Notice of Ways and Means Motion to implement certain provisions of the budget tabled in Parliament on March 29, 2012 and other measures

1. That it is expedient to implement certain provisions of the budget tabled in Parliament on March 29, 2012 and other measures, as follows:

PART 1

Amendments to the Income Tax Act and Related Regulations

R.S., c. 1 (5th Supp.)

Income Tax Act

2. (1) Subparagraph 6(1)(a)(i) of the Income Tax Act is replaced by the following:

(i) derived from the contributions of the taxpayer's employer to or under a deferred profit sharing plan, an employee life and health trust, a group sickness or accident insurance plan, a group term life insurance policy, a pooled registered pension plan , a private health services plan, a registered pension plan or a supplementary unemployment benefit plan,

(2) Subsection 6(1) of the Act is amended by adding the following after paragraph (e):

Group sickness or accident insurance plans

(e.1the total of

(i) all amounts (or the portions of those amounts) contributed by the taxpayer's employer after March 28, 2012 and before 2013 that are attributable to the taxpayer's coverage after 2012 under a group sickness or accident insurance plan, except to the extent that the contributions (or portions of those contributions) are attributable to benefits under the plan that, if received by the taxpayer, would be included in the taxpayer's income under paragraph (f) in the year the benefits are received if that paragraph were read without regard to its subparagraph (v), and

(ii) all amounts contributed in 2013 in respect of the taxpayer by the taxpayer's employer to a group sickness or accident insurance plan, except to the extent that the contributions are attributable to benefits under the plan that, if received by the taxpayer, would be included in the taxpayer's income under paragraph (f) in the year the benefits are received if that paragraph were read without regard to its subparagraph (v);

(3) Paragraph 6(1)(e.1) of the Act, as enacted by subsection (2), is replaced by the following:

Group sickness or accident insurance plans

(e.1the total of all amounts contributed in the year in respect of the taxpayer by the taxpayer's employer to a group sickness or accident insurance plan, except to the extent that the contributions are attributable to benefits under the plan that, if received by the taxpayer, would be included in the taxpayer's income under paragraph (f) in the year the benefits are received if that paragraph were read without regard to its subparagraph (v);

(4) Subsection (1) comes into force or is deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

(5) Subsection (2) applies to the 2013 taxation year.

(6) Subsection (3) applies to the 2014 and subsequent taxation years.

3. (1) Subsection 8(1) of the Act is amended by adding the following after paragraph (o.1):

Excess EPSP amounts

(o.2an amount that is an excess EPSP amount (as defined in subsection 207.8(1)) of the taxpayer for the year, other than any portion of the excess EPSP amount for which the taxpayer's tax for the year under subsection 207.8(2) is waived or cancelled;

(2) Subsection (1) applies to the 2012 and subsequent taxation years.

4. (1) Subsection 12(1) of the Act is amended by adding the following after paragraph (l):

Partnership — interest deduction add back

(l.1the total of all amounts, each of which is the amount, if any, determined in respect of a partnership by the formula

A × B/C – D
whereA

is the total of all amounts each of which is an amount of interest that is

(i) deductible by the partnership, and

(ii) paid by the partnership in, or payable by the partnership in respect of, the taxation year of the taxpayer (depending on the method regularly followed by the taxpayer in computing the taxpayer's income) on a debt amount included in the taxpayer's outstanding debts to specified non-residents (as defined in subsection 18(5)),

B

is the amount determined under paragraph 18(4)(a) in respect of the taxpayer for the year,

C

is the amount determined under paragraph 18(4)(b) in respect of the taxpayer for the year, and

D

is the total of all amounts each of which is an amount included under subsection 91(1) in computing the income of the taxpayer for the year or a subsequent taxation year, or of the partnership for a fiscal period, that may reasonably be considered to be in respect of interest described in A;

(2) Subsection (1) applies to taxation years that begin after March 28, 2012.

5. (1) Subsection 15(2) of the French version of the Act is replaced by the following:

Dette d'un actionnaire

(2) La personne ou la société de personnes — actionnaire d'une société donnée, personne ou société de personnes rattachée à un tel actionnaire ou associé d'une société de personnes, ou bénéficiaire d'une fiducie, qui est un tel actionnaire — qui, au cours d'une année d'imposition, obtient un prêt ou devient la débitrice de la société donnée, d'une autre société liée à celle-ci ou d'une société de personnes dont la société donnée ou une société liée à celle-ci est un associé est tenue d'inclure le montant du prêt ou de la dette dans le calcul de son revenu pour l'année. Le présent paragraphe ne s'applique pas aux sociétés résidant au Canada ni aux sociétés de personnes dont chacun des associés est une société résidant au Canada.

(2) The portion of subsection 15(2) of the Act after paragraph (c) is replaced by the following:

and the person or partnership has in a taxation year received a loan from or become indebted to (otherwise than by way of a pertinent loan or indebtedness) the particular corporation, any other corporation related to the particular corporation or a partnership of which the particular corporation or a corporation related to the particular corporation is a member, the amount of the loan or indebtedness is included in computing the income for the year of the person or partnership.

(3) Section 15 of the Act is amended by adding the following after subsection (2.1):

Pertinent loan or indebtedness

(2.11) For the purposes of subsection (2) and subject to subsection 17.1(3), "pertinent loan or indebtedness" means a loan received, or an indebtedness incurred, at any time, by a non-resident corporation (in this subsection referred to as the "subject corporation"), or by a partnership of which the subject corporation is, at that time, a member, that is an amount owing to a corporation resident in Canada (in this subsection and subsections (2.12) and (2.14) referred to as the "CRIC") or to a qualifying Canadian partnership in respect of the CRIC and in respect of which amount owing all of the following apply:

(asubsection (2) would, in the absence of this subsection, apply to the amount owing;

(bthe amount becomes owing after March 28, 2012;

(cat that time, the CRIC is controlled by a non-resident corporation that

(i) is the subject corporation, or

(ii) does not deal at arm's length with the subject corporation; and

(deither

(i) in the case of an amount owing to the CRIC, the CRIC and a non-resident corporation that controls the CRIC jointly elect in writing under this subparagraph in respect of the amount owing and file the election with the Minister on or before the filing-due date of the CRIC for the taxation year that includes that time, or

(ii) in the case of an amount owing to the qualifying Canadian partnership, all the members of the qualifying Canadian partnership and a non-resident corporation that controls the CRIC jointly elect in writing under this subparagraph in respect of the amount owing and file the election with the Minister on or before the filing-due date of the CRIC for its taxation year in which ends the fiscal period of the qualifying Canadian partnership that includes that time.

Late-filed elections

(2.12) Where an election referred to in paragraph (2.11)(d) was not made on or before the day on or before which the election was required by that paragraph to be made, the election is deemed to have been made on that day if the election is made on or before the day that is three years after that day and the penalty in respect of the election is paid by the CRIC when the election is made.

Penalty for late-filed election

(2.13) For the purposes of subsection (2.12), the penalty in respect of an election referred to in that subsection is the amount equal to the product obtained by multiplying $100 by the number of months each of which is a month all or part of which is during the period commencing with the day on or before which the election is required by paragraph (2.11)(d) to be made and ending on the day the election is made.

Partnerships

(2.14) For the purposes of this subsection, subsection (2.11) and section 17.1,

(aa "qualifying Canadian partnership", at any time in respect of a CRIC, means a partnership each member of which is, at that time, the CRIC or another corporation resident in Canada to which the CRIC is, at that time, related; and

(ba person or partnership that is (or is deemed by this paragraph to be) a member of a particular partnership that is a member of another partnership is deemed to be a member of the other partnership.

Mergers

(2.15) For the purposes of subsections (2.11) and (2.14),

(aif there has been an amalgamation to which subsection 87(1) applies, the new corporation referred to in that subsection is deemed to be the same corporation as, and a continuation of, each predecessor corporation referred to in that subsection; and

(bif there has been a winding-up to which subsection 88(1) applies, the parent referred to in that subsection is deemed to be the same corporation as, and a continuation of, the subsidiary referred to in that subsection.

(4) Subsection (1) applies to loans made and indebtedness arising in the 1990 and subsequent taxation years.

(5) Subsection (2) and subsections 15(2.11) to (2.14) of the Act, as enacted by subsection (3), apply to loans received and indebtedness incurred after March 28, 2012. However, any election referred to in paragraph 15(2.11)(d) of the Act, as enacted by subsection (3), that would otherwise be required to be filed with the Minister of National Revenue on or before the day that is 120 days after the day on which this Act receives royal assent is deemed to have been filed with the Minister on a timely basis if it is filed with the Minister on or before the day that is 365 days after the day on which this Act receives royal assent.

(6) Subsection 15(2.15) of the Act, as enacted by subsection (3), applies to amalgamations that occur, and windings-up that begin, after March 28, 2012.

6. (1) The Act is amended by adding the following after section 17:

Deemed interest income — sections 15 and 212.3

17.1 (1) Subject to subsection (2), if — at any time in a taxation year of a corporation resident in Canada (in this section referred to as the "CRIC") or in a fiscal period of a qualifying Canadian partnership in respect of the CRIC — a non-resident corporation, or a partnership of which the non-resident corporation is a member, owes an amount to the CRIC or the qualifying Canadian partnership and the amount owing is a pertinent loan or indebtedness (as defined in subsection 15(2.11) or 212.3(11)),

(asection 17 does not apply in respect of the amount owing; and

(bthe amount, if any, determined by the following formula is to be included in computing the income of the CRIC for the year or of the qualifying Canadian partnership for the fiscal period, as the case may be:

A – B
whereA

is the amount that is the greater of

(i) the amount of interest that would be included in computing the income of the CRIC for the year or of the qualifying Canadian partnership for the fiscal period, as the case may be, in respect of the amount owing for the particular period in the year, or the fiscal period, during which the amount owing was a pertinent loan or indebtedness if that interest were computed at the prescribed rate for the particular period, and

(ii) the total of all amounts of interest payable in respect of the period in the year, or the fiscal period, during which the amount owing was a pertinent loan or indebtedness, by the CRIC, the qualifying Canadian partnership, a person resident in Canada with which the CRIC did not, at the time the amount owing arose, deal at arm's length or a partnership of which the CRIC or the person is a member, in respect of a debt obligation — entered into as part of a series of transactions or events that includes the transaction by which the amount owing arose — to the extent that the proceeds of the debt obligation can reasonably be considered to have directly or indirectly funded, in whole or in part, the amount owing, and

B

is an amount included in computing the income of the CRIC for the year or of the qualifying Canadian partnership for the fiscal period, as the case may be, as, on account of, in lieu of or in satisfaction of, interest in respect of the amount owing for the period in the year, or the fiscal period, during which the amount owing was a pertinent loan or indebtedness.

Acquisition of control

(2) If at any time a parent referred to in section 212.3 acquires control of a CRIC and the CRIC was not controlled by a non-resident corporation immediately before that time, no amount is to be included under subsection (1) in computing the income of the CRIC in respect of a pertinent loan or indebtedness (as defined in subsection 212.3(11)) for the period that begins at that time and ends on the day that is 180 days after that time.

Tax treaties

(3) A particular loan or indebtedness that would, in the absence of this subsection, be a pertinent loan or indebtedness is deemed not to be a pertinent loan or indebtedness if, because of a provision of a tax treaty, the amount included in computing the income of the CRIC for any taxation year or of the qualifying Canadian partnership for any fiscal period, as the case may be, in respect of the particular loan or indebtedness is less than it would be if no tax treaty applied.

(2) Subsection (1) applies to taxation years and fiscal periods that end after March 28, 2012. However, in respect of acquisitions of control of a corporation resident in Canada that occur before the day on which the ways and means motion to implement this subsection is tabled in the House of Commons, subsection 17.1(2) of the Act, as enacted by subsection (1), is to be read as follows:

(2) If at any time a parent referred to in section 212.3 acquires control of a CRIC and the CRIC was not controlled by a non-resident corporation immediately before that time, no amount is to be included under subsection (1) in computing the income of the CRIC in respect of a pertinent loan or indebtedness (as defined in subsection 212.3(11)) for the period that begins on March 29, 2012 and ends on the day that is 180 days after the day on which the ways and means motion to implement this subsection is tabled in the House of Commons.

7. (1) Subparagraph 18(1)(k)(iii) of the Act is replaced by the following:

(iii) a pooled registered pension plan or registered pension plan;

(2) The portion of subsection 18(4) of the Act before paragraph (a) is replaced by the following:

Limitation — deduction of interest by certain corporations

(4) Notwithstanding any other provision of this Act (other than subsection (8)) , in computing the income for a taxation year of a corporation resident in Canada from a business or property, no deduction shall be made in respect of that proportion of any amount otherwise deductible in computing its income for the year in respect of interest paid or payable by it on outstanding debts to specified non-residents that

(3) The portion of subparagraph 18(4)(a)(ii) of the Act before clause (A) is replaced by the following:

(ii) 1.5 times the total of

(4) Clause 18(4)(a)(ii)(B) of the Act is replaced by the following:

(B) the average of all amounts each of which is the corporation's contributed surplus (other than any portion of that contributed surplus that arose in connection with an investment, as defined in subsection 212.3(10), to which subsection 212.3(2) applies) at the beginning of a calendar month that ends in the year, to the extent that it was contributed by a specified non-resident shareholder of the corporation, and

(5) The portion of subsection 18(5) of the Act before the definition "outstanding debts to specified non-residents" is replaced by the following:

Definitions

(5) Notwithstanding any other provision of this Act (other than subsection (5.1)), in this subsection and subsections (4) to (7 ),

(6) Subsection 18(5) of the Act is amended by adding the following in alphabetical order:

"specified proportion"

« proportion déterminée »

"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 purposes 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;

(7) Section 18 of the Act is amended by adding the following after subsection (6):

Partnership debts

(7) For the purposes of this subsection, paragraph (4)(a), subsections (5) to (6) and paragraph 12(1)(l.1), each member of a partnership at any time is deemed at that time

(ato owe the portion (in this subsection and paragraph 12(1)(l.1) referred to as the "debt amount") of each debt or other obligation to pay an amount of the partnership that is equal to

(i) the member's specified proportion for the last fiscal period, if any, of the partnership ending

(A) at or before the end of the taxation year referred to in subsection (4), and

(B) at a time when the member is a member of the partnership, and

(ii) if the member does not have a specified proportion described in subparagraph (i), the proportion that

(A) the fair market value of the member's interest in the partnership at that time

is of

(B) the fair market value of all interests in the partnership at that time;

(bto owe the debt amount to the person to whom the partnership owes the debt or other obligation to pay an amount; and

(cto have paid interest on the debt amount that is deductible in computing the member's income to the extent that an amount in respect of interest paid or payable on the debt amount by the partnership is deductible in computing the partnership's income.

Exception — foreign accrual property income

(8) An amount in respect of interest paid or payable to a controlled foreign affiliate of a corporation resident in Canada that would otherwise not be deductible by the corporation for a taxation year because of subsection (4) may be deducted to the extent that an amount included under subsection 91(1) in computing the corporation's income for the year or a subsequent year can reasonably be considered to be in respect of the interest.

(8) The portion of paragraph 18(11)(c) of the Act before subparagraph (i) is replaced by the following:

(cmaking a contribution to a deferred profit sharing plan, a pooled registered pension plan or a registered pension plan, other than

(9) Subsections (1) and (8) come into force or are deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

(10) Subsection (2) applies to taxation years that end after March 28, 2012.

(11) Subsection (3) applies to taxation years that begin after 2012.

(12) Subsection (4) is deemed to have come into force on March 29, 2012.

(13) Subsections (5) and (6) and subsection 18(7) of the Act, as enacted by subsection (7), apply to taxation years that begin after March 28, 2012.

(14) Subsection 18(8) of the Act, as enacted by subsection (7), applies to taxation years that end after 2004.

8. (1) Paragraph 20(1)(q) of the Act is replaced by the following:

Employer's contributions to RPP or PRPP

(qsuch amount in respect of employer contributions to registered pension plans or pooled registered pension plans as is permitted under subsection 147.2(1) or 147.5(10) ;

(2) Paragraph 20(2.2)(a) of the Act is replaced by the following:

(athat is or is issued pursuant to a pooled registered pension plan , a registered pension plan, a registered retirement savings plan, an income-averaging annuity contract or a deferred profit sharing plan;

(3) Subsections (1) and (2) come into force or are deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

9. (1) Subparagraph 37(1)(a)(i) of the Act is replaced by the following:

(i) on scientific research and experimental development related to a business of the taxpayer, carried on in Canada and directly undertaken by the taxpayer,

(i.01) on scientific research and experimental development related to a business of the taxpayer, carried on in Canada and directly undertaken on behalf of the taxpayer,

(2) Paragraph 37(1)(b) of the Act is repealed.

(3) Paragraph 37(1)(d) of the Act is replaced by the following:

(dthe total of all amounts each of which is the amount of any government assistance or non-government assistance (as defined in subsection 127(9)) in respect of an expenditure described in paragraph (a) or (b), as paragraph (a) or (b), as the case may be, read in its application in respect of the expenditure , that at the taxpayer's filing-due date for the year the taxpayer has received, is entitled to receive or can reasonably be expected to receive,

(4) Subsection 37(6) of the Act is replaced by the following:

Expenditures of a capital nature

(6) For the purposes of section 13, an amount claimed under subsection (1) that may reasonably be considered to be in respect of a property described in paragraph (1)(b), as that paragraph read in its application in respect of the property, is deemed to be an amount allowed to the taxpayer in respect of the property under regulations made under paragraph 20(1)(a), and for that purpose the property is deemed to be of a separate prescribed class.

(5) Clause 37(6.1)(a)(i)(B) of the Act is replaced by the following:

(B) the lesser of the amounts determined immediately before that time in respect of the corporation under subparagraphs (1)(b)(i) and (ii), as those subparagraphs read on March 29, 2012, in respect of expenditures made, and property acquired, by the corporation before 2014 , or

(6) Clause 37(8)(a)(ii)(A) of the Act is amended by adding "or" at the end of subclause (I), by replacing "or" with "and" at the end of subclause (II) and by repealing subclause (III).

(7) Subclause 37(8)(a)(ii)(B)(I) of the Act is repealed.

(8) Subclause 37(8)(a)(ii)(B)(II) of the Act is replaced by the following:

(II) an expenditure of a current nature in respect of the prosecution of scientific research and experimental development in Canada directly undertaken on behalf of the taxpayer,

(9) Subclause 37(8)(a)(ii)(B)(III) of the Act is repealed.

(10) Clause 37(8)(a)(ii)(B) of the Act is amended by adding "or" at the end of subclause (IV), by striking out "or" at the end of subclause (V) and by repealing subclause (VI).

(11) Paragraph 37(8)(d) of the Act is replaced by the following:

(dreferences to expenditures of a current nature include any expenditure made by a taxpayer other than an expenditure made by the taxpayer for

(i) the acquisition from a person or partnership of a property that is a capital property of the taxpayer, or

(ii) the use of, or the right to use, property that would be capital property of the taxpayer if it were owned by the taxpayer.

(12) Section 37 of the Act is amended by adding the following after subsection (13):

Look-through rule

(14) For the purposes of subparagraphs (1)(a)(i.01) to (iii), the amount of a particular expenditure made by a taxpayer shall be reduced by the amount of any related expenditure of the person or partnership to whom the particular expenditure is made that is not an expenditure of a current nature of the person or partnership.

Reporting of certain payments

(15) If an expenditure is required to be reduced because of subsection (14), the person or the partnership referred to in that subsection is required to inform the taxpayer in writing of the amount of the reduction without delay if requested by the taxpayer and in any other case no later than 90 days after the end of the calendar year in which the expenditure was made.

(13) Subsection (1) applies in respect of expenditures made after 2012.

(14) Subsections (2) and (6) to (12) apply in respect of expenditures made after 2013 and expenditures that subsection 37(1.2) of the Act deems not to have been made before 2014.

(15) Subsections (3) to (5) come into force on January 1, 2014.

10. (1) Paragraph 53(2)(c) of the Act is amended by striking out "and" at the end of subparagraph (xi), by adding "and" at the end of subparagraph (xii) and by adding the following after subparagraph (xii):

(xiii) the amount of any reduction (within the meaning of paragraph 247(13)(a)) of the amount of a dividend deemed to have been received by the taxpayer in respect of a transaction (as defined in subsection 247(1)) or series of transactions in which the partnership was a participant;

(2) Subsection (1) is deemed to have come into force on March 29, 2012.

11. (1) Subsection 56(1) of the Act is amended by striking out "and" at the end of paragraph (z.1), by adding "and" at the end of paragraph (z.2) and by adding the following after paragraph (z.2):

Pooled registered pension plan

(z.3any amount required by section 147.5 to be included in computing the taxpayer's income for the year.

(2) Subsection (1) comes into force or is deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

12. (1) Subparagraph 60(l)(v) of the Act is amended by adding the following after clause (A):

(A.1) the amount included in computing the taxpayer's income for the year as a payment (other than a payment that is part of a series of periodic payments) received by the taxpayer out of or under a pooled registered pension plan as a consequence of the death of an individual who was, immediately before the death, a spouse or common-law partner of the taxpayer,

(2) Clause 60(l)(v)(B.01) of the Act is replaced by the following:

(B.01) the amount included in computing the taxpayer's income for the year as a payment (other than a payment that is part of a series of periodic payments or that relates to an actuarial surplus) received by the taxpayer out of or under a pooled registered pension plan, a registered pension plan or a specified pension plan as a consequence of the death of an individual of whom the taxpayer was a child or grandchild, if the taxpayer was, immediately before the death, financially dependent on the individual for support because of mental or physical infirmity,

(3) Sub-subclause 60(l)(v)(B.1)(II)1 of the Act is replaced by the following:

1. a payment (other than a payment that is part of a series of periodic payments or that relates to an actuarial surplus) received by the taxpayer out of or under a pooled registered pension plan , a registered pension plan or a specified pension plan,

(4) Subsections (1) to (3) come into force or are deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

13. (1) The definition "eligible individual" in subsection 60.02(1) of the Act is replaced by the following:

"eligible individual"

« particulier admissible »

"eligible individual" means a child or grandchild of a deceased annuitant under a registered retirement savings plan or a registered retirement income fund, or of a deceased member of a pooled registered pension plan , a registered pension plan or a specified pension plan, who was financially dependent on the deceased for support, at the time of the deceased's death, by reason of mental or physical infirmity.

(2) Paragraph (c) of the definition "eligible proceeds" in subsection 60.02(1) of the Act is replaced by the following:

(ca payment (other than a payment that is part of a series of periodic payments or that relates to an actuarial surplus) out of or under a pooled registered pension plan , a registered pension plan or a specified pension plan.

(3) Subsections (1) and (2) come into force or are deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

14. (1) The definition "eligible pension income" in subsection 60.03(1) of the Act is replaced by the following:

"eligible pension income"

« revenu de pension déterminé »

"eligible pension income" , of an individual for a taxation year, means the total of

(athe eligible pension income (as defined in subsection 118(7)) of the individual for the year, and

(bif the individual has attained the age of 65 years before the end of the year, the lesser of

(i) the total of all amounts each of which is a payment made in the year to the individual

(A) out of or under a retirement compensation arrangement that provides benefits that supplement the benefits provided under a registered pension plan (other than an individual pension plan for the purposes of Part LXXXIII of the Income Tax Regulations ), and

(B) in respect of a life annuity that is attributable to periods of employment for which benefits are also provided to the individual under the registered pension plan, and

(ii) the amount, if any, by which the defined benefit limit (as defined in subsection 8500(1) of the Income Tax Regulations ) for the year multiplied by 35 exceeds the amount determined under paragraph (a).

(2) Subsection (1) applies to the 2013 and subsequent taxation years.

15. (1) Paragraph 75(3)(a) of the Act is replaced by the following:

(aby a trust governed by a deferred profit sharing plan, an employee benefit plan, an employees profit sharing plan, a pooled registered pension 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, a retirement compensation arrangement or a TFSA;

(2) Subsection (1) comes into force or is deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

16. (1) Paragraphs 84(1)(c.1) and (c.2) of the Act are replaced by the following:

(c.1if the corporation is an insurance corporation, any action by which it converts contributed surplus related to its insurance business (other than any portion of that contributed surplus that arose in connection with an investment, as defined in subsection 212.3(10), to which subsection 212.3(2) applies) into paid-up capital in respect of the shares of its capital stock,

(c.2if the corporation is a bank, any action by which it converts any of its contributed surplus that arose on the issuance of shares of its capital stock (other than any portion of that contributed surplus that arose in connection with an investment, as defined in subsection 212.3(10), to which subsection 212.3(2) applies) into paid-up capital in respect of shares of its capital stock, or

(2) The portion of paragraph 84(1)(c.3) of the Act before subparagraph (i) is replaced by the following:

(c.3if the corporation is neither an insurance corporation nor a bank, any action by which it converts into paid-up capital in respect of a class of shares of its capital stock any of its contributed surplus that arose after March 31, 1977 (other than any portion of that contributed surplus that arose in connection with an investment, as defined in subsection 212.3(10), to which subsection 212.3(2) applies)

(3) Subsections (1) and (2) are deemed to have come into force on March 29, 2012.

17. (1) Paragraph 87(2)(g.1) of the Act is replaced by the following:

Continuation

(g.1for the purposes of sections 12.4 and 26 and subsection 97(3) , the new corporation is deemed to be the same corporation as, and a continuation of, each predecessor corporation;

(2) Subsection (1) applies in respect of amalgamations that occur, and windings-up that begin, after March 28, 2012.

18. (1) Paragraph 88(1)(d) of the Act is amended by striking out "and" at the end of subparagraph (ii) and by adding the following after subparagraph (ii):

(ii.1) for the purpose of calculating the amount in subparagraph (ii) in respect of an interest of the subsidiary in a partnership, the fair market value of the interest at the time the parent last acquired control of the subsidiary is deemed to be the amount determined by the formula

A – B
whereA

is the fair market value (determined without reference to this subparagraph) of the interest at that time, and

B

is the portion of the amount by which the fair market value (determined without reference to this subparagraph) of the interest at that time exceeds its cost amount at that time as may reasonably be regarded as being attributable at that time to the total of all amounts each of which is

(A) in the case of a depreciable property held directly by the partnership or held indirectly by the partnership through one or more other partnerships, the amount by which the fair market value (determined without reference to liabilities) of the property exceeds its cost amount,

(B) in the case of a Canadian resource property or a foreign resource property held directly by the partnership or held indirectly by the partnership through one or more other partnerships, the fair market value (determined without reference to liabilities) of the property, or

(C) in the case of a property that is not a capital property, a Canadian resource property or a foreign resource property and that is held directly by the partnership or held indirectly through one or more other partnerships, the amount by which the fair market value (determined without reference to liabilities) of the property exceeds its cost amount, and

(2) Subsection 88(1) of the Act is amended by adding the following after paragraph (d.3):

(efor the purposes of the description of A in subparagraph (d)(ii.1), the fair market value of an interest in a particular partnership held by the subsidiary at the time the parent last acquired control of the subsidiary is deemed not to include the amount that is the total of each amount that is the fair market value of a property that would otherwise be included in the fair market value of the interest, if

(i) as part of the transaction or event or series of transactions or events in which control of the subsidiary is last acquired by the parent and on or before the acquisition of control,

(A) the subsidiary disposes of the property to the particular partnership or any other partnership and subsection 97(2) applies to the disposition, or

(B) where the property is an interest in a partnership, the subsidiary acquires the interest in the particular partnership or any other partnership from a person or partnership with whom the subsidiary does not deal at arm's length (otherwise than because of a right referred to in paragraph 251(5)(b)) and section 85 applies in respect of the acquisition of the interest, and

(ii) at the time of the acquisition of control, the particular partnership holds directly, or indirectly through one or more other partnerships, property described in clauses (A) to (C) of the description of B in subparagraph (d)(ii.1);

(3) Subsection (1) applies to amalgamations that occur and windings-up that begin after March 28, 2012, other than — if a taxable Canadian corporation (in this subsection referred to as the "parent corporation") has acquired control of another taxable Canadian corporation (in this subsection referred to as the "subsidiary corporation") — an amalgamation of the parent corporation and the subsidiary corporation that occurs before 2013, or a winding-up of the subsidiary corporation into the parent corporation that begins before 2013, if

(athe parent corporation acquired control of the subsidiary corporation before March 29, 2012 or was obligated as evidenced in writing before March 29, 2012 to acquire control of the subsidiary (except that the parent corporation shall not be considered to be obligated if, as a result of amendments to the Act, it may be excused from the obligation to acquire control); and

(bthe parent corporation had the intention as evidenced in writing before March 29, 2012 to amalgamate with, or wind up, the subsidiary corporation.

(4) Subsection (2) applies to dispositions made after August 13, 2012 other than a disposition made before 2013 pursuant to an obligation under a written agreement entered into before August 14, 2012 by parties that deal with each other at arm's length. The parties shall not be considered to be obligated if any party may be excused from the obligation as a result of amendments to the Act.

19. (1) Subparagraph (b)(iii) of the definition "paid-up capital" in subsection 89(1) of the Act is replaced by the following:

(iii) where the particular time is after March 31, 1977, an amount equal to the paid-up capital in respect of that class of shares at the particular time, computed without reference to the provisions of this Act except subsections 51(3) and 66.3(2) and (4), sections 84.1 and 84.2, subsections 85(2.1), 85.1(2.1) and (8), 86(2.1), 87(3) and (9), paragraph 128.1(1)(c.3), subsections 128.1(2) and (3), 138(11.7), 139.1(6) and (7), 192(4.1) and 194(4.1) and sections 212.1 and 212.3 ,

(2) Subsection (1) is deemed to have come into force on March 29, 2012.

20. (1) The portion of subsection 93.1(1) of the Act before paragraph (a) is replaced by the following:

Shares held by partnership

93.1 (1) For the purposes of determining whether a non-resident corporation is a foreign affiliate of a corporation resident in Canada for the purposes of subsections (2) and 20(12), sections 93 and 113, paragraphs 128.1(1)(c.3) and (d), section 212.3 and subsection 219.1(2), (and any regulations made for the purposes of those provisions), section 95 (to the extent that it is applied for the purposes of those provisions) and section 126, if , based on the assumptions contained in paragraph 96(1)(c), at any time shares of a class of the capital stock of a corporation are owned by a partnership or are deemed under this subsection to be owned by a partnership, then each member of the partnership is deemed to own at that time the number of those shares that is equal to the proportion of all those shares that

(2) Subsection (1) is deemed to have come into force on March 29, 2012.

21. (1) The portion of subsection 97(2) of the Act before paragraph (a) is replaced by the following:

Rules if election by partners

(2) Notwithstanding any other provision of this Act other than subsections (3) and 13(21.2), where a taxpayer at any time disposes of any property that is a capital property, Canadian resource property, foreign resource property, eligible capital property or inventory of the taxpayer to a partnership that immediately after that time is a Canadian partnership of which the taxpayer is a member, if the taxpayer and all the other members of the partnership jointly so elect in prescribed form within the time referred to in subsection 96(4),

(2) Section 97 of the Act is amended by adding the following after subsection (2):

Election not available — section 88

(3) Subsection (2) does not apply to a disposition of a property by a taxpayer to a particular partnership if

(aas part of a transaction or event or series of transactions or events that includes the disposition

(i) control of a taxable Canadian corporation (in this subsection referred to as the "subsidiary") is acquired by another taxable Canadian corporation (in this paragraph referred to as the "parent"),

(ii) the subsidiary is wound up under subsection 88(1) or amalgamated with one or more other corporations under subsection 87(11), and

(iii) the parent makes a designation under paragraph 88(1)(d) in respect of an interest in a partnership;

(bthe disposition occurs after the acquisition of control of the subsidiary;

(cthe property

(i) is referred to in clauses (A) to (C) of the description of B in subparagraph 88(1)(d)(ii.1), or

(ii) is an interest in a partnership that holds, directly or indirectly through one or more partnerships, property referred to in clauses (A) to (C) of the description of B in subparagraph 88(1)(d)(ii.1); and

(dthe subsidiary is the taxpayer or has, before the disposition of the property, directly or indirectly in any manner whatever, an interest in the taxpayer.

(3) Subsections (1) and (2) apply in respect of dispositions made after March 28, 2012.

22. (1) The portion of subsection 100(1) of the Act before paragraph (b) is replaced by the following:

Disposition of interest in partnership

100. (1) If, as part of a transaction or event or series of transactions or events, a taxpayer disposes of an interest in a partnership and an interest in the partnership is acquired by a person or partnership described in any of paragraphs (1.1)(a) to (d), then notwithstanding paragraph 38(a), the taxpayer's taxable capital gain for a taxation year from the disposition of the interest is deemed to be the total of

(a1/2 of such portion of the taxpayer's capital gain for the year from the disposition as may reasonably be regarded as attributable to increases in the value of any partnership property of the partnership that is capital property other than depreciable property held directly by the partnership or held indirectly by the partnership through one or more other partnerships, and

(2) Section 100 of the Act is amended by adding the following after subsection (1):

Acquisition by certain persons or partnerships

(1.1) Subject to subsection (1.2), subsection (1) applies in respect of a disposition of a partnership interest by a taxpayer if the interest is acquired by

(aa person exempt from tax under section 149;

(ba non-resident person;

(canother partnership to the extent that the interest can reasonably be considered to be held, at the time of its acquisition by the other partnership, indirectly through one or more partnerships, by a person that is

(i) exempt from tax under section 149,

(ii) a non-resident, or

(iii) a trust resident in Canada (other than a mutual fund trust) if

(A) an interest as a beneficiary (in this subsection and subsection (1.2) having the meaning assigned by subsection 108(1)) under the trust is held, directly or indirectly through one or more other partnerships, by a person that is exempt from tax under section 149 or that is a trust (other than a mutual fund trust), and

(B) the total fair market value of the interests as beneficiaries under the trust held by persons referred to in clause (A) exceeds 10% of the fair market value of all the interests as beneficiaries under the trust; or

(da trust resident in Canada (other than a mutual fund trust) to the extent that the trust can reasonably be considered to have a beneficiary that is

(i) exempt from tax under section 149,

(ii) a partnership, if

(A) an interest in the partnership is held, whether directly or indirectly through one or more other partnerships, by one or more persons that are exempt from tax under section 149 or are trusts (other than mutual fund trusts), and

(B) the total fair market value of the interests held by persons referred to in clause (A) exceeds 10% of the fair market value of all the interests in the partnership, or

(iii) another trust (other than a mutual fund trust), if

(A) one or more beneficiaries under the other trust are a person exempt from tax under section 149, a partnership or a trust (other than a mutual fund trust), and

(B) the total fair market value of the interests as beneficiaries under the other trust held by the beneficiaries referred to in clause (A) exceeds 10% of the fair market value of all the interests as beneficiaries under the other trust.

De minimis

(1.2) Subsection (1) does not apply to a taxpayer's disposition of a partnership interest to a partnership or trust described in paragraph (1.1)(c) or (d) — other than a trust under which the amount of the income or capital to be distributed at any time in respect of any interest as a beneficiary under the trust depends on the exercise by any person or partnership of, or the failure by any person or partnership to exercise, any discretionary power — if the extent to which subsection (1) would, but for this subsection, apply to the taxpayer's disposition of the interest because of subsection (1.1) does not exceed 10% of the taxpayer's interest.

Exception — non-resident person

(1.3) Subsection (1) does not apply in respect of a disposition of an interest in a partnership by a taxpayer to a person referred to in paragraph (1.1)(b) if

(aproperty of the partnership is used, immediately before and immediately after the acquisition of the interest by the non-resident person, in carrying on business through one or more permanent establishments in Canada; and

(bthe total fair market value of the property referred to in paragraph (a) equals at least 90% of the total fair market value of all property of the partnership.

Anti-avoidance — dilution

(1.4) Subsection (1.5) applies in respect of a taxpayer's interest in a partnership if

(ait is reasonable to conclude that one of the purposes of a dilution, reduction or alteration of the interest was to avoid the application of subsection (1) in respect of the interest; and

(bas part of a transaction or event or series of transactions or events that includes the dilution, reduction or alteration, there is

(i) an acquisition of an interest in the partnership by a person or partnership described in any of paragraphs (1.1)(a) to (d), or

(ii) an increase in, or alteration of, an interest in the partnership held by a person or partnership described in any of paragraphs (1.1)(a) to (d).

Deemed gain — dilution

(1.5) If this subsection applies in respect of a particular interest in a partnership of a taxpayer, then for the purposes of subsection (1),

(athe taxpayer is deemed to have disposed of an interest in the partnership at the time of the dilution, reduction or alteration;

(bthe taxpayer is deemed to have a capital gain from the disposition equal to the amount by which the fair market value of the particular interest immediately before the dilution, reduction or alteration exceeds its fair market value immediately thereafter; and

(cthe person or partnership referred to in paragraph (1.4)(b) is deemed to have acquired an interest in the partnership as part of the transaction or event or series of transactions or events that includes the disposition referred to in paragraph (a).

(3) Subsection (1) applies in respect of any disposition made after March 28, 2012, except that

(ain respect of any disposition made before August 14, 2012, the portion of subsection 100(1) of the Act before paragraph (b), as enacted by subsection (1), is to be read as follows:

100. (1) If, as part of a transaction or event or series of transactions or events, a taxpayer disposes of an interest in a partnership and that interest is acquired by a person exempt from tax under section 149 or by a non-resident person, notwithstanding paragraph 38(a), the taxpayer's taxable capital gain for a taxation year from the disposition of the interest is deemed to be

(a1/2 of such portion of the taxpayer's capital gain for the year therefrom as may reasonably be regarded as attributable to increases in the value of any partnership property of the partnership that is capital property other than depreciable property,

plus

(bsubsection (1) does not apply in respect of a disposition of an interest in a partnership by a taxpayer before 2013 to a person with whom the taxpayer deals at arm's length if the taxpayer is obligated to dispose of the interest to the person pursuant to a written agreement entered into by the taxpayer before March 29, 2012. A taxpayer is not considered to be obligated if, as a result of amendments to the Act, the taxpayer may be excused from the obligation.

(4) Subsection (2) is deemed to have come into force on March 29, 2012, except that subsections 100(1.1), (1.2), (1.4) and (1.5) of the Act, as enacted by subsection (2), do not apply

(abefore August 14, 2012; or

(bin respect of a disposition, dilution, reduction or alteration of an interest in a partnership if the disposition, dilution, reduction or alteration occurs before 2013 pursuant to an obligation under a written agreement entered into before August 14, 2012 by parties that deal with each other at arm's length and no party to the agreement may be excused from the obligation as a result of amendments to the Act.

23. (1) Paragraph (a) of the definition "trust" in subsection 108(1) of the Act is replaced by the following:

(aan amateur athlete trust, an employee life and health 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 pooled registered pension 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 TFSA,

(2) Subsection (1) comes into force or is deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

24. (1) Clause (a)(i)(C) of the definition "investment expense" in subsection 110.6(1) of the Act is replaced by the following:

(C) to make a contribution to a pooled registered pension plan , registered pension plan or deferred profit sharing plan, or

(2) Subsection (1) comes into force or is deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

25. (1) Subparagraph (a)(i) of the definition "pension income" in subsection 118(7) of the Act is replaced by the following:

(i) a payment in respect of a life annuity out of or under a superannuation or pension plan (other than a pooled registered pension plan) or a specified pension plan,

(2) Paragraph (a) of the definition "pension income" in subsection 118(7) of the Act is amended by adding the following before subparagraph (iv):

(iii.2) an amount included under section 147.5,

(3) Subsections (1) and (2) come into force or are deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

26. (1) The portion of paragraph 122.3(1)(c) of the Act before subparagraph (i) is replaced by the following:

(can amount equal to that proportion of the specified amount for the year that the number of days

(2) Paragraph 122.3(1)(d) of the Act is replaced by the following:

(dthe specified percentage for the year of the individual's income for the year from that employment that is reasonably attributable to duties performed on the days referred to in paragraph (c)

(3) Section 122.3 of the Act is amended by adding the following after subsection (1):

Specified amount

(1.01) For the purposes of paragraph (1)(c), the specified amount for a taxation year of an individual is

(afor the 2013 to 2015 taxation years, the amount determined by the formula

[$80,000 × A/(A + B)] + [C × B/(A + B)]
whereA

is the individual's income described in paragraph (1)(d) for the taxation year that is earned in connection with a contract that was committed to in writing before March 29, 2012 by a specified employer of the individual,

B

is the individual's income described in paragraph (1)(d) for the taxation year, other than income included in the description of A, and

C

is

(i) for the 2013 taxation year, $60,000,

(ii) for the 2014 taxation year, $40,000, and

(iii) for the 2015 taxation year, $20,000; and

(bfor the 2016 and subsequent taxation years, nil.

Specified percentage

(1.02) For the purposes of paragraph (1)(d), the specified percentage for a taxation year of an individual is

(afor the 2013 to 2015 taxation years, the amount determined by the formula

[80% × A/(A + B)] + [C × B/(A + B)]
whereA

is the value of A in subsection (1.01),

B

is the value of B in subsection (1.01), and

C

is

(i) for the 2013 taxation year, 60%,

(ii) for the 2014 taxation year, 40%, and

(iii) for the 2015 taxation year, 20%; and

(bfor the 2016 and subsequent taxation years, 0%.

(4) Subsections (1) to (3) apply to the 2013 and subsequent taxation years.

27. (1) Subparagraph (a)(i) of the definition "contract payment" in subsection 127(9) of the Act is replaced by the following:

(i) for or on behalf of a person or partnership entitled to a deduction in respect of the amount because of subparagraph 37(1)(a)(i.01) or (i.1), and

(2) Paragraph (b) of the definition "contract payment" in subsection 127(9) of the Act is replaced by the following:

(ban amount in respect of an expenditure of a current nature (within the meaning assigned by paragraph 37(8)(d)) of a taxpayer , other than a prescribed amount, payable by a Canadian government or municipality or other Canadian public authority or by a person exempt, because of section 149, from tax under this Part on all or part of the person's taxable income for scientific research and experimental development to be performed for it or on its behalf;

(3) The definition "first term shared-use-equipment" in subsection 127(9) of the Act is replaced by the following:

"first term shared-use-equipment"

« matériel à vocations multiples de première période »

"first term shared-use-equipment" , of a taxpayer, means depreciable property of the taxpayer (other than prescribed depreciable property of a taxpayer) acquired before 2014 that is used by the taxpayer, during its operating time in the period (in this subsection and subsection (11.1) referred to as the "first period") beginning at the time the property was acquired by the taxpayer and ending at the end of the taxpayer's first taxation year ending at least 12 months after that time, primarily for the prosecution of scientific research and experimental development in Canada, but does not include general purpose office equipment or furniture;

(4) Paragraph (a) of the definition "investment tax credit" in subsection 127(9) of the Act is replaced by the following:

(athe total of all amounts each of which is the specified percentage of the capital cost to the taxpayer of qualified property or qualified resource property acquired by the taxpayer in the year,

(5) Paragraph (a.1) of the definition "investment tax credit" in subsection 127(9) of the Act is replaced by the following:

(a.115% of the amount by which the taxpayer's SR&ED qualified expenditure pool at the end of the year exceeds the total of all amounts each of which is the super-allowance benefit amount for the year in respect of the taxpayer in respect of a province,

(6) Paragraph (a.3) of the definition "investment tax credit" in subsection 127(9) of the Act is replaced by the following:

(a.3if the taxpayer is a taxable Canadian corporation, the total of

(i) the specified percentage of the portion of the taxpayer's pre-production mining expenditure described in subparagraph (a)(i) of the definition "pre-production mining expenditure" , and

(ii) the specified percentage of the portion of the taxpayer's pre-production mining expenditure described in subparagraph (a)(ii) of the definition "pre-production mining expenditure" ,

(7) Paragraph (a) of the definition "pre-production mining expenditure" in subsection 127(9) of the Act is replaced by the following:

(ais a Canadian exploration expense and would be

(i) described in paragraph (f) of the definition "Canadian exploration expense" in subsection 66.1(6) if the expression "mineral resource" in that paragraph were defined to mean a mineral deposit from which the principal mineral to be extracted is diamond, a base or precious metal deposit, or a mineral deposit from which the principal mineral to be extracted is an industrial mineral that, when refined, results in a base or precious metal, or

(ii) described in paragraph (g), and not in paragraph (f), of the definition "Canadian exploration expense" in subsection 66.1(6) if the expression "mineral resource" in paragraph (g) were defined to mean a mineral deposit from which the principal mineral to be extracted is diamond, a base or precious metal deposit, or a mineral deposit from which the principal mineral to be extracted is an industrial mineral that, when refined, results in a base or precious metal, and

(8) Paragraphs (a) and (b) of the definition "qualified expenditure" in subsection 127(9) of the Act are replaced by the following:

(aan amount that is an expenditure incurred in the year by the taxpayer in respect of scientific research and experimental development and is

(i) an expenditure described in subparagraph 37(1)(a)(i),

(ii) 80% of an expenditure described in any of subparagraphs 37(1)(a)(i.01) to (iii),

(iii) an expenditure for first term shared-use-equipment or second term shared-use-equipment, or

(ivan expenditure described in subparagraph 37(1)(b)(i), or

(ba prescribed proxy amount of the taxpayer for the year,

(9) Paragraph (a) of the definition "qualified expenditure" in subsection 127(9) of the Act, as enacted by subsection (8), is amended by adding "or" at the end of subparagraph (ii) and by repealing subparagraph (iv).

(10) Paragraph (a) of the definition "qualified expenditure" in subsection 127(9) of the Act, as amended by subsection (9), is amended by adding "or" at the end of subparagraph (i) and by repealing subparagraph (iii).

(11) The portion of the definition "qualified property" in subsection 127(9) of the Act before paragraph (a) is replaced by the following:

"qualified property"

« bien admissible »

"qualified property" , of a taxpayer, means property (other than a qualified resource property) that is

(12) The definition "qualified property" in subsection 127(9) of the Act is amended by striking out "or" at the end of paragraph (a), by adding "or" at the end of paragraph (b) and by adding the following after paragraph (b):

(b.1prescribed energy generation and conservation property acquired by the taxpayer after March 28, 2012,

(13) Subparagraphs (c)(iv) to (xiii) of the definition "qualified property" in subsection 127(9) of the Act are replaced by the following:

(iv) storing grain, or

(v) harvesting peat,

(14) The portion of paragraph (c.1) of the definition "qualified property" in subsection 127(9) of the Act before subparagraph (i) is replaced by the following:

(c.1property (other than property described in paragraph (b.1)) to be used by the taxpayer in Canada primarily for the purpose of producing or processing electrical energy or steam in a prescribed area, if

(15) The portion of paragraph (d) of the definition "qualified property" in subsection 127(9) of the Act before subparagraph (i) is replaced by the following:

(dto be leased by the taxpayer to a lessee (other than a person exempt from tax under this Part because of section 149) who can reasonably be expected to use the property in Canada primarily for any of the purposes referred to in paragraph (c), but this paragraph does not apply to property that is prescribed for the purposes of paragraph (b) or (b.1) unless

(16) The definition "specified percentage" in subsection 127(9) of the Act is amended by adding the following after paragraph (a):

(a.1in respect of a qualified resource property acquired by a taxpayer primarily for use in Nova Scotia, New Brunswick, Prince Edward Island, Newfoundland and Labrador, the Gaspé Peninsula or the prescribed offshore region, and that is acquired

(i) after March 28, 2012 and before 2014, 10%,

(ii) after 2013 and before 2017, 10% if the property

(A) is acquired by the taxpayer under a written agreement of purchase and sale entered into by the taxpayer before March 29, 2012, or

(B) is acquired as part of a phase of a project and

(I) the construction of the phase was started by, or on behalf of, the taxpayer before March 29, 2012 (and for this purpose construction does not include obtaining permits or regulatory approvals, conducting environmental assessments, community consultations or impact benefit studies, and similar activities), or

(II) the engineering and design work for the construction of the phase, as evidenced in writing, was started by, or on behalf of, the taxpayer before March 29, 2012 (and for this purpose engineering and design work does not include obtaining permits or regulatory approvals, conducting environmental assessments, community consultations or impact benefit studies, and similar activities), and

(iii) in any other case,

(A) in 2014 and 2015, 5%, and

(B) after 2015, 0%,

(17) The definition "specified percentage" in subsection 127(9) of the Act is amended by striking out "and" at the end of paragraph (i) and by replacing paragraph (j) with the following:

(jin respect of a pre-production mining expenditure of the taxpayer that is described in subparagraph (a)(i) of the definition "pre-production mining expenditure" and that is incurred

(i) before 2013, 10%,

(ii) in 2013, 5%, and

(iii) after 2013, 0%, and

(kin respect of a pre-production mining expenditure of the taxpayer that is described in subparagraph (a)(ii) of the definition "pre-production mining expenditure" and that is incurred

(i) before 2014, 10%,

(ii) after 2013 and before 2016, 10% if the expenditure is incurred

(A) under a written agreement entered into by the taxpayer before March 29, 2012, or

(B) as part of the development of a new mine and

(I) the construction of the mine was started by, or on behalf of, the taxpayer before March 29, 2012 (and for this purpose construction does not include obtaining permits or regulatory approvals, conducting environmental assessments, community consultations or impact benefit studies, and similar activities), or

(II) the engineering and design work for the construction of the mine, as evidenced in writing, was started by, or on behalf of, the taxpayer before March 29, 2012 (and for this purpose engineering and design work does not include obtaining permits or regulatory approvals, conducting environmental assessments, community consultations or impact benefit studies, and similar activities), and

(iii) in any other case,

(A) in 2014, 7%,

(B) in 2015, 4%, and

(C) after 2015, 0%;

(18) Subsection 127(9) of the Act is amended by adding the following in alphabetical order:

"phase"

« phase »

"phase" , of a project, means a discrete expansion in the extraction, processing or production capacity of the project of a taxpayer beyond a capacity level that was attained before March 29, 2012 and which expansion in capacity was the taxpayer's demonstrated intention immediately before that date;

"qualified resource property"

« bien minier admissible »

"qualified resource property" , of a taxpayer, means property that is a prescribed building or prescribed machinery and equipment, that is acquired by the taxpayer after March 28, 2012, that has not been used, or acquired for use or lease, for any purpose whatever before it was acquired by the taxpayer and that is

(ato be used by the taxpayer in Canada primarily for the purpose of

(i) operating an oil or gas well or extracting petroleum or natural gas from a natural accumulation of petroleum or natural gas,

(ii) extracting minerals from a mineral resource,

(iii) processing

(A) ore (other than iron ore or tar sands ore) from a mineral resource to any stage that is not beyond the prime metal stage or its equivalent,

(B) iron ore from a mineral resource to any stage that is not beyond the pellet stage or its equivalent, or

(C) tar sands ore from a mineral resource to any stage that is not beyond the crude oil stage or its equivalent,

(iv) producing industrial minerals,

(v) processing heavy crude oil recovered from a natural reservoir in Canada to a stage that is not beyond the crude oil stage or its equivalent,

(vi) Canadian field processing,

(vii) exploring or drilling for petroleum or natural gas, or

(viii) prospecting or exploring for or developing a mineral resource, or

(bto be leased by the taxpayer to a lessee (other than a person exempt from tax under this Part because of section 149) who can reasonably be expected to use the property in Canada primarily for any of the purposes referred to in paragraph (a), but this paragraph does not apply to prescribed machinery and equipment unless

(i) the property is leased in the ordinary course of carrying on a business in Canada by a corporation whose principal business is any of, or a combination of, leasing property, lending money, purchasing conditional sales contracts, accounts receivable, bills of sale, chattel mortgages or hypothecary claims on movables, bills of exchange or other obligations representing all or part of the sale price of merchandise or services,

(ii) the property is manufactured and leased in the ordinary course of carrying on business in Canada by a corporation whose principal business is manufacturing property that it sells or leases, or

(iii) the property is leased in the ordinary course of carrying on business in Canada by a corporation the principal business of which is selling or servicing property of that type,

and, for the purpose of this definition, "Canada" includes the offshore region prescribed for the purpose of the definition "specified percentage" ;

(19) The portion of subsection 127(10.1) of the Act before paragraph (a) is replaced by the following:

Additions to investment tax credit

(10.1) For the purposes of paragraph (e) of the definition "investment tax credit" in subsection (9), if a corporation was throughout a taxation year a Canadian-controlled private corporation, there shall be added in computing the corporation's investment tax credit at the end of the year the amount that is 20% of the least of

(20) The portion of subsection 127(11) of the Act before paragraph (a) is replaced by the following:

Interpretation

(11) For the purposes of the definitions "qualified property" and "qualified resource property" in subsection (9),

(21) The portion of paragraph 127(11)(b) of the Act before subparagraph (i) is replaced by the following:

(bfor greater certainty, the purposes referred to in paragraph (c) of the definition "qualified property" and paragraph (a) of the definition "qualified resource property" in subsection (9) do not include

(22) Paragraph 127(11.2)(a) of the Act is replaced by the following:

(aqualified property, qualified resource property and first term shared-use-equipment are deemed not to have been acquired, and

(23) Paragraph 127(11.2)(a) of the Act, as enacted by subsection (22), is replaced by the following:

(aqualified property and qualified resource property are deemed not to have been acquired, and

(24) Paragraph 127(11.2)(b) of the Act is replaced by the following:

(bexpenditures included in an eligible child care space expenditure are deemed not to have been incurred

(25) Paragraph 127(11.5)(a) of the Act is replaced by the following:

(athe amount of an expenditure (other than a prescribed proxy amount or an amount described in paragraph (b)) incurred by a taxpayer in a taxation year is deemed to be the amount of the expenditure determined under subsection (11.6); and

(26) Subsection 127(11.5) of the Act, as amended by subsection (25), is replaced by the following:

Adjustments to qualified expenditures

(11.5) For the purposes of the definition "qualified expenditure" in subsection (9), the amount of an expenditure (other than a prescribed proxy amount) incurred by a taxpayer in a taxation year is deemed to be the amount of the expenditure determined under subsection (11.6).

(27) The portion of subsection 127(11.6) of the Act after paragraph (b) and before paragraph (c) is replaced by the following:

the amount of the expenditure incurred by the taxpayer for the service or property and the cost to the taxpayer of the property are deemed to be

(28) Subparagraph 127(11.6)(d)(i) of the Act is replaced by the following:

(i) the cost to the taxpayer of the property otherwise determined, and

(29) Subsection 127(11.8) of the Act is amended by adding "and" at the end of paragraph (a), by striking out "and" at the end of paragraph (b) and by repealing paragraph (c).

(30) Subsection 127(33) of the Act is replaced by the following:

Certain non-arm's length transfers

(33) Subsections (27) to (29), (34) and (35) do not apply to a taxpayer or partnership (in this subsection referred to as the "transferor") that disposes of a property to a person or partnership (in this subsection and subsections (34) and (35) referred to as the "purchaser"), that does not deal at arm's length with the transferor, if the purchaser acquired the property in circumstances where the cost of the property to the purchaser would have been an expenditure of the purchaser described in subclause 37(8)(a)(ii)(A)(III) or (B)(III) (as those subclauses read on March 29, 2012) but for subparagraph 2902(b)(iii) of the Income Tax Regulations .

(31) Subsections (1) and (8) apply in respect of expenditures made after 2012.

(32) Subsections (2), (9), (24), (25) and (29) apply in respect of expenditures made after 2013.

(33) Subsections (3), (18), (20) to (22) and (30) are deemed to have come into force on March 29, 2012.

(34) Subsections (4) and (6) apply to taxation years ending after March 28, 2012.

(35) Subsections (5) and (19) apply to taxation years that end after 2013, except that for taxation years that include January 1, 2014

(athe reference to "15%" in paragraph (a.1) of the definition "investment tax credit" in subsection 127(9) of the Act, as enacted by subsection (5), is to be read as a reference to the percentage that is the total of

(i) 20% multiplied by the proportion that the number of days that are in the taxation year and before 2014 is of the number of days in the taxation year, and

(ii) 15% multiplied by the proportion that the number of days that are in the taxation year and after 2013 is of the number of days in the taxation year; and

(bthe reference to "20%" in the portion of subsection 127(10.1) of the Act before paragraph (a), as enacted by subsection (19), is to be read as a reference to the percentage that is the total of

(i) 15% multiplied by the proportion that the number of days that are in the taxation year and before 2014 is of the number of days in the taxation year, and

(ii) 20% multiplied by the proportion that the number of days that are in the taxation year and after 2013 is of the number of days in the taxation year.

(36) Subsections (7) and (17) apply in respect of expenditures incurred after March 28, 2012.

(37) Subsections (10), (23) and (26) to (28) come into force on February 1, 2017.

(38) Subsections (11) to (16) apply in respect of property acquired after March 28, 2012.

28. (1) Subparagraph (f)(i) of the definition "refundable investment tax credit" in subsection 127.1(2) of the Act is replaced by the following:

(i) the portion of the amount required by subsection 127(10.1) to be added in computing the taxpayer's investment tax credit at the end of the year that is in respect of qualified expenditures incurred by the taxpayer in the year, and

(2) Subsection 127.1(2.01) of the Act is replaced by the following:

Addition to refundable investment tax credit

(2.01) In the case of a taxpayer that is a Canadian-controlled private corporation other than a qualifying corporation or an excluded corporation, the refundable investment tax credit of the taxpayer for a taxation year is the amount, if any, by which

(athe total of

(i) the portion of the amount required by subsection 127(10.1) to be added in computing the taxpayer's investment tax credit at the end of the year that is in respect of qualified expenditures incurred by the taxpayer in the year, and

(ii) all amounts determined under paragraph (a.1) of the definition "investment tax credit" in subsection 127(9) in respect of expenditures for which an amount is included in subparagraph (i)

exceeds

(bthe total of

(i) the portion of the total of all amounts deducted by the taxpayer under subsection 127(5) for the year or a preceding taxation year (other than an amount deemed by subsection (3) to have been so deducted for the year) that can reasonably be considered to be in respect of the total determined under paragraph (a), and

(ii) the portion of the total of all amounts required by subsection 127(6) to be deducted in computing the taxpayer's investment tax credit at the end of the year that can reasonably be considered to be in respect of the total determined under paragraph (a).

(3) Subsections (1) and (2) come into force on February 1, 2017.

29. (1) Paragraph 128(2)(d.1) of the Act is replaced by the following:

(d.1where, by reason of paragraph (d), a taxation year of the individual is not a calendar year,

(i) paragraph 146(5)(b) shall, for the purpose of the application of subsection 146(5) to the taxation year, be read as follows:

"(bthe amount, if any, by which

(i) the amount, if any, by which the taxpayer's RRSP deduction limit for the particular calendar year in which the taxation year ends exceeds the total of all contributions made by an employer in the particular calendar year to a pooled registered pension plan in respect of the taxpayer

exceeds

(ii) the total of the amounts deducted under this subsection and subsection (5.1) in computing the taxpayer's income for any preceding taxation year that ends in the particular calendar year.",

and

(ii) paragraph 146(5.1)(b) shall, for the purpose of the application of subsection 146(5.1) to the taxation year, be read as follows:

"(bthe amount, if any, by which

(i) the amount, if any, by which the taxpayer's RRSP deduction limit for the particular calendar year in which the taxation year ends exceeds the total of all contributions made by an employer in the particular calendar year to a pooled registered pension plan in respect of the taxpayer

exceeds

(ii) the total of the amount deducted under subsection (5) in computing the taxpayer's income for the year and the amounts deducted under this subsection and subsection (5) in computing the taxpayer's income for any preceding taxation year that ends in the particular calendar year.";

(2) Subsection (1) comes into force or is deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

30. (1) Subsection 128.1(1) of the Act is amended by striking out "and" at the end of paragraph (c.2) and by adding the following after paragraph (c.2):

Foreign affiliate dumping — immigrating corporation

(c.3if the taxpayer is a corporation that was, immediately before the particular time, controlled by a particular non-resident corporation and the taxpayer owned, immediately before the particular time, one or more shares of one or more non-resident corporations (each of which is in this paragraph referred to as a "subject affiliate") that, immediately after the particular time, were — or that became, as part of a transaction or event or series of transactions or events that includes the taxpayer having become resident in Canada — foreign affiliates of the taxpayer, then

(i) in computing the paid-up capital, at any time after the time that is immediately after the particular time, of any particular class of shares of the capital stock of the taxpayer there is to be deducted the amount determined by the formula

A × B/C
whereA

is the lesser of

(A) the paid-up capital in respect of all of the shares of the capital stock of the taxpayer at the time that is immediately after the particular time, and

(B) the total of all amounts each of which is the fair market value at the particular time of

(I) a share of the capital stock of a subject affiliate owned by the taxpayer at the particular time, or

(II) an amount owing by the subject affiliate to the taxpayer at the particular time,

B

is the paid-up capital in respect of the particular class of shares of the capital stock of the taxpayer at the time that is immediately after the particular time, and

C

is the paid-up capital in respect of all the shares of the capital stock of the taxpayer at the time that is immediately after the particular time, and

(ii) for the purposes of Part XIII, the taxpayer is deemed, immediately after the particular time, to have paid to the particular non-resident corporation, and the particular non-resident corporation is deemed, immediately after the particular time, to have received from the taxpayer, a dividend equal to the amount, if any, by which the amount determined under clause (B) of the description of A in subparagraph (i) exceeds the amount determined under clause (A) of the description of A in subparagraph (i); and

(2) Subsection 128.1(3) of the Act is replaced by the following:

Paid-up capital adjustment

(3) In computing the paid-up capital at any time in respect of a class of shares of the capital stock of a corporation

(athere is to be deducted an amount equal to the lesser of A and B, and added an amount equal to the lesser of A and C, where

A

is the absolute value of the difference between

(i) the total of all amounts deemed by subsection 84(3), (4) or (4.1) to be a dividend on shares of the class paid before that time by the corporation, and

(ii) the total that would be determined under subparagraph (i) if this Act were read without reference to subsection (2),

B

is the total of all amounts required by subsection (2) to be added in computing the paid-up capital in respect of the class before that time, and

C

is the total of all amounts required by subsection (2) to be deducted in computing the paid-up capital in respect of the class before that time; and

(bthere is to be added an amount equal to the lesser of

(i) the amount, if any, by which

(A) the total of all amounts deemed by subsection 84(3), (4) or (4.1) to be a dividend on shares of the class paid after March 28, 2012 and before that time by the corporation

exceeds

(B) the total that would be determined under clause (A) if this Act were read without reference to subparagraph (c.3)(i), and

(ii) the total of all amounts required by subparagraph (c.3)(i) to be deducted in computing the paid-up capital in respect of the class before that time.

(3) Subsection (1) applies in respect of corporations that become resident in Canada after March 28, 2012.

(4) Subsection (2) is deemed to have come into force on March 29, 2012.

31. (1) Subsection 138.1(7) of the Act is replaced by the following:

Non-application of subsections (1) to (6)

(7) Subsections (1) to (6) do not apply to the holder of a segregated fund policy with respect to such a policy that is issued or effected as or under a pooled registered pension plan , registered pension plan, registered retirement income fund, registered retirement savings plan or TFSA.

(2) Subsection (1) comes into force or is deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

32. (1) The description of D in paragraph (b) of the definition "unused RRSP deduction room" in subsection 146(1) of the Act is replaced by the following:

D

is the total of all amounts each of which is

(i) an amount deducted by the taxpayer under any of subsections (5) to (5.2) , in computing the taxpayer's income for the year,

(ii) an amount deducted by the taxpayer under paragraph 10 of Article XVIII of the Canada-United States Tax Convention signed at Washington on September 26, 1980 or a similar provision in another tax treaty, in computing the taxpayer's taxable income for the year,

(iii) a contribution made by an employer in the year to a pooled registered pension plan in respect of the taxpayer, or

(iv) the amount, if any, by which the taxpayer's exempt-income contribution amount (as defined in subsection 147.5(1)) for the year exceeds the taxpayer's unused non-deductible PRPP room (as defined in subsection 147.5(1)) at the end of the preceding taxation year, and

(2) The portion of subsection 146(1.1) of the Act before the formula is replaced by the following:

Restriction — financially dependent

(1.1) For the purposes of paragraph (b) of the definition "refund of premiums" in subsection (1), clause 60(l)(v)(B.01), the definition "eligible individual" in subsection 60.02(1), subparagraph 104(27)(e)(i) and section 147.5 , it is assumed, unless the contrary is established, that an individual's child or grandchild was not financially dependent on the individual for support immediately before the individual's death if the income of the child or grandchild for the taxation year preceding the taxation year in which the individual died exceeded the amount determined by the formula

(3) Paragraph 146(5)(a) of the Act is amended by adding the following after subparagraph (iii):

(iii.1) that was an exempt-income contribution amount (as defined in subsection 147.5(1)) for any taxation year,

(4) Paragraph 146(5)(b) of the Act is replaced by the following:

(bthe amount, if any, by which the taxpayer's RRSP deduction limit for the year exceeds the total of all contributions made by an employer in the year to a pooled registered pension plan in respect of the taxpayer.

(5) Paragraph 146(5.1)(b) of the Act is replaced by the following:

(bthe amount, if any, by which the taxpayer's RRSP deduction limit for the year exceeds the total of all amounts each of which is

(i) the amount deducted under subsection (5) in computing the taxpayer's income for the year, or

(ii) a contribution made by an employer in the year to a pooled registered pension plan in respect of the taxpayer.

(6) Subparagraph 146(8.2)(b)(iii) of the Act is replaced by the following:

(iii) was not paid by way of a transfer of an amount to a registered retirement savings plan from

(A) a pooled registered pension plan in circumstances to which subsection 147.5(21) applied, or

(Ba specified pension plan in circumstances to which subsection (21) applied,

(7) Subsection 146(21.2) of the Act is replaced by the following:

Specified pension plan — account

(21.2) For the purposes of paragraph (8.2)(b), subsection (8.21), paragraphs (16)(a) and (b) and 18(1)(u), subparagraph (a)(i) of the definition "excluded right or interest" in subsection 128.1(10), paragraph (b) of the definition "excluded premium" in subsection 146.01(1), paragraph (c) of the definition "excluded premium" in subsection 146.02(1), subsections 146.3(14) and 147(19), section 147.3 and paragraph 147.5(21)(c), and for the purposes of any regulations made under subsection 147.1(18), an individual's account under a specified pension plan is deemed to be a registered retirement savings plan under which the individual is the annuitant.

(8) Subsections (1) to (7) come into force or are deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

33. (1) The portion of the definition "registered education savings plan" in subsection 146.1(1) of the Act before paragraph (a) is replaced by the following:

"registered education savings plan" or "RESP"

« régime enregistré d'épargne-études » ou « REEE »

"registered education savings plan" or "RESP" means

(2) Section 146.1 of the Act is amended by adding the following after subsection (1):

Election

(1.1) A subscriber under an RESP that allows accumulated income payments and a holder of an RDSP may jointly elect in prescribed form to have subsection (1.2) apply in respect of a beneficiary under the RESP if, at the time the election is made, the beneficiary is also the beneficiary under the RDSP and

(athe beneficiary has a severe and prolonged mental impairment that prevents, or can reasonably be expected to prevent, the beneficiary from enrolling in a qualifying educational program at a post-secondary educational institution; or

(bthe RESP meets the conditions described in clause (2)(d.1)(iii)(A) or (B) to make an accumulated income payment.

Effect of election

(1.2) If an election is made under subsection (1.1) and is filed by the promoter of the RESP with the Minister without delay, then notwithstanding paragraph (2)(d.1) and any terms of the RESP required by that paragraph, an accumulated income payment under the RESP may be made to the RDSP.

(3) Paragraph 146.1(2)(i.1) of the Act is replaced by the following:

(i.1if the plan allows accumulated income payments, the plan provides that it must be terminated before March of the year following the year in which the first such payment is made out of the plan;

(4) Paragraph 146.1(7.1)(a) of the Act is replaced by the following:

(aeach accumulated income payment (other than an accumulated income payment made under subsection (1.2)) received in the year by the taxpayer under a registered education savings plan; and

(5) Subsections (2) to (4) come into force on January 1, 2014.

34. (1) Paragraph 146.3(2)(f) of the Act is amended by striking out "or" at the end of subparagraph (vi), by adding "or" at the end of subparagraph (vii) and by adding the following after subparagraph (vii):

(viii) a pooled registered pension plan in accordance with subsection 147.5(21);

(2) Subsection 146.3(14.1) of the Act is replaced by the following:

Transfer to PRPP or RPP

(14.1) An amount is transferred from a registered retirement income fund of an annuitant in accordance with this subsection if the amount

(ais transferred at the direction of the annuitant directly to an account of the annuitant under a pooled registered pension plan; or

(bis transferred at the direction of the annuitant directly to a registered pension plan of which, at any time before the transfer, the annuitant was a member (within the meaning assigned by subsection 147.1(1)) or to a prescribed registered pension plan and is allocated to the annuitant under a money purchase provision (within the meaning assigned by subsection 147.1(1)) of the plan.

(3) Subsections (1) and (2) come into force or are deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

35. (1) The definition "registered disability savings plan" in subsection 146.4(1) of the Act is replaced by the following:

"registered disability savings plan" or "RDSP"

« régime enregistré d'épargne-invalidité » ou « REEI »

"registered disability savings plan" or "RDSP" 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.

(2) Paragraph (d) of the definition "contribution" in subsection 146.4(1) of the Act is replaced by the following:

(dother than for the purposes of paragraphs (4)(f) to (h) and (n) and paragraph (b) of the definition "advantage" in subsection 205(1) ,

(i)  a specified RDSP payment as defined in subsection 60.02(1), or

(ii) an accumulated income payment made to the plan under subsection 146.1(1.2).

(3) Paragraph (c) of the definition "holder" in subsection 146.4(1) of the Act is replaced by the following:

(cthe 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)(ii) ).

(4) Subsection 146.4(1) of the Act is amended by adding the following in alphabetical order:

"specified maximum amount"

« plafond »

"specified maximum amount" , for a calendar year in respect of a disability savings plan, means the amount that is the greater of

(athe amount determined by the formula set out in paragraph (4)(l) in respect of the plan for the calendar year, and

(bthe amount determined by the formula

A + B
whereA

is 10% of 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)), and

B

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.

(5) Paragraphs 146.4(1.2)(b) to (f) of the Act are replaced by the following:

(bthe time that is immediately before the earliest time in a calendar year when the total disability assistance payments, other than non-taxable portions, made from the plan in the year and while it was a specified disability savings plan exceeds $10,000 (or such greater amount as is required to satisfy the condition in subparagraph (d)(i) );

(cthe time that is immediately before the time that

(i) a contribution is made to the plan,

(ii) an amount described in any of paragraphs (a) and (b) and subparagraph (d)(ii) of the definition "contribution" in subsection (1) is paid into the plan,

(iii) the plan is terminated,

(iv) the plan ceases to be a registered disability savings plan as a result of the application of paragraph (10)(a), or

(v) is the beginning of the first calendar year throughout which the beneficiary under the plan has no severe and prolonged impairments with the effects described in paragraph 118.3(1)(a.1); and

(dthe time immediately following the end of a calendar year if

(i) in the year the total amount of disability assistance payments made from the plan to the beneficiary is less than the amount determined by the formula set out in paragraph (4)(l) in respect of the plan for the year (or such lesser amount as is supported by the property of the plan), and

(ii) the year is not the calendar year in which the plan became a specified disability savings plan.

(6) Subsection 146.4(3) of the Act is replaced by the following:

Registered status nullified

(3) A disability savings plan is deemed never to have been a registered disability savings plan unless

(athe issuer of the plan provides without delay notification of the plan's establishment in prescribed form containing prescribed information to the specified Minister; and

(bif the beneficiary is the beneficiary under another registered disability savings plan at the time the plan is established, that other plan is terminated without delay .

(7) Subparagraphs 146.4(4)(n)(i) to (iii) of the Act are replaced by the following:

(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 specified maximum amount 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, and

(ii) 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;

(8) Subsection 146.4(4) of the Act is amended by adding the following after paragraph (n):

(n.1the plan provides that, if the beneficiary attained the age of 59 years before a 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);

(9) Paragraph 146.4(4)(o) of the Act is replaced by the following:

(othe 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 (other than information provided to the issuer of the other plan by the specified Minister) 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

(10) Subparagraph 146.4(4)(p)(ii) of the Act is replaced by the following:

(ii) the first calendar year

(A) if an election is made under subsection (4.1), that includes the time that the election ceases because of paragraph (4.2)(b) to be valid, and

(Bin any other case , throughout which the beneficiary has no severe and prolonged impairments with the effects described in paragraph 118.3(1)(a.1).

(11) Section 146.4 of the Act is amended by adding the following after subsection (4):

Election on cessation of DTC-eligibility

(4.1) A holder of a registered disability savings plan may elect in respect of a beneficiary under the plan who is not a DTC-eligible individual for a particular taxation year if

(aa medical doctor licensed to practise under the laws of a province certifies in writing that the nature of the beneficiary's condition is such that, in the professional opinion of the medical doctor, the beneficiary is likely to become a DTC-eligible individual for a future taxation year;

(bthe beneficiary was a DTC-eligible individual for the year that immediately precedes the particular taxation year;

(cthe holder makes the election in a manner and format acceptable to the specified Minister before the end of the year immediately following the particular taxation year and provides the election and the medical certification in respect of the beneficiary to the issuer of the plan; and

(dthe issuer notifies the specified Minister of the election in a manner and format acceptable to the specified Minister.

Election

(4.2) An election under subsection (4.1) ceases to be valid at the time that is the earlier of

(athe beginning of the first taxation year for which the beneficiary is again a DTC-eligible individual; and

(bthe end of the fourth taxation year following the particular taxation year referred to in subsection (4.1).

Transitional rule

(4.3) Unless an election is made under subsection (4.1), if 2011 or 2012 is the first calendar year throughout which the beneficiary of a registered disability savings plan has no severe and prolonged impairments with the effects described in paragraph 118.3(1)(a.1) and the plan has not been terminated, then notwithstanding subparagraph (4)(p)(ii) as it read on March 28, 2012 and any terms of the plan required by that subparagraph, the plan must be terminated no later than December 31, 2014.

(12) Paragraph 146.4(8)(c) of the Act is replaced by the following:

(cthe issuer of the prior plan provides the issuer of the new plan with all information in its possession concerning the prior plan (other than information provided to the issuer of the new plan by the specified Minister) 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

(13) Subsections (2) to (5), (7), (8) and (10) and subsections 146.4(4.1) and (4.2) of the Act, as enacted by subsection (11), come into force on January 1, 2014.

(14) Subsection 146.4(4.3) of the Act, as enacted by subsection (11), is deemed to have come into force on March 29, 2012, except that before 2014 it is to be read as follows:

(4.3) If 2011 or 2012 is the first calendar year throughout which the beneficiary of a registered disability savings plan has no severe and prolonged impairments with the effects described in paragraph 118.3(1)(a.1) and the plan has not been terminated, then notwithstanding subparagraph (4)(p)(ii) as it read on March 28, 2012 and any terms of the plan required by that subparagraph, the plan must be terminated no later than December 31, 2014.

36. (1) The Act is amended by adding the following after section 147.4:

Pooled Registered Pension Plans

Definitions

147.5 (1) The following definitions apply in this section.

"administrator"

« administrateur »

"administrator" , of a pooled pension plan, means

(aa corporation resident in Canada that is responsible for the administration of the plan and that is authorized under the Pooled Registered Pension Plans Act or a similar law of a province to act as an administrator for one or more pooled pension plans; or

(ban entity designated in respect of the plan under section 21 of the Pooled Registered Pension Plans Act or any provision of a law of a province that is similar to that section.

"designated pooled pension plan"

« régime de pension collectif désigné »

"designated pooled pension plan" , for a calendar year, means a pooled pension plan that, at any time in the year (other than the year in which the plan became registered as a PRPP), meets any of the following conditions:

(athe plan has fewer than 10 participating employers;

(bthe fair market value of the property held in connection with the accounts of all members of the plan employed by a particular participating employer exceeds 50% of the fair market value of the property held in connection with the plan;

(cmore than 50% of the members of the plan are employed by a particular participating employer; or

(dit is reasonable to conclude that the participation in the plan of one or more participating employers occurs primarily to avoid the application of any of paragraphs (a) to (c).

"exempt earned income"

« revenu gagné exonéré »

"exempt earned income" , of a taxpayer for a taxation year, means the total of all amounts each of which is an amount that is

(anot included in the taxpayer's earned income (as defined in subsection 146(1)) for the year and that would be so included but for paragraph 81(1)(a) as it applies with respect to the Indian Act ; and

(breported by the taxpayer in prescribed form filed with the Minister by the taxpayer's filing-due date for the year, or such later date as is acceptable to the Minister, provided that the later date is within three calendar years following the end of the year.

"exempt-income contribution amount"

« cotisation provenant du revenu exonéré »

"exempt-income contribution amount" , of a taxpayer for a taxation year, means the total of

(aall amounts each of which is a contribution to a PRPP made by the taxpayer for the year that is not deductible in computing the income of the taxpayer because of subsection (32), and

(bthe amount, if any, designated under subsection (34) by the taxpayer for the year in prescribed form filed with the Minister by the taxpayer's filing-due date for the year, or such later date as is acceptable to the Minister, provided that the later date is within three calendar years following the end of the year.

"member"

« participant »

"member" , of a pooled pension plan, means an individual (other than a trust) who holds an account under the plan.

"participating employer"

« employeur participant »

"participating employer" , in relation to a pooled pension plan for a calendar year, means an employer that, in the year,

(amakes contributions to the plan in respect of all or a class of its employees or former employees; or

(bremits to the administrator of the plan contributions made by members of the plan under a contract with the administrator in respect of all or a class of its employees.

"pooled pension plan"

« régime de pension collectif »

"pooled pension plan" means a plan that is registered under the Pooled Registered Pension Plan Act or a similar law of a province.

"pooled registered pension plan" or "PRPP"

« régime de pension agréé collectif » ou « RPAC »

"pooled registered pension plan" or "PRPP" means a pooled pension plan that has been accepted for registration by the Minister for the purposes of this Act, which registration has not been revoked.

"qualifying annuity"

« rente admissible »

"qualifying annuity" , for an individual, means an annuity that

(ais payable to

(i) the individual for the individual's life, or

(ii) the individual for the lives, jointly, of the individual and the individual's spouse or common-law partner and to the survivor of them for the survivor's life;

(bis payable beginning no later than the later of

(i) the end of the calendar year in which the individual attains 71 years of age, and

(ii) the end of the calendar year in which the annuity is acquired;

(cunless the annuity is subsequently commuted into a single payment, is payable

(i) at least annually, and

(ii) in equal amounts or is not so payable solely because of an adjustment that would, if the annuity were an annuity under a retirement savings plan, in accordance with any of subparagraphs 146(3)(b)(iii) to (v);

(dif the annuity includes a guaranteed period, requires that

(i) the period not exceed 15 years, and

(ii) in the event of the later of the death of the individual and that of the individual's spouse or common-law partner during the period, any remaining amounts otherwise payable be commuted into a single payment as soon as practicable after the later death; and

(edoes not permit any premiums to be paid, other than the premium paid from the PRPP to acquire the annuity.

"qualifying survivor"

« survivant admissible »

"qualifying survivor" , in relation to a member of a PRPP, means an individual who, immediately before the death of the member

(awas a spouse or common-law partner of the member; or

(bwas a child or grandchild of the member who was financially dependent on the member for support.

"restricted investment"

« placement non admissible »

"restricted investment" , for a pooled pension plan, means

(aa debt of a member of the plan;

(ba share of, an interest in, or a debt of

(i) a corporation, partnership or trust in which a member of the plan has a significant interest, or

(ii) a person or partnership that does not deal at arm's length with the member of the plan or with a person or partnership described in subparagraph (i);

(can interest (or, for civil law, a right) in, or a right to acquire, a share, interest or debt described in paragraph (a) or (b); or

(dprescribed property.

"single amount"

« montant unique »

"single amount" means an amount that is not part of a series of periodic payments.

"successor member"

« participant remplaçant »

"successor member" means an individual who was the spouse or common-law partner of a member of a PRPP immediately before the death of the member and who acquires, as a consequence of the death, all of the member's rights in respect of the member's account under the PRPP.

"unused non-deductible PRPP room"

« somme inutilisée non déductible au titre des RPAC »

"unused non-deductible PRPP room" , of a taxpayer at the end of a taxation year, means the amount determined by the formula

A – B
whereA

is the amount of the taxpayer's unused RRSP deduction room at the end of the year, determined in accordance with subsection (33); and

B

is the taxpayer's unused RRSP deduction room at the end of the year.

Registration conditions

(2) The Minister may accept for registration a pooled pension plan for the purposes of this Act, but shall not accept for registration any plan unless application for registration is made in prescribed manner by the plan administrator and, in the Minister's opinion, the plan complies with the following conditions:

(athe primary purpose of the plan is to accept and invest contributions in order to provide retirement income to plan members, subject to the limits and other requirements under this Act;

(ba single and separate account is maintained for each member under the member's Social Insurance Number

(i) to which are credited all contributions made to the plan in respect of the member, and any earnings of the plan allocated to the member, and

(ii) to which are charged all payments and distributions made in respect of the member;

(cthe only benefits provided under the plan in respect of each member are benefits determined solely with reference to, and provided by, the amount in the member's account;

(dall earnings of the plan are allocated to plan members on a reasonable basis and no less frequently than annually;

(ethe arrangement under which property is held in connection with the plan is acceptable to the Minister;

(fno right of a person under the plan is capable of being assigned, charged, anticipated, given as security or surrendered, other than

(i) an assignment pursuant to a decree, order or judgment of a competent tribunal, or a under a written agreement, relating to a division of property between the member and the member's spouse or common-law partner or former spouse or common-law partner, in settlement of rights arising out of, or on a breakdown of, their marriage or common-law partnership, or

(ii) an assignment by the legal representative of a deceased individual on the distribution of the individual's estate;

(gthe plan requires that all amounts contributed or allocated to a member's account vest immediately and indefeasibly for the benefit of the member;

(hthe plan permits the payment of an amount to a member if the amount is paid to reduce the amount of tax that would otherwise be payable under Part X.1 by the member;

(iany amount payable from an account of a member after the death of the member is paid as soon as practicable after the death;

(jthere is no reason to expect that the plan may become a revocable plan; and

(kany prescribed conditions.

Conditions applicable to PRPPs

(3) A pooled registered pension plan becomes a revocable plan at any time that

(aa contribution is made to the plan other than an amount

(i) paid by a member of the plan,

(ii) paid by an employer or former employer of a member of the plan in respect of the member, or

(iii) transferred to the plan in accordance with any of subsections (21), 146(16) and (21), 146.3(14) and (14.1), 147(19) and 147.3(1), (4) and (5) to (7);

(ba contribution is made to the plan in respect of a member after the calendar year in which the member attains 71 years of age, other than an amount described in subparagraph (a)(iii);

(ca participating employer makes contributions to the plan in a calendar year in respect of a member of the plan in excess of the RRSP dollar limit for the year, except in accordance with a direction by the member;

(da distribution is made from the plan other than

(i) a payment of benefits in accordance with subsection (5), or

(ii) a return of contributions

(A) if a contribution to the plan has been made as a result of a reasonable error by a member of the plan or a participating employer in relation to the plan and the return of contributions is made to the person who made the contribution no later than December 31 of the year following the calendar year in which the contribution was made,

(B) to avoid the revocation of the registration of the plan,

(C) to reduce the amount of tax that would otherwise be payable under Part X.1 by a member, or

(D) to comply with any requirement under this Act;

(eproperty is held in connection with the plan that

(i) the administrator knew or ought to have known was a restricted investment for the plan, or

(ii) in the case of a designated pooled pension plan, is a share or debt of, or an interest in, a participating employer of the plan or any person or partnership that does not deal at arm's length with a participating employer, or an interest (or, for civil law, a right) in, or a right to acquire, such a share, debt or interest;

(fthe value of a member's right under the plan depends on the value of, or income or capital gains in respect of, property that would be described in paragraph (e) if it were held in connection with the plan;

(gthe administrator borrows money or other property for the purposes of the plan; or

(hthe plan or the administrator does not comply with a prescribed condition.

Non-payment of minimum amount

(4) A PRPP becomes a revocable plan at the beginning of a calendar year if the total amount distributed from a member's account under the PRPP in the calendar year is less than the amount that would be the minimum amount for the calendar year under subsection 8506(5) of the Income Tax Regulations if the member's account were an account under a money purchase provision of a registered pension plan.

Permissible benefits

(5) The following benefits may be provided under a pooled pension plan:

(athe payment of benefits to a member that would be in accordance with paragraph 8506(1)(e.1) of the Income Tax Regulations if the benefits were provided under a money purchase provision of a registered pension plan; and

(bthe payment of a single amount from the member's account.

Additional conditions

(6) The Minister may, at any time, impose reasonable conditions, in writing, applicable with respect to PRPPs, a class of PRPPs or a particular PRPP.

Acceptance of amendments

(7) The Minister shall not accept an amendment to a PRPP unless

(aapplication for the acceptance is made in prescribed manner by the administrator of the PRPP; and

(bthe amendment and the PRPP as amended comply with the registration conditions specified in subsection (2).

Trust not taxable

(8) No tax is payable under this Part by a trust governed by a PRPP on its taxable income for a taxation year, except that, if at any time in the year, it carries on a business, tax is payable under this Part by the trust on the amount that would be its taxable income for the year if it had no income or losses from sources other than the business, and for this purpose,

(aall capital gains and capital losses from the disposition of property held in connection with the business are deemed to be income or losses, as the case may be, from the business; and

(bthe trust's income is to be computed without reference to subsections 104(6), (19) and (21).

Obligations of administrator

(9) The administrator of a PRPP shall exercise the care, diligence and skill of a reasonably prudent trustee to minimize the possibility that the registration of the PRPP may be revoked other than at the request of the administrator.

Employer contributions deductible

(10) There may be deducted in computing a taxpayer's income for a taxation year, the total of all amounts each of which is a contribution made by the taxpayer in the year or within 120 days after the end of the year to a PRPP in respect of the taxpayer's employees or former employees to the extent that the contribution

(awas made in accordance with the PRPP as registered and in respect of periods before the end of the year; and

(bwas not deducted in computing the taxpayer's income for a preceding taxation year.

Member contributions

(11) For the purposes of paragraphs 60(j), (j.1) and (l), section 146 (other than subsections (8.3) to (8.7)), paragraphs 146.01(3)(a) and 146.02(3)(a) and Parts X.1 and X.5, a contribution made to a PRPP by a member of a PRPP is deemed to be a premium paid by the member to an RRSP under which the member is the annuitant.

Member's account

(12) For the purposes of paragraph 18(1)(u), subparagraph (a)(i) of the definition "excluded right or interest" in subsection 128.1(10), paragraph 146(8.2)(b), subsection 146(8.21), paragraphs 146(16)(a) and (b), subparagraph 146(21)(a)(i), paragraph (b) of the definition "excluded premium" in subsection 146.01(1), paragraph (c) of the definition "excluded premium" in subsection 146.02(1), subsections 146.3(14) and 147(19) to (21), section 147.3 and paragraphs 212(1)(j.1) and (m), and of regulations made under 147.1(18), a member's account under a PRPP is deemed to be a registered retirement savings plan under which the member is the annuitant.

Taxable amounts

(13) There shall be included in computing the income of a taxpayer for a taxation year

(aif the taxpayer is a member of a PRPP, the total of all amounts each of which is a distribution made in the year from the member's account under the PRPP, other than an amount that is

(i) included in computing the income of another taxpayer for the year under paragraph (b),

(ii) described in subsection (22), or

(iii) distributed after the death of the member;

(bif the taxpayer is a participating employer in relation to a PRPP, the total of all amounts each of which is a return of contributions that is described in clause (3)(d)(ii)(A) and that is made to the taxpayer in the year.

Treatment on death — no successor member

(14) If a member of a PRPP dies and there is no successor member in respect of the deceased member's account under the PRPP, an amount, equal to the amount by which the fair market value of all property held in connection with the account immediately before the death exceeds the total of all amounts distributed from the account that are described in subsection (16), is deemed to have been distributed from the account immediately before the death.

Treatment on death — successor member

(15) If a member of a PRPP dies and there is a successor member in respect of the deceased member's account under the PRPP,

(athe account ceases to be an account of the deceased member at the time of the death;

(bthe successor member is, after the time of the death, deemed to hold the account as a member of the PRPP; and

(cthe successor member is deemed to be a separate member in respect of any other account under the PRPP that the successor member holds.

Qualifying survivor

(16) If, as a consequence of the death of a member of a PRPP, an amount is distributed in a taxation year from the member's account under the PRPP to, or on behalf of, a qualifying survivor of the member, the amount shall be included in computing the survivor's income for the year, except to the extent that it is an amount described in subsection (22).

Deemed distribution to qualifying survivor

(17) If an amount is distributed at any time from a deceased member's account under a PRPP to the member's legal representative and a qualifying survivor of the member is entitled to all or a portion of the amount in full or partial satisfaction of the survivor's rights as a beneficiary (as defined in subsection 108(1)) under the deceased's estate, then, for the purposes of subsection (16), the amount or portion of the amount, as the case may be, is deemed to have been distributed at that time from the member's account to the qualifying survivor (and not to the legal representative) to the extent that it is so designated jointly by the legal representative and the qualifying survivor in prescribed form filed with the Minister.

Post-death increase in value

(18) There shall be included in computing the income for a taxation year of a taxpayer who is not a qualifying survivor in relation to a member of a PRPP, the total of all amounts each of which is an amount determined by the formula

A – B
whereA

is the amount of a distribution made in the year from the member's account under the PRPP as a consequence of the member's death to, or on behalf of, the taxpayer, and

B

is an amount designated by the administrator of the PRPP not exceeding the lesser of

(athe amount of the distribution, and

(bthe amount by which the fair market value of all property held in connection with the account immediately before the death exceeds the total of all amounts each of which is

(i) the value of B in respect of any prior distribution made from the account, or

(ii) an amount included under subsection (16) in computing the income of a qualifying survivor in relation to the member.

Post-death decrease in value

(19) There may be deducted in computing the income of a member of a PRPP for the taxation year in which the member dies, an amount not exceeding the amount determined, after all amounts payable from the member's account under the PRPP have been distributed, by the formula

A – B
whereA

is the total of all amounts each of which is an amount in respect of the account

(aincluded in the member's income under subsection (13) because of the application of subsection (14),

(bincluded in the income of another taxpayer under subsection (16) or (18), or

(ctransferred in accordance with subsection (21) in circumstances described in subparagraph (21)(b)(iii); and

B

is the total of all distributions made from the account after the member's death.

Subsection (19) not applicable

(20) Except where the Minister has waived in writing the application of this subsection with respect to all or any portion of the amount determined in subsection (19) in respect of a member's account under a PRPP, that subsection does not apply if the last distribution from the account was made after the end of the calendar year following the year in which the member died.

Transfer of amounts

(21) An amount is transferred from a member's account under a PRPP in accordance with this subsection if the amount

(ais a single amount;

(bis transferred on behalf of an individual who

(i) is the member,

(ii) is a spouse or common-law partner or former spouse or common-law partner of the member and who is entitled to the amount under a decree, order or judgment of a competent tribunal, or under a written agreement, relating to a division of property between the member and the individual, in settlement of rights arising out of, or on a breakdown of, their marriage or common-law partnership, or

(iii) is entitled to the amount as a consequence of the death of the member and was a spouse or common-law partner of the member immediately before the death; and

(cis transferred directly to

(i) the individual's account under the PRPP,

(ii) another PRPP in respect of the individual,

(iii) a registered pension plan for the benefit of the individual,

(iv) a registered retirement savings plan or registered retirement income fund under which the individual is the annuitant, or

(v) a licensed annuities provider to acquire a qualifying annuity for the individual.

Taxation of transfers

(22) If subsection (21) applies to an amount transferred from a member's account under a PRPP on behalf of an individual,

(athe amount shall not, by reason only of that transfer, be included in computing the income of the individual; and

(bno deduction may be made in respect of the amount in computing the income of any taxpayer.

Taxation of qualifying annuity

(23) If an amount is transferred in accordance with subsection (21) to acquire a qualifying annuity, there shall be included — under this section and not under any other provision of this Act — in computing an individual's income for a taxation year any amount received by the individual during the year out of or under the annuity or as proceeds from a disposition in respect of the annuity.

Notice of intent

(24) The Minister may give notice (in subsections (25) and (26) referred to as a "notice of intent") to an administrator of a PRPP in writing that the Minister intends to revoke the registration of the plan as a PRPP if

(athe plan does not comply with the conditions for registration in subsection (2);

(bthe plan is not administered in accordance with the terms of the plan as registered;

(cthe plan becomes a revocable plan;

(da condition imposed under subsection (6) that applies with respect to the plan is not complied with; or

(eregistration of the plan under the Pooled Registered Pension Plans Act or a similar law of a province is refused or revoked.

Date of revocation

(25) The notice of intent shall specify the date on which revocation of a PRPP is to be effective, which date shall not be earlier than the earliest date on which one of the events described in subsection (24) occurs.

Notice of revocation

(26) At any time after 30 days after the day on which the notice of intent is mailed to an administrator of a PRPP, the Minister may give notice (in this subsection and in subsection (27) referred to as a "notice of revocation") in writing to the administrator that the registration of the PRPP is revoked as of the date specified in the notice of revocation and that date may not be earlier than the date specified in the notice of intent.

Revocation of registration

(27) If the Minister gives a notice of revocation to the administrator of a PRPP, the registration of the PRPP is revoked as of the date specified in the notice of revocation, unless the Federal Court of Appeal or a judge of that Court, on application made at any time before the determination of an appeal pursuant to subsection 172(3), orders otherwise.

Voluntary revocation

(28) If the administrator of a PRPP so requests in writing, the Minister may give notice in writing to the administrator that the registration of the PRPP is revoked as of a specified date and that date may not be earlier than the date specified in the administrator's request.

Single employer

(29) For the purposes of the definition "designated pooled pension plan" in subsection (1), all employers that are related to each other are deemed to be a single employer and all the structural units of a trade union, including each local, branch, national and international unit, are deemed to be a single employer.

Significant interest

(30) For the purposes of the definition "restricted investment" in subsection (1), a member of a pooled pension plan has a significant interest in a corporation, trust or partnership at any time if, at that time,

(ain the case of a corporation, the member is a specified shareholder of the corporation; and

(bin the case of a partnership or trust,

(i) the member is a specified unitholder of the partnership or the trust, as the case may be, or

(ii) the total fair market value of the member's interests in the partnership or the trust, as the case may be, together with all interests in the partnership or the trust held by persons or partnerships with whom the member does not deal at arm's length or is affiliated, is 10% or more of the fair market value of all interests in the partnership or the trust.

Contributions from exempt income

(31) Contributions may be made to a PRPP in respect of a member of the PRPP as if the member's earned income (as defined in subsection 146(1)) for a taxation year included the member's exempt earned income for the year.

Non-deductible contributions

(32) A contribution made by a member of a PRPP to the member's account under the PRPP out of or from the member's exempt earned income may not be deducted in computing the income of the member for any taxation year.

Exempt contributions not over-contributions

(33) For the purposes of Part X.1 as it applies because of subsection (11) in respect of contributions made to a PRPP,

(aan individual's earned income (as defined in subsection 146(1)) for any taxation year after 2012 includes the individual's exempt earned income for that year;

(ban individual's exempt-income contribution amount for any taxation year is deemed to have been deducted by the individual under subsection 146(5) in computing the individual's income for that year; and

(cthe description of D in paragraph (b) of the definition "unused RRSP deduction room" in subsection 146(1) is to be read without reference to subparagraph (iv).

Designation of exempt-income contribution amount

(34) A taxpayer may designate an amount as the taxpayer's exempt-income contribution amount for a taxation year if the amount designated does not exceed the lesser of

(athe taxpayer's unused non-deductible PRPP room at the end of the preceding taxation year, and

(bthe total of the taxpayer's contributions as a member to a PRPP for the year (other than contributions to which subsection (32) applies).

Regulations — other

(35) The Governor in Council may make regulations

(aprescribing conditions applicable to administrators;

(brequiring administrators to file information returns respecting pooled pension plans;

(cenabling the Minister to require any person to provide the Minister with information for the purposes and provisions of this Act relating to PRPPs; and

(dgenerally to carry out the purposes and provisions of this Act relating to PRPPs.

(2) Subsection (1) comes into force or is deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

37. (1) Subsection 148(1) of the Act is amended by adding the following after paragraph (b.2):

(b.3a pooled registered pension plan,

(2) Subsection (1) comes into force or is deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

38. (1) Subsection 149(1) of the Act is amended by adding the following after paragraph (u.2):

Pooled registered pension plan

(u.3a trust governed by a pooled registered pension plan to the extent provided under section 147.5;

(2) Subsection (1) comes into force or is deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

39. (1) Paragraph 152(6)(f.3) of the Act is replaced by following:

(f.3a deduction (including for the purposes of this subsection a reduction of an amount otherwise required to be included in computing a taxpayer's income) under subsection 146(8.9) or (8.92), 146.3(6.2) or (6.3) or 147.5(14) or (19) ,

(2) Subsection (1) comes into force or is deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

40. (1) The description of A in the definition "net tax owing" in subsection 156.1(1) of the Act is replaced by the following:

A

is the total of the taxes payable under this Part and Parts I.2, X.5 and XI.4 by the individual for the year,

(2) Subsection (1) applies to the 2012 and subsequent taxation years.

41. (1) Subsection 172(3) of the Act is amended by striking out "or" at the end of paragraph (f.1) and by adding the following after paragraph (g):

(hrefuses to accept for registration for the purposes of this Act any pooled pension plan or gives notice under subsection 147.5(24) to the administrator of a pooled registered pension plan that the Minister proposes to revoke its registration, or

(irefuses to accept an amendment to a pooled registered pension plan,

(2) The portion of subsection 172(3) of the Act, as amended by subsection (1), after paragraph (i) is replaced by the following:

the person described in paragraph (a), (a.1) or (a.2), the applicant in a case described in paragraph (b), (e) or (g), a trustee under the plan or an employer of employees who are beneficiaries under the plan, in a case described in paragraph (c), the promoter in a case described in paragraph (e.1), the administrator of the plan or an employer who participates in the plan, in a case described in paragraph (f) or (f.1), or the administrator of the plan in a case described in paragraph (h) or (i) , may appeal from the Minister's decision, or from the giving of the notice by the Minister, to the Federal Court of Appeal.

(3) Paragraphs 172(5)(a) and (b) of the Act are replaced by the following:

(ato register for the purposes of this Act any pension plan or pooled pension plan , or

(bto accept an amendment to a registered pension plan or a pooled registered pension plan

(4) Subsections (1) to (3) come into force or are deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

42. (1) Subsection 180(1) of the Act is amended by striking out "or" at the end of paragraph (c.1) and by replacing paragraph (d) with the following:

(c.2)  the mailing of notice to the administrator of the pooled registered pension plan under subsection 147.5(24), or

(dthe time the decision of the Minister to refuse the application for acceptance of the amendment to the registered pension plan or pooled registered pension plan was mailed, or otherwise communicated in writing, by the Minister to any person,

(2) Subsection (1) comes into force or is deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

43. (1) The description of D in paragraph 204.2(1.1)(b) of the Act is replaced by the following:

D

is the group plan amount in respect of the individual at that time,

(2) Subparagraph (a)(iii) of the description of I in subsection 204.2(1.2) of the Act is replaced by the following:

(iii)

an amount transferred to the plan on behalf of the individual in accordance with any of subsections 146(16), 147(19), 147.3(1) and (4) to (7) and 147.5(21) or in circumstances to which subsection 146(21) applies,

(3) The description of I in subsection 204.2(1.2) of the Act is amended by striking out "or" at the end of paragraph (a), by replacing "and" at the end of paragraph (b) with "or" and by adding the following after paragraph (b):

(can amount contributed in the year and before that time by an employer or former employer of the individual to an account of the individual under a pooled registered pension plan, and

(4) Paragraph (a) of the description of J in subsection 204.2(1.2) of the Act is replaced by following:

(athe total of all amounts each of which is an amount (other than the portion of it that reduces the amount on which tax is payable by the individual under subsection 204.1(1)) received by the individual in the year and before that time out of or under a pooled registered pension plan , a registered retirement savings plan or a registered retirement income fund and included in computing the individual's income for the year

(5) The portion of subsection 204.2(1.3) of the Act before paragraph (a) is replaced by the following:

Group plan amount

(1.3) For the purposes of this section, the group plan amount in respect of an individual at any time in a taxation year is the lesser of

(6) Subparagraph (i) of the description F in paragraph 204.2(1.3)(a) of the Act is replaced by the following:

(i) the total of all amounts each of which is a qualifying group plan amount in respect of the individual, to the extent that the amount is included in determining the value of I in subsection (1.2) in respect of the individual at that time, and

(7) Subparagraph (ii) of the description K in paragraph 204.2(1.3)(a) of the Act is replaced by the following:

(ii) in any other case, the group plan amount in respect of the individual at the end of the preceding taxation year, and

(8) Subsection 204.2(1.31) of the Act is replaced by the following:

Qualifying group plan amount

(1.31) For the purposes of the description of F in paragraph (1.3)(a), a qualifying group plan amount in respect of an individual is a premium paid under a registered retirement savings plan or an amount contributed by an employer or former employer of the individual to an account of the individual under a pooled registered pension plan if

(athe plan is part of a qualifying arrangement or is a pooled registered pension plan ,

(bthe premium or contribution is an amount to which the individual is entitled for services rendered by the individual (whether or not as an employee), and

(cthe premium or contribution was remitted to the plan on behalf of the individual by the person or body of persons that is required to remunerate the individual for the services, or by an agent for that person or body,

but does not include the part, if any, of a premium or contribution that, by making (or failing to make) an election or exercising (or failing to exercise) any other right under the plan after beginning to participate in the plan and within 12 months before the time the premium was paid or the contribution was made , the individual could have prevented the premium or contribution and that would not as a consequence have been required to be remitted on behalf of the individual to another registered retirement savings plan or pooled registered pension plan or to a money purchase provision of a registered pension plan.

(9) Section 204.2 of the Act is amended by adding the following after subsection (4):

PRPP withdrawals

(5) Notwithstanding the Pooled Registered Pension Plans Act or any similar law of a province, a member of a PRPP may withdraw an amount from the member's account under the PRPP to reduce the amount of tax that would otherwise be payable by the member under this Part, to the extent that the reduction cannot be achieved by withdrawals from plans other than PRPPs.

(10) Subsections (1) to (9) come into force or are deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

44. (1) Subsection 207.5(1) of the Act is amended by adding the following in alphabetical order:

"advantage"

« avantage »

"advantage" , in relation to a retirement compensation arrangement, means

(aany benefit, loan or indebtedness that is conditional in any way on the existence of the arrangement, other than

(i) a benefit derived from the provision of administrative or investment services in respect of the arrangement,

(ii) a loan or an indebtedness the terms and conditions of which are terms and conditions that persons dealing at arm's length with each other would have entered into, and

(iii) a payment out of or under the arrangement that is included in computing a taxpayer's income under Part I, and

(ba benefit that is an increase in the total fair market value of the subject property of the arrangement if it is reasonable to consider, having regard to all the circumstances, that the increase is attributable, directly or indirectly, to a transaction or event or a series of transactions or events one of the main purposes of which was to enable a person or a partnership to benefit from a provision of this Part, or from the exemption from tax under paragraph 149(1)(q.1), if the transaction, event or series

(i) would not have occurred in a normal commercial or investment context in which parties deal with each other at arm's length and act prudently, knowledgeably and willingly, or

(ii) included a payment received as, on account or in lieu of, or in satisfaction of, a payment

(A) for services provided by a person who is, or does not deal at arm's length with, a specified beneficiary of the arrangement, or

(B) of interest, of a dividend, of rent, of a royalty or of any other return on investment, or of proceeds of disposition, in respect of property (other than subject property of the arrangement) held by a person who is, or does not deal at arm's length with, a specified beneficiary of the arrangement,

(ca benefit that is income or a capital gain that is reasonably attributable, directly or indirectly, to

(i) a prohibited investment in respect of the arrangement,

(ii) an amount received by a specified beneficiary of the arrangement, or by a person who does not deal at arm's length with the specified beneficiary, if it is reasonable to consider, having regard to all the circumstances, that the amount was paid in relation to, or would not have been paid but for, subject property of the arrangement and the amount was paid as, on account or in lieu of, or in satisfaction of, a payment

(A) for services provided by a person who is, or who does not deal at arm's length with, the specified beneficiary, or

(B) of interest, of a dividend, of rent, of a royalty or of any other return on investment, or of proceeds of disposition,

(dan RCA strip in respect of the arrangement, and

(ea prescribed benefit;

"prohibited investment"

« placement interdit »

"prohibited investment" , for a retirement compensation arrangement at any time, means property (other than prescribed excluded property) that is at that time

(aa debt of a specified beneficiary of the arrangement,

(ba share of the capital stock of, an interest in, or a debt of

(i) a corporation, partnership or trust in which the specified beneficiary has a significant interest, or

(ii) a person or partnership that does not deal at arm's length with, or is affiliated with, the specified beneficiary,

(can interest (or, for civil law, a right) in, or a right to acquire, a share, interest or debt described in paragraph (a) or (b), or

(dprescribed property;

"RCA strip"

« somme découlant d'un dépouillement de CR »

"RCA strip" , in respect of a retirement compensation arrangement, means the amount of a reduction in the fair market value of subject property of the arrangement, if the value is reduced as part of a transaction or event or a series of transactions or events one of the main purposes of which is to enable a specified beneficiary of the arrangement, or a person or a partnership who does not deal at arm's length with the specified beneficiary, to benefit from a provision of this Part or to obtain a benefit in respect of subject property of the arrangement or as a result of the reduction, but does not include an amount that is included in computing the income of the specified beneficiary or of an employer or former employer of the specified beneficiary;

"significant interest"

« participation notable »

"significant interest" has the same meaning as in subsection 207.01(4);

"specified beneficiary"

« bénéficiaire déterminé »

"specified beneficiary" , of a retirement compensation arrangement, means an individual who has an interest or a right in respect of the arrangement and who has or had a significant interest in an employer or former employer in respect of the arrangement;

(2) Section 207.5 of the Act is amended by adding the following after subsection (2):

Limitation on election

(3) Subsection (2) does not apply in respect of an RCA trust if any part of a decline in the fair market value of subject property of the retirement compensation arrangement is reasonably attributable to a prohibited investment for, or an advantage in relation to, the RCA trust unless the Minister is satisfied that it is just and equitable to allow the election to be made, having regard to all the circumstances, in which case, the Minister may adjust the amount deemed by subsection (2) to be the refundable tax of the arrangement to take into account all or part of the decline in the fair market value of the subject property.

(3) Subsection (1) applies after March 28, 2012, except that the definition "advantage" in subsection 207.5(1) of the Act, as enacted by subsection (1), does not apply in respect of transactions or events that relate to subject property of a retirement compensation arrangement acquired before March 29, 2012

(aif the amount of what would otherwise be an advantage is included in computing the income of a beneficiary of the arrangement, or an employer in respect of the arrangement, for the taxation year in which the amount arose or the immediately following taxation year; or

(bif the subject property is a promissory note or similar debt obligation, commercially reasonable payments of principal and interest are made at least annually after 2012 in respect of the note or obligation and no RCA strip arises after March 28, 2012 in respect of the arrangement. For the purposes of this paragraph, an amendment to the terms of the note or obligation to provide for such payments is deemed not to be a disposition or an acquisition of the note or obligation.

(4) Subsection (2) applies to elections in respect of tax paid under subsection 207.7(1) of the Act in respect of contributions made to a retirement compensation arrangement after March 28, 2012 and income earned, capital gains realized and losses incurred, in respect of such contributions.

45. (1) The Act is amended by adding the following after section 207.6:

Tax payable on prohibited investment

207.61 (1) A custodian of a retirement compensation arrangement shall pay a tax under this Part for a calendar year if, at any time in the year,

(athe arrangement acquires property that is a prohibited investment for the arrangement; or

(bsubject property of the arrangement becomes a prohibited investment for the arrangement after March 29, 2012.

Amount of tax payable

(2) The amount of tax payable in respect of each property described in subsection (1) is 50% of the fair market value of the property at the time referred to in that subsection.

Refund

(3) If in a calendar year an RCA trust disposes of a property in respect of which a tax is imposed under subsection (1) on the custodian of the retirement compensation arrangement, the custodian is entitled to a refund for the year of an amount equal to

(athe amount of the tax so imposed, unless paragraph (b) applies; or

(bnil,

(i) if it is reasonable to consider that the custodian, or a specified beneficiary of the arrangement, knew, or ought to have known, at the time the property was acquired by the arrangement, that it was, or would become, a property described in subsection (1), or

(ii) if the property is not disposed of by the arrangement 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.

Deemed disposition and reacquisition

(4) If, at any time, a property held by an RCA trust ceases to be, or becomes, a prohibited investment for the RCA trust, the RCA trust is deemed to have disposed of the property immediately before that time for proceeds of disposition equal to the fair market value of the property at that time and to have reacquired the property at that time at a cost equal to that fair market value.

Tax payable in respect of advantage

207.62 (1) A custodian of a retirement compensation arrangement shall pay a tax under this Part for a calendar year if, in the year, an advantage in relation to the arrangement is extended to, or is received or receivable by, an RCA trust under the arrangement, a specified beneficiary of the arrangement or any person who does not deal at arm's length with the specified beneficiary.

Amount of tax payable

(2) The amount of tax payable in respect of an advantage described in subsection (1) is

(ain the case of a benefit, the fair market value of the benefit;

(bin the case of a loan or an indebtedness, the amount of the loan or indebtedness; and

(cin the case of an RCA strip, the amount of the RCA strip.

Joint liability

207.63 If a custodian of a retirement compensation arrangement is liable to pay a tax under section 207.61 or 207.62, a specified beneficiary of the arrangement is jointly and severally, or solidarily, liable for that tax to the extent that the specified beneficiary participated in, assented to or acquiesced in the making of, the transaction or event or series of transactions or events that resulted in the liability.

Waiver of tax payable

207.64 If a person would otherwise be liable to pay a tax under this Part because of any of sections 207.61 to 207.63, the Minister may waive or cancel all or part of the liability if the Minister considers it just and equitable to do so having regard to all the circumstances, including

(awhether the tax arose as a consequence of reasonable error; and

(bthe extent to which the transaction or event or series of transactions or events that gave rise to the tax also gave rise to another tax under this Act.

Deemed distribution

207.65 For the purposes of the definition "refundable tax" in subsection 207.5(1), tax paid under section 207.61 or 207.62 by a custodian of a retirement compensation arrangement out of property held in connection with the arrangement is deemed to be a distribution under the arrangement for the taxation year in which the tax is paid to the extent that the tax has not been refunded, waived or cancelled.

(2) Subsection (1) applies after March 28, 2012. For the purposes of section 207.61 of the Act, as enacted by subsection (1), an amendment to the terms of a promissory note, or similar debt obligation, that is subject property of a retirement compensation arrangement acquired before March 29, 2012 to provide for commercially reasonable payments of principal and interest is deemed not to be a disposition or an acquisition of the note or obligation.

46. (1) The Act is amended by adding the following after Part XI.3:

Part XI.4

Tax on Excess EPSP Amounts

Excess EPSP amount

207.8 (1) In this Part, "excess EPSP amount" , of a specified employee for a taxation year in respect of an employer, means the amount determined by the formula

A – (20% × B)
whereA

is the portion of the total of all amounts paid by the employer of the specified employee (or by a corporation with which the employer does not deal at arm's length) to a trust governed by an employees profit sharing plan that is allocated for the year to the specified employee; and

B

is the specified employee's total income for the year from an office or employment with the employer computed without reference to paragraph 6(1)(d) and sections 7 and 8.

Tax payable

(2) If a specified employee has an excess EPSP amount for a taxation year, the specified employee shall pay a tax for the year equal to the amount determined by the formula

(A + B) × C
whereA

is 29%;

B

is

(aif the specified employee is resident in Quebec at the end of the year, 0%,

(bif the specified employee is resident in a province other than Quebec at the end of the year, the highest percentage rate of tax, including surtaxes but not taxes that are limited to a maximum amount, imposed by the province for the year on the income of an individual who is a resident of the province, or

(cin any other case, 14%; and

C

is the total of all excess EPSP amounts of the specified employee for the year.

Waiver or cancellation

(3) If a specified employee would otherwise be liable to pay a tax under subsection (2), the Minister may waive or cancel all or part of the liability if the Minister considers it just and equitable to do so having regard to all the circumstances.

Return and payment of tax

(4) Every person who is liable to pay tax under this Part for a taxation year shall

(aon or before the person's filing-due date for the year, file with the Minister a return for the year under this Part in prescribed form and containing prescribed information; and

(bon or before the person's balance-due day for the year, pay to the Receiver General the amount of tax payable under this Part by the person for the year.

Provisions applicable to this Part

(5) Subsections 150(2) and (3), sections 152, 155 to 156.1, 158 to 160.1, 161 and 161.2 to 167 and Division J of Part I apply to this Part with any modifications that the circumstances require.

(2) Subsection (1) applies to the 2012 and subsequent taxation years, except that it does not apply in respect of payments made to a trust governed by an employees profit sharing plan

(abefore March 29, 2012; or

(bbefore 2013 pursuant to an obligation arising under a written agreement or arrangement entered into before March 29, 2012.

47. (1) The definition "registered life insurance policy" in subsection 211(1) of the Act is replaced by the following:

"registered life insurance policy"

« police d'assurance-vie agréée »

"registered life insurance policy" means a life insurance policy issued or effected as or under a pooled registered pension plan , a registered retirement savings plan, a deferred profit sharing plan or a registered pension plan;

(2) Subsection (1) comes into force or is deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

48. (1) Paragraph 212(1)(h) of the Act is amended by adding the following before subparagraph (iii):

(ii) an amount distributed from a pooled registered pension plan that has been designated by the administrator of the plan in accordance with subsection 147.5(18),

(2) The portion of subparagraph 212(1)(h)(iii.1) of the Act before clause (B) is replaced by the following:

(iii.1) the portion of the payment that is transferred by the payer on behalf of the non-resident person, pursuant to an authorization in prescribed form, to a pooled registered pension plan , registered pension plan, registered retirement savings plan or registered retirement income fund and that

(A) because of any of subsections 146(21), 147.3(9) and 147.5(22) would not, if the non-resident person had been resident in Canada throughout the taxation year in which the payment was made, be included in computing the non-resident person's income, or

(3) Subsections (1) and (2) come into force or are deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

49. (1) The Act is amended by adding the following after section 212.2:

Foreign affiliate dumping — conditions for application

212.3 (1) Subsection (2) applies to an investment in a non-resident corporation (in this section referred to as the "subject corporation") made at any time (in this section referred to as the "investment time") by a corporation resident in Canada (in this section referred to as the "CRIC") if

(athe subject corporation is immediately after the investment time, or becomes as part of a transaction or event or series of transactions or events that includes the making of the investment, a foreign affiliate of the CRIC;

(bthe CRIC is at the investment time, or becomes as part of a transaction or event or series of transactions or events that includes the making of the investment, controlled by a non-resident corporation (in this section referred to as the "parent"); and

(cneither subsection (16) nor (18) applies in respect of the investment.

Foreign affiliate dumping — consequences

(2) If this subsection applies to an investment in a subject corporation made by a CRIC,

(afor the purposes of this Part and subject to subsections (3) and (7), the CRIC is deemed to have paid to the parent, and the parent is deemed to have received from the CRIC, at the investment time, a dividend equal to the total of all amounts each of which is the portion of the fair market value at the investment time of any property (not including shares of the capital stock of the CRIC) transferred, any obligation assumed or incurred, or any benefit otherwise conferred, by the CRIC, or of any property transferred to the CRIC which transfer results in the reduction of an amount owing to the CRIC, that can reasonably be considered to relate to the investment; and

(bin computing the paid-up capital in respect of any class of shares of the capital stock of the CRIC at any time that is at or after the investment time, there is to be deducted the amount of any increase in the paid-up capital in respect of the class, determined without reference to this section, that can reasonably be considered to relate to the investment.

Dividend substitution election

(3) If a CRIC, all corporations that are, at the investment time, qualifying substitute corporations in respect of the CRIC, and the parent (or the parent and another non-resident corporation that is at the investment time controlled by the parent) jointly elect in writing under this subsection in respect of an investment, amounts are agreed on in respect of classes of shares of the capital stock of any of the CRIC and one or more of the qualifying substitute corporations, the total of the amounts agreed on equals the amount of the dividend that would, in the absence of this subsection, be deemed under paragraph (2)(a) to be paid and received, and the election is filed with the Minister on or before the earliest of the filing-due dates of the CRIC and the qualifying substitute corporations for their respective taxation years that include the investment time, then

(athe dividend that would, in the absence of this subsection, be deemed under paragraph (2)(a) to have been paid by the CRIC to the parent and received by the parent from the CRIC

(i) is reduced by the total of all amounts each of which is an amount agreed on in the election in respect of a class of shares of the capital stock of a qualifying substitute corporation, and

(ii) is, as reduced by the application of subparagraph (i), deemed to be paid to, and received by, the parent or the other non-resident corporation (if the other non-resident corporation has elected under this subsection), as one or more dividends in the amounts, and in respect of the classes of shares of the capital stock of the CRIC, agreed on in the election; and

(ba dividend is deemed, at the investment time, to be paid to either the parent or the other non-resident corporation, as the case may be, by each qualifying substitute corporation in respect of which an amount has been agreed on in the election, and received by the parent, or the other non-resident corporation, from that qualifying substitute corporation, in the amount, and in respect of each class referred to in subparagraph (a)(i), agreed on in the election.

Qualifying substitute corporation

(4) For the purposes of this section, "qualifying substitute corporation" , at any time in respect of a CRIC, means a corporation resident in Canada

(athat is, at that time, controlled by the parent;

(bthat has, at that time, an equity percentage (as defined in subsection 95(4)) in the CRIC; and

(cshares of the capital stock of which are, at that time, owned by the parent or another non-resident corporation with which the parent does not, at that time, deal at arm's length.

Modification of terms — paragraph (10)(e)

(5) In the case of an investment described in paragraph (10)(e), the CRIC is deemed for the purposes of paragraph (2)(a) to transfer to the subject corporation property that relates to the investment, the fair market value of which property is

(aif the investment is described in subparagraph (10)(e)(i), the amount owing in respect of the debt obligation referred to in that subparagraph immediately after the investment time, or

(bif the investment is described in subparagraph (10)(e)(ii), the fair market value of the shares referred to in that subparagraph immediately after the investment time.

Application of subsection (7)

(6) Subsection (7) applies if paragraph (2)(a) or (3)(b) applies to an investment in a subject corporation made by a CRIC and

(aif an election is made under subsection (3) in respect of the investment,

(i) each class of shares of the capital stock of the CRIC or of a qualifying substitute corporation, in respect of which an amount has been agreed on in the election, is a class of which the parent, or another non-resident corporation with which the parent does not, at the investment time, deal at arm's length, owns shares, and

(ii) the election results in the greatest possible amount that is the total of all amounts each of which would, if subparagraph (7)(b)(i) applied in respect of the investment, be a reduction of paid-up capital in respect of a share of the capital stock of the CRIC, or a qualifying substitute corporation, that is owned by the parent or another non-resident corporation with which the parent does not, at the investment time, deal at arm's length; or

(bin any other case, the following conditions are met:

(i) either

(A) there was only one class of issued and outstanding shares of the capital stock of the CRIC at the investment time, or

(B) the CRIC demonstrates that an amount of paid-up capital in respect of one or more classes of shares of the capital stock of the CRIC arose from one or more transfers of property to the CRIC and that

(I) in the case of an investment described in paragraph (10)(f), all the property transferred was used by the CRIC to make, in whole or in part, the direct acquisition referred to in that paragraph, and

(II) in any other case, all the property transferred was used by the CRIC to make, in whole or in part, the investment; and

(ii) at the investment time, each share of the capital stock of the CRIC that was not owned by the parent was owned by

(A) a person who was dealing at arm's length with the CRIC, or

(B) a non-resident person who was not dealing at arm's length with the CRIC.

Reduction of deemed dividend

(7) If this subsection applies, the following rules apply:

(athe amount of any dividend deemed under this section to have been paid by the CRIC or a qualifying substitute corporation and to have been received by a non-resident corporation in respect of the investment is to be reduced by the lesser of

(i) the amount that would, in the absence of this subsection, be deemed to be paid and received as a dividend under this section, and

(ii) one of

(A) if paragraph (6)(a) applies, the amount of paid-up capital in respect of the class of shares in respect of which the dividend is deemed to be paid,

(B) if clause (6)(b)(i)(A) applies, the amount of paid-up capital in respect of the class referred to in that clause immediately before the investment time, or

(C) if clause (6)(b)(i)(B) applies, the total of all amounts of paid-up capital, determined under that clause, in respect of a class of shares of the capital stock of the CRIC; and

(bin computing the paid-up capital in respect of a class of shares of the capital stock of the CRIC or a qualifying substitute corporation, as the case may be, at any time that is at or after the investment time, there is to be deducted

(i) if clause (a)(ii)(A) applies, the amount determined under paragraph (a) in respect of the class, and

(ii) if clause (a)(ii)(B) or (C) applies, the amount determined under paragraph (a) that can reasonably be considered to relate to the class.

Paid-up capital adjustment

(8) In computing the paid-up capital at any time after March 28, 2012 in respect of a class of shares of the capital stock of a corporation, there is to be added an amount equal to the lesser of

(athe amount, if any, by which

(i) the total of all amounts deemed by subsection 84(3), (4) or (4.1) to be a dividend on shares of the class paid after March 28, 2012 and before that time by the corporation

exceeds

(ii) the total that would be determined under subparagraph (i) if this Act were read without reference to paragraphs (2)(b) and (7)(b) and subsection (9), and

(bthe amount, if any, by which

(i) the total of all amounts required by paragraph (2)(b) or (7)(b) to be deducted in computing the paid-up capital in respect of the class before that time

exceeds

(ii) the total of all amounts required by subsection (9) to be added in computing the paid-up capital in respect of the class before that time.

Paid-up capital reinstatement

(9) If, in respect of an investment in a subject corporation made by a CRIC that is described in paragraph (10)(a), (b) or (f), an amount is required by paragraph (2)(b) or (7)(b) to be deducted in computing the paid-up capital in respect of a class of shares of the capital stock of a particular corporation, and the particular corporation reduces, at a time subsequent to the investment time, the paid-up capital in respect of the class, then the paid-up capital in respect of the class is to be increased, immediately before the subsequent time, by the least of

(athe amount of the reduction of the paid-up capital at the subsequent time,

(bthe amount, if any, by which

(i) the amount required by paragraph (2)(b) or (7)(b), as the case may be, to be deducted, in respect of the investment, in computing the paid-up capital in respect of the class

exceeds

(ii) the total of all amounts required under this subsection to be added, in respect of the investment, to the paid-up capital of the class in respect of a reduction of paid-up capital made before the subsequent time, and

(can amount that

(i) if the property distributed on the reduction of paid-up capital is shares of the capital stock of the subject corporation (in this paragraph referred to as the "subject shares") or shares of the capital stock of a foreign affiliate of the particular corporation that were substituted for the subject shares, is equal to the fair market value of the subject shares, or the portion of the fair market value of the substituted shares that may reasonably be considered to relate to the subject shares, as the case may be, at the subsequent time,

(ii) the particular corporation demonstrates that it has received directly or indirectly after the investment time and no more than 180 days before the subsequent time

(A) as proceeds from the disposition of the subject shares, or as the portion of the proceeds from the disposition of the substituted shares that may reasonably be considered to relate to the subject shares, other than as proceeds from a disposition in respect of which the related acquisition is one to which subsection (18) applies, or

(B) as a dividend or reduction of paid-up capital in respect of a class of subject shares, or the portion of a dividend or reduction of paid-up capital in respect of a class of substituted shares that may reasonably be considered to relate to the subject shares, or

(iii) if neither subparagraph (i) nor (ii) applies, is equal to nil.

Investment in subject corporation

(10) In this section, "investment" , in a subject corporation made by a CRIC, means any of

(aan acquisition of shares of the capital stock of the subject corporation by the CRIC;

(ba contribution of capital to the subject corporation by the CRIC, which is deemed to include any transaction or event under which a benefit is conferred on the subject corporation by the CRIC;

(ca transaction under which an amount becomes owing by the subject corporation to the CRIC, other than an amount owing

(i) that arises in the ordinary course of the business of the CRIC and that is repaid, other than as part of a series of loans or other transactions and repayments, within 180 days after the day on which the amount becomes owing, or

(ii) that is a pertinent loan or indebtedness immediately after the time of the transaction;

(dan acquisition of a debt obligation of the subject corporation by the CRIC from a person, other than

(i) if the acquisition is made in the ordinary course of the business of the CRIC, a debt obligation acquired from a person with which the CRIC deals at arm's length at the time of the acquisition, or

(ii) a debt obligation that is a pertinent loan or indebtedness immediately after the time of the acquisition;

(ean extension of

(i) the maturity date of a debt obligation (other than a debt obligation that is a pertinent loan or indebtedness immediately after the time of the extension) owing by the subject corporation to the CRIC, or

(ii) the redemption, acquisition or cancellation date of shares of the capital stock of the subject corporation owned by the CRIC;

(fan indirect acquisition by the CRIC of shares of the capital stock of the subject corporation that results from a direct acquisition by the CRIC of shares of the capital stock of another corporation resident in Canada, of which the subject corporation is a foreign affiliate, if the total fair market value of all the shares that are held directly or indirectly by the other corporation and are shares of foreign affiliates of the other corporation exceeds 75% of the total fair market value (determined without reference to debt obligations of any corporation resident in Canada in which the other corporation has a direct or indirect interest) of all of the properties owned by the other corporation; and

(gan acquisition by the CRIC of an option in respect of, or an interest in, or for civil law a right in, shares of the capital stock of, an amount owing by (other than an amount owing described in subparagraph (c)(i) or (ii)), or a debt obligation of (other than a debt obligation described in subparagraph (d)(i) or (ii)), the subject corporation.

Pertinent loan or indebtedness

(11) For the purposes of subsection (10) and subject to subsection 17.1(3), "pertinent loan or indebtedness" , at any time, means an amount owing at that time by the subject corporation to the CRIC in respect of which all of the following apply:

(aeither

(i) the amount became owing after March 28, 2012, or

(ii) the amount became owing before March 29, 2012 and is a debt obligation for which the maturity date was extended after March 28, 2012 and at or before that time;

(bthe amount owing is not an amount owing described in subparagraph (10)(c)(i) or a debt obligation described in subparagraph (10)(d)(i); and

(cthe CRIC and the parent jointly elect in writing under this paragraph in respect of the amount owing and file the election with the Minister on or before the filing-due date of the CRIC

(i) in the case of an amount owing described in subparagraph (a)(i), for the year in which the amount became owing, or

(ii) in the case of an amount owing described in subparagraph (a)(ii), for the year in which the extension was made.

Late-filed elections

(12) Where an election referred to in subsection (3) or paragraph (11)(c) was not made on or before the day on or before which the election was required by that paragraph to be made, the election is deemed to have been made on that day if the election is made on or before the day that is three years after that day and the penalty in respect of the election is paid by the CRIC when the election is made.

Penalty for late-filed election

(13) For the purposes of subsection (12), the penalty in respect of an election referred to in that subsection is the amount equal to the product obtained by multiplying $100 by the number of months each of which is a month all or part of which is during the period commencing with the day on or before which the election is required by subsection (3) or paragraph (11)(c), as the case may be, to be made and ending on the day on which the election is made.

Rules for paragraph (10)(f)

(14) For the purposes of paragraph (10)(f),

(athe condition in that paragraph is deemed to be satisfied at the time of the acquisition if

(i) any property (other than shares of foreign affiliates of the other corporation that is referred to in that paragraph) held directly or indirectly by that other corporation is disposed of, after the time of the acquisition, directly or indirectly by that corporation as part of a series of transactions or events that includes the acquisition, and

(ii) at any time that is subsequent to the time of the acquisition and that is in the period during which the series occurs, the condition in that paragraph would have been satisfied had the acquisition occurred at the subsequent time; and

(bthe fair market value of properties held directly or indirectly by the other corporation is not to be taken into account more than once in determining whether the condition in that paragraph is satisfied.

Control

(15) For the purposes of this section and paragraph 128.1(1)(c.3), a CRIC that would, in the absence of this subsection, be controlled at any time

(aby more than one non-resident corporation is deemed not to be controlled at that time by any such non-resident that controls at that time another non-resident corporation that controls at that time the CRIC, unless the application of this subsection would otherwise result in no non-resident corporation controlling the CRIC; and

(bby a particular non-resident corporation is deemed not to be controlled at that time by the particular corporation if the particular corporation is controlled at that time by another corporation that is at that time

(i) resident in Canada, and

(ii) not controlled by any non-resident person.

Exception — more closely connected business activities

(16) Subject to subsection (19), subsection (2) does not apply to an investment in a subject corporation made by a CRIC if the CRIC demonstrates that all of the following conditions are met:

(athe business activities carried on by the subject corporation and all other corporations (those other corporations in this subsection and subsection (17) referred to as the "subject subsidiary corporations") in which the subject corporation has, at the investment time, an equity percentage (as defined in subsection 95(4)) are at the investment time, and are expected to remain, on a collective basis, more closely connected to the business activities carried on in Canada by the CRIC, or by any corporation resident in Canada with which the CRIC does not, at the investment time, deal at arm's length, than to the business activities carried on by any non-resident corporation with which the CRIC, at the investment time, does not deal at arm's length, other than

(i) the subject corporation,

(ii) the subject subsidiary corporations, and

(iii) any corporation that is, immediately before the investment time, a controlled foreign affiliate of the CRIC for the purposes of section 17,

(bofficers of the CRIC had and exercised the principal decision-making authority in respect of the making of the investment and a majority of those officers were, at the investment time, persons each of whom was resident, and working principally,

(i) in Canada, or

(ii) in a country in which a particular corporation is resident if the particular corporation (in this subsection and subsection (17) referred to as a "connected affiliate") is a controlled foreign affiliate of the CRIC for the purposes of section 17 and carries on business activities that are, at the investment time, and are expected to remain, at least as closely connected to those of the subject corporation and the subject subsidiary corporations, on a collective basis, as the business activities carried on in Canada by the CRIC, or any corporation resident in Canada with which the CRIC does not, at the investment time, deal at arm's length, as the case may be, are to those of the subject corporation and the subject subsidiary corporations, on a collective basis; and

(cat the investment time, it is reasonably expected that

(i) officers of the CRIC will have and exercise the ongoing principal decision-making authority in respect of the investment,

(ii) a majority of those officers will be persons each of whom will be resident, and working principally, in Canada or in a country in which a connected affiliate is resident, and

(iii) the performance evaluation and compensation of the officers of the CRIC who are resident, and work principally, in Canada, or in a country in which a connected affiliate is resident, will be based on the results of operations of the subject corporation to a greater extent than will be the performance evaluation and compensation of any officer of a non-resident corporation (other than the subject corporation, a corporation controlled by the subject corporation or a connected affiliate) that does not deal at arm's length with the CRIC.

Dual officers

(17) For the purposes of paragraphs (16)(b) and (c), any person who is an officer of the CRIC and of a non-resident corporation with which the CRIC, at the investment time, does not deal at arm's length (other than the subject corporation, a subject subsidiary corporation or a connected affiliate) is deemed to not be resident, and to not work principally, in a country in which a connected affiliate is resident.

Exception — corporate reorganizations

(18) Subject to subsections (19) and (20), subsection (2) does not apply to an investment in a subject corporation made by a CRIC if

(athe investment is described in paragraph (10)(a) and is an acquisition of shares of the capital stock of the subject corporation

(i) from a corporation resident in Canada

(A) to which the CRIC is, immediately before the investment time, related (determined without reference to paragraph 251(5)(b)), and

(B) that is, at no time that is in the period during which the series of transactions or events that includes the making of the investment occurs and that is before the investment time, dealing at arm's length (determined without reference to paragraph 251(5)(b)) with the CRIC, or

(ii) on an amalgamation described in subsection 87(1) of two or more corporations (each of which is in this subparagraph referred to as a "predecessor corporation") to form the CRIC if

(A) all of the predecessor corporations are, immediately before the amalgamation, related to each other (determined without reference to paragraph 251(5)(b)), and

(B) none of the predecessor corporations deal at arm's length (determined without reference to paragraph 251(5)(b)) with another predecessor corporation at any time that is in the period during which the series of transactions or events that includes the making of the investment occurs and that is before the investment time;

(bthe investment is described in paragraph (10)(a) and is an acquisition of shares of the capital stock of the subject corporation in which the shares are acquired by the CRIC

(i) in an exchange to which subsection 51(1) applies,

(ii) as consideration for a disposition of shares to which subsection 85.1(3) applies (determined without reference to subsection 85.1(4)),

(iii) in the course of a reorganization of the capital of the subject corporation to which subsection 86(1) applies,

(iv) as a result of a foreign merger (as defined in subsection 87(8.1)) under which the subject corporation was formed,

(v) on a liquidation and dissolution to which subsection 88(3) applies,

(vi) on a redemption of shares of another non-resident corporation that is, immediately before the investment time, a foreign affiliate of the CRIC, or

(vii) as a dividend or a reduction of paid-up capital in respect of the shares of another non-resident corporation that is, immediately before the investment time, a foreign affiliate of the CRIC;

(cthe investment is an indirect acquisition referred to in paragraph (10)(f) that results from a direct acquisition of shares of the capital stock of another corporation resident in Canada

(i) from a corporation

(A) to which the CRIC is, immediately before the investment time, related (determined without reference to paragraph 251(5)(b)), and

(B) that is, at no time that is in the period during which the series of transactions or events that includes the making of the investment occurs and that is before the investment time, dealing at arm's length (determined without reference to paragraph 251(5)(b)) with the CRIC,

(ii) on an amalgamation described in subsection 87(1) of two or more corporations (each of which is in this subparagraph referred to as a "predecessor corporation") to form the CRIC if

(A) all of the predecessor corporations are, immediately before the amalgamation, related to each other (determined without reference to paragraph 251(5)(b)), and

(B) none of the predecessor corporations deal at arm's length (determined without reference to paragraph 251(5)(b)) with another predecessor corporation at any time that is in the period during which the series of transactions or events that includes the making of the investment occurs and that is before the investment time,

(iii) in an exchange to which subsection 51(1) applies,

(iv) in the course of a reorganization of the capital of the other corporation to which subsection 86(1) applies, or

(v) to the extent that an investment (other than one described in paragraph (10)(f)) is made in the subject corporation by the other corporation, or by a particular corporation resident in Canada to which the CRIC and the other corporation are related at the investment time, using property transferred, directly or indirectly, by the CRIC to the other corporation or the particular corporation, as the case may be, if the two investments

(A) occur within 30 days of each other, and

(B) are part of the same series of transactions or events; or

(dthe investment is an acquisition of shares of the capital stock of the subject corporation that is described in paragraph (10)(a), or an indirect acquisition referred to in paragraph (10)(f) that results from a direct acquisition of shares of the capital stock of another corporation resident in Canada, under which the shares of the subject corporation or the other corporation, as the case may be, are received by the CRIC as the sole consideration for an exchange of a debt obligation owing to the CRIC, other than an exchange to which subsection 51(1) applies.

Preferred shares

(19) Subsection (16) and paragraphs (18)(b) and (d) do not apply to an acquisition of shares of the capital stock of a subject corporation by a CRIC if, having regard to all the terms and conditions of the shares and any agreement in respect of the shares, the shares may not reasonably be considered to fully participate in the profits of the subject corporation and any appreciation in the value of the subject corporation, unless the subject corporation would be a subsidiary wholly-owned corporation of the CRIC throughout the period during which the series of transactions or events that includes the acquisition occurs if the CRIC owned all of the shares of the capital stock of the subject corporation that are owned by any of

(athe CRIC;

(ba corporation resident in Canada that is a subsidiary wholly-owned corporation of the CRIC; and

(ca corporation resident in Canada of which the CRIC is a subsidiary wholly-owned corporation.

Assumption of debt on liquidation or distribution

(20) Subsection (2) applies to an investment in a subject corporation made by a CRIC that is an acquisition of shares of the capital stock of the subject corporation described in any of subparagraphs (18)(b)(v) to (vii) to the extent of the lesser of

(athe total of all amounts each of which is the amount of a debt obligation assumed by the CRIC in respect of the liquidation and dissolution, redemption, dividend or reduction of paid-up capital, as the case may be, and

(bthe fair market value of the shares at the investment time.

Persons deemed not to be related

(21) If it can reasonably be considered that one of the main purposes of one or more transactions or events is to cause two or more persons to be related to each other so that, in the absence of this subsection, subsection (2) would not apply because of subsection (18) to an investment in a subject corporation made by a CRIC, those persons are deemed not to be related to each other for the purposes of subsection (18).

Mergers

(22) For the purposes of this section and subsections 219.1(3) and (4),

(aif there has been an amalgamation to which subsection 87(11) applies,

(i) the new corporation referred to in that subsection is deemed to be the same corporation as, and a continuation of, the parent and each subsidiary referred to in that subsection, and

(ii) the new corporation is deemed not to acquire any property of the parent, or of any subsidiary, as a result of the amalgamation; and

(bif there has been a winding-up to which subsection 88(1) applies,

(i) the parent referred to in that subsection is deemed to be the same corporation as, and a continuation of, the subsidiary referred to in that subsection, and

(ii) the parent is deemed not to acquire any property of the subsidiary as a result of the winding-up.

Indirect investment

(23) Subsection (2) applies to an investment in a subject corporation made by a CRIC to which, in the absence of this subsection, subsection (2) would not apply because of subsection (16), to the extent that one or more properties received by the subject corporation from the CRIC as a result of the investment, or property substituted for any such property, may reasonably be considered to have been used by the subject corporation, directly or indirectly as part of a series of transactions or events that includes the making of the investment, in a transaction or event to which subsection (2) would have applied if the CRIC had entered into the transaction, or participated in the event, as the case may be, instead of the subject corporation.

Indirect funding

(24) Subsection (2) does not apply to an investment in a subject corporation made by a CRIC to which, in the absence of this subsection, subsection (2) would apply, if the CRIC demonstrates that

(aall the properties received by the subject corporation from the CRIC as a result of the investment were used, at a particular time that is within 30 days after the investment time and at all times after the particular time, by the subject corporation to make a loan to a particular corporation that was, at the time of the loan, a controlled foreign affiliate of the CRIC for the purposes of section 17;

(bthe particular corporation is, throughout the period that begins at the investment time and during which the series of transactions or events that includes the making of the loan occurs, a corporation in which an investment made by the CRIC would not be subject to subsection (2) because of subsection (16); and

(cthe particular corporation uses, throughout the period during which the loan is outstanding, the proceeds of the loan in an active business (as defined in subsection 95(1)) carried on by it in the country in which it is resident.

Partnerships

(25) For the purposes of this section, subsection 17.1(1) (as it applies in respect of a pertinent loan or indebtedness as defined in subsection (11)), paragraph 128.1(1)(c.3) and subsection 219.1(2),

(aany transaction entered into, or event participated in, by a partnership is deemed to have been entered into, or participated in, as the case may be, by each member of the partnership in the proportion that the fair market value, at the time of the transaction or event, of the member's interest — held directly or indirectly through one or more other partnerships — in the partnership is of the fair market value, at that time, of all direct interests in the partnership;

(bif at any time, based on the assumptions contained in paragraph 96(1)(c), property would be owned by a partnership, that property is deemed to be owned at that time by each member of the partnership in the proportion that the fair market value, at that time, of the member's interest — held directly or indirectly through one or more other partnerships — in the partnership is of the fair market value, at that time, of all direct interests in the partnership;

(cif at any time there is an increase (including, for greater certainty, as a result of a particular acquisition of an interest in a partnership in which, immediately prior to the particular acquisition, the member did not have an interest) in the portion of a property that is deemed under paragraph (b) to be owned by a member of a partnership, the member is deemed at that time

(i) to acquire the additional portion of the property, and

(ii) to transfer property that relates to the acquisition of the additional portion and that has a fair market value equal to the fair market value at that time of the additional portion;

(dif at any time, based on the assumptions contained in paragraph 96(1)(c), an amount would be owing by a partnership, that amount is deemed to be owed by each member of the partnership in the proportion that the fair market value, at that time, of the member's interest — held directly or indirectly through one or more other partnerships — in the partnership is of the fair market value, at that time, of all direct interests in the partnership;

(eif a member of a partnership enters into a transaction, or participates in an event, with the partnership, paragraph (a) does not apply to the transaction or event to the extent that the transaction or event would, in the absence of this paragraph, be deemed by paragraph (a) to have been entered into, or participated in, as the case may be, by the member; and

(fa person or partnership that is (or is deemed by this paragraph to be) a member of a particular partnership that is a member of another partnership is deemed to be a member of the other partnership.

(2) Subject to subsection (3), subsection (1) applies in respect of transactions and events that occur after March 28, 2012. However,

(asubsection (1) does not apply to transactions that occur before 2013 between parties that deal at arm's length with each other if

(i) either

(A) in the case of an indirect acquisition referred to in paragraph 212.3(10)(f) of the Act, as enacted by subsection (1), the CRIC referred to in that paragraph is obligated to complete the direct acquisition referred to in that paragraph under the terms of an agreement in writing entered into before March 29, 2012 between the CRIC and a public corporation that is the other corporation resident in Canada referred to in that paragraph, or

(B) the parties are obligated to complete the transaction under the terms of an agreement in writing entered into between the parties before March 29, 2012, and

(ii) no party to the agreement may be excused from the obligation as a result of amendments to the Act; and

(bany election referred to in subsection 212.3(3) or paragraph 212.3(11)(c) of the Act, as enacted by subsection (1), that would otherwise be required to be filed with the Minister of National Revenue on or before the day that is 120 days after the day on which this Act receives royal assent is deemed to have been filed with the Minister on a timely basis if it is filed with the Minister on or before the day that is 365 days after the day on which this Act receives royal assent.

(3) If a corporation resident in Canada (in this subsection referred to as the "CRIC") and a non-resident corporation that controls the CRIC jointly elect in writing under this subsection in respect of all transactions and events to which subsection 212.3(2) of the Act, as enacted by subsection (1), would, in the absence of this subsection, apply and file the election with the Minister of National Revenue on or before the day that is the later of the CRIC's filing-due date for the CRIC's taxation year that includes the day on which this Act receives royal assent and the day that is one year after the day on which this Act receives royal assent, then, in respect of transactions and events that occur before August 14, 2012, section 212.3 of the Act, as enacted by subsection (1), is to be read without reference to its subsections (3) to (7), (9), (11) to (14), (17) to (22) and (24) and the following rules apply:

(asubsections 212.3(1) and (2) of the Act are to be read as follows:

212.3 (1) Subsection (2) applies to an investment in a non-resident corporation (referred to in this section as the "subject corporation") that is made, at any time, by a corporation resident in Canada (referred to in this section as the "CRIC") if

(athe subject corporation is, immediately after that time, or becomes, as part of a transaction or event or series of transactions or events that includes the investment, a foreign affiliate of the CRIC;

(bthe CRIC is at that time controlled by another non-resident corporation (referred to in this section as the "parent"); and

(cthe investment may not reasonably be considered to have been made by the CRIC, instead of being made or retained by the parent or another non-resident person that does not deal at arm's length with the parent, primarily for bona fide purposes other than to obtain a tax benefit (as defined in subsection 245(1)).

(2) If this subsection applies to an investment in a subject corporation,

(afor the purposes of this Part, the CRIC is deemed to have paid to the parent at the time the investment was made, and the parent is deemed to have received from the CRIC at that time, a dividend equal to the total of all amounts each of which is the fair market value, at that time, of any property (not including shares of the capital stock of the CRIC) transferred, or obligation assumed or incurred, by the CRIC in respect of the investment; and

(bin computing the paid-up capital at any time after March 28, 2012 of any class of shares of the capital stock of the CRIC, there is to be deducted the amount of any increase, because of the investment, in the paid-up capital in respect of the shares of the class, computed without reference to this section.

(bsubsection 212.3(8) of the Act is to be read as follows:

(8) In computing the paid-up capital at any time after March 28, 2012 in respect of a class of shares of the capital stock of a corporation, there is to be added an amount equal to the lesser of

(athe amount, if any, by which

(i) the total of all amounts deemed by subsection 84(3), (4) or (4.1) to be a dividend on shares of the class paid after March 28, 2012 and before that time by the corporation,

exceeds

(ii) the total that would be determined under subparagraph (i) if this Act were read without reference to paragraph (2)(b); and

(bthe total of all amounts required by paragraph (2)(b) to be deducted in computing the paid-up capital in respect of the class before that time.

(csubsection 212.3(10) of the Act is to be read as follows:

(10) For the purposes of this section, an investment made in a subject corporation by a CRIC means any of

(aan acquisition of shares of the capital stock of the subject corporation by the CRIC;

(ba contribution of capital to the subject corporation by the CRIC;

(ca transaction under which an amount became owing by the subject corporation to the CRIC, other than an amount owing that arises in the ordinary course of the business of the CRIC and that is repaid within a commercially reasonable period;

(dan acquisition of a debt obligation of the subject corporation by the CRIC from another person, other than, if the acquisition was made in the ordinary course of the business of the CRIC, an acquisition from a person with which the CRIC dealt, at the time of the acquisition, at arm's length;

(ean acquisition by the CRIC of an option in respect of, or an interest in, or for civil law a right in, shares of the capital stock, or a debt obligation, of the subject corporation; and

(fany transaction or event that is similar in effect to any of the transactions described in paragraphs (a) to (e).

(dsubsections 212.3(15) and (16) of the Act are to be read as follows:

(15) For the purposes of this section and paragraph 128.1(1)(c.3), a CRIC that is controlled by more than one non-resident corporation is deemed not to be controlled by any such non-resident that controls another non-resident corporation that controls the CRIC, unless the application of this subsection would otherwise result in no non-resident corporation controlling the CRIC.

(16) In determining whether paragraph (1)(c) applies, the following factors are to be given primary consideration:

(awhether the business activities carried on by the subject corporation and any other corporation in which the subject corporation has, at the time referred to in subsection (1), an equity percentage (as defined in subsection 95(4)) are at that time, and are expected to remain, more closely connected to the business activities carried on by the CRIC (or by a corporation resident in Canada that is a subsidiary wholly-owned corporation of the CRIC or that is a corporation of which the CRIC is a subsidiary wholly-owned corporation) than to the business activities carried on by any non-resident corporation (other than the subject corporation or any corporation in which the subject corporation has such an equity percentage) with which the CRIC, at that time, does not deal at arm's length;

(bwhether the terms or conditions of any shares of the subject corporation that are owned by the CRIC at that time, or any agreement in respect of the shares or their issue, are such that the CRIC does not fully participate in the profits of the subject corporation or any appreciation in the value of the subject corporation (for greater certainty, the fact that the shares owned by the CRIC do fully participate in the profits of the subject corporation and any appreciation in the value of the subject corporation is not a relevant factor);

(cwhether the investment was made at the direction or request of a non-resident corporation with which the CRIC was not, at that time, dealing at arm's length;

(dwhether, in the case of an investment described in paragraph (10)(a), (d), (e) or (f), negotiations with the vendor in respect of the investment were initiated by senior officers of the CRIC who were resident in, and worked principally in, Canada or, if the vendor initiated the transaction, the vendor's principal point of contact was an officer of the CRIC who was resident in, and worked principally in, Canada;

(ewhether senior officers of the CRIC who were resident in, and worked principally in, Canada had and exercised the principal decision-making authority in respect of the making of the investment, and have and exercise the principal decision making authority in respect of the investment;

(fwhether the performance evaluation or compensation of senior officers of the CRIC who are resident in, and work principally in, Canada is connected to the results of operations of the subject corporation to a greater extent than the performance evaluation or compensation of any senior officers of a non-resident corporation (other than the subject corporation or a corporation controlled by the subject corporation) that does not deal at arm's length with the CRIC is so connected; and

(gwhether senior officers of the subject corporation report to, and are functionally accountable to, senior officers of the CRIC who are resident in, and work principally in, Canada to a greater extent than to any senior officers of any non-resident corporation (other than the subject corporation) that does not deal at arm's length with the CRIC.

(esubsection 212.3(23) of the Act is to be read as follows:

(23) A particular investment by a CRIC in a subject corporation that would, in the absence of this subsection, be excluded from the application of subsection (2) because of paragraph (1)(c) is not to be so excluded to the extent that one or more properties, if any, received by the subject corporation from the CRIC as a result of the particular investment, or property substituted for any such property, may reasonably be considered to have been used by the subject corporation, directly or indirectly as part of a transaction or event or series of transactions or events that includes the particular investment, to make another investment in a non-resident corporation that would, if the other investment had been made by the CRIC, have been subject to subsection (2).

(fsubsection 212.3(25) of the Act is to be read as follows:

(25) For the purposes of this section, paragraph 128.1(1)(c.3) and subsection 219.1(2),

(aany transaction entered into by a partnership is deemed to have been entered into by each member of the partnership in proportion to the fair market value of the member's direct or indirect interest in the partnership;

(bproperty that would, in the absence of this paragraph, be owned by a partnership is deemed to be owned by each member of the partnership in proportion to the fair market value of the member's direct or indirect interest in the partnership; and

(camounts that would, in the absence of this paragraph, be owing by a partnership are deemed to be owed by each member of the partnership in proportion to the fair market value of the member's direct or indirect interest in the partnership.

50. (1) Section 214 of the Act is amended by adding the following after subsection (15):

Deemed dividends

(16) For the purposes of this Part,

(aan amount paid or credited as interest by a corporation resident in Canada, or by a partnership, in a taxation year of the corporation to a non-resident person is deemed to have been paid by the corporation as a dividend, and not to have been paid or credited by the corporation or the partnership as interest, to the extent that an amount in respect of the interest

(i) is not deductible in computing the income of the corporation for the year because of subsection 18(4), or

(ii) is included in computing the income of the corporation for the year under paragraph 12(1)(l.1); and

(bto the extent that amounts paid or credited to a non-resident person in the year are deemed by paragraph (a) to have been paid by a corporation as dividends, the corporation may designate in its return of income under Part I for the year which amounts paid or credited as interest to the non-resident person in the year are deemed to have been paid as dividends and not as interest.

Deemed interest payments

(17) For the purposes of subsection (16),

(ainterest payable (other than interest payable pursuant to a legal obligation to pay interest on an amount of interest) by a corporation resident in Canada, or by a partnership, in respect of a taxation year of the corporation, but that has not been paid or credited in the year, is deemed to have been paid immediately before the end of the year and not to have been paid or credited at any other time; and

(bif subsection (6) or (7) deems a payment of interest to have been made to a non-resident person in respect of a debt or other obligation of a corporation, interest that, at the time of the transfer or assignment, is payable by the corporation in respect of the debt or other obligation and has not been paid or credited is deemed to have been paid by the corporation immediately before that time to the non-resident person.

(2) Subsection (1) applies to taxation years that end after March 28, 2012, except that

(afor taxation years that include March 29, 2012, the amount of each dividend deemed by paragraph 214(16)(a) of the Act, as enacted by subsection (1), to have been paid in the taxation year is the proportion of the amount of the dividend otherwise determined under the paragraph that the number of days in the taxation year that are after March 28, 2012 is of the number of days in the taxation year; and

(bbefore August 14, 2012, subsection 214(17) of the Act, as enacted by subsection (1), is to be read as follows:

(17) For the purposes of subsection (16), interest payable (other than interest payable pursuant to a legal obligation to pay interest on an amount of interest) by a corporation resident in Canada, or by a partnership, in respect of a taxation year of the corporation, but that has not been paid or credited in the year, is deemed to have been paid immediately before the end of the year and not at any other time.

51. (1) Section 219.1 of the Act is replaced by the following:

Corporate emigration

219.1 (1)  If a taxation year of a corporation (in this subsection and subsection (2) referred to as the "emigrating corporation") is deemed by paragraph 128.1(4)(a) to have ended at any time, the emigrating corporation shall, on or before its filing-due date for the year, pay a tax under this Part for the year equal to the amount determined by the formula

25% × (A – B)
whereA

is the fair market value of all the property owned by the emigrating corporation immediately before that time; and

B

is the total of

(athe paid-up capital in respect of all the shares of the capital stock of the emigrating corporation immediately before that time,

(ball amounts (other than amounts payable by the emigrating corporation in respect of dividends and amounts payable under this section) each of which is a debt owing by the emigrating corporation, or an obligation of the emigrating corporation to pay an amount, that is outstanding at that time, and

(cif a tax was payable by the emigrating corporation under subsection 219(1) or this section for a preceding taxation year that began before 1996 and after the emigrating corporation last became resident in Canada, four times the total of all amounts that would, but for sections 219.2 and 219.3 and any tax treaty , have been so payable.

Foreign affiliate dumping — emigrating corporation

(2) The paid-up capital referred to in paragraph (a) of the description of B in subsection (1) is deemed to be nil if

(aone or more shares of the emigrating corporation are, at the time the emigrating corporation ceases to be resident in Canada, owned by another corporation resident in Canada;

(bthe other corporation is controlled, at that time, by a non-resident corporation; and

(cthe emigrating corporation is, immediately after that time — or becomes, as part of a transaction or event or series of transactions or events that includes the emigrating corporation ceasing to be resident in Canada — a foreign affiliate of the other corporation.

Application of subsection (4)

(3) Subsection (4) applies if

(aa corporation ceases to be resident in Canada at any time (referred to in subsection (4) as the "emigration time");

(ban amount is required by paragraph 212.3(2)(b) or (7)(b) to be deducted in computing the paid-up capital in respect of a class of shares of the capital stock of the corporation because of an investment in a subject corporation made by a CRIC that is described in paragraph 212.3(10)(a), (b) or (f);

(csubsection 212.3(9) has not applied in respect of any reduction of the paid-up capital in respect of a class of shares of the capital stock of the corporation or a specified predecessor corporation (as defined in subsection 95(1)) of the corporation; and

(dsubsection (2) does not apply in respect of the cessation of residence.

Paid-up capital reinstatement

(4) If this subsection applies, the paid-up capital referred to in paragraph (a) of the description of B in subsection (1) is to be increased, immediately before the time that is immediately before the emigration time, by the lesser of

(athe total of all amounts each of which is an amount by which the paid-up capital of a class of shares of the capital stock of the corporation was required by paragraph 212.3(2)(b) or (7)(b) to be reduced in respect of an investment in a subject corporation made by the CRIC that is described in paragraph 212.3(10)(a), (b) or (f), and

(bthe total of all amounts each of which is

(i) the fair market value of a share of the capital stock of a subject corporation that is owned by the corporation immediately before the emigration time, or

(ii) the portion of the fair market value of a particular share of the capital stock of a foreign affiliate of the corporation owned by the corporation immediately before the emigration time that may reasonably be considered to relate to a share of the capital stock of a subject corporation that was previously owned by the corporation and for which the particular share was substituted.

Assigned meanings from section 212.3

(5) For the purposes of subsections (3) and (4), "CRIC" and "subject corporation" have the meaning assigned to those terms by subsection 212.3(1) and "investment" has the same meaning as in subsection 212.3(10).

(2) Subsection (1) applies to corporations that cease to be resident in Canada after March 28, 2012.

52. (1) Section 227 of the Act is amended by adding the following after subsection (8.4):

No penalty — certain deemed payments

(8.5) Subsection (8) does not apply to a corporation in respect of

(aan amount of interest deemed by subsection 214(16) to have been paid as a dividend by the corporation unless, if the Act were read without reference to subsection 214(16), a penalty under subsection (8) would have applied in respect of the amount; and

(ban amount deemed by subsection 247(12) to have been paid as a dividend by the corporation.

(2) Subsection (1) applies to taxation years that end after March 28, 2012.

53. (1) Subparagraph 241(4)(d)(vii) of the Act is replaced by the following:

(vii) to an official solely for the purposes of the administration or enforcement of the Pension Benefits Standards Act, 1985 , the Pooled Registered Pension Plans Act or a similar law of a province,

(2) Paragraph (b) of the definition "official" in subsection 241(10) of the Act is replaced by the following:

(ban authority engaged in administering a law of a province similar to the Pension Benefits Standards Act, 1985 or the Pooled Registered Pension Plans Act ,

(3) Subsections (1) and (2) come into force or are deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

54. (1) Section 247 of the Act is amended by adding the following after subsection (11):

Deemed dividends to non-residents

(12) For the purposes of Part XIII, if a particular corporation that is a resident of Canada for the purposes of Part XIII would have a transfer pricing capital adjustment or a transfer pricing income adjustment for a taxation year, if the particular corporation, or a partnership of which the particular corporation is a member, had undertaken no transactions or series of transactions other than those in which a particular non-resident person, or a partnership of which the particular non-resident person is a member, that does not deal at arm's length with the particular corporation (other than a corporation that was for the purposes of section 17 a controlled foreign affiliate of the particular corporation throughout the period during which the transaction or series of transactions occurred) was a participant,

(aa dividend is deemed to have been paid by the particular corporation and received by the particular non-resident person immediately before the end of the taxation year; and

(bthe amount of the dividend is the amount, if any, by which

(i) the amount that would be the portion of the total of the particular corporation's transfer pricing capital adjustment and transfer pricing income adjustment for the taxation year that could reasonably be considered to relate to the particular non-resident person if

(A) the only transactions or series of transactions undertaken by the particular corporation were those in which the particular non-resident person was a participant, and

(B) the definition "transfer pricing capital adjustment" in subsection (1) were read without reference to the references therein to "1/2 of" and "3/4 of"

exceeds

(ii) the amount that would be the portion of the total of the particular corporation's transfer pricing capital setoff adjustment, and transfer pricing income setoff adjustment, for the taxation year that could reasonably be considered to relate to the particular non-resident person if

(A) the only transactions or series of transactions undertaken by the particular corporation were those in which the particular non-resident person was a participant, and

(B) the definition "transfer pricing capital adjustment" in subsection (1) were read without reference to the references therein to "1/2 of" and "3/4 of".

Repatriation

(13) If a dividend is deemed by subsection (12) to have been paid by a corporation and received by a non-resident person, and a particular amount has been paid with the concurrence of the Minister by the non-resident person to the corporation,

(athe amount of the dividend may be reduced by the amount (in this subsection referred to as the "reduction") that the Minister considers appropriate, having regard to all the circumstances, and

(bsubsections 227(8.1) and (8.3) apply as if

(i) the amount of the dividend were not reduced, and

(ii) on the day on which the particular amount was paid, the corporation paid to the Receiver General an amount equal to the amount that would be required to be withheld and remitted under Part XIII in respect of the reduction.

Repatriation — interest

(14) If the amount of a dividend is reduced under paragraph (13)(a), the amount of interest payable by a taxpayer because of paragraph (13)(b) may be reduced to the amount that the Minister considers appropriate, having regard to all the circumstances, including the provision of reciprocal treatment by the country in which the non-resident person referred to in subsection (13) is resident.

Non-application of provisions

(15) Section 15, subsections 56(2) and 212.3(2) and section 246 do not apply in respect of an amount to the extent that a dividend is deemed by subsection (12) (determined without reference to subsection (13)) to have been paid in respect of the amount.

(2) Subsection (1) applies in respect of any transaction that occurs after March 28, 2012.

55. (1) The definitions "registered disability savings plan" , "registered education savings plan" and "registered pension plan" in subsection 248(1) of the Act are replaced by the following:

"registered disability savings plan" or "RDSP"

« régime enregistré d'épargne-invalidité » ou « REEI »

"registered disability savings plan" or "RDSP" has the same meaning as in subsection 146.4(1);

"registered education savings plan" or "RESP"

« régime enregistré d'épargne-études » ou « REEE »

"registered education savings plan" or "RESP" has the same meaning as in subsection 146.1(1);

"registered pension plan"

« régime de pension agréé »

"registered pension plan" means a pension plan (other than a pooled pension plan) that has been registered by the Minister for the purposes of this Act and whose registration has not been revoked;

(2) The definition "retirement compensation arrangement" in subsection 248(1) of the Act is amended by adding the following after paragraph (a):

(a.1a pooled registered pension plan,

(3) The definition "salary deferral arrangement" in subsection 248(1) of the Act is amended by adding the following after paragraph (a):

(a.1a pooled registered pension plan,

(4) The portion of the definition "superannuation or pension benefit" in subsection 248(1) of the Act before paragraph (a) is replaced by the following:

"superannuation or pension benefit"

« prestation de retraite ou de pension »

"superannuation or pension benefit" includes any amount received out of or under a superannuation or pension fund or plan (including, except for the purposes of subparagraph 56(1)(a)(i), a pooled registered pension plan) and, without restricting the generality of the foregoing, includes any payment made to a beneficiary under the fund or plan or to an employer or former employer of the beneficiary under the fund or plan

(5) Subsection 248(1) of the Act is amended by adding the following in alphabetical order:

"pooled pension plan"

« régime de pension collectif »

"pooled pension plan" has the same meaning as in subsection 147.5(1);

"pooled registered pension plan" or "PRPP"

« régime de pension agréé collectif » ou « RPAC »

"pooled registered pension plan" or "PRPP" has the same meaning as in subsection 147.5(1);

"specified unitholder"

« détenteur d'unité déterminé »

"specified unitholder" , of a partnership or trust (referred to in this definition as the "entity"), the interests in which are described by reference to units, means a taxpayer who would be a specified shareholder of the entity if the entity were a corporation and each unit of the entity were a share of a class of the corporation having the same attributes as the unit;

(6) The definition "registered pension plan" in subsection 248(1) of the Act, as enacted by subsection (1), and subsections (2) to (5) come into force or are deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

56. (1) Subsection 252(3) of the Act is replaced by the following:

Extended meaning of "spouse" and "former spouse"

(3) For the purposes of paragraph 56(1)(b), section 56.1, paragraphs 60(b) and (j), section 60.1, subsections 70(6) and (6.1), 73(1) and (5) and 104(4), (5.1) and (5.4), the definition "pre-1972 spousal trust" in subsection 108(1), subsection 146(16), the definition "survivor" in subsection 146.2(1), subparagraph 146.3(2)(f)(iv), subsections 146.3(14), 147(19) and 147.3(5) and (7), section 147.5 , subsections 148(8.1) and (8.2), the definition "qualifying transfer" in subsection 207.01(1), subparagraph 210(c)(ii) and subsections 248(22) and (23), "spouse" and "former spouse" of a particular individual include another individual who is a party to a void or voidable marriage with the particular individual.

(2) Subsection (1) comes into force or is deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

57. (1) 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) and 132(6)(b), subsection 146.2(6), paragraph 146.4(5)(b), subsection 147.5(8) , paragraph 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) Subsection (1) comes into force or is deemed to have come into force on the day on which the the Pooled Registered Pension Plans Act comes into force.

C.R.C., c. 945

Income Tax Regulations

58. (1) Paragraph (b) of the definition "remuneration" in subsection 100(1) of the Income Tax Regulations is replaced by the following:

(ba superannuation or pension benefit (including an annuity payment made pursuant to or under a superannuation or pension fund or plan) other than a distribution

(i) that is made from a pooled registered pension plan and is not required to be included in computing a taxpayer's income under paragraph 56(1)(z.3) of the Act, or

(ii) that subsection 147.5(14) of the Act deems to have been made,

(2) Paragraph 100(3)(a) of the Regulations is replaced by the following:

(aa contribution to or under a pooled registered pension plan , a registered pension plan or a specified pension plan , or

(3) Subsections (1) and (2) come into force or are deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

59. (1) The Regulations are amended by adding the following after section 212:

Pooled Registered Pension Plans

213. An administrator of a PRPP must file with the Minister an information return for each calendar year in prescribed form in respect of the PRPP

(aif an agreement concerning annual information returns has been entered into by the Minister and an authority responsible for the supervision of the PRPP under the Pooled Registered Pension Plans Act or a similar law of a province, on or before the day on which an information return required by that authority is to be filed for the calendar year; and

(bin any other case, on or before May 1 of the following calendar year.

(2) Subsection (1) comes into force or is deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

60. (1) Paragraph 304(1)(a) of the Regulations is replaced by the following:

(aan annuity contract that is, or is issued pursuant to, an arrangement described in any of paragraphs 148(1)(a) to (b.3 ) and (d) of the Act;

(2) Subsection (1) comes into force or is deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

61. (1) The portion of subsection 1104(13) of the Regulations before the definition "basic oxygen furnace gas" is replaced by the following:

(13) The definitions in this subsection apply for the purposes of this subsection, subsections (14) to (17) and Classes 43.1 and 43.2 in Schedule II.

(2) The definitions "eligible waste fuel" and "plant residue" in subsection 1104(13) of the Regulations are replaced by the following:

"eligible waste fuel" means biogas, bio-oil, digester gas, landfill gas, municipal waste, plant residue , pulp and paper waste and wood waste. (combustible résiduaire admissible)

"plant residue" means residue of plants (not including wood waste and waste that no longer has the chemical properties of the plants of which it is a residue) that would otherwise be waste material and that is used

(ain a system that converts biomass into bio-oil or biogas; or

(bas an eligible waste fuel. (résidus végétaux)

(3) Section 1104 of the Regulations is amended by adding the following after subsection (16):

(17) A property that would otherwise be eligible for inclusion in Class 43.1 or Class 43.2 in Schedule II by a taxpayer is deemed not to be eligible for inclusion in either of those classes if

(athe property is included in Class 43.1 because of its subparagraph (c)(i) or is described in any of subparagraphs (d)(viii), (ix), (xi) and (xiii) of Class 43.1 and paragraph (a) of Class 43.2; and

(bat the time the property becomes available for use by the taxpayer, the taxpayer has not satisfied the requirements of all environmental laws, by-laws and regulations

(i) of Canada, a province or a municipality in Canada, or

(ii) of a municipal or public body performing a function of government in Canada

applicable in respect of the property.

(4) Subsections (1) to (3) are deemed to have come into force on March 29, 2012.

62. (1) Subsection 2900(4) of the Regulations is replaced by the following:

(4) For the purposes of the definition "qualified expenditure" in subsection 127(9) of the Act, the prescribed proxy amount of a taxpayer for a taxation year, in respect of a business, in respect of which the taxpayer elects under clause 37(8)(a)(ii)(B) of the Act is 55% of the total of all amounts each of which is that portion of the amount incurred in the year by the taxpayer in respect of salary or wages of an employee of the taxpayer who is directly engaged in scientific research and experimental development carried on in Canada that can reasonably be considered to relate to the scientific research and experimental development having regard to the time spent by the employee on the scientific research and experimental development.

(2) Subsection (1) applies to taxation years that end after 2012, except that for taxation years that begin before 2014 the reference to "55%" in subsection 2900(4) of the Regulations, as enacted by subsection (1), is to be read as a reference to the percentage that is the total of

(a65% multiplied by the proportion that the number of days that are in the taxation year and before 2013 is of the number of days in the taxation year,

(b60% multiplied by the proportion that the number of days that are in the taxation year and in 2013 is of the number of days in the taxation year, and

(c55% multiplied by the proportion that the number of days that are in the taxation year and after 2013 is of the number of days in the taxation year.

63. (1) Subparagraph 2902(b)(ii) of the Regulations is replaced by the following:

(ii) the acquisition of property that is qualified property or qualified resource property within the meaning assigned by subsection 127(9) of the Act, or

(2) Paragraph 2902(b) of the Regulations, as amended by subsection (1), is replaced by the following:

(ban expenditure incurred by a taxpayer in respect of

(i) the acquisition of property that is qualified property or qualified resource property within the meaning assigned by subsection 127(9) of the Act, or

(ii) the acquisition of property that has been used, or acquired for use or lease, for any purpose whatever before it was acquired by the taxpayer;

(3) The portion of paragraph 2902(e) of the Regulations before subparagraph (i) is replaced by the following:

(ean expenditure of a taxpayer, to the extent that the taxpayer has received or is entitled to receive a reimbursement in respect of it from

(4) Subsection (1) applies in respect of expenditures incurred after March 28, 2012.

(5) Subsections (2) and (3) apply in respect of expenditures incurred after 2013.

64. (1) Section 2903 of the Regulations is repealed.

(2) Subsection (1) applies after 2013.

65. (1) Section 4301 of the Regulations is amended by striking out "and" at the end of paragraph (b) and by adding the following after paragraph (b):

(b.1subsection 17.1(1) of the Act, the prescribed rate in effect during any particular quarter is the rate that would be determined under paragraph (a) in respect of the particular quarter if the reference in subparagraph (a)(i) to "the next higher whole percentage where the mean is not a whole percentage" were read as "two decimal points"; and

(2) Subsection (1) is deemed to have come into force on March 29, 2012.

66. (1) The portion of subsection 4600(1) of the Regulations before paragraph (a) is replaced by the following:

4600. (1) Property is a prescribed building for the purposes of the definitions "qualified property" and "qualified resource property" in subsection 127(9) of the Act if it is depreciable property of the taxpayer that is a building or grain elevator and it is erected on land owned or leased by the taxpayer,

(2) The portion of subsection 4600(2) of the Regulations before paragraph (a) is replaced by the following:

(2) Property is prescribed machinery and equipment for the purposes of the definitions "qualified property" and "qualified resource property" in subsection 127(9) of the Act if it is depreciable property of the taxpayer (other than property referred to in subsection (1)) that is

(3) Section 4600 of the Regulations is amended by adding the following after subsection (2):

(3) Property is prescribed energy generation and conservation property for the purposes of the definition "qualified property" in subsection 127(9) of the Act if it is depreciable property of the taxpayer (other than property referred to in subsection (1) or (2)) that is a property included in any of subparagraph (a.1)(i) of Class 17 and Classes 43.1, 43.2 and 48 in Schedule II.

(4) Subsections (1) to (3) are deemed to have come into force on March 29, 2012.

67. (1) Subsection 4802(1) of the Regulations is amended by adding the following after paragraph (c.2):

(c.3a pooled registered pension plan;

(2) Paragraph 4802(1.1)(e) of the Regulations is replaced by the following:

(eeach of the beneficiaries of the trust was a trust governed by a deferred profit sharing plan, a pooled registered pension plan or a registered pension plan.

(3) Subsections (1) and (2) come into force or are deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

68. (1) The portion of section 8201 of the Regulations before paragraph (a) is replaced by the following:

8201. For the purposes of subsection 16.1(1), the definition "outstanding debts to specified non-residents" in subsection 18(5), the definition "excluded income" and "excluded revenue" in subsection 95(2.5), subsections 100(1.3) , 112(2), 125.4(1) and 125.5(1), the definition "taxable supplier" in subsection 127(9), subparagraph 128.1(4)(b)(ii), paragraphs 181.3(5)(a) and 190.14(2)(b), the definition "Canadian banking business" in subsection 248(1) and paragraph 260(5)(a) of the Act, a "permanent establishment" of a person or partnership (either of whom is referred to in this section as the "person") means a fixed place of business of the person, including an office, a branch, a mine, an oil well, a farm, a timberland, a factory, a workshop or a warehouse if the person has a fixed place of business and, if the person does not have any fixed place of business, the principal place at which the person's business is conducted, and

(2) Subsection (1) applies to the 2012 and subsequent taxation years.

69. (1) Subparagraph 8502(b)(iv) of the Regulations is replaced by the following:

(iv) is transferred to the plan in accordance with any of subsections 146(16), 146.3(14.1), 147(19), 147.3(1) to (8) and 147.5(21) of the Act, or

(2) Subsection (1) comes into force or is deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

70. (1) Subparagraph (d)(ix) of Class 43.1 in Schedule II to the Regulations is replaced by the following:

(ix) equipment used by the taxpayer, or by a lessee of the taxpayer, for the sole purpose of generating heat energy, primarily from the consumption of eligible waste fuel and not using any fuel other than eligible waste fuel or fossil fuel, including such equipment that consists of fuel handling equipment used to upgrade the combustible portion of the fuel and control, feedwater and condensate systems, and other ancillary equipment, but not including equipment used for the purpose of producing heat energy to operate electrical generating equipment, buildings or other structures, heat rejection equipment (such as condensers and cooling water systems), fuel storage facilities, other fuel handling equipment and property otherwise included in Class 10 or 17,

(2) Clause (d)(xv)(B) of Class 43.1 in Schedule II to the Regulations is replaced by the following:

(B) is part of a district energy system that uses thermal energy that is primarily supplied by equipment that is described in subparagraphs (i), (iv) or (ix) or would be described in those subparagraphs if owned by the taxpayer, and

(3) Subsections (1) and (2) are deemed to have come into force on March 29, 2012.

SOR/2008-186

Canada Disability Savings Regulations

71. Paragraph 4(g) of the Canada Disability Savings Regulations is replaced by the following:

(gthe issuer shall, when transferring the property of the RDSP, provide to the issuer of the new plan all information that it is required to provide in accordance with paragraph 146.4(8)(c) of the Income Tax Act ; and

72. (1) Subsections 5(1) and (2) of the Regulations are replaced by the following:

5. (1) Subject to sections 5.1 and 5.2 , an issuer of an RDSP shall repay to the Minister, within the period set out in the issuer agreement, the amount referred to in subsection (2) if

(athe RDSP is terminated;

(bthe plan ceases to be an RDSP as a result of the application of paragraph 146.4(10)(a) of the Income Tax Act ;

(c the beneficiary ceases to be a DTC-eligible individual, unless they are the subject of an election made under subsection 146.4(4.1) of the Income Tax Act ; or

(d the beneficiary dies.

(2) The amount that must be repaid as a result of the occurrence of an event described in subsection (1) is the lesser of

(a the fair market value, immediately before the occurrence, of the property held by the RDSP, and

(b the assistance holdback amount of the RDSP immediately before the occurrence.

(2) Subsection (1) comes into force on January 1, 2014.

73. (1) The Regulations are amended by adding the following after section 5:

5.1 If an event described in paragraph 5(1)(a), (b) or (d) occurs while the beneficiary of an RDSP is the subject of an election made under subsection 146.4(4.1) of the Income Tax Act , the issuer of the RDSP shall repay to the Minister, within the period set out in the issuer agreement, the lesser of

(athe fair market value, immediately before the occurrence of the event, of the property held by the RDSP, and

(bthe amount determined by the formula

A + B – C
whereA

is the assistance holdback amount of the RDSP immediately before the beneficiary ceased to be a DTC-eligible individual,

B

is the amount of any grant or bond that is paid into the RDSP during the period beginning on the day on which the beneficiary ceased to be a DTC-eligible individual and ending on the day on which the event occurs, and

C

is the amount of any grant or bond that has been repaid since the day on which the beneficiary ceased to be a DTC-eligible individual.

5.2 If an election made under subsection 146.4(4.1) of the Income Tax Act in respect of the beneficiary of an RDSP ceases to be valid because of paragraph 146.4(4.2)(b) of that Act, the issuer of the RDSP shall repay to the Minister, within the period set out in the issuer agreement, the lesser of

(athe fair market value, immediately before the election ceases to be valid, of the property held by the RDSP, and

(bthe amount determined by the formula

A + B – C
whereA

is the assistance holdback amount of the RDSP immediately before the beneficiary ceased to be a DTC-eligible individual,

B

is the amount of any grant or bond that is paid into the RDSP during the period beginning on the day on which the beneficiary ceased to be a DTC-eligible individual and ending on the day on which the election ceases to be valid, and

C

is the amount of any grant or bond that has been repaid since the day on which the beneficiary ceased to be a DTC-eligible individual.

5.3 (1) Subject to section 5.4, if a disability assistance payment is made, the issuer of the RDSP shall repay to the Minister, within the period set out in the issuer agreement, the least of the following amounts:

(a$3 for every $1 of disability assistance payment made,

(bthe fair market value, immediately before the making of the disability assistance payment, of the property held by the RDSP, and

(cthe assistance holdback amount of the RDSP immediately before the making of the disability assistance payment.

(2) An issuer that repays the amount referred to in paragraph (1)(a) is to do so from the grants and bonds that were paid into the RDSP within the 10-year period preceding the making of the disability assistance payment, in the order in which they were paid into it.

5.4 (1) If a disability assistance payment is made to a beneficiary who is the subject of an election made under subsection 146.4(4.1) of the Income Tax Act , the issuer of the RDSP shall repay to the Minister, within the period set out in the issuer agreement, the least of the following amounts:

(a$3 for every $1 of disability assistance payment made,

(bthe fair market value, immediately before the making of the disability assistance payment, of the property held by the RDSP, and

(cthe amount determined by the formula

A + B – C
whereA

is the assistance holdback amount of the RDSP immediately before the beneficiary ceased to be a DTC-eligible individual,

B

is the amount of any grant or bond that is paid into the RDSP during the period beginning on the day on which the beneficiary ceased to be a DTC-eligible individual and ending on the day on which the disability assistance payment is made, and

C

is the amount of any grant or bond that has been repaid since the day on which the beneficiary ceased to be a DTC-eligible individual.

(2) An issuer that repays the amount referred to in paragraph (1)(a) is to do so from the grants and bonds that were paid into the RDSP within the 10-year period before the beneficiary ceased to be a DTC-eligible individual and those that were paid into the RDSP within the period referred to in the description of B in paragraph (1)(c), in the order in which they were paid into it.

(3) Subsection (1) does not apply in respect of any disability assistance payment made in the calendar year in which the beneficiary of the RDSP attains 60 years of age, or in any subsequent calendar year, if the total amount of disability assistance payments made to the beneficiary in that calendar year is less than or equal to the amount determined in accordance with paragraph 146.4(4)(l) of the Income Tax Act for that calendar year.

(2) Subsection (1) comes into force on January 1, 2014.

PART 2

Measures in Respect of Sales Tax

R.S., c. E-15

Excise Tax Act

1990, c. 45, s. 12(1)

74. (1) The definition "fiscal year" in subsection 123(1) of the Excise Tax Act is replaced by the following:

"fiscal year"

« exercice »

"fiscal year" of a person means

(aif section 244.1 applies to the person, the period determined under that section,

(bif section 244.1 does not apply to the person and the person has made an election under section 244 that is in effect, the period that the person elected to be the fiscal year of the person, and

(c)  in all other cases, the taxation year of the person;

(2) Subsection 123(1) of the Act is amended by adding the following in alphabetical order:

"participating employer"

« employeur participant »

"participating employer" of a pension plan means an employer that has made, or is required to make, contributions to the pension plan in respect of the employer's employees or former employees, or payments under the pension plan to the employer's employees or former employees, and includes an employer prescribed for the purposes of the definition "participating employer" in subsection 147.1(1) of the Income Tax Act ;

"pension entity"

« entité de gestion »

"pension entity" of a pension plan means a person in respect of the pension plan that is

(aa person referred to in paragraph (a) of the definition "pension plan" ,

(ba corporation referred to in paragraph (b) of that definition, or

(ca prescribed person;

"pension plan"

« régime de pension »

"pension plan" means a registered pension plan (as defined in subsection 248(1) of the Income Tax Act )

(athat governs a person that is a trust or that is deemed to be a trust for the purposes of that Act,

(bin respect of which a corporation is

(i) incorporated and operated either

(A) solely for the administration of the registered pension plan, or

(B) for the administration of the registered pension plan and for no other purpose other than acting as trustee of, or administering, a trust governed by a retirement compensation arrangement (as defined in subsection 248(1) of that Act), where the terms of the arrangement provide for benefits only in respect of individuals who are provided with benefits under the registered pension plan, and

(ii) accepted by the Minister, under subparagraph 149(1)(o.1)(ii) of that Act, as a funding medium for the purpose of the registration of the registered pension plan, or

(cin respect of which a person is prescribed for the purposes of the definition "pension entity" ;

(3) Subsection (1) is deemed to have come into force on July 1, 2009.

(4) Subsection (2) is deemed to have come into force on September 23, 2009.

2010, c. 12, s. 58(1)

75. (1) The definitions "participating employer" , "pension entity" and "pension plan" in subsection 172.1(1) of the Act are repealed.

(2) Subsection (1) is deemed to have come into force on September 23, 2009.

2009, c. 32, s. 14(1)

76. (1) Paragraph 218.1(1)(a) of the Act is replaced by the following:

(aevery person that is resident in a participating province and is the recipient of an imported taxable supply that is a supply of intangible personal property or a service that is acquired by the person for a prescribed purpose in respect of the supply or, in the absence of a prescribed purpose in respect of the supply , for consumption, use or supply in participating provinces to an extent that is prescribed, must, for each time an amount of consideration for the supply becomes due or is paid without having become due and for each participating province, pay to Her Majesty in right of Canada, in addition to the tax imposed by section 218, tax equal to the amount determined by the formula

A × B × C
whereA

is the tax rate for the participating province,

B

is the value of that consideration that is paid or becomes due at that time, and

C

is the prescribed percentage in respect of the supply or, in the absence of a prescribed percentage in respect of the supply , the extent (expressed as a percentage) to which the person acquired the property or service for consumption, use or supply in the participating province; and

2009, c. 32, s. 14(1)

(2) Clause (B) of the description of C in paragraph 218.1(1)(b) of the Act is replaced by the following:

(B) in any other case, the prescribed percentage in respect of the supply or, in the absence of a prescribed percentage in respect of the supply , the extent (expressed as a percentage) to which the person acquired the property or service for consumption, use or supply in the particular participating province.

2001, c. 15, s. 8(2)

(3) Subsection 218.1(1.1) of the Act is replaced by the following:

Delivery in a province

(1.1) Section 3 of Part II of Schedule IX applies for the purpose of subparagraph (1)(b)(ii) .

2010, c. 12, s. 64(2)

(4) The description of A2 in the second formula in paragraph 218.1(1.2)(a) of the Act is replaced by the following:

A2

is the prescribed percentage in respect of the internal charge or, in the absence of a prescribed percentage in respect of the internal charge , the extent (expressed as a percentage) to which the internal charge is attributable to outlays or expenses that were made or incurred to consume, use or supply the whole or part of property or of a qualifying service, in respect of which the internal charge is attributable, in carrying on, engaging in or conducting an activity of the qualifying taxpayer in the particular participating province, and

2010, c. 12, s. 64(2)

(5) The description of B2 in the third formula in paragraph 218.1(1.2)(a) of the Act is replaced by the following:

B2

is the prescribed percentage in respect of the external charge or, in the absence of a prescribed percentage in respect of the external charge , the extent (expressed as a percentage) to which the whole or part of the outlay or expense, which corresponds to the external charge, was made or incurred to consume, use or supply the whole or part of property or of a qualifying service, in respect of which the external charge is attributable, in carrying on, engaging in or conducting an activity of the qualifying taxpayer in the particular participating province; and

2010, c. 12, s. 64(2)

(6) The description of D in paragraph 218.1(1.2)(b) of the Act is replaced by the following:

D

is the prescribed percentage in respect of the qualifying consideration or, in the absence of a prescribed percentage in respect of the qualifying consideration , the extent (expressed as a percentage) to which the whole or part of the outlay or expense, which corresponds to the qualifying consideration, was made or incurred to consume, use or supply the whole or part of property or of a qualifying service, in respect of which the qualifying consideration is attributable, in carrying on, engaging in or conducting an activity of the qualifying taxpayer in the particular participating province.

(7) Subsections (1) and (2) apply in respect of any supply made on or after July 1, 2010.

(8) Subsection (3) is deemed to have come into force on July 1, 2010.

(9) Subsections (4) to (6) apply in respect of any specified year of a person that ends on or after July 1, 2010.

2010, c. 12, s. 68(1)

77. (1) The portion of subsection 220.05(3.1) of the Act before paragraph (a) is replaced by the following:

Pension entities

(3.1) No tax is payable under subsection (1) in respect of property if a person that is a pension entity of a pension plan is the recipient of a particular supply of the property made by a participating employer of the pension plan and

(2) Subsection (1) is deemed to have come into force on September 23, 2009.

2009, c. 32, s. 19(1)

78. (1) Subsection 220.08(1) of the Act is replaced by the following:

Tax in participating province

220.08 (1) Subject to this Part, every person that is resident in a participating province and is the recipient of a taxable supply made in a particular province of intangible personal property or a service that is acquired by the person for a prescribed purpose in respect of the supply or, in the absence of a prescribed purpose in respect of the supply , for consumption, use or supply in whole or in part in any participating province that is not the particular province must pay to Her Majesty in right of Canada, each time an amount of consideration for the supply becomes due or is paid without having become due, tax equal to the amount determined in prescribed manner.

2010, c. 12, s. 69(1)

(2) The portion of subsection 220.08(3.1) of the Act before paragraph (a) is replaced by the following:

Pension entities

(3.1) No tax is payable under subsection (1) in respect of a particular supply of property or a service made by a participating employer of a pension plan to a person that is a pension entity of the pension plan if

(3) Subsection (1) applies in respect of any supply made on or after July 1, 2010.

(4) Subsection (2) is deemed to have come into force on September 23, 2009.

1997, c. 10, s. 208(1)

79. (1) Subsection 225.2(1) of the Act is replaced by the following:

Selected listed financial institutions

225.2 (1) For the purposes of this Part, a financial institution is a selected listed financial institution throughout a reporting period in a fiscal year that ends in a taxation year of the financial institution if the financial institution is

(aa listed financial institution described in any of subparagraphs 149(1)(a)(i) to (x) during the taxation year; and

(ba prescribed financial institution throughout the reporting period .

1997, c. 10, s. 208(1)

(2) Paragraph (a) of the description of F in subsection 225.2(2) of the Act is replaced by the following:

(aall amounts of tax (other than a prescribed amount of tax) under subsection 165(2) in respect of supplies made in the participating province to the financial institution, or under section 212.1 calculated at the tax rate for the participating province, that

(i)  became payable, or were paid without having become payable, by the financial institution during

(A)  the particular reporting period, or

(B) any other reporting period of the financial institution that precedes the particular reporting period, provided that

(I) the particular reporting period ends within two years after the end of the financial institution's fiscal year that includes the other reporting period, and

(II) the financial institution was a selected listed financial institution throughout the other reporting period,

(ii) were not included in determining the positive or negative amounts that the financial institution is required to add, or may deduct, under this subsection in determining its net tax for any reporting period of the financial institution other than the particular reporting period, and

(iii) are claimed by the financial institution in a return under this Division filed by the financial institution for the particular reporting period, and

1997, c. 10, s. 208(1)

(3) Paragraph (b) of the description of F in subsection 225.2(2) of the English version of the Act is replaced by the following:

(ball amounts each of which is an amount, in respect of a supply made during the particular reporting period of property or a service to which the financial institution and another person have elected to have paragraph (c) of the description of A apply, equal to tax payable by the other person under any of subsection 165(2), sections 212.1 and 218.1 and Division IV.1 that is included in the cost to the other person of supplying the property or service to the financial institution; and

1997, c. 10, s. 208(1)

(4) Subsection 225.2(8) of the Act is repealed.

(5) Subsections (1) and (2) apply in respect of any reporting period of a person that ends on or after July 1, 2010.

(6) Subsection (4) is deemed to have come into force on July 1, 2010.

80. (1) The Act is amended by adding the following after section 225.2:

Definitions

225.3 (1) In this section, "exchange-traded fund" , "exchange-traded series" , "non-stratified investment plan" and "stratified investment plan" have the meaning prescribed by regulation.

Application to Minister

(2) A selected listed financial institution that is an exchange-traded fund may apply to the Minister to use particular methods, for a fiscal year that ends in a taxation year of the financial institution, to determine

(aif the financial institution is a stratified investment plan, the financial institution's percentages for the purposes of subsection 225.2(2) for each exchange-traded series of the financial institution, for each participating province and for the taxation year; and

(bif the financial institution is a non-stratified investment plan, the financial institution's percentages for the purposes of subsection 225.2(2) for each participating province and for the taxation year.

Form and manner of application

(3) An application made by a selected listed financial institution under subsection (2) is to be

(amade in prescribed form containing prescribed information, including

(i) if the financial institution is a stratified investment plan, the particular methods to be used for each exchange-traded series of the financial institution, and

(ii) if the financial institution is a non-stratified investment plan, the particular methods to be used for the financial institution; and

(bfiled by the financial institution with the Minister in prescribed manner on or before

(i) the day that is 180 days before the first day of the fiscal year for which the application is made, or

(ii) any later day that the Minister may allow.

Authorization

(4) On receipt of an application made under subsection (2), the Minister must

(aconsider the application and authorize or deny the use of the particular methods; and

(bnotify the selected listed financial institution in writing of the decision on or before

(i) the later of

(A) the day that is 180 days after the receipt of the application, and

(B) the day that is 180 days before the first day of the fiscal year for which the application is made, or

(ii) any later day that the Minister may specify, if the day is set out in a written application filed by the financial institution with the Minister.

Effect of authorization

(5) If the Minister authorizes under subsection (4) the use of particular methods for a fiscal year of the selected listed financial institution,

(adespite Part 2 of the Selected Listed Financial Institutions Attribution Method (GST/HST) Regulations ,

(i) the financial institution's percentages for any participating province and for the taxation year in which the fiscal year ends that would, in the absence of this section, be determined under that Part are to be determined in accordance with those particular methods, and

(ii) the financial institution's percentages for any exchange-traded series of the financial institution, for any participating province and for the taxation year in which the fiscal year ends that would, in the absence of this section, be determined under that Part are to be determined in accordance with those particular methods; and

(bthe financial institution must consistently, throughout the fiscal year, use those particular methods as indicated in the application to determine the percentages referred to in paragraph (a).

Revocation

(6) An authorization granted under subsection (4) to a selected listed financial institution in respect of a fiscal year of the financial institution ceases to have effect on the first day of the fiscal year and, for the purposes of this Part, is deemed never to have been granted, if

(athe Minister revokes the authorization and sends a notice of revocation to the financial institution at least 60 days before the first day of the fiscal year; or

(bthe financial institution files with the Minister in prescribed manner a notice of revocation in prescribed form containing prescribed information on or before the first day of the fiscal year.

Definitions

225.4 (1) The following definitions apply in this section.

"business input"

« intrant d'entreprise »

"business input" has the same meaning as in subsection 141.02(1).

"Canadian activity"

« activité au Canada »

"Canadian activity" has the same meaning as in section 217.

"exclusive input"

« intrant exclusif »

"exclusive input" of a person means property or a service that is acquired or imported by the person for consumption or use directly and exclusively for the purpose of making taxable supplies for consideration or directly and exclusively for purposes other than making taxable supplies for consideration.

Prescribed definitions

(2) In this section, "exchange-traded fund" , "exchange-traded series" , "individual" , "investment plan" , "non-stratified investment plan" , "plan member" , "private investment plan" , "series" , "specified investor" , "stratified investment plan" and "unit" have the meaning prescribed by regulation.

Stratified investment plans

(3) If a selected listed financial institution is a stratified investment plan and no election under subsection (6) in respect of a series of the financial institution is in effect throughout a fiscal year of the financial institution that ends in a calendar year, the following rules apply:

(afor the purposes of the Selected Listed Financial Institutions Attribution Method (GST/HST) Regulations ,

(i) if the series is an exchange-traded series, all units of the series that are held, at a particular time in the fiscal year, by a person that the financial institution knows, on December 31 of the calendar year, is not resident in Canada at the particular time are deemed to be held at the particular time by a particular individual that is resident in Canada but not resident in any participating province,

(ii) if the series is not an exchange-traded series, all units of the series that are held, at a particular time in the fiscal year, by an individual, or a specified investor in the financial institution, that the financial institution knows, on December 31 of the calendar year, is not resident in Canada at the particular time are deemed to be held at the particular time by a particular individual that is resident in Canada but not resident in any participating province, and

(iii) the financial institution is deemed to know, on December 31 of the calendar year, the province in which the particular individual referred to in subparagraph (i) or (ii) is resident;

(bfor the purposes of determining an input tax credit of the financial institution, any supply made during the fiscal year by the financial institution in respect of units of the series that are held by a person that is not resident in Canada is deemed to have been made to a person resident in Canada;

(cfor the purposes of the definitions "external charge" and "qualifying consideration" in section 217, any outlay made, or expense incurred, by the financial institution during the fiscal year in respect of units of the series that are held by a person that is not resident in Canada is deemed to be applicable to a Canadian activity of the financial institution; and

(dno amount of tax in respect of a business input of the financial institution that becomes payable by the financial institution during the fiscal year or that is paid by the financial institution during the fiscal year without having become payable is to be included in determining an input tax credit of the financial institution if the business input

(i) is acquired or imported for consumption, use or supply in the course of any activity relating to the series, or

(ii) is not an exclusive input of the financial institution.

Non-stratified investment plans

(4) If a selected listed financial institution is a non-stratified investment plan and no election under subsection (7) made by the financial institution is in effect throughout a fiscal year of the financial institution that ends in a calendar year, the following rules apply:

(afor the purposes of the Selected Listed Financial Institutions Attribution Method (GST/HST) Regulations ,

(i) if the financial institution is an exchange-traded fund, all units of the financial institution that are held, at a particular time in the fiscal year, by a person that the financial institution knows, on December 31 of the calendar year, is not resident in Canada at the particular time are deemed to be held at the particular time by a particular individual that is resident in Canada but not resident in any participating province,

(ii) if the financial institution is not an exchange-traded fund, all units of the financial institution that are held, at a particular time in the fiscal year, by an individual, or a specified investor in the financial institution, that the financial institution knows, on December 31 of the calendar year, is not resident in Canada at the particular time are deemed to be held at the particular time by a particular individual that is resident in Canada but not resident in any participating province, and

(iii) the financial institution is deemed to know, on December 31 of the calendar year, the province in which the particular individual referred to in subparagraph (i) or (ii) is resident;

(bfor the purposes of determining an input tax credit of the financial institution, any supply made during the fiscal year by the financial institution in respect of units of the financial institution that are held by a person that is not resident in Canada is deemed to have been made to a person resident in Canada;

(cfor the purposes of the definitions "external charge" and "qualifying consideration" in section 217, any outlay made, or expense incurred, by the financial institution during the fiscal year in respect of units of the financial institution that are held by a person that is not resident in Canada is deemed to be applicable to a Canadian activity of the financial institution; and

(dno amount of tax in respect of a business input of the financial institution that becomes payable by the financial institution during the fiscal year or that is paid by the financial institution during the fiscal year without having become payable is to be included in determining an input tax credit of the financial institution if the business input is not an exclusive input of the financial institution.

Pension entities and private investment plans

(5) If a selected listed financial institution is an investment plan that is a pension entity of a pension plan or a private investment plan and no election under subsection (7) made by the financial institution is in effect throughout a fiscal year of the financial institution that ends in a calendar year, the following rules apply:

(afor the purposes of the Selected Listed Financial Institutions Attribution Method (GST/HST) Regulations ,

(i) all plan members of the financial institution that the financial institution knows, on December 31 of the calendar year, are not resident in Canada at a particular time in the fiscal year are deemed to be resident in Canada at the particular time but not resident in any participating province, and

(ii) the financial institution is deemed to know, on December 31 of the calendar year, the province in which each of the plan members referred to in subparagraph (i) is resident;

(bfor the purposes of determining an input tax credit of the financial institution, any supply made during the fiscal year by the financial institution in respect of plan members of the financial institution that are not resident in Canada is deemed to have been made to a person resident in Canada;

(cfor the purposes of the definitions "external charge" and "qualifying consideration" in section 217, any outlay made, or expense incurred, by the financial institution during the fiscal year in respect of plan members of the financial institution that are not resident in Canada is deemed to be applicable to a Canadian activity of the financial institution; and

(dno amount of tax in respect of a business input of the financial institution that becomes payable by the financial institution during the fiscal year or that is paid by the financial institution during the fiscal year without having become payable is to be included in determining an input tax credit of the financial institution if the business input is not an exclusive input of the financial institution.

Election — stratified investment plans

(6) A stratified investment plan may make an election in respect of a series of the investment plan to have subsection (3) not apply to the series, and that election is to be effective from the first day of a fiscal year of the investment plan.

Election — other investment plans

(7) A person that is a non-stratified investment plan, a pension entity or a private investment plan may make an election to have subsection (4) or (5), as the case may be, not apply to the person, and that election is to be effective from the first day of a fiscal year of the person.

Form of election

(8) An election made under subsection (6) or (7) by a person is to

(abe made in prescribed form containing prescribed information;

(bset out the first fiscal year of the person during which the election is to be in effect; and

(cbe filed with the Minister in prescribed manner on or before the first day of that first fiscal year or any later day that the Minister may allow.

Cessation

(9) An election made under subsection (6) or (7) by a person ceases to have effect on the earliest of

(athe first day of the fiscal year of the person in which the person ceases to be a selected listed financial institution,

(bin the case of an election made under subsection (6), the first day of the fiscal year of the person in which the person ceases to be a stratified investment plan,

(cin the case of an election made under subsection (7), the first day of the fiscal year of the person in which the person ceases to be a non-stratified investment plan, a pension entity or a private investment plan, as the case may be, and

(dthe day on which a revocation of the election becomes effective.

Revocation

(10) A person that has made an election under subsection (6) or (7) may revoke the election, effective on the first day of a fiscal year of the person that begins at least five years after the election becomes effective, or on the first day of any earlier fiscal year as the Minister may allow on application by the person, by filing with the Minister in prescribed manner a notice of revocation in prescribed form containing prescribed information no later than the day on which the revocation is to become effective.

Restriction

(11) If a revocation of an election made under subsection (6) or (7) by a person becomes effective on a particular day, any subsequent election under that subsection is not a valid election unless the first day of the fiscal year of the person set out in the subsequent election is a day that is at least five years after the particular day or any earlier day as the Minister may allow on application by the person.

(2) Subsection (1) applies in respect of any fiscal year of a person that ends on or after July 1, 2010, except that for any fiscal year that begins before March 1, 2011, paragraph 225.4(8)(c) of the Act, as enacted by subsection (1), is to be read as follows:

(cbe filed with the Minister in prescribed manner on or before March 1, 2011 or any later day that the Minister may allow.

2010, c. 12, s. 71(1)

81. (1) Paragraph 232.01(1)(a) of the Act is replaced by the following:

(a"employer resource" and "specified resource" have the same meanings as in section 172.l;

(2) Subsection (1) is deemed to have come into force on September 23, 2009.

82. (1) Section 240 of the Act is amended by adding the following after subsection (1.1):

Prescribed selected listed financial institutions

(1.2) Every selected listed financial institution that is prescribed is required to be registered for the purposes of this Part.

Group registration of selected listed financial institutions

(1.3) The following rules apply in respect of a prescribed group of selected listed financial institutions:

(athe group is required to be registered for the purposes of this Part;

(ba person that is prescribed in respect of the group must apply to the Minister for registration of the group before the day that is prescribed;

(ceach member of the group is deemed to be a registrant for the purposes of this Part; and

(ddespite subsections (1) to (1.2), each member of the group is not required to be separately registered.

Additional member of group

(1.4) If a selected listed financial institution becomes, on a particular day, a member of an existing group that is required to be registered for the purposes of this Part or that is registered under this Subdivision, the following rules apply:

(aif the group is required to be registered, the application for the registration of the group under paragraph (1.3)(b) must list the financial institution as a member of the group;

(bif the group is registered, the financial institution or the person that is prescribed in respect of the group for the purpose of paragraph (1.3)(b) must, before the day that is 30 days after the particular day, apply to the Minister to add the financial institution to the registration of the group;

(cthe financial institution is deemed to be a registrant for the purposes of this Part as of the particular day; and

(ddespite subsections (1) to (1.2), the financial institution is not required to be separately registered as of the particular day.

1993, c. 27, s. 100(1)

(2) The portion of subsection 240(2.1) of the Act before paragraph (b) is replaced by the following:

Application

(2.1) A person required under any of subsections (1) to (1.2) to be registered must apply to the Minister for registration before the day that is 30 days after

(ain the case of a person required under subsection (1.1) to be registered in respect of a taxi business, the day the person first makes a taxable supply in Canada in the course of that business;

(a.1in the case of a selected listed financial institution required under subsection (1.2) to be registered, the day that is prescribed; and

1993, c. 27, s. 100(1)

(3) Paragraph 240(2.1)(b) of the French version of the Act is replaced by the following:

bdans les autres cas, la date où la personne effectue, autrement qu'à titre de petit fournisseur, une première fourniture taxable au Canada dans le cadre d'une activité commerciale qu'elle y exerce.

1993, c. 27, s. 100(1)

(4) The portion of subsection 240(3) of the Act before paragraph (a) is replaced by the following:

Registration permitted

(3) An application for registration for the purposes of this Part may be made to the Minister by any person that is not required under subsection (1), (1.1), (1.2), (2) or (4) to be registered, that is not required to be included in, or added to, the registration of a group under subsection (1.3) or (1.4) and that

1990, c. 45, s. 12(1)

(5) Subsection 240(5) of the Act is replaced by the following:

Form and contents of application

(5) An application for registration, or an application to be added to the registration of a group, is to be filed with the Minister in prescribed manner and is to be made in prescribed form containing prescribed information.

(6) Subsections (1) to (5) are deemed to have come into force on July 1, 2010.

1990, c. 45, s. 12(1); 1993, c. 27, s. 101(1)

83. (1) Subsection 241(1) of the Act is replaced by the following:

Registration

241. (1) The Minister may register any person that applies for registration and, upon doing so, must assign a registration number to the person and notify the person in writing of the registration number and the effective date of the registration.

Group registration

(1.1) If a person applies to register a group of selected listed financial institutions that is prescribed for the purposes of subsection 240(1.3), the Minister may register the group and, upon doing so, the following rules apply:

(athe Minister must assign a registration number to the group and notify in writing the person that is prescribed in respect of the group for the purpose of paragraph 240(1.3)(b) and each financial institution listed on the application of the registration number and the effective date of the registration of the group;

(bfor each member of the group that is registered under this Subdivision on the day preceding the effective date, that registration is cancelled as of the effective date of the registration of the group; and

(ceach member of the group is deemed, for the purposes of this Part other than section 242, to be registered under this Subdivision as of the effective date of the registration of the group and to have a registration number that is the same as the registration number of the group.

Addition of new member to group registration

(1.2) If an application is made to add a selected listed financial institution to the registration of a group under paragraph 240(1.4)(b), the Minister may add the financial institution to the registration and, upon doing so, the following rules apply:

(athe Minister must notify in writing the person that is prescribed in respect of the group for the purpose of paragraph 240(1.3)(b) and the financial institution of the effective date of the addition to the registration;

(bif the financial institution is registered under this Subdivision on the day preceding the effective date, that registration of the financial institution is cancelled as of the effective date; and

(cthe financial institution is deemed, for the purposes of this Part other than section 242, to be registered under this Subdivision as of the effective date and to have a registration number that is the same as the registration number of the group.

(2) Subsection (1) is deemed to have come into force on July 1, 2010.

84. (1) Section 242 of the Act is amended by adding the following after subsection (1):

Cancellation of group registration

(1.1) The Minister may, after giving reasonable written notice to each member of a group that is registered under this Subdivision and to the person that is prescribed in respect of the group for the purposes of paragraph 240(1.3)(b), cancel the registration of the group if the Minister is satisfied that the registration is not required for the purposes of this Part.

Cancellation of group registration

(1.2) The Minister must cancel the registration of a group in prescribed circumstances.

Removal from group registration

(1.3) The Minister may, after giving reasonable written notice to a particular person that is a member of a group that is registered under this Subdivision and to the person that is prescribed in respect of the group for the purposes of paragraph 240(1.3)(b), remove the particular person from the registration of the group if the Minister is satisfied that the particular person is not required to be included in the registration for the purposes of this Part.

Removal from group registration

(1.4) The Minister must remove a person from the registration of a group in prescribed circumstances.

1993, c. 27, s. 102(2)

(2) Subsection 242(3) of the Act is replaced by the following:

Notice of cancellation or variation

(3) If the Minister cancels or varies the registration of a person, the Minister must notify the person in writing of the cancellation or variation and its effective date.

Group registration — notice of cancellation

(4) If the Minister cancels the registration of a group,

(athe Minister must notify in writing each member of the group and the person that is prescribed in respect of the group for the purposes of paragraph 240(1.3)(b) of the cancellation and its effective date; and

(beach member of the group is deemed, for the purposes of this Part, to no longer be registered under this Subdivision as of the effective date of the cancellation.

Group registration — notice of removal

(5) If the Minister removes a particular person from the registration of a group,

(athe Minister must notify in writing the particular person and the person that is prescribed in respect of the group for the purposes of paragraph 240(1.3)(b) of the removal and its effective date; and

(bthe particular person is deemed, for the purposes of this Part, to no longer be registered under this Subdivision as of the effective date of the removal.

(3) Subsections (1) and (2) are deemed to have come into force on July 1, 2010.

85. (1) The Act is amended by adding the following after section 244:

Fiscal year — selected listed financial institution

244.1 (1) If a person is a financial institution described in subparagraph 149(1)(a)(vi) or (ix) that is a selected listed financial institution throughout a particular reporting period in a particular fiscal year of the person that begins in a particular calendar year and the person was not a selected listed financial institution throughout the reporting period immediately before the particular reporting period, the following rules apply:

(athe particular fiscal year ends on the last day of the particular calendar year; and

(bas of the beginning of the first day of the calendar year that is immediately after the particular calendar year, the fiscal years of the person are calendar years and any election made by the person under section 244 ceases to have effect.

Fiscal year — selected listed financial institution

(2) Despite subsection (1), if a person is a financial institution described in subparagraph 149(1)(a)(vi) or (ix) that is a selected listed financial institution throughout a particular reporting period in a particular fiscal year of the person, the following rules apply in prescribed circumstances to determine the fiscal year of the person:

(athe particular fiscal year ends on the day immediately before the prescribed day referred to in paragraph (b); and

(bthe following fiscal year of the person begins on a prescribed day.

Ceasing to be selected listed financial institution

(3) If a person is a financial institution described in subparagraph 149(1)(a)(vi) or (ix) that is a selected listed financial institution throughout a reporting period in a particular fiscal year and the person is not a selected listed financial institution throughout a reporting period in the following fiscal year of the person, that following fiscal year ends on the day on which it would end in the absence of this section.

(2) Subsection (1) applies in respect of any fiscal year of a person that ends after 2010, except that in applying subsection 244.1(1) of the Act, as enacted by subsection (1), in respect of any fiscal year that begins before 2011, that subsection of the Act is to be read without reference to "and the person was not a selected listed financial institution throughout the reporting period immediately before the particular reporting period".

1990, c. 45, s. 12(1)

86. (1) Subsection 246(3) of the Act is replaced by the following:

Duration of election

(3) An election made under this section by a person is to remain in effect until the earlier of

(a)  the beginning of the day on which an election by the person under section 247 or 248 takes effect, and

(bthe day on which a revocation of the election by the person under subsection (4) becomes effective.

Revocation of election

(4) A listed financial institution that has made an election under this section may revoke the election, effective on the first day of a fiscal year of the financial institution, by filing in prescribed manner with the Minister a notice of revocation in prescribed form containing prescribed information not later than the day on which the revocation is to become effective or any later day that the Minister may allow.

(2) Subsection (1) applies to any fiscal year that ends on or after July 1, 2010.

87. (1) Subsection 247(2) of the Act is amended by striking out "and" at the end of paragraph (b), by adding "and" at the end of paragraph (c) and by adding the following after paragraph (c):

(dthe day on which a revocation of the election by the person under subsection (3) becomes effective.

(2) Section 247 of the Act is amended by adding the following after subsection (2):

Revocation of election

(3) A listed financial institution that has made an election under this section may revoke the election, effective on the first day of a fiscal year of the financial institution, by filing in prescribed manner with the Minister a notice of revocation in prescribed form containing prescribed information not later than the day on which the revocation is to become effective or any later day that the Minister may allow.

(3) Subsections (1) and (2) apply to any fiscal year that ends on or after July 1, 2010.

2010, c. 12, s. 75(2)

88. (1) The definitions "participating employer" , "pension entity" and "pension plan" in subsection 261.01(1) of the Act are repealed.

(2) Subsection (1) is deemed to have come into force on September 23, 2009.

1997, c. 10, s. 229(1)

89. (1) Subsection 261.3(2) of the Act is repealed.

(2) Subsection (1) is deemed to have come into force on July 1, 2010.

1997, c. 10, s. 229(1)

90. (1) Subsection 261.31(1) of the Act is repealed.

1997, c. 10, s. 229(1); 2009, c. 32, s. 34(1)

(2) Subsections 261.31(2) and (3) of the Act are replaced by the following:

Rebate for tax payable by investment plans

(2) If tax under subsection 165(2), sections 212.1 or 218.1 or Division IV.1 is payable by a listed financial institution described in subparagraph 149(1)(a)(vi) or (ix), other than a selected listed financial institution, or by a prescribed person and prescribed conditions are satisfied, the Minister must , subject to section 261.4, pay a rebate to the financial institution or person equal to the amount determined in prescribed manner.

Election by segregated fund and insurer

(3) An insurer and a segregated fund of the insurer may elect, in prescribed form containing prescribed information, to have the insurer pay to, or credit in favour of, the segregated fund the amount of any rebates payable to the segregated fund under subsection (2) in respect of supplies made by the insurer to the segregated fund.

1997, c. 10, s. 229(1)

(3) Subsection 261.31(5) of the Act is replaced by the following:

Application to insurer

(5) An insurer may pay or credit to or in favour of a segregated fund of the insurer the amount of a rebate under subsection (2) in respect of a taxable supply made by the insurer to the segregated fund that, if the segregated fund complied with section 261.4 in relation to the supply, would be payable to the segregated fund if

(athe insurer and the segregated fund have filed an election made under subsection (3) that is in effect when tax in respect of the supply becomes payable; and

(bthe segregated fund, within one year after the day on which tax becomes payable in respect of the supply, submits to the insurer an application for the rebate in prescribed form containing prescribed information.

(4) Subsections (1) to (3) apply in respect of any rebate that is in respect of tax that became payable, or was paid without having become payable, on or after July 1, 2010.

91. (1) Section 261.4 of the Act is renumbered as subsection 261.4(1) and is amended by adding the following:

Exception for investment plans, etc.

(2) A rebate under any of sections 261.1 to 261.3 in respect of tax paid or payable by a listed financial institution described in subparagraph 149(1)(a)(vi) or (ix) must not be paid.

(2) Subsection (1) applies in respect of any rebate that is in respect of tax that became payable, or was paid without having become payable, on or after July 1, 2010.

92. (1) Section 263.01 of the Act is amended by adding the following after subsection (3):

Exception — prescribed person

(4) Despite subsection (1), a rebate under section 261.31 in respect of a prescribed amount of tax may be paid to a person that is prescribed for the purpose of subsection 261.31(2).

(2) Subsection (1) is deemed to have come into force on July 1, 2010.

2010, c. 12

Jobs and Economic Growth Act

93. (1) Subsection 58(2) of the Jobs and Economic Growth Act is amended by striking out "and" at the end of paragraph (a) and by adding the following after paragraph (a):

(a.1if a person that is a participating employer of a pension plan acquires property or a service for the purpose of making a supply of all or part of the property or service to a pension entity of the pension plan but not for the purpose of making a supply of any part of the property or service to a pension entity of the pension plan after June 2010, the amount determined for B in the formula in paragraph 172.1(5)(c) of the Act, as enacted by subsection (1), for Nova Scotia in respect of a taxable supply of all or part of the property or service that is deemed to have been made under paragraph 172.1(5)(a) of the Act, as enacted by subsection (1), on the last day of a fiscal year of the person is to be determined as if the tax rate for Nova Scotia on the last day of the fiscal year were 8%; and

(2) The formula in the read-as text in paragraph 58(2)(b) of the Act and the descriptions in that formula are replaced by the following:

E × [(F × G/H) – (I × J/H)]
whereE

is the amount determined for C,

F

is the provincial factor in respect of the pension plan and the participating province for the particular fiscal year,

G

is

(i) if the participating province is Ontario or British Columbia, the number of days in the particular fiscal year that are after June 2010, and

(ii) in any other case, the number of days in the particular fiscal year,

H

is the number of days in the particular fiscal year,

I

is the amount (expressed as a percentage) that would be the provincial factor in respect of the pension plan and the participating province for the particular fiscal year if the tax rate for the participating province on the last day of the fiscal year were 2%, and

J

is

(i) if the participating province is Nova Scotia, the number of days in the particular fiscal year that are before July 2010, and

(ii) in any other case, zero; and

94. Section 64 of the Act is amended by adding the following after subsection (7):

(8) Despite subsections (5) and (6), the amount of tax payable by a person under subsection 218.1(1.2) of the Act, as enacted by subsections (2) and (3), for the specified year of the person that begins before July 1, 2010 and ends on or after that day and for Nova Scotia or the Nova Scotia offshore area is equal to the amount determined by the formula

A – [0.2 × A × (B/C)]
whereA

is the amount that, in the absence of this subsection, would be tax payable under subsection 218.1(1.2) of the Act, as enacted by subsections (2) and (3), for the specified year and for Nova Scotia or the Nova Scotia offshore area, as the case may be;

B

is the number of days in the specified year that are before July 2010; and

C

is the number of days in the specified year.

95. The formula in the read-as text in subsection 75(4) of the Act and the descriptions in that formula are replaced by the following:

A × B × [(C/D) – ((2% × E/F)/D)] × [(F – G)/F]
whereA

is the pension rebate amount of the pension entity for the claim period,

B

is the pension entity's percentage for the participating province for the taxation year for the purposes of C in the formula in subsection 225.2(2),

C

is the tax rate for the participating province,

D

is the rate set out in subsection 165(1),

E

is

(i) if the participating province is Nova Scotia, the number of days in the claim period that are before July 1, 2010, and

(ii) in any other case, zero,

F

is the number of days in the claim period, and

G

is

(i) if the participating province is Ontario or British Columbia, the number of days in the claim period that are before July 1, 2010, and

(ii) in any other case, zero; and

2010, c. 12, s. 91

Input Tax Credit Allocation Methods (GST/HST) Regulations

96. The Input Tax Credit Allocation Methods (GST/HST) Regulations are deemed

(ato have been made under section 277 of the Excise Tax Act ;

(bfor the purposes of subsection 5(1) of the Statutory Instruments Act , to have been transmitted to the Clerk of the Privy Council for registration; and

(cto have met the publication requirements of subsection 11(1) of the Statutory Instruments Act .