C-621
Second Session, Forty-first Parliament,
62-63 Elizabeth II, 2013-2014
HOUSE OF COMMONS OF CANADA
BILL C-621
An Act to amend the Income Tax Act (economic substance)
first reading, June 16, 2014
Mr. Rankin
412160
SUMMARY
This enactment amends the Income Tax Act to require the Minister or the court to take into consideration the economic substance of a transaction in the determination of whether that transaction is an avoidance transaction and whether that transaction results in a misuse or abuse of that Act. Further, it establishes the presumption that an avoidance transaction that does not have substantial economic substance in relation to its anticipated tax benefit results in a misuse or abuse of that Act.
Available on the Parliament of Canada Web Site at the following address:http://www.parl.gc.ca
2nd Session, 41st Parliament,
62-63 Elizabeth II, 2013-2014
house of commons of canada
BILL C-621
An Act to amend the Income Tax Act (economic substance)
R.S., c. 1 (5th Supp.)
Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:
1. (1) Subsection 245(1) of the Income Tax Act is amended by adding the following in alphabetical order:
“economic substance”« substance économique »
“economic substance” means the change or anticipated change to a taxpayer's financial position that provides the taxpayer with a potential profit in a transaction and that has a specific purpose other than that of being a tax benefit.
(2) Section 245 of the Act is amended by adding the following after subsection (3):
Economic substance
(3.1) For the purpose of determining whether a transaction is an avoidance transaction under subsection (3), the Minister or the court, as the case may be, shall consider the economic substance of the transaction as a relevant factor.
(3) The portion of subsection 245(4) of the Act before paragraph (a) is replaced by the following:
For greater certainty
(4) For greater certainty, subsection (2) applies to a transaction only if it may reasonably be considered that the transaction 
(4) Section 245 of the Act is amended by adding the following after subsection (4):
Presumption
(4.1) If the Minister or the court, as the case may be, determines that an avoidance transaction does not have economic substance of a value that is substantially greater than its anticipated tax benefit, it shall be presumed that the transaction would result directly or indi­rectly in a misuse of the provisions of this Act or in an abuse having regard to the provisions of this Act, other than this section, read as a whole. 
Onus on taxpayer
(4.2) The onus of rebutting the presumption referred to in subsection (4.1) is on the taxpayer.
(5) The portion of subsection 245(5) of the Act before paragraph (c) is replaced by the following:
Determination of tax consequences
(5) Without restricting the generality of subsection (2), 
(a) any deduction in computing income, taxable income, taxable income earned in Canada or tax payable or any part thereof may be allowed or disallowed in whole or in part, 
(b) any such deduction, any income, loss or other amount or part thereof may be allocated to any person,
Published under authority of the Speaker of the House of Commons