year that ended before that time in respect of a dividend included in computing the amount determined under clause (A), or
(II) twice the amount deducted by the taxpayer under subsection 91(5.3) for a taxation year that ended before that time in respect of the disposition of a share on which a dividend included in computing the amount determined under clause (A) was paid;
(3) Subsections (1) and (2) apply after 2011.
17. (1) Paragraph 56(3)(a) of the Act is replaced by the following:
(a) the total of all amounts each of which is the amount included under subparagraph (1)(n)(i) in computing the taxpayer’s income for the taxation year in respect of a scholarship, fellowship or bursary received in connection with the taxpayer’s enrolment
(i) in an educational program in respect of which an amount may be deducted under subsection 118.6(2) in computing the taxpayer’s tax payable under this Part for the taxation year, for the immediately preceding taxation year or for the following taxation year, or
(ii) in an elementary or secondary school educational program,
(2) Subsection (1) applies to the 2007 and subsequent taxation years.
18. (1) Subsection 60(x) of the Act is replaced by the following:
Repayment under Canada Education Savings Act
(x) the total of all amounts each of which is an amount paid by the taxpayer in the year as a repayment, under the Canada Education Savings Act or under a designated provincial program (as defined in subsection 146.1(1)), of an amount that was included because of subsection 146.1(7) in computing the taxpayer’s income for the year or a preceding taxation year; and
(2) Subsection (1) applies to the 2007 and subsequent taxation years.
19. (1) Paragraphs (h) and (i) of the definition “principal-business corporation” in subsection 66(15) of the Act are replaced by the following:
(h) the generation of energy using property described in Class 43.1 or 43.2 of Schedule II to the regulations, or any combination thereof, and
(i) the development of projects for which it is reasonable to expect that at least 50% of the capital cost of the depreciable property to be used in each project would be the capital cost of property described in Class 43.1 or 43.2 of Schedule II to the regulations or any combination thereof,
(2) Subsection (1) applies on and after February 23, 2005.
20. (1) The portion of subsection 67.1(1) of the Act before paragraph (a) is replaced by the following:
Expenses for food, etc.
67.1 (1) Subject to subsection (1.1), for the purposes of this Act, other than sections 62, 63, 118.01 and 118.2, an amount paid or payable in respect of the human consumption of food or beverages or the enjoyment of entertainment is deemed to be 50 per cent of the lesser of
(2) Section 67.1 of the Act is amended by adding the following after subsection (1):
Expenses for food and beverages of long-haul truck drivers
(1.1) An amount paid or payable by a long-haul truck driver in respect of the consumption of food or beverages by the driver during an eligible travel period of the driver is deemed to be the amount determined by multiplying the specified percentage in respect of the amount so paid or payable by the lesser of
(a) the amount so paid or payable, and
(b) a reasonable amount in the circumstances.
(3) Section 67.1 of the Act is amended by adding the following after subsection (4):
Definitions
(5) The following definitions apply for the purpose of this section.
“eligible travel period”« période de déplacement admissible »
“eligible travel period” in respect of a long-haul truck driver is a period during which the driver is away from the municipality or metropolitan area where the specified place in respect of the driver is located for a period of at least 24 continuous hours for the purpose of driving a long-haul truck that transports goods to, or from, a location that is beyond a radius of 160 kilometres from the specified place.
“long-haul truck”« grand routier »
“long-haul truck” means a truck or a tractor that is designed for hauling freight and that has a gross vehicle weight rating (as that term is defined in subsection 2(1) of the Motor Vehicle Safety Regulations) that exceeds 11 788 kilograms.
“long-haul truck driver”« conducteur de grand routier »
“long-haul truck driver” means an individual whose principal business or principal duty of employment is driving a long-haul truck that transports goods.
“specified percentage”« pourcentage déterminé »
“specified percentage” in respect of an amount paid or payable is
(a) 60 per cent, if the amount is paid or becomes payable on or after March 19, 2007 and before 2008;
(b) 65 per cent, if the amount is paid or becomes payable in 2008;
(c) 70 per cent, if the amount is paid or becomes payable in 2009;
(d) 75 per cent, if the amount is paid or becomes payable in 2010; and
(e) 80 per cent, if the amount is paid or becomes payable after 2010.
“specified place”« endroit déterminé »
“specified place” means, in the case of an employee, the employer’s establishment to which the employee ordinarily reports to work is located and, in the case of an individual whose principal business is to drive a long-haul truck to transport goods, the place where the individual resides.
(4) Subsections (1) to (3) apply to amounts that are paid, or become payable, on or after March 19, 2007.
21. (1) Paragraph (b) of the definition “excluded security” in subsection 80(1) of the Act is replaced by the following:
(b) a share issued by the corporation to the person under the terms of the debt, where the debt was a bond, debenture or note listed on a designated stock exchange in Canada and the terms for the conversion to the share were not established or substantially modified after the later of February 22, 1994 and the time that the bond, debenture or note was issued;
(2) Subsection (1) applies on and after the day on which this Act is assented to.
22. (1) Paragraph 85(1.1)(i) of the Act is replaced by the following:
(i) a NISA Fund No. 2, if that property is owned by an individual.
(2) Subsection (1) applies to the balance in a NISA Fund No. 2 to the extent that that blance consists of contributions made to the fund, and amounts earned on those contributions, in the 2008 and subsequent taxation years.
23. (1) Paragraph (a) of the definition “public corporation” in subsection 89(1) of the Act is replaced by the following:
(a) a corporation that is resident in Canada at the particular time if at that time a class of shares of the capital stock of the corporation is listed on a designated stock exchange in Canada,
(2) Subsection (1) applies on and after the day on which this Act is assented to.
24. (1) Section 91 of the Act is amended by adding the following after subsection (5):
Deduction of dividend by shareholder
(5.1) Where in a taxation year a corporation resident in Canada receives a dividend on a share of the capital stock of a corporation that was at any time a foreign affiliate of the corporation and subsection (5) does not apply in respect of that dividend, there may be deducted, in respect of such portion of the dividend as is prescribed to have been paid out of the taxable surplus of the affiliate, in computing the corporation’s income for the year, the lesser of
(a) the amount, if any, by which that portion of the dividend exceeds the amount, if any, deductible in respect of the dividend under paragraph 113(1)(b), and
(b) the amount, if any, by which
(i) the total of all amounts required under subparagraph 92(1)(a)(ii) to be added in computing the adjusted cost base to the taxpayer of the share before the dividend was so received by the corporation
exceeds
(ii) the total of all amounts required under paragraph 92(1)(b) to be deducted in computing the adjusted cost base to the taxpayer of the share before the dividend was so received by the taxpayer.
Deduction of dividend by member of partnership
(5.2) Where in a taxation year a corporation is deemed under section 93.1 to have received a dividend from a foreign affiliate, there may be deducted, in respect of such portion of the dividend as is prescribed to have been paid out of the taxable surplus of the affiliate, in computing the corporation’s income for the year, the lesser of
(a) the amount, if any, by which that portion of the dividend exceeds the amount, if any, deductible in respect of the dividend under paragraph 113(1)(b), and
(b) the amount, if any, by which
(i) the total of all amounts required under subparagraph 53(1)(e)(xiv) to be added in computing the adjusted cost base to the taxpayer of the partnership interest that are reasonably attributable to a share in respect of which the dividend was paid
exceeds
(ii) the total of all amounts required under subparagraph 53(2)(c)(xiii) to be deducted in computing the adjusted cost base to the taxpayer of the partnership interest that are reasonably attributable to a share in respect of which the dividend was paid.
Deduction of capital gain by member of partnership
(5.3) Where in a taxation year a taxpayer is a member of a partnership, there may be deducted from the taxpayer’s income for the taxation year an amount equal to the lesser of
(a) ½ the amount of the taxpayer’s specified proportion (within the meaning of paragraph 18.2(10)(b)) of any capital gain that is attributable to a disposition by the partnership of a share of the capital stock of a corporation, and
(b) the amount, if any, by which
(i) the total of all amounts required under subparagraph 53(1)(e)(xiv) to be added in computing the adjusted cost base to the taxpayer of its interest in the partnership that are reasonably attributable to the share
exceeds
(ii) the total of all amounts required under subparagraph 53(2)(c)(xiii) to be deducted in computing the adjusted cost base to the taxpayer of the partnership interest that are reasonably attributable to the share.
(2) Subsection (1) applies after 2011.
25. (1) Subsection 92(1) of the Act is replaced by the following:
Adjusted cost base of share of foreign affiliate
92. (1) In computing, at any time in a taxation year, the adjusted cost base to a taxpayer resident in Canada of any share owned by the taxpayer of the capital stock of a foreign affiliate of the taxpayer,
(a) there shall be added in respect of that share
(i) any amount included in respect of that share under subsection 91(1) or (3) in computing the taxpayer’s income for the year or any preceding taxation year (or that would have been required to have been so included in computing the taxpayer’s income but for subsection 56(4.1) and sections 74.1 to 75 of this Act and section 74 of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952), and
(ii) the taxable earnings base adjustment (as defined in subsection 18.2(1)) of the taxpayer in respect of the share for the year or any preceding taxation year; and
(b) there shall be deducted in respect of that share
(i) any amount deducted by the taxpayer under subsection 91(2) or (4), and
(ii) any dividend received by the taxpayer before that time, to the extent of the amount deducted by the taxpayer, in respect of the dividend, under subsection 91(5) or (5.1)
in computing the taxpayer’s income for the year or any preceding taxation year (or that would have been deductible by the taxpayer but for subsection 56(4.1) and sections 74.1 to 75 of this Act and section 74 of the Income Tax Act, chapter 148 of the Revised Statutes of Canada,1952).
(2) Subsection (1) applies after 2011.
26. (1) The definitions “active business”, “controlled foreign affiliate”, “income from an active business” and “income from property” in subsection 95(1) of the Act are replaced by the following:
“active business”« entreprise exploitée activement »
“active business” of a foreign affiliate of a taxpayer means any business carried on by the foreign affiliate other than
(a) an investment business carried on by the foreign affiliate,
(b) a business that is deemed by subsection (2) to be a business other than an active business carried on by the foreign affiliate, or
(c) a non-qualifying business of the foreign affiliate;
“controlled foreign affiliate”« société étrangère affiliée contrôlée »
“controlled foreign affiliate”, at any time, of a taxpayer resident in Canada, means
(a) a foreign affiliate of the taxpayer that is, at that time, controlled by the taxpayer, or
(b) a foreign affiliate of the taxpayer that would, at that time, be controlled by the taxpayer if the taxpayer owned
(i) all of the shares of the capital stock of the foreign affiliate that are owned at that time by the taxpayer,
(ii) all of the shares of the capital stock of the foreign affiliate that are owned at that time by persons who do not deal at arm’s length with the taxpayer,
(iii) all of the shares of the capital stock of the foreign affiliate that are owned at that time by the persons (each of whom is referred to in this definition as a “relevant Canadian shareholder”), in any set of persons not exceeding four (which set of persons shall be determined without ref-erence to the existence of or the absence of any relationship, connection or action in concert between those persons), who
(A) are resident in Canada,
(B) are not the taxpayer or a person described in subparagraph (ii), and
(C) own, at that time, shares of the capital stock of the foreign affiliate, and
(iv) all of the shares of the capital stock of the foreign affiliate that are owned at that time by persons who do not deal at arm’s length with any relevant Canadian shareholder;
“income from an active business”« revenu provenant d’une entreprise exploitée activement »
“income from an active business” of a foreign affiliate of a taxpayer for a taxation year includes the foreign affiliate’s income for the taxation year that pertains to or is incident to that active business but does not include
(a) the foreign affiliate’s income from property for the taxation year,
(b) the foreign affiliate’s income for the taxation year from a business that is deemed by subsection (2) to be a business other than an active business of the foreign affiliate, or
(c) the foreign affiliate’s income from a non-qualifying business of the foreign affiliate for the taxation year;
“income from property”« revenu de biens »
“income from property” of a foreign affiliate of a taxpayer for a taxation year includes the foreign affiliate’s income for the taxation year from an investment business and the foreign affiliate’s income for the taxation year from an adventure or concern in the nature of trade, but does not include 
(a) the foreign affiliate’s income for the taxation year from a business that is deemed by subsection (2) to be a business other than an active business of the foreign affiliate, or
(b) the foreign affiliate’s income for the taxation year that pertains to or is incident to
(i) an active business of the foreign affiliate, or
(ii) a non-qualifying business of the foreign affiliate;
(2) The portion of the definition “excluded property” in subsection 95(1) of the Act before paragraph (a) of that definition and paragraphs (a) to (c) of that definition are replaced by the following:
“excluded property”« bien exclu »
“excluded property”, at a particular time, of a foreign affiliate of a taxpayer means any property of the foreign affiliate that is
(a) used or held by the foreign affiliate principally for the purpose of gaining or producing income from an active business carried on by it,
(b) shares of the capital stock of another foreign affiliate of the taxpayer where all or substantially all of the fair market value of the property of the other foreign affiliate is attributable to property, of that other foreign affiliate, that is excluded property,
(c) property all or substantially all of the income from which is, or would be, if there were income from the property, income from an active business (which, for this purpose, includes income that would be deemed to be income from an active business by paragraph (2)(a) if that paragraph were read without reference to subparagraph (v)), or
(c.1) property arising under or as a result of an agreement that
(i) provides for the purchase, sale or exchange of currency, and
(ii) either
(A) can reasonably be considered to have been made by the affiliate to reduce its risk, with respect to an amount that was receivable under an agreement that relates to the sale of excluded property or with respect to an amount that was receivable and was a property described in paragraph (c), of fluctuations in the value of the currency in which the amount receivable was denominated, or
(B) can reasonably be considered to have been made by the affiliate to reduce its risk, with respect to any of the following amounts, of fluctuations in the value of the currency in which that amount was denominated:
(I) an amount that was payable under an agreement that relates to the purchase of property that (at all times between the time of the acquisition of the property and the particular time) is excluded property of the affiliate,
(II) an amount of indebtedness, to the extent that the proceeds derived from the issuance or incurring of the indebtedness can reasonably be considered to have been used to acquire property that (at all times between the time of the acquisition of that property and the particular time) is excluded property of the affiliate, or
(III) an amount of indebtedness, to the extent that the proceeds derived from the issuance or incurring of the indebtedness can reasonably be considered to have been used to repay the outstanding balance of
1. an amount that, immediately before the time of that repayment, is described by subclause (I),
2. an amount of indebtedness of the affiliate that, immediately before the time of that repayment, is described by subclause (II), or
3. an amount of indebtedness of the affiliate that, immediately before the time of that repayment, is described by this subclause,
(3) The portion of the description of A in the definition “foreign accrual property income” in subsection 95(1) of the Act before paragraph (a) is replaced by the following:
A      is the amount that would, if section 80 did not apply to the affiliate for the year or a preceding taxation year, be the total of all amounts, each of which is the affiliate’s income for the year from property, the affiliate’s income for the year from a business other than an active business or the affiliate’s income for the year from a non-qualifying business of the affiliate, in each case that amount being determined as if each amount described in clause (2)(a)(ii)(D) that was paid or payable, directly or indirectly, by the affiliate to another foreign affiliate of the taxpayer or of a person with whom the taxpayer does not deal at arm’s length were nil where an amount in respect of the income derived by the other foreign affiliate from that amount that was paid or payable to it by the affiliate was added in computing its income from an active business, other than
(4) The description of D in the definition “foreign accrual property income” in subsection 95(1) of the Act is replaced by the following:
D      is the total of all amounts, each of which is the affiliate’s loss for the year from property, the affiliate’s loss for the year from a business other than an active business of the affiliate or the affiliate’s loss for the year from a non-qualifying business of the affiliate, in each case that amount being determined as if there were not included in the affiliate’s income any amount described in any of paragraphs (a) to (d) of the description of A and as if each amount described in clause (2)(a)(ii)(D) that was paid or payable, directly or indirectly, by the affiliate to another foreign affiliate of the taxpayer or of a person with whom the taxpayer does not deal at arm’s length were nil where an amount in respect of the income derived by the other foreign affiliate from that amount that was paid or payable to it by the affiliate was added in computing its income from an active business,
(5) The description of E in the definition “foreign accrual property income” in subsection 95(1) of the Act is replaced by the following:
E      is the amount of the affiliate’s allowable capital losses for the year from dispositions of property (other than excluded property) that can reasonably be considered to have accrued after its 1975 taxation year,
(6) The portion of the definition “investment business” in subsection 95(1) of the Act before paragraph (a) is replaced by the following:
“investment business”« entreprise de placement »
“investment business” of a foreign affiliate of a taxpayer means a business carried on by the foreign affiliate in a taxation year (other than a business deemed by subsection (2) to be a business other than an active business carried on by the foreign affiliate and other than a non-qualifying business of the foreign affiliate) the principal purpose of which is to derive income from property (including interest, dividends, rents, royalties or any similar returns or substitutes for such interest, dividends, rents, royalties or returns), income from the insurance or reinsurance of risks, income from the factoring of trade accounts receivable, or profits from the disposition of investment property, unless it is established by the taxpayer or the foreign affiliate that, throughout the period in the taxation year during which the business was carried on by the foreign affiliate,
(7) Subparagraph (a)(i) of the definition “investment business” in subsection 95(1) of the Act is replaced by the following:
(i) a business carried on by it as a foreign bank, a trust company, a credit union, an insurance corporation or a trader or dealer in securities or commodities, the activities of which are regulated under the laws
(A) of each country in which the business is carried on through a permanent establishment (as defined by regulation) in that country and of the country under whose laws the affiliate is governed and any of exists, was (unless the affiliate was continued in any jurisdiction) formed or organized, or was last continued,
(B) of the country in which the business is principally carried on, or
(C) if the affiliate is related to a non-resident corporation, of the country under whose laws that non-resident corporation is governed and any of exists, was (unless that non-resident corporation was continued in any jurisdiction) formed or organized, or was last continued, if those regulating laws are recognized under the laws of the country in which the business is principally carried on and all of those countries are members of the European Union, or
(8) The definition “investment business” in subsection 95(1) of the Act is amended by striking out the word “and” at the end of paragraph (a) and by replacing paragraph (b) with the following:
(b) either
(i) the affiliate (otherwise than as a member of a partnership) carries on the business (the affiliate being, in respect of those times, in that period of the year, that it so carries on the business, referred to in paragraph (c) as the “operator”), or
(ii) the affiliate carries on the business as a qualifying member of a partnership (the partnership being, in respect of those times, in that period of the year, that the affiliate so carries on the business, referred to in paragraph (c) as the “operator”), and
(c) the operator employs
(i) more than five employees full time in the active conduct of the business, or
(ii) the equivalent of more than five employees full time in the active conduct of the business taking into consideration only
(A) the services provided by employees of the operator, and
(B) the services provided outside Canada to the operator by any one or more persons each of whom is, during the time at which the services were performed by the person, an employee of
(I) a corporation related to the affiliate (otherwise than because of a right referred to in paragraph 251(5)(b)),
(II) in the case where the operator is the affiliate,
1. a corporation (referred to in this subparagraph as a “providing shareholder”) that is a qualifying shareholder of the affiliate,
2. a designated corporation in respect of the affiliate, or
3. a designated partnership in respect of the affiliate, and
(III) in the case where the operator is the partnership described in subparagraph (b)(ii),
1. any person (referred to in this subparagraph as a “providing member”) who is a qualifying member of that partnership,
2. a designated corporation in respect of the affiliate, or
3. a designated partnership in respect of the affiliate,
if the corporations referred to in subclause (B)(I) and the designated corporations, designated partnerships, providing shareholders or providing members referred to in subclauses (B)(II) and (III) receive compensation from the operator for the services provided to the operator by those employees the value of which is not less than the cost to those corporations, partnerships, shareholders or members of the compensation paid or accruing to the benefit of those employees that performed the services during the time at which the services were performed by those employees;
(9) Subsection 95(1) of the Act is amended by adding the following in alphabetical order:
“eligible trust”« fiducie admissible »
“eligible trust”, at any time, means a trust, other than a trust
(a) created or maintained for charitable purposes,
(b) governed by an employee benefit plan,
(c) described in paragraph (a.1) of the definition “trust” in subsection 108(1),
(d) governed by a salary deferral arrangement,
(e) operated for the purpose of administering or providing superannuation, pension, retirement or employee benefits, or
(f) where the amount of income or capital that any entity may receive directly from the trust at any time as a beneficiary under the trust depends on the exercise by any entity of, or the failure by any entity to exercise, a discretionary power;
“entity”« entité »
“entity” includes an association, a corporation, a fund, a natural person, a joint venture, an organization, a partnership, a syndicate and a trust;
“exempt trust”« fiducie exonérée »
“exempt trust”, at a particular time in respect of a taxpayer resident in Canada, means a trust that, at that time, is a trust under which the interest of each beneficiary under the trust is, at all times that the interest exists during the trust’s taxation year that includes the particular time, a specified fixed interest of the beneficiary in the trust, if at the particular time
(a) the trust is an eligible trust,
(b) there are at least 150 beneficiaries each of whom holds a specified fixed interest, in the trust, that has a fair market value of at least $500, and
(c) the total of all amounts each of which is the fair market value of an interest as a beneficiary under the trust held by a specified purchaser in respect of the taxpayer is not more than 10% of the total fair market value of all interests as a beneficiary under the trust;
“income from a non-qualifying business”« revenu provenant d’une entreprise non admissible »
“income from a non-qualifying business” of a foreign affiliate of a taxpayer resident in Canada for a taxation year includes the foreign affiliate’s income for the taxation year that pertains to or is incident to that non-qualifying business, but does not include
(a) the foreign affiliate’s income from property for the taxation year, or
(b) the foreign affiliate’s income for the taxation year from a business that is deemed by subsection (2) to be a business other than an active business of the foreign affiliate;
“non-qualifying business”« entreprise non admissible »
“non-qualifying business” of a foreign affiliate of a taxpayer at any time means a business carried on by the foreign affiliate through a permanent establishment in a jurisdiction that, at the end of the foreign affiliate’s taxation year that includes that time, is a non-qualifying country, other than
(a) an investment business of the foreign affiliate, or
(b) a business that is deemed by subsection (2) to be a business other than an active business of the foreign affiliate;
“non-qualifying country”« pays non admissible »
“non-qualifying country” at any time means a country or other jurisdiction with which
(a) Canada neither has a tax treaty at that time nor has, before that time, signed an agreement that will, on coming into effect, be a tax treaty,
(b) Canada does not have a comprehensive tax information exchange agreement that is in force and has effect at that time, and
(c) Canada has, more than 60 months before that time, either
(i) begun negotiations for a comprehensive tax information exchange agreement (unless that time is before 2014 and Canada was, on March 19, 2007, in the course of negotiating a comprehensive tax information exchange agreement with that jurisdiction), or
(ii) sought, by written invitation, to enter into negotiations for a comprehensive tax information exchange agreement (unless that time is before 2014 and Canada was, on March 19, 2007, in the course of negotiating a comprehensive tax information exchange agreement with that jurisdiction);
“specified fixed interest”« participation fixe désignée »
“specified fixed interest”, at any time, of an entity in a trust, means an interest of the entity as a beneficiary under the trust if
(a) the interest includes, at that time, rights of the entity as a beneficiary under the trust to receive, at or after that time and directly from the trust, income and capital of the trust,
(b) the interest was issued by the trust, at or before that time, to an entity, in exchange for consideration and the fair market value, at the time at which the interest was issued, of that consideration was equal to the fair market value, at the time at which it was issued, of the interest,
(c) the only manner in which any part of the interest may cease to be the entity’s is by way of a disposition (determined without reference to paragraph (i) of the definition “disposition” in subsection 248(1) and paragraph 248(8)(c)) by the entity of that part, and
(d) no amount of income or capital of the trust that any entity may receive directly from the trust at any time as a beneficiary under the trust depends on the exercise by any entity of, or the failure by any entity to exercise, a discretionary power;
“specified purchaser”« acheteur déterminé »
“specified purchaser”, at any time, in respect of a particular taxpayer resident in Canada, means an entity that is, at that time,
(a) the particular taxpayer,
(b) an entity resident in Canada with which the particular taxpayer does not deal at arm’s length,
(c) a foreign affiliate of an entity described in any of paragraphs (a) and (b) and (d) to (f),
(d) a trust (other than an exempt trust) in which an entity described in any of paragraphs (a) to (c) and (e) and (f) is beneficially interested,
(e) a partnership of which an entity described in any of paragraphs (a) to (d) and (f) is a member, or
(f) an entity (other than an entity described in any of paragraphs (a) to (e)) with which an entity described in any of paragraphs (a) to (e) does not deal at arm’s length;
(10) Paragraph 95(2)(a) of the Act is replaced by the following:
(a) in computing the income or loss from an active business for a taxation year of a particular foreign affiliate of a taxpayer in respect of which the taxpayer has a qualifying interest throughout the year or that is a controlled foreign affiliate of the taxpayer throughout the year, there shall be included any income or loss of the particular foreign affiliate for the year from sources in a country other than Canada that would otherwise be income or loss from property of the particular foreign affiliate for the year to the extent that
(i) the income or loss
(A) is derived by the particular foreign affiliate from activities that can reasonably be considered to be directly related to active business activities carried on in a country other than Canada by
(I) another foreign affiliate of the taxpayer in respect of which the taxpayer has a qualifying interest throughout the year, or
(II) a life insurance corporation that is resident in Canada throughout the year and that is
1. the taxpayer,
2. a person who controls the taxpayer,
3. a person controlled by the taxpayer, or
4. a person controlled by a person who controls the taxpayer, and
(B) would be included in computing the amount prescribed to be the earnings or loss, from an active business carried on in a country other than Canada, of
(I) that other foreign affiliate referred to in subclause (A)(I) if the income were earned by it, or
(II) the life insurance corporation referred to in subclause (A)(II) if that life insurance corporation were a foreign affiliate of the taxpayer and the income were earned by it,
(ii) the income or loss is derived from amounts that were paid or payable, directly or indirectly, to the particular foreign affiliate or a partnership of which the particular foreign affiliate was a member
(A) by a life insurance corporation that is resident in Canada and that is the taxpayer, a person who controls the taxpayer, a person controlled by the taxpayer or a person controlled by a person who controls the taxpayer, to the extent that those amounts that were paid or payable were for expenditures that are deductible in a taxation year of the life insurance corporation by the life insurance corporation in computing its income or loss for a taxation year from carrying on its life insurance business outside Canada and are not deductible in computing its income or loss for a taxation year from carrying on its life insurance business in Canada,
(B) by
(I) another foreign affiliate of the taxpayer in respect of which the taxpayer has a qualifying interest throughout the year, to the extent that those amounts that were paid or payable are for expenditures that were deductible by that other foreign affiliate in computing the amounts prescribed to be its earnings or loss for a taxation year from an active business (other than an active business carried on in Canada), or
(II) a partnership of which another foreign affiliate of the taxpayer (in respect of which other foreign affiliate the taxpayer has a qualifying interest throughout the year) is a qualifying member throughout each period, in the fiscal period of the partnership that ends in the year, in which that other foreign affiliate was a member of the partnership, to the extent that those amounts that were paid or payable are for expenditures that are deductible by the partnership in computing that other foreign affiliate’s share of any income or loss of the partnership, for a fiscal period, that is included in computing the amounts prescribed to be that other foreign affiliate’s earnings or loss for a taxation year from an active business (other than an active business carried on in Canada),
(C) by a partnership of which the particular foreign affiliate is a qualifying member throughout each period, in the fiscal period of the partnership that ends in the year, in which the particular foreign affiliate was a member of the partnership, to the extent that those amounts that were paid or payable are for expenditures that are deductible by the partnership in computing the partic-ular foreign affiliate’s share of any income or loss of the partnership, for a fiscal period, that is included in computing the amounts prescribed to be the particular foreign affiliate’s earnings or loss for a taxation year from an active business (other than an active business carried on in Canada), or
(D) by another foreign affiliate (referred to in this clause as the “second affiliate”) of the taxpayer — in respect of which the taxpayer has a qualifying interest throughout the year — to the extent that the amounts are paid or payable by the second affiliate, in respect of any particular period in the year,
(I) under a legal obligation to pay interest on borrowed money used for the purpose of earning income from property, or
(II) on an amount payable for property acquired for the purpose of gaining or producing income from property
where
(III) the property is, throughout the particular period, excluded property of the second affiliate that is shares of the capital stock of a corporation (referred to in this clause as the “third affiliate”) which is, throughout the particular period, a foreign affiliate (other than the particular foreign affiliate) of the taxpayer in respect of which the taxpayer has a qualifying interest,
(IV) the second affiliate and the third affiliate are resident in the same country for each of their taxation years (each of which taxation years is referred to in subclause (V) as a “relevant taxation year” of the second affiliate or of the third affiliate, as the case may be) that end in the year, and
(V) in respect of each of the second affiliate and the third affiliate for each relevant taxation year of that affiliate, either
1. that affiliate is subject to income taxation in that country in that relevant taxation year, or
2. the members or shareholders of that affiliate (which, for the purpose of this sub-subclause, includes a person that has, directly or indi-rectly, an interest, or for civil law a right, in a share of the capital stock of, or in an equity interest in, the affiliate) at the end of that relevant taxation year are subject to income taxation in that country on, in aggregate, all or substantially all of the income of that affiliate for that relevant taxation year in their taxation years in which that relevant taxation year ends,
(iii) the income or loss is derived by the particular foreign affiliate from the factoring of trade accounts receivable acquired by the particular foreign affiliate, or a partnership of which the particular foreign affiliate was a member, from another foreign affiliate of the taxpayer in respect of which the taxpayer has a qualifying interest throughout the year to the extent that the accounts receivable arose in the course of an active business carried on in a country other than Canada by that other foreign affiliate,
(iv) the income or loss is derived by the particular foreign affiliate from loans or lending assets acquired by the particular foreign affiliate, or a partnership of which the particular foreign affiliate was a member, from another foreign affiliate of the taxpayer in respect of which the taxpayer has a qualifying interest throughout the year, to the extent that the loans or lending assets arose in the course of an active business carried on in a country other than Canada by that other foreign affiliate,
(v) the income or loss is derived by the particular foreign affiliate from the disposition of excluded property that is not capital property, or
(vi) the income or loss is derived by the particular foreign affiliate under or as a result of an agreement that provides for the purchase, sale or exchange of currency and that can reasonably be considered to have been made by the particular foreign affiliate to reduce
(A) its risk — with respect to an amount that increases the amount required by this paragraph to be included in computing the particular foreign affiliate’s income for a taxation year from an active business or that decreases the amount required by this paragraph to be included in computing the particular foreign affiliate’s loss for a taxation year from an active business — of fluctuations in the value of the currency in which the amount was denominated, or
(B) its risk — with respect to an amount that decreases the amount required by this paragraph to be included in computing the particular foreign affiliate’s income for a taxation year from an active business or that increases the amount required by this paragraph to be included in computing the particular foreign affiliate’s loss for a taxation year from an active business — of fluctuations in the value of the currency in which the amount was denominated;
(11) Subparagraphs 95(2)(a.1)(i) and (ii) of the Act are replaced by the following:
(i) it is reasonable to conclude that the cost to any person of the property (other than property that is designated property) is relevant in computing the income from a business carried on by the taxpayer or by a person resident in Canada with whom the taxpayer does not deal at arm’s length or is relevant in computing the income from a business carried on in Canada by a non-resident person with whom the taxpayer does not deal at arm’s length, and
(ii) the property was neither
(A) manufactured, produced, grown, extracted or processed in the country
(I) under whose laws the affiliate is governed and any of exists, was (unless the affiliate was continued in any jurisdiction) formed or organized, or was last continued, and
(II) in which the affiliate’s business is principally carried on, nor
(B) an interest in real property, or a real right in an immovable, located in, or a foreign resource property in respect of, the country
(I) under whose laws the affiliate is governed and any of exists, was (unless the affiliate was continued in any jurisdiction) formed or organized, or was last continued, and
(II) in which the affiliate’s business is principally carried on,
(12) Paragraph 95(2)(b) of the Act is replaced by the following:
(b) the provision, by a foreign affiliate of a taxpayer, of services or of an undertaking to provide services
(i) is deemed to be a separate business, other than an active business, carried on by the affiliate, and any income from that business or that pertains to or is incident to that business is deemed to be income from a business other than an active business, to the extent that the amounts paid or payable in consideration for those services or for the undertaking to provide services
(A) are deductible, or can reasonably be considered to relate to amounts that are deductible, in computing the income from a business carried on in Canada, by
(I) any taxpayer of whom the affiliate is a foreign affiliate, or
(II) another taxpayer who does not deal at arm’s length with
1. the affiliate, or
2. any taxpayer of whom the affiliate is a foreign affiliate, or
(B) are deductible, or can reasonably be considered to relate to an amount that is deductible, in computing the foreign accrual property income of a foreign affiliate of
(I) any taxpayer of whom the affiliate is a foreign affiliate, or
(II) another taxpayer who does not deal at arm’s length with
1. the affiliate, or
2. any taxpayer of whom the affiliate is a foreign affiliate, and
(ii) is deemed to be a separate business, other than an active business, carried on by the affiliate, and any income from that business or that pertains to or is incident to that business is deemed to be income from a business other than an active business, to the extent that the services are, or are to be, performed by
(A) any taxpayer of whom the affiliate is a foreign affiliate,
(B) another taxpayer who does not deal at arm’s length with
(I) the affiliate, or
(II) any taxpayer of whom the affiliate is a foreign affiliate,
(C) a partnership any member of which is a person described in clause (A) or (B), or
(D) a partnership in which any person or partnership described in any of clauses (A) to (C) has, directly or indirectly, a partnership interest;
(13) Paragraph 95(2)(g) of the Act is replaced by the following:
(g) income earned, a loss incurred or a capital gain or capital loss realized, as the case may be, in a taxation year by a particular foreign affiliate of a taxpayer in respect of which the taxpayer has a qualifying interest throughout the taxation year or a particular foreign affiliate of a taxpayer that is a controlled foreign affiliate of the taxpayer throughout the taxation year, because of a fluctuation in the value of the currency of a country other than Canada relative to the value of Canadian currency, is deemed to be nil if it is earned, incurred or realized in reference to any of the following sources:
(i) a debt obligation that was owing to
(A) another foreign affiliate of the taxpayer in respect of which the taxpayer has a qualifying interest throughout the year (which other foreign affiliate is referred to in this paragraph as a “qualified foreign affiliate”) by the particular affiliate, or
(B) the particular affiliate by a qualified foreign affiliate,
(ii) the redemption, cancellation or acquisition of a share of the capital stock of, or the reduction of the capital of, the particular affiliate or a qualified foreign affiliate (which particular affiliate or which qualified foreign affiliate is referred to in this subparagraph as the “issuing corporation”) by the issuing corporation, or
(iii) the disposition to a qualified foreign affiliate of a share of the capital stock of another qualified foreign affiliate;
(g.01) any income, loss, capital gain or capital loss, derived by a foreign affiliate of a taxpayer under or as a result of an agreement that provides for the purchase, sale or exchange of currency and that can reasonably be considered to have been made by the foreign affiliate to reduce its risk (with respect to any source, any particular income, gain or loss determined in reference to which is deemed by paragraph (g) to be nil) of fluctuations in the value of currency, is, to the extent of the absolute value of the particular income, gain or loss, deemed to be nil;
(g.02) in applying subsection 39(2) for the purpose of this subdivision (other than sections 94 and 94.1), the gains and losses of a foreign affiliate of a taxpayer in respect of excluded property are to be computed in respect of the taxpayer separately from the gains and losses of the foreign affiliate in respect of property that is not excluded property;
(g.03) if at any time a particular foreign affiliate referred to in paragraph (g) is a member of a partnership or a qualified foreign affiliate referred to in that paragraph is a member of a partnership,
(i) in applying this paragraph, where a debt obligation is owing at that time by a debtor to the partnership of which the particular foreign affiliate is a member, the debt obligation is deemed to be owing at that time by the debtor to the particular foreign affiliate in the proportion that the particular foreign affiliate shared in any income earned, loss incurred or capital gain or capital loss realized by the partnership in respect of the debt obligation,
(ii) in applying this paragraph, where a debt obligation is owing at that time to a creditor by the partnership of which the particular foreign affiliate is a member, the debt obligation is deemed to be owing at that time to the creditor by the particular foreign affiliate in the proportion that the particular foreign affiliate shared in any income earned, loss incurred or capital gain or capital loss realized by the partnership in respect of the debt obligation,
(iii) in applying paragraph (g) and this paragraph, where a debt obligation is owing at that time by a debtor to the partnership of which the qualified foreign affiliate is a member, the debt obligation is deemed to be owing at that time by the debtor to the qualified foreign affiliate in the proportion that the qualified foreign affiliate shared in any income earned, loss incurred or capital gain or capital loss realized by the partnership in respect of the debt obligation,
(iv) in applying paragraph (g) and this paragraph, where a debt obligation is owing at that time to a creditor by the partnership of which the qualified foreign affiliate is a member, the debt obligation is deemed to be owing at that time to the creditor by the qualified foreign affiliate in the proportion that the qualified foreign affiliate shared in any income earned, loss incurred or capital gain or capital loss realized by the partnership in respect of the debt obligation, and
(v) in computing the particular foreign affiliate’s income or loss from a partnership, any income earned, loss incurred or capital gain or capital loss realized, as the case may be, by the partnership — in respect of the portion of a debt obligation owing to or owing by the partnership that is deemed by any of subparagraphs (i) to (iv) to be a debt obligation owing to or owing by the particular foreign affiliate (referred to in this subparagraph as the “allocated debt obligation”) — because of a fluctuation in the value of the currency of a country other than Canada relative to the value of Canadian currency, that is attrib-utable to the allocated debt obligation is deemed to be nil to the extent that paragraph (g) would, if the rules in subparagraphs (i) to (iv) were applied, have applied to the particular foreign affiliate, to deem to be nil the income earned, loss incurred or capital gain or capital loss realized, as the case may be, by the particular foreign affiliate in respect of the allocated debt obligation, because of a fluctuation in the value of the currency of a country other than Canada relative to the value of Canadian currency;
(14) Paragraph 95(2)(i) of the Act is replaced by the following:
(i) any income, gain or loss of a foreign affiliate of a taxpayer or of a partnership of which a foreign affiliate of a taxpayer is a member (which foreign affiliate or partnership is referred to in this paragraph as the “debtor”), for a taxation year or fiscal period of the debtor, as the case may be, is deemed to be income, a gain or a loss, as the case may be, from the disposition of an excluded property of the debtor, if the income, gain or loss is
(i) derived from the settlement or extinguishment of a debt of the debtor all or substantially all of the proceeds from which
(A) were used to acquire property, if at all times after the time at which the debt became debt of the debtor and before the time of that settlement or extinguishment, the property (or property substituted for the property) was property of the debtor and was, or would if the debtor were a foreign affiliate of the taxpayer be, excluded property of the debtor,
(B) were used at all times to earn income from an active business carried on by the debtor, or
(C) were used by the debtor for a combination of the uses described in clause (A) or (B),
(ii) derived from the settlement or extinguishment of a debt of the debtor all or substantially all of the proceeds from which were used to settle or extinguish a debt referred to in subparagraph (i) or in this subparagraph, or
(iii) derived under or as a result of an agreement that provides for the purchase, sale or exchange of currency and that can reasonably be considered to have been made by the debtor to reduce its risk, with respect to a debt referred to in subparagraph (i) or (ii), of fluctuations in the value of the currency in which the debt was denominated;
(15) Subparagraph 95(2)(l)(iii) of the Act is replaced by the following:
(iii) the business is carried on by the affiliate as a foreign bank, a trust company, a credit union, an insurance corporation or a trader or dealer in securities or commodities, the activities of which are regulated under the laws
(A) of each country in which the business is carried on through a permanent establishment (as defined by regulation) in that country and of the country under whose laws the affiliate is governed and any of exists, was (unless the affiliate was continued in any jurisdiction) formed or organized, or was last continued,
(B) of the country in which the business is principally carried on, or
(C) if the affiliate is related to a non-resident corporation, of the country under whose laws that non-resident corporation is governed and any of exists, was (unless that non-resident corporation was continued in any ju-risdiction) formed or organized, or was last continued, if those regulating laws are recognized under the laws of the country in which the business is principally carried on and all of those countries are members of the European Union, and
(16) Subsection 95(2) of the Act is amended by striking out the word “and” at the end of paragraph (l) and by adding the following after paragraph (m):
(n) in applying paragraphs (a) and (g) and subsections (2.2) and (2.21), in applying paragraph (b) of the description of A in the formula in the definition “foreign accrual property income” in subsection (1) and in applying paragraph (d) of the definition “exempt earnings”, and paragraph (c) of the definition “exempt loss”, in subsection 5907(1) of the Regulations, a non-resident corporation is deemed to be, at any time, a foreign affiliate of a particular corporation resident in Canada, and a foreign affiliate of the particular corporation in respect of which the particular corporation has a qualifying interest, if at that time
(i) the non-resident corporation is a foreign affiliate of another corporation that is resident in Canada and that is related (otherwise than because of a right referred to in paragraph 251(5)(b)) to the particular corporation, and
(ii) that other corporation has a qualifying interest in respect of the non-resident corporation;
(o) a particular person is a qualifying member of a partnership at a particular time if, at that time, the particular person is a member of the partnership and
(i) throughout the period, in the fiscal period of the partnership that includes the particular time, during which the member was a member of the partnership, the particular person is, on a regular, continuous and substantial basis
(A) actively engaged in those activities, of the principal business of the partnership carried on in that fiscal period by the partnership, that are other than activities connected with the provision of or the acquisition of funds required for the operation of that principal business, or
(B) actively engaged in those activities, of a particular business carried on in that fiscal period by the particular person (otherwise than as a member of a partnership) that is similar to the principal business carried on in that fiscal period by the partnership, that are other than activities connected with the provision of or the acquisition of funds required for the operation of the particular business, or
(ii) throughout the period, in the fiscal period of the partnership that includes the particular time, during which the particular person was a member of the partnership
(A) the total of the fair market value of all partnership interests in the partnership owned by the particular person was equal to or greater than 1% of the total of the fair market value of all partnership interests in the partnership owned by all members of the partnership, and
(B) the total of the fair market value of all partnership interests in the partnership owned by the particular person or persons (other than trusts) related to the particular person was equal to or greater than 10% of the total of the fair market value of all partnership interests in the partnership owned by all members of the partnership;
(p) a particular person is a qualifying shareholder of a corporation at any time if throughout the period, in the taxation year of the corporation that includes that time, during which the particular person was a shareholder of the corporation
(i) the particular person owned 1% or more of the issued and outstanding shares (having full voting rights under all circumstances) of the capital stock of the corporation,
(ii) the particular person, or the particular person and persons (other than trusts) related to the particular person, owned 10% or more of the issued and outstanding shares (having full voting rights under all circumstances) of the capital stock of the corporation,
(iii) the total of the fair market value of all the issued and outstanding shares of the capital stock of the corporation owned by the particular person is 1% or more of the total fair market value of all the issued and outstanding shares of the capital stock of the corporation, and
(iv) the total of the fair market value of all the issued and outstanding shares of the capital stock of the corporation owned by the particular person or by persons (other than trusts) related to the particular person is 10% or more of the total fair market value of all the issued and outstanding shares of the capital stock of the corporation;
(q) in applying paragraphs (o) and (p),
(i) where interests in any partnership or shares of the capital stock of any corporation (which interests or shares are referred to in this subparagraph as “equity interests”) are, at any time, property of a particular partnership or are deemed under this paragraph to be, at any time, property of the particular partnership, the equity interests are deemed to be owned at that time by each member of the particular partnership in a proportion equal to the proportion of the equity interests that
(A) the fair market value, at that time, of the member’s partnership interest in the particular partnership
is of
(B) the fair market value, at that time, of all members’ partnership interests in the particular partnership, and
(ii) where interests in a partnership or shares of the capital stock of a corporation (which interests or shares are referred to in this subparagraph as “equity interests”) are, at any time, property of a non-discretionary trust (within the meaning assigned by subsection 17(15)) or are deemed under this paragraph to be, at any time, property of such a non-discretionary trust, the equity interests are deemed to be owned at that time by each beneficiary under that trust in a proportion equal to that proportion of the equity interests that
(A) the fair market value, at that time, of the beneficiary’s beneficial interest in the trust
is of
(B) the fair market value, at that time, of all beneficial interests in the trust;
(r) in applying paragraph (a) and in applying paragraph (d) of the definition “exempt earnings”, and paragraph (c) of the definition “exempt loss”, in subsection 5907(1) of the Regulations, a partnership is deemed to be, at any time, a partnership of which a foreign affiliate — of a particular corporation resident in Canada and in respect of which foreign affiliate the particular corporation has a qualifying interest — is a qualifying member, if at that time
(i) a particular foreign affiliate — of another corporation that is resident in Canada and that is related (otherwise than because of a right referred to in paragraph 251(5)(b)) to the particular corporation — is a member of the partnership,
(ii) that other corporation has a qualifying interest in respect of the particular foreign affiliate, and
(iii) the particular foreign affiliate is a qualifying member of the partnership;
(s) in applying the definition “investment business” in subsection (1), a particular corporation is, at any time, a designated corporation in respect of a foreign affiliate of a taxpayer, if at that time
(i) a qualifying shareholder of the foreign affiliate or a person related to such a qualifying shareholder is a qualifying shareholder of the particular corporation,
(ii) the particular corporation
(A) is controlled by a qualifying shareholder of the foreign affiliate, or
(B) would be controlled by a particular qualifying shareholder of the foreign affiliate if the particular qualifying shareholder of the foreign affiliate owned each share of the capital stock of the particular corporation that is owned by a qualifying shareholder of the foreign affiliate or by a person related to a qualifying shareholder of the foreign affiliate, and
(iii) the total of all amounts each of which is the fair market value of a share of the capital stock of the particular corporation owned by a qualifying shareholder of the foreign affiliate or by a person related to a qualifying shareholder of the foreign affiliate is greater than 50% of the total fair market value of all the issued and outstanding shares of the capital stock of the particular corporation;
(t) in applying the definition “investment business” in subsection (1) in respect of a business carried on by a foreign affiliate of a taxpayer in a taxation year, a particular partnership is, at any time, a designated partnership in respect of the foreign affiliate of the taxpayer, if at that time
(i) the foreign affiliate or a person related to the foreign affiliate is a qualifying member of the particular partnership, and
(ii) the total of all amounts — each of which is the fair market value of a partnership interest in the particular partnership held by the foreign affiliate, by a person related to the foreign affiliate or (where the foreign affiliate carries on, at that time, the business as a qualifying member of another partnership) by a qualifying member of the other partnership — is greater than 50% of the total fair market value of all partnership interests in the particular partnership owned by all members of the particular partnership;
(u) if any entity is (or is deemed by this paragraph to be) a member of a particular partnership that is a member of another partnership,
(i) the entity is deemed to be a member of the other partnership for the purpose of
(A) subparagraph (ii),
(B) applying the reference, in paragraph (a), to “a member” of a partnership,
(C) paragraphs (a.1) to (b), (g.03) and (o), and
(D) paragraphs (b) and (c) of the definition “investment business” in subsection (1), and
(ii) in applying paragraph (g.03), the entity is deemed to have, directly, rights to the income or capital of the other partnership, to the extent of the entity’s direct and indirect rights to that income or capital;
(v) in applying paragraph (p),
(i) where shares of the capital stock of any corporation (referred to in this paragraph as the “issuing corporation”) are, at any time, owned by a corporation (referred to in this paragraph as the “holding corporation”) or are deemed under this paragraph to be, at any time, owned by a corporation (referred to in this paragraph as the “holding corporation”), those shares are deemed to be owned at that time by each shareholder of the holding corporation in a proportion equal to the proportion of those shares that
(A) the fair market value, at that time, of the shares of the capital stock of the issuing corporation that are owned by the shareholder
is of
(B) the fair market value, at that time, of all the issued and outstanding shares of the capital stock of the issuing corporation, and
(ii) a person who is deemed by subparagraph (i) to own, at any time, shares of the capital stock of a corporation is deemed to be, at that time, a shareholder of the corporation;
(w) where a foreign affiliate of a corporation resident in Canada carries on an active business in more than one country,
(i) where the business is carried on in a country other than Canada, it is deemed to carry on that business in that country only to the extent that the profit or loss from that business can reasonably be attributed to a permanent establishment situated in that country, and
(ii) where the business is carried on in Canada, it is deemed to carry on that business in Canada only to the extent that the income from the active business is subject to tax under this Part;
(x) the loss from an active business, from a non-qualifying business or from property (as the case may be) of a foreign affiliate of a taxpayer resident in Canada for a taxation year is the amount of that loss, if any, that is computed by applying the provisions in this subdivision with respect to the computation of income from the active business, from the non-qualifying business or from property (as the case may be) of the foreign affiliate for the taxation year with any modifications that the circumstances require;
(y) in determining — for the purpose of paragraph (a) and for the purpose of applying subsections (2.2) and (2.21) for the purpose of applying that paragraph — whether a non-resident corporation is, at any time, a foreign affiliate of a taxpayer in respect of which the taxpayer has a qualifying interest, where interests in any partnership or shares of the capital stock of any corporation (which interests or shares are referred to in this paragraph as “equity interests”) are, at that time, property of a particular partnership or are deemed under this paragraph to be, at any time, property of the particular partnership, the equity interests are deemed to be owned at that time by each member of the particular partnership in a proportion equal to the proportion of the equity interests that
(i) the fair market value, at that time, of the member’s partnership interest in the particular partnership
is of
(ii) the fair market value, at that time, of all members’ partnership interests in the particular partnership; and
(z) where a particular foreign affiliate of a taxpayer — in respect of which the taxpayer has a qualifying interest or that is a controlled foreign affiliate of the taxpayer — is a member of a partnership, the particular foreign affiliate’s foreign accrual property income or loss in respect of the taxpayer for a taxation year shall not include any income or loss of the partnership to the extent that the income or loss
(i) is attributable to the foreign accrual property income or loss of a foreign affiliate of the partnership that is also a foreign affiliate of the taxpayer (referred to in this paragraph as the “second foreign affiliate”) in respect of which the taxpayer has a qualifying interest or that is a controlled foreign affiliate of the taxpayer, and
(ii) is, because of paragraph (a) as applied in respect of the taxpayer, included in computing the income or loss from an active business of the second foreign affiliate for a taxation year.
(17) Section 95 of the Act is amended by adding the following after subsection (2):
Rules for the definition “controlled foreign affiliate”
(2.01) In applying paragraph (b) of the definition “controlled foreign affiliate” in subsection (1) and in applying this subsection,
(a) shares of the capital stock of a corporation that are at any time owned by, or that are deemed by this subsection to be at any time owned by, another corporation are deemed to be, at that time, owned by, or property of, as the case may be, each shareholder of the other corporation in the proportion that
(i) the fair market value at that time of the shares of the capital stock of the other corporation that, at that time, are owned by, or are property of, the shareholder
is of
(ii) the fair market value at that time of all the issued and outstanding shares of the capital stock of the other corporation;
(b) shares of the capital stock of a corporation that are, or are deemed by this subsection to be, at any time, property of a partnership, are deemed to be, at that time, owned by, or property of, as the case may be, each member of the partnership in the proportion that
(i) the fair market value at that time of the member’s partnership interest in the partnership
is of
(ii) the fair market value at that time of all partnership interests in the partnership;
(c) shares of the capital stock of a corporation that are at any time owned by, or that are deemed by this subsection to be at any time owned by, a non-discretionary trust (within the meaning assigned by subsection 17(15)) other than an exempt trust (within the meaning assigned by subsection (1)) are deemed to be, at that time, owned by, or property of, as the case may be, each beneficiary of the trust in the proportion that
(i) the fair market value at that time of the beneficiary’s beneficial interest in the trust
is of
(ii) the fair market value at that time of all beneficial interests in the trust; and
(d) all of the shares of the capital stock of a corporation that are at any time owned by, or that are deemed by this subsection to be at any time owned by, a particular trust (other than an exempt trust within the meaning assigned by subsection (1) or a non-discretionary trust within the meaning assigned by subsection 17(15)) are deemed to be, at that time, owned by, or property of, as the case may be,
(i) each beneficiary of the particular trust at that time, and
(ii) each settlor (within the meaning assigned by subsection 17(15)) in respect of the particular trust at that time.
Rule against double-counting
(2.02) In applying the assumption in paragraph (b) of the definition “controlled foreign affiliate” in subsection (1) in respect of a taxpayer resident in Canada to determine whether a foreign affiliate of the taxpayer is at any time a controlled foreign affiliate of the taxpayer, nothing in that paragraph or in subsection (2.01) is to be read or construed as requiring an interest, or for civil law a right, in a share of the capital stock of the foreign affiliate of the taxpayer owned at that time by the taxpayer to be taken into account more than once.
(18) Paragraph 95(2.1)(c) of the Act is replaced by the following:
(c) the affiliate entered into the agreements in the course of a business carried on by the affiliate, if
(i) the business is carried on by the affiliate principally in a country (other than Canada) and principally with persons with whom the affiliate deals at arm’s length, and
(ii) the business activities of the affiliate are regulated in that country; and
(19) Subsection 95(2.2) of the Act is replaced by the following:
Rule re subsection (2)
(2.2) For the purpose of subsection (2), other than paragraph (2)(f), a non-resident corporation that is not a foreign affiliate of a taxpayer in respect of which the taxpayer had a qualifying interest throughout a particular taxation year is deemed to be a foreign affiliate of the taxpayer in respect of which the taxpayer has a qualifying interest throughout that particular taxation year if
(a) a person or partnership has, in that particular taxation year, acquired or disposed of shares of the capital stock of that non-resident corporation or of any other corporation and, because of that acquisition or disposition, that non-resident corporation becomes or ceases to be a foreign affiliate of the taxpayer in respect of which the taxpayer has a qualifying interest, and
(b) at the beginning of that particular taxation year or at the end of that particular taxation year, the non-resident corporation is a foreign affiliate of the taxpayer in respect of which the taxpayer has a qualifying interest.
Rule re subsection (2.2)
(2.21) Subsection (2.2) does not apply for the purpose of paragraph (2)(a) in respect of any income or loss referred to in that paragraph, of a particular foreign affiliate of the taxpayer, to the extent that that income or loss can reasonably be considered to have been realized or to have accrued before the earlier of
(a) the time at which the particular affiliate became, as determined without reference to subsection (2.2), a foreign affiliate of the taxpayer in respect of which the taxpayer had a qualifying interest, and
(b) the time at which the particular affiliate became, as determined without reference to subsection (2.2), a foreign affiliate of another person resident in Canada in respect of which the other person resident in Canada had a qualifying interest, where
(i) the taxpayer is a corporation,
(ii) the taxpayer did not exist at the beginning of the taxation year,
(iii) the particular affiliate became a foreign affiliate of the taxpayer in the taxation year because of a disposition, in the taxation year, of shares of the capital stock of the particular affiliate to the taxpayer by the other person resident in Canada, and
(iv) the other person resident in Canada was, immediately before that disposition, related to the taxpayer.
(20) Paragraph 95(2.3)(b) of the Act is replaced by the following:
(b) the sale or exchange was made by the affiliate in the course of a business conducted principally with persons with whom the affiliate deals at arm’s length, if
(i) the business is principally carried on in the country (other than Canada) under whose laws the affiliate is governed and any of exists, was (unless the affiliate was continued in any jurisdiction) formed or organized, or was last continued, or
(ii) the affiliate is a foreign bank, a trust company, a credit union, an insurance corporation or a trader or dealer in securities or commodities and the activities of the business are regulated
(A) under the laws of the country under whose laws the affiliate is governed and any of exists, was (unless the affiliate was continued in any jurisdiction) formed or organized, or was last continued, and under the laws of each country in which the business is carried on through a permanent establishment (as defined by regulation) in that country,
(B) under the laws of the country (other than Canada) in which the business is principally carried on, or
(C) if the affiliate is related to a corporation, under the laws of the country under the laws of which that related corporation is governed and any of exists, was (unless that related corporation was continued in any ju-risdiction) formed or organized, or was last continued, if those regulating laws are recognized under the laws of the country in which the business is principally carried on and all of those countries are members of the European Union; and
(21) Paragraph 95(2.4)(a) of the Act is replaced by the following:
(a) the income is derived by the affiliate in the course of a business conducted principally with persons with whom the affiliate deals at arm’s length carried on by it as a foreign bank, a trust company, a credit union, an insurance corporation or a trader or dealer in securities or commodities, the activities of which are regulated under the laws
(i) of the country under whose laws the affiliate is governed and any of exists, was (unless the affiliate was continued in any jurisdiction) formed or organized, or was last continued and of each country in which the business is carried on through a permanent establishment (as defined by regulation) in that country,
(ii) of the country in which the business is principally carried on, or
(iii) if the affiliate is related to a corporation, of the country under the laws of which that related corporation is governed and any of exists, was (unless that related corporation was continued in any jurisdiction) formed or organized, or was last continued, if those regulating laws are recognized under the laws of the country in which the business is principally carried on and all of those countries are members of the European Union, and
(22) Section 95 of the Act is amended by adding the following after subsection (2.4):
Application of paragraph (2)(a.3)
(2.41) Paragraph (2)(a.3) does not apply to a foreign affiliate of a taxpayer resident in Canada in respect of the foreign affiliate’s income for a taxation year derived, directly or indirectly, from indebtedness of persons resident in Canada or from indebtedness in respect of businesses carried on in Canada (referred to in this subsection as the “Canadian indebtedness”) if
(a) the taxpayer is, at the end of the foreign affiliate’s taxation year
(i) a life insurance corporation resident in Canada, the business activities of which are subject by law to the supervision of the Superintendent of Financial Institutions or a similar authority of a province, or
(ii) a corporation resident in Canada that is a subsidiary controlled corporation of a corporation described in subparagraph (i);
(b) the Canadian indebtedness is used or held by the foreign affiliate, throughout the period in the taxation year that that Canadian indebtedness was used or held by the foreign affiliate, in the course of carrying on a business (referred to in this subsection as the “foreign life insurance business”) that is a life insurance business carried on outside Canada (other than a business deemed by paragraph (2)(a.2) to be a separate business other than an active business), the activities of which are regulated
(i) under the laws of the country under whose laws the foreign affiliate is governed and any of exists, was (unless the foreign affiliate was continued in any jurisdiction) formed or organized, or was last continued, and
(ii) under the laws of the country, if any, in which the business is principally carried on;
(c) more than 90% of the gross premium revenue of the foreign affiliate for the taxation year in respect of the foreign life insurance business was derived from the insurance or reinsurance of risks (net of reinsurance ceded) in respect of persons
(i) that were non-resident at the time at which the policies in respect of those risks were issued or effected, and
(ii) that were at that time dealing at arm’s length with the foreign affiliate, the taxpayer and all persons that were related at that time to the foreign affiliate or the taxpayer; and
(d) it is reasonable to conclude that the foreign affiliate used or held the Canadian indebtedness
(i) to fund a liability or reserve of the foreign life insurance business, or
(ii) as capital that can reasonably be considered to have been required for the foreign life insurance business.
Exception re paragraph (2)(a.3)
(2.42) If, at any time in a taxation year of a foreign affiliate of a taxpayer referred to in paragraph (2)(a.3), a life insurance corporation resident in Canada is the taxpayer referred to in paragraph (2)(a.3) or is a person who controls, or is controlled by, such a taxpayer, a particular indebtedness or a particular lease obligation of the life insurance corporation is, for the purposes of that paragraph, deemed, at that time, not to be an indebtedness or a lease obligation of a person resident in Canada, to the extent of the portion of the particular indebtedness or lease obligation that can reasonably be considered to have been issued by the life insurance corporation to the foreign affiliate
(a) in respect of the life insurance corporation’s life insurance business carried on outside Canada; and
(b) not in respect of
(i) the life insurance corporation’s life insurance business carried on in Canada, or
(ii) any other use.
(23) The definition “indebtedness” in subsection 95(2.5) of the Act is replaced by the following:
“indebtedness”« dette »
“indebtedness” does not include obligations of a particular person under agreements with non-resident corporations providing for the purchase, sale or exchange of currency where
(a) the agreements are swap agreements, forward purchase or sale agreements, forward rate agreements, futures agreements, options or rights agreements, or similar agreements,
(b) the particular person is a bank, a trust company, a credit union, an insurance corporation or a trader or dealer in securities or commodities resident in Canada, the business activities of which are subject by law to the supervision of a regulating authority in Canada such as the Superintendent of Financial Institutions or a similar authority of a province,
(c) the agreements are entered into by the non-resident corporation in the course of a business conducted principally with persons with whom the non-resident corporation deals at arm’s length, if
(i) the business is principally carried on in the country (other than Canada) under whose laws the non-resident corporation is governed and any of exists, was (unless the non-resident corporation was continued in any jurisdiction) formed or organized, or was last continued, or
(ii) the non-resident corporation is a foreign affiliate of the particular person, or of a person related to the particular person, and
(A) the non-resident corporation is a foreign bank, a trust company, a credit union, an insurance corporation or a trader or dealer in securities or commodities, and
(B) the activities of the business are regulated
(I) under the laws of the country under whose laws the non-resident corporation is governed and any of exists, was (unless the non-resident corporation was continued in any jurisdiction) formed or organized, or was last continued and under the laws of each country in which the business is carried on through a permanent establishment (as defined by regulation) in that country,
(II) under the laws of the country (other than Canada) in which the business is principally carried, or
(III) if the affiliate is related to a corporation, under the laws of the country under the laws of which a corporation related to the non-resident corporation is governed and any of exists, was (unless that related corporation was continued in any ju-risdiction) formed or organized, or was last continued, if those regulating laws are recognized under the laws of the country in which the business is principally carried on and all of those countries are members of the Eu-ropean Union, and
(d) the terms and conditions of such agreements are substantially the same as the terms and conditions of similar agreements made by persons dealings at arm’s length;
(24) Subsection 95(3) of the Act is amended by striking out the word “or” at the end of paragraph (a) and by adding the following after paragraph (b):
(c) the transmission of electronic signals or electricity along a transmission system located outside Canada; or
(d) the manufacturing or processing outside Canada, in accordance with the taxpayer’s specifications and under a contract between the taxpayer and the affiliate, of tangible property, or for civil law corporeal property, that is owned by the taxpayer if the property resulting from the manufacturing or processing is used or held by the taxpayer in the ordinary course of the taxpayer’s business carried on in Canada.
(25) Section 95 of the Act is amended by adding the following after subsection (3):
Designated property — subparagraph (2)(a.1)(i)
(3.1) Designated property referred to in subparagraph (2)(a.1)(i) is property that is described in the portion of paragraph (2)(a.1) that is before subparagraph (i) that is
(a) property that was sold to non-resident persons other than the affiliate, or sold to the affiliate for sale to non-resident persons, and
(i) that
(A) was — in the course of carrying on a business in Canada — manufactured, produced, grown, extracted or processed in Canada by the taxpayer, or by a person with whom the taxpayer does not deal at arm’s length, or
(B) was — in the course of a business carried on by a foreign affiliate of the taxpayer outside Canada — manufactured or processed from tangible property, or for civil law corporeal property, that, at the time of the manufacturing or processing, was owned by the taxpayer or by a person related to the taxpayer and used or held by the owner in the course of carrying on a business in Canada, if the manufacturing or processing was in accordance with the specifications of the owner of that tangible or corporeal property and under a contract between that owner and that foreign affiliate,
(ii) that was acquired, in the course of carrying on a business in Canada, by a purchaser from a vendor, if
(A) the purchaser is the taxpayer or is a person resident in Canada with whom the taxpayer does not deal at arm’s length, and
(B) the vendor is a person
(I) with whom the taxpayer deals at arm’s length,
(II) who is not a foreign affiliate of the taxpayer, and
(III) who is not a foreign affiliate of a person resident in Canada with whom the taxpayer does not deal at arm’s length, or
(iii) that was acquired by a purchaser from a vendor, if
(A) the purchaser is the taxpayer or is a person resident in Canada with whom the taxpayer does not deal at arm’s length,
(B) the vendor is a foreign affiliate of
(I) the taxpayer, or
(II) a person resident in Canada with whom the taxpayer does not deal at arm’s length, and
(C) that property was manufactured, produced, grown, extracted or processed in the country
(I) under whose laws the vendor is governed and any of exists, was (unless the vendor was continued in any jurisdiction) formed or organized, or was last continued, and
(II) in which the vendor’s business is principally carried on; or
(b) property that is an interest in real property, or a real right in an immovable, located in, or a foreign resource property in respect of, the country
(i) under whose laws the affiliate is governed and any of exists, was (unless the affiliate was continued in any jurisdiction) formed or organized, or was last continued, and
(ii) in which the affiliate’s business is principally carried on.
(26) The definitions “active business”, “income from an active business” and “income from property” in subsection 95(1) of the Act, as enacted by subsection (1), subsections (3), (4), and (6), the definitions “income from a non-qualifying business”, “non-qualifying business” and “non-qualifying country” in subsection 95(1) of the Act, as enacted by subsection (9), and paragraphs 95(2)(w) and (x) of the Act, as enacted by subsection (16), apply in respect of taxation years, of a foreign affiliate of a taxpayer, that begin after 2008.
(27) The definition “controlled foreign affiliate” in subsection 95(1) of the Act, as enacted by subsection (1), applies to taxation years, of a foreign affiliate of a taxpayer, that begin after 1995, except that
(a) for taxation years, of a foreign affiliate of a taxpayer, that begin after 2002 and on or before February 27, 2004, the definition “controlled foreign affiliate” in subsection 95(1) of the Act, as enacted by subsection (1), is to be read as follows:
“controlled foreign affiliate”, at any time, of a taxpayer resident in Canada, means
(a) a foreign affiliate of the taxpayer that is, at that time, controlled
(i) by the taxpayer,
(ii) by the taxpayer and not more than four other persons resident in Canada, or
(iii) by not more than four persons resident in Canada, other than the taxpayer, or
(b) a foreign affiliate of the taxpayer that would, at that time, be controlled by the taxpayer if the taxpayer owned
(i) all of the shares of the capital stock of the foreign affiliate that are owned at that time by the taxpayer,
(ii) all of the shares of the capital stock of the foreign affiliate that are owned at that time by persons who do not deal at arm’s length with the taxpayer,
(iii) all of the shares of the capital stock of the foreign affiliate that are owned at that time by the persons (each of whom is referred to in this definition as a “relevant Canadian shareholder”), in any set of persons not exceeding four (which set of persons shall be determined without ref-erence to the existence of or the absence of any relationship, connection or action in concert between those persons), who
(A) are resident in Canada,
(B) are not the taxpayer or a person described in subparagraph (ii), and
(C) own, at that time, shares of the capital stock of the foreign affiliate, and
(iv) all of the shares of the capital stock of the foreign affiliate that are owned at that time by persons who do not deal at arm’s length with any relevant Canadian shareholder;
(b) for taxation years, of a foreign affiliate of a taxpayer, that begin after 1995 and before 2003, the definition “controlled foreign affiliate” in subsection 95(1) of the Act, as enacted by subsection (1), is to be read as follows:
“controlled foreign affiliate”, at any time of a taxpayer resident in Canada, means a foreign affiliate of the taxpayer that
(a) is, at that time, controlled
(i) by the taxpayer,
(ii) by the taxpayer and not more than four other persons resident in Canada, or
(iii) by not more than four persons resident in Canada, other than the taxpayer, or
(b) would, at that time, be controlled by the taxpayer if the taxpayer owned
(i) each share of the capital stock of a corporation that is owned at that time by the taxpayer and each share of the capital stock of a corporation that is owned at that time by any of not more than four other persons resident in Canada,
(ii) each share of the capital stock of a corporation that is owned at that time by any of not more than four persons resident in Canada (other than the taxpayer), and
(iii) each share of the capital stock of a corporation that is owned at that time by the taxpayer and each share of the capital stock of a corporation that is owned at that time by any person with whom the taxpayer does not deal at arm’s length;
(28) Subject to subsection (46), subsections (2) and (14) apply to taxation years, of a foreign affiliate of a taxpayer, that begin after December 20, 2002, except that paragraph 95(2)(i) of the Act, as enacted by subsection (14), shall, in respect of settlements and extinguishments of debt held by a foreign affiliate of the taxpayer that occur in those taxation years and before October 2, 2007, be read as follows:
(i) any gain or loss determined in accordance with subsection 39(2) of a foreign affiliate of a taxpayer is deemed to be a gain or loss, as the case may be, from the disposition of an excluded property if the gain or loss is
(i) derived from the settlement or extinguishment of a debt all or substantially all of the proceeds from which were used at all times to acquire excluded property or to earn income from an active business or for a combination of those uses, or
(ii) derived under or as a result of an agreement that provides for the purchase, sale or exchange of currency and that can reasonably be considered to have been made by the affiliate to reduce its risk, with respect to a debt referred to in subparagraph (i), of fluctuations in the value of the currency in which the debt was denominated;
(29) Subsection (5) applies in respect of taxation years, of a foreign affiliate of a taxpayer, that end on or after December 20, 2002.
(30) Subject to subsection (46), subsections (7), (15), (18) and (20) to (23) apply to taxation years, of a foreign affiliate of a taxpayer, that begin after 1999.
(31) Subject to subsection (46), subsection (8) applies to taxation years, of a foreign affiliate of a taxpayer, that end after 1999.
(32) Subject to subsection (45), subsection (11) applies to taxation years, of a foreign affiliate of a taxpayer, that begin after December 20, 2002.
(33) The definition “entity” in subsection 95(1) of the Act, as enacted by subsection (9), applies in respect of taxation years, of a foreign affiliate of a taxpayer, that begin after 1994.
(34) The definitions “eligible trust”, “exempt trust”, “specified fixed interest” and “specified purchaser” in subsection 95(1) of the Act, as enacted by subsection (9), apply after February 27, 2004, except that, after February 27, 2004 and before October 2, 2007, the definition “specified purchaser” in subsection 95(1) of the Act, as enacted by subsection (9), shall be read as follows:
“specified purchaser”, at any time in respect of a particular taxpayer resident in Canada, means a person or partnership that is, at that time,
(a) the particular taxpayer;
(b) a taxpayer resident in Canada with which the particular taxpayer does not deal at arm’s length;
(c) a foreign affiliate of a person described in paragraph (a) or (b);
(d) a non-resident person with which a person described in any of paragraphs (a) to (c) does not deal at arm’s length;
(e) a trust (other than an exempt trust) in which a person or partnership described in any of paragraphs (a) to (d) and (f) is beneficially interested; and
(f) a partnership of which a person or partnership described in any of paragraphs (a) to (e) is a member.
(35) Subject to subsection (46), subsection (10) and paragraph 95(2)(z) of the Act, as enacted by subsection (16), apply to taxation years, of a foreign affiliate of a taxpayer, that end after 1999. However,
(a) subject to paragraph (b), paragraph 95(2)(a) of the Act, as enacted by subsection (10), shall, for taxation years, of a foreign affiliate of a taxpayer, that end after 1999 and begin before 2009, be read as follows:
(a) in computing the income or loss from an active business for a taxation year of a particular foreign affiliate of a taxpayer in respect of which the taxpayer has a qualifying interest throughout the year or that is a controlled foreign affiliate of the taxpayer throughout the year, there shall be included any income or loss of the particular foreign affiliate for that year from sources in a country other than Canada that would otherwise be income or loss from property of the particular foreign affiliate for the year to the extent that
(i) the income or loss
(A) is derived by the particular foreign affiliate from activities that can reasonably be considered to be directly related to active business activities carried on in a country other than Canada by
(I) another corporation
1. that is a non-resident corporation to which the particular foreign affiliate and the taxpayer are related throughout the year, or
2. that is a foreign affiliate of the taxpayer in respect of which the taxpayer has a qualifying interest throughout the year, or
(II) a life insurance corporation that is resident in Canada throughout the year and that is
1. the taxpayer,
2. a person who controls the taxpayer,
3. a person controlled by the taxpayer, or
4. a person controlled by a person who controls the taxpayer, and
(B) would be included in computing the amount prescribed to be the earnings or loss, from an active business carried on in a country other than Canada, of
(I) the non-resident corporation referred to in sub-subclause (A)(I)1 or the life insurance corporation referred to in subclause (A)(II), if that non-resident corporation or that life insurance corporation were a foreign affiliate of the taxpayer and the income were earned by it, or
(II) the foreign affiliate referred to in sub-subclause (A)(I)2, if the income were earned by it,
(ii) the income or loss is derived from amounts that were paid or payable, directly or indirectly, to the particular foreign affiliate or a partnership of which the particular foreign affiliate was a member
(A) by
(I) a non-resident corporation to which the particular foreign affiliate and the taxpayer are related throughout the year, or
(II) a partnership of which a non-resident corporation to which the particular foreign affiliate and the taxpayer are related throughout the year is a qualifying member throughout each period, in the fiscal period of the partnership that ends in the year, in which that non-resident corporation was a member of the partnership
to the extent that those amounts that were paid or payable are for expenditures that would, if the non-resident corporation or the partnership were a foreign affiliate of the taxpayer, be deductible by it in computing the amounts prescribed to be its earnings or loss for a taxation year from an active business (other than an active business carried on in Canada),
(B) by
(I) another foreign affiliate of the taxpayer in respect of which the taxpayer has a qualifying interest throughout the year, or
(II) a partnership of which another foreign affiliate of the taxpayer — in respect of which other foreign affiliate the taxpayer has a qualifying interest throughout the year or to which other foreign affiliate the particular foreign affiliate and the taxpayer are related throughout the year — is a qualifying member throughout each period, in the fiscal period of the partnership that ends in the year, in which that other foreign affiliate was a member of the partnership
to the extent that those amounts that were paid or payable are for expenditures that were deductible by the other foreign affiliate or would (if the partnership were a foreign affiliate of the taxpayer) be deductible by the partnership in computing the amounts prescribed to be its earnings or loss for a taxation year from an active business (other than an active business carried on in Canada),
(C) by a partnership of which the particular foreign affiliate is a qualifying member throughout each period, in the fiscal period of the partnership that ends in the year, in which the particular foreign affiliate was a member of the partnership, to the extent that those amounts that were paid or payable were for expenditures that would, if the partnership were a foreign affiliate of the taxpayer, be deductible in computing the amounts prescribed to be its earnings or loss for a taxation year from an active business (other than an active business carried on in Canada),
(D) by another foreign affiliate (referred to in this clause as the “second affiliate”) of the taxpayer — in respect of which the taxpayer has a qualifying interest throughout the year or to which the particular foreign affiliate and the taxpayer are related throughout the year — to the extent that the amounts are paid or payable by the second affiliate, in respect of any particular period in the year,
(I) under a legal obligation to pay interest on borrowed money used for the purpose of earning income from property, or
(II) on an amount payable for property acquired for the purpose of gaining or producing income from property
where
(III) the property is, throughout the particular period, excluded property of the second affiliate that is shares of the capital stock of a corporation (referred to in this clause as the “third affiliate”) which is, throughout the particular period, a foreign affiliate (other than the particular foreign affiliate) of the taxpayer in respect of which the taxpayer has a qualifying interest or to which the particular foreign affiliate and the taxpayer are related,
(IV) the second affiliate and the third affiliate are resident in the same country for each of their taxation years (each of which taxation years is referred to in subclause (V) as a “relevant taxation year” of the second affiliate or of the third affiliate, as the case may be) that end in the year, and
(V) in respect of each of the second affiliate and the third affiliate for each relevant taxation year of that affiliate, either
1. that affiliate is subject to income taxation in that country in that relevant taxation year, or
2. the members or shareholders of that affiliate (which, for the purpose of this sub-subclause, includes a person that has, directly or indi-rectly, an interest, or for civil law a right, in a share of the capital stock of, or in an equity interest in, the affiliate) at the end of that relevant taxation year are subject to income taxation in that country on, in aggregate, all or substantially all of the income of that affiliate for that relevant taxation year in their taxation years in which that relevant taxation year ends, or
(E) by a life insurance corporation that is resident in Canada and that is the taxpayer, a person who controls the taxpayer, a person controlled by the taxpayer or a person controlled by a person who controls the taxpayer, to the extent that those amounts that were paid or payable were for expenditures that are deductible by the life insurance corporation in computing its income or loss for a taxation year from carrying on its life insurance business outside Canada and are not deductible in computing its income or loss for a taxation year from carrying on its life insurance business in Canada,
(iii) the income or loss is derived by the particular foreign affiliate from the factoring of trade accounts receivable acquired by the particular foreign affiliate, or a partnership of which the particular foreign affiliate was a member, from a non-resident corporation to which the particular foreign affiliate and the taxpayer are related throughout the year to the extent that the accounts receivable arose in the course of an active business carried on in a country other than Canada by the non-resident corporation,
(iv) the income or loss is derived by the particular foreign affiliate from loans or lending assets acquired by the particular foreign affiliate, or a partnership of which the particular foreign affiliate was a member, from a non-resident corporation to which the particular foreign affiliate and the taxpayer are related throughout the year to the extent that the loans or lending assets arose in the course of an active business carried on in a country other than Canada by the non-resident corporation,
(v) the income or loss is derived by the particular foreign affiliate from the disposition of excluded property that is not capital property, or
(vi) the income or loss is derived by the particular foreign affiliate under or as a result of an agreement that provides for the purchase, sale or exchange of currency and that can reasonably be considered to have been made by the particular foreign affiliate to reduce
(A) its risk — with respect to an amount that increases the amount required by this paragraph to be included in computing the particular foreign affiliate’s income for a taxation year from an active business or that decreases the amount required by this paragraph to be included in computing the particular foreign affiliate’s loss for a taxation year from an active business — of fluctuations in the value of the currency in which the amount was denominated, or
(B) its risk — with respect to an amount that decreases the amount required by this paragraph to be included in computing the particular foreign affiliate’s income for a taxation year from an active business or that increases the amount required by this paragraph to be included in computing the particular foreign affiliate’s loss for a taxation year from an active business — of fluctuations in the value of the currency in which the amount was denominated;
(b) if a taxpayer so elects in writing and files the election with the Minister of National Revenue on or before the taxpayer’s filing-due date for the taxpayer’s taxation year that includes the day on which this Act is assented to,
(i) subclauses 95(2)(a)(ii)(D)(III) to (V) of the Act, as enacted by subsection (10), as required to be read by paragraph (a), also apply to taxation years, of all foreign affiliates of the taxpayer, that begin after 1994 and end before 2000, except that the references in those subclauses, as those subclauses apply to those taxation years of a foreign affiliate of a taxpayer, to “particular foreign affiliate” shall be read as references to “particular affiliate”; and
(ii) where the taxpayer has not validly made the election provided by subsection (46), clauses 95(2)(a)(ii)(A) to (C) and (E) of the Act, as enacted by subsection (10), as required to be read by paragraph (a), also apply to taxation years, of all foreign affiliates of the taxpayer, that begin after 1994 and end before 2000, except that the references in those clauses 95(2)(a)(ii)(A) to (C), as those clauses apply to those taxation years of a foreign affiliate of a taxpayer, to “particular foreign affiliate” shall be read as references to “particular affiliate” and
(A) subclause (II) of that clause 95(2)(a)(ii)(A) shall be read as follows:
(II) a partnership of which a non-resident corporation to which the particular affiliate and the taxpayer are related throughout the year is a member and of which that non-resident corporation is not a specified member at any time in a fiscal period of the partnership that ends in the year
(B) subclause (II) of that clause 95(2)(a)(ii)(B) shall be read as follows:
(II) a partnership of which another foreign affiliate of the taxpayer in respect of which the taxpayer has a qualifying interest throughout the year is a member and of which that other foreign affiliate is not a specified member at any time in a fiscal period of the partnership that ends in the year
(C) that clause 95(2)(a)(ii)(C) shall be read as follows:
(C) by a partnership of which the particular affiliate is a member and of which the particular affiliate is not a specified member at any time in a fiscal period of the partnership that ends in the year, to the extent that those amounts that were paid or payable were for expenditures that would be, if the partnership were a foreign affiliate of the taxpayer, deductible in a taxation year in computing the amounts prescribed to its earnings or loss from an active business carried on by it outside Canada,
(36) Subsection (12) applies to taxation years, of a foreign affiliate of a taxpayer, that begin after December 20, 2002, except that, in applying paragraph 95(2)(b) of the Act, as enacted by subsection (12), to taxation years, of a foreign affiliate of the taxpayer, that begin after December 20, 2002 and before February 28, 2004, that paragraph shall be read as follows:
(b) the provision, by a foreign affiliate of a taxpayer, of services or of an undertaking to provide services is deemed to be a separate business, other than an active business, carried on by the affiliate, and any income from that business or that pertains to or is incident to that business is deemed to be income from a business other than an active business, if
(i) the amount paid or payable in consideration for those services or for the undertaking to provide those services
(A) is deductible, or can reasonably be considered to relate to an amount that is deductible, in computing the income from a business carried on in Canada, by
(I) any taxpayer of whom the affiliate is a controlled foreign affiliate, or
(II) another person who is related to any taxpayer of whom the affiliate is a controlled foreign affiliate, or
(B) is deductible, or can reasonably be considered to relate to an amount that is deductible, in computing the foreign accrual property income of a controlled foreign affiliate of
(I) any taxpayer of whom the affiliate is a controlled foreign affiliate, or
(II) another person who is related to any taxpayer of whom the affiliate is a controlled foreign affiliate, or
(ii) the services are, or are to be, performed by
(A) any taxpayer of whom the affiliate is a controlled foreign affiliate and who is an individual resident in Canada, or
(B) another person who is related to any taxpayer of whom the affiliate is a controlled foreign affiliate and who is an individual resident in Canada;
(37) Subject to subsection (46), paragraphs 95(2)(g) to (g.03) of the Act, as enacted by subsection (13), apply to taxation years, of a foreign affiliate of a taxpayer, that begin after December 20, 2002, except that, for taxation years, of a foreign affiliate of a taxpayer, that begin after December 20, 2002 and before 2009, paragraph 95(2)(g) of the Act, as enacted by subsection (13), shall be read as follows:
(g) income earned, a loss incurred or a capital gain or capital loss realized, as the case may be, in a taxation year by a particular foreign affiliate of a taxpayer in respect of which the taxpayer has a qualifying interest throughout the taxation year or that is a controlled foreign affiliate of the taxpayer throughout the taxation year, because of a fluctuation in the value of the currency of a country other than Canada relative to the value of Canadian currency, is deemed to be nil if it is earned, incurred or realized in reference to any of the following sources:
(i) a debt obligation that was owing to
(A) another foreign affiliate of the taxpayer in respect of which the taxpayer has a qualifying interest throughout the year or any other non-resident corporation to which the particular affiliate and the taxpayer are related throughout the year (which other foreign affiliate or other non-resident corporation is referred to in this paragraph as a “qualified foreign corporation”), or
(B) the particular affiliate by a qualified foreign corporation,
(ii) the redemption, cancellation or acquisition of a share of the capital stock of, or the reduction of the capital of, the particular affiliate or a qualified foreign corporation (which particular affiliate or which qualified foreign affiliate is referred to in this subparagraph as the “issuing corporation”) by the issuing corporation, or
(iii) the disposition to a qualified foreign corporation of a share of the capital stock of another qualified foreign corporation;
(38) Subject to subsection (46), paragraphs 95(2)(n) and (p), (r) to (t), (v) and (y) of the Act, as enacted by subsection (16), apply to taxation years, of a foreign affiliate of a taxpayer, that end after 1999. However, if a taxpayer so elects in writing and files the election with the Minister of National Revenue on or before the taxpayer’s filing-due date for the taxpayer’s taxation year that includes the day on which this Act is assented to, paragraph 95(2)(n) of the Act, as enacted by subsection (16), applies to taxation years, of all foreign affiliates of the taxpayer, that begin after 1994.
(39) Subject to subsection (46), paragraphs 95(2)(o) and (q) of the Act, as enacted by subsection (16), apply to taxation years that end after 1999.
(40) Paragraph 95(2)(u) of the Act, as enacted by subsection (16), applies in respect of taxation years, of foreign affiliates of a taxpayer, that end after 1999. However, if a taxpayer so elects in writing and files the election with the Minister of National Revenue on or before the taxpayer’s filing-due date for the taxpayer’s taxation year that includes the day on which this Act is assented to, paragraph 95(2)(u) of the Act, as enacted by subsection (16), applies in respect of taxation years, of all foreign affiliates of the taxpayer, that begin after 1994.
(41) Subsection (17) applies to taxation years, of a foreign affiliate of a taxpayer, that begin after February 27, 2004.
(42) Subsection 95(2.2) of the Act, as enacted by subsection (19), applies to taxation years, of a foreign affiliate of a taxpayer, that end after 1999. However,
(a) subsection 95(2.2) of the Act, as enacted by subsection (19), shall be read as follows for taxation years, of a foreign affiliate of a taxpayer, that end after 1999 and begin before 2009:
(2.2) For the purpose of subsection (2), other than paragraph (2)(f),
(a) a non-resident corporation that was not a foreign affiliate of a taxpayer in respect of which the taxpayer had a qualifying interest throughout a particular taxation year shall be deemed to be a foreign affiliate of the taxpayer in respect of which the taxpayer had a qualifying interest throughout that year where
(i) a person or partnership has, in that year, acquired or disposed of shares of the capital stock of that non-resident corporation or any other corporation and, because of that acquisition or disposition, that non-resident corporation became or ceased to be a foreign affiliate of the taxpayer in respect of which the taxpayer had a qualifying interest, and
(ii) at the beginning of that year or at the end of that year, the non-resident corporation was a foreign affiliate of the taxpayer in respect of which the taxpayer had a qualifying interest; and
(b) a non-resident corporation that was not related to a taxpayer or to a taxpayer and a foreign affiliate of the taxpayer, as the case may be, throughout a particular taxation year is deemed to be related to the taxpayer or to the taxpayer and the foreign affiliate of the taxpayer throughout that year if
(i) a person or partnership has, in that year, acquired or disposed of shares of the capital stock of the non-resident corporation or any other corporation and, because of that acquisition or disposition, the non-resident corporation became (or would have become, if paragraph 251(5)(b) did not apply to rights contained in the agreement under which the person acquired the shares), or ceased to be, a non-resident corporation that was related to the taxpayer or to the taxpayer and the foreign affiliate of the taxpayer, and
(ii) at the beginning, or at the end, of that year, the non-resident corporation was related to the taxpayer or to the taxpayer and the foreign affiliate of the taxpayer.
(b) if a taxpayer elects in writing and files the election with the Minister of National Revenue on or before the taxpayer’s filing-due date for the taxpayer’s taxation year that includes the day on which this Act is assented to, subsection 95(2.2) of the Act, as enacted by subsection (19), also applies to taxation years, of all its foreign affiliates, that begin after 1994 and end before 2000, as though subsection 95(2.2) of the Act, as enacted by subsection (19), read as follows:
(2.2) For the purpose of subsection (2), other than paragraph (2)(f),
(a) a non-resident corporation that was not a foreign affiliate of a taxpayer in respect of which the taxpayer had a qualifying interest throughout a particular taxation year shall be deemed to be a foreign affiliate of a taxpayer in respect of which the taxpayer had a qualifying interest throughout that year where
(i) a person has, in that year, acquired or disposed of shares of the capital stock of that non-resident corporation or any other corporation and, because of that acquisition or disposition, that non-resident corporation became or ceased to be a foreign affiliate of the taxpayer in respect of which the taxpayer had a qualifying interest, and
(ii) at the beginning of that year or at the end of that year, the non-resident corporation was a foreign affiliate of the taxpayer in respect of which the taxpayer had a qualifying interest; and
(b) a non-resident corporation that was not related to a taxpayer or to a taxpayer and a foreign affiliate of the taxpayer, as the case may be, throughout a particular taxation year is deemed to be related to the taxpayer or to the taxpayer and the foreign affiliate of the taxpayer throughout that year if
(i) a person has, in that year, acquired or disposed of shares of the capital stock of the non-resident corporation or any other corporation and, because of that acquisition or disposition, the non-resident corporation became (or would have become, if paragraph 251(5)(b) did not apply to rights contained in the agreement under which the person acquired the shares), or ceased to be, a non-resident corporation that was related to the taxpayer or to the taxpayer and the foreign affiliate of the taxpayer, and
(ii) at the beginning, or at the end, of that year, the non-resident corporation was related to the taxpayer or to the taxpayer and the foreign affiliate of the taxpayer.
(43) Subsection 95(2.21) of the Act, as enacted by subsection (19), applies to taxation years, of a foreign affiliate of a taxpayer, that end after 1999. However,
(a) for taxation years, of a foreign affiliate of a taxpayer, that end after 1999 and begin before 2009, subsection 95(2.21) of the Act, as enacted by subsection (19), is to be read as follows:
(2.21) Subsection (2.2) does not apply for the purpose of paragraph (2)(a) in respect of any income or loss referred to in that paragraph, of a particular foreign affiliate of the taxpayer in respect of which the taxpayer has a qualifying interest throughout the taxation year of the particular affiliate or to which the taxpayer is related throughout the taxation year, to the extent that that income or loss can reasonably be considered to have been realized or to have accrued
(a) before the earlier of
(i) the time at which the particular affiliate became, as determined without reference to subsection (2.2), a foreign affiliate of the taxpayer in respect of which the taxpayer had a qualifying interest or to which the taxpayer is related, and
(ii) the time at which the particular affiliate became, as determined without reference to subsection (2.2), a foreign affiliate of another person resident in Canada in respect of which the other person resident in Canada had a qualifying interest or to which the other person resident in Canada is related, where
(A) the taxpayer is a corporation,
(B) the taxpayer did not exist at the beginning of the taxation year,
(C) the particular affiliate became a foreign affiliate of the taxpayer in the taxation year because of a disposition, in the taxation year, of shares of the capital stock of the particular affiliate to the taxpayer by the other person resident in Canada, and
(D) the other person resident in Canada was, immediately before that disposition, related to the taxpayer; or
(b) before the earlier of
(i) the time at which a non-resident corporation (other than the particular affiliate), or a foreign affiliate of the taxpayer (other than the particular affiliate), referred to in paragraph (2.2)(a) became, as determined without reference to subsection (2.2),
(A) a foreign affiliate of the taxpayer in respect of which the taxpayer had a qualifying interest, or
(B) related to the taxpayer and to the particular affiliate, and
(ii) the time at which a non-resident corporation (other than the particular affiliate), or a foreign affiliate of the taxpayer (other than the particular affiliate), referred to in paragraph (2.2)(a) became, as determined without reference to subsection (2.2), a foreign affiliate, of another person resident in Canada, in respect of which the other person resident in Canada had a qualifying interest (or became, as determined without reference to subsection (2.2), related to the other person resident in Canada and to the particular affiliate), where
(A) the taxpayer is a corporation,
(B) the taxpayer did not exist at the beginning of the taxation year,
(C) the particular affiliate became a foreign affiliate of the taxpayer in the taxation year because of a disposition, in the taxation year, of shares of the capital stock of the particular affiliate to the taxpayer by the other person resident in Canada, and
(D) the other person resident in Canada was, immediately before that disposition, related to the taxpayer.
(b) if a taxpayer makes a valid election under paragraph (42)(b) in respect of all its foreign affiliates, subsection 95(2.21) of the Act, as enacted by subsection (19), being read in the manner described in paragraph (a), also applies to taxation years, of all its foreign affiliates, that begin after 1994 and end before 2000.
(44) Subject to subsection (46), subsection (24) applies to the 2001 and subsequent taxation years of a foreign affiliate of a taxpayer. However, if a taxpayer elects in writing and files the election with the Minister of National Revenue on or before the taxpayer’s filing-due date for the taxpayer’s taxation year that includes the day on which this Act is assented to, that subsection applies to taxation years, of all its foreign affiliates, that begin after 1994.
(45) Subsection (25) applies to taxation years, of a foreign affiliate of a taxpayer, that begin after December 20, 2002. However, if a taxpayer elects in writing and files the election with the Minister of National Revenue on or before the taxpayer’s filing-due date for the taxpayer’s taxation year that includes the day on which this Act is assented to, subsections (11) and (25) apply to taxation years, of all its foreign affiliates, that begin after 1994.
(46) If a taxpayer so elects in writing and files the election with the Minister of National Revenue on or before the taxpayer’s filing-due date for the taxpayer’s taxation year that includes the day on which this Act is assented to,
(a) paragraphs (a), (c) and (c.1) of the definition “excluded property” in subsection 95(1) of the Act, as enacted by subsection (2), subsection (8), paragraphs 95(2)(g.01) and (g.02) of the Act, as enacted by subsection (13), paragraph 95(2)(i) of the Act, as enacted by subsection (14), paragraphs 95(2)(o) to (t) and (z) of the Act, as enacted by subsection (16), subsections (18) and (22) and paragraph 95(3)(d) of the Act, as enacted by subsection (24), apply to taxation years, of all foreign affiliates of the taxpayer, that begin after 1994;
(b) subparagraph 95(2)(a)(i) of the Act, as enacted by subsection (10), read in the manner described in paragraph (35)(a) but read without reference to sub-subclause 95(2)(a)(i)(A)(I)2 of the Act, subclause 95(2)(a)(i)(B)(II) of the Act and the word “or” at the end of subclause 95(2)(a)(i)(B)(I) of the Act, also applies to taxation years, of all foreign affiliates of the taxpayer, that begin after 1994 and end before 2000;
(c) clauses 95(2)(a)(ii)(A) to (C) and (E) of the Act and subparagraphs 95(2)(a)(v) and (vi) of the Act, all as enacted by subsection (10), read in the manner described in paragraph (35)(a), also apply to taxation years, of all foreign affiliates of the taxpayer, that begin after 1994 and end before 2000, except that the references to “income or loss” in that subparagraph 95(2)(a)(v) and that portion of subparagraph 95(2)(a)(vi) before clause (A) of that subparagraph 95(2)(a)(vi), as those subparagraphs apply to those taxation years of a foreign affiliate of the taxpayer, shall be replaced by a reference to “income”;
(d) paragraph 95(2)(g) of the Act, as enacted by subsection (13), being read in the manner described in subsection (37), also applies to taxation years, of all foreign affiliates of the taxpayer, that begin after 1994 and before December 21, 2002; and
(e) paragraph 95(2)(i) of the Act, as enacted by subsection (14), as required by subsection (28) to be read, in respect of settlements and extinguishments of debt held by a foreign affiliate of the taxpayer that occur before October 2, 2007 in taxation years, of the foreign affiliate of the taxpayer, that begin after December 20, 2002, also applies in respect of settlements and extinguishments of debt held by a foreign affiliate of the taxpayer that occur in taxation years, of the foreign affiliate of the taxpayer, that begin after 1994 and before December 21, 2002.
(47) If a taxpayer has made what would, but for this subsection, be a valid election under subsection (46) and the taxpayer has, on or before the taxpayer’s filing-due date for the taxpayer’s taxation year that includes the day that is the third anniversary of the day on which this Act is assented to, filed with the Minister of National Revenue a notice in writing to revoke the election, the election is deemed, otherwise than for the purpose of this subsection, never to have been made.
(48) Notwithstanding subsections 152(4) to (5) of the Act, any assessment of a taxpayer’s tax, interest and penalties payable under the Act for any taxation year shall be made that is necessary to take an election referred to in any of subsections (35), (38), (40), (42) and (44) to (46), or a revocation referred to in subsection (47), into account.
27. (1) Section 104 of the Act is amended by adding the following after subsection (21.2):
Beneficiaries’ taxable capital gain — QFP taxable capital gain
(21.21) If clause (21.2)(b)(ii)(A) applies to deem, for the purpose of section 110.6, the beneficiary to have a taxable capital gain (referred to in this subsection as the “QFP taxable capital gain”) from a disposition of capital property that is qualified farm property of the beneficiary, for the beneficiary’s taxation year that includes March 19, 2007 and in which the designation year of the trust ends, for the purpose of subsection 110.6(2.3), the beneficiary is, where the trust complies with the requirements of subsection (21.24), deemed to have a taxable capital gain from the disposition of qualified farm property of the beneficiary on or after March 19, 2007 equal to the amount determined by the formula
A × B/C
where
A      is the amount of the QFP taxable capital gain;
B      is, where the designation year of the trust includes March 19, 2007, the amount that would be determined in respect of the trust for the designation year under paragraph 3(b) in respect of capital gains and capital losses if the only properties referred to in paragraph 3(b) were qualified farm property of the trust that were disposed of by the trust on or after March 19, 2007; and
C      is, where the designation year of the trust includes March 19, 2007, the amount that would be determined in respect of the trust for the designation year under paragraph 3(b) in respect of capital gains and capital losses if the only properties referred to in paragraph 3(b) were qualified farm property.
Beneficiaries’ taxable capital gain — QSBC taxable capital gain
(21.22) If clause (21.2)(b)(ii)(B) applies to deem, for the purpose of section 110.6, the beneficiary to have a taxable capital gain (referred to in this subsection as the “QSBC taxable capital gain”) from a disposition of capital property that is a qualified small business corporation share of the beneficiary, for the beneficiary’s taxation year in which the designation year of the trust ends, for the purpose of subsection 110.6(2.3), the beneficiary, where the trust complies with requirements of subsection (21.24), is deemed to have a taxable capital gain from the disposition of a qualified small business corporation share of the beneficiary on or after March 19, 2007 equal to the amount determined by the formula
A × B/C
where
A      is the amount of the QSBC taxable capital gain;
B      is, where the designation year of the trust includes March 19, 2007, the amount that would be determined in respect of the trust for the designation year under paragraph 3(b) in respect of capital gains and capital losses if the only properties referred to in paragraph 3(b) were qualified small business corporation shares of the trust that were disposed of by the trust on or after March 19, 2007; and
C      is, where the designation year of the trust includes March 19, 2007, the amount that would be determined in respect of the trust for the designation year under paragraph 3(b) in respect of capital gains and capital losses if the only properties referred to in paragraph 3(b) were qualified small business corporation shares of the trust.
Beneficiaries’ taxable capital gain — QFFP taxable capital gain
(21.23) If clause (21.2)(b)(ii)(C) applies to deem, for the purpose of section 110.6, the beneficiary to have a taxable capital gain (referred to in this subsection as the “QFFP taxable capital gain”), from a disposition of capital property that is qualified fishing property of the beneficiary, for the beneficiary’s taxation year in which the designation year of the trust ends, for the purpose of subsection 110.6(2.3), the beneficiary, where the trust complies with requirements of subsection (21.24), is deemed to have a taxable capital gain from the disposition of qualified fishing property on or after March 19, 2007 equal to the amount determined by the formula
A × B/C
where
A      is the amount of the QFFP taxable capital gain;
B      is, where the designation year of the trust includes March 19, 2007, the amount that would be determined in respect of the trust for the designation year under paragraph 3(b) in respect of capital gains and capital losses if the only properties referred to in paragraph 3(b) were qualified fishing property that were disposed of by the trust on or after March 19, 2007; and
C      is, where the designation year of the trust includes March 19, 2007, the amount that would be determined in respect of the trust for the designation year under paragraph 3(b) in respect of capital gains and capital losses if the only properties referred to in paragraph 3(b) were qualified fishing property of the trust.
Trusts to designate amounts
(21.24) A trust shall determine and designate, in its return of income under this part for a designation year of the trust, the following amounts in respect of a beneficiary:
(a) the amount that is, under subsection (21.21), determined to be the beneficiary’s taxable capital gain from the disposition, on or after March 19, 2007, of qualified farm property of the beneficiary,
(b) the amount that is, under subsection (21.22), determined to be the beneficiary’s taxable capital gain from the disposition, on or after March 19, 2007, of qualified small business corporation share of the beneficiary, and
(c) the amount that is, under subsection (21.23), determined to be the beneficiary’s taxable capital gain from the disposition, on or after March 19, 2007, of qualified fishing property of the beneficiary.
(2) Subsection (1) applies to taxation years of trusts that end on or after March 19, 2007.
28. (1) Subparagraph 108(2)(b)(vi) of the Act is replaced by the following:
(vi) where the trust would not be a unit trust at the particular time if this paragraph were read without reference to this subparagraph and subparagraph (iii) were read without reference to clause (F), the units of the trust are listed at any time in the current year or in the following taxation year on a designated stock exchange in Canada, or
(2) Subsection (1) applies on and after the day on which this Act is assented to.
29. (1) The portion of paragraph 110(1)(d.01) of the Act before subparagraph (i) is replaced by the following:
(d.01) subject to subsection (2.1), if the taxpayer disposes of a security acquired in the year by the taxpayer under an agreement referred to in subsection 7(1) by making a gift of the security to a qualified donee, an amount in respect of the disposition of the security equal to 1/2 of the lesser of the benefit deemed by paragraph 7(1)(a) to have been received by the taxpayer in the year in respect of the acquisition of the security and the amount that would have been that benefit had the value of the security at the time of its acquisition by the taxpayer been equal to the value of the security at the time of the disposition, if
(2) Subsection (1) applies in respect of gifts made on or after March 19, 2007.
30. (1) Subsection 110.1(1) of the Act is amended by adding the following after paragraph (a):
Gifts of medicine
(a.1) the total of all amounts in respect of property that is the subject of an eligible medical gift made by the corporation in the taxation year or in any of the five preceding taxation years, each of which is the lesser of
(i) the cost to the corporation of the property, and
(ii) 50% of the amount, if any, by which the corporation’s proceeds of disposition of the property in respect of the gift exceeds the cost to the corporation of the property.
(2) Section 110.1 of the Act is amended by adding the following after subsection (7):
Eligible medical gift
(8) For the purpose of paragraph (1)(a.1), a gift referred to in paragraph (1)(a) is an eligible medical gift of a corporation if
(a) the corporation has directed the donee to apply the gift to charitable activities outside of Canada;
(b) in the case of a gift made on or before October 2, 2007, the property that is the subject of the gift is medicine;
(c) in the case of a gift made after October 2, 2007, the property that is the subject of the gift is a medicine that qualifies as a drug, within the meaning of the Food and Drugs Act, and the drug
(i) meets the requirements of that Act, or would meet those requirements if that Act were read without reference to its subsection 37(1), and
(ii) is not a food, cosmetic or device (as those terms are defined in that Act), a natural health product (as defined in the Natural Health Products Regulations) or a veterinary drug;
(d) the property was, immediately before the making of the gift, described in an inventory in respect of a business of the corporation; and
(e) the donee is a registered charity that has received a disbursement under a program of the Canadian International Development Agency.
(3) Subsections (1) and (2) apply in respect of gifts of property made after March 18, 2007.
31. (1) The formula in paragraph 110.6(2)(a) of the Act is replaced by the following:
[$375,000 - (A + B + C + D)] × E
(2) Section 110.6 of the Act is amended by adding the following after subsection (2.2):
Additional capital gains deduction — taxation year that includes March 19, 2007
(2.3) In computing the taxable income of an individual (other than a trust) for the individ-ual’s taxation year that includes March 19, 2007 (referred to in this subsection as the “transition year”), there may be deducted, where that individual was resident in Canada throughout the transition year and that individual disposed of in the transition year, and on or after March 19, 2007, a qualified small business corporation share of the individual, a qualified farm property of the individual, or a qualified fishing property of the individual, such amount as the individual may claim not exceeding the least of
(a) $125,000,
(b) the amount, if any, by which the individual’s cumulative gains limit at the end of the transition year exceeds the total of all amounts each of which is an amount deducted by the individual under subsection (2), (2.1) or (2.2) in computing the individ-ual’s taxable income for the transition year,
(c) the amount, if any, by which the individual’s annual gains limit for the transition year exceeds the total of all amounts each of which is an amount deducted by the individual under subsection (2), (2.1) or (2.2) in computing the individual’s taxable income for the transition year, and
(d) the amount that would be determined in respect of the individual for the transition year under paragraph 3(b) in respect of capital gains and capital losses if the only properties referred to in that paragraph were qualified small business corporation shares of the individual, qualified farm properties of the individual, and qualified fishing properties of the individual, disposed of by the individual on or after March 19, 2007.
(3) Subsection 110.6(4) of the Act is replaced by the following:
Maximum capital gains deduction
(4) Notwithstanding subsections (2), (2.1) and (2.2), the total amount that may be deducted under this section in computing an individual’s income for a taxation year shall not exceed the total of the amount determined by the formula in paragraph 2(a) and the amount that may be deducted under subsection (2.3), in respect of the individual for the year.
(4) The portion of subsection 110.6(5) of the Act before paragraph (a) is replaced by the following:
Deemed resident in Canada
(5) For the purposes of subsections (2) to (2.3), an individual is deemed to have been resident in Canada throughout a particular taxation year if
(5) The portion of subsection 110.6(6) of the Act before paragraph (a) is replaced by the following:
Failure to report capital gain
(6) Notwithstanding subsections (2) to (2.3), no amount may be deducted under this section in respect of a capital gain of an individual for a particular taxation year in computing the individual’s taxable income for the particular taxation year, if
(6) The portion of subsection 110.6(7) of the Act before paragraph (b) is replaced by the following:
Deduction not permitted
(7) Notwithstanding subsections (2) to (2.3), no amount may be deducted under this section in computing an individual’s taxable income for a taxation year in respect of a capital gain of the individual for the taxation year if the capital gain is from a disposition of property which disposition is part of a series of transactions or events
(a) that includes a dividend received by a corporation to which dividend subsection 55(2) does not apply but would apply if this Act were read without reference to paragraph 55(3)(b); or
(7) Subsection 110.6(8) of the Act is replaced by the following:
Deduction not permitted
(8) Notwithstanding subsections (2) to (2.3), where an individual has a capital gain for a taxation year from the disposition of a property and it can reasonably be concluded, having regard to all the circumstances, that a significant part of the capital gain is attributable to the fact that dividends were not paid on a share (other than a prescribed share) or that dividends paid on such a share in the taxation year or in any preceding taxation year were less than 90% of the average annual rate of return on that share for that year, no amount in respect of that capital gain shall be deducted under this section in computing the individual’s taxable income for the year.
(8) Section 110.6 of the Act is amended by adding the following after subsection (30):
Conditions for the application of subsection (32)
(31) Subsection (32) applies to an individual for a taxation year that begins after March 19, 2007 if
(a) in the taxation year the individual has a taxable capital gain from the disposition, before March 19, 2007, of a qualified small business corporation share of the individual, a qualified farm property of the individual or a qualified fishing property of the individual; and
(b) the total of all amounts each of which is an amount of a taxable capital gain of the individual described in paragraph (a) exceeds the amount that would be determined under paragraph (2)(a) in respect of the individual for the taxation year were the reference to “$375,000” in that paragraph read as a reference to “$250,000” (the amount of which excess is referred to in subsection (32) as the “denied excess”).
Deduction denied
(32) Notwithstanding subsections (2) to (2.3), if this subsection applies to an individual for a taxation year, no amount may be deducted under this section for the taxation year by the individual in respect of the individual’s taxable capital gains for the year described in paragraph (31)(a) to the extent of the denied excess.
(9) Subsection (1) applies to taxation years that begin after March 19, 2007.
(10) Subsections (2) to (5), (7) and (8) apply to taxation years that end on or after March 19, 2007.
(11) Subsection (6) applies to taxation years that end after May 1, 2006, except that for taxation years that end before March 19, 2007, the portion of subsection 110.6(7) of the Act before paragraph (a), as amended by subsection (5), shall be read as follows:
(7) Notwithstanding subsections (2) to (2.2), no amount may be deducted under this section in computing an individual’s taxable income for a taxation year in respect of a capital gain of the individual for the taxation year, if the capital gain is from a disposition of property which disposition is part of a series of transactions or events
32. Section 115 of the Act is amended by adding the following after subsection (2.2):
Non-resident persons — 2010 Olympic and Paralympic Winter Games
(2.3) Notwithstanding subsection (1), no amount is to be included in computing the taxable income earned in Canada for any taxation year of a non-resident person, in respect of any amount paid or payable to that person in respect of activities performed in Canada by that person in connection with the 2010 Olympic Winter Games or the 2010 Paralympic Winter Games, after 2009 and before April 2010, if that person is
(a) an athlete who represents a country other than Canada;
(b) a member of an officially registered support staff associated with a team from a country other than Canada;
(c) a person who serves as a games official;
(d) the International Olympic Committee;
(e) the International Paralympic Committee;
(f) an international sports federation that is a member of the General Association of International Sports Federations;
(g) an accredited foreign media organization; or
(h) an individual, other than a trust, who is an employee, an officer or a member of a person described in any one or more of paragraphs (a) to (g), or who provides services under contract with one or more persons described in those paragraphs.
33. (1) Paragraph 116(6)(b) of the Act is amended by replacing “prescribed stock exchange” with “recognized stock exchange”.
(2) Subsection (1) applies on and after the day on which this Act is assented to.
34. (1) Section 117 of the Act is amended by adding the following after subsection 117(2):
Tax payable — WITB advance payment
(2.1) The tax payable under this Part on the individual’s taxable income for a taxation year, as computed under subsection (2), is deemed to be the total of the amount otherwise computed under that subsection and, except for the purposes of sections 118 to 118.9, 120.2, 121, 122.3 and subdivision c, the total of all amounts received by the individual in respect of the taxation year under subsection 122.7(7).
(2) Subsection (1) applies to the 2008 and subsequent taxation years.
35. (1) The portion of subsection 117.1(1) of the Act before paragraph (a) is replaced by the following:
Annual adjustment
117.1 (1) The amount of $1,000 referred to in the formula in paragraph 8(1)(s), each of the amounts expressed in dollars in subparagraph 6(1)(b)(v.1), subsection 117(2), the description of B in subsection 118(1), subsection 118(2), paragraph (a) of the description of B in subsection 118(10), subsection 118.01(2), the descriptions of C and F in subsection 118.2(1), subsections 118.3(1), 122.5(3) and 122.51(1) and (2), the amounts of $500 and $1,000 referred to in the description of A, and the amounts of $9,500 and $14,500 referred to in the description of B, in the formula in subsection 122.7(2), the amount of $250 referred to in the description of C, and the amounts of $12,833 and $21,167 referred to in the description of D, in the formula in subsection 122.7(3), and each of the amounts expressed in dollars in Part I.2 in relation to tax payable under this Part or Part I.2 for a taxation year shall be adjusted so that the amount to be used under those provisions for the year is the total of
(2) Subsection (1) applies to the 2008 and subsequent taxation years.
36. (1) Subparagraph (b.1)(ii) of the description of B in subsection 118(1) of the Act is replaced by the following:
(ii) except where subparagraph (i) applies, the individual may deduct an amount under paragraph (b) in respect of the individual’s child who is under the age of 18 years at the end of the taxation year, or could deduct such an amount in respect of that child if paragraph 118(4)(a) did not apply to the individual for the taxation year and if the child had no income for the year, $2,000 for each such child.
(2) Section 118 of the Act is amended by adding the following after subsection (5):
Where subsection (5) does not apply
(5.1) Where, if this Act were read without reference to this subsection, solely because of the application of subsection (5), no individual is entitled to a deduction under paragraph (b) or (b.1) of the description of B in subsection (1) for a taxation year in respect of a child, subsection (5) shall not apply in respect of that child for that taxation year.
(3) Subsections (1) and (2) apply to the 2007 and subsequent taxation years.
37. (1) Paragraph (b) of the definition “eligible public transit pass” in subsection 118.02(1) of the Act is replaced by the following:
(b) identifying the right of an individual who is the holder or owner of the document to use public commuter transit services of that qualified Canadian transit organization
(i) on an unlimited number of occasions and on any day on which the public commuter transit services are offered during an uninterrupted period of at least 28 days, or
(ii) on an unlimited number of occasions during an uninterrupted period of at least five consecutive days, if the combination of that document and one or more other such documents gives the right to the individual to use those public commuter transit services on at least 20 days in a 28-day period.
(2) Subsection 118.02(1) of the Act is amended by adding the following in alphabetical order:
“eligible electronic payment card”« carte de paiement électronique admissible »
“eligible electronic payment card” means an electronic payment card that is
(a) used by an individual for at least 32 one-way trips, between the place of origin of the trip and its termination, during an uninterrupted period not exceeding 31 days, and
(b) issued by or on behalf of a qualified Canadian transit organization, which organization records and receipts the cost and usage of the electronic payment card and identifies the right, of the individual who is the holder or owner of such a card, to use public commuter transit services of that qualified Canadian transit organization.
(3) The description of C in subsection 118.02(2) of the Act is replaced by the following:
C      is the total of all amounts each of which is the portion of the cost of an eligible public transit pass or of an eligible electronic payment card, attributable to the use of public commuter transit services in the taxation year by the individual or by a person who is in the taxation year a qualifying relation of the individual, and
(4) Subsection 118.02(3) of the Act is replaced by the following:
Apportionment of credit
(3) If more than one individual is entitled to a deduction under this section for a taxation year in respect of an eligible public transit pass or of an eligible electronic payment card, the total of all amounts so deductible shall not exceed the maximum amount that would be so deductible for the year by any one of those individuals for that eligible public transit pass or eligible electronic payment card if that individual were the only individual entitled to deduct an amount for the year under this section, and if the individuals cannot agree as to what portion of the amount each can so deduct, the Minister may fix the portions.
(5) Subsections (1) to (4) apply to the 2007 and subsequent taxation years.
38. (1) The definitions “qualifying child” and “qualifying entity” in subsection 118.03(1) of the Act are replaced by the following:
“qualifying child”« enfant admissible »
“qualifying child” of an individual for a taxation year means a child of the individual who is, at the beginning of the taxation year, 
(a) under 16 years of age; or
(b) in the case where an amount is deductible under section 118.3 in computing any person’s tax payable under this Part for the taxation year in respect of that child, under 18 years of age.
“qualifying entity”« entité admissible »
“qualifying entity” means a person or partnership that offers one or more prescribed programs of physical activity.
(2) The portion of the definition “eligible fitness expense” in subsection 118.03(1) of the Act before paragraph (a) is replaced by the following:
“eligible fitness expense”« dépense admissible pour activités physiques »
“eligible fitness expense” in respect of a qualifying child of an individual for a taxation year means the amount of a fee paid to a qualifying entity (other than an amount paid to a person that is, at the time the amount is paid, the individual’s spouse or common-law partner or another individual who is under 18 years of age) to the extent that the fee is attributable to the cost of registration or membership of the qualifying child in a prescribed program of physical activity and, for the purposes of this section, that cost
(3) Section 118.03 of the Act is amended by adding the following after subsection (2):
Child fitness tax credit — child with disability
(2.1) For the purpose of computing the tax payable under this Part by an individual for a taxation year there may be deducted in respect of a qualifying child of the individual an amount equal to $500 multiplied by the appropriate percentage for the taxation year if
(a) the amount referred to in the description of B in subsection (2) is $100 or more; and
(b) an amount is deductible in respect of the qualifying child under section 118.3 in computing any person’s tax payable under this Part for the taxation year.
(4) Subsections (1) to (3) apply to the 2007 and subsequent taxation years.
39. (1) Section 118.1 of the Act is amended by adding the following after subsection (14):
Exchange of beneficial interest in trust
(14.1) Where a donee disposes of a beneficial interest in a trust that is a non-qualifying security of an individual in circumstances where paragraph (13)(c) would, but for this subsection, apply in respect of the disposition, and in respect of which the donee receives no consideration other than other non-qualifying securities of the individual, for the purpose of subsection (13) the gift referred to in that subsection is to be read as a reference to a gift of those other non-qualifying securities.
(2) Subparagraph 118.1(16)(c)(ii) of the Act is replaced by the following:
(ii) the individual or any person or partnership with which the individual does not deal at arm’s length uses property of the donee under an agreement that was made or modified after the time that is 60 months before the particular time, and the property was not used in the carrying on of the donee’s charitable activities,
(3) Paragraphs 118.1(18)(b) and (c) of the Act are replaced by the following:
(b) a share (other than a share listed on a designated stock exchange) of the capital stock of a corporation with which the individual or the estate or, where the individual is a trust, a person affiliated with the trust, does not deal at arm’s length immediately after that time;
(b.1) a beneficial interest of the individual or the estate in a trust that
(i) immediately after that time is affiliated with the individual or the estate, or
(ii) holds, immediately after that time, a non-qualifying security of the individual or estate, or held, at or before that time, a share described in paragraph (b) that is, after that time, held by the donee; or
(c) any other security (other than a security listed on a designated stock exchange) issued by the individual or the estate or by any person or partnership with which the individ-ual or the estate does not deal at arm’s length (or, in the case where the person is a trust, with which the individual or estate is affiliated) immediately after that time.
(4) Subsections (1) to (3) apply in respect of gifts made on or after March 19, 2007, except that in applying subsection 118.1(18) of the Act, as amended by subsection (3), before the day on which this Act is assented to, the references to “designated stock exchange” in that subsection 118.1(18) shall be read as references to “prescribed stock exchange”.
40. (1) Clause (a)(ii)(A) of the definition “tax otherwise payable under this Part” in subsection 120(4) of the Act is replaced by the following:
(A) subsection 117(2.1), section 119, subsection 120.4(2) and sections 126, 127, 127.4 and 127.41, and
(2) Subsection (1) applies to the 2008 and subsequent taxation years.
41. (1) Paragraph (d) of the definition “real estate investment trust” in subsection 122.1(1) of the Act is replaced by the following:
(d) at no time in the taxation year is the total fair market value of all properties held by the trust, each of which is a real or immovable property situated in Canada, cash, or a property described in paragraph (a) of the definition “fully exempt interest” in subsection 212(3), less than 75% of the equity value of the trust at that time.
(2) Subsection (1) applies after 2007.
42. (1) The Act is amended by adding the following after section 122.64:
Subdivision a.2
Working Income Tax Benefit
Definitions
122.7 (1) The following definitions apply in this section.
“adjusted net income”« revenu net rajusté »
“adjusted net income” of an individual for a taxation year means the amount that would be the individual’s income for the taxation year if 
(a) this Act were read without reference to paragraph 81(1)(a) and subsection 81(4);
(b) in computing that income, no amount were included under paragraph 56(1)(q.1) or subsection 56(6), or in respect of any gain from a disposition of property to which section 79 applies; and
(c) in computing that income, no amount were deductible under paragraph 60(y) or (z).
“cohabiting spouse or common-law partner”« conjoint visé »
“cohabiting spouse or common-law partner” of an individual at any time has the meaning assigned by section 122.6.
“designated educational institution”« établissement d’enseignement agréé »
“designated educational institution” has the meaning assigned by subsection 118.6(1).
“eligible dependant”« personne à charge admissible »
“eligible dependant” of an individual for a taxation year means a child of the individual who, at the end of the year,
(a) resided with the individual;
(b) was under the age of 19 years; and
(c) was not an eligible individual.
“eligible individual”« particulier admissible »
“eligible individual” for a taxation year means an individual (other than an ineligible individ-ual) who was resident in Canada throughout the taxation year and who was, at the end of the taxation year, 
(a) 19 years of age or older;
(b) the cohabiting spouse or common-law partner of another individual; or
(c) the parent of a child with whom the individual resides.
“eligible spouse”« conjoint admissible »
“eligible spouse” of an eligible individual for a taxation year means an individual (other than an ineligible individual) who was resident in Canada throughout the taxation year and who was, at the end of the taxation year, the cohabiting spouse or common-law partner of the eligible individual. 
“ineligible individual”« particulier non admissible »
“ineligible individual” for a taxation year means an individual 
(a) who is described in paragraph 149(1)(a) or (b) at any time in the taxation year;
(b) who, except where the individual has an eligible dependant for the taxation year, was enrolled as a full-time student at a designated educational institution for a total of more than 13 weeks in the taxation year; or
(c) who was confined to a prison or similar institution for a period of at least 90 days during the taxation year.
“return of income”« déclaration de revenu »
“return of income” filed by an individual for a taxation year means a return of income (other than a return of income filed under subsection 70(2) or 104(23), paragraph 128(2)(e) or subsection 150(4)) that is required to be filed for the taxation year or that would be required to be filed if the individual had tax payable under this Part for the taxation year. 
“working income”« revenu de travail »
“working income” of an individual for a taxation year means the total of 
(a) the total of all amounts each of which would, if this Act were read without reference to section 8, paragraph 81(1)(a) and subsection 81(4), be the individual’s income for the taxation year from an office or employment;
(b) all amounts that are included, or that would, but for paragraph 81(1)(a), be included, because of paragraph 56(1)(n) or (o) in computing the individual’s income for the taxation years; and
(c) the total of all amounts each of which would, if this Act were read without reference to paragraph 81(1)(a), be the individual’s income for the taxation year from a business carried on by the individual otherwise than as a specified member of a partnership.
Deemed payment on account of tax
(2) Subject to subsections (4) and (5), an eligible individual for a taxation year who files a return of income for the taxation year and who makes a claim under this subsection, is deemed to have paid, at the end of the taxation year, on account of tax payable under this Part for the taxation year, an amount equal to the amount, if any, determined by the formula
A - B
where
A      is
(a) if the individual had neither an eligible spouse nor an eligible dependant, for the taxation year, the lesser of $500 and 20% of the amount, if any, by which the individual’s working income for the taxation year exceeds $3,000, or
(b) if the individual had an eligible spouse or an eligible dependant, for the taxation year, the lesser of $1,000 and 20% of the amount, if any, by which the total of the working incomes of the individual and, if applicable, of the eligible spouse of the individual, for the taxation year, exceeds $3,000; and
B      is
(a) if the individual had neither an eligible spouse nor an eligible dependant, for the taxation year, 15% of the amount, if any, by which the individual’s adjusted net income for the taxation year exceeds $9,500, or
(b) if the individual had an eligible spouse or an eligible dependant, for the taxation year, 15% of the amount, if any, by which the total of the adjusted net incomes of the individual and, if appli-cable, of the eligible spouse of the individual, for the taxation year, exceeds $14,500.
Deemed payment on account of tax — disability supplement
(3) An eligible individual for a taxation year who files a return of income for the taxation year and who may deduct an amount under subsection 118.3(1) in computing tax payable under this Part for the taxation year is deemed to have paid, at the end of the taxation year, on account of tax payable under this Part for the taxation year, an amount equal to the amount, if any, determined by the formula
C - D
where
C      is the lesser of $250 and 20% of the amount, if any, by which the individual’s working income for the taxation year exceeds $1,750, and
D      is
(a) if the individual had neither an eligible spouse nor an eligible dependant, for the taxation year, 15% of the amount, if any, by which the individual’s adjusted net income for the taxation year exceeds $12,833,
(b) if the individual had an eligible spouse for the taxation year who was not entitled to deduct an amount under subsection 118.3(1) for the taxation year, or had an eligible dependant for the taxation year, 15% of the amount, if any, by which the total of the adjusted net incomes of the individual and, if appli-cable, of the eligible spouse, for the taxation year, exceeds $21,167, or
(c) if the individual had an eligible spouse for the taxation year who was entitled to deduct an amount under subsection 118.3(1) for the taxation year, 7.5% of the amount, if any, by which the total of the adjusted net incomes of the individual and of the eligible spouse, for the taxation year, exceeds $21,167.
Eligible spouse deemed not to be an eligible individual
(4) An eligible spouse of an eligible individ-ual for a taxation year is deemed, for the purpose of subsection (2), not to be an eligible individual for the taxation year if the eligible spouse made a joint application described in subsection (6) with the eligible individual and the eligible individual received an amount under subsection (7) in respect of the taxation year.
Amount deemed to be nil
(5) If an eligible individual had an eligible spouse for a taxation year and both the eligible individual and the eligible spouse make a claim for the taxation year under subsection (2), the amount deemed to have been paid under that subsection by each of them on account of tax payable under this Part for the taxation year, is nil.
Application for advance payment
(6) Subsection (7) applies to an individual for a taxation year if,
(a) at any time after January 1 and before September 1 of the taxation year, the individual makes an application (or in the case of an individual who has, at that time, a cohabiting spouse or common-law partner, the two of them make a joint application designating the individual for the purpose of subsection (7)), to the Minister in prescribed form, containing prescribed information; and
(b) where the individual and a cohabiting spouse or common-law partner have made a joint application referred to in paragraph (a)
(i) the individual’s working income for the taxation year can reasonably be expected to be greater than the working income of the individual’s cohabiting spouse or common-law partner for the taxation year, or
(ii) the individual can reasonably be expected to be deemed by subsection (3) to have paid an amount on account of tax payable under this Part for the taxation year.
Advance payment
(7) Subject to subsection (8), the Minister may pay to an individual before the end of January of the year following a taxation year, one or more amounts that, in total, do not exceed one-half of the total of the amounts that the Minister estimates will be deemed to be paid by the individual under subsection (2) or (3) at the end of the taxation year, and any amount paid by the Minister under this subsection is deemed to have been received by the individual in respect of the taxation year.
Limitation — advance payment
(8) No payment shall be made under subsection (7) to an individual in respect of a taxation year
(a) if the total amount that the Minister may pay under that subsection is less than $100; or
(b) before the day on which the individual has filed a return of income for a preceding taxation year in respect of which the individual received a payment under that subsection.
Notification to Minister
(9) If, in a taxation year, an individual makes an application described in subsection (6), the individual shall notify the Minister of the occurrence of any of the following events before the end of the month following the month in which the event occurs
(a) the individual ceases to be resident in Canada in the taxation year;
(b) the individual ceases, before the end of the taxation year, to be a cohabiting spouse or common-law partner of another person with whom the individual made the application;
(c) the individual enrols as a full-time student at a designated educational institution in the taxation year; or
(d) the individual is confined to a prison or similar institution in the taxation year.
Special rule re eligible dependant
(10) For the purpose of applying subsections (2) and (3), an individual (referred to in this subsection as the “child”) is deemed not to be an eligible dependant of an eligible individual for a taxation year if the child is an eligible dependant of another eligible individual for the taxation year and both eligible individuals identified the child as an eligible dependant for the purpose of claiming or computing an amount under this section for the taxation year.
Effect of bankruptcy
(11) For the purpose of this subdivision, if an individual becomes bankrupt in a particular calendar year
(a) notwithstanding subsection 128(2), any reference to the taxation year of the individ-ual (other than in this subsection) is deemed to be a reference to the particular calendar year; and
(b) the individual’s working income and adjusted net income for the taxation year ending on December 31 of the particular calendar year is deemed to include the individual’s working income and adjusted net income for the taxation year that begins on January 1 of the particular calendar year.
Special rules in the event of death
(12) For the purpose of this subdivision, if an individual dies after June 30 of a calendar year
(a) the individual is deemed to be resident in Canada from the time of death until the end of the year and to reside at the same place in Canada as the place where the individual resided immediately before death;
(b) the individual is deemed to be the same age at the end of the year as the individual would have been if the individual were alive at the end of the year;
(c) the individual is deemed to be the cohabiting spouse or common-law partner of another individual (referred to in this paragraph as the “surviving spouse”) at the end of the year if,
(i) immediately before death, the individ-ual was the cohabiting spouse or common-law partner of the surviving spouse, and
(ii) the surviving spouse is not the cohab-iting spouse or common-law partner of another individual at the end of the year; and
(d) any return of income filed by a legal representative of the individual is deemed to be a return of income filed by the individual.
Modification for purposes of provincial program
122.71 The Minister of Finance may enter into an agreement with the government of a province whereby the amounts determined under subsections 122.7(2) and (3) with respect to an eligible individual resident in the province at the end of the taxation year shall, for the purpose of calculating amounts deemed to be paid on account of the tax payable of an individual under those subsections, be replaced by amounts determined in accordance with the agreement.
(2) Subsection (1) applies to the 2007 and subsequent taxation years except that
(a) for the 2007 taxation year, paragraphs (b) and (c) of the definition “adjusted net income” in subsection 122.7(1) of the Act, as enacted by subsection (1), shall be read as follows:
(b) in computing that income, no amount were included under subsection 56(6), as a beneficiary of a registered disability savings plan or in respect of any gain from a disposition of property to which section 79 applies; and
(c) in computing that income, no amount were deductible under paragraph 60(y).
(b) subsections 122.7(6) to (8) of the Act, as enacted by subsection (1), apply to the 2008 and subsequent taxation years.
43. (1) The portion of paragraph 127(5)(a) of the Act before clause (ii)(B) is replaced by the following:
(a) the total of
(i) the taxpayer’s investment tax credit at the end of the year in respect of property acquired before the end of the year, of the taxpayer’s apprenticeship expenditure for the year or a preceding taxation year, of the taxpayer’s child care space amount for the year or a preceding taxation year, of the taxpayer’s flow-through mining expenditure for the year or a preceding taxation year, of the taxpayer’s pre-production mining expenditure for the year or a preceding taxation year or of the taxpayer’s SR&ED qualified expenditure pool at the end of the year or at the end of a preceding taxation year, and
(ii) the lesser of
(A) the taxpayer’s investment tax credit at the end of the year in respect of property acquired in a subsequent taxation year, of the taxpayer’s apprenticeship expenditure for a subsequent taxation year, of the taxpayer’s child care space amount for a subsequent taxation year, of the taxpayer’s flow-through mining expenditure for a subsequent taxation year, of the taxpayer’s pre-production mining expenditure for a subsequent taxation year or of the taxpayer’s SR&ED qualified expenditure pool at the end of the subsequent taxation year to the extent that an investment tax credit was not deductible under this subsection for the subsequent taxation year, and
(2) Subsection 127(7) of the Act is replaced by the following:
Investment tax credit of testamentary trust
(7) If, in a particular taxation year of a taxpayer who is a beneficiary under a testamentary trust or under an inter vivos trust that is deemed to be in existence by section 143, an amount is determined in respect of the trust under paragraph (a), (a.1), (a.4), (a.5), (b) or (e.1) of the definition “investment tax credit” in subsection (9) for its taxation year that ends in that particular taxation year, the trust may, in its return of income for its taxation year that ends in that particular taxation year, designate the portion of that amount that can, having regard to all the circumstances including the terms and conditions of the trust, reasonably be considered to be attributable to the taxpayer and was not designated by the trust in respect of any other beneficiary of the trust, and that portion shall be added in computing the investment tax credit of the taxpayer at the end of that particular taxation year and shall be deducted in computing the investment tax credit of the trust at the end of its taxation year that ends in that particular taxation year.
(3) The portion of subsection 127(8) of the Act before paragraph (a) is replaced by the following:
Investment tax credit of partnership
(8) Subject to subsections (28) and (28.1), where, in a particular taxation year of a taxpayer who is a member of a partnership, an amount would be determined in respect of the partnership, for its taxation year that ends in the particular taxation year, under paragraph (a), (a.1), (a.4), (a.5), (b) or (e.1) of the definition “investment tax credit” in subsection (9), if
(4) Subparagraph 127(8.2)(b)(i) of the Act is amended by striking out the word “or” at the end of clause (A.1) and by adding the following after clause (A.1):
(A.2) an amount that would be the child care space amount in respect of a property of the partnership if the reference to “$10,000” in paragraph (a) of the definition “child care space amount” in subsection (9) were read as a reference to “$40,000” and paragraph (b) of that definition were read without reference to “25% of”, or
(5) Paragraph 127(8.31)(a) of the Act is replaced by the following:
(a) the total of all amounts each of which is an amount that would, if the partnership were a person and its fiscal period were its taxation year, be determined in respect of the partnership under paragraph (a), (a.1), (a.4), (a.5), (b) or (e.1) of the definition “investment tax credit” in subsection (9) for a taxation year that is the fiscal period,
(6) Subsection 127(8.31) of the Act is amended by adding the word “and” at the end of subparagraph (b)(i), by striking out the word “and” at the end of subparagraph (b)(ii), and by repealing subparagraph (b)(iii).
(7) The definition “eligible apprentice” in subsection 127(9) of the Act is replaced by the following;
“eligible apprentice”« apprenti admissible »
“eligible apprentice” means an individual who is employed in Canada in a trade prescribed in respect of a province or in respect of Canada, during the first twenty-four months of the individual’s apprenticeship contract registered with the province or Canada, as the case may be, under an apprenticeship program designed to certify or license individuals in the trade;
(8) Paragraph (a) of the definition “flow-through mining expenditure” in subsection 127(9) of the Act is replaced by the following:
(a) that is a Canadian exploration expense incurred by a corporation after March 2007 and before 2009 (including, for greater certainty, an expense that is deemed by subsection 66(12.66) to be incurred before 2009) in conducting mining exploration activity from or above the surface of the earth for the purpose of determining the existence, location, extent or quality of a mineral resource described in paragraph (a) or (d) of the definition “mineral resource” in subsection 248(1),
(9) Paragraphs (c) and (d) of the definition “flow-through mining expenditure” in subsection 127(9) of the Act are replaced by the following:
(c) an amount in respect of which is renounced in accordance with subsection 66(12.6) by the corporation to the taxpayer (or a partnership of which the taxpayer is a member) under an agreement described in that subsection and made after March 2007 and before April 2008, and
(d) that is not an expense that was renounced under subsection 66(12.6) to the corporation (or a partnership of which the corporation is a member), unless that renunciation was under an agreement described in that subsection and made after March 2007 and before April 2008;
(10) The definition “investment tax credit” in subsection 127(9) of the Act is amended by adding the following after paragraph (a.4):
(a.5) the child care space amount of the taxpayer for the taxation year,
(11) Paragraph (e.1) of the definition “investment tax credit” in subsection 127(9) of the Act is amended by striking out the word “or” at the end of subparagraph (iv), by striking out the word “and” at the end of subparagraph (v) and by adding the following after subparagraph (v):
(vi) the amount of eligible salary and wages payable by the taxpayer to an eligible apprentice under paragraph (11.1)(c.4), to the extent that that reduction had the effect of reducing the amount of an apprenticeship expenditure of the taxpayer, or
(vii) the amount of an eligible child care space expenditure of the taxpayer under paragraph (11.1)(c.5), to the extent that that reduction had the effect of reducing the amount of a child care space amount of the taxpayer, and
(12) Paragraph (f.1) of the definition “specified percentage” in subsection 127(9) is replaced by the following:
(f.1) in respect of the repayment of government assistance, non-government assistance or a contract payment that reduced
(i) a qualified expenditure incurred by the taxpayer under any of subsections (18) to (20), 20%,
(ii) the amount of eligible salary and wages payable (by the taxpayer) to an eligible apprentice under paragraph (11.1)(c.4), 10%, or
(iii) the amount of the taxpayer’s eligible child care space expenditure under paragraph (11.1)(c.5), 25%;
(13) Subsection 127(9) of the Act is amended by adding the following definitions in alphabetical order:
“child care space amount”« somme relative à une place en garderie »
“child care space amount” of a taxpayer for a taxation year is, if the provision of child care spaces is ancillary to one or more businesses of the taxpayer that are carried on in Canada in the taxation year and that do not otherwise include the provision of child care spaces, the lesser of 
(a) the amount obtained when $10,000 is multiplied by the number of new child care spaces created by the taxpayer during the taxation year in a licensed child care facility for the benefit of children of the taxpayer’s employees, or of a combination of children of the taxpayer’s employees and other children; and
(b) 25% of the taxpayer’s eligible child care space expenditure for the taxation year;
“eligible child care space expenditure”« dépense admissible relative à une place en garderie »
“eligible child care space expenditure” of a taxpayer for a taxation year is the total of all amounts each of which is an amount 
(a) that is incurred by the taxpayer in the taxation year for the sole purpose of the creation of one or more new child care spaces in a licensed child care facility operated for the benefit of children of the taxpayer’s employees, or of a combination of children of the taxpayer’s employees and other children, and
(b) that is
(i) incurred by the taxpayer to acquire depreciable property of a prescribed class (other than a specified property) for use in the child care facility, or
(ii) incurred by the taxpayer to make a specified child care start-up expenditure in respect of the child care facility;
“specified child care start-up expenditure”« dépense de démarrage déterminée pour la garde d’enfants »
“specified child care start-up expenditure” of a taxpayer in respect of a child care facility is an expenditure incurred by the taxpayer (other than to acquire a depreciable property) that is 
(a) a landscaping cost incurred to create, at the child care facility, an outdoor play area for children,
(b) an architectural fee for designing the child care facility or a fee for advice on planning, designing and establishing the child care facility,
(c) a cost of construction permits in respect of the child care facility,
(d) an initial licensing or regulatory fee in respect of the child care facility, including fees for mandatory inspections,
(e) a cost of educational materials for children, or
(f) a similar amount incurred for the sole purpose of the initial establishment of the child care facility;
“specified property”« bien déterminé »
“specified property” in respect of a taxpayer means any property that is
(a) a motor vehicle or any other motorized vehicle, or
(b) a property that is, or is located in, or attached to, a residence
(i) of the taxpayer,
(ii) an employee of the taxpayer,
(iii) a person who holds an interest in the taxpayer, or
(iv) a person related to a person referred to in any of subparagraphs (i) to (iii);
(14) Paragraph 127(11.1)(c.4) of the Act is replaced by the following:
(c.4) the amount of a taxpayer’s eligible salary and wages for a taxation year is deemed to be the amount of the taxpayer’s eligible salary and wages for the year otherwise determined less the amount of any government assistance or non-government assistance in respect of the eligible salary and wages for the year that, at the time of the filing of the taxpayer’s return of income for the year, the taxpayer has received, is entitled to receive or can reasonably be expected to receive;
(c.5) the amount of a taxpayer’s eligible child care space expenditure for a taxation year is deemed to be the amount of the taxpayer’s eligible child care space expenditure for the taxation year otherwise determined less the amount of any government assistance or non-government assistance in respect of the eligible child care space expenditure for the taxation year that, at the time of the filing of the taxpayer’s return of income for the taxation year, the taxpayer has received, is entitled to receive or can reasonably be expected to receive; and
(15) Subsection 127(11.2) of the Act is replaced by the following:
Time of expenditure and acquisition
(11.2) In applying subsections (5), (7) and (8), paragraphs (a), (a.1) and (a.5) of the definition “investment tax credit” in subsection (9) and section 127.1,
(a) certified property, qualified property and first term shared-use-equipment are deemed not to have been acquired, and
(b) expenditures incurred to acquire property described in subparagraph 37(1)(b)(i) or included in an eligible child care expenditure are deemed not to have been incurred
by a taxpayer before the property is considered to have become available for use by the taxpayer, determined without reference to paragraphs 13(27)(c) and 13(28)(d), and subparagraph (27.12)(b)(i).
(16) Section 127 of the Act is amended by adding the following after subsection (27):
Recapture of investment tax credit — child care space amount
(27.1) There shall be added to a taxpayer’s tax otherwise payable under this Part for a particular taxation year, the total of all amounts each of which is an amount determined under subsection (27.12) in respect of a disposition by the taxpayer in the particular taxation year of a property a percentage of the cost of which can reasonably be considered to have been included in the child care space amount of the taxpayer for a taxation year, if the property was acquired in respect of a child care space that was created at a time that is less than 60 months before the disposition.
Disposition
(27.11) For the purpose of subsection (27.1),
(a) if a particular child care space, in respect of which any amount is included in the child care space amount of a taxpayer or a partnership for a taxation year or a fiscal period, ceases at any particular time to be available, the child care space is, except where the child care space has been disposed of by the taxpayer or the partnership before the particular time, deemed to be a property
(i) disposed of by the taxpayer or the partnership, as the case maybe, at the particular time,
(ii) a percentage of the cost of which can reasonably be considered to be included in the child care space amount of the taxpayer or the partnership, as the case may be, for a taxation year or a fiscal period, and
(iii) acquired in respect of a child care space that was created at the time the child care space was created,
(b) child care spaces that cease to be available are deemed to so cease in reverse chronological order to their creation, and
(c) a property acquired by a taxpayer or a partnership in respect of a child care space is deemed to be disposed of by the taxpayer or the partnership, as the case maybe, in a disposition described in clause (27.12)(b)(ii)(B) if the property is leased by the taxpayer or the partnership to a lessee for any purpose or is converted to a use by the taxpayer or the partnership other than to a use for the child care space.
Amount of recapture
(27.12) For the purposes of subsection (27.1) and (27.11), the amount determined under this subsection in respect of a disposition of a property by a taxpayer or a partnership is,
(a) where the property disposed of is a child care space, the amount that can reasonably be considered to have been included under paragraph (a.5) of the definition “investment tax credit” in subsection (9) in respect of the taxpayer or partnership in respect of the child care space, and
(b) in any other case, the lesser of,
(i) the amount that can reasonably be considered to have been included under paragraph (a.5) of the definition “investment tax credit” in subsection (9) in respect of the taxpayer or partnership in respect of the cost of the property, and
(ii) 25% of
(A) if the property, or a part of the property, is disposed of to a person who deals at arm’s length with the taxpayer or the partnership, the proceeds of disposition of the property, or of the part of the property, and
(B) in any other case, the fair market value of the property or of the part of the property, at the time of the disposition.
(17) Section 127 of the Act is amended by adding the following after subsection (28):
Recapture of partnership’s investment tax credits — child care property
(28.1) For the purpose of computing the amount determined under subsection (8) in respect of a partnership at the end of a particular fiscal period of the partnership, there shall be deducted the total of all amounts, each of which is an amount determined under subsection (27.12) in respect of a disposition by the partnership in the particular fiscal period of a property a percentage of the cost of which can reasonably be considered to have been included in the child care space amount of the partnership for a fiscal period, if the property was acquired in respect of a child care space that was created at a time that is less than 60 months before the disposition.
(18) Subsection 127(30) of the Act is replaced by the following:
Addition to tax
(30) Where a taxpayer is a member of a partnership at the end of a fiscal period of the partnership, there shall be added to the taxpayer’s tax otherwise payable under this Part for the taxpayer’s taxation year in which that fiscal period ends the amount that can reasonably be considered to be the taxpayer’s share of the amount, if any, by which
(a) the total of
(i) the total of all amounts each of which is the lesser of the amounts described in paragraphs (28)(d) and (e) in respect of the partnership in respect of the fiscal period,
(ii) the total of all amounts each of which is the lesser of the amounts described in paragraphs (35)(c) and (d) in respect of the partnership in respect of the fiscal period, and
(iii) the total of all amounts each of which is an amount required by subsection (28.1) to be deducted in computing the amount determined in respect of the partnership in respect of the fiscal period under subsection (8),
exceeds
(b) the amount that would be determined in respect of the partnership under subsection (8) if that subsection were read without reference to subsections (28), (28.1), and (35).
(19) Subsections (1) to (5) and (15) to (18) apply on and after March 19, 2007.
(20) Subsection (6) applies to the 2007 and subsequent taxation years.
(21) Subsection (7) applies to taxation years ending on or after May 2, 2006.
(22) Subsections (8) and (9) apply to expenses renounced under agreements made after March 2007.
(23) Subsections (10) and (13) apply to expenditures incurred on and after March 19, 2007.
(24) Subsections (11), (12) and (14) apply to taxation years that end on or after May 2, 2006, except that subparagraph (e.1) (vii) of the definition “investment tax credit” in subsection 127(9) of the Act, as enacted by subsection (11), subparagraph (f.1)(iii) of the definition “specified percentage” in subsection 127(9) of the Act, as enacted by subsection (12), and paragraph 127(11.1)(c.5) of the Act, as enacted by subsection (14), apply to taxation years that end on or after March 19, 2007.
44. (1) The portion of subsection 141(5) of the Act before paragraph (a) is replaced by the following:
Exclusion from taxable Canadian property
(5) For the purpose of paragraph (d) of the definition “taxable Canadian property” in subsection 248(1), a share of the capital stock of a corporation is deemed to be listed at any time on a designated stock exchange if
(2) Subsection (1) applies on and after the day on which this Act is assented to.
45. (1) The definition “contribution” in subsection 146.1(1) of the Act is replaced by the following:
“contribution”« cotisation »
“contribution”, into an education savings plan, does not include an amount paid into the plan under the Canada Education Savings Act or under a designated provincial program;
(2) Paragraph (c.1) of the definition “trust” in subsection 146.1(1) of the Act is replaced by the following:
(c.1) the repayment of amounts (and the payment of amounts related to that repayment) under the Canada Education Savings Act or under a designated provincial program,
(3) Subsection 146.1(1) of the Act is amended by adding the following in alphabetical order:
“designated provincial program”« programme provincial désigné »
“designated provincial program” means
(a) a program administered pursuant to an agreement entered into under section 12 of the Canada Education Savings Act, or
(b) a prescribed program;
(4) Subsections (1) to (3) apply to the 2007 and subsequent taxation years.
46. (1) The portion of subsection 149.1(1) of the Act before the definition “capital gains pool” is replaced by the following:
Definitions
149.1 (1) In this section and section 149.2,
(2) Subsection 149.1(1) of the Act is amended by adding the following in alphabetical order:
“divestment obligation percentage”« pourcentage de dessaisissement »
“divestment obligation percentage” of a private foundation for a particular taxation year, in respect of a class of shares of the capital stock of a corporation, is the percentage, if any, greater than 0%, determined by the formula
A + B - C
where
A      is the percentage determined under this definition in respect of the private foundation in respect of the class for the preceding taxation year,
B      is the total of all percentages, each of which is the portion of a net increase in the excess corporate holdings percentage of the private foundation in respect of the class for the particular taxation year or for a preceding taxation year that is allocated to the particular taxation year in accordance with subsection 149.2(5), and
C      is the total of all percentages, each of which is the portion of a net decrease in the excess corporate holdings percentage of the private foundation in respect of the class for the particular taxation year or for a preceding taxation year that is allocated to the particular taxation year in accordance with subsection 149.2(7);
“entrusted shares percentage”« pourcentage d’actions visées par une stipulation »
“entrusted shares percentage” of a private foundation, in respect of a class of shares of the capital stock of a corporation, at any particular time means the percentage of the issued and outstanding shares of that class that are held at the particular time by the private foundation that are shares that were acquired by the private foundation by way of a gift that was subject to a trust or direction that the shares are to be held by the private foundation for a period ending not earlier than the particular time, if the gift was made
(a) before March 19, 2007,
(b) on or after March 19, 2007 and before March 19, 2012
(i) under the terms of a will that was executed by a taxpayer before March 19, 2007 and not amended, by codicil or otherwise, on or after March 19, 2007, and
(ii) in circumstances where no other will of the taxpayer was executed or amended on or after March 19, 2007, or
(c) on or after March 19, 2007, under the terms of a testamentary or inter vivos trust created before March 19, 2007, and not amended on or after March 19, 2007;
“excess corporate holdings percentage”« pourcentage de participation excédentaire »
“excess corporate holdings percentage” of a private foundation, in respect of a class of shares of the capital stock of a corporation, at any time means 
(a) if the private foundation is not, at that time, a registered charity, 0%,
(b) if the private foundation holds, at that time, an insignificant interest in respect of the class, 0%, and
(c) in any other case, the number of percent-age points, if any, by which the total corporate holdings percentage of the private foundation in respect of the class, at that time, exceeds the greater of 20% and the entrusted shares percentage, at that time, of the private foundation in respect of the class;
“material transaction”« opération importante »
“material transaction” of a private foundation, in respect of a class of shares of the capital stock of a corporation, means a transaction or a series of transactions or events in shares of the class, in respect of which the total fair market value of the shares of the class that are acquired or disposed of by the private foundation or any relevant person in respect of the private foundation as part of the transaction or series (determined at the time of the transaction, or at the end of the series, as the case may be) exceeds the lesser of
(a) $100,000, and
(b) 0.5% of the total fair market value of all of the issued and outstanding shares of the class;
“original corporate holdings percentage”« pourcentage de participation initiale »
“original corporate holdings percentage” of a private foundation, in respect of a class of shares of the capital stock of a corporation, means the total corporate holdings percentage of the private foundation, in respect of that class, held on March 18, 2007;
“relevant person”« personne intéressée »
“relevant person” in respect of a private foundation means a person who, at any time in respect of which the expression is relevant, deals not at arm’s length with the private foundation (determined as if subsection 251(2) were applied as if the private foundation were a corporation), but does not include 
(a) a person who at that time is considered to deal not at arm’s length with the private foundation solely because of a right referred to in paragraph 251(5)(b), or
(b) an individual
(i) who at that time has attained the age of 18 years and lives separate and apart from any other individual (referred to in this definition as a “controlling individual”) who would, if the private foundation were a corporation, control, or be a member of a related group that controls, the private foundation, and
(ii) in respect of whom the Minister is satisfied, upon review of an application by the private foundation, that the individual would, if subsection 251(1) were read without reference to its paragraphs (a) and (b), at that time, deal at arm’s length with all controlling individuals;
“total corporate holdings percentage”« pourcentage de participation totale »
“total corporate holdings percentage” of a private foundation, in respect of a class of shares of the capital stock of a corporation, at any particular time means the percentage of the issued and outstanding shares of that class that are held at that time by the private foundation, or by a relevant person in respect of the private foundation who holds a material interest in respect of that class;
(3) Paragraph 149.1(4)(c) of the Act is replaced by the following:
(c) has, in respect of a class of shares of the capital stock of a corporation, a divestment obligation percentage at the end of any taxation year;
(4) The portion of paragraph 149.1(12)(a) of the Act after subparagraph (ii) is replaced by the following:
but, for the purpose of paragraph (3)(c), a charitable foundation is deemed not to have acquired control of a corporation if it has not purchased or otherwise acquired for consideration more than 5% of the issued shares of any class of the capital stock of that corporation;
(5) Subsection 149.1(15) of the Act is amended by striking out the word “and” at the end of paragraph (a), by adding the word “and” at the end of paragraph (b) and by adding the following after paragraph (b):
(c) if, at any time during a taxation year of a private foundation that is a registered charity, the private foundation holds more than an insignificant interest in respect of a class of shares of the capital stock of a corporation, the Minister shall make available to the public in such manner as the Minister deems appropriate,
(i) the name of the corporation, and
(ii) in respect of each class of shares of the corporation, that portion of the total corporate holdings percentage of the private foundation in respect of the class that is attributable to
(A) holdings of shares of that class by the private foundation, and
(B) the total of all holdings of shares of that class by relevant persons in respect of the private foundation.
(6) Subsections (1) and (2) apply on and after March 19, 2007.
(7) Subsections (3) to (5) apply to taxation years, of foundations, that begin after March 18, 2007, except that subsections (3) and (4) do not apply to a taxation year of a private foundation if subsection 149.2(8) of the Act, as enacted by clause 47(1), applies to the private foundation in respect of any class of shares of the capital stock of a corporation.
47. (1) The Act is amended by adding the following after section 149.1:
Material and insignificant interests
149.2 (1) In this section and section 149.1,
(a) a person has, at any time, a material interest in respect of a class of shares of the capital stock of a corporation if, at that time,
(i) the percentage of the shares of that class held by the person exceeds 0.5% of all the issued and outstanding shares of that class, or
(ii) the fair market value of the shares so held exceeds $100,000; and
(b) a private foundation has, at any time, an insignificant interest in respect of a class of shares of the capital stock of a corporation if, at that time, the percentage of shares of that class held by the private foundation does not exceed 2% of all the issued and outstanding shares of that class.
Material transaction — anti-avoidance
(2) If a private foundation or a relevant person in respect of the private foundation has engaged in one or more transactions or series of transactions or events, a purpose of which may reasonably be considered to be to avoid the application of the definition “material transaction”, each of those transactions or series of transactions or events is deemed to be a material transaction.
Net increase in excess corporate holdings percentage
(3) The net increase in the excess corporate holdings percentage of a private foundation for a taxation year, in respect of a class of shares of the capital stock of a corporation, is the number of percentage points, if any, determined by the formula
A - B
where
A      is the excess corporate holdings percentage of the private foundation at the end of the taxation year, in respect of the class, and
B      is
(a) 0%, if
(i) at the beginning of the taxation year the private foundation was not both a private foundation and a registered charity, or
(ii) the private foundation was both a registered charity and a private foundation on March 18, 2007 and the taxation year is the first taxation year of the private foundation that begins after that date; and
(b) in any other case, the excess corporate holdings percentage of the private foundation in respect of the class at the end of its preceding taxation year.
Net decrease in excess corporate holdings percentage
(4) The net decrease in the excess corporate holdings percentage of a private foundation for a taxation year, in respect of a class of shares of the capital stock of a corporation, is the number of percentage points, if any, by which the percentage determined for B in the formula in subsection (3) for the taxation year exceeds the percentage determined for A in that formula for the taxation year.
Allocation of net increase in excess corporate holdings percentage
(5) For the purpose of the description of B in the definition “divestment obligation percent-age” in subsection 149.1(1), the net increase in the excess corporate holdings percentage of a private foundation in respect of a class of shares of the capital stock of a corporation, for a taxation year (in this subsection referred to as the “current year”) is to be allocated in the following order:
(a) first to the divestment obligation percent-age of the private foundation in respect of that class for the current year, to the extent that the private foundation has in the current year acquired for consideration shares of that class;
(b) then to the divestment obligation percent-age of the private foundation in respect of that class for its fifth subsequent taxation year, to the extent of the lesser of
(i) that portion of the net increase in the excess corporate holdings percentage of the private foundation in respect of that class for the current year that is not allocated under paragraph (a), and
(ii) the percentage of the issued and outstanding shares of that class that were acquired by the private foundation in the current year by way of bequest;
(c) then to the divestment obligation percent-age of the private foundation in respect of that class for its second subsequent taxation year, to the extent of the lesser of
(i) that portion of the net increase in the excess corporate holdings percentage of the private foundation in respect of that class for the current year that is not allocated under paragraph (a) or (b), and
(ii) the total of
(A) the percentage of the issued and outstanding shares of that class that were acquired by the private foundation in the current year by way of gift, other than from a relevant person or by way of bequest, and
(B) the portion of the net increase in the excess corporate holdings percentage of the private foundation that is attributable to the redemption, acquisition or cancellation of any of the issued and outstanding shares of that class in the current year by the corporation; and
(d) then to the divestment obligation percent-age of the private foundation in respect of that class for its subsequent taxation year, to the extent of that portion of the net increase in the excess corporate holdings percentage of the private foundation in respect of that class for the current year that is not allocated under paragraph (a), (b) or (c).
Minister’s discretion
(6) Notwithstanding subsection (5), on application by a private foundation, the Minister may, if the Minister believes it would be just and equitable to do so, reallocate any portion of the net increase in the excess corporate holdings percentage of the private foundation in respect of a class of shares of the capital stock of a corporation for a taxation year, that would otherwise be allocated under subsection (5) to the private foundation’s divestment obligation percentage in respect of that class for a particular taxation year, to the private foundation’s divestment obligation percentage in respect of that class for any of the ten taxation years subsequent to the particular taxation year.
Allocation of net decrease in excess corporate holdings percentage
(7) For the purpose of the description of C in the definition “divestment obligation percent-age” in subsection 149.1(1), the net decrease in the excess corporate holdings percentage of a private foundation in respect of a class of shares of the capital stock of a corporation for a taxation year (in this subsection referred to as the “current year”) is to be allocated in the following order:
(a) first, to the divestment obligation percentage of the private foundation in respect of that class for the current year, to the extent of that divestment obligation percentage; and
(b) then to the divestment obligation percent-age of the private foundation in respect of that class for a subsequent taxation year of the private foundation (referred to in this paragraph as the “subject year”), to the extent of the lesser of
(i) that portion of the net decrease in the excess corporate holdings percentage of the private foundation in respect of that class for the current year that is not allocated under paragraph (a), or under this paragraph, to the divestment obligation percentage of the private foundation in respect of that class for a taxation year of the private foundation that precedes the subject year, and
(ii) the amount of the divestment obligation percentage of the private foundation in respect of that class for the subject year, calculated as at the end of the current year and without reference to this subsection.
Transitional rule
(8) If the original corporate holdings percent-age of a private foundation in respect of a class of shares of the capital stock of a corporation exceeds 20%, for the purpose of applying the definition “excess corporate holdings percent-age” in subsection 149.1(1) to
(a) the first taxation year of the private foundation that begins after March 18, 2007, the reference to 20% in that definition in respect of that class is to be read as the original corporate holdings percentage of the private foundation in respect of that class;
(b) taxation years of the private foundation that are after the taxation year referred to in paragraph (a) and that begin before March 19, 2012, the reference to 20% in that definition in respect of that class is to be read as the greater of
(i) 20%, and
(ii) the lesser of
(A) the total corporate holdings percent-age of the private foundation in respect of the class at the end of the immediately preceding taxation year, and
(B) the original corporate holdings percentage in respect of that class;
(c) taxation years of the private foundation that begin after March 18, 2012 and before March 19, 2017, the reference to 20% in that definition in respect of that class is to be read as the greater of
(i) 20%, and
(ii) the lesser of
(A) the total corporate holdings percentage of the private foundation in respect of the class at the end of the preceding taxation year, and
(B) the number of percentage points, if any, by which the private foundation’s original corporate holdings percentage in respect of that class exceeds 20%;
(d) taxation years of the private foundation that begin after March 18, 2017 and before March 19, 2022, the reference to 20% in that definition in respect of that class is to be read as the greater of
(i) 20%, and
(ii) the lesser of
(A) the total corporate holdings percent-age of the private foundation in respect of the class at the end of the preceding taxation year, and
(B) the number of percentage points, if any, by which the private foundation’s original corporate holdings percentage in respect of that class exceeds 40%; and
(e) taxation years of the private foundation that begin after March 18, 2022 and before March 19, 2027, the reference to 20% in that definition in respect of that class is to be read as the greater of
(i) 20%, and
(ii) the lesser of
(A) the total corporate holdings percentage of the private foundation in respect of the class at the end of the preceding taxation year, and
(B) the number of percentage points, if any, by which the private foundation’s original corporate holdings percentage in respect of that class exceeds 60%.
(2) Subsection (1) applies to taxation years, of private foundations, that begin on or after March 19, 2007.
48. (1) Paragraph 152(1)(b) of the Act is replaced by the following:
(b) the amount of tax, if any, deemed by subsection 120(2) or (2.2), 122.5(3), 122.51(2), 122.7(2) or (3), 125.4(3), 125.5(3), 127.1(1), 127.41(3) or 210.2(3) or (4) to be paid on account of the taxpayer’s tax payable under this Part for the year.
(2) Paragraph 152(4.2)(b) of the Act is replaced by the following:
(b) redetermine the amount, if any, deemed by subsection 120(2) or (2.2), 122.5(3), 122.51(2), 122.7(2) or (3), 127.1(1), 127.41(3) or 210.2(3) or (4) to be paid on account of the taxpayer’s tax payable under this Part for the year or deemed by subsection 122.61(1) to be an overpayment on account of the taxpayer’s liability under this Part for the year.
(3) Subsections (1) and (2) apply to the 2007 and subsequent taxation years.
49. (1) Paragraph 153(1)(a) of the Act is replaced by the following:
(a) salary, wages or other remuneration, other than amounts described in subsection 115(2.3) or 212(5.1),
(2) Paragraph 153(1)(g) of the Act is replaced by the following:
(g) fees, commissions or other amounts for services, other than amounts described in subsection 115(2.3) or 212(5.1),
50. (1) Paragraphs (a) and (b) of the definition “instalment threshold” in subsection 156.1(1) of the Act are replaced by the following:
(a) in the case of an individual resident in the Province of Quebec at the end of the year, $1,800, and
(b) in any other case, $3,000;
(2) Subsection (1) applies to the 2008 and subsequent taxation years and, for the purpose of applying subsection 156.1(2) of the Act in respect of the 2008 and 2009 taxation years, to the 2006 and 2007 taxation years.
51. (1) The portion of subsection 157(1) of the Act before subparagraph (a)(ii) is replaced by the following:
Payment by corporation
157. (1) Subject to subsections (1.1) and (1.5), every corporation shall, in respect of each of its taxation years, pay to the Receiver General
(a) either
(i) on or before the last day of each month in the year, an amount equal to 1/12 of the total of the amounts estimated by it to be the taxes payable by it under this Part and Parts VI, VI.1 and XIII.1 for the year,
(2) Paragraph 157(1)(b) of the Act is replaced by the following:
(b) the remainder of the taxes payable by it under this Part and Parts VI, VI.1 and XIII.1 for the year on or before its balance-due day for the year.
(3) Section 157 of the Act is amended by adding the following after subsection (1):
Special case
(1.1) A small-CCPC may, in respect of each of its taxation years, pay to the Receiver General
(a) one of the following:
(i) on or before the last day of each three-month period in the taxation year (or if the period that remains in a taxation year after the end of the last such three-month period is less than three months, on or before the last day of that remaining period), an amount equal to 1/4 of the total of the amounts estimated by it to be the taxes payable by it under this Part and Part VI.1 for the taxation year,
(ii) on or before the last day of each three-month period in the taxation year (or if the period that remains in a taxation year after the end of the last such three-month period is less than three months, on or before the last day of that remaining period), an amount equal to 1/4 of its first instalment base for the taxation year, or
(iii) on or before the last day
(A) of the first period in the taxation year not exceeding three months, an amount equal to 1/4 of its second instalment base for the taxation year, and
(B) of each of the following three-month periods in the taxation year (or if the period that remains in a taxation year after the end of the last such three-month period is less than three months, on or before the last day of that remaining period), an amount equal to 1/3 of the amount remaining after deducting the amount computed pursuant to clause (A) from its first instalment base for the taxation year; and
(b) the remainder of the taxes payable by it under this Part and Part VI.1 for the taxation year on or before its balance-due day for the taxation year.
Small-CCPC
(1.2) For the purpose of subsection (1.1), a small-CCPC, at a particular time during a taxation year, is a Canadian-controlled private corporation
(a) for which the amount determined under subsection (1.3) for the taxation year, or for the preceding taxation year, does not exceed $400,000;
(b) for which the amount determined under subsection (1.4) for the taxation year, or for the preceding taxation year, does not exceed $10 million;
(c) in respect of which an amount is deducted under section 125 of the Act in computing the corporation’s tax payable for the taxation year or for the preceding taxation year; and
(d) that has throughout the 12-month period that ends at the time its last remittance under this section is due,
(i) remitted, on or before the day on or before which the amounts were required to be remitted, all amounts that were required to be remitted under subsection 153(1), under Part IX of the Excise Tax Act, under subsection 82(1) of the Employment Insurance Act or under subsection 21(1) of the Canada Pension Plan; and
(ii) filed, on or before the day on or before which the returns were required to be filed, all returns that were required to be filed under this Act or under Part IX of the Excise Tax Act.
Taxable income — small-CCPC
(1.3) The amount determined under this subsection in respect of a corporation for a particular taxation year is
(a) if the corporation is not associated with another corporation in the particular taxation year, the amount that is the corporation’s taxable income for the particular taxation year; or
(b) if the corporation is associated with another corporation in the particular taxation year, the amount that is the total of all amounts each of which is the taxable income of the corporation for the particular taxation year or the taxable income of a corporation with which it is associated in the particular taxation year for a taxation year of that other corporation that ends in the particular taxation year.
Taxable capital — small-CCPC
(1.4) The amount determined under this subsection in respect of a corporation for a particular taxation year is
(a) if the corporation is not associated with another corporation in the particular taxation year, the amount that is the corporation’s taxable capital employed in Canada (within the meaning assigned by section 181.2) for the particular taxation year; or
(b) if the corporation is associated with another corporation in the particular taxation year, the amount that is the total of all amounts each of which is the taxable capital employed in Canada (within the meaning assigned by section 181.2) of the corporation for the particular taxation year or the taxable capital employed in Canada (within the meaning assigned by section 181.2) of a corporation with which it is associated in the particular taxation year for a taxation year of that other corporation that ends in the particular taxation year.
No longer a small-CCPC
(1.5) Notwithstanding subsection (1), where a corporation, that has remitted amounts in accordance with subsection (1.1), ceases at any particular time in a taxation year to be eligible to remit in accordance with subsection (1.1), the corporation shall pay to the Receiver General, the following amounts for the taxation year,
(a) on or before the last day of each month, in the taxation year, that ends after the particular time, either
(i) the amount determined by the formula
(A - B)/C
where
A      is the total of the amounts estimated by the corporation to be the taxes payable by it under this Part and Parts VI, VI.1 and XIII.1 for the taxation year,
B      is the total of all payments payable by the corporation in the taxation year in accordance with subsection (1.1), and
C      is the number of months that end in the taxation year and after the particular time, or
(ii) the total of
(A) the amount determined by the formula
(A - B)/C
where
A      is the corporation’s first instalment base for the taxation year,
B      is the total of all payments payable by the corporation in the taxation year in accordance with subsection (1.1), and
C      is the number of months that end in the taxation year and after the particular time; and
(B) the amount obtained when the estimated tax payable by the corporation, if any, under Part VI and XIII.1 for the taxation year is divided by the number of months that end in the taxation year and after the particular time; and
(b) the remainder of the taxes payable by it under this Part and Parts VI, VI.1 and XIII.1 for the taxation year on or before its balance-due date for the taxation year.
(4) Subsection 157(2.1) of the Act is replaced by the following:
$3,000 threshold
(2.1) A corporation may, instead of paying the instalments required for a taxation year by paragraph (1)(a) or by subsection (1.1), pay to the Receiver General, under paragraph (1)(b), the total of the taxes payable by it under this Part and Parts VI, VI.1 and XIII.1 for the taxation year, if
(a) the total of the taxes payable under this Part and Parts VI, VI.1 and XIII.1 by the corporation for the taxation year (determined before taking into consideration the specified future tax consequences for the year) is equal to or less than $3,000; or
(b) the corporation’s first instalment base for the year is equal to or less than $3,000.
(5) The portion of subsection 157(3) of the Act before paragraph (a) is replaced by the following:
Reduced instalments
(3) Notwithstanding subsection (1) and (1.5), the amount payable under subsection (1) or (1.5) for a taxation year by a corporation to the Receiver General on or before the last day of any month in the yearis deemed to be the amount, if any, by which
(6) Section 157 of the Act is amended by adding the following after subsection (3):
Amount of payment — three-month period
(3.1) Notwithstanding subsection (1.1), the amount payable under subsection (1.1) for a taxation year by a corporation to the Receiver General on or before the last day of any period in the yearis deemed to be the amount, if any, by which
(a) the amount so payable as determined under that subsection for the period
exceeds the total of
(b) 1/4 of the corporation’s dividend refund (within the meaning assigned by subsection 129(1)) for the taxation year, and
(c) 1/4 of the total of the amounts each of which is deemed by subsection 125.4(3), 125.5(3), 127.1(1) or 127.41(3) to have been paid on account of the corporation’s tax payable under this Part for the taxation year.
(7) Subsections (1) to (6) apply to taxation years that begin after 2007.
52. (1) Subsection 161(4.1) of the Act is replaced by the following:
Limitation — corporations
(4.1) For the purposes of subsection (2) and section 163.1, where a corporation is required to pay a part or instalment of tax for a taxation year computed by reference to a method described in subsection 157(1), (1.1) or (1.5), as the case may be, the corporation is deemed to have been liable to pay on or before each day on or before which subparagraph 157(1)(a)(i), (ii) or (iii), subparagraph 157(1.1)(a)(i), (ii) or (iii), or subparagraph 157(1.5)(a)(i) or (ii), as the case may be, requires a part or instalment to be made equal to the amount, if any, by which
(a) the part or instalment due on that day computed in accordance with whichever allowable method in the circumstances gives rise to the least total amount of such parts or instalments of tax for the year, computed by reference to
(i) the total of the taxes payable under this Part and Parts VI, VI.1 and XIII.1 by the corporation for the year, determined before taking into consideration the specified future tax consequences for the year,
(ii) its first instalment base for the year, or
(iii) its second instalment base and its first instalment base for the year,
exceeds
(b) the amount, if any, determined under any of paragraphs 157(3)(b) to (e) or under paragraph 157(3.1)(b) or (c), as the case may be, in respect of that instalment.
(2) Subsections (1) applies to taxation years that begin after 2007.
53. (1) Subsection 163(2) of the Act is amended by adding the following after paragraph (c.2):
(c.3) the amount, if any, by which
(i) the total of all amounts each of which is an amount that would be deemed by subsection 122.7(2) or (3) to be a payment on account of the person’s tax payable under this Part or another person’s tax payable under this Part for the year if those amounts were calculated by reference to the information provided in the return
exceeds
(ii) the total of all amounts each of which is an amount that is deemed by subsection 122.7(2) or (3) to be a payment on account of the person’s tax payable under this Part and, where applicable, the other person’s tax payable under this Part for the year,
(2) Subsection (1) applies to the 2007 and subsequent taxation years.
54. (1) The definition “tobacco manufacturing” in subsection 182(2) of the Act is replaced by the following:
“tobacco manufacturing”« fabrication du tabac »
“tobacco manufacturing” means any activity, other than an exempt activity, relating to the manufacture or processing in Canada of tobacco or tobacco products in or into any form that is, or would after any further activity become, suitable for smoking;
(2) Subsection 182(2) of the Act is amended by adding the following in alphabetical order:
“exempt activity”« activité exclue »
“exempt activity”, of a particular corporation, means
(a) farming; or
(b) processing leaf tobacco, if
(i) that processing is done by, and is the principal business of, the particular corporation,
(ii) the particular corporation does not manufacture any tobacco product, and
(iii) the particular corporation is not related to any other corporation that carries on tobacco manufacturing (determined, in respect of the other corporation, as if the particular corporation did not exist and the definition “tobacco manufacturing” were read without reference to the words “in Canada”);
(3) Subsections (1) and (2) apply to taxation years that end after 2006.
55. (1) Subparagraph 186.1(b)(vii) of the Act is replaced by the following:
(vii) a registered securities dealer that was throughout the year a member, or a participating organization, of a designated stock exchange in Canada.
(2) Subsection (1) applies after April 2, 2000, except that, in its application before the day on which this Act is assented to, the reference to “designated stock exchange” in subparagraph 186.1(b)(vii) of the Act, as amended by subsection (1), shall be read as a reference to “prescribed stock exchange”.
56. Section 188.1 of the Act is amended by adding the following after subsection (3):
Penalty for excess corporate holdings
(3.1) A private foundation is liable to a penalty under this Part for a taxation year, in respect of a class of shares of the capital stock of a corporation, equal to
(a) 5% of the amount, if any, determined by multiplying the divestment obligation percentage of the private foundation for the taxation year in respect of the class by the total fair market value of all of the issued and outstanding shares of the class, except if the private foundation is liable for the taxation year under paragraph (b) for a penalty in respect of the class; or
(b) 10% of the amount, if any, determined by multiplying the divestment obligation percentage of the private foundation for the taxation year in respect of the class by the total fair market value of all of the issued and outstanding shares of the class, if
(i) the private foundation has failed to disclose, in its return required under subsection 149.1(14) for the taxation year,
(A) a material transaction, in the taxation year, of the private foundation in respect of the class,
(B) a material interest held at the end of the taxation year by a relevant person in respect of the private foundation, or
(C) the total corporate holdings percent-age of the private foundation in respect of the class at the end of the taxation year, unless at no time in the taxation year the private foundation held greater than an insignificant interest in respect of the class, or
(ii) the Minister has, less than five years before the end of the taxation year, assessed a liability under paragraph (a) or this paragraph for a preceding taxation year of the private foundation in respect of any divestment obligation percentage.
Avoidance of divestiture
(3.2) If, at the end of a taxation year, a private foundation would — but for a transaction or series of transactions entered into by the private foundation or a relevant person in respect of the private foundation (in this subsection referred to as the “holder”) a result of which is that the holder holds, directly or indirectly, an interest (or for civil law, a right), in a corporation other than shares — have a divestment obligation percentage for that taxation year in respect of the private foundation’s holdings of a class of shares of the capital stock of the corporation, and it can reasonably be considered that a purpose of the transaction or series is to avoid that divestment obligation percentage by substituting shares of the class for that interest or right, for the purposes of applying this section, subsection 149.1(1) and section 149.2,
(a) each of those interests or rights is deemed to have been converted, immediately after the time it was first held, directly or indirectly by the holder, into that number of shares of that class that would, if those shares were shares of the class that were issued by the corporation, have a fair market value equal to the fair market value of the interest or right at that time;
(b) each such share is deemed to be a share that is issued by the corporation and outstanding and to continue to be held by the holder until such time as the holder no longer holds the interest or right; and
(c) each such share is deemed to have a fair market value, at any particular time, equal to the fair market value, at the particular time, of a share of the class issued by the corporation.
57. (1) Paragraph (b) of the definition “qualified investment” in section 204 of the Act is replaced by the following:
(b) debt obligations described in paragraph (a) of the definition “fully exempt interest” in subsection 212(3),
(2) Subparagraphs (c)(i) and (ii) of the definition “qualified investment” in section 204 of the Act are replaced by the following:
(i) a corporation, mutual fund trust or limited partnership the shares or units of which are listed on a designated stock exchange in Canada,
(ii) a corporation the shares of which are listed on a designated stock exchange outside Canada, or
(3) Paragraph (d) of the definition “qualified investment” in section 204 of the Act is replaced by the following:
(d) securities (other than futures contracts or other derivative instruments in respect of which the holder’s risk of loss may exceed the holder’s cost) that are listed on a designated stock exchange,
(4) Subsection (1) applies after 2007.
(5) Subsections (2) and (3) apply on and after the day on which this Act is assented to.
58. (1) Subsection 207.1(5) of the Act is replaced by the following:
Tax payable in respect of agreement to acquire shares
(5) Where at any time a taxpayer whose taxable income is exempt from tax under Part I makes an agreement (otherwise than as a consequence of the acquisition or writing by it of an option listed on a designated stock exchange) to acquire a share of the capital stock of a corporation (otherwise than from the corporation) at a price that may differ from the fair market value of the share at the time the share may be acquired, the taxpayer shall, in respect of each month during which the taxpayer is a party to the agreement, pay a tax under this Part equal to the total of all amounts each of which is the amount, if any, by which the amount of a dividend paid on the share at a time in the month at which the taxpayer is a party to the agreement exceeds the amount, if any, of the dividend that is received by the taxpayer.
(2) Subsection (1) applies on and after the day on which this Act is assented to.
59. (1) Subparagraph 212(1)(b)(vii) of the Act is amended by striking out the word “or” at the end of clause (E), by adding the word “or” at the end of clause (F) and by adding the following after clause (F):
(G) in the event that a change to this Act or to a tax treaty has the effect of relieving the non-resident person from liability for tax under this Part in respect of the interest;
(2) Paragraph 212(1)(b) of the Act is replaced by the following:
(b) interest that
(i) is not fully exempt interest, and is paid or payable to a person with whom the payer is not dealing at arm’s length, or
(ii) is participating debt interest;
(3) Subsection 212(3) of the Act is replaced by the following:
Interest — definitions
(3) The following definitions apply for the purpose of paragraph (1)(b).
“fully exempt interest”« intérêts entièrement exonérés »
“fully exempt interest” means
(a) interest that is paid or payable on a bond, debenture, note, mortgage, hypothecary claim or similar debt obligation
(i) of, or guaranteed (otherwise than by being insured by the Canada Deposit Insurance Corporation) by, the Government of Canada,
(ii) of the government of a province,
(iii) of an agent of a province,
(iv) of a municipality in Canada or a municipal or public body performing a function of government in Canada,
(v) of a corporation, commission or association to which any of paragraphs 149(1)(d) to (d.6) applies, or
(vi) of an educational institution or a hospital if repayment of the principal amount of the obligation and payment of the interest is to be made, or is guaranteed, assured or otherwise specifically provided for or secured by the government of a province;
(b) interest that is paid or payable on a mortgage, hypothecary claim or similar debt obligation secured by, or on an agreement for sale or similar obligation with respect to, real property situated outside Canada or an interest in any such real property, or to immovables situated outside Canada or a real right in any such immovable, except to the extent that the interest payable on the obligation is deductible in computing the income of the payer under Part I from a business carried on by the payer in Canada or from property other than real or immovable property situated outside Canada;
(c) interest that is paid or payable to a prescribed international organization or agency; or
(d) an amount paid or payable or credited under a securities lending arrangement that is deemed by subparagraph 260(8)(a)(i) to be a payment made by a borrower to a lender of interest, if
(i) the securities lending arrangement was entered into by the borrower in the course of carrying on a business outside Canada, and
(ii) the security that is transferred or lent to the borrower under the securities lending arrangement is described in paragraph (b) or (c) of the definition “qualified security” in subsection 260(1) and issued by a non-resident issuer.
“participating debt interest”« intérêts sur des créances participatives »
“participating debt interest” means interest (other than interest described in any of paragraphs (b) to (d) of the definition “fully exempt interest”) that is paid or payable on an obligation, other than a prescribed obligation, all or any portion of which interest is contingent or dependent on the use of or production from property in Canada or is computed by reference to revenue, profit, cash flow, commodity price or any other similar criterion or by reference to dividends paid or payable to shareholders of any class of shares of the capital stock of a corporation.
(4) Subsection 212(14) of the Act is repealed.
(5) Section 212 of the Act is amended by adding the following after subsection (17):
Payments to the International Olympic Committee and the International Paralympic Committee
(17.1) Notwithstanding subsections (1) and (2),
(a) the International Olympic Committee is not taxable under this Part on any amount paid or credited to it, after 2005 and before 2011, in respect of the 2010 Olympic Winter Games, and
(b) the International Paralympic Committee is not taxable under this Part on any amount paid or credited to it, after 2005 and before 2011, in respect of the 2010 Paralympic Winter Games.
(6) Subsections 212(18) and (19) of the Act are replaced by the following:
Undertaking
(18) Every person who in a taxation year is a prescribed financial institution or a person resident in Canada who is a registered securities dealer shall on demand from the Minister, served personally or by registered letter, file within such reasonable time as may be stipulated in the demand, an undertaking in prescribed form relating to the avoidance of payment of tax under this Part.
Tax on registered securities dealers
(19) Every taxpayer who is a registered securities dealer resident in Canada shall pay a tax under this Part equal to the amount determined by the formula
1/365 × .25 × (A - B) × C
where
A      is the total of all amounts each of which is the amount of money provided before the end of a day to the taxpayer (and not returned or repaid before the end of the day) by or on behalf of a non-resident person as collateral or as consideration for a security that was lent or transferred under a designated securities lending arrangement,
B      is the total of
(a) all amounts each of which is the amount of money provided before the end of the day by or on behalf of the taxpayer (and not returned or repaid before the end of the day) to a non-resident person as collateral or as consideration for a security that is described in paragraph (a) of the definition “fully exempt interest” in subsection (3), or that is an obligation of the government of any country, province, state, municipality or other political subdivision, and that was lent or transferred under a securities lending arrangement, and
(b) the greater of
(i) 10 times the greatest amount determined, under the laws of the province or provinces in which the taxpayer is a registered securities dealer, to be the capital employed by the taxpayer at the end of the day, and
(ii) 20 times the greatest amount of capital required, under the laws of the province or provinces in which the taxpayer is a registered securities dealer, to be maintained by the taxpayer as a margin in respect of securities described in paragraph (a) of the definition “fully exempt interest” in subsection (3), or that is an obligation of the government of any country, province, state, municipality or other political subdivision, at the end of the day, and
C      is the prescribed rate of interest in effect for the day,
and shall remit that amount to the Receiver General on or before the 15th day of the month after the month in which the day occurs.
Designated SLA
(20) For the purpose of subsection (19), a designated securities lending arrangement is a securities lending arrangement
(a) under which
(i) the lender is a prescribed financial institution or a registered securities dealer resident in Canada,
(ii) the particular security lent or transferred is an obligation described in paragraph (a) of the definition “fully exempt interest” in subsection (3) or an obligation of the government of any country, prov- ince, state, municipality or other political subdivision,
(iii) the amount of money provided to the lender at any time during the term of the arrangement either as collateral or as consideration for the particular security does not exceed 110% of the fair market value at that time of the particular security; and
(b) that was neither intended, nor made as a part of a series of securities lending arrangements, loans or other transactions that was intended, to be in effect for more than 270 days.
(7) Subsection (1) applies to obligations entered into on or after March 19, 2007.
(8) Subsections (2) to (4) and (6) apply after 2007.
60. (1) Paragraph 214(8)(a) of the Act is replaced by the following:
(a) that is described in paragraph (a) of the definition “fully exempt interest” in subsection 212(3), or on which the interest would have been exempt under subparagraph 212(1)(b)(iii) or (vii) as they applied to the 2007 taxation year;
(2) Subsection 214(11) of the Act is repealed.
(3) Subsections (1) and (2) apply after 2007.
61. (1) Section 220 of the Act is amended by adding the following after subsection (3.2):
Joint election — pension income split
(3.201) On application by a taxpayer, the Minister may extend the time for making an election, or grant permission to amend or revoke an election, under section 60.03 if
(a) the application is made on or before the day that is three calendar years after the taxpayer’s filing-due date for the taxation year to which the election applies; and
(b) the taxpayer is resident in Canada
(i) if the taxpayer is deceased at the time of the application, at the time that is immediately before the taxpayer’s death, or
(ii) in any other case, at the time of the application.
(2) The portion of subsection 220(3.5) of the Act before paragraph (a) is replaced by the following:
Penalty for late filed, amended or revoked elections
(3.5) Where, on application by a taxpayer or a partnership, the Minister extends the time for making an election or grants permission to amend or revoke an election (other than an extension or permission under subsection (3.201)), the taxpayer or the partnership, as the case may be, is liable to a penalty equal to the lesser of
(3) Subsections (1) and (2) applies to the 2007 and subsequent taxation years.
62. (1) Subsection 221(1) of the Act is amended by adding the following after paragraph (d.1):
(d.2) requiring any class of persons to make information available to the public for the purpose of making information returns respecting any class of information required in connection with assessments under this Act;
(2) Subsection (1) applies to information in respect of taxation years of taxpayers and fiscal periods of partnerships that end on or after July 4, 2007.
63. The portion of subsection 231.2(1) of the Act before paragraph (a) is replaced by the following:
Requirement to provide documents or information
231.2 (1) Notwithstanding any other provision of this Act, the Minister may, subject to subsection (2), for any purpose related to the administration or enforcement of this Act (including the collection of any amount payable under this Act by any person), of a comprehensive tax information exchange agreement between Canada and another country or jurisdiction that is in force and has effect or, for greater certainty, of a tax treaty with another country, by notice served personally or by registered or certified mail, require that any person provide, within such reasonable time as stipulated in the notice,
64. (1) Subparagraph 241(4)(e)(xii) of the Act is replaced by the following:
(xii) a provision contained in a tax treaty with another country or in a comprehensive tax information exchange agreement between Canada and another country or jurisdiction that is in force and has effect;
(2) Subsection 241(4) of the Act is amended by striking out the word “or” at the end of paragraph (o), by adding the word “or” at the end of paragraph (p) and by adding the following after paragraph (p):
(q) provide taxpayer information to an official of the government of a province solely for the use in the management or administration by that government of a program relating to earning supplementation or income support.
65. (1) The definition “NISA Fund No. 2” in subsection 248(1) of the Act is replaced by the following:
“NISA Fund No. 2”« second fonds du compte de stabilisation du revenu net »
“NISA Fund No. 2” means the portion of a taxpayer’s net income stabilization account 
(a) that is described in paragraph 8(2)(b) of the Farm Income Protection Act, and
(b) that can reasonably be considered to be attributable to a program that allows the funds in the account to accumulate;
(2) Subsection 248(1) of the Act is amended by adding the following definitions in alphabetical order:
“designated stock exchange”« bourse de valeurs désignée »
“designated stock exchange” means a stock exchange, or that part of a stock exchange, for which a designation by the Minister of Finance under section 262 is in effect;
“functional currency”« monnaie fonctionnelle »
“functional currency” of a taxpayer for a particular taxation year has the meaning assigned by section 261; 
“recognized stock exchange”« bourse de valeurs reconnue »
“recognized stock exchange” means
(a) a designated stock exchange, and
(b) any other stock exchange, if that other stock exchange is located in Canada or in a country that is a member of the Organisation for Economic Co-operation and Development and that has a tax treaty with Canada;
(3) Subsection 248(29) of the Act is repealed.
(4) Subsection (1) applies to the 2008 and subsequent taxation years.
(5) The definitions “designated stock exchange” and “recognized stock exchange” in subsection 248(1) of the Act, as enacted by subsection (2), and subsection (3) apply on and after the day on which this Act is assented to.
(6) The definition “functional currency” in subsection 248(1) of the Act, as enacted by subsection (2), applies in respect of taxation years that begin on or after the day on which this Act is assented to.
66. (1) Paragraph (a) of the definition “qualified security” in subsection 260(1) of the Act is replaced by the following:
(a) a share of a class of the capital stock of a corporation that is listed on a stock exchange or of a class of the capital stock of a corporation that is a public corporation by reason of the designation of the class by the corporation in an election made under subparagraph (b)(i) of the definition “public corporation” in subsection 89(1) or by the Minister in a notice to the corporation under subparagraph (b)(ii) of that definition,
(2) Paragraph 260(8)(a) of the Act is amended by adding the word “and” at the end of subparagraph (i) and by replacing subparagraphs (ii) and (iii) with the following:
(ii) the security is deemed to be a security described in paragraph (a) of the definition “fully exempt interest” in subsection 212(3) if the security is described in paragraph (c) of the definition “qualified security” in subsection (1), and
(3) Section 260 of the Act is amended by adding the following after subsection (9):
Non-arm’s length compensation payment
(10) For the purpose of Part XIII, where the lender under a securities lending arrangement is not dealing at arm’s length with either the borrower under the arrangement or the issuer of the security that is transferred or lent under the arrangement, or both, and subsection (8) deems an amount to be a payment of interest by a person to the lender in respect of that security, the lender is deemed, in respect of that payment, not to be dealing at arm’s length with that person.
(4) Subsection (1) applies on and after the day on which this Act is assented to.
(5) Subsections (2) and (3) apply after 2007.
67. (1) The Act is amended by adding the following after section 260:
Definitions
261. (1) The definitions in this subsection apply in this section.
“Canadian currency year”« année de déclaration en monnaie canadienne »
“Canadian currency year” of a taxpayer means a taxation year of the taxpayer in respect of which subsection (4) did not apply to the taxpayer.
“Canadian tax results”« résultats fiscaux canadiens »
“Canadian tax results” of a taxpayer for a particular taxation year of the taxpayer means 
(a) the amount of the income of the taxpayer for the particular taxation year;
(b) the amount of the taxable income of the taxpayer for the particular taxation year;
(c) the amount (other than an amount payable on behalf of another person under subsection 153(1) or section 215) of tax or other amount payable under this Act by the taxpayer in respect of the particular taxation year;
(d) the amount (other than an amount refundable on behalf of another person in respect of amounts payable on behalf of that person under subsection 153(1) or section 215) of tax or other amount refundable under this Act to the taxpayer in respect of the particular taxation year; and
(e) any amount that is relevant in determining the amounts described in respect of the taxpayer under paragraphs (a) to (d).
“consolidated financial statements”« états financiers consolidés »
“consolidated financial statements” of a taxpayer for a taxation year means the financial statements of the taxpayer that are prepared in accordance with generally accepted accounting principles that are applicable to that taxation year.
“currency exchange rate”« taux de change monétaire »
“currency exchange rate” on a particular day means, in respect of a conversion of an amount determined in a particular currency into an amount determined in another currency, the average, for the 12 month period ending on the particular day, 
(a) where the particular currency is Canadian currency, of the rate of exchange (calculated by reference to the rate of exchange quoted by the Bank of Canada at noon on each business day in the period) for the exchange of the Canadian dollar for a unit of the other currency or such rate or rates of exchange acceptable to the Minister;
(b) where the other currency is Canadian currency, of the rate of exchange (calculated by reference to the rate of exchange quoted by the Bank of Canada at noon on each business day in the period) for the exchange of a unit of the particular currency for the Canadian dollar or such rate or rates of exchange acceptable to the Minister; or
(c) where neither the particular currency nor the other currency is Canadian currency, of the rate of exchange (calculated by reference to the rates of exchange quoted by the Bank of Canada at noon on each business day in the period for the exchange of the Canadian dollar for a unit of each of those currencies) for the exchange of a unit of the particular currency for a unit of the other currency or such rate or rates of exchange acceptable to the Minister.
“functional currency”« monnaie fonctionnelle »
“functional currency” of a taxpayer for a particular taxation year of the taxpayer means the currency of a country other than Canada if that currency is 
(a) a qualifying currency;
(b) the currency that is, more often than any other currency, used in the conduct of the taxpayer’s principal business activities in the particular taxation year; and
(c) the currency in which the financial results of the taxpayer for the particular taxation year are computed in the taxpayer’s consolidated financial statements and legal-entity financial statements for the particular taxation year.
“functional currency year”« année de déclaration en monnaie fonctionnelle »
“functional currency year” of a taxpayer means a taxation year of the taxpayer in respect of which subsection (4) applies to the taxpayer.
“generally accepted accounting principles”« principes comptables généralement reconnus »
“generally accepted accounting principles” means the accounting principles established or recommended by the Accounting Standards Board of Canada or such other accounting principles as are determined to be acceptable by the Minister. 
“initial functional currency year”« année initiale de déclaration en monnaie fonctionnelle »
“initial functional currency year” of a taxpayer means a functional currency year of the taxpayer if the particular taxation year of the taxpayer ending immediately before the beginning of that functional currency year of the taxpayer was a Canadian currency year of the taxpayer.
“initial reversionary year”« année initiale de déclaration en monnaie canadienne »
“initial reversionary year” of a taxpayer means the first taxation year of the taxpayer that begins immediately after the last functional currency year of the taxpayer.
“last Canadian currency year”« dernière année de déclaration en monnaie canadienne »
“last Canadian currency year” of a taxpayer means the last taxation year of the taxpayer that ends before the beginning of the initial functional currency year of the taxpayer.
“last functional currency year”« dernière année de déclaration en monnaie fonctionnelle »
“last functional currency year” of a taxpayer means a functional currency year of the taxpayer if the particular taxation year of the taxpayer beginning immediately after the end of that functional currency year is a Canadian currency year of the taxpayer.
“legal-entity financial statements”« états financiers individuels »
“legal-entity financial statements” of a taxpayer for a taxation year means the financial statements of the taxpayer that would be prepared for that taxation year in accordance with generally accepted accounting principles that are applica-ble to that taxation year if those generally accepted accounting principles did not require consolidation.
“qualifying currency”« monnaie admissible »
“qualifying currency” of a taxpayer for a taxation year means each of
(a) the currency of the United States of America;
(b) the currency of the European Monetary Union;
(c) the currency of the United Kingdom; and
(d) a prescribed currency.
“reversionary exchange rate”« taux de change canadien »
“reversionary exchange rate” of a taxpayer for a functional currency year of the taxpayer means the average, for the 12-month period ending on the last day of the functional currency year of the taxpayer, of the rate of exchange (quoted by the Bank of Canada at noon on each business day in the period) for the exchange of a unit of the functional currency of the taxpayer for the functional currency year for the Canadian dollar. 
“tax credit”« crédit d’impôt »
“tax credit” means an amount deductible in computing a taxpayer’s tax payable, or deemed to have been paid on account of a taxpayer’s tax payable, under any Part of this Act for a taxation year. 
“transitional exchange rate”« taux de change transitoire »
“transitional exchange rate” of a taxpayer means the average, for the 12-month period ending on the last day of the last Canadian currency year of the taxpayer, of the rate of exchange (calculated by reference to the rate of exchange quoted by the Bank of Canada at noon on each business day in the period) for the exchange of the Canadian dollar for a unit of the functional currency of the taxpayer for the initial functional currency year of the taxpayer. 
Canadian currency requirement
(2) Subject to subsections (3) to (10),
(a) the Canadian tax results of a taxpayer for a particular taxation year are to be determined using Canadian currency; and
(b) subject to subsection 79(7), paragraphs 80(2)(k) and 142.7(8)(b), if a particular amount that is relevant in computing the taxpayer’s Canadian tax results for the particular taxation year is an amount expressed in a currency other than Canadian currency, that amount is to be converted to an amount expressed in Canadian currency using the rate of exchange quoted by the Bank of Canada at noon on the day on which that amount first arose for the exchange of a unit of that other currency for a unit of Canadian currency or such other rate of exchange as is acceptable to the Minister.
Application of subsection (4)
(3) Subsection (4) applies to a taxpayer in respect of a particular taxation year of the taxpayer if
(a) the taxpayer is, throughout the particular taxation year, a corporation (other than an investment corporation, a mortgage investment corporation or a mutual fund corporation) resident in Canada;
(b) the taxpayer has elected that subsection (4) apply to the taxpayer in respect of the particular taxation year, or a preceding taxation year, and each subsequent taxation year of the taxpayer and has filed that election with the Minister in prescribed form and manner on or before the taxpayer’s filing due date
(i) for the taxation year immediately preceding the first taxation year in respect of which the election was made, or
(ii) where there was not a taxation year immediately preceding the first taxation year in respect of which the election was made, for the first taxation year in respect of which the election was made;
(c) there is a functional currency of the taxpayer for the particular taxation year;
(d) where the taxpayer’s taxation year immediately preceding the particular taxation year was a functional currency year of the taxpayer, the functional currency of the taxpayer for that preceding taxation year is the same as the functional currency of the taxpayer for the particular taxation year; and
(e) where the taxpayer’s taxation year immediately preceding the particular taxation year was a Canadian currency year of the taxpayer, no preceding taxation year of the taxpayer was a functional currency year of the taxpayer.
Functional currency reporting
(4) If, because of subsection (3), this subsection applies to a taxpayer for a particular taxation year of the taxpayer,
(a) the taxpayer’s Canadian tax results for the particular taxation year are to be determined using the taxpayer’s functional currency for the particular taxation year;
(b) each reference in the Act or the regulations to a particular amount expressed in Canadian dollars is to be read as a reference to a particular amount expressed in the taxpayer’s functional currency for the partic-ular taxation year determined by applying the currency exchange rate in respect of the conversion of Canadian currency into that functional currency as of the first day of the particular taxation year;
(c) subject to subsection 79(7), paragraphs 80(2)(k) and 142.7(8)(b), if a particular amount that is relevant in computing the taxpayer’s Canadian tax results for the particular taxation year is an amount expressed in a currency other than the taxpayer’s functional currency for the particular taxation year, that amount is to be converted to an amount expressed in the taxpayer’s functional currency for the particular taxation year by using the rates of exchange quoted by the Bank of Canada at noon on the day that the particular amount first arose for the exchange of the Canadian dollar for a unit of each of those currencies or such other rate of exchange as is acceptable to the Minister;
(d) each reference in subsection 79(7), paragraph 80(2)(k) and subsections 80.01(11) and 80.1(8) to “Canadian currency” is to be read as a reference to “the taxpayer’s functional currency”;
(e) the reference in subsection 39(2) to “the value of the currency or currencies of one or more countries other than Canada relative to Canadian currency, a taxpayer has made a gain or sustained a loss in a taxation year” is to be read as reference to “the value of the currency or currencies of one or more countries (other than the taxpayer’s functional currency for the taxation year) relative to a taxpayer’s functional currency for a taxation year, the taxpayer has made a gain or sustained a loss in the taxation year” and the references in that subsection to “currency of a country other than Canada” shall be read as references to “currency other than the taxpayer’s functional currency for the taxation year”;
(f) the definition “foreign currency” in subsection 248(1) is, in respect of the taxpayer, to be, at any time in the particular taxation year, read as:
“foreign currency” in respect of a taxpayer, at any time in a particular taxation year, means a currency other than the taxpayer’s functional currency for the particular taxation year;
(g) where a taxation year of a foreign affiliate of the taxpayer ends in the particular taxation year of the taxpayer, the references in section 95 and in regulations made for the purposes of that section (other than subsection 5907(6) of the Regulations) to “Canadian currency” shall be read, in respect of the foreign affiliate, as a reference to “the taxpayer’s functional currency for the particular taxation year ”.
Converting Canadian currency amounts
(5) In applying this Act to a taxpayer for a particular functional currency year of the taxpayer
(a) subject to subparagraph (10)(b)(iii), in determining the amount (expressed in the taxpayer’s functional currency for the partic-ular functional currency year) that may be deducted, or relevant in determining the amount that may be deducted, under subsection 37(1) or 66(4), section 110.1 or 111 or subsection 126(2), 127(5), 129(1), 181.1(4) or 190.1(3) in the particular functional currency year, each amount (determined in Canadian currency) that is relevant to the determination and that was determined for a taxation year of the taxpayer that preceded the initial functional currency year of the taxpayer, is to be converted to the taxpayer’s functional currency for the particular functional currency year using the transitional exchange rate of the taxpayer;
(b) in determining, at any time in the particular functional currency year, the cost (expressed in the taxpayer’s functional currency for the particular functional currency year) to the taxpayer of a property that was acquired by the taxpayer before the beginning of the taxpayer’s initial functional currency year, the cost (determined in Canadian currency) to the taxpayer of the property at the end of the last Canadian currency year of the taxpayer is to be converted to the taxpayer’s functional currency for the partic-ular functional currency year using the transitional exchange rate of the taxpayer;
(c) in determining, at any time in the particular functional currency year, the adjusted cost base (expressed in the taxpayer’s functional currency for the particular functional currency year) to the taxpayer of a capital property that was acquired by the taxpayer before the beginning of the taxpayer’s initial functional currency year, each amount (determined in Canadian currency) that was required by section 53 to be added or deducted in computing, at any time before the beginning of the initial functional currency year of the taxpayer, the adjusted cost base of the property to the taxpayer is to be converted to the taxpayer’s functional currency for the particular functional currency year using the transitional exchange rate of the taxpayer;
(d) in determining, at any time in the particular functional currency year, the amount (expressed in the taxpayer’s functional currency for the particular functional currency year) of the taxpayer’s undepreciated capital cost of depreciable property of a prescribed class, cumulative eligible capital in respect of a business, cumulative Canadian exploration expense (within the meaning assigned by subsection 66.1(6)), cumulative Canadian development expense (within the meaning assigned by subsection 66.2(5)), cumulative foreign resource expense in respect of a country other than Canada (within the meaning assigned by subsection 66.21(1)) and cumulative Canadian oil and gas property expense (within the meaning assigned by subsection 66.4(5)), (each of which is referred to in this paragraph as a “pool amount”) each amount (determined in Canadian currency) that was added to or deducted from a particular pool amount of the taxpayer in respect of a taxation year of the taxpayer preceding the initial functional currency year of the taxpayer is to be converted to the taxpayer’s functional currency for the particular functional currency year using the transitional exchange rate of the taxpayer;
(e) in determining any amount (expressed in the taxpayer’s functional currency for the particular functional currency year) that has been deducted or claimed as a reserve in computing the income of the taxpayer for its last Canadian currency year, that amount (determined in Canadian currency) deducted or claimed as a reserve is to be converted to the taxpayer’s functional currency for the particular functional currency year using the transitional exchange rate of the taxpayer;
(f) in determining the amount (expressed in the taxpayer’s functional currency for the particular functional currency year) of any outlay or expense referred to in subsection 18(9) that was made or incurred by the taxpayer and the amount that was deducted in respect of that outlay or expense in respect of a taxation year preceding the initial functional currency year of the taxpayer, such amounts of outlay or expense or deductions (determined in Canadian currency for those years) are to be converted to the taxpayer’s functional currency for the particular functional currency year using the transitional exchange rate of the taxpayer;
(g) in determining, at any time in the particular functional currency year, the amount (expressed in the taxpayer’s functional currency for the particular functional currency year) of the taxpayer’s paid-up capital in respect of any class of shares of its capital stock, any amount (determined in Canadian currency) added or deducted in computing the taxpayer’s paid-up capital in respect of the class in a taxation year preceding the initial functional currency year of the taxpayer is to be converted to the taxpayer’s functional currency for the partic-ular functional currency year using the transitional exchange rate of the taxpayer;
(h) where the taxpayer issued a debt obligation in a taxation year of the taxpayer preceding the initial functional currency year of the taxpayer, in determining the amount (expressed in the taxpayer’s functional currency for the particular functional currency year) for which the obligation was issued, the principal amount (expressed in the taxpayer’s functional currency for the particular functional currency year) of the obligation, any amount (expressed in the taxpayer’s functional currency for the particular functional currency year) paid in satisfaction of the principal amount of the obligation in a taxation year of the taxpayer preceding the initial functional currency year of the taxpayer, and the amount (determined in the taxpayer’s functional currency for the partic-ular functional currency year) of any gain or loss attributable to the fluctuation in the values of currencies,
(i) where the obligation was issued in the taxpayer’s functional currency for the particular functional currency year, the amount (determined in the taxpayer’s functional currency for the particular functional currency year) for which the obligation was issued, the principal amount (determined in the taxpayer’s functional currency for the particular functional currency year) of the obligation and the amounts (determined in the taxpayer’s functional currency for the particular functional currency year) paid in satisfaction of the principal amount of the obligation, in a taxation year of the taxpayer preceding the initial functional currency year of the taxpayer are those amounts determined in those years in the taxpayer’s functional currency for the particular functional currency year,
(ii) where the obligation was issued in Canadian currency, the amount for which the obligation was issued (determined in Canadian currency), the principal amount (determined in Canadian currency) of the obligation and the amounts (determined in Canadian currency) paid in satisfaction of the principal amount of the obligation, in a taxation year preceding the initial functional currency year are to be converted to the taxpayer’s functional currency for the particular functional currency year using the transitional exchange rate of the taxpayer, and
(iii) where the obligation was issued in a currency (referred to in this subparagraph as the “third currency”) other than Canadian currency or the taxpayer’s functional currency for the particular functional currency year, the amount (determined in the third currency) for which the obligation was issued, the principal amount (determined in the third currency) of the obligation and the amounts (determined in the third currency) paid in satisfaction of the principal amount of the obligation in a taxation year of the taxpayer preceding the initial functional currency year of the taxpayer, are to be converted to the taxpayer’s functional currency for the particular functional currency year using the currency exchange rate in respect of a conversion of an amount determined in the third currency into an amount determined in the taxpayer’s functional currency for the particular functional currency year on the last day of the last Canadian currency year of the taxpayer;
(i) in determining the amount (expressed in the taxpayer’s functional currency for the particular functional currency year) of tax payable under Part I for a Canadian currency year for the purpose of determining the taxpayer’s first instalment base or second instalment base for the taxpayer’s initial functional currency year, the amount (determined in Canadian currency) of tax payable is to be converted to the taxpayer’s functional currency for the particular functional currency year using the transitional exchange rate of the taxpayer; and
(j) any amount (expressed in Canadian currency), other than an amount referred to in paragraphs (a) to (i), determined under the provisions of this Act in or in respect of a taxation year preceding the initial functional currency year of the taxpayer that is relevant in determining the Canadian tax results (expressed in the taxpayer’s functional currency for the particular functional currency year) of the taxpayer for the particular functional currency year is to be converted to the taxpayer’s functional currency for the particular functional currency year using the transitional exchange rate of the taxpayer.
Deferred amounts relating to debt
(6) In applying this Act to a taxpayer for a particular functional currency year of the taxpayer
(a) where, at any time in the particular functional currency year, the taxpayer has made a particular payment (expressed in the taxpayer’s functional currency for the partic-ular functional currency year) on account of the principal amount (expressed in the taxpayer’s functional currency for the partic-ular functional currency year) of a debt obligation that was issued by the taxpayer in a Canadian currency year of the taxpayer that ended before the beginning of the initial functional currency year of the taxpayer
(i) the taxpayer is deemed to have a capital gain under paragraph 39(2)(a) or income, as the case may be, attributable to the fluctuation in the values of currencies in respect of the particular payment for the particular functional currency year equal to the amount determined by the formula
A × B/C
where
A      is the amount determined by the formula
D × E
where
D      is the amount (expressed in Canadian currency), if any, that would have been determined to be the taxpayer’s capital gain under paragraph 39(2)(a) or income, as the case may be, if the principal amount of the debt obligation outstanding (determined in Canadian currency), immediately before the end of the last Canadian currency year of the taxpayer, had been settled by a payment by the taxpayer to the holder of the obligation of an amount equal to that outstanding principal amount at that time, and
E      is the transitional exchange rate of the taxpayer,
B      is the amount of the particular payment (expressed in the taxpayer’s functional currency for the particular functional currency year), and
C      is the principal amount of the debt obligation outstanding (determined in the taxpayer’s functional currency for the particular functional currency year) at the beginning of the initial functional currency year of the taxpayer,
(ii) the taxpayer is deemed to have a capital loss under paragraph 39(2)(b) or a loss, as the case may be, attributable to the fluctuation in the values of currencies in respect of the particular payment for the particular functional currency year equal to the amount determined by the formula
F × G/H
where
F      is the amount determined by the formula
I × J
where
I      is the amount (expressed in Canadian currency), if any, that would have been determined to be the taxpayer’s capital loss under paragraph 39(2)(b) or loss, as the case may be, if the principal amount of the debt obligation outstanding (determined in Canadian currency), immediately before the end of the last Canadian currency year of the taxpayer, had been settled by a payment by the taxpayer to the holder of the obligation of an amount equal to that outstanding principal amount at that time, and
J      is the transitional exchange rate of the taxpayer,
G      is the amount of the particular payment (expressed in the taxpayer’s functional currency for the particular functional currency year), and
H      is the principal amount of the debt obligation outstanding (determined in the taxpayer’s functional currency for the particular functional currency year) at the beginning of the initial functional currency year of the taxpayer, and
(iii) where a debt obligation is denominated in a currency other than the taxpayer’s functional currency for the particular functional currency year, any amount determined under element B in the formula in subparagraph (i) or element G in the formula in subparagraph (ii) is to be determined with reference to the relative value of that currency and the taxpayer’s functional currency for the particular functional currency year at the beginning of the initial functional currency year of the taxpayer, and
(b) notwithstanding paragraph 80(2)(k), where an obligation of the taxpayer was issued in a taxation year of the taxpayer preceding the initial functional currency year of the taxpayer in a currency other than the taxpayer’s functional currency for the partic-ular functional currency year, a forgiven amount arising at any time in the particular functional currency year in respect of the obligation is to be determined by reference to the currency exchange rate on the last day of the taxpayer’s last Canadian currency year in respect of a conversion of an amount determined in the other currency into an amount determined in the taxpayer’s functional currency for the particular functional currency year.
Amounts payable or refundable in respect of a functional currency year
(7) Notwithstanding subsection (4),
(a) if, at any particular time, an amount (determined in the taxpayer’s functional currency for the particular functional currency year) first becomes payable under this Act by a taxpayer to the Receiver General in respect of a particular functional currency year of the taxpayer,
(i) that amount (determined in the taxpayer’s functional currency for the partic-ular functional currency year) is to be converted to Canadian currency using the currency exchange rate on the earlier of the day the amount is so paid and the day that includes the particular time in respect of a conversion of an amount determined in the taxpayer’s functional currency for the particular functional currency year into an amount determined in Canadian currency, and
(ii) the amount so determined in Canadian currency under subparagraph (i) is to be paid to the Receiver General in Canadian currency; and
(b) if, at any particular time, an amount (determined in a taxpayer’s functional currency for the particular functional currency year) first becomes payable under this Act to the taxpayer by the Minister, for a particular functional currency year of the taxpayer, or is deemed to be paid on account of an amount payable by the taxpayer under the Act for that particular functional currency year,
(i) that amount (determined in the taxpayer’s functional currency for the partic-ular functional currency year) is to be converted to Canadian currency using the currency exchange rate on the day that includes the particular time in respect of the conversion of an amount determined in the taxpayer’s functional currency for the particular functional currency year into an amount determined in Canadian currency, and
(ii) the amount so determined in Canadian currency under subparagraph (i) is to be paid to the taxpayer by the Minister or is deemed to have been paid to the taxpayer by the Minister, as the case may be, in Canadian currency.
Application of subsection (9)
(8) Subsection (9) applies to a taxpayer for a particular Canadian currency year that begins after the last functional currency year of the taxpayer.
Converting functional currency amounts
(9) Where, because of subsection (8), this subsection applies to a taxpayer for a particular Canadian currency year of the taxpayer, in applying this Act to the taxpayer for that particular Canadian currency year, the following rules apply:
(a) subject to subparagraph (10)(a)(iii), in determining the amount (expressed in Canadian currency) that may be deducted, or relevant in determining the amount that may be deducted, under subsection 37(1) or 66(4), section 110.1 or 111 or subsection 126(2), 127(5), 129(1), 181.1(4) or 190.1(3) in the particular Canadian currency year,
(i) each amount (determined in the taxpayer’s functional currency for the functional currency year of the taxpayer) that is relevant to the determination and that was first required to be determined in a functional currency year of the taxpayer that preceded the particular Canadian currency year, is to be converted to Canadian currency using the reversionary exchange rate of the taxpayer for that functional currency year, and
(ii) each amount (determined in Canadian currency) that is relevant to the determination and that was first required to be determined in a Canadian currency year of the taxpayer preceding the particular Canadian currency year is the amount that was so determined in Canadian currency in that Canadian currency year;
(b) in determining, at any time in the particular Canadian currency year, the cost (expressed in Canadian currency) to the taxpayer of a property,
(i) where the property was acquired by the taxpayer in a functional currency year of the taxpayer preceding the particular Canadian currency year, the cost (determined in the taxpayer’s functional currency for the functional currency year) to the taxpayer of the property is to be converted to Canadian currency using the reversionary exchange rate of the taxpayer for that functional currency year, and
(ii) where the property was acquired by the taxpayer in a Canadian currency year of the taxpayer preceding the particular Canadian currency year, the cost (determined in Canadian currency) to the taxpayer of the property is the cost so determined in Canadian currency in that Canadian currency year;
(c) in determining, at any time in the particular Canadian currency year, the adjusted cost base (expressed in Canadian currency) to the taxpayer of a capital property
(i) each amount (determined in the taxpayer’s functional currency for the functional currency year) that is required by section 53 to be added or deducted in computing the adjusted cost base of the property to the taxpayer and was first required by that section to be added or deducted at any time in a functional currency year of the taxpayer preceding the particular Canadian currency year is to be converted to Canadian currency using the reversionary exchange rate of the taxpayer for that functional currency year, and
(ii) each amount (determined in Canadian currency) that is required by section 53 to be added or deducted in computing the adjusted cost base of the property to the taxpayer and was first required by that section to be added or deducted at any time in a Canadian currency year of the taxpayer preceding the particular Canadian currency year is the amount that was so determined in Canadian currency in that Canadian currency year;
(d) in determining, at any time in the particular Canadian currency year, the amount (expressed in Canadian currency) of the taxpayer’s undepreciated capital cost of depreciable property of a prescribed class, cumulative eligible capital in respect of a business, cumulative Canadian exploration expense (within the meaning assigned by subsection 66.1(6)), cumulative Canadian development expense (within the meaning assigned by subsection 66.2(5)), cumulative foreign resource expense in respect of a country other than Canada (within the meaning assigned by subsection 66.21(1)) and cumulative Canadian oil and gas property expense (within the meaning assigned by subsection 66.4(5)), (each of which is referred to in this paragraph as a “pool amount”),
(i) each amount (determined in the taxpayer’s functional currency for the functional currency year) that is required to be added to or deducted from a particular pool amount of the taxpayer and was first required to be added or deducted in respect of a functional currency year of the taxpayer preceding the particular Canadian currency year is to be converted to Canadian currency using the reversionary exchange rate of the taxpayer for that functional currency year, and
(ii) each amount (determined in Canadian currency) that is required to be added to or deducted from a particular pool amount of the taxpayer and was first required to be added or deducted in respect of a Canadian currency year of the taxpayer preceding the particular Canadian currency year is the amount that was so determined in Canadian currency in that Canadian currency year;
(e) in determining any amount (expressed in Canadian currency) that has been deducted or claimed as a reserve in computing the income of the taxpayer for its last functional currency year preceding the particular Canadian currency year, that amount (determined in the taxpayer’s functional currency for the last functional currency year) deducted or claimed as a reserve for that last functional currency year is to be converted to Canadian currency using the reversionary exchange rate of the taxpayer for that last functional currency year;
(f) in determining the amount (expressed in Canadian currency) of any outlay or expense referred to in subsection 18(9) that was made or incurred by the taxpayer and the amount that was deducted by the taxpayer in respect of that outlay or expense in respect of a taxation year of the taxpayer preceding the particular Canadian currency year,
(i) such of those amounts (determined in the taxpayer’s functional currency for the functional currency year) that were first made or incurred or deducted by the taxpayer in or in respect of a functional currency year of the taxpayer preceding the particular Canadian currency year are to be converted to Canadian currency using the reversionary exchange rate of the taxpayer for that functional currency year, and
(ii) such of those amounts (determined in Canadian currency) that were first made or incurred or deducted by the taxpayer in or in respect of a Canadian currency year of the taxpayer preceding the particular Canadian currency year are the amounts that were so determined in Canadian currency in that Canadian currency year;
(g) in determining, at any time in the particular Canadian currency year, the amount (expressed in Canadian currency) of the taxpayer’s paid-up capital in respect of any class of shares of its capital stock,
(i) any amount (determined in the taxpayer’s functional currency for the functional currency year) that was first added or deducted in computing the taxpayer’s paid-up capital in respect of the class in a functional currency year of the taxpayer preceding the particular Canadian currency year is to be converted to Canadian currency using the reversionary exchange rate of the taxpayer for that functional currency year, and
(ii) any amount (determined in Canadian currency) that was first added or deducted in computing the taxpayer’s paid-up capital in respect of the class in a Canadian currency year of the taxpayer preceding the particular Canadian currency year is the amount that was so determined in Canadian currency in that Canadian currency year;
(h) where an obligation was issued in a taxation year of the taxpayer preceding the initial reversionary year of the taxpayer, in determining, at any time in the particular Canadian currency year, the amount (expressed in Canadian currency) for which an obligation was issued, the principal amount (expressed in Canadian currency) of the obligation, the amounts (expressed in Canadian currency) paid in satisfaction of the principal amount of the obligation, and the amount (determined in Canadian currency), if any, of any gain or loss attributable to the fluctuation in the value of the Canadian currency relative to the value of the currency in which the obligation was issued,
(i) subject to paragraph (i), where the obligation was issued in a currency other than Canadian currency,
(A) the amount (determined in the currency in which the obligation was issued) for which the obligation was issued and the principal amount (determined in the currency in which the obligation was issued) of the obligation are
(I) where the taxation year of the taxpayer in which the obligation was issued was a Canadian currency year of the taxpayer, the amounts (determined in Canadian currency) that were so determined in Canadian currency in that Canadian currency year, or
(II) where the taxation year of the taxpayer in which the obligation was issued was a functional currency year of the taxpayer, the amounts determined by converting those amounts (determined in the taxpayer’s functional currency for the functional currency year) to Canadian currency by using the reversionary exchange rate of the taxpayer for that functional currency year, and
(B) the amounts (determined in the currency in which the obligation was issued) paid at any time in a taxation year of the taxpayer preceding the initial reversionary year of the taxpayer in satisfaction of the principal amount of the obligation are
(I) where the taxation year of the taxpayer in which an amount was paid was a Canadian currency year of the taxpayer, the amount (determined in Canadian currency) that was so determined in Canadian currency in that Canadian currency year, or
(II) where the taxation year of the taxpayer in which an amount was paid was a functional currency year of the taxpayer, the amount determined by converting that amount (determined in the taxpayer’s functional currency for the functional currency year) to Canadian currency by using the reversionary exchange rate of the taxpayer for that functional currency year, and
(ii) where the obligation was issued in Canadian currency, the amount (determined in Canadian currency) for which the obligation was issued, the principal amount (determined in Canadian currency) of the obligation and the amounts (determined in Canadian currency) paid, in a taxation year of the taxpayer preceding the initial reversionary year of the taxpayer, in satisfaction of the principal amount of the obligation, are the amounts so determined in Canadian currency in those preceding years;
(i) where an obligation was issued in a currency other than Canadian currency in a taxation year of the taxpayer preceding the initial reversionary year of the taxpayer, in determining, in respect of subsection 79(7) or paragraph 80(2)(k) or 142.7(8)(b), the amount (expressed in Canadian currency) for which the obligation was issued, the principal amount (determined in Canadian currency) of the obligation, and the amounts (determined in Canadian currency) paid in satisfaction of the principal amount of the obligation, at any time in the particular Canadian currency year, those amounts are to be determined as if subsections (1) to (7) had not applied to the taxpayer for any preceding taxation year;
(j) where the particular Canadian currency year is the initial reversionary year of the taxpayer, for the purpose of determining the taxpayer’s first instalment base or second instalment base in the particular Canadian currency year, the amount (determined in the taxpayer’s functional currency for the functional currency year) of tax payable by the taxpayer under Part I for the last functional currency year of the taxpayer is to be converted to Canadian currency using the reversionary exchange rate of the taxpayer for that last functional currency year; and
(k) in determining any amount (determined in Canadian currency and referred to in this paragraph as the “specified amount”), at any time in the particular Canadian currency year, other than an amount referred to in paragraphs (a) to (j), that is relevant in determining the Canadian tax results of the taxpayer for the particular Canadian currency year
(i) any amount (determined in the taxpayer’s functional currency for the functional currency year) that is relevant in determining the specified amount and was first determined in or in respect of a functional currency year of the taxpayer preceding the particular Canadian currency year, is to be converted to Canadian currency using the reversionary exchange rate of the taxpayer for that functional currency year, and
(ii) any amount (determined in Canadian currency) that is relevant in determining the specified amount and was first determined in or in respect of a Canadian currency year of the taxpayer preceding the particular Canadian currency year is the amount that was so determined in Canadian currency in that Canadian currency year.
Functional currency and Canadian currency amounts carried back
(10) In determining an amount that a taxpayer may claim under section 111 or subsection 126(2), 127(5), 181.1(4) or 190.1(3), for a particular taxation year of the taxpayer, the following rules apply:
(a) if the particular taxation year is a Canadian currency year of the taxpayer, the amount that may be claimed (determined in Canadian currency) is to be determined,
(i) by converting each amount (determined in the taxpayer’s functional currency for the particular functional currency year) of a loss incurred, tax credit arising and expenditure made in or in respect of a particular functional currency year of the taxpayer that ends after the particular taxation year to Canadian currency using the currency exchange rate in respect of the conversion of an amount determined in the taxpayer’s functional currency for the particular functional currency year into an amount determined in Canadian currency on the last day of that particular functional currency year,
(ii) as if each amount (determined in Canadian currency) of a loss incurred, tax credit arising, expenditure made and deduction claimed in or in respect of a Canadian currency year of the taxpayer were the amount of that loss incurred, tax credit arising, expenditure made and deduction claimed in Canadian currency in or in respect of that Canadian currency year of the taxpayer, and
(iii) by converting each amount (determined in the taxpayer’s functional currency for the particular functional currency year) claimed in or in respect of a particular functional currency year of the taxpayer preceding the initial reversionary year of the taxpayer (in respect of an amount of loss incurred, tax credit arising or expenditure made by a taxpayer in or in respect of a Canadian currency year) to Canadian currency using the currency exchange rate on the last day of the Canadian currency year of the taxpayer in or in respect of which the amount claimed arose in respect of the conversion of an amount determined in the taxpayer’s functional currency for the particular functional currency year to an amount determined in Canadian currency; and
(b) if the particular taxation year is a functional currency year of the taxpayer, the amount that may be claimed (determined in the taxpayer’s functional currency for the particular taxation year) is to be determined,
(i) by converting each amount (determined in Canadian currency) of a loss incurred, tax credit arising and expenditure made in or in respect of a particular Canadian currency year of the taxpayer that ends after the particular taxation year to the taxpayer’s functional currency for the particular taxation year using the currency exchange rate in respect of the conversion of an amount determined in Canadian currency into an amount determined in the taxpayer’s functional currency for the particular taxation year on the last day of that particular Canadian currency year,
(ii) as if each amount (determined in the taxpayer’s functional currency for the particular taxation year) of a loss incurred, tax credit arising, expenditure made and deduction claimed in or in respect of a functional currency year of the taxpayer were the amount of that loss incurred, tax credit arising, expenditure made and deduction claimed in the taxpayer’s functional currency for the particular taxation year, and
(iii) by converting each amount (determined in Canadian currency) claimed in or in respect of a particular Canadian currency year of the taxpayer preceding the initial functional currency year of the taxpayer (in respect of an amount of loss incurred, tax credit arising or expenditure made by a taxpayer in or in respect of a functional currency year of the taxpayer) to the taxpayer’s functional currency for the particular taxation year using the currency exchange rate on the last day of the functional currency year of the taxpayer in or in respect of which the amount claimed arose in respect of the conversion of an amount determined in Canadian currency to an amount determined in the taxpayer’s functional currency for the particular taxation year.
Subsection 88(1) wind-ups — effect on subsidiary
(11) Subsection (12) applies to a corporation (referred to in this subsection and subsection (12) as the “subsidiary”) that has been wound up into another corporation (referred to in this subsection as the “parent”) if
(a) subsection 88(1) applied to the subsidiary and the parent in respect of the winding-up of the subsidiary;
(b) the taxation year of the subsidiary (referred to in this subsection and subsection (12) as the “distribution year of the subsidiary”) in which any portion of a property (such portion of the property referred to in this subsection as the “distributed property”) of the subsidiary was distributed to the parent, or any portion of an obligation (such portion of the obligation referred to in this subsection as the “assumed obligation”) of the subsidiary was assumed by the parent, on the winding-up of the subsidiary would, were this section read without reference to this subsection, be a functional currency year of the subsidiary; and
(c) either
(i) where the taxation year of the parent (referred to in this paragraph as the “acquisition year of the parent”) in which the subsidiary distributed the distributed property to the parent, or the assumed obligation of the subsidiary was assumed by the parent, on the winding-up of the subsidiary was a functional currency year of the parent, the functional currency for the acquisition year of the parent was not the functional currency of the subsidiary for the distribution year of the subsidiary, or
(ii) the acquisition year of the parent was not a functional currency year of the parent.
Taxation year of subsidiary
(12) Where, because of subsection (11), this subsection applies to the subsidiary, for the purposes of this section
(a) the last taxation year of the subsidiary that ends before the beginning of the distribution year of the subsidiary is deemed to be the last functional currency year of the subsidiary; and
(b) subsection (4) is deemed not to apply to the subsidiary for each taxation year of the subsidiary commencing after the end of the last functional currency year of the subsidiary described in paragraph (a).
Amalgamations — effect on predecessor corporations
(13) Subsection (14) applies to a corporation (referred to in this subsection and subsection (14) as the “specified predecessor”) that has merged with one or more other corporations to form one corporate entity (referred to in this subsection as the “new corporation”) if
(a) the merger was an amalgamation (within the meaning assigned by subsection 87(1));
(b) the taxation year of the specified pred- ecessor (referred to in this subsection and subsection (14) as the “last taxation year of the specified predecessor”) that ended immediately before the amalgamation would, were this section read without reference to subsection (14), be a functional currency year of the specified predecessor; and
(c) either
(i) where the taxation year of the new corporation (referred to in this paragraph as the “first taxation year of the new corporation”) that began at the time of the amalgamation was a functional currency year of the new corporation, the functional currency of the new corporation for the first taxation year of the new corporation was not the functional currency of the specified predecessor for the last taxation year of the specified predecessor, or
(ii) the first taxation year of the new corporation was not a functional currency year of the new corporation.
Taxation year of specified predecessor
(14) Where, because of subsection (13), this subsection applies to the specified predecessor, for the purposes of this section
(a) the taxation year of the specified pred- ecessor that ends immediately before the beginning of the last taxation year of the specified predecessor is deemed to be the last functional currency year of the specified predecessor; and
(b) subsection (4) is deemed not to apply to the specified predecessor corporation for each taxation year of the specified predecessor commencing after the end of the last functional currency year of the specified predecessor described in paragraph (a).
Deemed continuation on winding-up or amalgamation
(15) For the purpose of this section,
(a) subject to subsection (16), where there has been a winding-up of a taxpayer (referred to in this subsection and subsection (16) as the “subsidiary”) into another taxpayer (referred to in this subsection and subsection (16) as the “parent”) to which subsection 88(1) has applied, the parent is deemed to be the same corporation as and a continuation of the subsidiary; and
(b) subject to subsection (17), where there has been an amalgamation (within the meaning assigned by subsection 87(1)) of two or more corporations (each such taxpayer referred to in this subsection and subsection (17) as a “predecessor”) to form one corporate entity (referred to in this subsection and subsection (17) as the “new corporation”) the new corporation is deemed to be the same corporation as and a continuation of each such predecessor corporation.
Exception to deemed continuation — winding-up
(16) Where the parent would not, in a taxation year of the parent ending after the time the subsidiary was wound up, satisfy the requirements of paragraph (3)(e) because the last functional currency year of the subsidiary referred to in subsection (12) in respect of the winding-up is, because of paragraph (15)(a), the last functional currency year of the parent, paragraph (15)(a) shall not apply, for the purposes of paragraph (3)(e), to the parent in respect of the subsidiary if the total of all amounts each of which is the cost amount, at the end of the taxation year of the parent in which the property of the subsidiary was distributed to the parent in the course of winding-up, to the parent of a property that was distributed to the parent on the winding-up (or property substituted for such property) is less than 50% of the total of all amounts each of which is the cost amount, at the end of that taxation year, to the parent of a property of the parent.
Exception to deemed continuation — amalgamation
(17) Where the new corporation would not, in a taxation year of the new corporation commencing on or after the time of the amalgamation, satisfy the requirements of paragraph (3)(e) because the last functional currency year of the predecessor referred to in subsection (14) in respect of the amalgamation is, because of paragraph (15)(b) the last functional currency year of the new corporation, paragraph (15)(b) shall not apply, for the purposes of paragraph (3)(e), to the new corporation in respect of the predecessor if the total of all amounts each of which is the cost amount, at the end of the taxation year of the new corporation that began at the time of the amalgamation, to the new corporation of a property that, immediately before the amalgamation, was a property of the predecessor (or property substituted for such property) is less than 50% of the total of all amounts each of which is the cost amount, at the end of that taxation year of the new corporation, to the new corporation of a property of the new corporation.
Anti-avoidance
(18) Where, at any time, all or substantially all of the property (referred to in this subsection as the “transferred property”) of a business (referred to in this subsection as the “transferred business”) of a taxpayer has been disposed of by the taxpayer (referred to in this subsection as the “transferor”) and acquired, either directly or indirectly by a corporation resident in Canada (referred to in this subsection as the “transferee”) that, immediately after the acquisition, was related to the taxpayer, and a taxation year of the transferor beginning before that time was a functional currency year of the transferor, for the purposes of this section, the transferee is deemed to be the same corporation as and a continuation of the transferor if the total of all amounts each of which is the cost amount, at the end of the taxation year of the transferee in which the transferred business was transferred, to the transferee of a property that was a transferred property (or property substituted for such property) is greater than 50% of the total of all amounts each of which is the cost amount, at the end of that taxation year of the transferree, to the transferree of a property of the transferree.
Authority to designate stock exchange
262. (1) The Minister of Finance may designate a stock exchange, or a part of a stock exchange, for the purposes of this Act.
Revocation of designation
(2) The Minister of Finance may revoke the designation of a stock exchange, or a part of a stock exchange, designated under subsection (1).
Timing
(3) A designation under subsection (1) or a revocation under subsection (2) shall specify the time at and after which it is in effect, which time may, for greater certainty, precede the time at which the designation or revocation is made.
Publication
(4) The Minister of Finance shall cause to be published, by posting on the Internet website of the Department of Finance or by any other means that the Minister of Finance considers appropriate, the names of those stock exchanges, or parts of stock exchanges, as the case may be, that are or at any time were designated under subsection (1).
Transition
(5) The Minister of Finance is deemed to have designated under subsection (1) each stock exchange and each part of a stock exchange that was, immediately before the day on which this section came into force, a prescribed stock exchange, with effect on and after that day.
(2) The definition “Canadian tax results” in subsection 261(1), and subsection 261(2), of the Act, as enacted by subsection (1), apply for all taxation years.
(3) Subsection 261(1) (other than the definition “Canadian tax results”), and subsections 261(3) to (18), of the Act, as enacted by subsection (1), apply in respect of taxation years that begin on or after the day on which this Act is assented to.
(4) Subsection 261(10) of the Act, as enacted by subsection (1), applies on and after the day on which this Act is assented to.
(5) Section 262 of the Act, as enacted by subsection (1), applies on and after the day on which this Act is assented to.
68. (1) The Act is amended by replacing “prescribed stock exchange” with “designated stock exchange” in the following provisions:
(a) the portion of paragraph 187.3(2)(d) before subparagraph (i); and
(b) paragraph (d.1) of the definition “term preferred share” in subsection 248(1).
(2) The Act is amended by replacing “prescribed stock exchange” with “designated stock exchange” in the following provisions:
(a) subparagraphs 7(9)(d)(i) and (ii);
(b) subparagraph 13(27)(f)(i);
(c) subparagraph 48.1(1)(a)(ii);
(d) subparagraphs 86.1(2)(c)(ii) and (d)(ii);
(e) subsection 87(4.3) and paragraphs 87(9)(a.2) and (10)(e);
(f) subsection 110.1(6);
(g) paragraph 112(2.21)(c);
(h) clauses (a)(i)(A) and (B) of the definition “qualified investment” in subsection 115.2(1);
(i) paragraph 118.1(18)(a);
(j) subparagraphs (a)(i) and (ii) and clauses (c)(ii)(A) and (B) of the definition “split income” in subsection 120.4(1);
(k) paragraph (c) of the definition “Canadian-controlled private corporation” in subsection 125(7);
(l) subsection 137(4.1);
(m) paragraph (b) of the definition “non-qualified investment” in subsection 149.1(1);
(n) subsection 207.5(2);
(o) paragraph (a) of the definition “Canadian property mutual fund investment” in subsection 218.3(1);
(p) paragraph (d) of the definition “grandfathered share” in subsection 248(1); and
(q) paragraphs (d) to (f) of the definition “taxable Canadian property” in subsection 248(1).
(3) Subsections (1) and (2) apply on and after the day on which this Act is assented to.
R.S., c. 2 (5th Supp.)
Income Tax Application Rules
69. (1) Subsection 10(5) of the Income Tax Application Rules is repealed.
(2) Subsection (1) applies after 2007.
R.S., c. I-4
Income Tax Conventions Interpretation Act
70. (1) The Income Tax Conventions Interpretation Act is amended by adding the following after section 4.1:
Stock exchanges
4.2 Notwithstanding the provisions of a convention or the Act giving the convention the force of law in Canada, each reference in a convention to a stock exchange that is prescribed under, or for the purposes of, the Income Tax Act shall be read as a reference to a designated stock exchange, as defined in the Income Tax Act.
(2) Subsection (1) applies on and after the day on which this Act is assented to.
C.R.C., c. 945
Income Tax Regulations
71. (1) Paragraphs 108(1.12)(a) and (b) of the Income Tax Regulations are replaced by the following:
(a) the average monthly withholding amount in respect of an employer for either the first or the second calendar year before the particular calendar year that includes that time is less than $3,000,
(b) throughout the 12-month period before that time, the employer has remitted, on or before the day on or before which the amounts were required to be remitted, all amounts each of which was required to be remitted under subsection 153(1) of the Act, under subsection 21(1) of the Canada Pension Plan, under subsection 82(1) of the Employment Insurance Actor under Part IX of the Excise Tax Act, and
(2) Subsection (1) applies in respect of amounts required to be deducted or withheld after 2007.
72. (1) The Regulations are amended by adding the following after section 204:
Interpretation
204.1 (1) The following definitions apply in this section.
“public investment trust”, at any time, means a public trust all or substantially all of the fair market value of the property of which is, at that time, attributable to the fair market value of property of the trust that is
(a) units of public trusts;
(b) partnership interests in public partnerships (as defined in subsection 229.1(1));
(c) shares of the capital stock of public corporations; or
(d) any combination of properties referred to in paragraphs (a) to (c). (fiducie de placement ouverte)
“public trust”, at any time, means a mutual fund trust the units of which are, at that time, listed on a designated stock exchange in Canada. (fiducie ouverte)
Required Information Disclosure
(2) A trust that is, at any time in a taxation year of the trust, a public trust shall, within the time required by subsection (3),
(a) make public, in prescribed form, information in respect of the trust for the taxation year by posting that prescribed form, in a manner that is accessible to the general public, on the Internet website of CDS Innovations Inc.; and
(b) notify the Minister in writing as to when the posting of the prescribed form, as required by paragraph (a), has been made.
Required Disclosure Time
(3) The time required for a public trust to satisfy the requirements of subsection (2) in respect of the public trust for a taxation year of the public trust is
(a) subject to paragraph (b), on or before the day that is 60 days after the end of the taxation year; and
(b) where the public trust is, at any time in the taxation year, a public investment trust, on or before the day that is 67 days after the end of the calendar year in which the taxation year ends.
(2) Subsection (1) applies to information in respect of taxation years that end on or after July 4, 2007.
73. (1) The Regulations are amended by adding the following after section 229:
Definitions
229.1 (1) The definitions in this subsection apply in this section.
“public investment partnership”, at any time, means a public partnership all or substantially all of the fair market value of the property of which is, at that time, attributable to the fair market value of property of the partnership that is
(a) units of public trusts (as defined in subsection 204.1(1));
(b) partnership interests in public partnerships;
(c) shares of the capital stock of public corporations; or
(d) any combination of properties referred to in paragraphs (a) to (c). (société de personnes de placement ouverte)
“public partnership”, at any time, means a partnership the partnership interests in which are, at that time, listed on a designated stock exchange in Canada if, at that time, the partnership carries on a business in Canada or is a Canadian partnership. (société de personnes ouverte)
Required Information Disclosure
(2) Every member of a partnership that is, at any time in a fiscal period of the partnership, a public partnership shall, within the time required by subsection (3),
(a) make public, in prescribed form, information in respect of the public partnership for the fiscal period by posting the prescribed form, in a manner that is accessible to the general public, on the Internet website of CDS Innovations Inc.; and
(b) notify the Minister in writing as to when the posting of the prescribed form, as required by paragraph (a), has been made.
Required Disclosure Time
(3) The time required for the members of a public partnership to satisfy the requirements of subsection (2) in respect of the public partnership for a fiscal period of the public partnership is
(a) subject to paragraph (b), on or before the day that is the earlier of
(i) 60 days after the end of the calendar year in which the fiscal period ends, and
(ii) four months after the end of the fiscal period; and
(b) where the public partnership is, at any time in the fiscal period, a public investment partnership, on or before the day that is 67 days after the end of the calendar year in which the fiscal period ends.
Obligation Fulfilled by One Partner Deemed Fulfilled by All
(4) Every member of a partnership that is required to satisfy the requirements of subsection (2) in respect of the partnership for a fiscal period of the partnership will be deemed to have satisfied those requirements if a particular member of the partnership, who has authority to act for the partnership, has satisfied those requirements in respect of the partnership for the fiscal period.
(2) Subsection (1) applies to information in respect of fiscal periods that end on or after July 4, 2007.
74. (1) Section 3201 of the Regulations is amended
(a) by replacing “the Australian Stock Exchange” in paragraph (a) with “the Australian Securities Exchange”;
(b) by replacing “the Brussels Stock Exchange” in paragraph (b) with “Euronext Brussels”;
(c) by replacing “the Paris Stock Exchange” in paragraph (c) with “Euronext Paris”;
(d) by replacing “the Amsterdam Stock Exchange” in paragraph (i) with “Euronext Amsterdam”;
(e) by replacing “the Zurich Stock Exchange” in paragraph (m) with “the SWX Swiss Exchange”;
(f) by replacing “the Cincinnati Stock Exchange” in subparagraph (o)(v) with “the National Stock Exchange”;
(g) by repealing subparagraph (o)(vi);
(h) by replacing “the Midwest Stock Exchange” in subparagraph (o)(vii) with “the Chicago Stock Exchange”;
(i) by replacing “the Pacific Stock Exchange” in subparagraph (o)(x) with “NYSE Arca”; and
(j) by replacing subparagraphs (o)(xi) and (xii) with the following:
(xi) the Philadelphia Stock Exchange;
(2) Sections 3200 and 3201 of the Regulations are repealed.
(3) Paragraphs (1)(a) to (d), (f) to (h) and (j) are deemed to have come into force on the day immediately before the day on which this Act is assented to.
(4) Paragraph (1)(e) is deemed to have come into force on January 1, 2007.
(5) Paragraph (1)(i) is deemed to have come into force on April 1, 2006.
(6) Subsection (2) comes into force on the day on which this Act is assented to.
75. (1) The definition “prescribed stock exchange” in section 3700 of the Regulations is repealed.
(2) Subsection (1) comes into force on the day on which this Act is assented to.
76. (1) Subparagraphs 3702(1)(b)(i) and (ii) of the Regulations are amended by replacing “prescribed stock exchange” with “designated stock exchange”.
(2) Subsection (1) comes into force on the day on which this Act is assented to.
77. (1) Subparagraph 4800(2)(a)(i) and paragraph 4800(3)(a) of the Regulations are amended by replacing “stock exchange in Canada prescribed for the purposes of section 89 of the Act” with “designated stock exchange in Canada”.
(2) Subsection (1) comes into force on the day on which this Act is assented to.
78. (1) The portion of subsection 6201(5) of the Regulations before paragraph (a) is replaced by the following:
(5) For the purpose of paragraph (f) of the definition “term preferred share” in subsection 248(1) of the Act, a share of a class of the capital stock of a corporation that is listed on a designated stock exchange in Canada is a prescribed share at any particular time with respect to another corporation that is registered or licensed under the laws of a province to trade in securities and that holds the share for the purpose of sale in the course of the business ordinarily carried on by it unless
(2) The portion of subsection 6201(5.1) of the Regulations before paragraph (a) is replaced by the following:
(5.1) For the purpose of the definition “taxable RFI share” in subsection 248(1) of the Act, a share of a class of the capital stock of a corporation that is listed on a designated stock exchange in Canada is a prescribed share at any particular time with respect to another corporation that is registered or licensed under the laws of a province to trade in securities and that holds the share for the purpose of sale in the course of the business ordinarily carried on by it unless
(3) Subsections (1) and (2) apply to dividends received in taxation years that begin after October 1994, except that in its application before the day on which this Act is assented to, the references to “a designated stock exchange in Canada” in subsections 6201(5) and (5.1) of the Regulations, as enacted by subsections (1) and (2), shall be read as a reference to “a stock exchange referred to in section 3200”.
79. (1) Paragraph 7303.1(1)(a) of the Regulations is replaced by the following:
(a) the Yukon Territory, the Northwest Territories or Nunavut;
(2) Paragraph 7303.1(2)(a) of the Regulations is amended by striking out the word “or” at the end of subparagraph (i), by adding the word “or” at the end of subparagraph (ii) and by adding the following after subparagraph (ii):
(iii) north of 55°13'N latitude and east of 123°16'W longitude;
(3) Subsection (1) applies after March 31, 1999.
(4) Subsection (2) applies to the 2007 and subsequent taxation years.
80. (1) The Regulations are amended by adding the following after section 7309:
7310. For the purpose of the definition “eligible apprentice” in subsection 127(9) of the Act, a prescribed trade in respect of a province means, at all times in a taxation year, a trade that is, at any time in that taxation year, a Red Seal trade for the province under the Interprovincial Standards Red Seal Program.
(2) Subsection (1) applies to taxation years ending on or after May 2, 2006, except that in its application to taxation years ending before October 2007, section 7310 of the Regulations, as enacted by subsection (1), is to be read as follows:
7310. For the purpose of the definition “eligible apprentice” in subsection 127(9) of the Act, a prescribed trade in respect of a province means, at all times in a taxation year, a trade that is, on September 30, 2007, a Red Seal trade for the province under the Interprovincial Standards Red Seal Program.
81. (1) Clause 8303(5)(f.1)(ii)(C) of the Regulations is replaced by the following:
(C) the plan is not a designated plan,
(2) Subparagraph 8303(5)(f.2)(iv) of the Regulations is replaced by the following:
(iv) the plan is not a designated plan,
(3) Subsections (1) and (2) apply to past service events that occur after 2007.
82. (1) Subsection 8500(1) of the Regulations is amended by adding the following in alphabetical order:
“designated plan” has the meaning assigned by section 8515; (régime désigné)
(2) Subsection 8500(2) of the Regulations is replaced by the following:
(2) All words and expressions used in this Part that are defined in subsection 147.1(1) of the Act or in Part LXXXIII have the meanings assigned in those provisions.
(3) Subsections (1) and (2) apply after 2007.
83. (1) The portion of paragraph 8503(3)(a) of the Regulations before subparagraph (i) is replaced by the following:
Eligible Service
(a) the only lifetime retirement benefits provided under the provision to a member (other than additional lifetime retirement benefits provided to a member because the member is totally and permanently disabled at the time the member’s retirement benefits commence to be paid) are lifetime retirement benefits provided in respect of one or more of the following periods (other than the portion of a period that is after the calendar year in which the member attains 71 years of age), namely,
(2) Subsection 8503(9) of the Regulations is amended by striking out the word “and” at the end of paragraph (e), by adding the word “and” at the end of paragraph (f) and by adding the following after paragraph (f):
(g) the provisions in paragraph (2)(m), Part LXXXIII and subsection 8517(4) that depend on whether the member’s retirement benefits have commenced to be paid apply to past service events, commutations and transfers occurring in the period in which the member’s benefits are suspended as if the member’s benefits had not previously commenced to be paid.
(3) Section 8503 of the Regulations is amended by adding the following after subsection (15):
Definitions
(16) The following definitions apply in this subsection and in subsections (17) to (23).
“qualifying period” of a member under a defined benefit provision of a pension plan means a period throughout which the member is employed by an employer who participates in the plan but does not include any period that is before the day that is the first day, on or after the later of the following days, in respect of which retirement benefits are provided under the provision to the member:
(a) the day on which retirement benefits first commenced to be paid to the member under the provision; and
(b) the member’s specified eligibility day under the provision. (période admissible)
“specified eligibility day” of a member under a defined benefit provision of a pension plan means the earlier of
(a) the later of
(i) the day on which the member attains 55 years of age, and
(ii) the day on which the member attains the earliest age at which payment of the member’s lifetime retirement benefits may commence under the terms of the provision without a reduction computed by reference to the member’s age, duration of service, or both (and without any other similar reduction), otherwise than because of the member being totally and permanently disabled; and
(b) the day on which the member attains 60 years of age. (date d’admissibilité)
Bridging Benefits Payable on a Stand-alone Basis
(17) The condition in subparagraph (2)(b)(i) that bridging benefits be payable to a member under a defined benefit provision of a pension plan for a period beginning no earlier than the time lifetime retirement benefits commence to be paid under the provision to the member does not apply where the following conditions are satisfied:
(a) the bridging benefits do not commence to be paid before the member’s specified eligibility day under the provision;
(b) the plan provides that bridging benefits are payable under the provision to the member only for calendar months
(i) at any time in which the member is employed by an employer who participates in the plan, or
(ii) that begin on or after the time the member’s lifetime retirement benefits under the provision commence to be paid;
(c) the member was not, at any time before the time at which the bridging benefits commence to be paid, connected with an employer who participates in the plan; and
(d) the plan is not a designated plan.
Rules of Application
(18) Where bridging benefits under a defined benefit provision of a pension plan commence to be paid to a member in circumstances to which subsection (17) applies, the following rules apply:
(a) if the member dies before lifetime retirement benefits under the provision commence to be paid to the member, subsections (2) and (6) apply in respect of benefits provided under the provision on the death of the member as if the bridging benefits had not commenced to be paid before the member’s death; and
(b) the provisions in paragraph (2)(m), Part LXXXIII and subsection 8517(4) that depend on whether the member’s retirement benefits have commenced to be paid apply to past service events, commutations and transfers occurring before lifetime retirement benefits under the provision commence to be paid to the member as if the bridging benefits had not commenced to be paid.
Benefit Accruals After Pension Commencement
(19) Paragraph (3)(b) does not apply to retirement benefits (in this subsection and in subsections (20) and (21) referred to as “additional benefits”) provided under a defined benefit provision of a pension plan to a member of the plan if the following conditions are satisfied:
(a) the additional benefits are provided in respect of all or part of a qualifying period of the member under the provision;
(b) the amount of retirement benefits payable to the member under the provision for each whole calendar month in the qualifying period does not exceed 5% of the amount (expressed on an annualized basis) of retirement benefits that have accrued under the provision to the member to the beginning of the month, determined without a reduction computed by reference to the member’s age, duration of service, or both, and without any other similar reduction (except that, if the plan limits the amount of pensionable service of a member or prohibits the provision of benefits in respect of periods after a member attains a specific age or combination of age and pensionable service, this condition does not apply to any calendar month in respect of which no benefits can be provided to the member because of the limit or prohibition, as the case may be);
(c) no part of the additional benefits are provided as a consequence of a past service event, unless the benefits are provided in circumstances to which subsection 8306(1) would apply if no qualifying transfers were made in connection with the past service event;
(d) the member was not, at any time before the additional benefits become provided, connected with an employer who participates in the plan; and
(e) the plan is not a designated plan.
Redetermination of Benefits
(20) Where the amount of retirement benefits payable under a defined benefit provision of a pension plan to a member is redetermined to include additional benefits provided to the member in respect of a qualifying period of the member under the provision, the conditions in paragraph (2)(b) and section 8504 apply in respect of benefits payable under the provision to the member after the redetermination as if the member’s retirement benefits had first commenced to be paid at the time of the redetermination.
Rules of Application
(21) Where additional benefits are provided under a defined benefit provision of a pension plan to a member in respect of a qualifying period of the member under the provision, the following rules apply:
(a) if the qualifying period ends as a consequence of the member’s death, subsections (2) and (6) apply in respect of benefits provided under the provision on the death of the member as if the member’s retirement benefits had not commenced to be paid before the member’s death; and
(b) the provisions in paragraph (2)(m), Part LXXXIII and subsection 8517(4) that depend on whether the member’s retirement benefits have commenced to be paid apply to past service events, commutations and transfers occurring in the qualifying period as if the member’s retirement benefits had not commenced to be paid.
Anti-avoidance
(22) Subsections (20) and (21) do not apply where it is reasonable to consider that one of the main reasons for the provision of additional benefits to the member is to obtain the benefit of any of those subsections.
Cross-plan Rules
(23) Where a member is provided with benefits under two or more associated defined benefit provisions, the determination of whether the conditions in subsections (17) and (19) are satisfied in respect of benefits payable or provided to the member under a particular associated provision shall be made on the basis of the following assumptions:
(a) benefits payable to the member under each of the other associated provisions were payable under the particular associated provision;
(b) if, before the member’s specified eligi-bility day (determined without reference to this paragraph) under the particular associated provision, the member had commenced to receive retirement benefits under another associated provision on or after the member’s specified eligibility day under that provision, the member’s specified eligibility day under the particular associated provision were the member’s specified eligibility day under that other associated provision; and
(c) if one or more of the other associated provisions is in a designated plan, the plan that includes the particular provision were also a designated plan.
Associated Defined Benefit Provisions
(24) For the purpose of subsection (23), a defined benefit provision is associated with another defined benefit provision (other than a provision that is not in a registered pension plan) if
(a) the provisions are in the same pension plan; or
(b) the provisions are in separate pension plans and
(i) there is an employer who participates in both plans, or
(ii) an employer who participates in one of the plans does not deal at arm’s length with an employer who participates in the other plan.
Subsection (24) not Applicable
(25) A particular defined benefit provision of a pension plan is not associated with a defined benefit provision of another pension plan if it is unreasonable to expect the benefits under the particular provision to be coordinated with the benefits under the other provision and the Minister has agreed not to treat the particular provision as being associated with the other provision.
(4) Subsections (1) to (3) apply to benefits that are provided or payable after 2007.
84. (1) The portion of subsection 8504(2) of the Regulations before paragraph (a) is replaced by the following:
(2) For the purposes of subsection (1) and paragraph 8505(3)(d), the highest average compensation of a member of a pension plan for the purpose of a defined benefit provision of the plan, indexed to the calendar year (in this subsection referred to as the “year of commencement”) in which the member’s lifetime retirement benefits under the provision commence to be paid, is,
(2) Subsection (1) applies to the 2008 and subsequent calendar years.
85. (1) Paragraph 8507(3)(a) of the Regulations is amended by striking out the word “and” at the end of subparagraph (v) and by adding the following after subparagraph (vi):
(vii) no part of the period is after the earlier of
(A) the time at which bridging benefits commence to be paid to the individual in circumstances to which subsection 8503(17) applied, and
(B) the earliest day in respect of which benefits have been provided to the individual in circumstances to which subsection 8503(19) applied; and
(2) Subsection (1) applies to the 2008 and subsequent calendar years.
86. (1) Paragraph 8514(2)(a) of the Regulations is replaced by the following:
(a) a debt obligation described in paragraph (a) of the definition “fully exempt interest” in subsection 212(3) of the Act;
(2) Paragraphs 8514(2)(b) and (c) of the Regulations are amended by replacing “stock exchange referred to in section 3200 or 3201” in those paragraphs with “designated stock exchange”.
(3) Subsection (1) applies after 2007.
(4) Subsection (2) comes into force on the day on which this Act is assented to.
87. (1) Paragraph 8516(2)(d) of the Regulations is replaced by the following:
(d) at the time the contribution is made, the plan is not a designated plan.
(2) Paragraph 8516(3)(d) of the Regulations is replaced by the following:
(d) at the time the contribution is made, the plan is not a designated plan.
(3) Paragraph 8516(4)(e) of the Regulations is replaced by the following:
(e) at the time the contribution is made, the plan is not a designated plan.
(4) Subsections (1) to (3) apply after 2007.
88. (1) The Regulations are amended by adding the following after Part XCIII:
PART XCIV
PRESCRIBED PROGRAMS OF PHYSICAL ACTIVITY
Interpretation
9400. (1) The following definitions apply in this Part.
“physical activity” means a supervised activity suitable for children (other than an activity where a child rides on or in a motorized vehicle as an essential component of the activity) that
(a) in the case of a qualifying child in respect of whom an amount is deductible under section 118.3 of the Act in computing any person’s income for the taxation year, results in movement and in an observable expenditure of energy in a recreational context; and
(b) in the case of any other child, contributes to cardio-respiratory endurance and to one or more of the following:
(i) muscular strength,
(ii) muscular endurance,
(iii) flexibility, and
(iv) balance. (activité physique)
“qualifying child” has the meaning assigned by subsection 118.03(1) of the Act. (enfant admissible)
Prescribed Program of Physical Activity
(2) For the purpose of the definition “eligible fitness expense” in subsection 118.03(1) of the Act, a prescribed program of physical activity is
(a) a weekly program, that is not part of a school’s curriculum, of a duration of eight or more consecutive weeks in which all or substantially all of the activities include a significant amount of physical activity;
(b) a program, that is not part of a school’s curriculum, of a duration of five or more consecutive days of which more than 50% of the daily activities include a significant amount of physical activity;
(c) a program, that is not part of a school’s curriculum, of a duration of eight or more consecutive weeks, offered to children by a club, association or similar organization (in this section referred to as an “organization”) in circumstances where a participant in the program may select amongst a variety of activities if
(i) more than 50% of those activities offered to children by the organization are activities that include a significant amount of physical activity, or
(ii) more than 50% of the time scheduled for activities offered to children in the program is scheduled for activities that include a significant amount of physical activity; or
(d) a membership in an organization, that is not part of a school’s curriculum, of a duration of eight or more consecutive weeks if more than 50% of all the activities offered to children by the organization include a significant amount of physical activity.
Mixed-use Facility
(3) For the purpose of the definition “eligible fitness expense” in subsection 118.03(1) of the Act, a prescribed program of physical activity is that portion of a program, which program does not meet the requirements of paragraph (2)(c) and is not part of a school’s curriculum, of a duration of eight or more consecutive weeks, offered to children by an organization in circumstances where a participant in the program may select amongst a variety of activities
(a) that is the percentage of those activities offered to children by the organization that are activities that include a significant amount of physical activity; or
(b) that is the percentage of the time scheduled for activities in the program that is scheduled for activities that include a significant amount of physical activity.
Membership
(4) For the purpose of the definition “eligible fitness expense” in subsection 118.03(1) of the Act, a prescribed program of physical activity is that portion of a membership in an organization, which membership does not meet the requirements of paragraph (2)(d) and is not part of a school’s curriculum, of a duration of eight or more consecutive weeks that is the percentage of all the activities offered to children by the organization that are activities that include a significant amount of physical activity.
Horseback Riding
(5) For the purpose of the definition “physical activity” in subsection (1), horseback riding is deemed to be an activity that contributes to cardio-respiratory endurance and to one or more of muscular strength, muscular endurance, flexibility and balance.
(2) Subsection (1) applies after 2006.
89. (1) The Regulations are amended by replacing “stock exchange referred to in section 3200” with “designated stock exchange in Canada” in the following provisions:
(a) subparagraph 4900(1)(i)(i);
(b) the portion of subparagraph 4900(1)(i)(ii) after clause (C);
(c) the portion of 6201(1) before paragraph (a);
(d) the portion of subsection 6201(2) before paragraph (a); and
(e) the portion of subsection 6201(4) before paragraph (a).
(2) Subsection (1) comes into force on the day on which this Act is assented to.
C.R.C., c. 385
Canada Pension Plan Regulations
SOR/97-472, s. 1(2)
90. (1) Paragraphs 8(1.12)(a) and (b) of the Canada Pension Plan Regulations are replaced by the following:
(a) the average monthly withholding amount in respect of an employer for either the first or the second calendar year before the particular calendar year that includes that time is less than $3,000;
(b) throughout the 12-month period before that time, the employer has remitted, on or before the day on or before which the amounts were required to be remitted, all amounts each of which was required to be remitted under subsection 21(1) of the Act, under subsection 82(1) of the Employment Insurance Act, under Part IX of the Excise Tax Act or under subsection 153(1) of the Income Tax Act; and
(2) Subsection (1) applies in respect of amounts required to be deducted or withheld after 2007.
SOR/97-33
Insurable Earnings and Collection of Premiums Regulations
SOR/97-472, s. 2(2)
91. (1) Paragraphs 4(3.1)(a) and (b) of the Insurable Earnings and Collection of Premiums Regulations are replaced by the following:
(a) the average monthly withholding amount in respect of an employer for either the first or the second calendar year before the particular calendar year that includes that time is less than $3,000;
(b) throughout the 12-month period before that time, the employer has remitted, on or before the day on or before which the amounts were required to be remitted, all amounts each of which was required to be remitted under subsection 82(1) of the Act, under subsection 21(1) of the Canada Pension Plan, under Part IX of the Excise Tax Act, or under subsection 153(1) of the Income Tax Act; and
(2) Subsection (1) applies in respect of amounts required to be deducted or withheld after 2007.
Coordinating Amendments
Bill C-10
92. Sections 93 to 100 apply if Bill C-10, introduced in the 2nd session of the 39th Parliament and entitled the Income Tax Amendments Act, 2006 (referred to in those sections as the “other Act”), receives royal assent.
93. (1) If this Act receives royal assent before the other Act receives royal assent, section 4 of the other Act is repealed.
(2) The definition “controlled foreign affiliate” in subsection 17(15) of the Income Tax Act, as enacted by subsection 10(3) of this Act, is replaced by the following:
“controlled foreign affiliate”« société étrangère affiliée contrôlée »
“controlled foreign affiliate”, at any time, of a taxpayer resident in Canada, means a corporation that would, at that time, be a controlled foreign affiliate of the taxpayer within the meaning assigned by the definition “controlled foreign affiliate” in subsection 95(1) if the word “or” were added at the end of paragraph (a) of that definition and
(a) subparagraph (b)(ii) of that definition were read as “all of the shares of the capital stock of the foreign affiliate that are owned at that time by persons resident in Canada who do not deal at arm’s length with the taxpayer,”;
(b) subparagraph (b)(iv) of that definition were read as “all of the shares of the capital stock of the foreign affiliate that are owned at that time by persons resident in Canada who do not deal at arm’s length with any relevant Canadian shareholder;”; and
(c) that definition were read without reference to its paragraph (c).
(3) Subsection (2) applies to taxation years, of a foreign affiliate of a taxpayer, that begin after February 23, 1998, except that, in applying the definition “controlled foreign affiliate” in subsection 17(15) of the Income Tax Act, as enacted by subsection (2),
(a) for taxation years, of a foreign affiliate of a taxpayer, that begin after 2002 and on or before February 27, 2004, that definition is to be read as follows:
“controlled foreign affiliate” has the meaning that would be assigned by the definition “controlled foreign affiliate” in subsection 95(1) for taxation years, of a foreign affiliate of a taxpayer, that begin after 2002 and on or before February 27, 2004, if the word “or” were added at the end of paragraph (a) of that definition and
(a) subparagraph (b)(ii) of that definition were read as “all of the shares of the capital stock of the foreign affiliate that are owned at that time by persons resident in Canada who do not deal at arm’s length with the taxpayer,”;
(b) subparagraph (b)(iv) of that definition were read as “all of the shares of the capital stock of the foreign affiliate that are owned at that time by persons resident in Canada who do not deal at arm’s length with any relevant Canadian shareholder;”; and
(c) that definition were read without reference to its paragraph (c).
(b) for taxation years, of a foreign affiliate of a taxpayer, that begin after February 23, 1998 and before 2003, that definition is to be read as follows:
“controlled foreign affiliate” has the meaning that would be assigned by the definition “controlled foreign affiliate” in subsection 95(1) for taxation years, of a foreign affiliate of a taxpayer, that begin after February 23, 1998 and before 2003, if subparagraph (b)(iii) of that definition were read as “each share of the capital stock of a corporation that is owned at that time by the taxpayer and each share of the capital stock of a corporation that is owned at that time by any person resident in Canada with whom the taxpayer does not deal at arm’s length.”.
94. (1) If this Act receives royal assent before the other Act receives royal assent, subsection 19(2) of the other Act is repealed.
(2) The definition “controlled foreign affiliate” in subsection 95(1) of the Income Tax Act, as enacted by subsection 26(1) of this Act, is replaced by the following:
“controlled foreign affiliate”« société étrangère affiliée contrôlée »
“controlled foreign affiliate”, at any time, of a taxpayer resident in Canada, means
(a) a foreign affiliate of the taxpayer that is, at that time, controlled by the taxpayer,
(b) a foreign affiliate of the taxpayer that would, at that time, be controlled by the taxpayer if the taxpayer owned
(i) all of the shares of the capital stock of the foreign affiliate that are owned at that time by the taxpayer,
(ii) all of the shares of the capital stock of the foreign affiliate that are owned at that time by persons who do not deal at arm’s length with the taxpayer,
(iii) all of the shares of the capital stock of the foreign affiliate that are owned at that time by the persons (each of whom is referred to in this definition as a “relevant Canadian shareholder”), in any set of persons not exceeding four (which set of persons shall be determined without ref-erence to the existence of or the absence of any relationship, connection or action in concert between those persons), who
(A) are resident in Canada,
(B) are not the taxpayer or a person described in subparagraph (ii), and
(C) own, at that time, shares of the capital stock of the foreign affiliate, and
(iv) all of the shares of the capital stock of the foreign affiliate that are owned at that time by persons who do not deal at arm’s length with any relevant Canadian shareholder, or
(c) a foreign affiliate of the taxpayer that is, at that time, a controlled foreign affiliate of the taxpayer because of paragraph 94.1(2)(h);
(3) Subsection (2) applies to taxation years, of a foreign affiliate of a taxpayer, that begin after 1995, except that
(a) for taxation years, of a foreign affiliate of a taxpayer, that begin after 2002 and on or before February 27, 2004, the definition “controlled foreign affiliate” in subsection 95(1) of the Income Tax Act, as enacted by subsection (2), is to be read as follows:
“controlled foreign affiliate”, at any time, of a taxpayer resident in Canada, means
(a) a foreign affiliate of the taxpayer that is, at that time, controlled
(i) by the taxpayer,
(ii) by the taxpayer and not more than four other persons resident in Canada, or
(iii) by not more than four persons resident in Canada, other than the taxpayer,
(b) a foreign affiliate of the taxpayer that would, at that time, be controlled by the taxpayer if the taxpayer owned
(i) all of the shares of the capital stock of the foreign affiliate that are owned at that time by the taxpayer,
(ii) all of the shares of the capital stock of the foreign affiliate that are owned at that time by persons who do not deal at arm’s length with the taxpayer,
(iii) all of the shares of the capital stock of the foreign affiliate that are owned at that time by the persons (each of whom is referred to in this definition as a “relevant Canadian shareholder”), in any set of persons not exceeding four (which set of persons shall be determined without ref-erence to the existence of or the absence of any relationship, connection or action in concert between those persons), who
(A) are resident in Canada,
(B) are not the taxpayer or a person described in subparagraph (ii), and
(C) own, at that time, shares of the capital stock of the foreign affiliate, and
(iv) all of the shares of the capital stock of the foreign affiliate that are owned at that time by persons who do not deal at arm’s length with any relevant Canadian shareholder, or
(c) a foreign affiliate of the taxpayer that is, at that time, a controlled foreign affiliate of the taxpayer because of paragraph 94.1(2)(h);
(b) for taxation years, of a foreign affiliate of a taxpayer, that begin after 1995 and before 2003, the definition “controlled foreign affiliate” in subsection 95(1) of the Income Tax Act, as enacted by subsection (2), is to be read as follows:
“controlled foreign affiliate”, at any time of a taxpayer resident in Canada, means a foreign affiliate of the taxpayer that
(a) is, at that time, controlled
(i) by the taxpayer,
(ii) by the taxpayer and not more than four other persons resident in Canada, or
(iii) by not more than four persons resident in Canada, other than the taxpayer, or
(b) would, at that time, be controlled by the taxpayer if the taxpayer owned
(i) each share of the capital stock of a corporation that is owned at that time by the taxpayer and each share of the capital stock of a corporation that is owned at that time by any of not more than four other persons resident in Canada,
(ii) each share of the capital stock of a corporation that is owned at that time by any of not more than four persons resident in Canada (other than the taxpayer), and
(iii) each share of the capital stock of a corporation that is owned at that time by the taxpayer and each share of the capital stock of a corporation that is owned at that time by any person with whom the taxpayer does not deal at arm’s length.
95. (1) Paragraph 95(2)(g.02) of the Act, as enacted by subsection 26(13) of this Act, is replaced by the following:
(g.02) in applying subsection 39(2) for the purpose of this subdivision (other than sections 94 to 94.4), the gains and losses of a foreign affiliate of a taxpayer in respect of excluded property are to be computed in respect of the taxpayer separately from the gains and losses of the foreign affiliate in respect of property that is not excluded property;
(2) Subsection (1) applies to taxation years, of a foreign affiliate of a taxpayer, that begin after 2002.
96. Paragraph 110.1(1)(a.1) of the Act, as enacted by subsection 30(1) of this Act, is replaced by the following:
Gifts of medicine
(a.1) the total of all amounts each of which is an amount, in respect of property that is the subject of an eligible medical gift made by the corporation in the taxation year or in any of the 5 preceding taxation years, determined by the formula
A × B/C
where
A      is the lesser of
(a) the cost to the corporation of the property, and
(b) 50 per cent of the amount, if any, by which the corporation’s proceeds of disposition of the property in respect of the gift exceeds the cost to the corporation of the property;
B      is the eligible amount of the gift; and
C      is the corporation’s proceeds of disposition of the property in respect of the gift.
97. (1) Subsections 179(1) to (3), (10), (16) to (19), (24) and (27) of the other Act and subsections 59(2), (3), (6) and (8) of this Act apply as though the other Act had received royal assent before this Act received royal assent.
(2) Subsection 268(1) of the other Act is repealed.
(3) If subsection 194(8) of the other Act comes into force, then, on the day on which this Act is assented to, the portion of paragraph (d) of the definition “fully exempt interest” in subsection 212(3) of the Income Tax Act before subparagraph (i), as enacted by subsection 59(3) of this Act, is replaced by the following:
(d) an amount paid or payable or credited under a securities lending arrangement that is deemed by subparagraph 260(8)(c)(i) to be a payment made by a borrower to a lender of interest, if
98. (1) If the other Act receives royal assent before this Act receives royal assent, section 63 and subsection 64(1) of this Act are repealed.
(2) On the later of the day on which the other Act receives royal assent and the day on which this Act receives royal assent, paragraph (b) of the definition “listed international agreement” in subsection 248(1) of the Income Tax Act, as enacted by subsection 187(11) of the other Act, is replaced by the following:
(b) a comprehensive tax information exchange agreement between Canada and another country or jurisdiction;
99. (1) The definition “qualified trust unit” in subsection 260(1) of the Act, as enacted by subsection 194(5) of the other Act, is replaced by the following:
“qualified trust unit”« unité de fiducie déterminée »
“qualified trust unit” means a unit of a mutual fund trust that is listed on a stock exchange;
(2) If the other Act receives royal assent before subsection 66(2) of this Act comes into force, that subsection 66(2) is repealed and the words “Subsections (2) and (3) apply” in subsection 66(5) of this Act are replaced by “Subsection (3) applies”.
(3) Subparagraph 260(8)(c)(ii) of the Income Tax Act, as enacted by subsection 194(8) of the other Act, is replaced by the following:
(ii) is, to the extent of the amount of the interest, if any, paid in respect of the security, deemed, if the security is described in paragraph (c) of the definition “qualified security” in subsection (1), to have been payable on a security described in paragraph (a) of the definition “fully exempt interest” in subsection 212(3); and
(4) On the first day on which both subsection 260(10) of the Income Tax Act, as enacted by subsection 194(9) of the other Act, and subsection 260(10) of the Income Tax Act, as enacted by subsection 66(3) of this Act, are in force, subsection 260(10) of the Income Tax Act, as enacted by subsection 66(3) of this Act, is renumbered as subsection 260(9.1) and is repositioned accordingly if required.
100. (1) If the other Act receives royal assent before this Act receives royal assent, paragraph 68(2)(d) of this Act is repealed.
(2) Sections 17, 18, 69 and 87 of the other Act and section 68 of this Act apply as though the other Act had received royal assent before this Act received royal assent, and, on the day on which this Act is assented to, the references to “prescribed stock exchange” in the following provisions of the Income Tax Act, as enacted by those sections of the other Act, are replaced by references to “designated stock exchange”:
(a) paragraphs (b) and (c) of the definition “qualified person” in subsection 55(1), and subsection 55(6);
(b) the definitions “arm’s length transfer” and “excluded property” in subsection 94(1);
(c) the definitions “arm’s length interest” and “exempt interest” in subsection 94.1(1); and
(d) the definitions “readily obtainable fair market value” and “trading day” in subsection 94.2(1), and paragraph 94.2(2)(b).
PART 4
DISABILITY SAVINGS
Amendments Relating to Income Tax
R.S., c. 1 (5th Supp.)
Income Tax Act
101. Paragraph 4(3)(a) of the Income Tax Act is replaced by the following:
(a) subject to paragraph (b), all deductions permitted in computing a taxpayer’s income for a taxation year for the purposes of this Part, except any deduction permitted by any of paragraphs 60(b) to (o), (p), (r) and (v) to (z), shall apply either wholly or in part to a particular source or to sources in a particular place; and
102. Subsection 18(11) of the Act is amended by striking out the word “or” at the end of paragraph (g), by adding the word “or” at the end of paragraph (h) and by adding the following after paragraph (h):
(i) making a contribution to a registered disability savings plan,
103. Clause 40(2)(g)(iv)(A) of the Act is replaced by the following:
(A) a trust governed by a deferred profit sharing plan, an employees profit sharing plan, a registered disability savings plan or a registered retirement income fund under which the taxpayer is a beneficiary or immediately after the disposition becomes a beneficiary, or
104. Subsection 56(1) of the Act is amended by adding the following after paragraph (q):
Registered disability savings plan payments
(q.1) amounts in respect of a registered disability savings plan required by section 146.4 to be included in computing the taxpayer’s income for the year;
105. Section 60 of the Act is amended by striking out the word “and’’ at the end of paragraph (x), by adding the word “and” at the end of paragraph (y) and by adding the following after paragraph (y):
Repayment under the Canada Disability Savings Act
(z) the total of all amounts each of which is an amount paid in the taxation year as a repayment, under the Canada Disability Savings Act, of an amount that was included because of section 146.4 in computing the taxpayer’s income for the taxation year or a preceding taxation year.
106. Subsection 74.5(12) of the Act is amended by striking out the word “or” at the end of paragraph (a.1) and by adding the following after that paragraph:
(a.2) as a payment of a contribution under a registered disability savings plan; or
107. Paragraph 75(3)(a) of the Act is replaced by the following:
(a) by a trust governed by a deferred profit sharing plan, an employee benefit plan, an employees profit sharing plan, a registered disability savings plan, a registered education savings plan, a registered pension plan, a registered retirement income fund, a registered retirement savings plan, a registered supplementary unemployment benefit plan or a retirement compensation arrangement;
108. 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), in section 204 and in subsection 205(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.
109. Paragraph 107.4(1)(j) of the Act is replaced by the following:
(j) if the contributor is an amateur athlete trust, a cemetery care trust, an employee trust, an inter vivos trust deemed by subsection 143(1) to exist in respect of a congregation that is a constituent part of a religious organization, a related segregated fund trust (as defined by section 138.1), a trust described in paragraph 149(1)(o.4) or a trust governed by an eligible funeral arrangement, an employees profit sharing plan, a registered disability savings plan, a registered education savings plan or a registered supplementary unemployment benefit plan, the particular trust is the same type of trust.
110. Paragraph (a) of the definition “trust” in subsection 108(1) of the Act is replaced by the following:
(a) an amateur athlete trust, an employee trust, a trust described in paragraph 149(1)(o.4) or a trust governed by a deferred profit sharing plan, an employee benefit plan, an employees profit sharing plan, a foreign retirement arrangement, a registered disability savings plan, a registered education savings plan, a registered pension plan, a registered retirement income fund, a registered retirement savings plan or a registered supplementary unemployment benefit plan,
111. The definition “adjusted income” in subsection 122.5(1) of the Act is replaced by the following:
“adjusted income”« revenu rajusté »
“adjusted income”, of an individual for a taxation year in relation to a month specified for the taxation year, means the total of the individual’s income for the taxation year and the income for the taxation year of the individual’s qualified relation, if any, in relation to the specified month, both calculated as if no amount were included under paragraph 56(1)(q.1) or subsection 56(6) or in respect of any gain from a disposition of property to which section 79 applies in computing that income and as if no amount were deductible under paragraph 60(y) or (z) in computing that income.
112. The definition “adjusted income” in section 122.6 of the Act is replaced by the following:
“adjusted income”« revenu modifié »
“adjusted income”, of an individual for a taxation year, means the total of all amounts each of which would be the income for the year of the individual or of the person who was the individual’s cohabiting spouse or common-law partner at the end of the year if no amount were included under paragraph 56(1)(q.1) or subsection 56(6) or in respect of any gain from a disposition of property to which section 79 applies in computing that income and if no amount were deductible under paragraph 60(y) or (z) in computing that income;
113. Paragraph (a) of the definition “excluded right or interest” in subsection 128.1(10) of the Act is amended by adding the following after subparagraph (iii):
(iii.1) a registered disability savings plan,
114. Paragraph 132.2(1)(k) of the Act is replaced by the following:
(k) where a share to which paragraph (j) applies would, but for this paragraph, cease to be a qualified investment (within the meaning assigned by subsection 146(1), 146.1(1) or 146.3, section 204 or subsection 205(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 transfer time and the time at which it is disposed of in accordance with paragraph (j);
115. The Act is amended by adding the following after section 146.3:
Registered Disability Savings Plan
Definitions
146.4 (1) The following definitions apply in this section.
“assistance holdback amount”« montant de retenue »
“assistance holdback amount”, in relation to a disability savings plan, has the meaning assigned under the Canada Disability Savings Act.
“contribution”« cotisation »
“contribution” to a disability savings plan does not include (other than for the purpose of paragraph (b) of the definition “disability savings plan”) an amount paid into the plan under the Canada Disability Savings Act or a prescribed payment.
“disability assistance payment”« paiement d’aide à l’invalidité »
“disability assistance payment”, in relation to a disability savings plan of a beneficiary, means any payment made from the plan to the beneficiary or to the beneficiary’s estate.
“disability savings plan”« régime d’épargne- invalidité »
“disability savings plan” of a beneficiary means an arrangement
(a) between
(i) a corporation (in this section referred to as the “issuer”)
(A) that is licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada the business of offering to the public its services as trustee, and
(B) with which the specified Minister has entered into an agreement that applies to the arrangement for the purposes of the Canada Disability Savings Act, and
(ii) one or more of the following:
(A) the beneficiary,
(B) an entity that, at the time the arrangement is entered into, is a qualifying person in relation to the beneficiary, and
(C) a legal parent of the beneficiary who, at the time the arrangement is entered into, is not a qualifying person in relation to the beneficiary but is a holder of another arrangement that is a registered disability savings plan of the beneficiary;
(b) under which one or more contributions are to be made in trust to the issuer to be invested, used or otherwise applied by the issuer for the purpose of making payments from the arrangement to the beneficiary; and
(c) that is entered into in a taxation year in respect of which the beneficiary is a DTC-eligible individual.
“DTC-eligible individual”« particulier admissible au CIPH »
“DTC-eligible individual”, in respect of a taxation year, means an individual in respect of whom an amount is deductible, or would if this Act were read without reference to paragraph 118.3(1)(c) be deductible, under section 118.3 in computing a taxpayer’s tax payable under this Part for the taxation year.
“holder”« titulaire »
“holder” of a disability savings plan at any time means each of the following:
(a) an entity that has, at that time, rights as an entity with whom the issuer entered into the plan;
(b) an entity that has, at that time, rights as a successor or assignee of an entity described in paragraph (a) or in this paragraph; and
(c) the beneficiary if, at that time, the beneficiary is not an entity described in paragraph (a) or (b) and has rights under the plan to make decisions (either alone or with other holders of the plan) concerning the plan, except where the only such right is a right to direct that disability assistance payments be made as provided for in subparagraph (4)(n)(iii)).
“lifetime disability assistance payments”« paiements viagers pour invalidité »
“lifetime disability assistance payments” under a disability savings plan of a beneficiary means disability assistance payments that are identified under the terms of the plan as lifetime disability assistance payments and that, after they begin to be paid, are payable at least annually until the earlier of the day on which the beneficiary dies and the day on which the plan is terminated.
“plan trust”« fiducie de régime »
“plan trust”, in relation to a disability savings plan, means the trust governed by the plan.
“qualifying person”« responsable »
“qualifying person”, in relation to a beneficiary of a disability savings plan, at any time, means
(a) if the beneficiary has not, at or before that time, attained the age of majority, an entity that is, at that time,
(i) a legal parent of the beneficiary,
(ii) a guardian, tutor, curator or other individual who is legally authorized to act on behalf of the beneficiary, or
(iii) a public department, agency or institution that is legally authorized to act on behalf of the beneficiary, and
(b) if the beneficiary has, at or before that time, attained the age of majority and is not, at that time, contractually competent to enter into a disability savings plan, an entity that is, at that time, an entity described in subparagraph (a)(ii) or (iii).
“registered disability savings plan”« régime enregistré d’épargne- invalidité »
“registered disability savings plan” means a disability savings plan that satisfies the conditions in subsection (2), but does not include a plan to which subsection (3) or (10) applies.
“specified Minister”« ministre responsable »
“specified Minister” means the minister designated under section 4 of the Canada Disability Savings Act.
“specified year”« année déterminée »
“specified year” for a disability savings plan of a beneficiary means the particular calendar year in which a medical doctor licensed to practice 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, the beneficiary is not likely to survive more than five years, and each of the five calendar years following the particular calendar year, but does not include any calendar year prior to the calendar year in which the certification is provided to the issuer of the plan.
Registered status
(2) The conditions that must be satisfied for a disability savings plan of a beneficiary to be a registered disability savings plan are as follows:
(a) before the plan is entered into, the issuer of the plan has received written notification from the Minister that, in the Minister’s opinion, a plan whose terms are identical to the plan would, if entered into by entities eligible to enter into a disability savings plan, comply with the conditions in subsection (4);
(b) at or before the time the plan is entered into, the issuer of the plan has been provided with the Social Insurance Number of the beneficiary and the Social Insurance Number or business number, as the case may be, of each entity with which the issuer has entered into the plan; and
(c) at the time the plan is entered into, the beneficiary is resident in Canada, except that this condition does not apply if, at that time, the beneficiary is the beneficiary under another registered disability savings plan.
Registered status nullified
(3) A disability savings plan is deemed never to have been a registered disability savings plan if
(a) the issuer of the plan has not, on or before the day that is 60 days after the particular day on which the plan was entered into, provided notification of the plan’s existence in prescribed form containing prescribed information to the specified Minister; or
(b) the beneficiary was, on the particular day, the beneficiary under another registered disability savings plan and that other plan has not been terminated on or before the day that is 120 days after the particular day or any later day that the specified Minister considers reasonable in the circumstances.
Plan conditions
(4) The conditions referred to in paragraph (2)(a) are as follows:
(a) the plan stipulates
(i) that it is to be operated exclusively for the benefit of the beneficiary under the plan,
(ii) that the designation of the beneficiary under the plan is irrevocable, and
(iii) that no right of the beneficiary to receive payments from the plan is capable, either in whole or in part, of surrender or assignment;
(b) the plan allows an entity to acquire rights as a successor or assignee of a holder of the plan only if the entity is
(i) the beneficiary,
(ii) the beneficiary’s estate,
(iii) a holder of the plan at the time the rights are acquired,
(iv) a qualifying person in relation to the beneficiary at the time the rights are acquired, or
(v) an individual who is a legal parent of the beneficiary and was previously a holder of the plan;
(c) the plan provides that, where an entity (other than a legal parent of the beneficiary) that is a holder of the plan ceases to be a qualifying person in relation to the beneficiary at any time, the entity ceases at that time to be a holder of the plan;
(d) the plan provides for there to be at least one holder of the plan at all times that the plan is in existence and may provide for the beneficiary (or the beneficiary’s estate, as the case may be) to automatically acquire rights as a successor or assignee of a holder in order to ensure compliance with this requirement;
(e) the plan provides that, where an entity becomes a holder of the plan after the plan is entered into, the entity is prohibited (except to the extent otherwise permitted by the Minister or the specified Minister) from exercising their rights as a holder of the plan until the issuer has been advised of the entity having become a holder of the plan and been provided with the entity’s Social Insurance Number or business number, as the case may be;
(f) the plan prohibits contributions from being made to the plan at any time if
(i) the beneficiary is not a DTC-eligible individual in respect of the taxation year that includes that time, or
(ii) the beneficiary died before that time;
(g) the plan prohibits a contribution from being made to the plan (other than as a transfer in accordance with subsection (8)) at any time if
(i) the beneficiary attained the age of 59 years before the calendar year that includes that time,
(ii) the beneficiary is not resident in Canada at that time, or
(iii) the total of the contribution and all other contributions made (other than as a transfer in accordance with subsection (8)) at or before that time to the plan or to any other registered disability savings plan of the beneficiary would exceed $200,000;
(h) the plan prohibits contributions to the plan by any entity that is not a holder of the plan, except with the written consent of a holder of the plan;
(i) the plan provides that no payments may be made from the plan other than
(i) disability assistance payments,
(ii) a transfer in accordance with subsection (8), and
(iii) repayments under the Canada Disability Savings Act;
(j) the plan prohibits a disability assistance payment from being made if it would result in the fair market value of the property held by the plan trust immediately after the payment being less than the assistance holdback amount in relation to the plan;
(k) the plan provides for lifetime disability assistance payments to begin to be paid no later than the end of the particular calendar year in which the beneficiary attains the age of 60 years or, if the plan is established in or after the particular year, in the calendar year following the calendar year in which the plan is established;
(l) the plan provides that the total amount of lifetime disability assistance payments made in any calendar year (other than a specified year for the plan) shall not exceed the amount determined by the formula
A/(B + 3 - C) + D
where
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 205(1)),
B      is the greater of 80 and the age in whole years of the beneficiary at the beginning of the calendar year,
C      is the age in whole years of the beneficiary at the beginning of the calendar year, and
D      is the total of all amounts each of which is
(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 205(1)) that is paid to the plan trust in the calendar year, or
(ii) if the periodic payment under such an annuity contract is not made to the plan trust because the plan trust disposed of the right to that payment in the calendar year, a reasonable estimate of that payment on the assumption that the annuity contract had been held throughout the calendar year and no rights under the contract were disposed of in the calendar year;
(m) the plan stipulates whether or not disability assistance payments that are not lifetime disability assistance payments are to be permitted under the plan;
(n) the plan provides that when the total of all amounts paid under the Canada Disability Savings Act before the beginning of a calendar year to any registered disability savings plan of the beneficiary exceeds the total of all contributions made (other than as a transfer in accordance with subsection (8)) before the beginning of the calendar year to any registered disability savings plan of the beneficiary,
(i) if the calendar year is not a specified year for the plan, the total amount of disability assistance payments made from the plan to the beneficiary in the calendar year shall not exceed the amount determined by the formula set out in paragraph (l) in respect of the plan for the calendar year, except that, in calculating that total amount, any payment made following a transfer in the calendar year from another plan in accordance with subsection (8) is to be disregarded if it is made
(A) to satisfy an undertaking described in paragraph (8)(d), or
(B) in lieu of a payment that would otherwise have been permitted to be made from the other plan in the calendar year had the transfer not occurred,
(ii) if the beneficiary attained the age of 59 years before the calendar year, the total amount of disability assistance payments made from the plan to the beneficiary in the calendar year shall not be less than the amount determined by the formula set out in paragraph (l) in respect of the plan for the calendar year (or such lesser amount as is supported by the property of the plan trust), and
(iii) if the beneficiary attained the age of 27 years, but not the age of 59 years, before the calendar year, the beneficiary has the right to direct that, within the constraints imposed by subparagraph (i) and paragraph (j), one or more disability assistance payments be made from the plan to the beneficiary in the calendar year;
(o) the plan provides that, at the direction of the holders of the plan, the issuer shall transfer all of the property held by the plan trust (or an amount equal to its value) to another registered disability savings plan of the beneficiary, together with all information in its possession that may reasonably be considered necessary for compliance, in respect of the other plan, with the requirements of this Act and with any conditions and obligations imposed under the Canada Disability Savings Act; and
(p) the plan provides for any amounts remaining in the plan (after taking into consideration any repayments under the Canada Disability Savings Act) to be paid to the beneficiary or the beneficiary’s estate, as the case may be, and for the plan to be terminated, by the end of the calendar year following the earlier of
(i) the calendar year in which the beneficiary dies, and
(ii) the taxation year in respect of which the beneficiary ceases to be a DTC-eligible individual.
Trust not taxable
(5) No tax is payable under this Part by a trust on the taxable income of the trust for a taxation year if, throughout the period in the year during which the trust was in existence, the trust was governed by a registered disability savings plan, except that
(a) tax is payable under this Part by the trust on its taxable income for the year if the trust has borrowed money
(i) in the year, or
(ii) in a preceding taxation year and has not repaid it before the beginning of the year; and
(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 (as defined in subsection 205(1)) 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,
(i) “income” includes dividends described in section 83, and
(ii) paragraphs 38(a) and (b) are to be read as if the fraction set out in each of those paragraphs were replaced by the word “all”.
Taxation of disability assistance payments
(6) Where a disability assistance payment is made from a registered disability savings plan of a beneficiary, the amount, if any, by which the amount of the payment exceeds the non-taxable portion of the payment shall be included,
(a) if the beneficiary is alive at the time the payment is made, in computing the beneficiary’s income for the beneficiary’s taxation year in which the payment is made; and
(b) in any other case, in computing the income of the beneficiary’s estate for the estate’s taxation year in which the payment is made.
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
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 (other than as a transfer in accordance with subsection (8))
exceeds
(b) the total of all amounts each of which is the non-taxable portion of a disability assistance payment made before the particular time from any registered disability savings plan of the beneficiary; and
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.
Transfer of funds
(8) An amount is transferred from a registered disability savings plan (in this subsection referred to as the “prior plan”) of a beneficiary in accordance with this subsection if
(a) the amount is transferred directly to another registered disability savings plan (in this subsection referred to as the “new plan”) of the beneficiary;
(b) the prior plan is terminated immediately after the transfer;
(c) the issuer of the prior plan provides the issuer of the new plan with all information in its possession concerning the prior plan as may reasonably be considered necessary for compliance, in respect of the new plan, with the requirements of this Act and with any conditions and obligations imposed under the Canada Disability Savings Act; and
(d) where the beneficiary attained the age of 59 years before the calendar year in which the transfer occurs, the issuer of the new plan undertakes to make (in addition to any other disability assistance payments that would otherwise have been made from the new plan in the year) one or more disability assistance payments from the plan in the year, the total of which is equal to the amount, if any, by which
(i) the total amount of disability assistance payments that would have been required to be made from the prior plan in the year if the transfer had not occurred
exceeds
(ii) the total amount of disability assist-ance payments made from the prior plan in the year.
No income inclusion on transfer
(9) An amount transferred in accordance with subsection (8) is not, solely because of that transfer, to be included in computing the income of any taxpayer.
Non-compliance — cessation of registered status
(10) Where, at any particular time, a registered disability savings plan is non-compliant as described in subsection (11),
(a) the plan ceases, as of the particular time, to be a registered disability savings plan (other than for the purposes of applying, as of the particular time, this subsection and subsection (11));
(b) a disability assistance payment is deemed to have been made from the plan at the time (in this subsection referred to as the “relevant time”) immediately before the particular time to the beneficiary under the plan (or, if the beneficiary is deceased at the relevant time, to the beneficiary’s estate), the amount of which payment is equal to the amount, if any, by which
(i) the fair market value of the property held by the plan trust at the relevant time
exceeds
(ii) the assistance holdback amount in relation to the plan; and
(c) if the plan is non-compliant because of a payment that is not in accordance with paragraph (4)(j), a disability assistance payment is deemed to have been made from the plan at the relevant time (in addition to the payment deemed by paragraph (b) to have been made) to the beneficiary under the plan (or, if the beneficiary is deceased at the relevant time, to the beneficiary’s estate)
(i) the amount of which payment is equal to the amount by which the lesser of
(A) the assistance holdback amount in relation to the plan, and
(B) the fair market value of the property held by the plan trust at the relevant time
exceeds
(C) the fair market value of the property held by the plan trust immediately after the particular time, and
(ii) the non-taxable portion of which is deemed to be nil.
Non-compliance
(11) A registered disability savings plan is non-compliant
(a) at any time that the plan fails to comply with a condition in subsection (4);
(b) at any time that there is a failure to administer the plan in accordance with its terms (other than those terms which the plan is required by subparagraph (4)(a)(i) to stipulate); and
(c) at any time that a person fails to comply with a condition or an obligation imposed, with respect to the plan, under the Canada Disability Savings Act, and the specified Minister has notified the Minister that, in the specified Minister’s opinion, it is appropriate that the plan be considered to be non-compliant because of the failure.
Non-application of subsection (11)
(12) Where a registered disability savings plan would otherwise be non-compliant at a particular time because of a failure described in paragraph (11)(a) or (b),
(a) the Minister may waive the application of the relevant paragraph with respect to the failure, if it is just and equitable to do so;
(b) the Minister may deem the failure to have occurred at a later time;
(c) if the failure consists of the making of a contribution that is prohibited under any of paragraphs (4)(f) to (h), an amount equal to the amount of the contribution has been withdrawn from the plan within such period as is specified by the Minister and the Minister has approved the application of this paragraph with respect to the failure,
(i) the contribution is deemed never to have been made, and
(ii) the withdrawal is deemed not to be a disability assistance payment and not to be in contravention of the condition in paragraph (4)(i); or
(d) if the failure consists of the plan not being terminated as required under paragraph (4)(p) and was due either to the issuer not being aware of the beneficiary having died or having ceased to be a DTC-eligible individual or to some uncertainty as to the beneficiary having ceased to be a DTC-eligible individ-ual, the Minister may specify a later date by which it is reasonable to assume that the plan can be terminated in an orderly manner and, for the purposes of paragraphs (11)(a) and (b), paragraph (4)(p) and the plan terms are to be read as though they required the plan to be terminated by that date.
Obligations of issuer
(13) The issuer of a registered disability savings plan shall,
(a) where an entity becomes a holder of the plan after the plan is entered into, so notify the specified Minister in prescribed form containing prescribed information on or before the day that is 60 days after the later of
(i) the day on which the issuer is advised of the entity having become a holder of the plan, and
(ii) the day on which the issuer is provided with the new holder’s Social Insurance Number or business number, as the case may be;
(b) not amend the plan before having received notification from the Minister that, in the Minister’s opinion, a plan whose terms are identical to the amended plan would, if entered into by entities eligible to enter into a disability savings plan, comply with the conditions in subsection (4);
(c) where the issuer becomes aware that the plan is, or is likely to become, non-compliant (determined without reference to paragraph (11)(c) and subsection (12)), notify the Minister and the specified Minister of this fact on or before the day that is 30 days after the day on which the issuer becomes so aware; and
(d) exercise the care, diligence and skill of a reasonably prudent person to minimize the possibility that a holder of the plan may become liable to pay tax under Part XI in connection with the plan.
116. Subsection 149(1) of the Act is amended by adding the following after paragraph (u):
Trusts under registered disability savings plans
(u.1) a trust governed by a registered disability savings plan to the extent provided by section 146.4;
117. Subsection 153(1) of the Act is amended by adding the following after paragraph (h):
(i) a payment from a registered disability savings plan,
118. The Act is amended by adding the following after section 160.2:
Joint and several liability — registered disability savings plan
160.21 (1) Where, in computing income for a taxation year, a taxpayer is required to include an amount in respect of a disability assistance payment (as defined in subsection 146.4(1)) that is deemed by subsection 146.4(10) to have been made at any particular time from a registered disability savings plan, the taxpayer and each holder (as defined in subsection 146.4(1)) of the plan immediately after the particular time are jointly and severally, or solidarily, liable to pay the part of the taxpayer’s tax under this Part for that taxation year that is equal to the amount, if any, determined by the formula
A - B
where
A      is the amount of the taxpayer’s tax under this Part for that taxation year; and
B      is the amount that would be the taxpayer’s tax under this Part for that taxation year if no disability assistance payment were deemed by subsection 146.4(10) to have been paid from the plan at the particular time.
No limitation on liability
(2) Subsection (1) limits neither
(a) the liability of the taxpayer referred to in that subsection under any other provision of this Act, nor
(b) the liability of any holder referred to in that subsection for the interest that the holder is liable to pay under this Act on an assessment in respect of the amount that the holder is liable to pay because of that subsection.
Rules applicable — registered disability savings plans
(3) Where a holder (as defined in subsection 146.4(1)) of a registered disability savings plan has, because of subsection (1), become jointly and severally, or solidarily, liable with a taxpayer in respect of part or all of a liability of the taxpayer under this Act, the following rules apply:
(a) a payment by the holder on account of the holder’s liability shall to the extent of the payment discharge the holder’s liability, but
(b) a payment by the taxpayer on account of the taxpayer’s liability only discharges the holder’s liability to the extent that the payment operates to reduce the taxpayer’s liability to an amount less than the amount in respect of which the holder was, by subsection (1), made liable.
Assessment
(4) The Minister may at any time assess a taxpayer in respect of any amount payable because of this section, and the provisions of this Division (including, for greater certainty, the provisions in respect of interest payable) apply, with any modifications that the circumstances require, in respect of an assessment made under this section as though it had been made under section 152 in respect of taxes payable under this Part.
119. The definition “adjusted income” in subsection 180.2(1) of the Act is replaced by the following:
“adjusted income”« revenu modifié »
“adjusted income” of an individual for a taxation year means the amount that would be the individual’s income under Part I for the year if no amount were included under paragraph 56(1)(q.1) or subsection 56(6) or in respect of a gain from a disposition of property to which section 79 applies in computing that income and if no amount were deductible under paragraph 60(w), (y) or (z) in computing that income;
120. The Act is amended by adding the following after section 204.94:
PART XI
TAXES IN RESPECT OF REGISTERED DISABILITY SAVINGS PLANS
Definitions
205. (1) The following definitions apply in this Part.
“advantage”« avantage »
“advantage”, in relation to a registered disability savings plan, means any benefit or loan that is conditional in any way on the existence of the plan other than
(a) a disability assistance payment;
(b) a contribution made by, or with the written consent of, a holder of the plan;
(c) a transfer in accordance with subsection 146.4(8);
(d) an amount paid under the Canada Disability Savings Act;
(e) a benefit derived from the provision of administrative or investment services in respect of the plan; or
(f) a loan
(i) made in the ordinary course of the lender’s ordinary business of lending money if, at the time the loan was made, bona fide arrangements were made for repayment of the loan within a reasonable time, and
(ii) whose sole purpose was to enable a person to make a contribution to the plan.
“allowable refund”« remboursement admissible »
“allowable refund” of a person for a calendar year means the total of all amounts each of which is a refund to which the person is entitled under subsection 206.1(4) for the year.
“benefit”« bénéfice »
“benefit”, in relation to a registered disability savings plan, includes any payment or allocation of an amount to the plan that is represented to be a return on investment in respect of property held by the plan trust, but which cannot reasonably be considered, having regard to all the circumstances, to be on terms and conditions that would apply to a similar transaction in an open market between parties dealing with each other at arm’s length and acting prudently, knowledgeably and willingly.
“qualified investment”« placement admissible »
“qualified investment” for a trust governed by a registered disability savings plan 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 registered disability savings plan” 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 146.4(4)(p), any amounts that would otherwise be payable after the termination be commuted into a single payment; and
(d) a prescribed investment.
Definitions in subsection 146.4(1)
(2) The definitions in subsection 146.4(1) apply in this Part.
Tax payable where inadequate consideration
206. (1) A tax is payable under this Part for a calendar year in connection with a registered disability savings plan if, in the year, a trust governed by the plan
(a) disposes of property for consideration less than the fair market value of the property at the time of the disposition, or for no consideration; or
(b) acquires property for consideration greater than the fair market value of the property at the time of the acquisition.
Amount of tax payable
(2) The amount of tax payable in respect of each disposition or acquisition described in subsection (1) is
(a) the amount by which the fair market value differs from the consideration; or
(b) if there is no consideration, the amount of the fair market value.
Liability for tax
(3) Each person who is a holder of a registered disability savings plan 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.
Payment of amount collected to RDSP
(4) Where a tax has been imposed under subsection (1) in connection with a registered disability savings plan of a beneficiary, the Minister may pay all or part of any amount collected in respect of the tax to a trust governed by a registered disability savings plan of the beneficiary (referred to in this subsection as the “current plan”) if
(a) it is just and equitable to do so having regard to all circumstances; and
(b) the Minister is satisfied that neither the beneficiary nor any existing holder of the current plan was involved in the transaction that gave rise to the tax.
Deemed not to be a contribution
(5) A payment under subsection (4) is deemed not to be a contribution to a registered disability savings plan for the purposes of section 146.4.
Tax payable on non-qualified investment
206.1 (1) A tax is payable under this Part for a calendar year in connection with a registered disability savings plan if, in the year,
(a) the trust governed by the plan acquires property that is not a qualified investment for the trust; or
(b) property held by the trust governed by the plan ceases to be a qualified investment for the trust.
Amount of tax payable
(2) The amount of tax payable,
(a) in respect of each property described in paragraph (1)(a), is 50% of the fair market value of the property at the time it was acquired by the trust; and
(b) in respect of each property described in paragraph (1)(b), is 50% of the fair market value of the property at the time immediately before the time it ceased to be a qualified investment for the trust.
Liability for tax
(3) Each person who is a holder of a registered disability savings plan 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.
Refund of tax on disposition of non-qualified investment
(4) Where in a calendar year a trust governed by a registered disability savings plan disposes of a property in respect of which a tax is imposed under subsection (1), the person or persons who are liable to pay the tax are entitled to a refund for the year of an amount equal to
(a) except where paragraph (b) applies, the lesser of
(i) the amount of the tax so imposed, and
(ii) the proceeds of disposition of the property; and
(b) nil,
(i) if it is reasonable to expect that any of those persons knew or ought to have known at the time the property was acquired by the trust that it was not, or would cease to be, a qualified investment for the trust, or
(ii) if the property is not disposed of by the trust before the end of the calendar year following the calendar year in which the tax arose, or any later time that the Minister considers reasonable in the circumstances.
Apportionment of refund
(5) Where 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.
Deemed disposition and reacquisition
(6) For the purposes of this Act, where at any time property held by a plan trust in respect of which a tax was imposed under subsection (1) subsequently becomes a qualified investment for the trust, the trust is deemed to have disposed of the property at that time for proceeds of disposition equal to its fair market value at that time and to have reacquired it immediately after that time at a cost equal to that fair market value.
Tax payable where advantage extended
206.2 (1) A tax is payable under this Part for a calendar year in connection with a registered disability savings plan if, in the year, an advantage in relation to the plan is extended to a person who is, or who does not deal at arm’s length with, a beneficiary under, or a holder of, the plan.
Amount of tax payable
(2) The amount of tax payable in respect of an advantage described in subsection (1) is
(a) in the case of a benefit, the fair market value of the benefit; and
(b) in the case of a loan, the amount of the loan.
Liability for tax
(3) Each person who is a holder of a registered disability savings plan 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. If, however, the advantage is extended by the issuer of the plan or by a person not dealing at arm’s length with the issuer, the issuer is liable to pay the tax and not the holders.
Tax payable on use of property as security
206.3 (1) Every issuer of a registered disability savings plan shall pay a tax under this Part for a calendar year if, in the year, with the consent or knowledge of the issuer, a trust governed by the plan uses or permits to be used any property held by the trust as security for indebtedness of any kind.
Amount of tax payable
(2) The amount of tax payable in respect of each property described in subsection (1) is equal to the fair market value of the property at the time the property commenced to be used as security.
Waiver of liability
206.4 If a person would otherwise be liable to pay a tax under this Part for a calendar year, the Minister may waive or cancel all or part of the liability where it is just and equitable to do so having regard to all the circumstances, including
(a) whether the tax arose as a consequence of reasonable error; and
(b) the extent to which the transaction which gave rise to the tax also gave rise to another tax under this Part.
Return and payment of tax
207. (1) Every person who is liable to pay tax under this Part for a calendar year shall within 90 days after the end of the year
(a) file with the Minister a return for the year under this Part in prescribed form and containing prescribed information including
(i) an estimate of the amount of tax payable under this Part by the person for the year, and
(ii) an estimate of the amount of any refund to which the person is entitled under this Part for the year; and
(b) pay to the Receiver General the amount, if any, by which the amount of the person’s tax payable under this Part for the year exceeds the person’s allowable refund for the year.
Refund
(2) Where a person has filed a return under this Part for a calendar year within three years after the end of the year, the Minister
(a) may, on mailing the notice of assessment for the year, refund without application any allowable refund of the person for the year, to the extent that it was not applied against the person’s tax payable under paragraph (1)(b); and
(b) shall, with all due dispatch, make the refund referred to in paragraph (a) after mailing the notice of assessment if an application for it has been made in writing by the person within three years after the mailing of an original notice of assessment for the year.
Multiple holders
(3) Where two or more holders of a registered disability savings plan 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 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 as required by this Part for the year is deemed to have been filed by each other holder in respect of the joint liability to which the return relates.
Provisions applicable to Part
(4) Subsections 150(2) and (3), sections 152 and 158 to 167 and Division J of Part I apply to this Part with any modifications that the circumstances require.
121. Subsection 212(1) of the Act is amended by adding the following after paragraph (r):
Registered disability savings plan
(r.1) an amount that would, if the non-resident person had been resident in Canada throughout the taxation year in which the amount was paid, be required by paragraph 56(1)(q.1) to be included in computing the non-resident person’s income for the taxation year;
122. Paragraph 241(4)(d) of the Act is amended by adding the following after subparagraph (vii.4):
(vii.5) to an official solely for the purposes of the administration and enforcement of the Canada Disability Savings Act,
123. (1) Subparagraph (f)(vi) of the definition “disposition” in subsection 248(1) of the Act is replaced by the following:
(vi) if the transferor is an amateur athlete trust, a cemetery care trust, an employee trust, an inter vivos trust deemed by subsection 143(1) to exist in respect of a congregation that is a constituent part of a religious organization, a related segregated fund trust (in this paragraph having the meaning assigned by section 138.1), a trust described in paragraph 149(1)(o.4) or a trust governed by an eligible funeral arrangement, an employees profit sharing plan, a registered disability savings plan, a registered education savings plan or a registered supplementary unemployment benefit plan, the transferee is the same type of trust, and
(2) Subsection 248(1) of the Act is amended by adding the following in alphabetical order:
“registered disability savings plan”« régime enregistré d’épargne- invalidité »
“registered disability savings plan” has the same meaning as in subsection 146.4(1);
124. Section 253.1 of the Act is replaced by the following:
Investments in limited partnerships
253.1 For the purposes of subparagraph 108(2)(b)(ii), paragraphs 130.1(6)(b), 131(8)(b), 132(6)(b), 146.4(5)(b) and 149(1)(o.2), the definition “private holding corporation” in subsection 191(1) and regulations made for the purposes of paragraphs 149(1)(o.3) and (o.4), if a trust or corporation holds an interest as a member of a partnership and, by operation of any law governing the arrangement in respect of the partnership, the liability of the member as a member of the partnership is limited, the member shall not, solely because of its acquisition and holding of that interest, be considered to carry on any business or other activity of the partnership.
C.R.C., c. 945
Income Tax Regulations
125. 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, 204 or 205 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.
126. (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 (h) of the definition “qualified investment” in section 204 of the Act and paragraph (d) of the definition “qualified investment” in subsection 205(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) Paragraph 4900(1)(c) of the Regulations is replaced by the following:
(c) a share of the capital stock of a mortgage investment corporation that does not hold as part of its property at any time during the calendar year in which the particular time occurs any indebtedness, whether by way of mortgage or otherwise, of a person who is a connected person under the governing plan of the plan trust;
(3) Subparagraph 4900(1)(e)(ii) of the Regulations is replaced by the following:
(ii) the issuer is not a connected person under the governing plan of the plan trust;
(4) 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, except where the plan trust is governed by a registered education savings plan, 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
(5) The portion of subparagraph 4900(1)(h)(iii) of the Regulations before clause (A) is replaced by the following:
(iii) that, except where the plan trust is governed by a registered education savings plan, 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
(6) Paragraph 4900(1)(i.2) of the Regulations is replaced by the following:
(i.2) indebtedness of a Canadian corporation (other than a corporation that is a connected person under the governing plan of the plan trust) represented by a bankers’ acceptance;
(7) Subparagraph 4900(1)(j)(ii) of the Regulations is replaced by the following:
(ii) the debtor (and any partnership that does not deal at arm’s length with the debtor) is not a connected person under the governing plan of the plan trust;
(8) The portion of paragraph 4900(1)(q) of the Regulations before subparagraph (i) is replaced by the following:
(q) a debt issued by a Canadian corporation (other than a corporation with share capital or a corporation that is a connected person under the governing plan of the plan trust) where
(9) The portion of paragraph 4900(1)(r) of the Regulations before subparagraph (i) is replaced by the following:
(r) a debt issued by a Canadian corporation (other than a corporation with share capital or a corporation that is a connected person under the governing plan of the plan trust) if
(10) 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 and paragraph (d) of the definition “qualified investment” in subsection 205(1) of the Act, a property is prescribed as a qualified investment for a trust governed by a registered education savings plan or a trust governed by a registered disability savings plan 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.
127. (1) The definition “governing plan” in subsection 4901(2) of the Regulations is replaced by the following:
“governing plan” means a registered retirement savings plan, a registered education savings plan, a registered retirement income fund, a registered disability savings plan, a deferred profit sharing plan or a revoked plan; (régime d’encadrement)
(2) Subsection 4901(2) of the Regulations is amended by adding the following in alphabetical order:
“connected person”, in relation to a governing plan of a plan trust, means a person who is an annuitant, a beneficiary, an employer or a subscriber under, or a holder of, the governing plan and any person who does not deal at arms’s length with that person; (personne rattachée)
Consequential Amendments
1996, c. 23
Employment Insurance Act
2006, c. 4, s. 172
128. The definition “income” in section 144 of the Employment Insurance Act is replaced by the following:
“income”« revenu »
“income” of a person for a period means the amount that would be their income for the period determined under the Income Tax Act if no amount were
(a) deductible under paragraphs 60(v.1), (w), (y) and (z) of that Act,
(b) included in respect of a gain from a disposition of property to which section 79 of that Act applies, or
(c) included under paragraph 56(1)(q.1) or subsection 56(6) of that Act;
R.S., c. O-9
Old Age Security Act
2006, c. 4, s. 180
129. Paragraph (e) of the definition “income” in section 2 of the Old Age Security Act is replaced by the following:
(e) there shall be deducted from the person’s income for the year any amount included under paragraph 56(1)(q.1) or subsection 56(6) of the Income Tax Act and there shall be included in the person’s income for the year any amount that may be deducted under paragraph 60(y) or (z) of that Act;
Coordinating Amendments
Bill C-10
130. Sections 131 to 134 apply if Bill C-10, introduced in the 2nd session of the 39th Parliament and entitled the Income Tax Amendments Act, 2006 (referred to in those sections as the “other Act”), receives royal assent.
131. (1) If section 101 of this Act comes into force before section 47 of the other Act, then paragraph 4(3)(a) of the Income Tax Act is replaced by the following:
(a) subject to paragraph (b), all deductions permitted in computing a taxpayer’s income for a taxation year for the purposes of this Part, except any deduction permitted by any of paragraphs 60(b) to (o), (p), (r) and (v) to (z), shall apply either wholly or in part to a particular source or to sources in a particular place; and
(2) If section 101 of this Act comes into force on the same day as section 47 of the other Act, then that section 47 is deemed to have come into force before that section 101.
(3) The replacement of paragraph 4(3)(a) of the Income Tax Act by the operation of subsection (1) applies in respect of the 2007 and subsequent taxation years.
132. (1) If subsection 25 of the other Act comes into force before section 109 of this Act, then paragraph 107.4(1)(j) of the Income Tax Act is replaced by the following:
(j) if the contributor is an amateur athlete trust, a cemetery care trust, an employee trust, an inter vivos trust deemed by subsection 143(1) to exist in respect of a congregation that is a constituent part of a religious organization, a related segregated fund trust (as defined by section 138.1), a trust described in paragraph 149(1)(o.4) or a trust governed by an eligible funeral arrangement, an employees profit sharing plan, a registered disability savings plan, a registered education savings plan or a registered supplementary unemployment benefit plan, the particular trust is the same type of trust; and
(2) If section 25 of the other Act comes into force on the same day as section 109 of this Act, then that section 109 is deemed to have come into force before that section 25.
(3) The replacement of paragraph 107.4(1)(j) of the Income Tax Act by the operation of subsection (1) applies in respect of the 2008 and subsequent taxation years.
133. (1) If subsection 130(1) of the other Act comes into force before section 114 of this Act, then
(a) that section 114 is deemed never to have come into force and is repealed; and
(b) paragraph 132.2(3)(h) of the Income Tax 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) or 146.3(1), section 204 or subsection 205(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);
(2) If section 114 of this Act comes into force before subsection 130(1) of the other Act, then paragraph 132.2(3)(h) of the Income Tax 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) or 146.3(1), section 204 or subsection 205(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);
(3) If subsection 130(1) of the other Act comes into force on the same day as section 114 of this Act, then that subsection 130(1) is deemed to have come into force before that section 114 and subsection (1) applies as a consequence.
(4) The replacement of paragraph 132.2(3)(h) of the Income Tax Act by the operation of paragraph (1)(b) or subsection (2) or (3) applies in respect of the 2008 and subsequent taxation years.
134. (1) On the first day on which both subsection 191(1) of the other Act and section 124 of this Act are in force, section 253.1 of the Income Tax Act is replaced by the following:
Investments in limited partnerships
253.1 For the purposes of subparagraph 108(2)(b)(ii), paragraphs 130.1(6)(b), 131(8)(b), 132(6)(b), 146.1(2.1)(c), 146.4(5)(b) and 149(1)(o.2), the definition “private holding corporation” in subsection 191(1) and regulations made for the purposes of paragraphs 149(1)(o.3) and (o.4), if a trust or corporation holds an interest as a member of a partnership and, by operation of any law governing the arrangement in respect of the partnership, the liability of the member as a member of the partnership is limited, the member shall not, solely because of its acquisition and holding of that interest, be considered to carry on any business or other activity of the partnership.
(2) The replacement of section 253.1 of the Income Tax Act by the operation of subsection (1) applies in respect of the 2008 and subsequent taxation years.
Application
135. Sections 101 to 129 apply to the 2008 and subsequent taxation years, except that section 101 also applies to the 2007 taxation year.
Canada Disability Savings Act
Enactment of Act
Enactment of Act
136. The Canada Disability Savings Act is enacted as follows:
An Act to encourage savings for persons with disabilities
SHORT TITLE
Short title
1. This Act may be cited as the Canada Disability Savings Act.
INTERPRETATION
Definitions
2. (1) The following definitions apply in this Act.
“Canada Disability Savings Bond”« bon canadien pour l’épargne- invalidité »
“Canada Disability Savings Bond” means the bond payable or paid under section 7.
“Canada Disability Savings Grant”« subvention canadienne pour l’épargne- invalidité »
“Canada Disability Savings Grant” means the grant payable or paid under section 6. 
“child tax benefit”« prestation fiscale pour enfants »
“child tax benefit” means a deemed overpayment under Subdivision a.1 of Division E of Part 1 of the Income Tax Act.
“contribution”« cotisation »
“contribution” means any amount paid into the registered disability savings plan of a beneficiary in accordance with section 146.4 of the Income Tax Act but does not include 
(a) an amount transferred under subsection 146.4(8) of that Act;
(b) any prescribed payment referred to in the definition “contribution” in subsection 146.4(1) of that Act; or
(c) an amount paid into the plan under this Act.
“family income”« revenu familial »
“family income” means the income determined by the Minister in accordance with the definition “adjusted income” in section 122.6 of the Income Tax Act by using the information provided by the Minister of National Revenue for that purpose.
Income Tax Act expressions
(2) Unless a contrary intention appears, in this Act
(a) the expressions “adjusted income”, “eligible individual” and “qualified dependant” have the same meanings as in section 122.6 of the Income Tax Act;
(b) the expressions “holder”, “issuer” and “registered disability savings plan” have the same meanings as in section 146.4 of that Act; and
(c) any other expression has the same meaning as in that Act.
PURPOSE
Purpose
3. The purpose of this Act is to encourage long term savings through registered disability savings plans to provide for the financial security of persons with severe and prolonged impairments in physical or mental functions.
MINISTER
Designation of Minister
4. The Governor in Council may, by order, designate a minister of the Crown to be “the Minister” for the purposes of this Act.
Informing Canadians
5. The Minister may take any measures that the Minister considers appropriate to make known to Canadians the existence of Canada Disability Savings Grants and Canada Disability Savings Bonds.
PAYMENTS
Canada Disability Savings Grants
6. (1) Subject to this Act and the regulations, on application, the Minister may, in respect of any contribution made to a registered disability savings plan of a beneficiary, pay a Canada Disability Savings Grant into the plan. The grant is to be paid on any terms and conditions that the Minister may specify by agreement between the Minister and the issuer of the plan.
Amount of grant
(2) The amount of a Canada Disability Savings Grant that may be paid for a particular year is equal to
(a) 300% of the part of the total contributions made in the particular year that is less than or equal to $500, and 200% of the part of those contributions that is more than $500 but less than or equal to $1,500, if the beneficiary is
(i) an individual who is at least 18 years of age on December 31 of the year preceding the particular year and whose family income for the particular year is less than or equal to $74,357,
(ii) a qualified dependant of an eligible individual whose adjusted income used to determine the amount of a child tax benefit in respect of January in the particular year is less than or equal to $74,357, or
(iii) a person in respect of whom a special allowance under the Children’s Special Allowances Act is payable for at least one month in the particular year; or
(b) 100% of the total contributions made in the particular year, up to a maximum of $1,000, in any other case.
Family income
(3) For the purposes of subparagraph (2)(a)(i), the family income for a particular year is that income determined for the year that ended on December 31 of the second preceding year.
No determination for January
(4) If there has been no determination of eligibility for a child tax benefit in respect of January in a particular year, the adjusted income to be used for the purposes of subparagraph (2)(a)(ii) is the adjusted income used to determine the amount of a child tax benefit for the first month in the particular year in respect of which eligibility has been established.
Beneficiary born in December
(5) In applying subsection (4) in respect of a beneficiary born in December, the reference to “the first month in the particular year in respect of which eligibility has been established” in that subsection is to be read as a reference to “January of the next year”.
Indexing
(6) The amount of $74,357 referred to in paragraph (2)(a) is to be adjusted, as set out in section 117.1 of the Income Tax Act, for each year after 2007.
Lifetime cap
(7) Not more than $70,000 in Canada Disability Savings Grants may be paid in respect of a beneficiary during their lifetime.
Canada Disability Savings Bonds
7. (1) Subject to this Act and the regulations, on application, the Minister may pay a Canada Disability Savings Bond into a registered disability savings plan of a beneficiary. The bond is to be paid on any terms and conditions that the Minister may specify by agreement between the Minister and the issuer of the plan.
Amount of bond
(2) The amount of a Canada Disability Savings Bond that may be paid for a particular year is
(a) $1,000, if the beneficiary is
(i) an individual who is at least 18 years of age on December 31 of the year preceding the particular year and whose family income for the particular year is less than or equal to $20,883,
(ii) a qualified dependant of an eligible individual whose adjusted income used to determine the amount of a child tax benefit in respect of January in the particular year is less than or equal to $20,883, or
(iii) a person in respect of whom a special allowance under the Children’s Special Allowances Act is payable for at least one month in the particular year; or
(b) the amount determined by the formula set out in subsection (4), if the beneficiary is
(i) an individual who is at least 18 years of age on December 31 of the year preceding the particular year and whose family income for the particular year is more than $20,883 but less than $37,178, or
(ii) a qualified dependant of an eligible individual whose adjusted income used to determine the amount of a child tax benefit in respect of January in the particular year is more than $20,883 but less than $37,178.
Family income
(3) For the purposes of subparagraphs (2)(a)(i) and (b)(i), the family income for a particular year is that income determined for the year that ended on December 31 of the second preceding year.
Formula
(4) For the purposes of paragraph (2)(b), the formula is as follows:
$1,000 - [$1,000 × (A - B) / (C - B)]
where
A      is, as the case may be, the family income referred to in subparagraph (2)(b)(i) or the adjusted income referred to in subparagraph (2)(b)(ii);
B      is $20,883; and
C      is $37,178.
Rounding of amounts
(5) If an amount calculated under subsection (4) contains a fraction of a cent, the amount is to be rounded to the nearest whole cent or, if the amount is equidistant from two whole cents, to the higher of them.
No determination for January
(6) If there has been no determination of eligibility for a child tax benefit in respect of January in a particular year, the adjusted income to be used for the purposes of subparagraphs (2)(a)(ii) and (b)(ii) is the adjusted income used to determine the amount of a child tax benefit for the first month in the particular year in respect of which eligibility has been established.
Beneficiary born in December
(7) In applying subsection (6) in respect of a beneficiary born in December, the reference to “the first month in the particular year in respect of which eligibility has been established” in that subsection is to be read as a reference to “January of the next year”.
Indexing
(8) The amounts of $20,883 and $37,178 referred to in subsections (2) and (4) are to be adjusted, as set out in section 117.1 of the Income Tax Act, for each year after 2007.
Lifetime cap
(9) Not more than $20,000 in Canada Disability Savings Bonds may be paid in respect of a beneficiary during their lifetime.
Payment
8. Neither a Canada Disability Savings Grant nor a Canada Disability Savings Bond may be paid unless
(a) the Minister is provided with, as the case may be,
(i) the Social Insurance Number of the beneficiary,
(ii) the Social Insurance Number of the eligible individual referred to in subparagraph 6(2)(a)(ii) or 7(2)(a)(ii) or (b)(ii), and
(iii) the business number of the department, agency or institution that maintains the beneficiary in respect of whom a special allowance is payable under the Children’s Special Allowances Act for a month in the particular year; and
(b) the beneficiary is resident in Canada, in the case of a Canada Disability Savings Grant, at the time the contribution to the plan is made and, in the case of a Canada Disability Savings Bond, immediately before the payment is made.
Interest
9. The Minister may, in prescribed circumstances, pay interest, calculated as prescribed, in respect of Canada Disability Savings Grants or Canada Disability Savings Bonds.
Payments out of CRF
10. All amounts payable by the Minister under this Act shall be paid out of the Consolidated Revenue Fund.
Waiver
11. On application made by the holder or the beneficiary, to avoid undue hardship, the Minister may, in prescribed circumstances, waive any of the prescribed requirements of this Act or the regulations that relate to the payment of any amount or the repayment of any amount or earnings generated by that amount. The application must be in the form and manner approved by the Minister.
GENERAL
Debt due to Her Majesty
12. (1) An amount required to be repaid under this Act, the regulations or an agreement entered into under this Act constitutes a debt due to Her Majesty in right of Canada as of the date on which the Minister issues a written notice to the person responsible for the debt indicating the amount that is due.
Recovery of payments and interest
(2) Debts due to Her Majesty in right of Canada under this Act are recoverable, including in the Federal Court or any other court of competent jurisdiction, by the Minister of National Revenue.
Deduction and set-off
(3) Despite subsection 14(1), debts due to Her Majesty in right of Canada under this Act may be recovered at any time by way of deduction from, set-off against or, in Quebec, compensation against, any sum of money that may be due or payable by Her Majesty in right of Canada to the person responsible for the debt, other than an amount payable under section 122.61 of the Income Tax Act.
Deduction and set-off by the Minister
13. Despite subsections 12(2) and 14(1), an amount required to be repaid by a person under this Act, the regulations or an agreement entered into under this Act may be recovered by the Minister at any time by way of deduction from, set-off against or, in Quebec, compensation against, any sum of money that may be due or payable under this Act to the person.
Limitation or prescription period
14. (1) Subject to this section, no action or proceedings shall be taken to recover debts due to Her Majesty in right of Canada under this Act after the expiry of the six-year limitation or prescription period that begins on the day on which the Minister issues the notice referred to in subsection 12(1).
Acknowledgement of liability
(2) If a person’s liability for debts due to Her Majesty in right of Canada under this Act is acknowledged in accordance with subsection (4), the time during which the limitation or prescription period has run before the acknowledgement does not count in the calculation of that period.
Acknowledgement after expiry of limitation or prescription period
(3) If a person’s liability for debts due to Her Majesty in right of Canada under this Act is acknowledged in accordance with subsection (4) after the expiry of the limitation or prescription period, an action or proceedings to recover the money may, subject to subsections (2) and (5), be brought within six years after the date of the acknowledgement.
Types of acknowledgements
(4) An acknowledgement of liability means
(a) a written promise to pay the money owing, signed by the person or his or her agent or other representative;
(b) a written acknowledgement of the money owing, signed by the person or his or her agent or other representative, whether or not a promise to pay can be implied from it and whether or not it contains a refusal to pay;
(c) a part payment by the person or his or her agent or other representative of any money owing; or
(d) any acknowledgement of the money owing made by the person, his or her agent or other representative or the trustee or director in the course of proceedings under the Bankruptcy and Insolvency Act or any other legislation dealing with the payment of debts.
Limitation or prescription period suspended
(5) The running of a limitation or prescription period is suspended during
(a) the period beginning on the day on which the Minister receives an application under section 11 and ending on the day on which the Minister issues a decision;
(b) the period beginning on the day on which the Minister of National Revenue receives an application concerning subsection 146.4(12) of the Income Tax Act and ending on the day on which that Minister makes a decision;
(c) the period beginning on the day on which an application for judicial review, with respect to a decision of the Minister to issue a notice under subsection 12(1), is filed and ending on the day on which the final decision is rendered; and
(d) any period in which it is prohibited to commence or continue an action or other proceedings against the person to recover debts due to Her Majesty in right of Canada under this Act.
Enforcement proceedings
(6) This section does not apply in respect of an action or proceedings relating to the execution, renewal or enforcement of a judgment.
Collection of information
15. If the Minister considers it advisable, the Minister may, subject to conditions agreed on by the Minister and the Minister of National Revenue, collect any prescribed information for the administration of section 146.4 and Part XI of the Income Tax Act.
Notification by Minister of National Revenue
16. When the Minister of National Revenue considers that a registered disability savings plan is no longer registered by virtue of the application of paragraph 146.4(10)(a) of the Income Tax Act, the Minister of National Revenue shall as soon as possible notify the Minister in writing.
Regulations
17. The Governor in Council may make regulations for carrying out the purpose and provisions of this Act and, without limiting the generality of the foregoing, may make regulations
(a) establishing requirements that must be met by a registered disability savings plan and by persons in respect of the plan before a Canada Disability Savings Grant or a Canada Disability Savings Bond may be paid in respect of the plan;
(b) establishing the manner of determining the amount of a Canada Disability Savings Grant that may be paid in respect of contributions made to registered disability savings plans or the amount of a Canada Disability Savings Bond that may be paid into those plans;
(c) specifying terms and conditions to be included in agreements entered into between an issuer of a registered disability savings plan and the Minister;
(d) governing the repayment of any amount paid under this Act or earnings generated by those amounts including providing for the circumstances under which an amount or earnings must be repaid and the manner of calculating such an amount or earnings;
(e) specifying the circumstances in which the Minister may pay interest on Canada Disability Savings Grants or Canada Disability Savings Bonds as well as the manner of calculating interest;
(f) specifying the requirements of this Act or the regulations relating to the payment of any amount or the repayment of any amount or earnings generated by that amount that may be waived by the Minister to avoid undue hardship;
(g) specifying the circumstances in which the Minister may waive the requirements provided under paragraph (f);
(h) specifying information that the Minister may collect under section 15; and
(i) requiring issuers to keep any record, book or other document containing any information relevant to the administration or enforcement of this Act or the regulations, and respecting where, how and how long it is to be kept.
1992, c. 48 (Sch.)
Consequential Amendment to the Children’s Special Allowances Act
2004, c. 26, s. 18
137. Subsection 10(2) of the Children’s Special Allowances Act is replaced by the following:
Release of information
(2) Any information obtained by or on behalf of the Minister in the course of the administration or enforcement of this Act or the regulations or the carrying out of an agreement entered into under section 11 may be communicated to any person if it can reasonably be regarded as necessary for the purposes of the administration or enforcement of this Act, the Income Tax Act, the Canada Disability Savings Act or the Canada Education Savings Act or a program administered under an agreement entered into under section 12 of the Canada Education Savings Act.
Coming into Force
Order in council
138. The provisions of the Canada Disability Savings Act, as enacted by section 136, and section 137 come into force on a day or days to be fixed by order of the Governor in Council.
PART 5
INCENTIVE FOR PROVINCES TO ELIMINATE TAXES ON CAPITAL
R.S., c. F-8; 1995, c. 17, s. 45(1)
Federal-Provincial Fiscal Arrangements Act
139. The Federal-Provincial Fiscal Arrangements Act is amended by adding the following after section 8.7:
PART IV
TRANSFER PAYMENTS WITH RESPECT TO THE ELIMINATION OF PROVINCIAL CAPITAL TAXES
Definition of “capital tax”
9. In this Part, “capital tax” means a tax that is imposed on one or more of the following:
(a) an element of shareholders’ equity in a corporation such as share capital or retained earnings;
(b) a form of long-term indebtedness owed by a corporation; or
(c) any other element of capital that the Minister considers appropriate.
It does not include
(d) a tax imposed under Part VI.1 of the Taxation Act, R.S.Q., c. I-3;
(e) a tax imposed under section 74.1 of the Corporations Tax Act, R.S.O. 1990, c. C-40; or
(f) any tax that the Minister does not consider to be sufficiently similar to a tax imposed under Part I.3 or VI of the Income Tax Act.
Incentive to eliminate capital taxes
10. (1) As an incentive for a province to eliminate capital taxes imposed by the province, the province is eligible to receive a payment under this Part if
(a) before January 2, 2011, it eliminates a capital tax that is imposed under a law of the province that was in force on March 18, 2007; and
(b) any legislation that is required to give effect to the elimination is enacted after March 18, 2007 and before January 2, 2011.
Meaning of elimination
(2) For the purposes of this Part, a capital tax is considered to be eliminated if
(a) under the law of the province, the tax ceases before January 2, 2011 to be imposed on all corporations, except that the tax may continue to be imposed on any corporation that is exempt from tax under any of paragraphs 149(1)(d) to (d.4) of the Income Tax Act on all of its taxable income; or
(b) in the case where the tax is imposed only on financial institutions, the law under which the tax is imposed is amended, before January 2, 2011, to replace the tax with a new capital tax imposed only on financial institutions that meets the following criteria:
(i) no financial institution becomes subject to the new capital tax that was not subject to the replaced tax,
(ii) every financial institution on which the new capital tax is imposed must be permitted to reduce the amount of the new capital tax payable by it for a taxation year by the amount of income tax payable by it to the province for the year and, if the amount of income tax so payable exceeds the amount of the new capital tax so payable, the financial institution must be permitted to apply the amount of the excess to reduce capital tax payable by it in other taxation years in a manner satisfactory to the Minister, and
(iii) the Minister is satisfied that the total amount of revenue that would be raised by the new capital tax from financial institutions if there were no reduction for income tax payable is intended to be broadly commensurate with the total amount of revenue raised from those financial institutions by the province’s income tax.
Separate capital tax
(3) If a province imposes a capital tax that applies to financial institutions as well as corporations that are not financial institutions, the capital tax is deemed to be two separate capital taxes for the purposes of this Part.
Amount of payment
11. (1) The amount that a province may be eligible to receive, in respect of a period fixed by the Minister, is equal to 17% of the estimated foregone revenue for that period.
Preliminary payment
(2) A province is eligible to receive a preliminary payment for a period if the province has provided information in accordance with section 12.01 such that the Minister is able to make a preliminary determination of the estimated foregone revenue for that period. The Minister shall try to make a preliminary payment to the province on or before the last day of the period if the Minister receives the information in a timely manner.
Final determination
(3) After finalized information that is consistent with a province’s public accounts becomes available so as to enable the Minister to make a final determination of the amount under subsection (1) in respect of a period, the Minister shall do so and reconcile the final determination with any preliminary payment paid to the province. If the amount of the final determination is greater than the preliminary payment, the Minister shall, without delay, pay the difference to the province. However, if the amount of the final determination is less than the preliminary payment, the difference may be deducted from any amount payable to the province under this Act or be recovered from the province as a debt due to Her Majesty in right of Canada.
Program time limit
(4) For the purposes of determining the amount of a payment under this Part, a period shall not include a day that is before March 19, 2007 or after January 1, 2011.
Consolidated Revenue Fund
(5) The Minister may pay to a province, out of the Consolidated Revenue Fund, any amount that the province is eligible to receive under this Part.
Estimated foregone revenue
12. (1) Except where subsection (2) applies, the estimated foregone revenue for a province in respect of a period is the amount, as determined by the Minister, by which
(a) the estimated base revenue, determined as the estimated amount of revenue in respect of a specific capital tax that the province would have received in respect of the period from corporations that would have been subject to tax under Part I of the Income Tax Act under the laws of the province as they read on March 18, 2007, including any enactment that would be applicable to the period but that had not come into force on or before that date,
exceeds
(b) the estimated actual revenue, determined as the estimated amount of revenue in respect of the capital tax that the province receives in respect of the period from corporations that are subject to tax under Part I of the Income Tax Act.
Estimated foregone revenue — capital tax on financial institutions
(2) In the case of a capital tax that has been eliminated as described in paragraph 10(2)(b), the estimated foregone revenue for a province in respect of a period is the amount determined by the Minister to be the estimated amount of revenue in respect of the capital tax that the province would have received in respect of the period from financial institutions that would have been subject to tax under Part I of the Income Tax Act under the laws of the province as they read on March 18, 2007, including any enactment that would be applicable to the period but that had not come into force on or before that date.
Provision of information
12.01 (1) No payment may be made to a province under this Part unless the province provides to the Minister all of the information that the Minister considers necessary for the determination of the amount of that payment in accordance with this Part.
Certification by Minister of province
(2) All information provided by a province shall be of the best quality that is available at the time it is provided and shall be certified as such by an appropriate minister of the provincial government.
PART 6
BANK FOR INTERNATIONAL SETTLEMENTS (IMMUNITY) ACT
Enactment of Act
140. The Bank for International Settlements (Immunity) Act is enacted as follows:
An Act to provide immunity to the Bank for International Settlements from government measures and from civil judicial process
Short title
1. This Act may be cited as the Bank for International Settlements (Immunity) Act.
Immunity — government measures
2. The Bank for International Settlements, its property and any property entrusted to it are exempt from the measures referred to in Article 1 of the Protocol regarding the immunities of the Bank for International Settlements that was ratified by Canada on January 20, 1938.
Immunity — judicial process
3. (1) The Bank is immune from the juris-diction of any court in respect of a civil proceeding.
Immunity — property
(2) The Bank’s property and any property entrusted to it are immune, in respect of any civil proceeding, from attachment and execution.
Binding on Her Majesty
(3) Subsections (1) and (2) are binding on Her Majesty in right of Canada.
Non-application of sections 2 and 3
4. For reasons of national security or for the purposes of the conduct of Canada’s international affairs or the implementation of Canada’s international obligations, the Governor in Council may determine that, to the extent specified by the Governor in Council,
(a) the Bank, its property and any property entrusted to it are not exempt under section 2;
(b) the Bank is not immune under subsection 3(1); and
(c) the Bank’s property and any property entrusted to it are not immune under subsection 3(2).
PART 7
PHASED RETIREMENT — AMENDMENTS OTHER THAN THOSE CONCERNING INCOME TAX
R.S., c. 32 (2nd Supp.)
Pension Benefits Standards Act, 1985
141. The Pension Benefits Standards Act, 1985 is amended by adding the following after section 16:
Phased Retirement Benefit
Definitions
16.1 (1) The following definitions apply in this section.
“phased retirement benefit”« prestation de retraite progressive »
“phased retirement benefit” means a pension benefit that is equal to a portion of the immediate pension benefit to which a person is entitled under subsection 16(1) or which they are eligible to receive under subsection 16(2).
“phased retirement period”« période de retraite progressive »
“phased retirement period” means the period in respect of which the phased retirement benefit is to be paid.
Phased retirement benefit
(2) A pension plan may provide for the payment of a phased retirement benefit.
Conditions
(3) A phased retirement benefit is only to be paid to a person if
(a) the person enters into a written agreement with an employer who contributes to the pension plan from which the phased retirement benefit is to be paid, or with a prescribed administrator, that evidences their consent to its payment;
(b) in the case of a person who was receiving a joint and survivor pension benefit prior to the phased retirement period, the person’s spouse or common-law partner who would receive that joint and survivor pension benefit on the death of the person consents in writing to the cessation of the payment of the joint and survivor pension benefit;
(c) the employer provides a copy of the agreement referred to in paragraph (a) to the administrator of the pension plan from which the phased retirement benefit is to be paid;
(d) the person accrues a pension benefit during the phased retirement period under circumstances to which subsection 8503(19) of the Income Tax Regulations applies; and
(e) the pension plan from which the phased retirement benefit is to be paid has not been terminated.
Rules — during phased retirement period
(4) During a phased retirement period
(a) the person is deemed to be a member;
(b) subsection 2(3) does not apply and the person is deemed not to be receiving an immediate pension benefit;
(c) the administrator of the pension plan from which the phased retirement benefit is to be paid shall not pay the immediate pension benefit to which the person would otherwise be entitled under subsection 16(1) or which they would otherwise be eligible to receive under subsection 16(2);
(d) paragraph 18(1)(b) and subsections 36(1) and (4) do not apply to an agreement or arrangement that may be entered into for the payment of the phased retirement benefit;
(e) section 21 does not apply to the calculation of the phased retirement benefit;
(f) section 22 does not apply to the phased retirement benefit; and
(g) in the case of a person who, prior to the phased retirement period, was receiving an immediate pension benefit from the pension plan from which the phased retirement benefit is to be paid, the administrator of that pension plan shall not pay the immediate pension benefit and an election that was made under subsection 22(5) is void unless it was made under provincial property law within the meaning of subsection 25(1).
Rules — after phased retirement period
(5) At the end of a phased retirement period
(a) the pension benefit accrued during the phased retirement period is to be treated as vested without regard to conditions as to age, period of membership in the pension plan or period of employment;
(b) the immediate pension benefit to which the person is entitled under subsection 16(1) or which they are eligible to receive under subsection 16(2) is, unless otherwise prescribed, to be calculated without regard to the amount of the phased retirement benefit received;
(c) an election under subsection 22(5) that is void under paragraph (4)(g) remains void;
(d) subsection 26(2) applies as if it contained no reference to “but before the commencement of payment of a pension benefit”; and
(e) in the case of a phased retirement period that ends as a result of the death of a person,
(i) the person is deemed to have retired for purposes of the survivor benefit,
(ii) the person is deemed to have been entitled to the joint and survivor pension benefit payable pursuant to section 22, without regard to subsection 22(5), in respect of the immediate pension benefit to which the person would otherwise be entitled under subsection 16(1) or which they would otherwise be eligible to receive under subsection 16(2), and
(iii) subsections 23(5) to (7) apply.
142. Section 39 of the Act is amended by adding the following after paragraph (k):
(k.1) respecting phased retirement benefits;
Coming into Force
Order in council
143. This Part comes into force on a day to be fixed by order of the Governor in Council.
PART 8
ADVANCE MARKET COMMITMENT
Payments
144. (1) In respect of fiscal years beginning on or after April 1, 2008 and for the purpose of Canada’s contribution to the Advance Market Commitment, payments not exceeding in the aggregate the Canadian dollar equivalent of US$200 million — less the C$115 million that was paid under the authority of paragraph (b) of Order in Council P.C. 2007-368, which order was dated March 22, 2007 and made under section 3 of An Act to authorize the Minister of Finance to make certain payments, being chapter 36 of the Statutes of Canada, 2005 — may, on the requisition of the Minister for International Cooperation, be made out of the Consolidated Revenue Fund to international organizations in order to increase the availability of a vaccine for pneumococcal disease.
Agreements
(2) The Minister for International Cooperation may, subject to any terms or conditions that are established by the Governor in Council on the recommendation of the Minister for International Cooperation and the Minister of Finance, enter into agreements with international organizations for the purpose of the contribution referred to in subsection (1).
Exchange rate
(3) The rate of exchange that is to be used in order to determine the Canadian dollar equivalent of a payment that is made under subsection (1) is the rate that is determined, by the entity providing foreign banking services to the Receiver General, on the day on which the payment is made.
PART 9
OIL AND GAS OPERATIONS IN CANADA
R.S., c. O-7; 1992, c. 35, s. 2
Canada Oil and Gas Operations Act
145. The definition “pipeline” in section 2 of the Canada Oil and Gas Operations Act is replaced by the following:
“pipeline”« pipeline »
“pipeline” means any pipe or any system or arrangement of pipes by which oil, gas or any substance, including water, incidental to the drilling for or production of oil or gas is conveyed from any well-head or other place at which it is produced to any other place, or from any place where it is stored, processed or treated to any other place, and includes all property of any kind used for the purpose of, or in connection with or incidental to, the operation of a pipeline in the gathering, transporting, handling and delivery of the oil, gas or substance and, without restricting the generality of the foregoing, includes offshore installations or vessels, tanks, surface reservoirs, pumps, racks, storage and loading facilities, compressors, compressor stations, pressure measuring and controlling equipment and fixtures, flow controlling and measuring equipment and fixtures, metering equipment and fixtures, and heating, cooling and dehydrating equipment and fixtures, but does not include any pipe or any system or arrangement of pipes that constitutes a distribution system for the distribution of gas to ultimate consumers;
146. Section 2.1 of the Act is amended by striking out the word “and” at the end of paragraph (c), by adding the word “and” at the end of paragraph (d) and by adding the following after paragraph (d):
(e) economically efficient infrastructures.
147. The Act is amended by adding the following after section 4:
Limitations on pipelines
4.01 (1) A holder of an authorization under paragraph 5(1)(b) to construct or operate a pipeline shall not, without the leave of the National Energy Board,
(a) sell, transfer or lease to any person its pipeline, in whole or in part;
(b) purchase or lease any pipeline from any person;
(c) enter into an agreement for amalgamation with any person; or
(d) abandon the operation of a pipeline.
Definition of “pipeline”
(2) For the purposes of paragraph (1)(b), “pipeline” includes a pipeline as defined in section 2 or any other pipeline.
Exception
(3) Despite paragraph (1)(a), leave shall only be required if the holder sells, transfers or leases any part of its pipeline that is capable of being operated for the transmission of oil, gas or any substance, including water, incidental to the drilling for or production of oil or gas.
1994, c. 10, s. 5
148. Subsection 5.3(1) of the Act is replaced by the following:
Board guidelines and interpretation notes
5.3 (1) The National Energy Board may issue and publish, in any manner the Board considers appropriate, guidelines and interpretation notes with respect to the application and administration of section 5, 5.1 or 13.02 or any regulations made under section 13.17 or 14.
149. The Act is amended by adding the following after section 5.3:
Jurisdiction and Powers of the National Energy Board
Jurisdiction
5.31 (1) The National Energy Board has full and exclusive jurisdiction to inquire into, hear and determine any matter
(a) if it appears to the National Energy Board that any person failed to do any act, matter or thing required to be done by this Act, any regulation, order or direction made under this Act, or an operating licence or authorization issued under section 5, or that any person has done or is doing any act, matter or thing contrary to or in contravention of this Act, any regulation, order or direction made under this Act, or an operating licence or authorization issued under section 5; or
(b) if it appears to the National Energy Board that the circumstances may require the Board, in the public interest, to make any order or give any direction, leave, sanction or approval that by law it is authorized to make or give, or with respect to any act, matter or thing that is prohibited, sanctioned or required to be done by this Act, any regulation, order or direction made under this Act, or an operating licence or authorization issued under section 5.
Of its own motion
(2) The National Energy Board may, of its own motion, inquire into, hear and determine any matter or thing that under this Act it may inquire into, hear and determine.
Matters of law and fact
(3) For the purposes of this Act, the National Energy Board has full jurisdiction to hear and determine all matters, whether of law or of fact.
Mandatory orders
5.32 The National Energy Board may
(a) order and require any person to do, without delay, or within or at any specified time and in any manner set by the Board, any act, matter or thing that the person is or may be required to do under this Act, any regulation, order or direction made under this Act or an operating licence or authorization issued under section 5; and
(b) prohibit the doing or continuing of any act, matter or thing that is contrary to this Act, any regulation, order or direction made under this Act or an operating licence or authorization issued under section 5.
Committee’s decisions and orders
5.33 Sections 5.31 and 5.32 do not apply to any act, matter or thing required by or contrary to any decision or order of the Committee.
Confidentiality
5.34 In any proceedings with respect to Part 0.1, the National Energy Board may take any measures and make any order that it considers necessary to ensure the confidentiality of any information likely to be disclosed in the proceedings if the Board is satisfied that
(a) disclosure of the information could reasonably be expected to result in a material loss or gain to a person directly affected by the proceedings, or could reasonably be expected to prejudice the person’s competitive position; or
(b) the information is financial, commercial, scientific or technical information that is confidential information supplied to the National Energy Board and
(i) the information has been consistently treated as confidential information by a person directly affected by the proceedings, and
(ii) the Board considers that the person’s interest in confidentiality outweighs the public interest in disclosure of the proceedings.
Confidentiality — security
5.35 In respect of any order, or in any proceedings, of the National Energy Board with respect to Part 0.1, the Board may take any measures and make any order that it considers necessary to ensure the confidentiality of information that is contained in the order or is likely to be disclosed in the proceedings if the Board is satisfied that
(a) there is a real and substantial risk that disclosure of the information will impair the security of pipelines, buildings, structures or systems, including computer or communication systems, or methods employed to protect them; and
(b) the need to prevent disclosure of the information outweighs the public interest in disclosure of orders and proceedings of the National Energy Board.
Conditional orders, etc.
5.36 (1) Without limiting the generality of any provision of this Act that authorizes the National Energy Board to impose terms and conditions in respect of any operating licence or authorization issued under section 5 or any of its orders, the Board may direct in any operating licence, authorization or order that it or any portion or provision of it shall come into force at a future time or on the happening of any contingency, event or condition specified in the operating licence, authorization or order or on the performance to the satisfaction of the Board of any conditions or requirements that the Board may impose in the operating licence, authorization or order, and the Board may direct that the whole or any portion of the operating licence, authorization or order shall have force for a limited time or until the happening of a specified event.
Interim orders
(2) The National Energy Board may, instead of making an order final in the first instance, make an interim order, and may reserve its decision pending further proceedings in connection with any matter.
Documents
Documents
5.37 (1) A holder of an authorization to construct or operate a pipeline issued under paragraph 5(1)(b) shall keep, in a form and manner determined by the National Energy Board, any documents, including any records or books of account, that the Board requires and that contain information that is determined by the Board to be necessary for the administration of this Act and any regulations made under it.
Production and inspection
(2) The holder shall produce those documents to the National Energy Board, or make them available to the Board or its designated representative, for inspection or copying at a time and under conditions set by the Board.
150. The Act is amended by adding the following after section 13:
PART 0.1
TRAFFIC, TOLLS AND TARIFFS
Interpretation
Definitions
13.01 The following definitions apply in this Part.
“holder”« titulaire »
“holder” means a holder of an authorization to construct or operate a pipeline issued under paragraph 5(1)(b).
“tariff”« tarif »
“tariff” means a schedule of tolls, terms and conditions, classifications, practices or rules and regulations applicable to the provision of a service by a holder and includes rules respecting the calculation of tolls.
“toll”« droit »
“toll” includes any rate, charge or allowance charged or made
(a) for the shipment, transportation, transmission, care, handling or delivery of oil, gas or any substance, including water, incidental to the drilling for or production of oil or gas that is transmitted through a pipeline, or for storage or demurrage or the like;
(b) for the provision of a pipeline when the pipeline is available and ready to provide for the transmission of oil, gas or any substance, including water, incidental to the drilling for or production of oil or gas; and
(c) in respect of the purchase and sale of gas that is the property of a holder and that is transmitted by the holder through its pipeline, from which is subtracted the cost to the holder of the gas at the point where it enters the pipeline.
Powers of Board
Regulation of traffic, etc.
13.02 The National Energy Board may make orders with respect to all matters relating to traffic, tolls or tariffs.
Filing of Tariff
Tolls to be filed
13.03 (1) A holder shall not charge any tolls except tolls that are
(a) specified in a tariff that has been filed with the National Energy Board and is in effect; or
(b) approved by an order of the Board.
Tariff — gas
(2) If gas transmitted by a holder through its pipeline is the property of the holder, the holder shall file with the National Energy Board true copies of all the contracts it makes for the sale of the gas, at the time they are made, and any amendments to those contracts made from time to time, and the true copies constitute, for the purposes of this Part, a tariff under subsection (1).
Commencement of tariff
13.04 If a holder files a tariff with the National Energy Board and the holder proposes to charge a toll referred to in paragraph (b) of the definition “toll” in section 13.01, the Board may establish the day on which the tariff is to come into effect and the holder shall not begin charging the toll before that day.
Just and Reasonable Tolls
Tolls to be just and reasonable
13.05 All tolls shall be just and reasonable and shall always, under substantially similar circumstances and conditions with respect to all traffic of the same description carried over the same route, be charged equally to all persons at the same rate.
National Energy Board determinations
13.06 The National Energy Board may determine, as questions of fact, whether or not traffic is or has been carried out under substantially similar circumstances and conditions referred to in section 13.05, whether in any case a holder has or has not complied with the provisions of that section, and whether there has, in any case, been unjust discrimination as set out in section 13.1.
Interim tolls
13.07 If the National Energy Board has made an interim order authorizing a holder to charge tolls until a specified time or the happening of a specified event, the Board may, in any subsequent order, direct the holder
(a) to refund, in a manner satisfactory to the Board, any part of the tolls charged by the holder under the interim order that is in excess of the tolls determined by the Board to be just and reasonable, together with interest on the amount so refunded; or
(b) to recover in its tolls, in a manner satisfactory to the Board, the amount by which the tolls determined by the Board to be just and reasonable exceed the tolls charged by the holder under the interim order, together with interest on the amount so recovered.
Disallowance of Tariff
Disallowance of tariff
13.08 The National Energy Board may disallow any tariff or any portion of any tariff that it considers to be contrary to any of the provisions of this Act or any order of the Board and may require a holder, within a time fixed by the Board, to substitute for it a tariff satisfactory to the Board or may establish other tariffs in lieu of the tariff or the portion so disallowed.
Suspension of tariff
13.09 The National Energy Board may suspend any tariff or any portion of any tariff before or after the tariff goes into effect.
Discrimination
No unjust discrimination
13.1 A holder shall not make any unjust discrimination in tolls, service or facilities against any person or locality.
Burden of proof
13.11 If it is shown that a holder makes any discrimination in tolls, service or facilities against any person or locality, the burden of proving that the discrimination is not unjust lies on the holder.
No rebates, etc.
13.12 (1) No holder or shipper or an officer or employee, or an agent or mandatary, of a holder or shipper shall
(a) offer, grant, give, solicit, accept or receive a rebate, concession or discrimination whereby a person obtains transmission of oil, gas or any substance, including water, incidental to the drilling for or production of oil or gas by a holder at a rate less than that named in the tariffs then in force; or
(b) knowingly be party or privy to a false billing, false classification, false report or other device resulting in a rate being charged that is less than that named in the tariffs then in force.
Prosecution
(2) No prosecution shall be instituted for an offence under this section without leave of the National Energy Board.
Contracts Limiting Liabilities
Contracts limiting liability
13.13 (1) Except as provided in this section, no contract, condition or notice made or given by a holder impairing, restricting or limiting its liability in respect of the transmission of oil, gas or any substance, including water, incidental to the drilling for or production of oil or gas relieves the holder from its liability, unless that class of contract, condition or notice is included as a term or condition of its tariffs as filed or has been first authorized or approved by order of the National Energy Board.
National Energy Board may determine limits
(2) The National Energy Board may determine the extent to which the liability of a holder may be impaired, restricted or limited as provided in this section.
Terms and conditions
(3) The National Energy Board may establish the terms and conditions under which oil, gas or any substance, including water, incidental to the drilling for or production of oil or gas may be transmitted by a holder.
Transmission of Oil or Gas
Duty of holder of an operating licence or authorization under subsection 5(1)
13.14 (1) Subject to any exemptions or conditions that the National Energy Board may establish, a holder operating a pipeline for the transmission of oil shall, according to its powers, without delay and with due care and diligence, receive, transport and deliver all oil and any other substance, including water, incidental to the drilling for or production of oil offered for transmission by means of its pipeline.
Orders for transmission of commodities
(2) The National Energy Board may, by order, on any terms and conditions that it may specify in the order, require a holder operating a pipeline for the transmission of gas to receive, transport and deliver, according to its powers, gas and any other substance, including water, incidental to the drilling for or production of gas offered for transmission by means of its pipeline.
Extension of facilities
(3) If the National Energy Board finds that no undue burden will be placed on the holder by requiring the holder to do so and if it considers it necessary or desirable to do so in the public interest, the Board may require a holder operating a pipeline for the transmission of oil or gas to provide adequate and suitable facilities for
(a) the receipt, transmission and delivery of the oil, gas or any substance, including water, incidental to the drilling for or production of oil or gas offered for transmission by means of its pipeline;
(b) the storage of the oil, gas or any substance, including water, incidental to the drilling for or production of oil or gas; and
(c) the junction of its pipeline with other facilities for the transmission of the oil, gas or any substance, including water, incidental to the drilling for or production of oil or gas.
Transmission and Sale of Gas
Extension of services of gas pipeline companies
13.15 (1) If the National Energy Board considers it necessary or desirable to do so in the public interest, it may direct a holder operating a pipeline for the transmission of gas to extend or improve its transmission facilities to provide facilities for the junction of its pipeline with any facilities of, and sell gas to, any person or municipality engaged or legally authorized to engage in the local distribution of gas to the public, and for those purposes to construct branch lines to communities immediately adjacent to its pipeline, if the Board finds that to do so will not place an undue burden on the holder.
Limitation on extension
(2) Subsection (1) does not empower the National Energy Board to compel a holder to sell gas to additional customers if to do so would impair its ability to render adequate service to its existing customers.
Holder’s powers
13.16 A holder may, for the purposes of its undertaking and subject to the provisions of this Act, transmit oil, gas or any substance, including water, incidental to the drilling for or production of oil or gas by pipeline and regulate the time and manner in which it shall be transmitted and the tolls to be charged for the transmission.
Regulations
Regulations
13.17 The Governor in Council may make regulations for the purposes of this Part, designating as oil or gas any substance resulting from the processing or refining of hydrocarbons or coal if that substance
(a) is asphalt or a lubricant; or
(b) is a suitable source of energy by itself or when it is combined or used in association with something else.
Consequential Amendments
R.S., c. 36 (2nd Supp.)
Canada Petroleum Resources Act
1994, c. 10, s. 18
151. Subsection 101(2) of the Canada Petroleum Resources Act is replaced by the following:
Privileged information or documentation
(2) Subject to this section, information or documentation is privileged if it is provided for the purposes of this Act or the Canada Oil and Gas Operations Act, other than Part 0.1 of that Act, or any regulation made under either Act, or for the purposes of Part II.1 of the National Energy Board Act, whether or not the information or documentation is required to be provided.
R.S., c. N-7
National Energy Board Act
152. Section 18 of the English version of the National Energy Board Act is replaced by the following:
General or particular orders
18. Where the Board may make or issue any order or direction or prescribe any terms or conditions or do any other thing in relation to any person, the Board may do so, either generally or in any particular case or class of cases.
153. Paragraph 25(b) of the Act is replaced by the following:
(b) a document purporting to be certified by the Secretary, or by any other person authorized by the Board to certify documents for the purposes of this section, and sealed with the seal of the Board stating that a valid and subsisting document of authorization has or has not been issued by the Board to a person or persons named in the certified document, is evidence of the facts stated in it, without proof of the signature or official character of the person appearing to have signed the document and without further proof.
PART 10
1991, c. 22
AMENDMENTS TO THE FARM INCOME PROTECTION ACT
154. (1) The definition “agreement” in section 2 of the Farm Income Protection Act is replaced by the following:
“agreement”« accord »
“agreement”, unless the context indicates otherwise, means an agreement entered into under subsection 4(1);
(2) Section 2 of the Act is amended by adding the following in alphabetical order:
“financial institution”« institution financière »
“financial institution” has the same meaning as in section 2 of the Bank Act;
155. Paragraph 8(2)(b) of the Act is replaced by the following:
(b) Fund No. 2, to which shall be credited all amounts paid in respect of that producer by Canada or a province.
156. The heading “CAISSES ET COMPTE” before section 13 of the French version of the Act is replaced by the following:
CAISSES ET COMPTES
157. The heading before section 15 of the Act is replaced by the following:
Net Income Stabilization Account in the Accounts of Canada
158. Subsection 15(1) of the Act is replaced by the following:
Establishment
15. (1) If an agreement that provides for the establishment and administration by the Government of Canada of a net income stabilization account program in respect of an agricultural product or class of agricultural products indicates that the accounts of producers participating in the program are to be in the accounts of Canada, there shall be established in the accounts of Canada a Net Income Stabilization Account.
159. The Act is amended by adding the following after section 15:
Net Income Stabilization Accounts in Financial Institutions
Agreement with financial institutions
15.1 (1) If an agreement that provides for the establishment of a net income stabilization account program in respect of an agricultural product or class of agricultural products indicates that the accounts of producers participating in the program are to be in financial institutions, the Minister may enter into an agreement with one or more financial institutions to provide for their holding of Net Income Stabilization Accounts of producers participating in the program.
Contents — terms and conditions
(2) An agreement with a financial institution must set the terms and conditions required for the holding of Net Income Stabilization Accounts including, but not limited to, the prescribed terms and conditions and the following terms and conditions:
(a) the financial institution may hold only one Net Income Stabilization Account in respect of any particular producer; and
(b) the financial institution may permit withdrawals to be made from a Net Income Stabilization Account only as provided for in the agreement.
Contents — additional provisions
(3) In addition to the terms and conditions required by subsection (2), an agreement with a financial institution must provide for
(a) the nature of the investments that may be held in a Net Income Stabilization Account;
(b) the account transactions that the financial institution must perform in accordance with the agreement;
(c) the information that must be submitted to the Minister by the financial institution in the periods specified in the agreement;
(d) the Minister’s right of access to and right to audit any records held by the financial institution that contain information relating to the Net Income Stabilization Accounts held by it and the manner in which those rights are to be exercised;
(e) the penalties that may be imposed if the financial institution does not comply with the agreement;
(f) the terms and conditions respecting the amendment, termination or expiry of the agreement; and
(g) the manner of transferring Net Income Stabilization Accounts held by the financial institution on the termination or expiry of the agreement.
Limit of one Account
(4) A particular producer may hold only one Net Income Stabilization Account at financial institutions at any time in respect of the program to which the Account relates.
Payments to Her Majesty
(5) A financial institution that holds a Net Income Stabilization Account of a particular producer shall, on the direction of the Minister, pay from the Account to Her Majesty in right of Canada or in right of a province
(a) any amount that is owing by the producer in respect of amounts paid into the Account in excess of the producer’s entitlement under the program to which the Account relates or any other program established under this Act;
(b) any administrative fees or penalties under the program to which the Account relates or any other program in respect of which amounts were paid into the Account; or
(c) all or part of any other amount that is owing by the producer to Her Majesty.
No assignments, etc.
(6) Except for the purposes of the Agricultural Marketing Programs Act, an amount in a Net Income Stabilization Account of a producer may not be assigned or given as security, and any transaction that purports to do so is void to that extent.
Exemption from attachment, etc.
(7) An amount in a Net Income Stabilization Account of a producer is exempt from attachment, seizure and execution, except in the case of a producer who has the status of a bankrupt, or if the attachment, seizure or execution is for the purpose of satisfying the provisions of an agreement or court order relating to separation or divorce that provides for the division of the Account into separate Net Income Stabilization Accounts.
160. Subsection 16(1) of the French version of the Act is replaced by the following:
Ouverture
16. (1) Est ouvert parmi les comptes du Canada un compte intitulé « caisse d’assurance-revenu » — appelé la caisse au présent article — dans le cas où l’accord prévoit que le fédéral administrera un régime d’assurance-revenu pour un produit agricole ou une catégorie de produits agricoles.
PART 11
FEDERAL-PROVINCIAL FISCAL ARRANGEMENTS
R.S., c. F-8; 1995, c. 17, s. 45(1)
Amendments to the Federal-Provincial Fiscal Arrangements Act
2007, c. 29, s. 62
161. The description of D in the definition “total per capita fiscal capacity” in subsection 3.5(1) of the Federal-Provincial Fiscal Arrangements Act is replaced by the following:
D      is, with respect to Newfoundland and Labrador, any amount that may be paid to that province for that fiscal year under Part V of the Canada-Newfoundland Atlantic Accord Implementation Act;
162. Section 3.7 of the Act is amended by adding the following after subsection (3):
Deemed election — Nova Scotia
(3.1) Nova Scotia is deemed, on the day on which this subsection comes into force, to have made the election under subsection (3) in respect of the fiscal year beginning on April 1, 2008.
163. The Act is amended by adding the following after section 3.7:
Additional fiscal equalization payment
3.71 (1) If a province makes the election under subsection 3.7(3), an additional fiscal equalization payment for the period referred to in subsection (3) may be paid to that province equal to the amount by which
(a) the aggregate of the following amounts:
(i) the aggregate of the fiscal equalization amounts computed under section 3.72 for that province for all fiscal years in the period,
(ii) the aggregate of the amounts that would be paid to that province for all fiscal years in the period in accordance with sections 7 to 14 and 21 to 28 of the Nova Scotia and Newfoundland and Labrador Additional Fiscal Equalization Offset Payments Act as that Act read on April 1, 2007, computed as if the fiscal equalization payment for that province for each fiscal year in the period were equal to the fiscal equalization amount computed under section 3.72 for that province for that fiscal year, and
(iii) subject to subsection (2), the aggregate of the amounts, with respect to Newfoundland and Labrador, that would be paid to that province for all fiscal years in the period under Part V of the Canada-Newfoundland Atlantic Accord Implementation Act, as that Act read on April 1, 2007, computed as if the fiscal equalization payment for that province for each fiscal year in the period were equal to the fiscal equalization amount computed under section 3.72 for that province for that fiscal year, and computed in accordance with subsection 174(3) of the Budget and Economic Statement Implementation Act, 2007 if the conditions described in that subsection are met,
is greater than
(b) the aggregate of the following amounts:
(i) the aggregate of the fiscal equalization payments paid to that province for the period,
(ii) the aggregate of the amounts paid to that province for the period in accordance with sections 7 to 14 and 21 to 28 of the Nova Scotia and Newfoundland and Labrador Additional Fiscal Equalization Offset Payments Act, and
(iii) the aggregate of the amounts, with respect to Newfoundland and Labrador, paid to that province for the period under Part V of the Canada-Newfoundland Atlantic Accord Implementation Act.
Deeming
(2) For each fiscal year for which subsection 3.72(4) applies to Newfoundland and Labrador by reason of paragraph 3.72(6)(a), the amount that would be paid to that province under Part V of the Canada-Newfoundland Atlantic Accord Implementation Act is deemed to be zero for the purpose of subparagraph (1)(a)(iii).
Definition of “period”
(3) For the purpose of subsection (1), “period” means the period beginning on April 1 of the first fiscal year in respect of which the province makes the election under subsection 3.7(3) and ending on the earlier of
(a) in the case of
(i) Nova Scotia, March 31 of the fiscal year preceding the first fiscal year with respect to which it does not meet the conditions under paragraphs 12(1)(a) and (b) of the Nova Scotia and Newfoundland and Labrador Additional Fiscal Equalization Offset Payments Act and is not receiving any transitional payments under section 14 of that Act, and
(ii) Newfoundland and Labrador, March 31 of the fiscal year preceding the first fiscal year with respect to which it does not meet the conditions under paragraphs 26(1)(a) and (b) of the Nova Scotia and Newfoundland and Labrador Additional Fiscal Equalization Offset Payments Act and is not receiving any transitional payments under section 28 of that Act, and
(b) March 31, 2020.
Fiscal equalization amount
3.72 (1) For the purpose of this section and section 3.71, the fiscal equalization amount for a province for a fiscal year is the average of
(a) the greater of zero and the amount determined by the formula
(A - B) × C
where
A      is the per capita equalization standard for that fiscal year,
B      is the aggregate of the average annual per capita yield in that province for each revenue source for that fiscal year, and
C      is the average annual population of that province for that fiscal year, and
(b) the amount determined by the formula
D × [(E - F) × G] / H
where
D      is
(a) for the fiscal year beginning on April 1, 2006, the product obtained by multiplying $10,900,000,000 by 1.035, and
(b) for each subsequent fiscal year, the product obtained by multiplying the amount computed for the immediately preceding fiscal year by 1.035,
E      is the five-province per capita equalization standard for that fiscal year determined under subsection (3),
F      is the aggregate of the average annual per capita yield in that province for each revenue source for that fiscal year,
G      is the average annual population of that province for that fiscal year, and
H      is the aggregate of the amount for each of the provinces determined by the formula
(I - J) × K
where
I      is the five-province per capita equalization standard for that fiscal year determined under subsection (3),
J      is the aggregate of the average annual per capita yield in the province for each revenue source for that fiscal year, and
K      is the average annual population of the province for that fiscal year.
Clarification — paragraph (1)(a)
(2) For the purposes of paragraph (1)(a), the Minister shall determine the per capita equalization standard for a fiscal year by computing the fiscal equalization amount for each province for that fiscal year in the manner described in that paragraph and shall, in making that determination, ensure that
(a) the amount determined by the following formula would be the same with respect to every province for which a fiscal equalization amount is greater than zero:
A + (B / C)
where
A      is the aggregate of the average annual per capita yield in that province for each revenue source for that fiscal year,
B      is the fiscal equalization amount for that province for that fiscal year, and
C      is the average annual population of that province for that fiscal year; and
(b) the aggregate of the fiscal equalization amounts for all provinces for which the fiscal equalization amount is greater than zero for that fiscal year would be equal to
(i) for the fiscal year beginning on April 1, 2006, the product obtained by multiplying $10,900,000,000 by 1.035, and
(ii) for each subsequent fiscal year, the product obtained by multiplying the amount computed for the immediately preceding fiscal year by 1.035.
Clarification — paragraph (1)(b)
(3) For the purposes of paragraph (1)(b),
(a) the five-province per capita equalization standard for a fiscal year is the amount determined by the formula
(A + B + C + D + E ) / F
where
A      is the product of the average annual population of Ontario for that fiscal year and the aggregate of the average annual per capita yield for each revenue source in respect of Ontario for that fiscal year,
B      is the product of the average annual population of Quebec for that fiscal year and the aggregate of the average annual per capita yield for each revenue source in respect of Quebec for that fiscal year,
C      is the product of the average annual population of Manitoba for that fiscal year and the aggregate of the average annual per capita yield for each revenue source in respect of Manitoba for that fiscal year,
D      is the product of the average annual population of British Columbia for that fiscal year and the aggregate of the average annual per capita yield for each revenue source in respect of British Columbia for that fiscal year,
E      is the product of the average annual population of Saskatchewan for that fiscal year and the aggregate of the average annual per capita yield for each revenue source in respect of Saskatchewan for that fiscal year, and
F      is the aggregate of the average annual population for that fiscal year of Ontario, Quebec, Manitoba, British Columbia and Saskatchewan;
(b) if, for a province, the value determined for F in paragraph (1)(b) is greater than the value determined for E in that paragraph, the difference between those values in relation to that province is deemed to be zero; and
(c) if, for a province, the value determined for J in the description of H in paragraph (1)(b) is greater than the value determined for I in that description, the difference between those values in relation to that province is deemed to be zero.
Adjustment of revenue to be equalized
(4) Subject to subsections (5) and (6), if, for a fiscal year, the fiscal equalization amount for a province determined under subsection (1) is greater than zero and that province has seventy per cent or more of the average annual revenue base for all of the provinces in that fiscal year in respect of a revenue source, the revenue to be equalized from that revenue source for all of the provinces for the purpose of determining the average annual per capita yield for each province for that revenue source for that fiscal year is an amount equal to seventy per cent of the revenue to be equalized as otherwise determined from that revenue source for all of the provinces for each of the three immediately preceding fiscal years.
Nova Scotia
(5) For the purpose of calculating the additional fiscal equalization payment that may be paid to Nova Scotia under subsection 3.71(1),
(a) subsection (4) applies to Nova Scotia in respect of the revenue source referred to in paragraph (z.5) of the definition “revenue source” in subsection 3.9(1) only for those fiscal years in the period referred to in subsection 3.71(3) for which the application of subsection (4) would result in an increase in the amount calculated under paragraph 3.71(1)(a); and
(b) subsection (4) applies to Newfoundland and Labrador in respect of the revenue source referred to in paragraph (z.5) of the definition “revenue source” in subsection 3.9(1) only for those fiscal years for which that province makes the election under subsection 3.9(5).
Newfoundland and Labrador
(6) For the purpose of calculating the additional fiscal equalization payment that may be paid to Newfoundland and Labrador under subsection 3.71(1),
(a) subsection (4) applies to Newfoundland and Labrador in respect of the revenue source referred to in paragraph (z.5) of the definition “revenue source” in subsection 3.9(1) only for those fiscal years in the period referred to in subsection 3.71(3) for which the application of subsection (4) would result in an increase in the amount calculated under paragraph 3.71(1)(a); and
(b) subsection (4) applies to Nova Scotia in respect of the revenue source referred to in paragraph (z.5) of the definition “revenue source” in subsection 3.9(1) only for those fiscal years for which that province makes the election under subsection 3.9(5).
164. (1) Subsection 3.9(1) of the Act is amended by adding the following in alphabetical order:
“average annual revenue base”« assiette annuelle moyenne »
“average annual revenue base” means, in respect of a province for a revenue source for a fiscal year, the amount determined by the formula
(A + B + C) / 3
where
A      is the revenue base for the fiscal year that is one year prior to that fiscal year;
B      is the revenue base for the fiscal year that is two years prior to that fiscal year; and
C      is the revenue base for the fiscal year that is three years prior to that fiscal year.
“national average rate of tax”« taux d’imposition national moyen »
“national average rate of tax” means, in respect of a revenue source, the rate equal to the quotient obtained by dividing the aggregate of the revenue to be equalized for a revenue source for a fiscal year for all provinces by the revenue base in respect of that revenue source for that fiscal year for all provinces.
“revenue base”« assiette »
“revenue base” means, in respect of a revenue source for a province for a fiscal year, the measure of the relative capacity of that province to derive revenue from that revenue source for that fiscal year and may be defined more particularly by the regulations.
“revenue source”« source de revenu »
“revenue source” means any of the following sources from which provincial revenues are or may be derived:
(a) personal income taxes;
(b) corporation income taxes, and revenues derived from government business enterprises that are not included in any other paragraph of this definition;
(c) taxes on capital of corporations;
(d) general and miscellaneous sales taxes, harmonized sales taxes and amusement taxes;
(e) tobacco taxes;
(f) motive fuel taxes derived from the sale of gasoline;
(g) motive fuel taxes derived from the sale of diesel fuel;
(h) non-commercial motor vehicle licensing revenues;
(i) commercial motor vehicle licensing revenues;
(j) alcoholic beverage revenues;
(k) hospital and medical care insurance premiums;
(l) forestry revenues;
(m) conventional new oil revenues;
(n) conventional old oil revenues;
(o) heavy oil revenues;
(p) mined oil revenues;
(q) light and medium third tier oil revenues;
(r) heavy third tier oil revenues;
(s) revenues from domestically sold natural gas and exported natural gas;
(t) sales of Crown leases and reservations on oil and natural gas lands;
(u) oil and gas revenues other than those described in paragraphs (m) to (t);
(v) mining revenues;
(w) water power rentals;
(x) insurance premium taxes;
(y) payroll taxes;
(z) provincial and local government property taxes;
(z.1) race track taxes;
(z.2) revenues from lottery ticket sales;
(z.3) revenues, other than those described in paragraphs (z.1) and (z.2), from games of chance;
(z.4) miscellaneous provincial taxes and revenues, provincial revenues from sales of goods and services, local government rev-enues from sales of goods and services, and miscellaneous local government taxes and revenues; and
(z.5) revenues of the Government of Canada from any of the sources referred to in this definition that are shared by Canada with the provinces.
“revenue to be equalized”« revenu sujet à péréquation »
“revenue to be equalized” means, in respect of a revenue source for a province for a fiscal year, the revenue, as determined by the Minister, derived by that province for that fiscal year from that revenue source and may be defined more particularly by the regulations.
2007, c. 29, s. 62
(2) Subsections 3.9(2) to (7) of the Act are replaced by the following:
Deduction in computing revenue to be equalized
(2) In computing the revenue to be equalized from personal incomes taxes — referred to in paragraph (a) of the definition “revenue source” in subsection (1) — for all the provinces for a fiscal year, the Minister may deduct from the amount that, but for this subsection, would be the revenue to be equalized from that revenue source for all the provinces for that fiscal year, the amount, as estimated by the Minister, by which the revenues derived by Canada under the Income Tax Act from personal income taxes for the taxation year ending in that fiscal year are less than the revenues that would have been derived by Canada under that Act from those taxes if no special abatement of those taxes had been provided under subsection 120(2) of that Act or Part VI of this Act.
Municipal property taxes and miscellaneous revenues and taxes
(3) For the purpose of determining the revenue to be equalized derived by a province for a fiscal year from the revenue sources referred to in paragraphs (a) and (b), the following are deemed to be revenues derived by that province for that fiscal year from those revenue sources:
(a) in the case of the part of the revenue source referred to in paragraph (z) of the definition “revenue source” in subsection (1) that consists of local government property taxes, the aggregate of the revenue derived from that part of the revenue source by each municipality, board, commission or other local authority in that province that has power to levy property taxes for the financial year of each such local authority ending in that fiscal year; and
(b) in the case of the part of the revenue source referred to in paragraph (z.4) of the definition “revenue source” in subsection (1) that consists of local government revenues from sales of goods and services and miscellaneous local government taxes and revenues, the aggregate of the revenue derived from that part of the revenue source by each municipality, board, commission or other local authority in that province that has power to derive those revenues for the financial year of each such local authority ending in that fiscal year.
Adjustment of revenue to be equalized
(4) Subject to subsection (5), if, for a fiscal year, a province would be entitled to receive a fiscal equalization payment under section 3.6, computed as if that section applied to that province, and if that province has seventy per cent or more of the average annual revenue base for all of the provinces in that fiscal year in respect of a revenue source, the revenue to be equalized from that revenue source for all of the provinces for the purpose of determining the average annual per capita yield for each province for that revenue source for that fiscal year is an amount equal to seventy per cent of the revenue to be equalized as otherwise determined from that revenue source for all of the provinces for each of the three immediately preceding fiscal years.
Election
(5) In order for subsection (4) to apply to Nova Scotia or to Newfoundland and Labrador in respect of the revenue source referred to in paragraph (z.5) of the definition “revenue source” in subsection (1), Nova Scotia or Newfoundland and Labrador, as the case may be, shall make an election at the prescribed time and in the prescribed manner.
Validity of election
(6) An election under subsection (5) by Nova Scotia or Newfoundland and Labrador in respect of a fiscal year is not valid if it has made an election under subsection 3.7(3) for that fiscal year or any previous fiscal year or if it makes an election under subsection 3.7(3) for that fiscal year.
Effect of election under subsection (5)
(7) Despite any provision of the Canada-Newfoundland Atlantic Accord Implementation Act, if Newfoundland and Labrador makes the election described in subsection (5) for a fiscal year, the fiscal equalization offset payment that may otherwise be payable to the province under that Act is, for that fiscal year, zero.
2007, c. 29, s. 62
165. Sections 3.91 to 3.93 of the Act are replaced by the following:
Time of calculation — ss. 3.2 to 3.4
3.91 (1) At a time determined by the Minister, no later than three months before the beginning of a fiscal year, the Minister shall calculate
(a) the fiscal equalization payment that may be paid to a province under sections 3.2 to 3.4 for that fiscal year on the basis that the province makes an election under subsection 3.2(2) for that fiscal year; and
(b) the fiscal equalization payment that may be paid to the province under those sections for that fiscal year on the basis that the province does not make an election under that subsection for that fiscal year.
Deeming
(2) Subsection (1) applies to Nova Scotia and Newfoundland and Labrador as if sections 3.2 to 3.4 applied to each of those provinces.
Time of calculation — s. 3.6
(3) At a time determined by the Minister, no later than three months before the end of a fiscal year, the Minister shall calculate
(a) the fiscal equalization payment that may be paid to Nova Scotia and Newfoundland and Labrador under section 3.6 for that fiscal year on the basis that both make an election under subsection 3.9(5) for that fiscal year;
(b) the fiscal equalization payment that may be paid to Nova Scotia and Newfoundland and Labrador under section 3.6 for that fiscal year on the basis that only Nova Scotia makes an election under subsection 3.9(5) for that fiscal year;
(c) the fiscal equalization payment that may be paid to Nova Scotia and Newfoundland and Labrador under section 3.6 for that fiscal year on the basis that only Newfoundland and Labrador makes an election under subsection 3.9(5) for that fiscal year; and
(d) the fiscal equalization payment that may be paid to Nova Scotia and Newfoundland and Labrador under section 3.6 for that fiscal year on the basis that neither makes an election under subsection 3.9(5) for that fiscal year.
Cessation
(4) Subsection (3) ceases to apply in respect of Nova Scotia or Newfoundland and Labrador if section 3.6 ceases to apply in respect of that province.
Time of calculation — s. 3.72
(5) The fiscal equalization amounts referred to in section 3.72 for a fiscal year shall be calculated no later than three months before the end of the fiscal year.
Underpayment
3.92 If the Minister determines that the Minister has underpaid any amounts payable to a province under this Part, the Minister may, within the prescribed time and in the prescribed manner, pay that province an amount equal to the underpayment.
Overpayment
3.93 If the Minister determines that the Minister has overpaid any amounts paid to a province under this Part, the Minister may recover the amount of that overpayment
(a) within the prescribed time and in the prescribed manner, from any amount payable under this Act to that province; or
(b) from that province as a debt due to Her Majesty in right of Canada.
166. The Act is amended by adding the following after section 3.95:
Day of election
3.96 An election under this Part is deemed to have been made on the day on which the election is received by the Minister.
Deeming — final computation
3.97 For the purpose of the Canada-Newfoundland Atlantic Accord Implementation Act and the Nova Scotia and Newfoundland and Labrador Additional Fiscal Equalization Offset Payments Act, the final computation of the amount of the fiscal equalization payment for a fiscal year is deemed to have been made on March 31 of that fiscal year.
2007, c. 29, s. 62
167. Sections 4.4 and 4.5 of the Act are replaced by the following:
Underpayment
4.4 If the Minister determines that the Minister has underpaid any amounts payable to a territory under this Part, the Minister may, within the prescribed time and in the prescribed manner, pay that territory an amount equal to the underpayment.
Overpayment
4.5 If the Minister determines that the Minister has overpaid any amounts paid to a territory under this Part, the Minister may recover the amount of that overpayment
(a) within the prescribed time and in the prescribed manner, from any amount payable under this Act to that territory; or
(b) from that territory as a debt due to Her Majesty in right of Canada.
1997, c. 10, s. 264(1); 2007, c. 29, s. 73
168. Paragraphs 40(a.2) to (b) of the Act are replaced by the following:
(a.2) providing for the provincial or territo-rial revenues that are derived from, or are deemed to be derived from, the revenue sources referred to in each paragraph of the definition “revenue source” in subsections 3.5(1), 3.9(1) and 4(1);
(a.3) amending the definition “revenue source” in subsection 3.9(1) by dividing a revenue source set out in a paragraph of that definition into two or more separate revenue sources;
(b) respecting the calculation and payment to a province of advances on account of any amount that may become payable to the province under this Act, an administration agreement, a reciprocal taxation agreement or a sales tax harmonization agreement and the adjustment, by way of reduction or set off, of other payments to the province because of those advances;
(b.1) respecting the recovery of overpayments;
2007, c. 29
Amendments to the Budget Implementation Act, 2007
169. Section 78 of the Budget Implementation Act, 2007 is repealed.
170. Section 83 of the Act and the heading before it are repealed.
171. Section 84 of the Act is replaced by the following:
Newfoundland and Labrador
84. (1) Sections 79 and 82 come into force, or are deemed to have come into force, on April 1 of the first fiscal year in respect of which Newfoundland and Labrador makes the election under subsection 3.7(3) of the Federal-Provincial Fiscal Arrangements Act.
Notice
(2) The Minister of Finance shall publish in the Canada Gazette the date on which sections 79 and 82 come into force.
Nova Scotia
(3) Section 81 comes into force, or is deemed to have come into force, on April 1, 2008.
1987, c. 3
Consequential Amendment to the Canada-Newfoundland Atlantic Accord Implementation Act
2004, c. 22, s. 6
172. Section 220 of the Canada-Newfoundland Atlantic Accord Implementation Act is replaced by the following:
Calculation
220. The fiscal equalization offset payment that is to be paid to Her Majesty in right of the Province for a fiscal year pursuant to section 219 is the amount, as determined by the Federal Minister, equal to the aggregate of
(a) the amount, if any, by which
(i) the fiscal equalization payment that would be received by Her Majesty in right of the Province for the fiscal year if the amount of that payment were determined in accordance with section 3.2 of the Federal-Provincial Fiscal Arrangements Act, without regard to section 3.4 of that Act,
is less than
(ii) where the average of the per capita fiscal capacity of the Province for the fiscal years taken into account in the calculation of the fiscal equalization payment for that fiscal year is less than or equal to 70 per cent of the average, for those fiscal years, of the national average per capita fiscal capacity, 95 per cent,
(iii) where the average of the per capita fiscal capacity of the Province for the fiscal years taken into account in the calculation of the fiscal equalization payment for that fiscal year is less than or equal to 75 per cent but greater than 70 per cent of the average, for those fiscal years, of the national average per capita fiscal capacity, 90 per cent, or
(iv) where the average of the per capita fiscal capacity of the Province for the fiscal years taken into account in the calculation of the fiscal equalization payment for that fiscal year is greater than 75 per cent of the average, for those fiscal years, of the national average per capita fiscal capacity, 85 per cent
of the aggregate of
(v) the fiscal equalization payment that would be received by Her Majesty in right of the Province for the fiscal year immediately preceding the fiscal year if the amount of that payment were determined in accordance with section 3.2 of the Federal-Provincial Fiscal Arrangements Act, without regard to section 3.4 of that Act, as if
(A) in the case where the province makes the election under subsection 3.2(2) of that Act for the fiscal year, the province made the election under subsection 3.2(2) of that Act for the fiscal year immediately preceding the fiscal year, or
(B) in the case where the province does not make the election under subsection 3.2(2) of that Act for the fiscal year, the province did not make the election under subsection 3.2(2) of that Act for the fiscal year immediately preceding the fiscal year, and
(vi) the amount computed in accordance with this paragraph for the fiscal year immediately preceding the fiscal year as this paragraph read for that fiscal year, and
(b) the phase-out portion, in respect of the fiscal year, of the amount, as determined by the Federal Minister, by which
(i) the aggregate of the fiscal equalization payment that would be received by Her Majesty in right of the Province for the fiscal year immediately preceding the fiscal year if the amount of that payment were determined in accordance with section 3.2 of the Federal-Provincial Fiscal Arrangements Act, without regard to section 3.4 of that Act, and the amount computed in accordance with paragraph (a) for the fiscal year immediately preceding the fiscal year, as that paragraph read for that fiscal year,
is greater than
(ii) the aggregate of
(A) the fiscal equalization payment that would be received by Her Majesty in right of the Province for the fiscal year if the amount of that payment were determined in accordance with section 3.2 of the Federal-Provincial Fiscal Arrangements Act, without regard to section 3.4 of that Act, as if 
(I) in the case where the province makes the election under subsection 3.2(2) of that Act for the fiscal year, the province made the election under subsection 3.2(2) of that Act for the fiscal year immediately preceding the fiscal year, or
(II) in the case where the province does not make the election under subsection 3.2(2) of that Act for the fiscal year, the province did not make the election under subsection 3.2(2) of that Act for the fiscal year immediately preceding the fiscal year, and
(B) the amount computed in accordance with paragraph (a) for the fiscal year.
Transitional Provisions
Calculation re fiscal year 2008-2009
173. If section 165 of this Act comes into force after a calculation has already been made under section 3.91 of the Federal-Provincial Fiscal Arrangements Act of the fiscal equalization payment that may be paid to a province under section 3.6 of that Act for the fiscal year beginning on April 1, 2008, the Minister of Finance may, under section 3.91 of that Act, as enacted by section 165 of this Act, recalculate the fiscal equalization payment that may be paid to the province under section 3.6 of the Federal-Provincial Fiscal Arrangements Act for that fiscal year.
Effect of election by Newfoundland and Labrador — fiscal year 2007-2008
174. (1) For the fiscal year that begins on April 1, 2007, if Newfoundland and Labrador makes the election under subsection 3.7(1) of the Federal-Provincial Fiscal Arrangements Act,
(a) section 220 of the Canada-Newfoundland Atlantic Accord Implementation Act shall be read as follows:
220. The fiscal equalization offset payment that is to be paid to Her Majesty in right of the Province for a fiscal year pursuant to section 219 is the amount, as determined by the Federal Minister, equal to the aggregate of
(a) the amount, if any, by which
(i) the fiscal equalization payment that would be received by Her Majesty in right of the Province for the fiscal year if the amount of that payment were determined in accordance with section 3.2 of the Federal-Provincial Fiscal Arrangements Act, without regard to section 3.4 of that Act,
is less than
(ii) where the average of the per capita fiscal capacity of the Province for the fiscal years taken into account in the calculation of the fiscal equalization payment for that fiscal year is less than or equal to 70 per cent of the average, for those fiscal years, of the national average per capita fiscal capacity, 95 per cent,
(iii) where the average of the per capita fiscal capacity of the Province for the fiscal years taken into account in the calculation of the fiscal equalization payment for that fiscal year is less than or equal to 75 per cent but greater than 70 per cent of the average, for those fiscal years, of the national average per capita fiscal capacity, 90 per cent, or
(iv) where the average of the per capita fiscal capacity of the Province for the fiscal years taken into account in the calculation of the fiscal equalization payment for that fiscal year is greater than 75 per cent of the average, for those fiscal years, of the national average per capita fiscal capacity, 85 per cent
of the aggregate of the fiscal equalization payment that would be received by Her Majesty in right of the Province under Part I of the Federal-Provincial Fiscal Arrangements Act for the fiscal year immediately preceding the fiscal year and the amount computed in accordance with this paragraph for the fiscal year immediately preceding the fiscal year as this paragraph read for that fiscal year, and
(b) the phase-out portion, in respect of the fiscal year, of the amount, as determined by the Federal Minister, by which
(i) the aggregate of the fiscal equalization payment that would be received by Her Majesty in right of the Province under Part I of the Federal-Provincial Fiscal Arrangements Act for the fiscal year immediately preceding the fiscal year and the amount computed in accordance with paragraph (a) for the fiscal year immediately preceding the fiscal year as that paragraph read for that fiscal year
is greater than
(ii) the aggregate of the fiscal equalization payment that would be received by Her Majesty in right of the Province if the amount of that payment were determined in accordance with section 3.2 of the Federal-Provincial Fiscal Arrangements Act, without regard to section 3.4 of that Act, for the fiscal year and the amount computed in accordance with paragraph (a) for the fiscal year.
(b) a reference to “average” in section 220 of the Canada-Newfoundland Atlantic Accord Implementation Act, except within the expression “national average per capita fiscal capacity”, shall be considered to mean a weighted average where the most recent fiscal year that is taken into account in the calculation of the fiscal equalization payment shall be weighted at 50% and each of the other two fiscal years that are taken into account in the calculation of the fiscal equalization payment shall be weighted at 25%; and
(c) the definition “fiscal equalization payment” in section 18 of the Nova Scotia and Newfoundland and Labrador Additional Fiscal Equalization Offset Payments Act shall be read as follows:
“fiscal equalization payment” means
(a) for the purposes of section 22, the fiscal equalization payment that would be received by the Province for a fiscal year if the amount of that payment were determined in accord-ance with section 3.2 of the Federal-Provincial Fiscal Arrangements Act, without regard to section 3.4 of that Act; and
(b) for the purposes of sections 24 to 26, the fiscal equalization payment that would be received by the Province for a fiscal year under Part I of the Federal-Provincial Fiscal Arrangements Act if the Province’s total per capita fiscal capacity were the amount determined by the formula
A + B + (C / F)
where
A,      B, C and F have the same meaning as in the definition “total per capita fiscal capacity” in subsection 3.5(1) of that Act.
Effect of election by Nova Scotia — fiscal year 2007-2008
(2) For the fiscal year that begins on April 1, 2007, if Nova Scotia makes the election under subsection 3.7(1) of the Federal-Provincal Fiscal Arrangements Act, the definition “fiscal equalization payment” in section 4 of the Nova Scotia and Newfoundland and Labrador Additional Fiscal Equalization Offset Payments Act shall be read as follows:
“fiscal equalization payment” means 
(a) for the purposes of section 8, the fiscal equalization payment that would be received by the Province for a fiscal year if the amount of that payment were determined in accord-ance with section 3.2 of the Federal-Provincial Fiscal Arrangements Act, without regard to section 3.4 of that Act; and
(b) for the purposes of sections 10 to 12, the fiscal equalization payment that would be received by the Province for a fiscal year under Part I of the Federal-Provincial Fiscal Arrangements Act if the Province’s total per capita fiscal capacity were the amount determined by the formula
A + B + (C / F)
where
A,      B, C and F have the same meaning as in the definition “total per capita fiscal capacity” in subsection 3.5(1) of that Act.
Effect of election by Newfoundland and Labrador — fiscal year 2008-2009
(3) For the fiscal year that begins on April 1, 2008, if Newfoundland and Labrador does not make the election under subsection 3.7(3) of the Federal-Provincial Fiscal Arrangements Act and made, in respect of the preceding fiscal year, the election under subsection 3.7(1) of that Act,
(a) the portion of paragraph 220(a) of the Canada-Newfoundland Atlantic Accord Implementation Act after subparagraph (iv) shall be read as follows:
of the aggregate of the fiscal equalization payment that would be received by Her Majesty in right of the Province under section 3.1 of the Federal-Provincial Fiscal Arrangements Act for the fiscal year immediately preceding the fiscal year and the amount computed in accordance with this paragraph for the fiscal year immediately preceding the fiscal year as this paragraph read for that fiscal year, and
(b) subparagraph 220(b)(i) of that Act shall be read as follows:
(i) the aggregate of the fiscal equalization payment that would be received by Her Majesty in right of the Province under section 3.1 of the Federal-Provincial Fiscal Arrangements Act for the fiscal year immediately preceding the fiscal year and the amount computed in accordance with paragraph (a) for the fiscal year immediately preceding the fiscal year as that paragraph read for that fiscal year
Coming into Force
Newfoundland and Labrador
175. (1) Section 172 comes into force, or is deemed to have come into force, on April 1 of the first fiscal year in respect of which Newfoundland and Labrador makes the election under subsection 3.7(3) of the Federal-Provincial Fiscal Arrangements Act.
Notice
(2) The Minister of Finance shall publish in the Canada Gazette the date on which section 172 comes into force.
PART 12
2004, c. 26
AMENDMENTS TO THE CANADA EDUCATION SAVINGS ACT
176. The Canada Education Savings Act is amended by adding the following after section 12:
Collection of information
12.1 If the Minister considers it advisable, the Minister may, subject to conditions agreed on by the Minister and the Minister of National Revenue, collect the Social Insurance Number of any registered education savings plan subscriber as well as any prescribed information, for the administration of section 146.1 and Parts X.4 and X.5 of the Income Tax Act.
177. Section 13 of the Act is amended by striking out the word “and” at the end of paragraph (j), by adding the word “and” at the end of paragraph (k) and by adding the following after paragraph (k):
(l) specifying information that the Minister may collect under section 12.1.
PART 13
PRIVATE-PUBLIC PARTNERSHIPS
Payments
178. There may be paid out of the Consolidated Revenue Fund, on the requisition of the Minister of Finance, a sum not exceeding five million dollars, to an entity designated by the Minister of Finance, to facilitate public-private partnership projects in respect of that entity’s operating and capital expenditures for each of fiscal years 2007-2008 and 2008-2009.
PART 14
TAX AMENDMENTS TO IMPLEMENT THE 2007 ECONOMIC STATEMENT
Amendments Relating to Income Tax
R.S., c. 1 (5th Supp.)
Income Tax Act
179. (1) Paragraph 117(2)(a) of the Income Tax Act is replaced by the following:
(a) 15% of the amount taxable, if the amount taxable is equal to or less than the amount determined for the taxation year in respect of $36,378;
(2) Subsection (1) applies to the 2007 and subsequent taxation years.
180. (1) Paragraphs 118(3.1)(c) to (f) of the Act are replaced by the following:
(c) for the 2007 and 2008 taxation years, to be replaced by $9,600;
(d) for the 2009 taxation year, to be replaced by $10,100; and
(e) for each of the 2010 and subsequent taxation years, to be replaced by the amount that is the amount that would be determined for that description for those years in respect of the particular amount by applying section 117.1 (without reference to subsection 117.1(3)) to the amount determined under this subsection in respect of the amount for the immediately preceding taxation year.
(2) Paragraphs 118(3.2)(c) to (f) of the Act are replaced by the following:
(c) for the 2007 and 2008 taxation years, to be replaced by $9,600;
(d) for the 2009 taxation year, to be replaced by $10,100; and
(e) for each of the 2010 and subsequent taxation years, to be replaced by the amount that is the amount that would be determined for that description for those years in respect of the particular amount by applying section 117.1 (without reference to subsection 117.1(3)) to the amount determined under this subsection in respect of the amount for the immediately preceding taxation year.
(3) Subsections (1) and (2) apply to the 2007 and subsequent taxation years.
181. (1) Paragraphs (b) to (e) of the definition “general rate reduction percent-age” in subsection 123.4(1) of the Act are replaced by the following:
(b) that proportion of 8.5% that the number of days in the taxation year that are in 2008 is of the number of days in the taxation year,
(c) that proportion of 9% that the number of days in the taxation year that are in 2009 is of the number of days in the taxation year,
(d) that proportion of 10% that the number of days in the taxation year that are in 2010 is of the number of days in the taxation year,
(e) that proportion of 11.5% that the number of days in the taxation year that are in 2011 is of the number of days in the taxation year, and
(f) that proportion of 13% that the number of days in the taxation year that are after 2011 is of the number of days in the taxation year.
(2) Subsection (1) applies to the 2008 and subsequent taxation years.
182. (1) Paragraphs 125(1.1)(b) and (c) of the Act are replaced by the following:
(b) that proportion of 17% that the number of days in the taxation year that are after 2007 is of the number of days in the taxation year.
(2) Subsection (1) applies to the 2008 and subsequent taxation years.
Amendments to Implement the GST/HST Rate Reduction
R.S., c. E-15
Excise Tax Act
2006, c. 4, s. 2(1)
183. (1) The description of G in paragraph (a) of the definition “basic tax content” in subsection 123(1) of the Excise Tax Act is amended by striking out the word “and” at the end of clause (A) and by replacing clause (B) with the following:
(B) 6%, if the amount determined for D is included, or would be included if the tax became payable, in the description of A in subsection 225.2(2) for a reporting period of the selected listed financial institution that ends after June 30, 2006, but before January 1, 2008, and
(C) 5%, in any other case,
2006, c. 4, s. 2(2)
(2) The description of P in paragraph (b) of the definition “basic tax content” in subsection 123(1) of the Act is amended by striking out the word “and” at the end of clause (A) and by replacing clause (B) with the following:
(B) 6%, if the amount determined for M is included, or would be included if the tax became payable, in the description of A in subsection 225.2(2) for a reporting period of the selected listed financial institution that ends after June 30, 2006, but before January 1, 2008, and
(C) 5%, in any other case,
(3) Subsections (1) and (2) come into force, or are deemed to have come into force, on January 1, 2008.
2006, c. 4, s. 3(1)
184. (1) Subsection 165(1) of the Act is replaced by the following:
Imposition of goods and services tax
165. (1) Subject to this Part, every recipient of a taxable supply made in Canada shall pay to Her Majesty in right of Canada tax in respect of the supply calculated at the rate of 5% on the value of the consideration for the supply.
(2) Subsection (1) applies
(a) to any supply (other than a supply deemed under section 191 of the Act to have been made) made on or after January 1, 2008;
(b) for the purposes of calculating tax in respect of any supply (other than a supply by way of sale of real property) made before January 1, 2008, but only in respect of the portion of the tax that
(i) becomes payable on or after January 1, 2008, without having been paid before that day, or
(ii) is paid on or after January 1, 2008, without having become payable;
(c) for the purposes of calculating tax in respect of any supply (other than a supply deemed under Part IX of the Act to have been made) by way of sale of real property made before January 1, 2008, if ownership and possession of the property are transferred on or after January 1, 2008, to the recipient under the agreement for the supply, unless the supply is a supply of a residential complex pursuant to an agreement of purchase and sale, evidenced in writing, entered into on or before October 30, 2007;
(d) for the purposes of determining, under section 181.1 of the Act, tax or an input tax credit in respect of a supply of property or a service in respect of which tax became payable on or after January 1, 2008;
(e) for the purposes of the description of A in clause 184.1(2)(d)(i)(A) of the Act in respect of a person acting as a surety under a performance bond in respect of a contract for a particular taxable supply of construction services if a contract payment (within the meaning of paragraph 184.1(2)(a) of the Act) becomes due or is paid without having become due to the person on or after January 1, 2008, by reason of the person carrying on the particular construction;
(f) to any supply by way of sale of a residential complex, which is a single unit residential complex (as defined in subsection 123(1) of the Act) or a residential condominium unit, deemed under subsection 191(1) of the Act to have been made on or after January 1, 2008, unless the supply is deemed to have been made as a consequence of the builder giving possession of the complex to a person under an agreement, entered into on or before October 30, 2007, for the supply by way of sale of the building or part of it in which the residential unit forming part of the complex is situated;
(g) to any supply by way of sale of a residential condominium unit deemed under subsection 191(2) of the Act to have been made on or after January 1, 2008, unless possession of the unit was given to the particular person referred to in that subsection before January 1, 2008;
(h) to any supply by way of sale of a residential complex deemed under subsection 191(3) of the Act to have been made on or after January 1, 2008, unless the supply is deemed to have been made as a consequence of the builder giving possession of a residential unit in the complex to a person under an agreement for the supply by way of sale of the building or part of it forming part of the complex and
(i) the agreement was entered into on or before October 30, 2007, or
(ii) another agreement for the supply by way of sale of the building or part of it forming part of the complex was entered into by the builder and another person
(A) on or before May 2, 2006, and that other agreement was not terminated before July 1, 2006, or
(B) on or before October 30, 2007, and that other agreement was not terminated before January 1, 2008;
(i) to any supply by way of sale of an addition to a residential complex deemed under subsection 191(4) of the Act to have been made on or after January 1, 2008, unless the supply is deemed to have been made as a consequence of the builder giving possession of a residential unit in the addition to a person under an agreement for the supply by way of sale of the building or part of it forming part of the complex and
(i) the agreement was entered into on or before October 30, 2007, or
(ii) another agreement for the supply by way of sale of the building or part of it forming part of the addition was entered into by the builder and another person
(A) on or before May 2, 2006, and that other agreement was not terminated before July 1, 2006, or
(B) on or before October 30, 2007, and that other agreement was not terminated before January 1, 2008;
(j) for the purposes of calculating tax on the cost to another person of supplying property or a service to a financial institution under paragraph (c) of the description of A in subsection 225.2(2) of the Act for a reporting period of the financial institution that ends on or after January 1, 2008;
(k) for the purposes of the description of E in subsection 225.2(2) of the Act in determining the net tax of a financial institution for a reporting period that ends on or after January 1, 2008;
(l) for the purposes of the description of A in subsection 253(1) and subparagraphs 253(2)(a)(ii) and (c)(ii) of the Act in determining the amount of a rebate payable under subsection 253(1) of the Act for a calendar year after 2007;
(m) for the purposes of subparagraphs (i) and (ii) of the description of C in subsection 21.3(2) of the Streamlined Accounting (GST/HST) Regulations in determining, pursuant to that subsection, an amount of tax that became payable, or was paid without having become payable, by a registrant during reporting periods ending after 2007, except that for the reporting period of the registrant that includes January 1, 2008, the formula and the descriptions of A, B, C and D in that subsection shall be read as follows:
(A × B) + (C × D)
where
A      is
(a) if tax under subsection 165(2) or section 212.1 of the Act was payable in respect of the supply or importation, 14/114, and
(b) in any other case, 6/106,
B      is the total of all amounts each of which is
(a) the consideration that became due, or was paid without having become due, by the registrant during that period but before January 1, 2008, in respect of the supply of the property or service to the registrant,
(b) the tax under Division II or III that became payable, or was paid without having become payable, by the registrant during that period but before January 1, 2008, in respect of the supply or importation of the property or service,
(c) in the case of tangible personal property that was imported by the registrant, the amount of a tax or duty imposed in respect of the property under the Act (other than Part IX), the Customs Act, the Special Import Measures Act or any other law relating to customs, that became due or was paid without having become due, by the registrant during that period but before January 1, 2008,
(d) the amount of a tax, duty or fee prescribed by paragraph 3(b) or (c) of the Taxes, Duties and Fees (GST/HST) Regulations that became due, or was paid without having become due, by the registrant during that period but before January 1, 2008, in respect of the property or service, other than tax imposed under an Act of a legislature of a province to the extent that the tax is recoverable by the registrant under that Act,
(e) a reasonable gratuity paid by the registrant during that period but before January 1, 2008, in connection with the supply, or
(f) interest, a penalty or other amount paid by the registrant during that period but before January 1, 2008, if the amount was charged to the registrant by the supplier because an amount of consideration, or an amount of a tax, duty or fee referred to in paragraph (c) or (d), that was payable in respect of the supply or importation was overdue,
C      is
(a) if tax under subsection 165(2) or section 212.1 of the Act was payable in respect of the supply or importation, 13/113, and
(b) in any other case, 5/105, and
D      is the total of all amounts each of which is
(a) the consideration that became due, or was paid without having become due, by the registrant during that period but on or after January 1, 2008, in respect of the supply of the property or service to the registrant,
(b) the tax under Division II or III that became payable, or was paid without having become payable, by the registrant during that period but on or after January 1, 2008, in respect of the supply or importation of the property or service,
(c) in the case of tangible personal property that was imported by the registrant, the amount of a tax or duty imposed in respect of the property under the Act (other than Part IX), the Customs Act, the Special Import Measures Act or any other law relating to customs, that became due, or was paid without having become due, by the registrant during that period but on or after January 1, 2008,
(d) the amount of a tax, duty or fee prescribed by paragraph 3(b) or (c) of the Taxes, Duties and Fees (GST/HST) Regulations that became due, or was paid without having become due, by the registrant during that period but on or after January 1, 2008, in respect of the property or service, other than tax imposed under an Act of a legislature of a province to the extent that the tax is recoverable by the registrant under that Act,
(e) a reasonable gratuity paid by the registrant during that period but on or after January 1, 2008, in connection with the supply, or
(f) interest, a penalty or other amount paid by the registrant during that period but on or after January 1, 2008, if the amount was charged to the registrant by the supplier because an amount of consideration, or an amount of a tax, duty or fee referred to in paragraph (c) or (d), that was payable in respect of the supply or importation was overdue.
(n) for the purposes of subparagraphs (i) and (ii) of the description of C in paragraph 21.3(4)(b) of the Streamlined Accounting (GST/HST) Regulations in determining an amount excluded under subsection 21.3(4) of those Regulations from the determination of an input tax credit in respect of a passenger vehicle for which tax on the acquisition or importation first became payable or was first paid without having become payable after 2007; and
(o) for the purposes of determining or calculating any of the following amounts if none of paragraphs (a) to (n) applies:
(i) tax on or after January 1, 2008,
(ii) tax that is not payable but would have been payable on or after January 1, 2008, in the absence of certain circumstances described in the Act, and
(iii) an amount or a number, at any time on or after January 1, 2008, by or in accordance with an algebraic formula that makes reference to the rate set out in subsection 165(1) of the Act.
(3) Despite paragraph (2)(e) and for the purposes of the description of A in clause 184.1(2)(d)(i)(A) of the Act in determining the total amount of all input tax credits in respect of direct inputs (within the meaning of paragraph 184.1(2)(c) of the Act), where a surety is carrying on a particular construction of real property situated in Canada as full or partial satisfaction of the surety’s obligation under a bond, a contract payment (within the meaning of paragraph 184.1(2)(a) of the Act), other than a contract payment that is not in respect of the particular construction, becomes due or is paid without having become due before January 1, 2008, and another contract payment (within the meaning of paragraph 184.1(2)(a) of the Act), other than a contract payment that is not in respect of the particular construction, becomes due on or after that day, without having been paid before that day, or is paid without having become due on or after that day, clause 184.1(2)(d)(i)(A) of the Act shall be read as follows:
(A) the amount determined by the formula
(A × B) + (C × D) + (E × F)
where
A      is
(I) if the supply deemed under subparagraph (a)(i) to be made by the surety is made in a participating province, the total of 7% and the rate of tax for that participating province, and
(II) in any other case, 7%,
B      is the total of all contract payments (other than contract payments that are not in respect of the particular construction) that become due before July 1, 2006, or are paid, without having become due, to the surety before that day,
C      is
(I) if the supply deemed under subparagraph (a)(i) to be made by the surety is made in a participating province, the total of 6% and the rate of tax for the participating province, and
(II) in any other case, 6%,
D      is the total of all contract payments (other than contract payments that are not in respect of the particular construction) that become due on or after July 1, 2006, and before January 1, 2008, without having been paid before July 1, 2006, or are paid, without having become due, to the surety on or after that day and before January 1, 2008,
E      is
(I) if the supply deemed under subparagraph (a)(i) to be made by the surety is made in a participating province, the total of 5% and the rate of tax for the participating province, and
(II) in any other case, 5%, and
F      is the total of all contract payments (other than contract payments that are not in respect of the particular construction) that become due on or after January 1, 2008, without having been paid before that day, or are paid, without having become due, to the surety on or after that day
2006, c. 4, s. 4(1)
185. (1) The description of A in clause 173(1)(d)(vi)(B) of the Act is replaced by the following:
A      is
(I) where
1. the benefit amount is required to be included under paragraph 6(1)(a) or (e) of the Income Tax Act in computing the individual’s income from an office or employment and the last establishment of the employer at which the individual ordinarily worked or to which the individual ordinarily reported in the year in relation to that office or employment is located in a participating prov-ince, or
2. the benefit amount is required under subsection 15(1) of that Act to be included in computing the individual’s income and the individual is resident in a participating prov-ince at the end of the year,
the total of 4% and the tax rate for the participating province, and
(II) in any other case, 4%,
(2) Subsection (1) applies to the 2008 and subsequent taxation years of an individual.
2006, c. 4, s. 19(1)
186. (1) Section 212 of the Act is replaced by the following:
Imposition of goods and services tax
212. Subject to this Part, every person who is liable under the Customs Act to pay duty on imported goods, or who would be so liable if the goods were subject to duty, shall pay to Her Majesty in right of Canada tax on the goods calculated at the rate of 5% on the value of the goods.
(2) Subsection (1) applies to goods imported into Canada, or released (as defined in the Customs Act), on or after January 1, 2008.
2006, c. 4, s. 20(1)
187. (1) Section 218 of the Act is replaced by the following:
Imposition of goods and services tax
218. Subject to this Part, every recipient of an imported taxable supply shall pay to Her Majesty in right of Canada tax calculated at the rate of 5% on the value of the consideration for the imported taxable supply.
(2) Subsection (1) applies
(a) to any imported taxable supply made on or after January 1, 2008;
(b) for the purposes of calculating tax in respect of any imported taxable supply made before January 1, 2008, but only in respect of consideration that becomes due on or after that day without having been paid before that day or that is paid, without having become due, on or after January 1, 2008; and
(c) if neither paragraph (a) nor (b) applies, for the purposes of determining or calculating tax that is not payable but would have been payable on or after January 1, 2008, in the absence of certain circumstances described in the Act.
2006, c. 4, s. 24(1)
188. (1) Paragraph 254(2)(h) of the Act is replaced by the following:
(h) where the total consideration is not more than $350,000, an amount equal to the lesser of $6,300 and 36% of the total tax paid by the particular individual, and
2006, c. 4, s. 24(2)
(2) The description of A in paragraph 254(2)(i) of the Act is replaced by the following:
A      is the lesser of $6,300 and 36% of the total tax paid by the particular individual, and
(3) Subsections (1) and (2) apply to any rebate in respect of a supply by way of sale of a residential complex in respect of which ownership is transferred on or after January 1, 2008, to the particular individual referred to in section 254 of the Act, unless the tax payable under subsection 165(1) of the Act in respect of the supply of the complex applied at the rate of 6% or 7%.
2006, c. 4, s. 25(1)
189. (1) Paragraph 254.1(2)(c) of the Act is replaced by the following:
(c) the fair market value of the complex, at the time possession of the complex is given to the particular individual under the agreement, is less than $472,500,
2006, c. 4, s. 25(2)
(2) Paragraphs 254.1(2)(h) and (i) of the Act are replaced by the following:
(h) if the fair market value referred to in paragraph (c) is not more than $367,500, an amount equal to 1.71% of the total (in this subsection referred to as the “total consideration”) of all amounts, each of which is the consideration payable by the particular individual to the builder for the supply by way of sale to the particular individual of the building or part of a building referred to in paragraph (a) or of any other structure that forms part of the complex, other than consideration that can reasonably be regarded as rent for the supplies of the land attributable to the complex or as consideration for the supply of an option to purchase that land, and
(i) if the fair market value referred to in paragraph (c) is more than $367,500 but less than $472,500, the amount determined by the formula
A × [($472,500 - B)/$105,000]
where
A      is the lesser of $6,300 and 1.71% of the total consideration, and
B      is the fair market value referred to in paragraph (c).
2006, c. 4, s. 25(3)
(3) Paragraph 254.1(2.1)(a) of the Act is replaced by the following:
(a) a particular individual is entitled to a rebate under subsection (2), or to be paid or credited the amount of such a rebate under subsection (4), in respect of a residential complex situated in Nova Scotia, or would be so entitled if the fair market value of the complex, at the time possession of the complex is given to the particular individual under the agreement for the supply of the complex to the particular individual, were less than $472,500,
(4) Subsections (1) to (3) apply in respect of a supply, to a particular individual referred to in section 254.1 of the Act, of a building or part of it in which a residential unit forming part of a residential complex is situated if possession of the unit is given to the particular individual on or after January 1, 2008, unless the builder is deemed under section 191 of the Act to have paid tax under subsection 165(1) of the Act calculated at the rate of 6% or 7% in respect of the supply referred to in paragraph 254.1(2)(d) of the Act.
2006, c. 4, s. 26(1)
190. (1) Paragraph 255(2)(d) of the Act is replaced by the following:
(d) the total (in this subsection referred to as the “total consideration”) of all amounts, each of which is the consideration payable for the supply to the particular individual of the share or an interest in the corporation, complex or unit, is less than $472,500,
2006, c. 4, s. 26(2)
(2) Paragraphs 255(2)(g) and (h) of the Act are replaced by the following:
(g) if the total consideration is not more than $367,500, an amount equal to 1.71% of the total consideration, and
(h) if the total consideration is more than $367,500 but less than $472,500, the amount determined by the formula
A × [($472,500 - B)/$105,000]
where
A      is the lesser of $6,300 and 1.71% of the total consideration, and
B      is the total consideration.
2006, c. 4, s. 26(3)
(3) Paragraph 255(2.1)(c) of the Act is replaced by the following:
(c) the particular individual is entitled to a rebate under subsection (2) in respect of the share or would be so entitled if the total (in this subsection referred to as the “total consideration”) of all amounts, each of which is the consideration payable for the supply to the particular individual of the share or an interest in the corporation, complex or unit, were less than $472,500,
(4) Subsections (1) to (3) apply for the purpose of determining a rebate in respect of a supply, by a cooperative housing corporation to an individual, of a share of the capital stock of the corporation if the individual is acquiring the share for the purpose of using a residential unit in a residential complex as the primary place of residence of the individual, or a relation (as defined in subsection 255(1) of the Act) of the individ-ual, and the rebate application is filed on or after January 1, 2008, unless the corporation paid tax under subsection 165(1) of the Act in respect of the supply of the complex to the corporation calculated at the rate of 6% or 7%.
2006, c. 4, s. 27(1)
191. (1) Subparagraphs (i) and (ii) of the description of A in subsection 256(2) of the Act are replaced by the following:
(i) if all or substantially all of that tax was paid at the rate of 5%, $6,300,
(ii) if all or substantially all of that tax was paid at the rate of 6%, $7,560, and
(iii) in any other case, the lesser of $8,750 and the amount determined by the formula
(C × $2,520) + (D × $1,260) + $6,300
where
C      is the extent (expressed as a percent-age) to which that tax was paid at the rate of 7%, and
D      is the extent (expressed as a percent- age) to which that tax was paid at the rate of 6%, and
(2) Subsection (1) applies to any rebate in respect of a residential complex for which an application is filed with the Minister of National Revenue on or after January 1, 2008.
2006, c. 4, s. 28(1)
192. (1) The portion of the description of A in subsection 256.2(3) of the Act before the formula is replaced by the following:
A      is the lesser of $6,300 and the amount determined by the formula
2006, c. 4, s. 28(2)
(2) The portion of the description of A in subsection 256.2(4) of the Act before the formula is replaced by the following:
A      is the lesser of $6,300 and the amount determined by the formula
2006, c. 4, s. 28(3)
(3) The portion of the description of A in subsection 256.2(5) of the Act before the formula is replaced by the following:
A      is the lesser of $6,300 and the amount determined by the formula
(4) Subsection (1) applies to
(a) a taxable supply to a recipient from another person of a residential complex or an interest in a residential complex, in respect of which ownership and possession under the agreement for the supply are transferred on or after January 1, 2008, unless the agreement for the supply is evidenced in writing and was entered into on or before October 30, 2007; and
(b) a deemed purchase (within the meaning of subparagraph 256.2(3)(a)(ii) of the Act) by a builder if the tax in respect of the deemed purchase of a complex or an addition to a complex is deemed to have been paid on or after January 1, 2008.
(5) Subsection (2) applies to a supply of a building or part of it forming part of a residential complex and a supply of land, described in subparagraphs 256.2(4)(a)(i) and (ii) of the Act, that result in a person being deemed under section 191 of the Act to have made and received a taxable supply by way of sale of the complex or of an addition to it on or after January 1, 2008, unless the supply is deemed to have been made as a consequence of the builder giving possession of a residential unit in the complex or the addition to a person under an agreement for the supply by way of sale of the building or part of it forming part of the complex or the addition and
(a) the agreement was entered into on or before October 30, 2007;
(b) another agreement was entered into by the builder and another person on or before May 2, 2006, and that other agreement was not terminated before July 1, 2006, and was for the supply by way of sale of the building or part of it forming part of
(i) in the case of a deemed supply of a complex, the complex, or
(ii) in the case of a deemed supply of an addition, the addition; or
(c) another agreement was entered into by the builder and another person on or before October 30, 2007, and that other agreement was not terminated before January 1, 2008, and was for the supply by way of sale of the building or part of it forming part of
(i) in the case of a deemed supply of a complex, the complex, or
(ii) in the case of a deemed supply of an addition, the addition.
(6) Subsection (3) applies to
(a) a taxable supply by way of sale to a recipient from another person of a residential complex, or an interest in a residential complex, in respect of which ownership and possession under the agreement for the supply are transferred on or after January 1, 2008, unless the agreement is evidenced in writing and was entered into on or before October 30, 2007; and
(b) a deemed purchase (within the meaning of subparagraph 256.2(5)(a)(ii) of the Act) by a builder if the tax in respect of the deemed purchase of a complex or an addition to a complex is deemed to have been paid on or after January 1, 2008.
2006, c. 4, s. 29(1)
193. (1) The description of C in subsection 256.6(1) of the Act is replaced by the following:
C      is the fair market value of the complex or, if the builder is deemed to have made a supply of an addition, of the addition, at the time the builder is deemed to have made the supply referred to in paragraph (b),
(2) Subsection (1) is deemed to have come into force on July 1, 2006.
194. (1) The Act is amended by adding the following after section 256.6:
Transitional rebate — 2008 rate reduction
256.7 (1) If a particular person, other than a cooperative housing corporation,
(a) pursuant to an agreement of purchase and sale, evidenced in writing, entered into on or before May 2, 2006, is the recipient of a taxable supply by way of sale from another person of a residential complex in respect of which ownership and possession under the agreement are transferred to the particular person on or after January 1, 2008,
(b) has paid all of the tax under subsection 165(1) in respect of the supply calculated at the rate of 7%, and
(c) is not entitled to claim an input tax credit or a rebate, other than a rebate under this subsection or under subsection 256.3(1), in respect of the tax referred to in paragraph (b),
the Minister shall, subject to subsection (7), pay a rebate to the particular person, in addition to the rebate payable under subsection 256.3(1), equal to 1% of the value of the consideration for the supply.
Transitional rebate — 2008 rate reduction
(2) If a particular person, other than a cooperative housing corporation,
(a) pursuant to an agreement of purchase and sale, evidenced in writing, entered into on or before May 2, 2006, is the recipient of a taxable supply by way of sale from another person of a residential complex in respect of which ownership and possession under the agreement are transferred to the particular person on or after January 1, 2008,
(b) has paid all of the tax under subsection 165(1) in respect of the supply calculated at the rate of 7%, and
(c) is entitled to claim a rebate under subsection 256.2(3) in respect of any residential unit situated in the complex,
the Minister shall, subject to subsection (7), pay a rebate to the particular person, in addition to the rebate payable under subsection 256.3(2), equal to the amount determined by the formula
A × [0.01 - ((B/A)/7)]
where
A      is the consideration payable for the supply to the particular person of the complex, and
B      is the amount of the rebate under subsection 256.2(3) that the particular person is entitled to claim in respect of the complex.
Transitional rebate — 2008 rate reduction
(3) If a particular person, other than a cooperative housing corporation,
(a) pursuant to an agreement of purchase and sale, evidenced in writing, entered into on or before May 2, 2006, is the recipient of a taxable supply by way of sale from another person of a residential complex in respect of which ownership and possession under the agreement are transferred to the particular person on or after January 1, 2008,
(b) has paid all of the tax under subsection 165(1) in respect of the supply calculated at the rate of 7%, and
(c) is entitled to claim a rebate under section 259 in respect of the tax referred to in paragraph (b) and is not entitled to claim any input tax credit or any other rebate, other than a rebate under this subsection or under subsection 256.3(3), in respect of that tax,
the Minister shall, subject to subsection (7), pay a rebate to the particular person, in addition to the rebate payable under subsection 256.3(3), equal to the amount determined by the formula
A × [0.01 - ((B/A)/7)]
where
A      is the consideration payable for the supply to the particular person of the complex, and
B      is
(i) in the case where the complex is situated in a participating province, the amount of the rebate under section 259 that the particular person would have been entitled to claim if no tax under subsection 165(2) would have been payable or paid in respect of the complex, and
(ii) in any other case, the amount of the rebate under section 259 that the partic-ular person is entitled to claim in respect of the complex.
Transitional rebate — 2008 rate reduction
(4) If a cooperative housing corporation
(a) pursuant to an agreement of purchase and sale, evidenced in writing, entered into on or before May 2, 2006, is the recipient of a taxable supply by way of sale from another person of a residential complex in respect of which ownership and possession under the agreement are transferred to the corporation on or after January 1, 2008,
(b) has paid all of the tax under subsection 165(1) in respect of the supply calculated at the rate of 7%, and
(c) is not entitled to claim an input tax credit or a rebate, other than a rebate under this subsection, section 256.2, subsection 256.3(4) or section 259 in respect of the tax referred to in paragraph (b),
the Minister shall, subject to subsection (7), pay a rebate to the corporation, in addition to the rebate payable under subsection 256.3(4), equal to the amount determined by the formula
A × [0.01 - ((B/A)/7)]
where
A      is the consideration payable for the supply, and
B      is
(i) if the corporation is entitled to claim a rebate under section 259 in respect of the complex,
(A) in the case where the complex is situated in a participating province, the amount of the rebate under section 259 that the corporation would have been entitled to claim if no tax under subsection 165(2) would have been payable or paid in respect of the complex, and
(B) in any other case, the amount of the rebate under section 259 that the corporation is entitled to claim in respect of the complex,
(ii) 36% of the tax paid under subsection 165(1) by the corporation in respect of the supply if the corporation is not entitled to claim a rebate under section 259 in respect of the complex, and
(A) the corporation is entitled to, or can reasonably expect to be entitled to, claim a rebate under section 256.2 in respect of any residential unit situated in the complex, or
(B) it is the case that, or it can reasonably be expected that, a share of the capital stock of the corporation is or will be sold to an individual for the purpose of using a residential unit in the complex as the primary place of residence of the individual, or of a relation (as defined in subsection 255(1)) of the individual, and that the individual is or will be entitled to claim a rebate under section 255 in respect of the share, and
(iii) in any other case, zero.
Transitional rebate — 2008 rate reduction
(5) If a particular individual
(a) pursuant to an agreement of purchase and sale, evidenced in writing, entered into on or before May 2, 2006, is the recipient of a taxable supply by way of sale from another person of a residential complex in respect of which ownership and possession under the agreement are transferred to the particular individual on or after January 1, 2008,
(b) has paid all of the tax under subsection 165(1) in respect of the supply calculated at the rate of 7%, and
(c) is entitled to claim a rebate under subsection 254(2) in respect of the complex,
the Minister shall, subject to subsection (7), pay a rebate to the particular individual, in addition to the rebate payable under subsection 256.3(5), equal to the amount determined by the formula
A × [0.01 - ((B/A)/7)]
where
A      is the total of all amounts, each of which is the consideration payable for the supply to the particular individual of the complex or for any other taxable supply to the particular individual of an interest in the complex in respect of which the particular individual has paid tax under subsection 165(1) calculated at the rate of 7%, and
B      is the amount of the rebate under subsection 254(2) that the particular individual is entitled to claim in respect of the complex.
Group of individuals
(6) If a supply of a residential complex is made to two or more individuals, the references in subsection (5) to a particular individual shall be read as references to all of those individuals as a group, but only the particular individual that applied for the rebate under section 254 may apply for the rebate under subsection (5).
Application for rebate
(7) A rebate under this section in respect of a residential complex shall not be paid to a person, unless the person files an application for the rebate within two years after the day on which ownership of the complex is transferred to the person.
Transitional rebate where section 254.1 applies — 2008 rate reduction
256.71 (1) If
(a) under an agreement, evidenced in writing, entered into on or before May 2, 2006, between a particular person and a builder of a residential complex that is a single unit residential complex or a residential condo-minium unit, the particular person is the recipient of
(i) an exempt supply by way of lease of the land forming part of the complex or an exempt supply of such a lease by way of assignment, and
(ii) an exempt supply by way of sale of the building or part of it in which the residential unit forming part of the complex is situated,
(b) possession of the complex is given to the particular person under the agreement on or after January 1, 2008,
(c) the builder is deemed under subsection 191(1) to have made and received a supply of the complex as a consequence of giving possession of the complex to the particular person under the agreement and to have paid tax under subsection 165(1) in respect of the supply calculated at the rate of 7%, and
(d) the particular person is entitled to claim a rebate under subsection 254.1(2) in respect of the complex,
the Minister shall, subject to subsection (4),
(e) pay a rebate to the particular person, in addition to the rebate payable under subsection 256.4(1), equal to the amount determined by the formula
A × [0.01 - ((B/A)/7)]
where
A      is the amount determined by the formula
C × (100/D)
where
C      is the total of all amounts, each of which is the consideration payable by the particular person to the builder for the supply by way of sale to the particular person of the building or part of the building referred to in subparagraph (a)(ii) or of any other structure that forms part of the complex, other than consideration that can reasonably be regarded as rent for the supplies of the land attributable to the complex or as consideration for the supply of an option to purchase that land, and
D      is
(i) if the complex is situated in a participating province, 115, and
(ii) in any other case, 107, and
B      is the amount of the rebate under subsection 254.1(2) that the particular person is entitled to claim in respect of the complex, and
(f) if the builder is not entitled to claim an input tax credit or a rebate, other than a rebate under this subsection or under subsection 256.2(4) or 256.4(1), in respect of the tax referred to in paragraph (c), pay a rebate to the builder, in addition to the rebate payable under subsection 256.4(1), equal to the amount determined by the formula
(E - F) × [0.01 - ((G/(E - F))/7)]
where
E      is the fair market value of the complex at the time that the builder is deemed to have made the supply referred to in paragraph (c),
F      is the amount determined for A under paragraph (e), and
G      is the amount of the rebate, if any, that the builder is entitled to claim under subsection 256.2(4).
Transitional rebate where section 254.1 does not apply — 2008 rate reduction
(2) If
(a) under an agreement, evidenced in writing, entered into on or before May 2, 2006, between a particular person and a builder of a residential complex that is a single unit residential complex or a residential condo-minium unit, the particular person is the recipient of
(i) an exempt supply by way of lease of the land forming part of the complex or an exempt supply of such a lease by way of assignment, and
(ii) an exempt supply by way of sale of the building or part of it in which the residential unit forming part of the complex is situated,
(b) possession of the complex is given to the particular person under the agreement on or after January 1, 2008,
(c) the builder is deemed under subsection 191(1) to have made and received a supply of the complex as a consequence of giving possession of the complex to the particular person under the agreement and to have paid tax under subsection 165(1) in respect of the supply calculated at the rate of 7%, and
(d) the particular person is not entitled to claim a rebate under subsection 254.1(2) in respect of the complex,
the Minister shall, subject to subsection (4),
(e) pay a rebate to the particular person, in addition to the rebate payable under subsection 256.4(2), equal to the amount determined by the formula
A/B
where
A      is the total of all amounts, each of which is the consideration payable by the particular person to the builder for the supply by way of sale to the particular person of the building or part of the building referred to in subparagraph (a)(ii) or of any other structure that forms part of the complex, other than consideration that can reasonably be regarded as rent for the supplies of the land attrib-utable to the complex or as consideration for the supply of an option to purchase that land, and
B      is
(i) if the complex is situated in a participating province, 115, and
(ii) in any other case, 107, and
(f) if the builder is not entitled to claim an input tax credit or a rebate, other than a rebate under this subsection or under subsection 256.4(2), in respect of the tax referred to in paragraph (c), pay a rebate to the builder, in addition to the rebate payable under subsection 256.4(2), equal to the amount determined by the formula
0.01 × [C - (D × (100/E))]
where
C      is the fair market value of the complex at the time the builder is deemed to have made the supply referred to in paragraph (c),
D      is the total of all amounts, each of which is the consideration payable by the particular person to the builder for the supply by way of sale to the particular person of the building or part of the building referred to in subparagraph (a)(ii) or of any other structure that forms part of the complex, other than consideration that can reasonably be regarded as rent for the supplies of the land attrib-utable to the complex or as consideration for the supply of an option to purchase that land, and
E      is
(i) if the complex is situated in a participating province, 115, and
(ii) in any other case, 107.
Group of individuals
(3) If the supplies described in subsection (1) or (2) are made to two or more individuals, the references in that subsection to a particular person shall be read as references to all of those individuals as a group, but, in the case of a rebate where paragraph (1)(e) applies, only the individual that applied for the rebate under section 254.1 may apply for the rebate under subsection (1).
Application for rebate
(4) A rebate under this section in respect of a residential complex shall not be paid to a person, unless the person files an application for the rebate within two years after
(a) in the case of a rebate to a person other than the builder of the complex, the day on which possession of the complex is transferred to the person; and
(b) in the case of a rebate to the builder of the complex, the end of the month in which the tax referred to in paragraph (1)(c) or (2)(c) is deemed to have been paid by the builder.
Transitional rebate for purchaser — 2008 rate reduction
256.72 (1) Where
(a) under an agreement, evidenced in writing, entered into between a particular person and a builder of a residential complex, other than a single unit residential complex or a residential condominium unit, or an addition to it, the particular person is the recipient of
(i) an exempt supply by way of lease of the land forming part of the complex or an exempt supply of such a lease by way of assignment, and
(ii) an exempt supply by way of sale of the building or part of it in which a residential unit forming part of the complex or the addition is situated,
(b) possession of a residential unit forming part of the complex or the addition is given to the particular person under the agreement on or after January 1, 2008,
(c) the builder is deemed under subsection 191(3) or (4) to have made and received a supply of the complex or the addition as a consequence of giving possession
(i) of the residential unit to the particular person under the agreement, or
(ii) of a residential unit forming part of the complex or the addition to another person under an agreement described in paragraph (a) entered into between the other person and the builder,
(d) the builder is deemed to have paid tax under subsection 165(1) in respect of the supply calculated at the rate of 7%, and
(e) if the builder is deemed to have paid the tax referred to in paragraph (d) on or after January 1, 2008, it is the case that the builder and
(i) the particular person entered into the agreement on or before May 2, 2006, or
(ii) a person, other than the particular person, on or before May 2, 2006, entered into an agreement described in paragraph (a) in respect of a residential unit situated in the residential complex or in the addition that the builder is deemed to have supplied (as described in paragraph (c)) and that agreement was not terminated before July 1, 2006,
the Minister shall, subject to subsection (3),
(f) if the particular person is entitled to claim a rebate under subsection 254.1(2) in respect of the complex, pay a rebate to the particular person, in addition to the rebate payable under subsection 256.5(1), equal to the amount determined by the formula
A × [0.01 - ((B/A)/7)]
where
A      is the amount determined by the formula
C × (100/D)
where
C      is the total of all amounts, each of which is the consideration payable by the particular person to the builder for the supply by way of sale to the particular person of the building or part of the building referred to in subparagraph (a)(ii) or of any other structure that forms part of the complex or the addition, other than consideration that can reasonably be regarded as rent for the supplies of the land attributable to the complex or as consideration for the supply of an option to purchase that land, and
D      is
(i) if the complex is situated in a participating province, 115, and
(ii) in any other case, 107, and
B      is the amount of the rebate under subsection 254.1 that the particular person is entitled to claim in respect of the complex, and
(g) if the particular person is not entitled to claim a rebate under subsection 254.1(2) in respect of the complex, pay a rebate to the particular person, in addition to the rebate payable under subsection 256.5(1), equal to the amount determined by the formula
E/F
where
E      is the total of all amounts, each of which is the consideration payable by the particular person to the builder for the supply by way of sale to the particular person of the building or part of a building referred to in subparagraph (a)(ii) or of any other structure that forms part of the complex or the addition, other than consideration that can reasonably be regarded as rent for the supplies of the land attributable to the complex or as consideration for the supply of an option to purchase that land, and
F      is
(i) if the complex is situated in a participating province, 115, and
(ii) in any other case, 107.
Group of individuals
(2) If the supplies described in subsection (1) are made to two or more individuals, the references in that subsection to a particular person shall be read as references to all of those individuals as a group, but, in the case of a rebate under paragraph (1)(f), only the individ-ual that applied for the rebate under section 254.1 may apply for the rebate under that paragraph.
Application for rebate
(3) A rebate under this section in respect of a residential complex shall not be paid to a person, unless the person files an application for the rebate within two years after the day on which possession of the unit referred to in paragraph (1)(b) is transferred to the person.
Transitional rebate for builder — 2008 rate reduction
256.73 (1) If
(a) under an agreement, evidenced in writing, entered into between a particular person and a builder of a residential complex, other than a single unit residential complex or a residential condominium unit, or an addition to it, the particular person is the recipient of
(i) an exempt supply by way of lease of the land forming part of the complex or a supply of such a lease by way of assignment, and
(ii) an exempt supply by way of sale of the building or part of it in which a residential unit forming part of the complex or the addition is situated,
(b) the builder is deemed under subsection 191(3) or (4) to have made and received on or after January 1, 2008, a supply of the complex or the addition as a consequence of giving possession
(i) of the residential unit to the particular person under the agreement, or
(ii) of a residential unit forming part of the complex or the addition to another person under an agreement described in paragraph (a) entered into between the other person and the builder,
(c) the builder and
(i) the particular person entered into the agreement on or before May 2, 2006, or
(ii) a person, other than the particular person, on or before May 2, 2006, entered into an agreement described in paragraph (a) in respect of a residential unit situated in the residential complex or in the addition that the builder is deemed to have supplied (as described in paragraph (b)) and that agreement was not terminated before July 1, 2006,
(d) the builder is deemed to have paid tax under subsection 165(1) in respect of the supply referred to in paragraph (b) calculated at the rate of 7%, and
(e) the builder is not entitled to claim an input tax credit or a rebate, other than a rebate under this subsection or under subsection 256.2(4) or 256.6(1), in respect of the tax referred to in paragraph (d),
the Minister shall, subject to subsection (2), pay a rebate to the builder, in addition to the rebate payable under subsection 256.6(1), equal to the amount determined by the formula
A × [0.01 - ((B/A)/7)]
where
A      is the amount determined by the formula
C - [D × (100/E)]
where
C      is the fair market value of the complex or, if the builder is deemed to have made a supply of an addition, of the addition, at the time the builder is deemed to have made the supply referred to in paragraph (b),
D      is
(i) if the builder is deemed to have made a supply of a complex, the total of all amounts, each of which is the consideration payable by a person to the builder for the supply by way of sale to the person of the building or part of it forming part of the complex or of any other structure that forms part of the complex, or
(ii) if the builder is deemed to have made a supply of an addition, the total of all amounts, each of which is the consideration payable by a person to the builder for the supply by way of sale to the person of the building or part of it forming part of the addition or of any other structure that forms part of the addition, and
E      is
(i) if the complex is situated in a participating province, 115, and
(ii) in any other case, 107, and
B      is the rebate, if any, under subsection 256.2(4) that the builder is entitled to claim in respect of the complex or, if the builder is deemed to have made a supply of an addition, the addition.
Application for rebate
(2) A rebate under this section in respect of a residential complex or an addition to it shall not be paid to a builder, unless the builder files an application for the rebate within two years after the end of the month in which tax referred to in subsection (1) is deemed to have been paid by the builder.
Transitional rebate — 2008 rate reduction
256.74 (1) If a particular person, other than a cooperative housing corporation,
(a) pursuant to an agreement of purchase and sale, evidenced in writing, entered into after May 2, 2006, but on or before October 30, 2007, is the recipient of a taxable supply by way of sale from another person of a residential complex in respect of which ownership and possession under the agreement are transferred to the particular person on or after January 1, 2008,
(b) has paid all of the tax under subsection 165(1) in respect of the supply calculated at the rate of 6%, and
(c) is not entitled to claim an input tax credit or a rebate, other than a rebate under this subsection, in respect of the tax referred to in paragraph (b),
the Minister shall, subject to subsection (7), pay a rebate to the particular person equal to 1% of the value of the consideration for the supply.
Transitional rebate — 2008 rate reduction
(2) If a particular person, other than a cooperative housing corporation,
(a) pursuant to an agreement of purchase and sale, evidenced in writing, entered into after May 2, 2006, but on or before October 30, 2007, is the recipient of a taxable supply by way of sale from another person of a residential complex in respect of which ownership and possession under the agreement are transferred to the particular person on or after January 1, 2008,
(b) has paid all of the tax under subsection 165(1) in respect of the supply calculated at the rate of 6%, and
(c) is entitled to claim a rebate under subsection 256.2(3) in respect of any residential unit situated in the complex,
the Minister shall, subject to subsection (7), pay a rebate to the particular person equal to the amount determined by the formula
A × [0.01 - ((B/A)/6)]
where
A      is the consideration payable for the supply to the particular person of the complex, and
B      is the amount of the rebate under subsection 256.2(3) that the particular person is entitled to claim in respect of the complex.
Transitional rebate — 2008 rate reduction
(3) If a particular person, other than a cooperative housing corporation,
(a) pursuant to an agreement of purchase and sale, evidenced in writing, entered into after May 2, 2006, but on or before October 30, 2007, is the recipient of a taxable supply by way of sale from another person of a residential complex in respect of which ownership and possession under the agreement are transferred to the particular person on or after January 1, 2008,
(b) has paid all of the tax under subsection 165(1) in respect of the supply calculated at the rate of 6%, and
(c) is entitled to claim a rebate under section 259 in respect of the tax referred to in paragraph (b) and is not entitled to claim any input tax credit or any other rebate, other than a rebate under this subsection, in respect of that tax,
the Minister shall, subject to subsection (7), pay a rebate to the particular person equal to the amount determined by the formula
A × [0.01 - ((B/A)/6)]
where
A      is the consideration payable for the supply to the particular person of the complex, and
B      is
(i) in the case where the complex is situated in a participating province, the amount of the rebate under section 259 that the particular person would have been entitled to claim if no tax under subsection 165(2) would have been payable or paid in respect of the complex, and
(ii) in any other case, the amount of the rebate under section 259 that the partic-ular person is entitled to claim in respect of the complex.
Transitional rebate — 2008 rate reduction
(4) If a cooperative housing corporation
(a) pursuant to an agreement of purchase and sale, evidenced in writing, entered into after May 2, 2006, but on or before October 30, 2007, is the recipient of a taxable supply by way of sale from another person of a residential complex in respect of which ownership and possession under the agreement are transferred to the corporation on or after January 1, 2008,
(b) has paid all of the tax under subsection 165(1) in respect of the supply calculated at the rate of 6%, and
(c) is not entitled to claim an input tax credit or a rebate, other than a rebate under this subsection or under section 256.2 or 259, in respect of the tax referred to in paragraph (b),
the Minister shall, subject to subsection (7), pay a rebate to the corporation equal to the amount determined by the formula
A × [0.01 - ((B/A)/6)]
where
A      is the consideration payable for the supply, and
B      is
(i) if the corporation is entitled to claim a rebate under section 259 in respect of the complex,
(A) in the case where the complex is situated in a participating province, the amount of the rebate under section 259 that the corporation would have been entitled to claim if no tax under subsection 165(2) would have been payable or paid in respect of the complex, and
(B) in any other case, the amount of the rebate under section 259 that the corporation is entitled to claim in respect of the complex,
(ii) 36% of the tax paid under subsection 165(1) by the corporation in respect of the supply if the corporation is not entitled to claim a rebate under section 259 in respect of the complex, and
(A) the corporation is entitled to, or can reasonably expect to be entitled to, claim a rebate under section 256.2 in respect of any residential unit situated in the complex, or
(B) it is the case that, or it can reasonably be expected that, a share of the capital stock of the corporation is or will be sold to an individual for the purpose of using a residential unit in the complex as the primary place of residence of the individual, or of a relation (as defined in subsection 255(1)) of the individual, and that the individual is or will be entitled to claim a rebate under section 255 in respect of the share, and
(iii) in any other case, zero.
Transitional rebate — 2008 rate reduction
(5) If a particular individual
(a) pursuant to an agreement of purchase and sale, evidenced in writing, entered into after May 2, 2006, but on or before October 30, 2007, is the recipient of a taxable supply by way of sale from another person of a residential complex in respect of which ownership and possession under the agreement are transferred to the particular individ-ual on or after January 1, 2008,
(b) has paid all of the tax under subsection 165(1) in respect of the supply calculated at the rate of 6%, and
(c) is entitled to claim a rebate under subsection 254(2) in respect of the complex,
the Minister shall, subject to subsection (7), pay a rebate to the particular individual equal to the amount determined by the formula
A × [0.01 - ((B/A)/6)]
where
A      is the total of all amounts, each of which is the consideration payable for the supply to the particular individual of the complex or for any other taxable supply to the particular individual of an interest in the complex in respect of which the particular individual has paid tax under subsection 165(1) calculated at the rate of 6%, and
B      is the amount of the rebate under subsection 254(2) that the particular individual is entitled to claim in respect of the complex.
Group of individuals
(6) If a supply of a residential complex is made to two or more individuals, the references in subsection (5) to a particular individual shall be read as references to all of those individuals as a group, but only the particular individual that applied for the rebate under section 254 may apply for the rebate under subsection (5).
Application for rebate
(7) A rebate under this section in respect of a residential complex shall not be paid to a person, unless the person files an application for the rebate within two years after the day on which ownership of the complex is transferred to the person.
Transitional rebate where section 254.1 applies — 2008 rate reduction
256.75 (1) If
(a) under an agreement, evidenced in writing, entered into after May 2, 2006, but on or before October 30, 2007, between a particular person and a builder of a residential complex that is a single unit residential complex or a residential condominium unit, the particular person is the recipient of
(i) an exempt supply by way of lease of the land forming part of the complex or an exempt supply of such a lease by way of assignment, and
(ii) an exempt supply by way of sale of the building or part of it in which the residential unit forming part of the complex is situated,
(b) possession of the complex is given to the particular person under the agreement on or after January 1, 2008,
(c) the builder is deemed under subsection 191(1) to have made and received a supply of the complex as a consequence of giving possession of the complex to the particular person under the agreement and to have paid tax under subsection 165(1) in respect of the supply calculated at the rate of 6%, and
(d) the particular person is entitled to claim a rebate under subsection 254.1(2) in respect of the complex,
the Minister shall, subject to subsection (4),
(e) pay a rebate to the particular person equal to the amount determined by the formula
A × [0.01 - ((B/A)/6)]
where
A      is the amount determined by the formula
C × (100/D)
where
C      is the total of all amounts, each of which is the consideration payable by the particular person to the builder for the supply by way of sale to the particular person of the building or part of the building referred to in subparagraph (a)(ii) or of any other structure that forms part of the complex, other than consideration that can reasonably be regarded as rent for the supplies of the land attributable to the complex or as consideration for the supply of an option to purchase that land, and
D      is
(i) if the complex is situated in a participating province, 114, and
(ii) in any other case, 106, and
B      is the amount of the rebate under subsection 254.1(2) that the particular person is entitled to claim in respect of the complex, and
(f) if the builder is not entitled to claim an input tax credit or a rebate, other than a rebate under this subsection or under subsection 256.2(4), in respect of the tax referred to in paragraph (c), pay a rebate to the builder equal to the amount determined by the formula
(E - F) × [0.01 - ((G/(E - F))/6)]
where
E      is the fair market value of the complex at the time that the builder is deemed to have made the supply referred to in paragraph (c),
F      is the amount determined for A under paragraph (e), and
G      is the amount of the rebate, if any, that the builder is entitled to claim under subsection 256.2(4).
Transitional rebate where section 254.1 does not apply — 2008 rate reduction
(2) If
(a) under an agreement, evidenced in writing, entered into after May 2, 2006, but on or before October 30, 2007, between a particular person and a builder of a residential complex that is a single unit residential complex or a residential condominium unit, the particular person is the recipient of
(i) an exempt supply by way of lease of the land forming part of the complex or an exempt supply of such a lease by way of assignment, and
(ii) an exempt supply by way of sale of the building or part of it in which the residential unit forming part of the complex is situated,
(b) possession of the complex is given to the particular person under the agreement on or after January 1, 2008,
(c) the builder is deemed under subsection 191(1) to have made and received a supply of the complex as a consequence of giving possession of the complex to the particular person under the agreement and to have paid tax under subsection 165(1) in respect of the supply calculated at the rate of 6%, and
(d) the particular person is not entitled to claim a rebate under subsection 254.1(2) in respect of the complex,
the Minister shall, subject to subsection (4),
(e) pay a rebate to the particular person equal to the amount determined by the formula
A/B
where
A      is the total of all amounts, each of which is the consideration payable by the particular person to the builder for the supply by way of sale to the particular person of the building or part of the building referred to in subparagraph (a)(ii) or of any other structure that forms part of the complex, other than consideration that can reasonably be regarded as rent for the supplies of the land attribut-able to the complex or as consideration for the supply of an option to purchase that land, and
B      is
(i) if the complex is situated in a participating province, 114, and
(ii) in any other case, 106, and
(f) if the builder is not entitled to claim an input tax credit or a rebate, other than a rebate under this subsection, in respect of the tax referred to in paragraph (c), pay a rebate to the builder equal to the amount determined by the formula
0.01 × [C - (D × (100/E))]
where
C      is the fair market value of the complex at the time the builder is deemed to have made the supply referred to in paragraph (c),
D      is the total of all amounts, each of which is the consideration payable by the particular person to the builder for the supply by way of sale to the particular person of the building or part of the building referred to in subparagraph (a)(ii) or of any other structure that forms part of the complex, other than consideration that can reasonably be regarded as rent for the supplies of the land attribut-able to the complex or as consideration for the supply of an option to purchase that land, and
E      is
(i) if the complex is situated in a participating province, 114, and
(ii) in any other case, 106.
Group of individuals
(3) If the supplies described in subsection (1) or (2) are made to two or more individuals, the references in that subsection to a particular person shall be read as references to all of those individuals as a group, but, in the case of a rebate where paragraph (1)(e) applies, only the individual that applied for the rebate under section 254.1 may apply for the rebate under subsection (1).
Application for rebate
(4) A rebate under this section in respect of a residential complex shall not be paid to a person, unless the person files an application for the rebate within two years after
(a) in the case of a rebate to a person other than the builder of the complex, the day on which possession of the complex is transferred to the person; and
(b) in the case of a rebate to the builder of the complex, the end of the month in which the tax referred to in paragraph (1)(c) or (2)(c) is deemed to have been paid by the builder.
Transitional rebate for purchaser — 2008 rate reduction
256.76 (1) Where
(a) under an agreement, evidenced in writing, entered into between a particular person and a builder of a residential complex, other than a single unit residential complex or a residential condominium unit, or an addition to it, the particular person is the recipient of
(i) an exempt supply by way of lease of the land forming part of the complex or an exempt supply of such a lease by way of assignment, and
(ii) an exempt supply by way of sale of the building or part of it in which a residential unit forming part of the complex or the addition is situated,
(b) possession of a residential unit forming part of the complex or the addition is given to the particular person under the agreement on or after January 1, 2008,
(c) the builder is deemed under subsection 191(3) or (4) to have made and received a supply of the complex or the addition as a consequence of giving possession
(i) of the residential unit to the particular person under the agreement, or
(ii) of a residential unit forming part of the complex or the addition to another person under an agreement described in paragraph (a) entered into between the other person and the builder,
(d) the builder is deemed to have paid tax under subsection 165(1) in respect of the supply calculated at the rate of 6%, and
(e) if the builder is deemed to have paid the tax referred to in paragraph (d) on or after January 1, 2008, it is the case that the builder and
(i) the particular person entered into the agreement after May 2, 2006, but on or before October 30, 2007, or
(ii) a person, other than the particular person, after May 2, 2006, but on or before October 30, 2007, entered into an agreement described in paragraph (a) in respect of a residential unit situated in the residential complex or in the addition that the builder is deemed to have supplied (as described in paragraph (c)) and that agreement was not terminated before January 1, 2008,
the Minister shall, subject to subsection (3),
(f) if the particular person is entitled to claim a rebate under subsection 254.1(2) in respect of the complex, pay a rebate to the particular person equal to the amount determined by the formula
A × [0.01 - ((B/A)/6)]
where
A      is the amount determined by the formula
C × (100/D)
where
C      is the total of all amounts, each of which is the consideration payable by the particular person to the builder for the supply by way of sale to the particular person of the building or part of the building referred to in subparagraph (a)(ii) or of any other structure that forms part of the complex or the addition, other than consideration that can reasonably be regarded as rent for the supplies of the land attributable to the complex or as consideration for the supply of an option to purchase that land, and
D      is
(i) if the complex is situated in a participating province, 114, and
(ii) in any other case, 106, and
B      is the amount of the rebate under section 254.1 that the particular person is entitled to claim in respect of the complex, and
(g) if the particular person is not entitled to claim a rebate under subsection 254.1(2) in respect of the complex, pay a rebate to the particular person equal to the amount determined by the formula
E/F
where
E      is the total of all amounts, each of which is the consideration payable by the particular person to the builder for the supply by way of sale to the particular person of the building or part of a building referred to in subparagraph (a)(ii) or of any other structure that forms part of the complex or the addition, other than consideration that can reasonably be regarded as rent for the supplies of the land attributable to the complex or as consideration for the supply of an option to purchase that land, and
F      is
(i) if the complex is situated in a participating province, 114, and
(ii) in any other case, 106.
Group of individuals
(2) If the supplies described in subsection (1) are made to two or more individuals, the references in that subsection to a particular person shall be read as references to all of those individuals as a group, but, in the case of a rebate under paragraph (1)(f), only the individ-ual that applied for the rebate under section 254.1 may apply for the rebate under that paragraph.
Application for rebate
(3) A rebate under this section in respect of a residential complex shall not be paid to a person, unless the person files an application for the rebate within two years after the day on which possession of the unit referred to in paragraph (1)(b) is transferred to the person.
Transitional rebate for builder — 2008 rate reduction
256.77 (1) If
(a) under an agreement, evidenced in writing, entered into between a particular person and a builder of a residential complex, other than a single unit residential complex or a residential condominium unit, or an addition to it, the particular person is the recipient of
(i) an exempt supply by way of lease of the land forming part of the complex or a supply of such a lease by way of assignment, and
(ii) an exempt supply by way of sale of the building or part of it in which a residential unit forming part of the complex or the addition is situated,
(b) the builder is deemed under subsection 191(3) or (4) to have made and received on or after January 1, 2008, a supply of the complex or the addition as a consequence of giving possession
(i) of the residential unit to the particular person under the agreement, or
(ii) of a residential unit forming part of the complex or the addition to another person under an agreement described in paragraph (a) entered into between the other person and the builder,
(c) the builder and
(i) the particular person entered into the agreement after May 2, 2006, but on or before October 30, 2007, or
(ii) a person, other than the particular person, after May 2, 2006, but on or before October 30, 2007, entered into an agreement described in paragraph (a) in respect of a residential unit situated in the residential complex or in the addition that the builder is deemed to have supplied (as described in paragraph (b)) and that agreement was not terminated before January 1, 2008,
(d) the builder is deemed to have paid tax under subsection 165(1) in respect of the supply referred to in paragraph (b) calculated at the rate of 6%, and
(e) the builder is not entitled to claim an input tax credit or a rebate, other than a rebate under this subsection or under subsection 256.2(4), in respect of the tax referred to in paragraph (d),
the Minister shall, subject to subsection (2), pay a rebate to the builder equal to the amount determined by the formula
A × [0.01 - ((B/A)/6)]
where
A      is the amount determined by the formula
C - [D × (100/E)]
where
C      is the fair market value of the complex or, if the builder is deemed to have made a supply of an addition, of the addition, at the time the builder is deemed to have made the supply referred to in paragraph (b),
D      is
(i) if the builder is deemed to have made a supply of a complex, the total of all amounts, each of which is the consideration payable by a person to the builder for the supply by way of sale to the person of the building or part of it forming part of the complex or of any other structure that forms part of the complex, or
(ii) if the builder is deemed to have made a supply of an addition, the total of all amounts, each of which is the consideration payable by a person to the builder for the supply by way of sale to the person of the building or part of it forming part of the addition or of any other structure that forms part of the addition, and
E      is
(i) if the complex is situated in a participating province, 114, and
(ii) in any other case, 106, and
B      is the rebate, if any, under subsection 256.2(4) that the builder is entitled to claim in respect of the complex or, if the builder is deemed to have made a supply of an addition, the addition.
Application for rebate
(2) A rebate under this section in respect of a residential complex or an addition to it shall not be paid to a builder, unless the builder files an application for the rebate within two years after the end of the month in which tax referred to in subsection (1) is deemed to have been paid by the builder.
(2) Subsection (1) comes into force, or is deemed to have come into force, on January 1, 2008.
195. (1) The Act is amended by adding the following after section 274.1:
Variation of agreement — 2008 rate reduction
274.11 If
(a) at any time before January 1, 2008, a supplier and a recipient enter into an agreement for a taxable supply of property or a service,
(b) the supplier and the recipient at a later time either directly or indirectly
(i) vary or alter the agreement for the supply, or
(ii) terminate the agreement and enter into one or more new agreements with each other or with other persons and under one or more of those agreements the supplier supplies, and the recipient receives, one or more supplies that includes all or substantially all the property or service referred to in paragraph (a),
(c) the supplier, the recipient and, where applicable, the other persons are not dealing with each other at arm’s length at the time the agreement is entered into or at the later time,
(d) tax under subsection 165(1) or section 218 in respect of the supply referred to in paragraph (a) would have been calculated at the rate of 6% or 7%, as the case may be, on all or part of the value of the consideration for the supply attributable to the property or service in the absence of the variation, alteration or termination of the agreement,
(e) tax under subsection 165(1) or section 218 in respect of the supply made under the varied or altered agreement or made under any of the new agreements would, in the absence of this section, be calculated at the rate of 5% on any part of the value of the consideration for the supply, attributable to any part of the property or service, on which tax, in respect of the supply referred to in paragraph (a), was initially calculated at the rate of 6% or 7%, as the case may be, and
(f) the variation or alteration of the agreement or the entering into of the new agreements may not reasonably be considered for both the supplier and the recipient to have been undertaken or arranged primarily for bona fide purposes other than to benefit in any manner from the rate change,
the following rule applies
(g) tax under subsection 165(1) or section 218 in respect of the supply made under the varied or altered agreement or made under any of the new agreements shall be calculated at the rate at which tax would have been calculated under paragraph (d) on any part of the value of the consideration, referred to in paragraph (e), attributable to any part of the property or service.
(2) Subsection (1) applies to any agreement varied, altered, terminated or entered into on or after October 30, 2007.
Related Amendments as a Result of the GST/HST Rate Reduction
2002, c. 9, s. 5
Air Travellers Security Charge Act
2006, c. 4, s. 33(1)
196. (1) The portion of paragraph 12(1)(a) of the Air Travellers Security Charge Act before subparagraph (i) is replaced by the following:
(a) $4.67 for each chargeable emplanement included in the service, to a maximum of $9.33, if
2006, c. 4, s. 33(2)
(2) The portion of paragraph 12(1)(b) of the Act before subparagraph (i) is replaced by the following:
(b) $4.90 for each chargeable emplanement included in the service, to a maximum of $9.80, if
2006, c. 4, s. 33(3)
(3) The portion of paragraph 12(1)(d) of the Act before subparagraph (i) is replaced by the following:
(d) $8.34 for each chargeable emplanement included in the service, to a maximum of $16.68, if
2006, c. 4, s. 33(4)
(4) The portion of paragraph 12(2)(b) of the Act before subparagraph (i) is replaced by the following:
(b) $8.34 for each chargeable emplanement by an individual on an aircraft used to transport the individual to a destination outside Canada but within the continental zone, to a maximum of $16.68, if
(5) Subsections (1) to (4) apply in respect of any air transportation service that includes a chargeable emplanement on or after January 1, 2008 and for which any consideration is paid or becomes payable on or after that day.
2002, c. 22
Excise Act, 2001
Amendments to the Act
2006, c. 4, s. 34(1)
197. (1) The portion of the definition “taxed tobacco” in section 58.1 of the Excise Act, 2001 before paragraph (a) is replaced by the following:
“taxed tobacco”« tabac imposé »
“taxed tobacco” of a person means cigarettes, tobacco sticks, loose tobacco and cigars, in respect of which duty has been imposed under section 42 before January 1, 2008 at a rate set out in paragraph 1(b), 2(b) or 3(b) of Schedule 1 or in section 4 of that Schedule, as those provisions read on December 31, 2007, and that, at the beginning of January 1, 2008,
(2) Subsection (1) comes into force, or is deemed to have come into force, on January 1, 2008.
2006, c. 4, s. 34(1)
198. (1) Paragraphs 58.2(a) to (d) of the Act are replaced by the following:
(a) 0.295 cent per cigarette;
(b) 0.275 cent per tobacco stick;
(c) 0.195 cent per gram of loose tobacco; and
(d) 0.19 cent per cigar.
(2) Subsection (1) comes into force, or is deemed to have come into force, on January 1, 2008.
2006, c. 4, s. 34(1)
199. (1) Section 58.3 of the Act is replaced by the following:
Exemption for small retail inventory
58.3 Tax under this Part in respect of the inventory of all taxed tobacco of a person that is held at the beginning of January 1, 2008 at a separate retail establishment of the person is not payable if that retail establishment holds inventory of 30,000 or fewer units.
(2) Subsection (1) comes into force, or is deemed to have come into force, on January 1, 2008.
2006, c. 4, s. 34(1)
200. (1) Subsection 58.5(1) of the Act is replaced by the following:
Returns
58.5 (1) Every person liable to pay tax under this Part shall, on or before February 29, 2008, file a return with the Minister in the prescribed form and manner.
(2) Subsection (1) applies to tax that a person is required to pay under section 58.2 of the Act after December 31, 2007.
2006, c. 4, s. 34(1)
201. (1) Subsection 58.6(1) of the Act is replaced by the following:
Payment
58.6 (1) Every person shall pay to the Receiver General the total tax payable by the person under this Part on or before February 29, 2008.
(2) Subsection (1) applies to tax that a person is required to pay under section 58.2 of the Act after December 31, 2007.
2006, c. 4, s. 35(1)
202. (1) Subparagraphs 216(2)(a)(i) to (iv) of the Act are replaced by the following:
(i) $0.17 multiplied by the number of cigarettes to which the offence relates,
(ii) $0.127 multiplied by the number of tobacco sticks to which the offence relates,
(iii) $0.116 multiplied by the number of grams of manufactured tobacco other than cigarettes or tobacco sticks to which the offence relates, and
(iv) $0.29 multiplied by the number of cigars to which the offence relates, and
2006, c. 4, s. 35(2)
(2) Subparagraphs 216(3)(a)(i) to (iv) of the Act are replaced by the following:
(i) $0.255 multiplied by the number of cigarettes to which the offence relates,
(ii) $0.19 multiplied by the number of tobacco sticks to which the offence relates,
(iii) $0.174 multiplied by the number of grams of manufactured tobacco other than cigarettes or tobacco sticks to which the offence relates, and
(iv) $0.67 multiplied by the number of cigars to which the offence relates, and
(3) Subsections (1) and (2) come into force on the later of January 1, 2008 and the day on which this Act is assented to.
2006, c. 4, s. 36(1)
203. (1) Paragraphs 240(a) to (c) of the Act are replaced by the following:
(a) $0.361448 per cigarette that was removed in contravention of that subsection,
(b) $0.2105 per tobacco stick that was removed in contravention of that subsection, and
(c) $207.704 per kilogram of manufactured tobacco, other than cigarettes and tobacco sticks, that was removed in contravention of that subsection.
(2) Subsection (1) comes into force on the later of January 1, 2008 and the day on which this Act is assented to.
2006, c. 4, s. 37(1)
204. (1) Paragraph 1(b) of Schedule 1 to the Act is replaced by the following:
(b) $0.425 for each five cigarettes or fraction of five cigarettes contained in any package, in any other case.
(2) Subsection (1) comes into force, or is deemed to have come into force, on January 1, 2008.
2006, c. 4, s. 38(1)
205. (1) Paragraph 2(b) of Schedule 1 to the Act is replaced by the following:
(b) $0.06325 per stick, in any other case.
(2) Subsection (1) comes into force, or is deemed to have come into force, on January 1, 2008.
2006, c. 4, s. 39(1)
206. (1) Paragraph 3(b) of Schedule 1 to the Act is replaced by the following:
(b) $57.85 per kilogram, in any other case.
(2) Subsection (1) comes into force, or is deemed to have come into force, on January 1, 2008.
2006, c. 4, s. 40(1)
207. (1) Section 4 of Schedule 1 to the Act is replaced by the following:
4. Cigars: $18.50 per 1,000 cigars.
(2) Subsection (1) comes into force, or is deemed to have come into force, on January 1, 2008.
2006, c. 4, s. 41(1)
208. (1) Paragraph (a) of Schedule 2 to the Act is replaced by the following:
(a) $0.067 per cigar, and
2006, c. 4, s. 41(2)
(2) The portion of paragraph (b) of Schedule 2 to the Act before subparagraph (i) is replaced by the following:
(b) 67%, computed on
(3) Subsections (1) and (2) come into force, or are deemed to have come into force, on January 1, 2008.
Application
209. For the purposes of applying the provisions of the Customs Act that provide for the payment of, or the liability to pay, interest in respect of any amount, the amount shall be determined and interest shall be computed on it as though sections 204 to 208 had come into force on January 1, 2008.
Published under authority of the Speaker of the House of CommonsAvailable from:Publishing and Depository ServicesPublic Works and Government Services Canada