Archived - Explanatory Notes to Legislative Proposals Relating to Income Tax

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

November 2006

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These notes are intended for information purposes only and should not be construed as an official interpretation of the provisions they describe.

Table of Contents

Clause in Legislation Section of the Act Amended Topic

Preface

1 Title

Part 1 – Foreign Investment Entities and Non-Resident Trusts
2 12 Income from Business or Property
3 12.2 Life Insurance Policies – Definitions
4 17 Loan to Non-resident – Controlled Foreign Affiliate
5 39 Capital Gain from Disposition of Property
6 51 Convertible Property
7 52 Cost of Certain Property
8 53 Adjustments to Cost Base
9 70 Death of a Taxpayer
10 73 Inter Vivos Transfers by Individuals
11 75 Trusts – Attribution
12 85 Definition of "eligible property"
13 85.1 Share-for-share Exchange
14 86 Share-for-share Exchange – Reorganization of Capital
15 87 Amalgamations – Non-resident Trusts and Foreign Investment Entities
16 91 Amounts to be Included in Respect of Share of a Foreign Affiliate
17 94 Non-resident Trusts
18 94.1 to 94.4 Foreign Investment Entities
19 95 Foreign Affiliates
20 96 Partnerships and their Members
21 97 Contributions of Property to a Partnership
22 98 Disposition of Partnership Property
23 104 Trusts and their Beneficiaries
24 107 Cost of Capital Interest
25 107.4 Qualifying Disposition
26 108 Trusts
27 113 Deduction in Respect of Dividend Received
from Foreign Affiliate
28 114 Part-year Residents
29 115 Taxable Income Earned in Canada
30 122 Tax Payable by Inter Vivos Trust
31 126 Foreign Tax Credit
32 128.1 Changes in Residence
33 149 Exempt Corporations
34 152 Assessment and Reassessment
35 160 Tax Liability – Non-arm’s Length Transfers of Property
36 and 37 162 and 163 Penalties
38 215 Withholding and Remittance of Tax
39 216 Deduction and Payment of Tax
40 233.2 Foreign Reporting Requirements
41 233.3 Returns in Respect of Foreign Property
42 233.4 Returns Respecting Foreign Affiliates
43 233.5 Due Diligence Exception
44 248 Interpretation and Certain Arrangements under Civil Law
45 S.C. 2001, c. 17 Inter VivosTransfer of Property by an Individual
46 S.C. 2001, c. 17 Disposition by Taxpayer of Capital Interest

Part 2 – General
47 4 Income or Loss from a Source or from Sources in a Place
– Deductions Applicable
48 6 Employment Income
49 7 Employment Security Options – Definitions
50 8 Income from Office or Employment – Deductions
51 12 Income Inclusions
52 13 Depreciable Property
53 14 Eligible Capital Property
54 15 Shareholder Benefits
55 18 Prohibited Deductions
56 18.1 Non-application of Section 18.1
57 20 Deductions
58 37 Scientific Research and Experimental Development
59 38.1 Allocation of Gain on Gifts to Qualified Donees
60 40 Gains and Losses – General Rules
61 43 Part Dispositions
62 43.1 Life Estates in Real Property
63 44 Exchanges of Property
64 44.1 Capital Gains Deferral – Eligible Small Business Investments
65 52 Cost of Certain Property
66 53 Adjustments to Cost Base
67 54 Definitions – Capital Gains and Losses
68 54.1 Exception to Principal Residence Rules
69 55 Tax Avoidance – Dividends
70 56 Other Sources of Income
71 56.4 Restrictive Covenants
72 60 Deductions in Computing Income
73 60.011 Application of Paragraph 60(1) to Annuity With Trust as a Annuitant
74 63 Child Care Expenses
75 66 Exploration and Development Expenses
76 66.7 Exploration and Development Expenses – Successor Rules
77 68 Allocation of Amounts in Consideration for Property, Services or Restrictive Covenants
78 69 Inadequate Consideration
79 70 Death of a Taxpayer
80 72 Election by Legal Representative and Transferee re Reserves
81 73 Inter VivosTransfers by Individuals
82 75.2 Rules Applicable With Respect to "Qualifying Trust Annuity"
83 80.2 Reimbursement of Crown Charges
84 82 Compensation Payments Deductible by Individuals
85 84 Deemed Dividend
86 85 Transfer of Property to Corporation by Shareholders
87 86.1 Eligible Distribution Not Included in Income
88 87 Amalgamations
89 88 Winding-up of a Corporation
90 89 Taxable Canadian Corporation
91 96 Partnerships and their Members
92 99 Fiscal Period of Terminated Partnership
93 100 Replacement of Partnership Capital
94 104 Trusts and their Beneficiaries
95 106 Proceeds of Disposition of Income Interest
96 107 Interests in Trusts
97 107.1 Dispositions by Employee Trust, Employee Benefit Plan or Similar Trust
98 107.2 Distribution by a Retirement Compensation Arrangement
99 107.4 Qualifying Disposition
100 108 Taxation of Trusts and Their Beneficiaries
101 110 Taxable Income – Deductions
102 110.1 Charitable Donations Deduction
103 110.6 Lifetime Capital Gains Exemption
104 111 Loss Carryovers
105 116 Certificates for Dispositions
106 118 Personal Tax Credits
107 118.1 Charitable Donations Tax Credit
108 118.2 Medical Expense Tax Credit
109 118.3 Tax Credit for Mental or Physical Impairment
110 118.5 Tuition Credit
111 118.6 Education Tax Credit
112 118.7 Credit for EI and QPIP Premiums and CPP Contributions
113 120.2 Minimum Tax Carry-over
114 120.31 Lump-sum Payments
115 120.4 Tax on Split Income
116 122.3 Overseas Employment Tax Credit
117 125 Small Business Deduction
118 125.1 Manufacturing and Processing Profits Deduction
119 125.11 Resource Income
120 125.4 Canadian Film or Video Production Tax Credit
121 126 Foreign Tax Credit
122 126.1 UI Premium Tax Credit
123 127 Deductions in Computing Tax
124 127.4 Labour-sponsored Venture Capital Corporations
125 127.52 Minimum Tax
126 128.1 Returning Trust Beneficiary
127 129 Private Corporations – Refundable Dividend Tax on Hand
128 132 Definition "mutual fund trust"
129 132.11 Taxation Year of Mutual Fund Trust
130 132.2 Mutual Fund Qualifying Exchanges
131 134.1 Non-resident-owned Investment Corporations – Transition
132 136 Cooperative Corporation
133 137 Credit Unions
134 137.1 Deposit Insurance Corporations
135 138 Insurance Corporations
136 142.6 Mark-to-market Rules
137 142.7 Authorized Foreign Banks – Conversion
138 143 Communal Organizations
139 143.2 Limited-recourse Debt in Respect of a Gift or Monetary Contribution
140 143.3 Expenditure – Limitations
141 146 Registered Retirement Savings Plans
142 146.01 Home Buyers’ Plan
143 146.1 Registered Education Savings Plans – Conditions for Registration
144 146.3 Registered Retirement Income Funds
145 147 Deferred Profit Sharing Plans
146 148 Amounts Included in Computing Policyholder’s Income
147 148.1 Eligible Funeral Arrangements
148 149 Exemptions
149 149.1 Charities
150 152 Assessment
151 153 Withholding
152 157 Instalments
153 159 Person Acting for Another – Personal Liability
154 160 Tax Liability – Non-arm’s Length Transfers of Property
155 160.1 Where Excess Refunded
156 160.2 Joint and Several Liability – Amounts Received out of or under RRSP
157 160.3 Liability – Amounts Received out of or under RCA Trust
158 160.4 Liability – Transfers by Insolvent Corporation
159 162 Penalties
160 163 False Statements or Omissions – GSTC Payments
161 164 Refunds
162 Part I.3 Large Corporations Tax
163 181.2 Taxable Capital Employed in Canada
164 181.3 Taxable Capital Employed in Canada of Financial Institution
165 Part III Additional Tax on Excessive Elections
166 188 Revocation Tax
167 190.13 Financial Institutions Capital Tax
168 191 Excluded Dividend – Partner
169 191.1 Tax on Taxable Dividends
170 200 Distribution Deemed Disposition
171 204.81 Labour-sponsored Venture Capital Corporations
172 204.9 Transfers Between Plans
173 Part XI Foreign Property Rules
174 207.31 Tax Payable by Recipient of an Ecological Gift
175 Part XII.2 Tax on Designated Income of Certain Trusts
176 210.2 Amateur Athlete Trusts
177 211.6 Part XII.4
178 Part XII.5 Recovery of Labour-Sponsored Funds Tax Credit
179 212 Taxation of Non-residents
180 214 Deemed Payments
181 216 Alternative re Rents and Timber Royalties
182 220 Administration and Enforcement
183 230 Records and Books
184 231.2 Requirement to Provide Documents or Information
185 237.1 Tax Shelters
186 241 Provision of Information
187 248 Interpretation
188 249 Taxation Year
189 251 Arm’s Length
190 252 Extended meaning of "spouse" and "former spouse"
191 253.1 Investments in Limited Partnerships
192 256 Acquisition of Control of a Corporation
193 259 Proportional Holdings in Properties
194 260 Securities Lending Arrangements
195 Schedule Listed Corporations
196 and 197 Amendments to An Act to Amend the Income Tax Act (Natural Resources)
198 Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act
199 FPFAA 12.2 Amendments to the Federal – Provincial Fiscal Arrangements Act
200 S.C. 2000, c. 17 Debt Forgiveness Rules
201 S.C. 2000, c. 17 Disposition of Shares in a Foreign Affiliate

Part 3 – Amendments Related to Bijuralism