Explanatory Notes relating to the Income Tax Act, the Excise Act, 2001 and the Excise Tax Act

Published by
The Honourable James M. Flaherty, P.C., M.P.
Minister of Finance

February 2009

---

Notice to the reader:

The text in this document is an exact copy of the text found in the PDF version. However, the software used to produce this version cannot fully reproduce the underlining and sidebar features found in the other formats.

• PDF Version March 19, 2009 version following change on page 99
• PDF Version February 27, 2009 version following change on page 56
• PDF Version February 12, 2009

---

Related Documents:

• Government of Canada Moves to Implement Outstanding Tax Measures (News Release 2009-014)
• Notice of Ways and Means Motion to implement certain provisions of the budget tabled in Parliament on January 27, 2009 and related fiscal measures

---

Table of Contents

Clause in Legislation		Section of the Act Amended	Topic
Preface
Part 1 Amendments related to Income Tax
Income Tax Act
2	6			Income from office or employment
3	7			Stock options
4	12			Income from business or property
5	12.5			Insurer’s reserve inclusion
6	18.2			Interest deductibility
7	20			Borrowed money
8	20.4			Insurer’s reserve deduction
9	39			Meaning of capital gain and capital loss
10	40			Calculation of gain or loss
11	53			Adjustments to cost base
12	54			Superficial losses
13	56			Other income inclusions
14	60			Deductions in computing income
15	60.021			RRIF and variable benefit minimum amount rules
16	62			Moving expenses
17	80.01			Deemed settlement on SIFT winding-up
18	85.1			SIFT unit for share exchange
19	87			Financial institution rules
20	88			Windings-up
21	88.1			Application of section 88 on SIFT trust wind-up event
22	89			Definitions – corporations
23	91			Foreign affiliate income
24	92			Adjusted cost base of share of foreign affiliate
25	95			Foreign affiliates
26	107			Capital interests in a trust
27	107.4			Tax consequences of qualifying dispositions
28	108			Trusts – definitions and rules "cost amount"
29	110.1			Eligible medical gift
30	111			Exchange rate and foreign currency debt
31	115			Non-resident’s taxable income earned in Canada
32	116			Excluded property
33	117			Rates for taxation years after 2008
34	118			Canada Employment Credit
35	118.1			Charitable and other gifts
36	122.1			SIFT trusts and SIFT partnerships
37	122.51			Refundable medical expense supplement
38	122.7			Working income tax benefit
39	125			Small Business Limit
40	127			Investment tax credits
41	127.1			Refundable investment tax credits
42	127.4			Qualifying trust
43	128.3			Former resident – replaced shares
44	132.2			Qualifying exchange
45	138			Insurance corporations
46	142.2			Financial institutions
47	142.5			Mark-to-market properties
48	142.51			Transitional rules
49	142.6			Securities held by financial institutions – change in status
50	143.1			Amateur Athletes’ Reserve Funds
51	146			Registered Retirement Savings Plans
52	146.01			Home Buyers’ Plan
53	146.2			Tax-Free Savings Accounts
54	146.3			Registered Retirement Income Funds
55	149.1			Charities – Definitions
56	149.2			Excess corporate holdings – private foundations
57	150.1			Mandatory filing by electronic transmission
58	152			Assessment and reassessment
59	157(1.2)			Small-CCPCs - quarterly installments
60	162			Late filing penalty – prescribed information returns
61	181.3			Taxable capital employed in Canada of financial institution
62	188.1			Foundation – anti-avoidance
63	190.11			Life insurer
64	190.13			Non-resident life insurer
65	197			SIFT partnerships
66	204			Definitions "qualified investment"
67	204.81			LSVCC conditions for registration
68	207.01			Taxes in respect of TFSAs
69	207.03			Tax payable on non-resident contributions
70	207.04			Tax payable on prohibited or non-qualified investment
71	207.06			Waiver of tax payable
72	211			Tax on investment income of life insurers
73	212			Tax on non-residents
74	218.3			Part XIII.2 Tax – "assessable distribution"
75	241			Communication of information
76	248			Interpretation
77	253.1			Investments in limited partnerships
78	256			Associated Corporations
79	259			Proportional holdings in trust property
80	261			Functional currency tax reporting
Budget Implementation Acts
81				RDSP deadline extension
82	19			Budget Implementation Act, 2008
Income Tax Regulations
83	202			Information returns
84	204			Estates and trusts
85	209			Distribution of taxpayers’ portions of returns
86	221			Registered Retirement Savings Plans
87	221			Registered Retirement Income Funds
88	221			Qualified investments
89	223			TFSAs
90	304			Annuities and life insurance policies
91	400			Taxable income earned in a province by a corporation
92	401			Computation of taxable income
93	402.1			Central paymaster
94	403			Foreign net insurance premiums
95	413			Non-resident corporations
96	413.1			International Banking Centre exception
97	414 and 415			Provincial SIFT tax rate
98	Part XIV			Insurance business policy reserves
99	1401			Policy reserves for pre-1996 policies
100	1404 and 1405			Policy reserves
101	1408			Definitions – Life insurance policy
102	2400			Transition year
103	2600			Definition – "income earned in the year in the province"
104	3505			Conditions
105	4900			Deferred income plans – qualified investments
106	4901			Deferred income plans – qualified investments
107	5000 and 5001			TFSA – prohibited investments
108	Part LVII			Medical expense tax credit
109	5700			Medical devices and equipment
110	5701			Prescribed drugs, medicaments, etc
111	5906			Foreign affiliates
112	5907			Foreign affiliates
113	7305.1			Automobile benefits
114	7306			Automobile deduction limits
115	8308.1			Pension credit – tax treaty
116	8308.2			Prescribed amount under foreign plans
117	8506			Variable benefit minimum amount
118	9000 to 9004			Financial Institutions—prescribed entities and properties
Part 2 Amendments in respect of Sales and Excise Taxes
Excise Act, 2001
119	2			Definition "officer"
120	211			Communication of information
Excise Tax Act
121	295			Communication of information