Archived - Legislative Proposals and Explanatory Notes relating to the Income Tax Act, the Excise Act, 2001 and the Excise Tax Act
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Part 1
Amendments in Respect of Income Tax

Income Tax Act 

  1.  (1)  Paragraph 7(1.4)(b) of the Income Tax Act is amended by striking out the word "or" at the end of subparagraph (iv), by adding the word "or" at the end of subparagraph (v), and by adding the following after subparagraph (v):

(vi)  if the old securities were equity in a SIFT wind-up entity that was, at the time of the disposition, a mutual fund trust, a SIFT wind-up corporation in respect of the SIFT wind-up entity

  (2)  Subsection (1) applies after December 19, 2007.

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

Former TFSA

(z.5)  any amount required because of subsection 146.2(9) to be included in computing the taxpayer’s income for the year; and

  (2)  The definition "investment contract" in subsection 12(11) of the Act is amended by adding the following after paragraph (d):

 (d.1)  a TFSA,

  (3)  Subsections (1) and (2) apply to the 2009 and subsequent taxation years.

  3.  (1)  The Act is amended by adding the following after section 12.4:

Definitions

  12.5  (1)  The definitions in this section apply for the purposes of this section and section 20.4.

"base year"
« année de base »

"base year" of an insurer means the insurer’s taxation year that immediately precedes its transition year.

"insurance business"
« entreprise d’assurance »

"insurance business" of an insurer, is an insurance business carried on by the insurer, other than a life insurance business.

"reserve transition amount"
« montant transitoire »

"reserve transition amount" of an insurer, in respect of an insurance business carried on by it in Canada in its transition year, is the positive or negative amount determined by the formula

A - B

where

A is the maximum amount that the insurer would be permitted to claim under paragraph 20(7)(c) (and that would be prescribed by section 1400 of the Regulations for the purpose of paragraph 20(7)(c)) as a policy reserve for its base year in respect of its insurance policies if

(a)  the generally accepted accounting principles that applied to the insurer in valuing its assets and liabilities for its transition year had applied to it for its base year, and

(b)  section 1400 of the Regulations were read in respect of the insurer’s base year as it reads in respect of its transition year, and

B is the maximum amount that the insurer is permitted to claim under paragraph 20(7)(c) as a policy reserve for its base year.

"transition year"
« année transitoire »

"transition year" of an insurer means the insurer’s first taxation year that begins after September 30, 2006.

Transition year income inclusion

  (2)  There shall be included in computing an insurer’s income for its transition year from an insurance business carried on by it in Canada in the transition year, the positive amount, if any, of the insurer’s reserve transition amount in respect of that insurance business.

Transition year income deduction reversal

  (3)  If an amount has been deducted under subsection 20.4(2) in computing an insurer’s income for its transition year from an insurance business carried on by it in Canada, there shall be included in computing the insurer’s income, for each particular taxation year of the insurer that ends after the beginning of the transition year, from that insurance business, the amount determined by the formula

A × B/1825

where

A is the amount deducted under subsection 20.4(2) in computing the insurer’s income for the transition year from that insurance business; and

B is the number of days in the particular taxation year that are before the day that is 1825 days after the first day of the transition year.

Winding-up

  (4)  If an insurer has, in a winding-up to which subsection 88(1) has applied, been wound-up into another corporation (referred to in this subsection as the "parent"), and immediately after the winding-up the parent carries on an insurance business, in applying subsections (3) and 20.4(3) in computing the income of the insurer and the income of the parent for particular taxation years that end on or after the first day (referred to in this subsection as the "start day") on which assets of the insurer were distributed to the parent on the winding-up,

(a)  the parent is, on and after the start day, deemed to be the same corporation as and a continuation of the insurer in respect of

(i)  any amount included under subsection (2) or deducted under subsection 20.4(2) in computing the insurer’s income from an insurance business for its transition year,

(ii)  any amount included under subsection (3) or deducted under subsection 20.4(3) in computing the insurer’s income from an insurance business for a taxation year of the insurer that begins before the start day, and

(iii)  any amount that would — in the absence of this subsection and if the insurer existed and carried on an insurance business on each day (that is the start day or a subsequent day) that the parent carries on an insurance business — be required to be included or deducted, in respect of any of those days, under subsection (3) or 20.4(3) in computing the insurer’s income from an insurance business; and

(b) the insurer is, in respect of each of its particular taxation years, to determine the value for B in the formulas in subsections (3) and 20.4(3) without reference to the start day and days after the start day.  

Amalgamations

  (5)  If there is an amalgamation (within the meaning assigned by subsection 87(1)) of an insurer with one or more other corporations to form one corporation (referred to in this subsection as the "new corporation"), and immediately after the amalgamation the new corporation carries on an insurance business, in applying subsections (3) and 20.4(3) in computing the new corporation’s income for particular taxation years that begin on or after the day on which the amalgamation occurred, the new corporation is, on and after that day, deemed to be the same corporation as and a continuation of the insurer in respect of

(a)  any amount included under subsection (2) or deducted under subsection 20.4(2) in computing the insurer’s income from an insurance business for its transition year;

(b)  any amount included under subsection (3) or deducted under subsection 20.4(3) in computing the insurer’s income from an insurance business for a taxation year of the insurer that begins before the day on which the amalgamation occurred; and

(c)  any amount that would — in the absence of this subsection and if the insurer existed and carried on an insurance business on each day (that is the day on which the amalgamation occurred or a subsequent day) that the new corporation carries on an insurance business — be required to be included or deducted, in respect of any of those days, under subsection (3) or 20.4(3) in computing the insurer’s income from an insurance business.

Application of subsection (7)

  (6)  Subsection (7) applies if, at any time, an insurer (referred to in this subsection and subsection (7) as the "transferor") transfers, to a corporation (referred to in this subsection and subsection (7) as the "transferee") that is related to the transferor, property in respect of an insurance business carried on by the transferor in Canada (referred to in this subsection and subsection (7) as the "transferred business") and

(a)  subsection 138(11.5) or (11.94) applies to the transfer; or

(b)  subsection 85(1) applies to the transfer, the transfer includes all or substantially all of the property and liabilities of the transferred business and, immediately after the transfer, the transferee carries on an insurance business.

Transfer of insurance business

  (7)  If this subsection applies in respect of the transfer, at any time, of property

(a)  the transferee is, at and after that time, deemed to be the same corporation as and a continuation of the transferor in respect of

(i)  any amount included under subsection (2) or deducted under subsection 20.4(2) in computing the transferor’s income for its transition year that can reasonably be attributed to the transferred business,

(ii)  any amount included under subsection (3) or deducted under subsection 20.4(3) in computing the transferor’s income for a taxation year of the transferor that begins before that time that can reasonably be attributed to the transferred business, and

(iii)  any amount that would — in the absence of this subsection and if the transferor existed and carried on an insurance business on each day (that includes that time or a subsequent day) that the transferee carries on an insurance business — be required to be included or deducted, in respect of any of those days, under subsection (3) or 20.4(3) in computing the transferor’s income that can reasonably be attributed to the transferred business; and

(b)  in determining, in respect of the day that includes that time or any subsequent day, any amount that is required under subsection (3) or 20.4(3) to be included or deducted in computing the transferor’s income for each particular taxation year from the transferred business, the description of A in the formulas in those subsections is deemed to be nil.

Ceasing to carry on business

  (8)  If at any time an insurer ceases to carry on all or substantially all of an insurance business (referred to in this subsection as the "discontinued business"), and none of subsections (4) to (6) apply, there shall be included in computing the insurer’s income from the discontinued business for the insurer’s taxation year that includes the time that is immediately before that time, the amount determined by the formula

A - B

where

A is the amount deducted under subsection 20.4(2) in computing the insurer’s income from the discontinued business for its transition year; and

B is the total of all amounts each of which is an amount included under subsection (3) in computing the insurer’s income from the discontinued business for a taxation year that began before that time.

Ceasing to exist

  (9)  If at any time an insurer that carried on an insurance business ceases to exist (otherwise than as a result of a winding-up or amalgamation described in subsection (4) or (5)), for the purposes of subsections (8) and 20.4(4), the insurer is deemed to have ceased to carry on the insurance business at the earlier of

(a)  the time (determined without reference to this subsection) at which the insurer ceased to carry on the insurance business; and

(b)  the time that is immediately before the end of the last taxation year of the insurer that ended at or before the time at which the insurer ceased to exist.

  (2)  Subsection (1) applies to taxation years that begin on or after October 1, 2006.

  4.  (1)  The Act is amended by adding the following after section 20.3:

Definitions

  20.4  (1)  The definitions in section 12.5 apply for the purposes of this section.

Transition year income deduction

  (2)  There shall be deducted in computing an insurer’s income for its transition year from an insurance business carried on by it in Canada in the transition year the absolute value of the negative amount, if any, of the insurer’s reserve transition amount in respect of that insurance business.

Transition year income inclusion reversal

  (3)  If an amount has been included under subsection 12.5(2) in computing an insurer’s income for its transition year from an insurance business carried on by it in Canada, there shall be deducted in computing the insurer’s income, for each particular taxation year of the insurer that ends after the beginning of the transition year, from that insurance business, the amount determined by the formula

A × B/1825

where

A is the amount included under subsection 12.5(2) in computing the insurer’s income for the transition year from that insurance business; and

B is the number of days in the particular taxation year that are before the day that is 1825 days after the first day of the transition year.

Ceasing to carry on business

  (4)  If at any time an insurer ceases to carry on all or substantially all of an insurance business (referred to in this subsection as the "discontinued business"), and none of subsections 12.5(4) to (6) apply, there shall be deducted in computing the insurer’s income from the discontinued business for the insurer’s taxation year that includes the time that is immediately before that time, the amount determined by the formula

A - B

where

A is any amount included under subsection 12.5(2) in computing the insurer’s income from the discontinued business for its transition year; and

B is the total of all amounts each of which is an amount deducted under subsection (3) in computing the insurer’s income from the discontinued business for a taxation year that began before that time.

  (2)  Subsection (1) applies to taxation years that begin on or after October 1, 2006.

  5.  (1)  Subparagraph 39(1)(a)(ii.2) of the Act is replaced by the following:

(ii.2)  a property if the disposition is a disposition to which subsection 142.4(4) or (5) or 142.5(1) applies,

  (2)  Subsection (1) applies to taxation years that begin on or after October 1, 2006.

  6.   (1)  Section 40 of the Act is amended by adding the following after subsection (9):

Application

  (10)  Subsection (11) applies in computing at any particular time a corporation’s gain or loss (in this subsection and subsection (11) referred to as the "new gain" or "new loss", as the case may be), in respect of any part (which in this subsection and subsection (11) is referred to as the "relevant part" and which may for greater certainty be the whole) of a foreign currency debt of the corporation, arising from a fluctuation in the value of the currency of the foreign currency debt (other than, for greater certainty, a gain or a capital loss that arises because of the application of subsection 111(12)), if at any time before the particular time the corporation realized a capital loss or gain in respect of the foreign currency debt because of subsection 111(12).

Gain or loss on foreign currency debt

  (11) If this subsection applies, the new gain is the positive amount, or the new loss is the negative amount, as the case may be, determined by the formula

A + B - C

where

A  is

(a)   if the corporation would, but for any application of subsection 111(12), recognize a new gain, the amount of the new gain, determined without reference to this subsection, or

(b)   if the corporation would, but for any application of subsection 111(12), recognize a new loss, the amount of the new loss, determined without reference to this subsection, multiplied by (-1);

B  is the total of all amounts each of which is that portion of the amount of a capital loss realized by the corporation at any time before the particular time, in respect of the foreign currency debt because of subsection 111(12), that is reasonably attributable to the relevant part of the foreign currency debt; and

C  is the total of all amounts each of which is that portion of the amount of a gain realized by the corporation at any time before the particular time, in respect of the foreign currency debt because of subsection 111(12), that is reasonably attributable to the relevant part of the foreign currency debt;

  (2)   Subsection (1) applies after 2005.

   7.  (1)  Section 80.01 of the Act is amended by adding the following after subsection (5):

Deemed Settlement on SIFT trust wind-up event

  (5.1)  If a trust that is a SIFT wind-up entity is the only beneficiary under another trust (in this subsection referred to as the "subsidiary trust"), and a capital property that is a debt or other obligation (in this subsection referred to as the "subsidiary trust’s obligation") of the subsidiary trust to pay an amount to the SIFT wind-up entity is, as a consequence of a distribution from the subsidiary trust that is a SIFT trust wind-up event, settled at a particular time without any payment of an amount or by the payment of an amount that is less than the principal amount of the subsidiary trust’s obligation

(a)  paragraph (b) applies if,

(i)  the payment is less than the amount that would have been the adjusted cost base to the SIFT wind-up entity of the subsidiary trust’s obligation immediately before the particular time, and

(ii)  the SIFT wind-up entity elects, in prescribed form on or before the SIFT wind-up entity’s filing-due date for the taxation year that includes the particular time, to have paragraph (b) apply;

(b)  if this paragraph applies, the amount paid at the particular time in satisfaction of the principal amount of the subsidiary trust’s obligation is deemed to be equal to the amount that would be the adjusted cost base to the SIFT wind-up entity of the subsidiary trust’s obligation immediately before the particular time if that adjusted cost base included amounts added in computing the SIFT wind-up entity’s income in respect of the portion of the indebtedness representing unpaid interest, to the extent that the SIFT wind-up entity has not deducted any amounts as bad debts in respect of that unpaid interest; and

(c)  for the purposes of applying section 80 to the subsidiary trust’s obligation, the subsidiary trust’s obligation is deemed to have been settled immediately before the time that is immediately before the distribution.

  (2)  Subsection (1) applies after ANNOUNCEMENT DATE.

   8.  (1)  Section 85.1 of the Act is amended by adding the following after subsection (6):

Application of subsection (8)

  (7)  Subsection (8) applies in respect of the disposition (referred to in this subsection and subsection (8) as the "particular disposition") by a taxpayer of SIFT wind-up entity equity (referred to in this subsection and subsection (8) as the "particular unit") to a taxable Canadian corporation, if

(a)  the particular disposition occurs during a period (referred to in this subsection and subsection (8) as the "exchange period") of no more than 60 days in which all of the equity in the SIFT wind-up entity that was issued and outstanding at the start of the period, or that is issued during the period, is

(i)  disposed of to the corporation, or

(ii)  redeemed or cancelled by the SIFT wind-up entity;

(b)  the taxpayer

(i)  disposes of all of its equity in the SIFT wind-up entity during the exchange period, and

(ii)  receives no consideration for the particular disposition, other than a share (referred to in this subsection and subsection (8) as the "exchange share") of the capital stock of the corporation that

(A)  is issued during the exchange period to the taxpayer by the corporation, and

(B)  has a fair market value at its issuance that is equal to the fair market value of the particular unit immediately before the particular disposition; and

(c)  all of the exchange shares issued to holders of equity in the SIFT wind-up entity are shares of a single class of the capital stock of the corporation.

Rollover on SIFT unit for share exchange

  (8)  If this subsection applies in respect of a particular disposition by a taxpayer of a particular unit of a SIFT wind-up entity to a corporation for consideration that is an exchange share, the following rules apply:

(a)  subsections 85(1) and (2) are deemed not to apply in respect of the particular disposition;

(b)  the taxpayer is deemed to have

(i)  disposed of the particular unit for proceeds of disposition equal to the cost amount to the taxpayer of the particular unit immediately before the particular disposition, and

(ii)  acquired the exchange share at a cost equal to the cost amount to the taxpayer of the particular unit immediately before the particular disposition;

(c)  if the particular unit was immediately before the particular disposition taxable Canadian property of the taxpayer, the exchange share is deemed to be taxable Canadian property of the taxpayer;

(d)  the cost to the corporation of the particular unit is deemed to be the lesser of

(i)  the fair market value of the particular unit immediately before the particular disposition, and

(ii)  the amount described as B in the formula in paragraph (e) in respect of the particular unit; and

(e)  in computing the paid up capital in respect of each class of shares of the capital stock of the corporation at any time after the particular disposition there shall be deducted the amount determined by the formula

( A - B ) × C / A

where

A is the increase, if any, as a result of the particular disposition, in the paid-up capital in respect of all the shares of the capital stock of the corporation, computed without reference to this paragraph as it applies to the particular disposition,

B is the amount determined by the formula

D - E

where

D is

(i)  unless subparagraph (ii) applies, the total of all amounts each of which is

(A)  if the SIFT wind-up entity is a trust, the fair market value of property received by the SIFT wind-up entity on the issuance of the particular unit, or

(B)  if the SIFT wind-up entity is a partnership,

(I)  an amount that has at any time been added, in computing the adjusted cost base to any taxpayer of the particular unit on or before the particular disposition, because of subparagraph 53(1)(e)(iv) or (x), or

(II)  an amount that would at any time have been added, in computing the adjusted cost base to any taxpayer of the particular unit on or before the particular disposition, because of subparagraph 53(1)(e)(i) if subsection 96(1) were read in the specified manner, and

(ii)  if the SIFT wind-up entity has on or after the end of the exchange period issued a unit, nil, and

E is the total of all amounts each of which

(i)  if the SIFT wind-up entity is a trust, has become payable by the SIFT wind-up entity, in respect of the particular unit, to any holder of the unit on or before the particular disposition, other than an amount that has become payable out of its income (determined without reference to subsection 104(6)) or capital gains, and

(ii)  if the SIFT wind-up entity is a partnership,

(A) has at any time been deducted, in computing the adjusted cost base to any taxpayer of the particular unit on or before the particular disposition, because of subparagraph 53(2)(c)(iv) or (v), or  

(B)   would have at any time been deducted, in computing the adjusted cost base to any taxpayer of the particular unit on or before the particular disposition, because of subparagraph 53(2)(c)(i) if subsection 96(1) were read in the specified manner, and

C is the increase, if any, as a result of the particular disposition, in the paid-up capital in respect of the class of shares, computed without reference to this paragraph as it applies to the particular disposition.

  (2)  Subsection (1) applies to

(a)  dispositions that occur on or after ANNOUNCEMENT DATE and before 2013; and

(b)  a disposition, by a taxpayer to a corporation, that occurs on or after December 20, 2007 and before ANNOUNCEMENT DATE, if the corporation (jointly with the taxpayer, if the taxpayer and the corporation have validly elected that subsection 85(1) or (2) of the Act apply to the disposition) elects in writing, filed with the Minister of National Revenue on or before the corporation’s filing-due date for its taxation year that includes the date of Royal Assent of this Bill, that this subsection apply to the disposition.

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

Financial institution rules

(g.2)  for the purposes of paragraphs 142.4(4)(c) and (d) and subsections 142.5(5) and (7), 142.51(11) and 142.6(1), the new corporation is deemed to be the same corporation as, and a continuation of, each predecessor corporation;

  (2)  Subsection 87(2) of the Act is amended by adding the following after paragraph (s):

(s.1)  if a predecessor corporation was a SIFT wind-up corporation immediately before the amalgamation, the new corporation is deemed to be a SIFT wind-up corporation;

  (3)  Section 87(2.2) of the Act is replaced by the following:

Amalgamation of insurers

  (2.2)  Where there has been an amalgamation and one or more of the predecessor corporations was an insurer, the new corporation is, notwithstanding subsection (2), deemed, for the purposes of paragraphs 12(1)(d), (e), (e.1), (i) and (s), subsection 12.5(8), paragraphs 20(1)(l), (l.1), (p) and (jj) and 20(7)(c), subsections 20(22) and 20.4(4), sections 138, 138.1, 140, 142 and 148 and Part XII.3, to be the same corporation as, and a continuation of, each of those predecessor corporations.

  (4)  Subsections (1) and (3) apply to taxation years that begin on or after October 1, 2006.

  (5)  Subsection (2) applies after December 19, 2007.

  10.  (1)  Subparagraph 88(1)(g)(i) of the Act is replaced by the following:

(i)  for the purposes of paragraphs 12(1)(d), (e), (e.1), (i) and (s), subsection 12.5(8), paragraphs 20(1)(l), (l.1), (p) and (jj) and 20(7)(c), subsections 20(22) and 20.4(4), sections 138, 138.1, 140, 142 and 148 and Part XII.3, the parent is deemed to be the same corporation as, and a continuation of, the subsidiary, and

  (2)  Subsection (1) applies to taxation years that begin on or after October 1, 2006.

  11.  (1)  The Act is amended by adding the following after section 88:

Application

  88.1  (1)  Subsection (2) applies to a trust’s distribution of property to a taxpayer if

(a)  the distribution is a SIFT trust wind-up event;

(b)  the trust is

(i)  a SIFT wind-up entity the only beneficiary under which is a taxable Canadian corporation, or

(ii)  a trust the only beneficiary under which is another trust described by subparagraph (i);

(c)  where the trust is a SIFT wind-up entity, the distribution occurs no more than 60 days after the first other distribution, if any, of the property that is a SIFT trust wind-up event of a trust under which the SIFT wind-up entity is the beneficiary; and

(d)  if the property is shares of the capital stock of a taxable Canadian corporation,

(i)  the property was not acquired by the trust on a distribution to which subsection 107(3.1) applies, and

(ii)  the trust elects in writing, filed with the Minister on or before the trust’s filing-due date for its taxation year that includes the time of the distribution, that this section apply to the distribution.

SIFT trust wind-up event

  (2)  If this subsection applies to a trust’s distribution of property to a taxpayer, subsections 88 (1) to (1.7) and section 87, as it applies for the purposes of those subsections, apply, with any modifications that the circumstances require, as if

(a)  the trust were a taxable Canadian corporation (in this subsection referred to as the "subsidiary") that is not a private corporation;

(b)  where the taxpayer is a SIFT wind-up entity, the taxpayer were a taxable Canadian corporation that is not a private corporation;

(c)  the distribution were a winding-up of the subsidiary;

(d)  the taxpayer’s interests as a beneficiary under the trust were shares of a single class of shares of the capital stock of the subsidiary owned by the taxpayer;

(e)  the paid-up capital in respect of that class of shares of the subsidiary were the amount determined by the formula

A - B

where

A is the total of all amounts each of which is the fair market value of property received by the trust on the issuance by it of an interest as a beneficiary under the trust that is, immediately before the distribution, held by the taxpayer, and

B is the total of all amounts each of which has become payable by the trust, in respect of an interest described in A, to any holder of the interest before the distribution, other than an amount that has become payable out of its income (determined without reference to subsection 104(6)) or capital gains;

(f)  each trust, a majority-interest beneficiary (in this subsection, within the meaning assigned by section 251.1) of which is another trust that is by operation of this subsection treated as if it were a corporation, were a corporation; and

(g)   the taxpayer last acquired control of the subsidiary and of each corporation (including a trust that is by operation of this subsection treated as if it were a corporation) controlled by the subsidiary at the time, if any, at which the taxpayer last became a majority-interest beneficiary of the trust.

  (2)  Subsection (1) applies after ANNOUNCEMENT DATE, except that subsection 88.1(1) of the Act, as enacted by subsection (1), is to be read without reference to its paragraph (c) in its application to a trust’s distribution of property, if the distribution occurs no more than 60 days after the day on which this Act is assented to.

  12.  (1)  The definition "general rate income pool" in subsection 89(1) of the Act is replaced by the following:

"general rate income pool"
« compte de revenu à taux général »

"general rate income pool" at the end of a particular taxation year, of a taxable Canadian corporation that is a Canadian-controlled private corporation or a deposit insurance corporation in the particular taxation year, is the positive or negative amount determined by the formula

A - B

where

A  is the positive or negative amount that would, before taking into consideration the specified future tax consequences for the particular taxation year, be determined by the formula

C + [D x (E - F- G)] + H+ I - J

where

C  is the corporation’s general rate income pool at the end of its preceding taxation year,

D  is

(a)  for the 2009 taxation year, 0.68,

(b)  for the 2010 taxation year, 0.69,

(c)  for the 2011 taxation year, 0.70, and

(d)  for taxation years after 2011, 0.72,

E  is

(a)  unless paragraph (b) applies, the corporation’s taxable income for the particular taxation year, and

(b)  if the corporation is a deposit insurance corporation in the particular taxation year, nil,

F  is the amount determined by multiplying the amount, if any, deducted by the corporation under subsection 125(1) for the particular taxation year by the quotient obtained by dividing 100 by the rate of the deduction provided under that subsection for the particular taxation year,

G  is

(a)  if the corporation is a Canadian-controlled private corporation in the particular taxation year, the lesser of the corporation’s aggregate investment income for the particular taxation year and the corporation’s taxable income for the particular taxation year, and

(b)  in any other case, nil,

H  is the total of all amounts each of which is

(a)  an eligible dividend received by the corporation in the particular taxation year, or

(b)  an amount deductible under section 113 in computing the taxable income of the corporation for the particular taxation year,

I  is the total of all amounts determined under subsections (4) to (6) in respect of the corporation for the particular taxation year, and

J  is

(a)  unless paragraph (b) applies, the amount, if any, by which

(i)  the total of all amounts each of which is the amount of an eligible dividend paid by the corporation in its preceding taxation year

exceeds

(ii)  the total of all amounts each of which is an excessive eligible dividend designation made by the corporation in its preceding taxation year, or

(b)  if subsection (4) applies to the corporation in the particular taxation year, nil, and

B  is the amount determined by the formula

D × (K - L)

where

K  is the total of the corporation’s full rate taxable incomes (as would be defined in the definition "full rate taxable income" in subsection 123.4(1), if that definition were read without reference to its subparagraphs (a)(i) to (iii)) for the corporation’s preceding three taxation years, determined without taking into consideration the specified future tax consequences, for those preceding taxation years, that arise in respect of the particular taxation year, and

L  is the total of the corporation’s full rate taxable incomes (as would be defined in the definition "full rate taxable income" in subsection 123.4(1), if that definition were read without reference to its subparagraphs (a)(i) to (iii)) for those preceding taxation years;

  (2)  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), 128.1(2) and (3), 138(11.7), 139.1(6) and (7), 192(4.1) and 194(4.1) and section 212.1,

  (3)  Subsection (2) applies after December 19, 2007.

  13.  (1)  Subsection 95(1) of the Act is amended by adding the following in alphabetical order:

"antecedent corporation"
« société antécédente »

"antecedent corporation" of a particular corporation at any time means a corporation that

(a)  was a predecessor corporation (within the meaning assigned by subsection 87(1)) in respect of an amalgamation that occurred after that time, to which subsection 87(11) applied and by which the particular corporation was formed, or

(b)  was wound-up into the particular corporation in a winding-up that began after that time and to which subsection 88(1) applied;

"calculating currency"
« monnaie de calcul »

"calculating currency" for a taxation year of a foreign affiliate of a taxpayer means

(a)  the currency of the country in which the foreign affiliate is resident at the end of the taxation year, or

(b)  any currency that the taxpayer demonstrates to be reasonable in the circumstances;

"designated acquired corporation"
« société acquise désignée »

"designated acquired corporation" of a taxpayer means a particular antecedent corporation of the taxpayer if

(a)  the taxpayer or another antecedent corporation of the taxpayer acquired control of the particular antecedent corporation, and

(b)  the taxpayer or the other antecedent corporation, as the case may be, dealt at arm’s length with the particular antecedent corporation immediately before the acquisition of control;

"specified person or partnership"
« personne ou société de personnes déterminée »

"specified person or partnership", in respect of a taxpayer, at any time means a person (other than a designated acquired corporation of the taxpayer), or a partnership, that is

(a)  the taxpayer,

(b)  a person (other than a partnership) that, at that time, is resident in Canada and does not deal at arm’s length with the taxpayer,

(c)  a corporation that would, at that time, be an antecedent corporation of the taxpayer or of a person described in paragraph (b) if the reference to "subsection 87(11)" in the definition "antecedent corporation" were read as a reference to "section 87",

(d)  a foreign affiliate of a person described in any of paragraphs (a) to (c) or of a partnership described in paragraph (e), or

(e)  a partnership a member of which is described in any of paragraphs (a) to (d);

  (2)  Paragraph 95(2)(f) of the Act is replaced by the following:

(f)  except as otherwise provided in this subdivision and except to the extent that the context otherwise requires, a foreign affiliate of a taxpayer is deemed to be at all times resident in Canada for the purposes of determining, in respect of the taxpayer for a taxation year of the foreign affiliate, each amount that is the foreign affiliate’s

(i)  capital gain, capital loss, taxable capital gain or allowable capital loss from a disposition of a property, or

(ii)  income or loss from a property, from a business other than an active business or from a non-qualifying business;

(f.1)  in computing an amount described in paragraph (f) in respect of a property or a business, there is not to be included any portion of that amount that can reasonably be considered to have accrued while no person or partnership that held the property, or carried on the business, was a specified person or partnership in respect of the taxpayer referred to in paragraph (f);

(f.11)  in determining an amount described in paragraph (f) for a taxation year of a foreign affiliate of a taxpayer,

(i)   if the amount is described in subparagraph (f)(i), this Act is to be read without reference to section 26 of the Income Tax Application Rules, and

(ii)  if the amount is described in subparagraph (f)(ii),

(A)  this Act is to be read without reference to subsections 14(1.01) to (1.03), 17(1) and 18(4) and section 91, except that, where the foreign affiliate is a member of a partnership, section 91 is to be applied to determine the income or loss of the partnership and for that purpose subsection 96(1) is to be applied to determine the foreign affiliate’s share of that income or loss of the partnership, and

(B)  if the foreign affiliate has, in the taxation year, disposed of a foreign resource property in respect of a country, it is deemed to have designated, in respect of the disposition and in accordance with subparagraph 59(1)(b)(ii) for the taxation year, the amount, if any, by which

(I)  the amount determined under paragraph 59(1)(a) in respect of the disposition

exceeds

(II)  the amount determined under subparagraph 59(1)(b)(i) in respect of the disposition;

(f.12)  a foreign affiliate of a taxpayer shall determine each of the following amounts in its calculating currency for a taxation year:

(i)  subject to paragraph (f.13), each capital gain, capital loss, taxable capital gain and allowable capital loss of the foreign affiliate for the taxation year from the disposition, at any time, of a capital property that, at that time, was an excluded property of the foreign affiliate,

(ii)  its income or loss for the taxation year from each active business carried on by it in the taxation year in a country, and

(iii)  its income or loss that is included in computing its income or loss from an active business for the taxation year because of paragraph (a);

(f.13)  a foreign affiliate of a taxpayer shall determine the amount included in computing its foreign accrual property income, in respect of the taxpayer for a taxation year of the foreign affiliate, attributable to its capital gain or taxable capital gain, from the disposition of an excluded property in the taxation year, in Canadian currency by converting the amount of the capital gain, or taxable capital gain, otherwise determined under subparagraph (f.12)(i) in its calculating currency for the taxation year into Canadian currency using the rate of exchange quoted by the Bank of Canada at noon on the day on which the disposition was made;

(f.14)  a foreign affiliate of a taxpayer shall determine in Canadian currency each amount of its income, loss, capital gain, capital loss, taxable capital gain or allowable capital loss for a taxation year, other than an amount to which paragraph (f.12) or (f.13) applies;

(f.15)  for the purpose of applying subparagraph (f)(i), the reference in subsection 39(2) to "the currency or currencies of one or more countries other than Canada relative to Canadian currency" shall be read as a reference to "one or more currencies other than the calculating currency relative to the calculating currency" and the references in that subsection to "of a country other than Canada" shall be read as references to "other than the calculating currency";

  (3)  The portion of subsection 95(2.2) of the Act before paragraph (a) is replaced by the following:

Qualifying interest throughout year

  (2.2)  For the purposes of paragraphs (2)(a) and (g), a non-resident corporation that is not a foreign affiliate of a taxpayer in respect of which the taxpayer has a qualifying interest throughout a particular taxation year is deemed to be a foreign affiliate of the taxpayer in respect of which the taxpayer has a qualifying interest throughout that particular taxation year if

  (4)  Section 95 of the Act is amended by adding the following after subsection (2.2):

Controlled foreign affiliate throughout year

  (2.201)   For the purposes of paragraphs (2)(a) and (g), a non-resident corporation is deemed to be a controlled foreign affiliate of a taxpayer throughout a taxation year of the non-resident corporation if

(a)  in the taxation year, a person or partnership acquires or disposes of shares of the capital stock of a corporation and, because of the acquisition or disposition, the non-resident corporation becomes or ceases to be a controlled foreign affiliate of the taxpayer, and

(b)  at either or both of the beginning and end of the taxation year, the non-resident corporation is a controlled foreign affiliate of the taxpayer.

  (5)  Section 95 of the Act is amended by adding the following after subsection (2.5):

Rule for the definition "specified person or partnership"

  (2.6)  For the purpose of the definition "specified person or partnership" in subsection (1), if a person or partnership (referred to in this subsection as the "taxpayer") is not dealing at arm’s length with another person or partnership (referred to in this subsection as the "particular person") at a particular time

(a)  the taxpayer is deemed to have existed and not to have dealt at arm’s length with the particular person, nor with each antecedent corporation of the particular person, throughout the period that began when the particular person or the antecedent corporation, as the case may be, came into existence and that ends at the particular time, and

(b)  the taxpayer is deemed not to have dealt at arm’s length, at each time in the period referred to in paragraph (a) at which the particular person or an antecedent corporation, as the case may be, did not deal at arm’s length with a third person or partnership, with that third person or partnership.

  (6)  Subsections (1), (2) and (5) apply to taxation years of a foreign affiliate of a taxpayer that begin after October 2, 2007. However,

(a)  for taxation years of a foreign affiliate that begin before 2009, subparagraph 95(2)(f)(ii) of the Act, as enacted by subsection (2), shall be read as follows:

(ii)   income or loss from a property or from a business other than an active business;

(b)  if the taxpayer elects in writing in respect of all of its foreign affiliates and files the election with the Minister of National Revenue on or before the day (in this subsection referred to as the taxpayer’s "election day") that is the later of the taxpayer’s filing-due date for the taxpayer’s taxation year that includes the day on which this Act is assented to and the day that is one year after the day on which this Act is assented to, subsection 95(2.6) of the Act, as enacted by subsection (5), shall, in its application to a taxation year of a foreign affiliate of the taxpayer that begins before Announcement Date and after October 2, 2007, be read as follows:

Rule for the definition "specified person or partnership"

  (2.6)  For the purpose of the definition "specified person or partnership" in subsection (1), in determining whether, at a particular time, a person was not, at a time (referred to in this subsection as the "prior time") that is before the particular time and at which that person did not exist, dealing at arm’s length with another person, where the person exists at the particular time but did not exist at the prior time

(a)  the person is deemed to exist at the prior time, and

(b)  where the person is related to another person at the particular time, the person is deemed to have been related to that other person at the prior time;

(c)  if the taxpayer elects in writing in respect of all of its foreign affiliates and files the election with the Minister of National Revenue on or before the taxpayer’s election day, subsections (1), (2) and (5) also apply to taxation years of a foreign affiliate of the taxpayer that begin before October 2, 2007 and after the date chosen by the taxpayer under paragraph (d), except that subparagraph 95(2)(f)(ii) of the Act, as enacted by subsection (2), shall be read in its application to those taxation years in the manner described in paragraph (a); and

(d)  to be valid, an election under paragraph (c) must include the identification by the taxpayer of its choice of one of the following dates:

(i)  December 31, 1994,

(ii)  December 20, 2002, or

(iii)  February 27, 2004.

  (7)  Subsection (3) applies to taxation years of a foreign affiliate of a taxpayer that begin after 1994. However, the portion of subsection 95(2.2) of the Act before paragraph (a), as enacted by subsection (3), shall, in its application to taxation years of a foreign affiliate that begin after 1994 and before 2009, be read as follows:

Rule for paragraphs (2)(a) and (g)

  (2.2)  For the purposes of paragraphs (2)(a) and (g),

  (8)  Subsection (4) applies to taxation years of a foreign affiliate of a taxpayer that end after 1999. However,

(a)   subject to paragraph (b), for taxation years of a foreign affiliate that begin before December 21, 2002, the reference to "for the purposes of paragraphs (2)(a) and (g)" in subsection 95(2.201) of the Act, as enacted by subsection (4), shall be read as a reference to "for the purpose of paragraph (2)(a)"; and

(b)   if the taxpayer has made a valid election under subsection 26(46) of the Budget and Economic Statement Implementation Act, 2007, being S.C. 2007, c. 35, subsection (4) applies to taxation years of a foreign affiliate of the taxpayer that begin after 1994.

  (9)  Notwithstanding subsections 152(4) to (5) of the Act, any assessment of a taxpayer’s tax, interest and penalties payable under the Act for any taxation year shall be made that is necessary to take into account the provisions of subsections (1) to (8).

  14.  (1)  The portion of subsection 107(2) of the Act before paragraph (a) is replaced by the following:

Distribution by personal trust

  (2)  Subject to subsections (2.001), (2.002) and (4) to (5), if at any time a property of a personal trust or a prescribed trust is distributed (otherwise than as a SIFT trust wind-up event) by the trust to a taxpayer who was a beneficiary under the trust and there is a resulting disposition of all or any part of the taxpayer’s capital interest in the trust,

  (2)  The portion of subsection 107(2.1) of the Act before paragraph (a) is replaced by the following:

Other distributions

  (2.1)  Where at any time a property of a trust is distributed by the trust to a beneficiary under the trust, there would, if this Act were read without reference to paragraphs (h) and (i) of the definition "disposition" in subsection 248(1), be a resulting disposition of all or any part of the beneficiary’s capital interest in the trust (which interest or part, as the case may be, is in this subsection referred to as the "former interest") and the rules in subsections (2) and (3.1) and section 132.2 do not apply in respect of the distribution,

  (3)  Section 107 of the Act is amended by adding the following after subsection (2.2):

Application of subsection (3.1)

  (3)  Subsection (3.1) applies to a trust’s distribution of property to a taxpayer if:

(a)  the distribution is a SIFT trust wind-up event to which section 88.1 does not apply;

(b)  the property is shares of the capital stock of a taxable Canadian corporation; and

(c)  where the trust is a SIFT wind-up entity, the distribution occurs no more than 60 days after the first other distribution, if any, of the property that is a SIFT trust wind-up event of a trust under which the SIFT wind-up entity is the beneficiary.

SIFT trust wind-up event

  (3.1)  If this subsection applies to a trust’s distribution of property to a taxpayer, the following rules apply:

(a)  the trust is deemed to have disposed of the property for proceeds of disposition equal to the adjusted cost base to the trust of the property immediately before the distribution;

(b)  the taxpayer is deemed to have disposed of the taxpayer’s interest as a beneficiary under the trust for proceeds of disposition equal to the cost amount to the taxpayer of the interest immediately before the distribution;

(c)  the taxpayer is deemed to have acquired the property at a cost equal to

(i)  if the taxpayer is the only beneficiary under the trust and is a SIFT wind-up entity or a SIFT wind-up corporation in respect of a SIFT wind-up entity, the adjusted cost base to the trust of the property immediately before the distribution, and

(ii)  in any other case, the cost amount to the taxpayer of the taxpayer’s interest as a beneficiary under the trust immediately before the distribution; and

(d)  if the taxpayer’s interest as a beneficiary under the trust was immediately before the disposition taxable Canadian property of the taxpayer, the property is deemed to be taxable Canadian property of the taxpayer.

  (4)  Subsections (1) to (3) apply after ANNOUNCEMENT DATE.

  15.  (1)  Paragraph 107.4(3)(f) of the Act is replaced by the following:

(f)  if the property was deemed to be taxable Canadian property of the transferor by this paragraph or paragraph 44.1(2)(c), 51(1)(f), 85(1)(i), 85.1(1)(a) or (8)(c), subsection 85.1(5) or 87(4) or (5) or paragraph 97(2)(c), 107(2)(d.1) or (3.1)(d), the property is deemed to be taxable Canadian property of the transferee trust;

  (2)  Subsection (1) applies after ANNOUNCEMENT DATE.

  16.  (1)  The portion of the definition "cost amount" in subsection 108(1) of the Act before paragraph (a) is replaced by the following:

"cost amount"
« coût indiqué »

"cost amount" to a taxpayer at any time of a capital interest or part of it, as the case may be, in a trust, means (notwithstanding subsection 248(1) and except for the purposes of subsection 107(3.1) and section 107.4 and, if that time is in a taxation year of the trust that began before 2007 (or, where sections 94.1 to 94.4 apply to a taxation year of the trust that begins before 2007, if that time is in a taxation year of the trust that began before the first day of the first such taxation year to which those sections apply), except in respect of a capital interest in a trust that is at that time a foreign affiliate of the taxpayer),

  (2)  Subsection (1) applies after ANNOUNCEMENT DATE.

  17.  (1)   Subsection 111(8) of the Act is amended by adding the following in alphabetical order:

"exchange rate"
« taux de change »

"exchange rate" at any time in respect of a currency of a country other than Canada means the rate of exchange between that currency and Canadian currency quoted by the Bank of Canada at noon on the day that includes that time or, if that day is not a business day, on the day that immediately precedes that day, or a rate of exchange acceptable to the Minister;

"foreign currency debt"
« dette en monnaie étrangère »

"foreign currency debt" means a debt obligation denominated in a currency of a country other than Canada;

  (2)   Section 111 of the Act is amended by adding the following after subsection (11):

Foreign currency debt on acquisition of control

  (12)   For the purposes of subsection (4), if at any time a corporation owes a foreign currency debt, the corporation is deemed to own at the time (in this subsection referred to as the "measurement time") that is immediately before that time a property

(a)   the adjusted cost base of which at the measurement time is the amount determined by the formula

A + B - C

where

A  is the amount of principal owed by the corporation under the foreign currency debt at the measurement time, calculated, for greater certainty, using the exchange rate applicable at the measurement time;

B  is the portion of any gain, previously recognized in respect of the foreign currency debt because of this section, that is reasonably attributable to the amount described in A;

C  is the portion of any capital loss previously recognized in respect of the foreign currency debt because of this section, that is reasonably attributable to the amount described in A; and

(b)  the fair market value of which is the amount that would be the amount of the principal owed by the corporation under the foreign currency debt at the measurement time if that amount were calculated using the exchange rate applicable at the time of the original borrowing;

Additional amount

  (13)   For the purposes of subsection (12) and subsections 40(10) and (11), if

(a)  at any particular time a corporation would, but for this subsection realize a gain or loss from a fluctuation in the value of the currency of a foreign currency debt of the corporation;

(b)  at any time before the particular time the corporation realized a capital loss or gain in respect of the foreign currency debt because of subsection 111(12); and

(c)  the amount of principal owed by the corporation under the foreign currency debt (expressed in the foreign currency) immediately before the particular time exceeds the amount of principal owed by the corporation under the foreign currency debt (expressed in the foreign currency) immediately before the last time that subsection 111(12) applied to the corporation in respect of the foreign currency debt;

the excess is deemed to be the amount of principal owed by the corporation under a separate foreign currency debt of the corporation;

  (3)   Subsections (1) and (2) apply to any acquisition of control of a corporation that occurs

(a)   after March 7, 2008, other than an acquisition of control that occurs before 2009 pursuant to the terms of an agreement made in writing on or before March 7, 2008; or

(b)   after 2005, if the corporation so elects in writing and files the election with the Minister of National Revenue on or before the corporation’s filing due-date for the corporation’s taxation year that includes the day on which this Act is assented to;

  (4)   If an election under paragraph (3)(b) is made by the corporation in respect of an acquisition of control, a designation under paragraph 111(4)(e) by the corporation for its taxation year that ended immediately before the acquisition of control is deemed to have been made in a timely manner if that designation is made on or before the corporation’s filing due-date for its taxation year that includes the day on which this Act is assented to.

  18.  (1)  The portion of subsection 118.1(5.3) of the Act before paragraph (a) is replaced by the following:

Direct designation — RRSPs, RRIFs and TFSAs

  (5.3)  If as a consequence of an individual’s death, a transfer of money, or a transfer by means of a negotiable instrument, is made, from an arrangement (other than an arrangement of which a licensed annuities provider is the issuer or carrier) that is a registered retirement savings plan or registered retirement income fund or that was, immediately before the individual’s death, a TFSA to a qualified donee, solely because of the donee’s interest or, for civil law, a right as a beneficiary under the arrangement, the individual was the annuitant under, or the holder of, the arrangement immediately before the individual’s death and the transfer occurs within the 36-month period that begins at the time of the death (or, where written application to extend the period has been made to the Minister by the individual’s legal representative, within such longer period as the Minister considers reasonable in the circumstances),

  (2)  Subsection (1) applies to the 2009 and subsequent taxation years.

  19.  (1)  The definition "investment" in subsection 122.1(1) of the Act is replaced by the following:

"investment"
« placement »

"investment", in a trust or partnership,

(a)  means

(i)  a property that is a security of the trust or partnership, or

(ii)  a right which may reasonably be considered to replicate a return on, or the value of, a security of the trust or partnership; but

(b)  does not include an unaffiliated publicly-traded liability of the trust or partnership.

  (2)  The definition "non-portfolio property" in subsection 122.1(1) of the Act is amended by replacing the portion of paragraph (a) before subparagraph (i) with the following:

(a)  a security of a subject entity (other than a portfolio investment entity), if at that time the trust or partnership holds

  (3)  Paragraph (a) of the definition "qualified REIT property" in subsection 122.1(1) of the Act is replaced by the following:

(a)  a real or immovable property;

  (4)  Subparagraph (c)(i) of the definition "qualified REIT property" in subsection 122.1(1) of the Act is replaced by the following:

(i)  legal title to real or immovable property of the trust or of another subject entity all of the securities of which are held by the trust (including real or immovable property that the trust or the other subject entity holds together with one or more other persons or partnerships), and

  (5)  Paragraphs (c) and (d) of the definition "real estate investment trust" in subsection 122.1(1) of the Act are replaced by the following:

(c)  not less than 75% of the trust’s revenues for the taxation year are derived from one or more of the following:

(i)  rent from real or immovable properties,

(ii)  interest from mortgages, or hypothecs, on real or immovable properties, and

(iii)  capital gains from dispositions of real or immovable properties; and

(d)  at each time in the taxation year an amount, that is equal to 75% or more of the equity value of the trust at that time, is the amount that is the total fair market value of all properties held by the trust each of which is real or immovable property, indebtedness of a Canadian corporation represented by a bankers’ acceptance, property described by either paragraph (a) or (b) of the definition "qualified investment" in section 204, or a deposit with a credit union.

  (6)  The definition "rent from real or immovable properties" in subsection 122.1(1) of the Act is amended by replacing subparagraph (a)(ii) with the following:

(ii)  payment for services ancillary to the rental of real or immovable properties and customarily supplied or rendered in connection with the rental of real or immovable properties, and

(iii)  a payment that is included under paragraph 104(13)(a) in computing the recipient’s income and that was made from the part of a trust’s income (determined without reference to subsection 104(6)) that was derived from rent from real or immovable properties; but

  (7)  The definition "SIFT trust" in subsection 122.1(1) of the Act is amended by replacing the portion before paragraph (a) with the following:

"SIFT trust"
« fiducie intermédiaire de placement déterminée »

"SIFT trust", being a specified investment flow-through trust, for a taxation year means a trust (other than an excluded subsidiary entity, or a real estate investment trust, for the taxation year) that meets the following conditions at any time during the taxation year:

  (8)  Subsection 122.1(1) of the Act is amended by adding the following definitions in alphabetical order:

"equity"
« capitaux propres »

"equity", of an entity, means

(a)  if the entity is a corporation, a share of the capital stock of the corporation;

(b)  if the entity is a trust, an income or capital interest in the trust;

(c)  if the entity is a partnership, an interest as a member of the partnership;

(d)  a liability of the entity (and, for purposes of the definition "publicly-traded liability" in this section, a security of the entity that is a liability of another entity), if

(i)  the liability is convertible into, or exchangeable for, equity of the entity or of another entity, or

(ii)  any amount paid or payable in respect of the liability is contingent or dependent on the use of or production from property, or is computed by reference to revenue, profit, cash flow, commodity price or any other similar criterion or by reference to dividends paid or payable to shareholders of any class of shares of the capital stock of a corporation, or to income or capital paid or payable to any member of a partnership or beneficiary under a trust; and

(e)  a right to, or to acquire, anything described in this paragraph and any of paragraphs (a) to (d).

"excluded subsidiary entity"
« filiale exclue »

"excluded subsidiary entity", for a taxation year, means an entity none of the equity of which is at any time in the taxation year

(a)   listed or traded on a stock exchange or other public market; nor

(b)   held by any person or partnership other than

(i)  a real estate investment trust,

(ii)  a taxable Canadian corporation,

(iii)  a SIFT trust (determined without reference to subsection (2)),

(iv)  a SIFT partnership (determined without reference to subsection 197(8)), or

(v)  an excluded subsidiary entity for the taxation year.

"portfolio investment entity"
« entité de placement de portefeuille »

"portfolio investment entity"at any time means an entity that does not at that time hold any non-portfolio property.

"publicly-traded liability"
« dette transigée publiquement »

"publicly-traded liability", of an entity, means a liability that is a security of the entity, that is not equity of the entity and that is listed or traded on a stock exchange or other public market.

"unaffiliated publicly-traded liability"
« dette non affiliée transigée publiquement »

"unaffiliated publicly-traded liability", of an entity at any time means a publicly-traded liability of the entity if, at that time the total fair market value of all publicly-traded liabilities of the entity that are held at that time by persons or partnerships that are not affiliated with the entity is at least 90% of the total fair market value of all publicly-traded liabilities of the entity.

  (9)  Subsections (1) to (8) are deemed to have come into force on October 31, 2006.

  20.  (1)  Paragraph 127(9.01)(b) of theAct is replaced by the following:

(b)  the number that is the total of 10 and the number of taxation years by which the number of taxation years of the taxpayer that have ended after 1997 exceeds 11.

  (2)  Paragraph 127(9.02)(b) of the Act is replaced by the following:

(b)  the number that is the total of 9 and the number of taxation years by which the number of taxation years of the taxpayer that have ended after 1997 exceeds 11.

  (3)  Subparagraphs (a)(i) and (ii) of the description of B in subsection 127(10.2) of the Act are replaced by the following:

(i)  if the particular corporation is not associated with any other corporation in the particular taxation year, the amount that is its taxable capital employed in Canada (within the meaning assigned by section 181.2 or 181.3) for its immediately preceding taxation year, or

(ii)  if the particular corporation is associated with one or more other corporations in the particular taxation year, the amount that is the total of all amounts, each of which is the taxable capital employed in Canada (within the meaning assigned by section 181.2 or 181.3) of the particular corporation for its, or of one of the other corporations for its, last taxation year that ended in the last calendar year that ended before the end of the particular taxation year, or

  (4)  Subsection 127(10.22) of the Act is replaced by the following:

Deemed non-association of corporations

  (10.22)  If a particular Canadian-controlled private corporation is associated with another corporation in circumstances where those corporations would not be associated if the Act were read without reference to paragraph 256(1.2)(a), the particular corporation has issued shares to one or more persons who have been issued shares by the other corporation and there is at least one shareholder of the particular corporation who is not a shareholder of the other corporation or one shareholder of the other corporation who is not a shareholder of the particular corporation, the particular corporation is deemed not to be associated with the other corporation for the purpose of determining the particular corporation’s expenditure limit under subsection (10.2).

  (5)  Paragraph 127(10.6)(c) of the Act is replaced by the following.

(c)  for the purpose of subsection (10.2), where a Canadian-controlled private corporation has a taxation year that is less than 51 weeks, the taxable income of the corporation for the year shall be determined by multiplying that amount by the ratio that 365 is of the number of days in that year.

  (6)  Paragraph 127(36)(b) of the Act is replaced by the following:

(b)  the number that is the total of 10 and the number of taxation years or fiscal periods, as the case may be, by which the number of taxation years or fiscal periods of the taxpayer that have ended after 1997 exceeds 11.

  (7)  Subsections (1), (2) and (6) apply in respect of the 2008 and subsequent taxation years.

  (8)  Subsection (3) applies to taxation years that end on or after February 26, 2008.

  (9)  Subsections (4) and (5) apply to taxation years that end on or after March 9, 2009.

  21.  (1)  The definition "qualifying corporation" in subsection 127.1(2) of the Act is replaced by the following:

"qualifying corporation"
« société admissible »

"qualifying corporation" for a particular taxation year that ends in a calendar year means a particular corporation that is a Canadian-controlled private corporation in the particular taxation year the taxable income of which for its immediately preceding taxation year — together with, if the particular corporation is associated in the particular taxation year with one or more other corporations (in this subsection referred to as "associated corporations"), the taxable income of each associated corporation for its last taxation year that ended in the preceding calendar year (determined before taking into consideration the specified future tax consequences for that last year) — does not exceed the qualifying income limit of the particular corporation for the particular taxation year;

  (2)  Subsection 127.1(2) of the Act is amended by adding the following in alphabetical order:

"qualifying income limit"
« plafond de revenu admissible »

"qualifying income limit" of a corporation for a taxation year is the amount determined by the formula

$400,000 × [($40 million - A)/$40 million]

where

A is

(a)  nil, if $10 million is greater than or equal to the amount (in paragraph (b) referred to as the "taxable capital amount") that is the total of the corporation’s taxable capital employed in Canada (within the meaning assigned by section 181.2 or 181.3) for its immediately preceding taxation year and the taxable capital employed in Canada (within the meaning assigned by section 181.2 or 181.3) of each associated corporation for the associated corporation’s last taxation year that ended in the last calendar year that ended before the end of the particular taxation year, or

(b)  in any other case, the lesser of $40 million and the amount by which the taxable capital amount exceeds $10 million;

  (3)  Subsections (1) and (2) apply to taxation years that end on or after February 26, 2008, except that for taxation years that include February 26, 2008, the formula and the description of A in the definition "qualifying income limit" in subsection 127.1(2) of the Act, as enacted by subsection (2), shall be read as follows:

A + [(B-A) × (C/D)]

where

A is the business limit of the corporation for the taxation year determined in accordance with section 125 of the Act;

B is the qualifying income limit of the corporation for the taxation year determined under subsection 127.1(2) of the Act, as enacted by subsection (2);

C is the number of days in the taxation year that are after February 25, 2008; and

D is the total number of days in the taxation year.

   22.  (1)  Section 128.3 of the Act is replaced by the following:

Former resident — replaced shares

  128.3  If, in a transaction to which section 51, subparagraphs 85.1(1)(a)(i) and (ii), subsection 85.1(7) or section 86 or 87 applies, a person acquires a share (in this section referred to as the "new share") in exchange for another share or equity in a SIFT wind-up entity (in this section referred to as the "old share"), for the purposes of section 119, subsections 126(2.21) to (2.23), 128.1(6) to (8), 180.1(1.4) and 220(4.5) and (4.6), the person is deemed not to have disposed of the old share, and the new share is deemed to be the same share as the old share.

  (2)  Subsection (1) applies after December 19, 2007.

  23.  (1)  The portion before paragraph (a) of the definition "qualifying exchange" in subsection 132.2(2) of the Act is replaced by the following:

"qualifying exchange"
« échange admissible »

"qualifying exchange" means a transfer at any time (in this section referred to as the "transfer time") of all or substantially all of the property of a mutual fund corporation (other than a SIFT wind-up corporation) or mutual fund trust to a mutual fund trust (in this section referred to as the "transferor" and "transferee", respectively, and as the "funds"), if

  (2)  Subsection (1) applies after December 19, 2007.

  24.  (1)  Paragraph 136(2)(d) of the Act is replaced by the following:

(d)  at least 90% of its shares, if any, are held by members described in paragraph (c) or by trusts governed by registered retirement savings plans, registered retirement income funds, registered education savings plans or TFSAs, the annuitants, holders or subscribers under which are members described in that paragraph.

  (2)  Subsection (1) applies to the 2009 and subsequent taxation years.

  25.  (1)  The portion of subsection 138(10) of the Act before paragraph (b) is replaced with the following:

Application of financial institution rules

  (10)  Notwithstanding sections 142.3, 142.4, 142.5 and 142.51, where in a taxation year an insurer (other than an insurer resident in Canada that does not carry on a life insurance business) carries on an insurance business in Canada and in a country other than Canada, in computing its income for the year from carrying on an insurance business in Canada,

(a)  sections 142.3, 142.5 and 142.51 apply only in respect of property that is designated insurance property for the year in respect of the business; and

  (2)  Subsection 138(12) of the Act is amended by adding the following definitions in alphabetical order:

"base year"
« année de base »

"base year"of a life insurer means the life insurer’s taxation year that immediately precedes its transition year;

"reserve transition amount"
« montant transitoire »

"reserve transition amount" of a life insurer, in respect of a life insurance business carried on by it in Canada in its transition year, is the positive or negative amount determined by the formula

A - B

where

A is the maximum amount that the life insurer would be permitted to claim under subparagraph 138(3)(a)(i) (and that would be prescribed by section 1404 of the Regulations for the purpose of subparagraph 138(3)(a)(i)) as a policy reserve for its base year in respect of its life insurance policies in Canada if

(a)  the generally accepted accounting principles that applied to the life insurer in valuing its assets and liabilities for its transition year had applied to it for its base year, and

(b)  section 1404 of the Regulations were read in respect of the life insurer’s base year as it reads in respect of its transition year, and

B is the maximum amount that the life insurer is permitted to claim under subparagraph 138(3)(a)(i) as a policy reserve for its base year;

"transition year"
« année transitoire »

"transition year" of a life insurer means the life insurer’s first taxation year that begins after September 30, 2006;

  (3)  Section 138 of the Act is amended by adding the following after subsection (15):

Transition year income inclusion

  (16)  There shall be included in computing a life insurer’s income for its transition year from a life insurance business carried on by it in Canada in the transition year, the positive amount, if any, of the life insurer’s reserve transition amount in respect of that life insurance business.

Transition year income deduction

  (17)  There shall be deducted in computing a life insurer’s income for its transition year from a life insurance business carried on by it in Canada in the transition year, the absolute value of the negative amount, if any, of the life insurer’s reserve transition amount in respect of that life insurance business.

Transition year income inclusion reversal

  (18)  If an amount has been included under subsection (16) in computing a life insurer’s income for its transition year from a life insurance business carried on by it in Canada, there shall be deducted in computing the life insurer’s income, for each particular taxation year of the life insurer that ends after the beginning of the transition year, from that life insurance business, the amount determined by the formula

A × B/1825

where

A is the amount included under subsection (16) in computing the life insurer’s income for the transition year from that life insurance business; and

B is the number of days in the particular taxation year that are before the day that is 1825 days after the first day of the transition year.

Transition year income deduction reversal

  (19)  If an amount has been deducted under subsection (17) in computing a life insurer’s income for its transition year from a life insurance business carried on by it in Canada, there shall be included in computing the life insurer’s income, for each particular taxation year of the life insurer that ends after the beginning of the transition year, from that life insurance business, the amount determined by the formula

A × B/1825

where

A is the amount deducted under subsection (17) in computing the life insurer’s income for the transition year from that life insurance business; and

B is the number of days in the particular taxation year that are before the day that is 1825 days after the first day of the transition year.

Winding-up

  (20)  If a life insurer has, in a winding-up to which subsection 88(1) has applied, been wound-up into another corporation (referred to in this subsection as the "parent"), and immediately after the winding-up the parent carries on a life insurance business, in applying subsections (18) and (19) in computing the income of the life insurer and of the parent for particular taxation years that end on or after the first day (referred to in this subsection as the "start day") on which assets of the life insurer were distributed to the parent on the winding-up,

(a)  the parent is, on and after the start day, deemed to be the same corporation as and a continuation of the life insurer in respect of

(i)  any amount included under subsection (16) or deducted under subsection (17) in computing the life insurer’s income from a life insurance business for its transition year,

(ii)  any amount deducted under subsection (18) or included under subsection (19) in computing the life insurer’s income from a life insurance business for a taxation year of the life insurer that begins before the start day, and

(iii)  any amount that would — in the absence of this subsection and if the life insurer existed and carried on a life insurance business on each day (that is the start day or a subsequent day) that the parent carries on a life insurance business — be required to be included or deducted, in respect of any of those days, under subsection (18) or (19) in computing the life insurer’s income from a life insurance business; and

(b)  the life insurer is, in respect of each of its particular taxation years, to determine the value for B in the formulas in subsections (18) and (19) without reference to the start day and days after the start day.

Amalgamations

  (21)  If there is an amalgamation (within the meaning assigned by subsection 87(1)) of a life insurer with one or more other corporations to form one corporation (referred to in this subsection as the "new corporation"), and immediately after the amalgamation the new corporation carries on a life insurance business, in applying subsections (18) and (19) in computing the income of the new corporation for particular taxation years of the new corporation that begin on or after the day on which the amalgamation occurred, the new corporation is, on and after that day, deemed to be the same corporation as and a continuation of the life insurer in respect of

(a)  any amount included under subsection (16) or deducted under subsection (17) in computing the life insurer’s income from a life insurance business for its transition year;

(b)  any amount deducted under subsection (18) or included under subsection (19) in computing the life insurer’s income from a life insurance business for a taxation year that begins before the day on which the amalgamation occurred; and

(c)  any amount that would — in the absence of this subsection and if the life insurer existed and carried on a life insurance business on each day (that is the day on which the amalgamation occurred or a subsequent day) that the new corporation carries on a life insurance business — be required to be included or deducted, in respect of any of those days, under subsection (18) or (19) in computing the life insurer’s income from a life insurance business.

Application of subsection (23)

  (22)  Subsection (23) applies if, at any time, a life insurer (referred to in this subsection and subsection (23) as the "transferor") transfers, to a corporation (referred to in this subsection and subsection (23) as the "transferee") that is related to the transferor, property in respect of a life insurance business carried on by the transferor in Canada (referred to in this subsection and subsection (7) as the "transferred business") and

(a)  subsection 138(11.5) or (11.94) applies to the transfer; or

(b)  subsection 85(1) applies to the transfer, the transfer includes all or substantially all of the property and liabilities of the transferred business and, immediately after the transfer, the transferee carries on a life insurance business.

Transfer of life insurance business

  (23)  If this subsection applies in respect of the transfer, at any time, of property

(a)  the transferee is, at and after that time, deemed to be the same corporation as and a continuation of the transferor in respect of

(i)  any amount included under subsection (16) or deducted under subsection (17) in computing the transferor’s income for its transition year that can reasonably be attributed to the transferred business,

(ii)  any amount deducted under subsection (18) or included under subsection (19) in computing the transferor’s income for a taxation year of the transferor that begins before that time that can reasonably be attributed to the transferred business, and

(iii)  any amount that would — in the absence of this subsection and if the transferor existed and carried on a life insurance business on each day (that includes that time or a subsequent day) that the transferee carries on a life insurance business — be required to be deducted or included, in respect of any of those days, under subsection (18) or (19) in computing the transferor’s income that can reasonably be attributed to the transferred business; and

(b)  in determining, in respect of the day that includes that time or any subsequent day, any amount that is required under subsection (18) or (19) to be included or deducted in computing the transferor’s income for each particular taxation year from the transferred business, the description of A in the formulas in those subsections is deemed to be nil.

Ceasing to carry on business

  (24)  If at any time a life insurer ceases to carry on all or substantially all of a life insurance business (referred to in this subsection as the "discontinued business"), and none of subsections (20) to (22) apply,

(a)  there shall be deducted, in computing the life insurer’s income from the discontinued business for the life insurer’s taxation year that includes the time that is immediately before that time, the amount determined by the formula

A - B

where

A is the amount included under subsection (16) in computing the life insurer’s income from the discontinued business for its transition year, and

B is the total of all amounts each of which is an amount deducted under subsection (18) in computing the life insurer’s income from the discontinued business for a taxation year that began before that time; and

(b)  there shall be included, in computing the life insurer’s income from the discontinued business for the life insurer’s taxation year that includes the time that is immediately before that time, the amount determined by the formula

C - D

where

C is the amount deducted under subsection (17) in computing the life insurer’s income from the discontinued business for its transition year, and

D is the total of all amounts each of which is an amount included under subsection (19) in computing the life insurer’s income from the discontinued business for a taxation year that began before that time.

Ceasing to exist

  (25)  If at any time a life insurer that carried on a life insurance business ceases to exist (otherwise than as a result of a winding-up or amalgamation described in subsection (20) or (21)), for the purposes of subsection (24), the life insurer is deemed to have ceased to carry on the life insurance business at the earlier of

(a)  the time (determined without reference to this subsection) at which the life insurer ceased to carry on the life insurance business; and

(b)  the time that is immediately before the end of the last taxation year of the life insurer that ended at or before the time at which the life insurer ceased to exist.

  (4)  Subsections (1) to (3) apply to taxation years that begin on or after October 1, 2006.

  26.  (1)  Paragraph (a) of the definition "bien évalué à la valeur du marché" in subsection 142.2(1) of the French version of the Act is replaced by the following:

a)  une action;

  (2)  Paragraph (d) of the definition "mark-to-market property" in subsection 142.2(1) of the Act is replaced by the following:

(d)  a share of a corporation in which the taxpayer has a significant interest at any time in the year,

(d.1)  a property that is, at every time in the year at which the taxpayer holds the property, a prescribed payment card corporation share of the taxpayer,

(d.2)  if the taxpayer is an investment dealer and the year begins after 1998, a property that is, at every time in the year at which the taxpayer holds the property, a prescribed securities exchange investment of the taxpayer, or

(d.3)  a share of a corporation held, at any time in the year, by the taxpayer if

(i)  control of the corporation is, at any time (referred to in this paragraph as the "acquisition of control time") that is after 2001 and is in the 24 month period that begins immediately after the end of the year, acquired by

(A)  the taxpayer,

(B)  one or more persons related to the taxpayer (otherwise than by reason of a right referred to in paragraph 251(5)(b)), or

(C)  the taxpayer and one or more persons described in clause (B), and

(ii)  the taxpayer elects in writing that this paragraph apply and files the election with the Minister on or before the taxpayer’s filing-due date for the taxpayer’s taxation year that includes the acquisition of control time, or

  (3)  The definition "mark-to-market property" in subsection 142.2(1) of the Act, as amended by subsection (2), is replaced by the following:

"mark-to-market property"
« bien évalué à la valeur du marché »

"mark-to-market property" of a taxpayer for a taxation year means property (other than an excluded property) held at any time in the taxation year by the taxpayer that is

(a)  a share,

(b)  if the taxpayer is not an investment dealer, a specified debt obligation that is a fair value property of the taxpayer for the taxation year,

(c)  if the taxpayer is an investment dealer, a specified debt obligation, or

(d)  a tracking property of the taxpayer that is a fair value property of the taxpayer for the taxation year;

  (4)  Subsection 142.2(1) of the Act is amended by adding the following definitions in alphabetical order:

"excluded property"
« bien exclu »

"excluded property" of a taxpayer for a taxation year means property, held at any time in the taxation year by the taxpayer, that is

(a)  a share of the capital stock of a corporation if, at any time in the taxation year, the taxpayer has a significant interest in the corporation,

(b)  a property that is, at all times in the taxation year at which the taxpayer held the property, a prescribed payment card corporation share of the taxpayer,

(c)  if the taxpayer is an investment dealer, a property that is, at all times in the taxation year at which the taxpayer held the property, a prescribed securities exchange investment of the taxpayer,

(d)  a share of the capital stock of a corporation if

(i)  control of the corporation is, at any time (referred to in this paragraph as the "acquisition of control time") that is in the 24 month period that begins immediately after the end of the year, acquired by

(A)  the taxpayer,

(B)  one or more persons related to the taxpayer (otherwise than by reason of a right referred to in paragraph 251(5)(b)) , or

(C)  the taxpayer and one or more persons described in clause (B), and

(ii)  the taxpayer elects in writing that this paragraph apply and files the election with the Minister on or before the taxpayer’s filing-due date for the taxpayer’s taxation year that includes the acquisition of control time, or

(e)  a prescribed property;

"fair value property"
« bien évalué à sa juste valeur »

"fair value property"of a taxpayer for a taxation year means property, held at any time in the taxation year by the taxpayer, that is — or it is reasonable to expect would, if the taxpayer held the property at the end of the taxation year, be — valued (otherwise than solely because its fair value was less than its cost to the taxpayer or, if the property is a specified debt obligation, because of a default of the debtor) in accordance with generally accepted accounting principles, at its fair value (determined in accordance with those principles) in the taxpayer’s balance sheet as at the end of the taxation year;

"tracking property"
« bien à évaluer »

"tracking property" of a taxpayer means property of the taxpayer the fair market value of which is determined primarily by reference to one or more criteria in respect of property (referred to in this definition as "tracked property") that, if owned by the taxpayer, would be mark-to-market property of the taxpayer, which criteria are

(a)  the fair market value of the tracked property,

(b)  the profits or gains from the disposition of the tracked property,

(c)  the revenue, income or cash flow from the tracked property, or

(d)  any other similar criteria in respect of the tracked property;

  (5)  The portion of subsection 142.2(2) of the Act before paragraph (a) is replaced by the following:

Significant interest

  (2)  For the purposes of the definitions "excluded property", "mark-to-market property" and "specified debt obligation" in subsection (1), and subsection (5), a taxpayer has a significant interest in a corporation at any time if

  (6)  Subsections 142.2(4) and (5) of the Act are replaced by the following:

Extension of meaning of "related"

  (4)  For the purposes of this subsection and subsections (2) and (3), in determining if, at a particular time, a person or partnership is related to another person or partnership, the rules in section 251 are to be applied as if,

(a)  a partnership (other than a partnership in respect of which any amount of the income or capital of the partnership that any entity may receive directly from the partnership at any time as a member of the partnership depends on the exercise by any entity of, or the failure by any entity to exercise, a discretionary power) were a corporation having capital stock of a single class divided into 100 issued shares and each member of the partnership owned, at the particular time, that proportion of the issued shares of that class that

(i)  the fair market value of the member’s interest in the partnership at the particular time

is of

(ii)  the fair market value of all interests in the partnership at the particular time; and

(b)  a trust (other than a trust in respect of which any amount of the income or capital of the trust that any entity may receive directly from the trust at any time as a beneficiary under the trust depends on the exercise by any entity of, or the failure by any entity to exercise, a discretionary power) were a corporation having capital stock of a single class divided into 100 issued shares and each beneficiary under the trust owned, at the particular time, that proportion of the issued shares of that class that

(i)  the fair market value of the beneficiary’s beneficial interest in the trust at the particular time

is of

(ii)  the fair market value at that time of all beneficial interests in the trust.

  (7)  Subsections (1) and (2) apply to taxation years that end after February 22, 1994, except that any election made under paragraph (d.3) of the definition "mark-to-market property" in subsection 142.2(1) of the Act, as enacted by subsection (2), is deemed to have been made on a timely basis if it is filed with the Minister of National Revenue on or before the taxpayer’s filing-due date for the taxpayer’s taxation year in which this Act is assented to.

  (8)  Subsection (3) applies to taxation years that begin on or after October 1, 2006 except that for taxation years that begin before November 7, 2007, the definition "mark-to-market property" in subsection 142.2(1) of the Act, as enacted by subsection (3), is to be read without its paragraph (d).

 (9)  Subsections (4) to (6) apply to taxation years that begin on or after October 1, 2006 except that any election made under paragraph (d) of the definition "excluded property" in subsection 142.2(1), as enacted by subsection (4), is deemed to have been made on a timely basis if it is filed with the Minister of National Revenue on or before the taxpayer’s filing-due date for the taxpayer’s taxation year in which this Act is assented to.

  27.  (1)  Section 142.5 of the Act is amended by adding the following after subsection (8):

Application of subsection (8.2)

  (8.1)  Subsection (8.2) applies to a taxpayer for the taxpayer’s first taxation year that begins on or after October 1, 2006 (referred to in this subsection and subsection (8.2) as the "first taxation year") if

(a)  subsection (2) deems the taxpayer to have disposed of a particular specified debt obligation immediately before the end of the first taxation year (in subsection (8.2) referred to as "the particular disposition"); and

(b)  the particular specified debt obligation was owned by the taxpayer at the end of the taxation year immediately preceding the first taxation year and was not a mark-to-market property of the taxpayer for that preceding taxation year.

Rules applicable to first deemed disposition of debt obligation

  (8.2)  If this subsection applies to a taxpayer for the first taxation year, the following rules apply to the taxpayer in respect of the particular disposition:

(a)  subsection 20(21) does not apply to the taxpayer in respect of the particular disposition; and

(b)  if section 12.4 does not apply to the taxpayer in respect of the particular disposition, there shall be included in computing the taxpayer’s income for the first taxation year the amount, if any, by which

(i)  the total of all amounts each of which is

(A)  an amount deducted under paragraph 20(1)(l) in respect of the particular specified debt obligation of the taxpayer in computing the taxpayer’s income for the taxation year immediately preceding the first taxation year, or

(B)  an amount deducted under paragraph 20(1)(p) in respect of the particular specified debt obligation of the taxpayer in computing the taxpayer’s income for a taxation year that preceded the first taxation year,

exceeds

(ii)  the total of all amounts each of which is

(A)  an amount included under paragraph 12(1)(d) in respect of the particular specified debt obligation of the taxpayer in computing the taxpayer’s income for the first taxation year, or

(B)   an amount included under paragraph 12(1)(i) in respect of the particular specified debt obligation of the taxpayer in computing the taxpayer’s income for the first taxation year or a preceding taxation year.

  (2)  Subsection (1) applies to taxation years that begin on or after October 1, 2006.

  28.  (1)  The Act is amended by adding the following after section 142.5:

Definitions

  142.51  (1)  The following definitions apply for the purposes of this section.

"base year"
« année de base »

"base year"of a taxpayer means the taxpayer’s taxation year that immediately precedes its transition year.

"transition amount"
« montant transitoire »

"transition amount"of a taxpayer for the taxpayer’s transition year is the positive or negative amount determined by the formula

A - B

where

A is the total of all amounts each of which is the fair market value, at the end of the taxpayer’s base year, of a transition property of the taxpayer; and

B is the total of all amounts each of which is the cost amount to the taxpayer, at the end of the taxpayer’s base year, of a transition property of the taxpayer.

"transition property"
« bien transitoire »

"transition property"of a taxpayer means a property that

(a)  was a specified debt obligation held by the taxpayer at the end of the taxpayer’s base year;

(b)  was not a mark-to-market property of the taxpayer for the taxpayer’s base year, but would have been a mark-to-market property of the taxpayer for the taxpayer’s base year if the property had been carried at the property’s fair market value in the taxpayer’s balance sheet as at the end of each taxation year of the taxpayer – that ends after the taxpayer last acquired the property (otherwise than by reason of a reacquisition under subsection 142.5(2)) and before the commencement of the taxpayer’s transition year; and

(c)  was a mark-to-market property of the taxpayer for the transition year of the taxpayer.

"transition year"
« année transitoire »

"transition year" of a taxpayer means the taxpayer’s first taxation year that begins after September 30, 2006.

Transition year income inclusion

  (2)  If a taxpayer is a financial institution in its transition year, there shall be included in computing the taxpayer’s income for its transition year the absolute value of the negative amount, if any, of the taxpayer’s transition amount.

Transition year income deduction

  (3)  If a taxpayer is a financial institution in its transition year, there shall be deducted in computing the taxpayer’s income for its transition year the positive amount, if any, of the taxpayer’s transition amount.

Transition year income inclusion reversal

  (4)  If an amount has been included under subsection (2) in computing a taxpayer’s income for its transition year there shall be deducted in computing the taxpayer’s income for each particular taxation year of the taxpayer that ends after the beginning of the transition year, and in which particular taxation year the taxpayer is a financial institution, the amount determined by the formula

A × B/1825

where

A is the amount included under subsection (2) in computing the taxpayer’s income for the transition year; and

B is the number of days in the particular taxation year that are before the day that is 1825 days after the first day of the transition year.

Transition year income deduction reversal

  (5)  If an amount has been deducted under subsection (3) in computing a taxpayer’s income for its transition year, there shall be included in computing the taxpayer’s income, for each particular taxation year of the taxpayer ending after the beginning of the transition year, and in which particular taxation year the taxpayer is a financial institution, the amount determined by the formula

A × B/1825

where

A is the amount deducted under subsection (3) in computing the taxpayer’s income for the transition year; and

B is the number of days in the particular taxation year that are before the day that is 1825 days after the first day of the transition year.

Winding-up

  (6)  If a taxpayer has, in a winding-up to which subsection 88(1) has applied, been wound-up into another corporation (referred to in this subsection as the "parent"), and immediately after the winding-up the parent is a financial institution, in applying subsections (4) and (5) in computing the income of the taxpayer and of the parent for particular taxation years that end on or after the first day (referred to in this subsection as the "start day") on which assets of the taxpayer were distributed to the parent on the winding-up,

(a)  the parent is, on and after the start day, deemed to be the same corporation as and a continuation of the taxpayer in respect of

(i)  any amount included under subsection (2) or deducted under subsection (3) by the taxpayer in computing the taxpayer’s income for its transition year,

(ii)  any amount deducted under subsection (4) or included under subsection (5) in computing the taxpayer’s income for a taxation year of the taxpayer that begins before the start day, and

(iii)  any amount that would — in the absence of this subsection and if the taxpayer existed and was a financial institution on each day (that is the start day or a subsequent day) that the parent is a financial institution — be required to be deducted or included, in respect of any of those days, under subsection (4) or (5) in computing the taxpayer’s income for its transition year; and

(b)  the taxpayer is, in respect of each of its particular taxation years, to determine the value for B in the formulas in subsections (4) and (5) without reference to the start day and days after the start day.

Amalgamations

  (7)  If there is an amalgamation (within the meaning assigned by subsection 87(1)) of a taxpayer with one or more other corporations to form one corporation (referred to in this subsection as the "new corporation"), and immediately after the amalgamation the new corporation is a financial institution, in applying subsections (4) and (5) in computing the income of the new corporation for particular taxation years of the new corporation that begin on or after the day on which the amalgamation occurred, the new corporation is, on and after that day, deemed to be the same corporation as and a continuation of the taxpayer in respect of

(a)  any amount included under subsection (2) or deducted under subsection (3) in computing the taxpayer’s income for its transition year of the taxpayer;

(b)  any amount deducted under subsection (4) or included under subsection (5) in computing the taxpayer’s income for a taxation year of the taxpayer that begins before the day on which the amalgamation occurred; and

(c)  any amount that would — in the absence of this subsection and if the taxpayer existed and was a financial institution on each day (that is the day on which the amalgamation occurred or a subsequent day) that the new corporation is a financial institution — be required to be included or deducted, in respect of any of those days, under subsection (4) or (5) in computing the taxpayer’s income.

Application of subsection (9)

  (8)  Subsection (9) applies if, at any time, a taxpayer (referred to in this subsection and subsection (9) as the "transferor") transfers, to a corporation (referred to in this subsection and subsection (9) as the "transferee") that is related to the transferor, property in respect of a business carried on by the transferor in Canada (referred to in this subsection and subsection (9) as the "transferred business") and

(a)  subsection 138(11.5) or (11.94) applies to the transfer; or

(b)  subsection 85(1) applies to the transfer, the transfer includes all or substantially all of the property and liabilities of the transferred business and, immediately after the transfer, the transferee is a financial institution.

Transfer of a business

  (9)  If this subsection applies in respect of the transfer, at any time, of property

(a)  the transferee is, at and after that time, deemed to be the same corporation as and a continuation of the transferor in respect of

(i)  any amount included under subsection (2) or deducted under subsection (3) in computing the transferor’s income for its transition year that can reasonably be attributed to the transferred business,

(ii)  any amount deducted under subsection (4) or included under subsection (5) in computing the transferor’s income for a taxation year of the transferor that begins before that time that can reasonably be attributed to the transferred business, and

(iii)  any amount that would — in the absence of this subsection and if the transferor existed and was a financial institution on each day (that includes that time or a subsequent day) that the transferee is a financial institution — be required to be deducted or included, in respect of any of those days, under subsection (4) or (5) in computing the transferor’s income that can reasonably be attributed to the transferred business; and

(b)  in determining, in respect of the day that includes that time or any subsequent day, any amount that is required under subsection (4) or (5) to be included or deducted in computing the transferor’s income for each particular taxation year from the transferred business, the description of A in the formulas in those subsections is deemed to be nil.

Continuation of a partnership

  (10)  If subsection 98(6) deems a partnership (in this subsection referred to as the "new partnership") to be a continuation of another partnership (in this subsection referred to as the "predecessor partnership"), and at the time that is immediately after the predecessor partnership ceases to exist, the new partnership is a financial institution, in applying subsections (4) and (5) in computing the income of the new partnership for particular taxation years of the new partnership that begin on or after the day on which the new partnership comes into existence, the new partnership is, on or after the day on which the new partnership comes into existence, deemed to be the same partnership as and a continuation of the predecessor partnership in respect of

(a)  any amount included under subsection (2) or deducted under subsection (3) in computing the predecessor partnership’s income for its transition year;

(b)  any amount deducted under subsection (4) or included under subsection (5) in computing the predecessor partnership’s income for a taxation year of the predecessor partnership that begins before the day on which the new partnership comes into existence; and

(c)  any amount that would — in the absence of this subsection and if the predecessor partnership existed and was a financial institution on each day (that is the day on which the new partnership comes into existence or a subsequent day) that the new partnership is a financial institution — be required to be deducted or included, in respect of any of those days, under subsection (4) or (5) in computing the predecessor partnership’s income.

Ceasing to carry on a business

  (11)  If at any time, a taxpayer ceases to be a financial institution

(a)  there shall be deducted, in computing the income of the taxpayer for the taxation year of the taxpayer that includes the time that is immediately before that time, the amount determined by the formula

A - B

where

A is the amount included under subsection (2) in computing the taxpayer’s income for its transition year, and

B is the total of all amounts each of which is an amount deducted under subsection (4) in computing the income of the taxpayer for a taxation year that began before that time; and

(b)  there shall be included, in computing the income of the taxpayer for the taxation year of the taxpayer that includes the time that is immediately before that time, the amount determined by the formula

C - D

where

C is the amount deducted under subsection (3) in computing the taxpayer’s income for its transition year, and

D is the total of all amounts each of which is an amount included under subsection (5) in computing the taxpayer’s income for a taxation year that began before that time.

Ceasing to exist

  (12)  If at any time a taxpayer ceases to exist (otherwise than as a result of a merger to which subsection 87(2) applies, a winding-up to which subsection 88(1) applies or a continuation to which subsection 98(6) applies), for the purposes of subsection (11), the taxpayer is deemed to have ceased be a financial institution at the earlier of

(a)  the time (determined without reference to this subsection) at which the taxpayer ceased to be a financial institution; and

(b)  the time that is immediately before the end of the last taxation year of the taxpayer that ended at or before the time at which the taxpayer ceased to exist.

  (2)  Subsection (1) applies to taxation years that begin on or after October 1, 2006.

  29.  (1)  Section 142.6 of the Act is amended by adding the following after subsection (1.3):

Change in status — prescribed payment card corporation share

  (1.4)  If, at any particular time in a taxation year, a property becomes a mark-to-market property of a taxpayer for the taxation year because it ceased, at the particular time, to be a prescribed payment card corporation share of the taxpayer,

(a)  the taxpayer is deemed

(i)  to have disposed of the property immediately before the particular time for proceeds of disposition equal to its fair market value immediately before the particular time, and

(ii)  to have acquired the property, at the particular time, at a cost equal to those proceeds; and

(b)  subsection 142.5(1) does not apply to the disposition under subparagraph (a)(i).

Change in status — prescribed securities exchange investment

  (1.5)  If, at any particular time in a taxation year, a property becomes a mark-to-market property of a taxpayer for the taxation year because it ceased, at the particular time, to be a prescribed securities exchange investment of the taxpayer,

(a)  the taxpayer is deemed

(i)  to have disposed of the property immediately before the particular time for proceeds of disposition equal to its fair market value immediately before the particular time, and

(ii)  to have acquired the property, at the particular time, at a cost equal to those proceeds; and

(b)  subsection 142.5(1) does not apply to the disposition under subparagraph (a)(i).

Change in status — significant interest

  (1.6)  If, at the end of a particular taxation year, a taxpayer holds shares of the capital stock of a corporation, because of that holding, the taxpayer has a significant interest in that corporation at any time in that taxation year, and the taxpayer did not, at any time in the following taxation year have a significant interest in that corporation, the taxpayer is deemed to have,

(a)  disposed of those shares immediately before the end of the particular taxation year for proceeds of disposition equal to the fair market value, at that time, of those shares; and

(b)  acquired those shares at the end of the particular taxation year at a cost equal to those proceeds.

  (2)  Subsection 142.6(2) of the Act is replaced by the following:

Deemed disposition not applicable

  (2)  For the purposes of this Act, the determination of when a taxpayer acquired a share shall be made without regard to a disposition or acquisition that occurred because of subsection 142.5(2) or subsection (1), (1.1), (1.2), (1.4), (1.5), or (1.6).

  (3)  Subsection 142.6(1.4) of the Act, as enacted by subsection (1), applies to taxation years that end after February 22, 1994.

  (4)  Subsection 142.6(1.5) of the Act, as enacted by subsection (1), applies to taxation years that begin after 1998.

  (5)  Subsection 142.6(1.6) of the Act, as enacted by subsection (1), applies to taxation years that begin on or after October 1, 2006.

  (6)  Subsection (2) applies to taxation years that begin on or after October 1, 2006.

  30.  (1)  Subsections 146.2(4) to (6) of the Act are renumbered as subsections 146.2(6) to (8).

  (2)  Subsections 146.2(7) to (9) of the Act are renumbered as subsections 146.2(10) to (12).

  (3)  Subparagraph (b)(ii) of the definition "qualifying arrangement" in subsection 146.2(1) of the Act is replaced by the following:

(ii)  an annuity contract with an issuer that is a licensed annuities provider, or

  (4)  Subsection 146.2(3) of the Act is replaced by the following:

Paragraphs (2)(a), (b) and (e) not applicable

  (3)  The conditions in paragraphs (2)(a), (b) and (e) do not apply to the extent that they are inconsistent with subsection (4).

Using TFSA interest as security for a loan

  (4)   A holder of a TFSA may use the holder’s interest or, for civil law, right in the TFSA as security for a loan or other indebtedness if

(a)  the terms and conditions of the indebtedness are terms and conditions that persons dealing at arm’s length with each other would have entered into; and

(b)  it can reasonably be concluded that none of the main purposes for that use is to enable a person (other than the holder) or a partnership to benefit from the exemption from tax under this Part of any amount in respect of the TFSA.

TFSA

  (5)  If the issuer of an arrangement that is, at the time it is entered into, a qualifying arrangement files with the Minister, before March of the calendar year following the calendar year in which the arrangement was entered into, an election in prescribed form and manner to register the arrangement as a TFSA under the Social Insurance Number of the individual with whom the arrangement was entered into, the arrangement becomes a TFSA at the time the arrangement was entered into and ceases to be a TFSA at the earliest of the following times:

(a)  the time at which the last holder of the arrangement dies,

(b)  the time at which the arrangement ceases to be a qualifying arrangement, or

(c)  the earliest time at which the arrangement is not administered in accordance with the conditions in subsection (2).

  (5)  Section 146.2 of the Act is amended by adding the following after subsection (8):

Trust ceasing to be a TFSA on death of holder

  (9)  If an arrangement that governs a trust ceases to be a TFSA because of the death of the holder of the TFSA,

(a)  the arrangement is deemed, for the purposes of subsections (6) and (8), any regulations made under subsection (13), the definition "trust" in subsection 108(1), paragraph 149(1)(u.2) and the definitions "qualified investment" and "non-qualified investment" in subsection 207.01(1), to continue to be a TFSA until, and to cease to be a TFSA immediately after, the exemption-end time, being in this subsection the earlier of

(i)  the time at which the trust ceases to exist, and

(ii)  the end of the first calendar year that begins after the holder dies;

(b)  there shall be included in computing a taxpayer’s income for a taxation year the total of all amounts each of which is an amount determined by the formula

A - B

where

A is the amount of a payment made out of or under the trust, in satisfaction of all or part of the taxpayer’s beneficial interest in the trust, in the taxation year, after the holder’s death and at or before the exemption-end time, and

B is an amount designated by the trust not exceeding the lesser of

(i)  the amount of the payment, and

(ii)  the amount by which the fair market value of all of the property held by the trust immediately before the holder’s death exceeds the total of all amounts each of which is the value of B in respect of any other payment made out of or under the trust; and

(c)  there shall be included in computing the trust’s income for its first taxation year, if any, that begins after the exemption-end time the amount determined by the formula

A - B

where

A is the fair market value of all of the property held by the trust at the exemption-end time, and

B is the amount by which the fair market value of all of the property held by the trust immediately before the holder’s death exceeds the total of all amounts each of which is the value of B in paragraph (b) in respect of a payment made out of or under the trust.

  (6)  Section 146.2 of the Act is amended by adding the following after subsection (12):

Regulations

  (13)  The Governor in Council may make regulations requiring issuers of TFSAs to file information returns in respect of TFSAs.

  (7)  Subsections (1) to (6) apply to the 2009 and subsequent taxation years.

  31.  (1)  The definition "entrusted shares percentage" in subsection 149.1(1) of the Act is repealed.

  (2)   The definition "divestment obligation percentage" in subsection 149.1(1) of the Act is replaced by the following:

"divestment obligation percentage"
« pourcentage de dessaisissement »

"divestment obligation percentage"of a private foundation for a particular taxation year, in respect of a class of shares of the capital stock of a corporation, is the percentage, if any, that is the lesser of

(a)  the excess, if any, at the end of the taxation year, of the percentage of issued and outstanding shares of that class that are held by the private foundation over the exempt shares percentage of the private foundation, and

(b)  the percentage determined by the formula

A + B - C

where

A is the percentage determined under this paragraph in respect of the private foundation in respect of the class for the preceding taxation year,

B is the total of all percentages, each of which is the portion of a net increase in the excess corporate holdings percentage of the private foundation in respect of the class for the particular taxation year or for a preceding taxation year that is allocated to the particular taxation year in accordance with subsection 149.2(5), and

C is the total of all percentages, each of which is the portion of a net decrease in the excess corporate holdings percentage of the private foundation in respect of the class for the particular taxation year or for a preceding taxation year that is allocated to the particular taxation year in accordance with subsection 149.2(7);

  (3)  Paragraph (c) of the definition "excess corporate holdings percentage" in subsection 149.1(1) of the Act is replaced with the following:

(c)  in any other case, the number of percentage points, if any, by which the total corporate holdings percentage of the private foundation in respect of the class, at that time, exceeds the greater of 20% and the exempt shares percentage, at that time, of the private foundation in respect of the class;

  (4)  Subsection 149.1(1) of the Act is amended by adding the following definitions in alphabetical order:

"equity percentage"
« pourcentage d’intérêt »

"equity percentage"of a person in a corporation has, subject to subsection 149.2(2.1), the same meaning as defined in subsection 95(4);

"exempt shares"
« actions exonérées »

"exempt shares" held by a private foundation at any particular time means shares, of a class of the capital stock of a corporation,

(a)  that were acquired by the private foundation by way of a gift that was subject to a trust or direction that the shares are to be held by the private foundation for a period ending not earlier than the particular time, if the gift was made

(i)  before March 19, 2007,

(ii)  on or after March 19, 2007 and before March 19, 2012

(A)  under the terms of a will that was executed by a taxpayer before March 19, 2007 and not amended, by codicil or otherwise, on or after March 19, 2007, and

(B)  in circumstances where no other will of the taxpayer was executed or amended on or after March 19, 2007, or

(iii)  on or after March 19, 2007, under the terms of a testamentary or inter vivos trust created before March 19, 2007, and not amended on or after March 19, 2007,

(b)  that were last acquired by the private foundation before March 19, 2007, other than shares that, at the particular time,

(i)  are described in paragraph (a),

(ii)  are listed on a designated stock exchange, or

(iii)  are shares of the capital stock of a particular corporation, which particular corporation has an equity percentage greater than 0% in a public corporation, a class of the shares of the capital stock of which is listed on a designated stock exchange, if

(A)  a corporation (in this subparagraph referred to as a "controlled corporation" and which may, for greater certainty, be the particular corporation)

(I)  owns one or more shares of a class of the capital stock of the public corporation, and

(II)  is controlled, directly or indirectly in any manner whatever, by one or more relevant persons in respect of the private foundation, or by the private foundation alone or together with one or more such relevant persons,

(B)  the private foundation, if it held directly the shares described in subclause (A)(I), would have an excess corporate holdings percentage (determined without reference to subsection 149.2(8)) in respect of that class of shares that is greater than 0%, and

(C)  the private foundation, alone or together with all controlled corporations, holds more than an insignificant interest in respect of the class of shares described in subclause (A)(I), or

(c)  that are substituted shares held by the private foundation;

"exempt shares percentage"
« pourcentage d’actions exonérées »

"exempt shares percentage"of a private foundation at any time, in respect of a class of shares of the capital stock of a corporation, is the total of all amounts, each of which is the percentage of the issued and outstanding shares of that class that are exempt shares held by the private foundation at that time;

"substituted shares"
« actions de remplacement »

"substituted shares" held by a private foundation means shares acquired by the private foundation, in exchange for exempt shares held by the private foundation, in the course of a transaction to which section 51, subsection 85.1(1), or section 86 or 87 applies;

  (5)  Subsections (1) to (4) apply after March 18, 2007.

  32.  (1)  Section 149.2 of the Act is amended by adding the following after subsection (2):

Ownership

  (2.1)  For the purposes of the definition "equity percentage", and subparagraph (b)(iii) of the definition "exempt shares", in subsection 149.1(1), a person who, if paragraph 251(5)(b) applied would be deemed by that paragraph to have the same position in relation to the control of a corporation as if the person owned a share, is deemed to own the share.

  (2)  Section 149.2 of the Act is amended by adding the following after subsection (8):

Where subsection (10) applies

  (9)  Subsection (10) applies for the purposes of applying section 149.1 and subsections (8) and 188.1(3.1) to a private foundation at a particular time if, both on March 18, 2007 and at the particular time,

(a)   the private foundation was the sole trustee of a trust, or was a majority interest beneficiary (within the meaning assigned by section 251.1) of a trust more than 50% of the trustees of which were the private foundation and one or more relevant persons in respect of the private foundation; and

(b)  the trust held one or more shares of a class of the capital stock of a corporation.

Shares held through a trust on March 18, 2007

  (10)  If this subsection applies at a particular time to a private foundation in respect of shares of a class of the capital stock of a corporation held by a trust, the private foundation is deemed to hold at the particular time that number of those shares as is determined by the formula

A × B / C

where

A is the lesser of the number of those shares held by the trust on March 18, 2007 and the number so held at the particular time,

B is the total fair market value of all interests held by the private foundation in the trust at the particular time, and

C is the total fair market value of all property held by the trust at the particular time.

Discretionary trusts

  (11)  For the purpose of subsection (10), if the amount of income or capital of a trust that a person may receive as a beneficiary under the trust depends on the exercise by any person of, or the failure by any person to exercise, a discretionary power, that person is deemed to have fully exercised, or to have failed to exercise, the power, as the case may be.

  (3)  Subsections (1) applies after March 18, 2007.

  (4)  Subsection (2) applies to taxation years, of private foundations, that begin on or after February 26, 2008.

  (5)  If a registered charity was on March 19, 2007 a private foundation, in applying paragraphs 149.2(5)(b) and (c) of the Act to the first taxation year of the registered charity that begins after that date, the phrase "in the current year" in those paragraphs shall be read as the phrase "in the period that begins on March 18, 2007 and ends at the end of the current year".

  33.  (1)  Subsection 152(4) of the Act is amended by striking out the word "or" at the end of paragraph (a), by adding the word "or" at the end of paragraph (b) and by adding the following after paragraph (b):

(c)  as a consequence of a change in the allocation of the taxpayer’s taxable income earned in a province as determined under the law of a province that provides rules similar to those prescribed for the purposes of section 124, an assessment, reassessment or additional assessment of tax for a taxation year payable by a corporation under a law of a province that imposes on the corporation a tax similar to the tax imposed under this Part (in this paragraph referred to as a "provincial reassessment") is made, and as a consequence of the provincial reassessment, an assessment, reassessment or additional assessment is made on or before the day that is one year after the later of

(i)  the day on which the Minister is advised of the provincial reassessment, and

(ii)  the day that is 90 days after the day of mailing of a notice of the provincial reassessment.

  (2)  Section 152 of the Act is amended by adding the following after subsection (6.1):

Extended reassessment period

  (6.2)  The Minister shall reassess a taxpayer’s tax for a particular taxation year, in order to take into account the application of paragraph (d) of the definition "excluded property" in subsection 142.2(1) in respect of shares held by the taxpayer in the particular year, if

(a)  the taxpayer has filed for the particular taxation year the return of income required by section 150; and

(b)  the taxpayer files with the Minister, on or before the filing-due date for the taxpayer’s taxation year that includes the acquisition of control time referred to in paragraph (d) of that definition, a prescribed form amending the return.

  (3)  Subsection (2) applies to taxation years that begin after 2001, except that

(a)  for taxation years that begin before October 1, 2006, each reference in subsection 152(6.2) of the Act, as enacted by subsection (2), to "paragraph (d) of the definition "excluded property"" shall be read as a reference to "paragraph (d.3) of the definition "mark-to-market property""; and

(b)  a prescribed form referred to in paragraph 152(6.2)(b) of the Act, as enacted by subsection (2), is deemed to have been filed by a taxpayer with the Minister of National Revenue on a timely basis if it is filed by the taxpayer with the Minister of National Revenue on or before the taxpayer’s filing-due date for the taxpayer’s taxation year that includes the day on which this Act is assented to.

  34.  (1)  Clause 181.3(1)(c)(ii)(B) of the Act is repealed.

  (2)  Subsection (1) applies to taxation years that begin on or after October 1, 2006.

  35.  (1)  Paragraph 188.1(3.2)(c) of the Act is replaced by the following:

(c)  each of those shares is deemed to have a fair market value, at the particular time, equal to the fair market value, at the particular time, of a share of the class issued by the corporation, determined without reference to this subsection.

  (2)  Section 188.1 of the Act is amended by adding the following after subsection (3.2):

Where subsection (3.5) applies

  (3.3)  Subsection (3.5) applies to a private foundation at a particular time in a taxation year if

(a)  at the particular time, a person (in this subsection and subsection (3.5) referred to as an "insider" of the private foundation) that is the private foundation, or is a relevant person in respect of the private foundation, is a beneficiary under a trust;

(b)  at or before the particular time

(i)  the insider acquired an interest in or under the trust, or

(ii)  the trust acquired a property;

(c)  it may reasonably be considered that a purpose of the acquisition described in paragraph (b) was to hold, directly or indirectly, shares of a class of the capital stock of a corporation (referred to in subsection (3.5) as the "subject corporation");

(d)  the shares described in paragraph (c) would, if they were held by the insider, cause the private foundation to have a divestment obligation percentage for the taxation year; and

(e)  at the particular time, the insider holds the interest described in subparagraph (b)(i), or the trust holds the property described in subparagraph (b)(ii), as the case may be.

Rules applicablee

  (3.4)  For the purpose of subsections (3.3) and (3.5),

(a)  interests (or, for civil law, rights), other than shares, of a trust in a corporation that entitle the trust to a right described in paragraph 251(5)(b) in respect of a class of the capital stock of the corporation, are deemed to be converted into shares of that class in the manner described by paragraph (3.2)(a); and

(b)  if the amount of income or capital of the trust that a person may receive as a beneficiary under the trust depends on the exercise by any person of, or the failure by any person to exercise, a discretionary power, that person is deemed to have fully exercised, or to have failed to exercise, the power, as the case may be.

Avoidance of divestiture

  (3.5)  If this subsection applies to a private foundation at a particular time in respect of an interest of an insider of the private foundation in a trust, for the purposes of applying this section, subsection 149.1(1) and section 149.2,

(a)  the insider is deemed to hold at the particular time, in addition to any shares of the capital stock of the subject corporation that it holds otherwise than because of this subsection, the number of shares, of the class of shares referred to in paragraph (3.3)(c), determined by the formula

A × B / C

where

A is the number of shares of that class that are held, directly or indirectly, by the trust at the particular time,

B is the total fair market value of all interests held by the insider in the trust at the particular time, and

C is the total fair market value of all property held by the trust at the particular time;

(b)  each of those shares is deemed to be a share that is issued by the corporation and outstanding and to continue to be held by the holder until such time as the holder no longer holds the interest or right; and

(c)  each of those shares is deemed to have a fair market value, at the particular time, equal to the fair market value, at the particular time, of a share of the class issued by the corporation, determined without reference to this subsection.

  (3)  Subsections (1) and (2) apply to taxation years, of private foundations, that begin on or after February 26, 2008.

  36.  (1)  Subparagraph 190.11(b)(ii) of the Act is repealed.

  (2)  Subsection (1) applies to taxation years that begin on or after October 1, 2006.

  37.  (1)  Subparagraph 190.13(c)(iv) of the Act is repealed.

  (2)  Subsection (1) applies to taxation years that begin on or after October 1, 2006.

  38.  (1)  The definition "SIFT partnership" in subsection 197(1) of the Act is amended by replacing the portion before paragraph (a) with the following:

"SIFT partnership"
« société de personnes intermédiaire de placement déterminée »

"SIFT partnership", being a specified investment flow-through partnership, for any taxation year, means a partnership (other than an "excluded subsidiary entity" for the taxation year as defined in subsection 122.1(1)) that meets the following conditions at any time during the taxation year:

  (2)  Subsection (1) is deemed to have come into force on October 31, 2006.

  39.  (1)  Paragraph (c.1) of the definition "qualified investment" in section 204 of the Act is replaced by the following:

(c.1)  debt obligations that meet the following criteria, namely,

(i)  any of

(A)  the debt obligations had, at the time of acquisition by the trust, an investment grade rating with a prescribed credit rating agency,

(B)  the debt obligations have an investment grade rating with a prescribed credit rating agency, or

(C)  the debt obligations were acquired by the trust in exchange for debt obligations that satisfied the condition in clause (A) and as part of a proposal to, or an arrangement with, the creditors of the issuer of the debt obligations that has been approved by a court under the Bankruptcy and Insolvency Act or the Companies’ Creditors Arrangement Act, and

(ii)  either

(A)  the debt obligations were issued as part of a single issue of debt of at least $25 million, or

(B)  in the case of debt obligations that are issued on a continuous basis under a debt issuance program, the issuer of the debt obligations had issued and outstanding debt under the program of at least $25 million,

  (2)  Subsection (1) applies in determining whether a property is, at any time after March 18, 2007, a qualified investment.

  40.  (1)  The definition "restricted property" in subsection 207.01(1) of the Act is repealed.

  (2)  Paragraph (a) of the definition "advantage" in subsection 207.01(1) of the Act is amended by striking out "and" at the end of subparagraph (i) and by adding the following after subparagraph (ii):

(iii)  a distribution under the TFSA;

  (3)  Paragraph (b) of the definition "advantage" in subsection 207.01(1) of the Act is replaced by the following:

(b)  an increase in the total fair market value of the property held in connection with the TFSA if it is reasonable to consider, having regard to all the circumstances, that the increase is attributable, directly or indirectly, to

(i)  a transaction or event or a series of transactions or events that

(A)  would not have occurred in an open market in which parties deal with each other at arm’s length and act prudently, knowledgeably and willingly, and

(B)  had as one of its main purposes to enable a person or a partnership to benefit from the exemption from tax under Part I of any amount in respect of the TFSA, or

(ii)   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 who does not deal at arm’s length with, the holder of the TFSA, 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 property held in connection with the TFSA) held by a person who is, or who does not deal at arm’s length with, the holder of the TFSA; and

(c)  a prescribed benefit.

  (4)  The description of E in the definition "excess TFSA amount" in subsection 207.01(1) of the Act is replaced by the following:

E is the total of all amounts each of which is the qualifying portion of a distribution made in the calendar year and at or before the particular time under a TFSA of which the individual was the holder at the time of the distribution and, for this purpose, the qualifying portion of a distribution is

(a)  nil, if the distribution is a qualifying transfer or a prescribed distribution; and

(b)  in any other case, the lesser of

(i)  the amount of the distribution, and

(ii)  the amount that would be the individual’s excess TFSA amount at the time of the distribution if the amount of the distribution were nil.

  (5)  The portion of the definition "prohibited investment" in subsection 207.01(1) of the Act before paragraph (a) is replaced by the following:

"prohibited investment"
« placement interdit »

"prohibited investment", at any time, for a trust governed by a TFSA means property (other than prescribed excluded property) that is at that time

  (6)  Paragraph (d) of the definition "prohibited investment" in subsection 207.01(1) of the Act is replaced by the following:

(d)  prescribed property.

  (7)  Subsection 207.01(1) of the Act is amended by adding the following in alphabetical order:

"exempt contribution"
« cotisation exclue »

"exempt contribution" means a contribution made in a calendar year under a TFSA by the survivor of an individual if

(a)  the contribution is made during the period (in this definition referred to as the "rollover period") that begins when the individual dies and that ends at the end of the first calendar year that begins after the individual dies (or at any later time that is acceptable to the Minister);

(b)  a payment (in this definition referred to as the "survivor payment") was made to the survivor during the rollover period, as a consequence of the individual’s death, directly or indirectly out of or under an arrangement that ceased, because of the individual’s death, to be a TFSA;

(c)  the survivor designates, in prescribed form filed in prescribed manner within 30 days after the day on which the contribution is made, the contribution in relation to the survivor payment; and

(d)  the amount of the contribution does not exceed the least of

(i)  the amount, if any, by which

(A)  the amount of the survivor payment

exceeds

(B)  the total of all other contributions designated by the survivor in relation to the survivor payment,

(ii)  the amount, if any, by which

(A)  the total proceeds of disposition that would, if section 146.2 were read without reference to subsection 146.2(9), be determined in respect of the arrangement under paragraph 146.2(8)(a), (10)(a) or (11)(a), as the case may be,

exceeds

(B)  the total of all other exempt contributions in respect of the arrangement made by the survivor at or before the time of the contribution, and

(iii)  if the individual had, immediately before the individual’s death, an excess TFSA amount or if payments described in paragraph (b) are made to more than one survivor of the individual, nil or the greater amount, if any, allowed by the Minister in respect of the contribution.

  (8)  Subsection 207.01(2) of the Act is repealed.

  (9)  The portion of subsection 207.01(3) of the Act before paragraph (a) is replaced by the following:

Survivor as successor holder

  (3)  If an individual’s survivor becomes the holder of a TFSA as a consequence of the individual’s death and, immediately before the individual’s death, the individual had an excess TFSA amount, the survivor is deemed (other than for the purposes of the definition "exempt contribution") to have made, at the beginning of the month following the individual’s death, a contribution under a TFSA equal to the amount, if any, by which

  (10)  Subsections (1) to (9) apply to the 2009 and subsequent taxation years.

  41.  (1)  Subsection 207.04(3) of the Act is replaced by the following:

Where both prohibited and non-qualified investment

  (3)  For the purposes of this section and subsection 146.2(6), if a trust governed by a TFSA holds property at any time that is, for the trust, both a prohibited investment and a non-qualified investment, the property is deemed at that time not to be a non-qualified investment, but remains a prohibited investment, for the trust.

  (2)  Paragraph 207.04(7)(a) of the Act is replaced by the following:

(a)  the Act were read without reference to paragraph 82(1)(b), section 121 and subsection 146.2(6); and

  (3)  Subsections (1) and (2) apply to the 2009 and subsequent taxation years.

  42.  (1)  The portion of subsection 207.06(2) of the Act before paragraph (a) is replaced by the following:

Waiver of tax payable

  (2)  If a person would otherwise be liable to pay a tax under this Part because of subsection 207.04(1) or section 207.05, the Minister may waive or cancel all or part of the liability where the Minister considers it just and equitable to do so having regard to all the circumstances, including

  (2)  Subsection (1) applies to the 2009 and subsequent taxation years.

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

(a)  as a registered retirement savings plan, or

  (2)  Subsection (1) applies to the 2009 and subsequent taxation years.

  44.  (1)  Paragraph 212(1)(p) of the Act is replaced by the following:

Former TFSA

(p)  an amount that would, if the non-resident person had been resident in Canada at the time at which the amount was paid, be required by paragraph 12(1)(z.5) to be included in computing the non-resident person’s income for the taxation year that includes that time;

  (2)  Subsection (1) applies to the 2009 and subsequent taxation years.

  45.  (1)  The portion of subsection 241(1) of the Act before paragraph (a) is replaced by the following:

Provision of information

  241.  (1)  Except as authorized by this section, no official or other representative of a government entity shall

  (2)  Subsection 241(2) of the Act is replaced by the following:

Idem

  (2)  Notwithstanding any other Act of Parliament or other law, no official or other representative of a government entity shall be required, in connection with any legal proceedings, to give or produce evidence relating to any taxpayer information.

  (3)  Paragraph 241(4)(l) of the Act is replaced by the following:

(l)  subject to subsection (9.2), provide to a representative of a government entity the business number of, the name of (including any trade name or other name used by), and any contact information, corporate information and registration information in respect of, the holder of a business number (other than an excluded individual), if the information is provided solely for the purposes of the administration or enforcement of

(i)  an Act of Parliament or of a legislature of a province, or

(ii)  a by-law of a municipality in Canada or a law of an aboriginal government;

  (4)  The portion of subsection 241(5) of the Act before paragraph (a) is replaced by the following:

Disclosure to taxpayer or on consent

  (5)  An official or other representative of a government entity may provide taxpayer information relating to a taxpayer

  (5)  The portion of subsection 241(6) of the Act before paragraph (a) is replaced by the following:

Appeal from order or direction

  (6)  An order or direction that is made in the course of or in connection with any legal proceedings and that requires an official, other representative of a government entity or authorized person to give or produce evidence relating to any taxpayer information may, by notice served on all interested parties, be appealed forthwith by the Minister or by the person against whom the order or direction is made to

  (6)  Section 241 of the Act is amended by adding the following after subsection (9.1):

Restrictions on information sharing

  (9.2)  No information may be provided to a representative of a government entity under paragraph (4)(l) in connection with a program, activity or service provided or undertaken by the government entity unless the government entity uses the business number as an identifier in connection with the program, activity or service.

Public disclosure

  (9.3)  The Minister may, in connection with a program, activity or service provided or undertaken by the Minister, make available to the public the business number of, and the name of (including any trade name or other name used by), the holder of a business number (other than an excluded individual).

Public disclosure by representative of government entity

  (9.4)  A representative of a government entity may, in connection with a program, activity or service provided or undertaken by the government entity, make available to the public the business number of, and the name of (including any trade name or other name used by), the holder of a business number (other than an excluded individual), if

(a)  a representative of the government entity was provided with that information pursuant to paragraph 4(l); and

(b)  the government entity uses the business number as an identifier in connection with the program, activity or service.

  (7)  The portion of the definition "taxpayer information" in subsection 241(10) of the Act that is after paragraph (b) is replaced by the following:

but does not include information that does not directly or indirectly reveal the identity of the taxpayer to whom it relates and, for the purposes of applying subsections (2), (5) and (6) to a representative of a government entity that is not an official, taxpayer information includes only the information referred to in paragraph 241(4)(l);

  (8)  Subsection 241(10) of the Act is amended by adding the following in alphabetical order:

"aboriginal government"
« gouvernement autochtone »

"aboriginal government" means an aboriginal government as defined in subsection 2(1) of the Federal-Provincial Fiscal Arrangements Act;

"contact information"
« coordonnées »

"contact information", in respect of a holder of a business number, means the name, address, telephone number, facsimile number and preferred language of communication of the holder, or similar information as specified by the Minister in respect of the holder, and includes such information in respect of one or more

(a)  trustees of the holder, if the holder is a trust;

(b)  members of the holder, if the holder is a partnership;

(c)  officers of the holder, if the holder is a corporation; or

(d)  officers or members of the holder, if the holder is not described by any of paragraphs (a) to (c);

"corporate information"
« renseignements d’entreprise »

"corporate information", in respect of a holder of a business number that is a corporation, means the name (including the number assigned by the incorporating authority), date of incorporation, jurisdiction of incorporation and any information on the dissolution, reorganization, amalgamation, winding-up or revival of the corporation;

"excluded individual"
« particulier exclu »

"excluded individual" means an individual who is a holder of a business number solely because the individual is required under this Act to deduct or withhold an amount from an amount paid or credited or deemed to be paid or credited;

"government entity"
« entité gouvernementale »

"government entity" means

(a)  a department or agency of the Government of Canada or of a province;

(b)  a municipality in Canada;

(c)  an aboriginal government;

(d)  a corporation all of the shares (except directors’ qualifying shares) of the capital stock of which are owned by one or more persons each of which is

(i)  Her Majesty in right of Canada,

(ii)  Her Majesty in right of a province,

(iii)  a municipality in Canada, or

(iv)  a corporation described in this paragraph; or

(e)  a board or commission, established by Her Majesty in right of Canada or Her Majesty in right of a province, that performs an administrative or regulatory function of government, or by one or more municipalities in Canada, that performs an administrative or regulatory function of a municipality.

"registration information"
« renseignements relatifs à l’inscription »

"registration information", in respect of a holder of a business number, means

(a)  any information pertaining to the legal form of the holder,

(b)  the type of activities carried on or proposed to be carried on by the holder,

(c)  each date on which

(i)  the business number was issued to the holder,

(ii)  the holder began activities,

(iii)  the holder ceased or resumed activities, or

(iv)  the business number assigned to the holder was changed, and

(d)  the reasons for the cessation, resumption or change referred to in subparagraph (c)(iii) or (iv);

"representative"
« représentant »

"representative" of a government entity means a person who is employed in the service of, who occupies a position of responsibility in the service of, or who is engaged by or on behalf of, a government entity, and includes, for the purposes of subsections 241(1), (2), (5) and (6), a person who was formerly so employed, who formerly occupied such a position or who formerly was so engaged;

  46.  (1)  The definitions "personal trust" and "TFSA" in subsection 248(1) of the Act are replaced by the following:

"personal trust"
« fiducie personelle »

"personal trust" means a trust (other than a trust that is, or was at any time after 1999, a unit trust) that is

(a)  a testamentary trust, or

(b)  an inter vivos trust, no beneficial interest in which was acquired for consideration payable directly or indirectly to

(i)  the trust, or

(ii)  any person or partnership that has made a contribution to the trust by way of transfer, assignment or other disposition of property;

"TFSA"
« compte d’épargne libre d’impôt »

"TFSA", being a tax-free savings account, has the meaning assigned by subsection 146.2(5);

  (2)  Paragraph (d) of the definition "Canadian real, immovable or resource property" in subsection 248(1) of the Act is replaced by the following:

(d)  a share of the capital stock of a corporation, an income or capital interest in a trust or an interest in a partnership (other than a taxable Canadian corporation, a SIFT trust or a SIFT partnership), if more than 50% of the fair market value of the share or interest is derived directly or indirectly from one or any combination of properties described in paragraphs (a) to (c), or

  (3)  Subsection 248(1) of the Act is amended by adding the following definition in alphabetical order:

"foreign currency debt"
« dette en monnaie étrangère »

"foreign currency debt" has the meaning assigned by subsection 111(8);

"SIFT trust wind-up event"
« fait lié à la conversion d’une EIPD-fiducie »

"SIFT trust wind-up event" means a distribution, by a trust of all of its property to a taxpayer, that meets the following conditions:

(a)  the distribution occurs before 2013,

(b)  there is a resulting disposition of all of the taxpayer’s interest as a beneficiary under the trust, and

(c)  the trust is

(i)  a SIFT wind-up entity, or

(ii)  a trust the only beneficiary of which is, throughout the period that begins on ANNOUNCEMENT DATE and that ends at the time of the distribution, another trust that is a SIFT wind-up entity;

"SIFT wind-up corporation"
« société de conversion d’EIPD »

"SIFT wind-up corporation", in respect of a SIFT wind-up entity, means at any time a public corporation shares of the capital stock of which were, before that time,

(a)   issued as consideration for a disposition to the corporation, as part of a series of transactions under which the corporation acquired all of the equity in the SIFT wind-up entity, of equity in the SIFT wind-up entity, or

(b)   distributed on a SIFT trust wind-up event to one or more taxpayers that are neither SIFT wind-up entities nor corporations that have issued shares as described by paragraph (a);

"SIFT wind-up entity"
« EIPD convertible »

"SIFT wind-up entity" means a trust or partnership that at any time in the period that began on October 31, 2006 and that ends on ANNOUNCEMENT DATE is

(a)  a SIFT trust (determined without reference to subsection 122.1(2)),

(b)  a SIFT partnership (determined without reference to subsection 197(8)), or

(c)  a real estate investment trust;

"SIFT wind-up entity equity"
« intérêt dans une EIPD convertible »

"SIFT wind-up entity equity", or equity in a SIFT wind-up entity, means

(a)  if the SIFT wind-up entity is a trust, a capital interest (determined without reference to subsection (25)) in the trust, and

(b)  if the SIFT wind-up entity is a partnership, an interest as a member of the partnership where, 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, to the extent of the interest, limited, but

(c)  if all of the interests, described in paragraph (a) or (b) as the case may be, in a SIFT wind-up entity are described by reference to units, the part of the interest represented by such a unit;

  (4)  Paragraph 248(3)(c) of the Act is replaced by the following:

(c)  an arrangement (other than an arrangement that is a trust determined without reference to this paragraph) entered into with a corporation that is licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada the business of offering to the public its services as trustee is deemed to be a trust and property subject to rights and obligations under the arrangement is, if the arrangement is deemed by this paragraph to be a trust, deemed to be held in trust and not otherwise, where the arrangement is

(i)  established by or under a written contract that is governed by the laws of the Province of Quebec,

(ii)  presented as a declaration of trust or provides that, for the purposes of this Act, it shall be considered to be a trust, and

(iii)  presented as an arrangement in respect of which the corporation is to take action for the arrangement to become a registered disability savings plan, a registered education savings plan, a registered retirement income fund, a registered retirement savings plan or a TFSA;

  (5)  Subsection 248(25.1) of the Act is replaced by the following:

Trust-to-trust transfers

  (25.1)  Where at any time a particular trust transfers property to another trust (other than a trust governed by a registered retirement savings plan or by a registered retirement income fund) in circumstances to which paragraph (f) of the definition "disposition" in subsection (1) applies, without affecting the personal liabilities under this Act of the trustees of either trust or the application of subsection 104(5.8) and paragraph 122(2)(f), the other trust is deemed to be after that time the same trust as, and a continuation of, the particular trust, and, for greater certainty, if the property was deemed to be taxable Canadian property of the particular trust by paragraph 51(1)(f), 85(1)(i), 85.1(1)(a) or (8)(c), subsection 85.1(5) or 87(4) or (5) or paragraph 97(2)(c), 107(2)(d.1) or (3.1)(d), the property is deemed to be taxable Canadian property of the other trust.

  (6)  The definition "personal trust" in subsection 248(1) of the Act, as enacted by subsection (1), applies after ANNOUNCEMENT DATE.

  (7)  The definition "TFSA" in subsection 248(1) of the Act, as enacted by subsection (1), applies to the 2009 and subsequent taxation years.

  (8)  Subsection (2) is deemed to have come into force on October 31, 2006.

  (9)  The definition "foreign currency debt" in subsection 248(1) of the Act, as enacted by subsection (3), applies after 2005.

  (10)  The definitions "SIFT trust wind-up event", "SIFT wind-up corporation", "SIFT wind-up entity" and "SIFT wind-up entity equity" in subsection 248(1) of the Act, as enacted by subsection (3), apply after December 19, 2007.

  (11)  Subsection (4) applies to taxation years that begin after October 30, 2003.

  (12)  Subsection (5) applies after December 19, 2007.

  47.  (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), 132(6)(b) and 146.1(2.1)(c), subsection 146.2(6), paragraphs 146.4(5)(b) and 149(1)(o.2), the definition "private holding corporation" in subsection 191(1) and regulations made for the purposes of paragraphs 149(1)(o.3) and (o.4), if a trust or corporation holds an interest as a member of a partnership and, by operation of any law governing the arrangement in respect of the partnership, the liability of the member as a member of the partnership is limited, the member shall not, solely because of its acquisition and holding of that interest, be considered to carry on any business or other activity of the partnership.

  (2)  Subsection (1) applies to the 2009 and subsequent taxation years.

  48.  (1)  Subsection 256(7) of the Act is amended by adding the following after paragraph (c):

(c.1)  if a particular trust is the only beneficiary of another trust, the particular trust is described in paragraph (c) of the definition "SIFT trust wind-up event", the particular trust would, in the absence of this paragraph, acquire control of a corporation solely because of a SIFT trust wind-up event that is a distribution of shares of the capital stock of the corporation by the other trust, and the other trust controlled the corporation immediately before the distribution, the particular trust is deemed not to acquire control of the corporation because of the distribution;

  (2)  Subsection (1) applies after ANNOUNCEMENT DATE.

  49.  (1)  The portion of subsection 259(1) of the Act before paragraph (a) is replaced by the following:

Proportional holdings in trust property

  259.  (1)  For the purposes of subsections 146(6), (10) and (10.1), 146.1(2.1), 146.2(6) and 146.3(7), (8) and (9) and Parts X, X.2 and XI to XI.1, if at any time a taxpayer that is a registered investment or that is described in any of paragraphs 149(1)(r), (s), (u) to (u.2) or (x) acquires, holds or disposes of a particular unit in a qualified trust and the qualified trust elects for any period that includes that time to have this subsection apply,

  (2)  Subsection (1) applies to the 2009 and subsequent taxation years.

Budget Implementation Act, 2008 

  50.  (1)  The description of B in the formula in subsection 19(5) of the Budget Implementation Act, 2008 is replaced by the following:

B is the expenditure limit of the corporation for the taxation year determined in accordance with the formula in subsection 127(10.2), as that subsection would apply to a taxation year that ended on February 26, 2008;

Income Tax Regulations 

  51.  (1)  Paragraph 202(2)(h) of the Income Tax Regulations is replaced by the following:

(h)  a payment to which paragraph 212(1)(p) of the Act applies,

  (2)  Subsection (1) applies to the 2009 and subsequent taxation years.

  52.  (1)  Subsection 204(3) of the Regulations is amended by striking out "or" at the end of paragraph (d.1), by adding "or" at the end of paragraph (e) and by adding the following after paragraph (e):

(f)  governed by a TFSA or by an arrangement that is deemed by paragraph 146.2(9)(a) of the Act to be a TFSA.

  (2)  Subsection (1) applies to the 2009 and subsequent taxation years.

  53.  (1)  Subsection 209(1) of the Regulations is replaced by the following:

  (1)  A person who is required by any of sections 200, 201, 202, 204, 208, 212, 214, 215, 217, 218, 226, 227, 228, 229, 230, 232, 233 or 234 or subsection 223(2) to make an information return shall forward to each taxpayer to whom the return relates two copies of the portion of the return that relates to that taxpayer.

  (2)  Subsection (1) applies to the 2009 and subsequent taxation years.

  54.  (1)  Subsection 221(2) of the Regulations is replaced by the following:

  (2)  Where in any taxation year a reporting person (other than a registered investment) claims that a share of its capital stock issued by it, or an interest as a beneficiary under it, is a qualified investment under section 146, 146.1, 146.3, 204, 205 or 207.01 of the Act, the reporting person shall, in respect of the year and within 90 days after the end of the year, make an information return in prescribed form.

  (2)  Subsection (1) applies to the 2009 and subsequent taxation years.

  55.  (1)  Section 223 of the Regulations is replaced by the following:

TFSAs

  223.   (1)  An issuer of a TFSA shall make an information return for each calendar year in prescribed form in respect of the TFSA.

  (2)  An issuer of a TFSA who makes a payment of an amount that is required because of paragraph 146.2(9)(b) of the Act to be included in computing the income of a taxpayer for a taxation year shall make an information return in prescribed form.

  (3)  An issuer of a TFSA that governs a trust shall notify the holder of the TFSA in prescribed form and manner before March of a calendar year if, at any time during the preceding calendar year,

(a)  the trust acquires or disposes of property that is a non-qualified investment for the trust; or

(b)  property held by the trust becomes or ceases to be a non-qualified investment for the trust.

  (2)  Subsection (1) applies to the 2009 and subsequent taxation years.

  56.  (1)  Paragraph 304(1)(a) of the Regulations is replaced by the following:

(a)  an annuity contract that is, or is issued pursuant to, an arrangement described in any of paragraphs 148(1)(a) to (b.2) or (d) of the Act; and

  (2)  Subsection (1) applies to annuity contracts issued after 2008.

   57.  (1)  Sections 414 and 415 of the Regulations are replaced by the following:

Definitions

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

"general corporate income tax rate"
« taux général d’imposition du revenu des sociétés »

"general corporate income tax rate", in a province for a taxation year, means

(a)  for Quebec, 0%; and

(b)  for each other province, the highest percentage rate of tax imposed under the laws of the province on the taxable income of a public corporation earned in the taxation year in the province.

"province"
« province »

"province" includes the Newfoundland offshore area and the Nova Scotia offshore area.

"taxable SIFT distributions"
« montant des distributions imposables »

"taxable SIFT distributions", for a taxation year, means

(a)  in the case of a SIFT trust, its non-deductible distributions amount for the taxation year; and

(b)  in the case of a SIFT partnership, its taxable non-portfolio earnings for the taxation year.

  (2)  In determining the amount of a SIFT trust’s or SIFT partnership’s taxable SIFT distributions for a taxation year earned in a province

(a)  except as provided in paragraph (b), this Part applies in respect of the SIFT trust or SIFT partnership as though

(i)  each reference to "corporation" (other than in the expression "subsidiary controlled corporation") were read as a reference to "SIFT trust" or "SIFT partnership" as the case may be,

(ii)  each reference to "taxable income" were read as a reference to "taxable SIFT distributions", and

(iii)  "subsidiary controlled corporation" in respect of a SIFT trust or a SIFT partnership meant a corporation more than 50% of the issued share capital of which (having full voting rights under all circumstances) belongs to the SIFT trust or SIFT partnership; and

(b)  subsection 400(1), section 401, subsections 402(1) and (2), and sections 403 to 413 do not apply.

  (3)  In applying the definition "provincial SIFT tax rate" in subsection 248(1) of the Act in respect of a SIFT trust or SIFT partnership for a taxation year, the prescribed amount determined in respect of the SIFT trust or SIFT partnership for the taxation year is

(a)  if the SIFT trust or SIFT partnership has no permanent establishment in a province in the taxation year, 0.10;

(b)  if the SIFT trust or SIFT partnership has a permanent establishment in a province in the taxation year and has no permanent establishment outside that province in the taxation year, the decimal fraction equivalent of the general corporate income tax rate in the province for the taxation year; and

(c)  if the SIFT trust or SIFT partnership has a permanent establishment in the taxation year in a province, and has a permanent establishment outside that province in the taxation year, the amount, expressed as a decimal fraction, determined by the formula

A + B

where

A is the total of all amounts, if any, each of which is in respect of a province in which the SIFT trust or SIFT partnership has a permanent establishment in the taxation year and is determined by the formula

C/D × E

where

C is its taxable SIFT distributions for the taxation year earned in the province,

D is its total taxable SIFT distributions for the taxation year, and

E  is the decimal fraction equivalent of the general corporate income tax rate in the province for the taxation year, and

B is the amount determined by the formula

(1 - F/D) × 0.1

where

F is the total of all amounts each of which is an amount determined under the description of C in respect of a province in which the SIFT trust or SIFT partnership has a permanent establishment in the taxation year.

  (2)  Subsection (1) applies to the 2007 and subsequent taxation years.

  58.  (1)  The portion of subsection 1401(1) of the Regulations before subparagraph (c)(i) is replaced by the following:

  1401.  (1)  For the purposes of subsection 211.1(3) of the Act and section 307 of the Regulations, the amounts determined under this subsection are,

(a)  in respect of deposit administration fund policies, the aggregate of the insurer’s liabilities under those policies calculated in the manner required for the purposes of the insurer’s annual report to the relevant authority for the year or, where the insurer was throughout the year subject to the supervision of the relevant authority but was not required to file an annual report with the relevant authority for the year, in its financial statements for the year;

(b)  in respect of a group term life insurance policy that provides coverage for a period not exceeding 12 months, the unearned portion of the premium paid by the policyholder for the policy at the end of the year determined by apportioning the premium paid by the policyholder equally over the period to which that premium pertains;

(c)  in respect of a life insurance policy, other than a policy referred to in paragraph (a) or (b), the greater of

  (2)  The portion of paragraph 1401(1)(c.1) of the Regulations before subparagraph (i) is replaced by the following:

(c.1)  in respect of a group life insurance policy, the amount (other than an amount in respect of which a deduction may be claimed by the insurer pursuant to subsection 140(1) of the Act because of subparagraph 138(3)(a)(v) of the Act in computing its income for the year) in respect of a dividend, refund of premiums or refund of premium deposits provided for under the terms of the policy that will be used by the insurer to reduce or eliminate a future adverse claims experience under the policy or that will be paid or unconditionally credited to the policyholder by the insurer or applied in discharge, in whole or in part, of a liability of the policyholder to pay premiums to the insurer, which is the least of

  (3)  The portion of paragraph 1401(1)(d) of the Regulations before subparagraph (i) is replaced by the following:

(d)  in respect of a policy, other than a policy referred to in paragraph (a), in respect of a benefit, risk or guarantee that is

  (4)  The portion of paragraph 1401(1)(d) of the Regulations after subparagraph (ix) and before subparagraph (x) is replaced by the following:

equal to the lesser of

  (5)  Paragraphs 1401(1)(d.1) to (e) of the Regulations are repealed.

  (6)  Subsections 1401(1.1), (3) and (4) of the Regulations are repealed.

  (7)  Subsections (1) to (6) apply to taxation years that begin on or after October 1, 2006.

  59.  (1)  The headings before section 1404 and section 1404 of the Regulations are replaced by the following:

Division 4
Life Insurance Policy Reserves

  1404.  (1)  For the purpose of subparagraph 138(3)(a)(i) of the Act, there may be deducted, in computing a life insurer’s income from carrying on its life insurance business in Canada for a taxation year in respect of its life insurance policies in Canada, the amount the insurer claims, not exceeding

(a)  the amount determined under subsection (3) in respect of the insurer for the year, where that amount is greater than nil; and

(b)  nil, in any other case.

  (2)  For the purpose of paragraph 138(4)(b) of the Act, the amount prescribed in respect of an insurer for a taxation year, in respect of its life insurance policies in Canada, is

(a)  the absolute value of the amount determined under subsection (3) in respect of the insurer for the year, where that amount is less than nil; and

(b)  nil, in any other case.

  (3)  For the purposes of paragraphs (1)(a) and (2)(a), the amount determined under this subsection in respect of an insurer for a taxation year, in respect of its life insurance policies in Canada, is the amount, which may be positive or negative, determined by the formula

A + B + C + D - M

where

A is the amount (except to the extent the amount is determined in respect of a claim, premium, dividend or refund in respect of which an amount is included in determining the value of B, C or D), in respect of the insurer’s life insurance policies in Canada, equal to the lesser of

(a)  the total of the reported reserves of the insurer at the end of the year in respect of those policies, and

(b)  the total of the policy liabilities of the insurer at the end of the year in respect of those policies;

B is the amount, in respect of the insurer’s life insurance policies in Canada under which there may be claims incurred before the end of the year that have not been reported to the insurer before the end of the year, equal to 95% of the lesser of

(a)  the total of the reported reserves of the insurer at the end of the year in respect of the possibility that there are such claims, and

(b)  the total of the policy liabilities of the insurer at the end of the year in respect of the possibility that there are such claims;

C is the total of all amounts each of which is the unearned portion at the end of the year of the premium paid by the policyholder for the policy, determined by apportioning the premium paid by the policyholder equally over the period to which that premium relates, where the policy is a group term life insurance policy that

(a)  provides coverage for a period that does not exceed 12 months, and

(b)  is a life insurance policy in Canada;

D is the total of all amounts (other than an amount deductible under subparagraph 138(3)(a)(v) of the Act) each of which is the amount, which is the least of P, Q and R, in respect of a dividend, refund of premiums or refund of premium deposits provided for under the terms of a group life insurance policy that is a life insurance policy in Canada that will be

(a)  used by the insurer to reduce or eliminate a future adverse claims experience under the policy,

(b)  paid or unconditionally credited to the policyholder by the insurer, or

(c)  applied in discharge, in whole or in part, of a liability of the policyholder to pay premiums to the insurer under the policy,

where

P is a reasonable amount as a reserve determined as at the end of the year in respect of the dividend, refund of premiums or refund of premium deposits provided for under the terms of the policy,

Q is 25% of the amount of the premium under the terms of the policy for the 12-month period ending

(a)  on the day the policy is terminated, if the policy is terminated in the year, and

(b)  at the end of the year, in any other case, and

R is the amount of the reported reserve of the insurer at the end of the year in respect of the dividend, refund of premiums or refund of premium deposits provided for under the terms of the policy; and

M is the total of all amounts determined in respect of a life insurance policy in Canada each of which is

(a)  an amount payable in respect of a policy loan under the policy, or

(b)  interest that has accrued to the insurer to the end of the year in respect of a policy loan under the policy.

  (2)  Subsection (1) applies to taxation years that begin on or after October 1, 2006.

  60.  (1)  The definition "life insurance policy in Canada" in subsection 1408(1) of the Regulations is replaced by the following:

"life insurance policy in Canada"
« police d’assurance-vie au Canada »

"life insurance policy in Canada" has the same meaning as defined in subsection 138(12) of the Act.

  (2)  Subsection 1408(1) of the Regulations is amended by adding the following in alphabetical order:

"life insurance policy"
« police d’assurance-vie »

"life insurance policy" has the same meaning as defined in subsection 138(12) of the Act.

  (3)  Subsections (1) and (2) apply to taxation years that begin after November 7, 2007.

  61.  (1)  Subsection 2400(1) of the Regulations is amended by adding the following in alphabetical order:

"base year"
« année de base »

"base year" of an insurer means the insurer’s taxation year that immediately precedes its transition year.

"transition year"
« année transitoire »

"transition year" of an insurer means the insurer’s first taxation year that begins after September 30, 2006.

  (2)  Section 2400 of the Regulations is amended by adding the following after subsection (7):

Transition year

  (8)  A computation that is required to be made under this Part in respect of an insurer’s base year and that is relevant to a computation (in this subsection referred to as the "transition year computation") that is required to be made under this Part in respect of the insurer’s transition year shall, for the purposes only of the transition year computation, be made using the same definitions, rules and methodologies that are used in the transition year computation.

  (3)  Subsections (1) and (2) apply to taxation years that begin on or after October 1, 2006.

  62.  (1)  The portion of subsection 4900(1) of the Regulations before paragraph (a) is replaced by the following:

  4900.  (1)  For the purposes of paragraph (d) of the definition "qualified investment" in subsection 146(1) of the Act, paragraph (e) of the definition "qualified investment" in subsection 146.1(1) of the Act, paragraph (c) of the definition "qualified investment" in subsection 146.3(1) of the Act, paragraph (h) of the definition "qualified investment" in section 204 of the Act, paragraph (d) of the definition "qualified investment" in subsection 205(1) of the Act and paragraph (c) of the definition "qualified investment" in subsection 207.01(1) of the Act, each of the following investments is prescribed as a qualified investment for a plan trust at a particular time if at that time it is

  (2)  Paragraph 4900(1)(i.3) of the Regulations is repealed.

  (3)  Subparagraph 4900(1)(j.2)(ii) of the Regulations is replaced by the following:

(ii)  the certificate has, at the time of acquisition by the plan trust, an investment grade rating with a credit rating agency referred to in subsection (2), and

  (4)  Paragraph 4900(1)(k) of the Regulations is repealed.

  (5)  Paragraph 4900(1)(l) of the Regulations is repealed.

  (6)  Paragraph 4900(1)(o) of the Regulations is repealed.

  (7)  Subsection 4900(1) of the Regulations is amended by adding the following after paragraph (o):

(p.1)  an American Depositary Receipt where the property represented by the receipt is listed on a designated stock exchange;

  (8)  Paragraph 4900(1)(s) of the Regulations is repealed.

  (9)  Subsection 4900(5) of the Regulations is replaced by the following:

  (5)  For the purposes of paragraph (e) of the definition "qualified investment" in subsection 146.1(1) of the Act, paragraph (d) of the definition "qualified investment" in subsection 205(1) of the Act and paragraph (c) of the definition "qualified investment" in subsection 207.01(1) of the Act, a property is prescribed as a qualified investment for a trust governed by a registered disability savings plan, a registered education savings plan or a TFSA at any time if at that time the property is an interest in a trust or a share of the capital stock of a corporation that was a registered investment for a trust governed by a registered retirement savings plan during the calendar year in which that time occurs or during the preceding year.

  (10)  Paragraph 4900(12)(a) of the Regulations is replaced by the following:

(a)  the property was a share of the capital stock of a specified small business corporation,

  (11)  Section 4900 of the Regulations is amended by adding the following after subsection (13):

  (14)  For the purposes of paragraph (c) of the definition "qualified investment" in subsection 207.01(1) of the Act, a property is prescribed as a qualified investment for a trust governed by a TFSA at any time if, at the time the property was acquired by the trust, the property

(a)  was

(i)  a share of the capital stock of a specified small business corporation,

(ii)  a share of the capital stock of a venture capital corporation described in any of sections 6700, 6700.1 or 6700.2, or

(iii)  a qualifying share in respect of a specified cooperative corporation and the TFSA; and

(b)  was not a prohibited investment (within the meaning assigned by subsection 207.01(1) of the Act) for the trust.

  (12)  Subsections (1) and (9) to (11) apply to the 2009 and subsequent taxation years.

  (13)  Subsections (2) to (6) and (8) apply to property acquired after this Act is assented to.

  (14)  Subsection (7) applies in determining whether a property is, at any time after 2005, a qualified investment, except that in applying paragraph 4900(1)(p.1) of the Regulations, as enacted by subsection (7), before December 14, 2007, the reference in that paragraph to "designated stock exchange" shall be read as a reference to "stock exchange referred to in section 3200 or 3201".

  63.  (1)  The definitions "connected person", "governing plan" and "qualifying share" in subsection 4901(2) of the Regulations are replaced by the following:

"connected person"
« personne rattachée »

"connected person" under a governing plan of a plan trust means a person who is an annuitant, a beneficiary, an employer or a subscriber under, or a holder of, the governing plan and any person who does not deal at arms’s length with that person;

"governing plan"
« régime d’encadrement »

"governing plan" means a deferred profit sharing plan or a revoked plan, a registered disability savings plan, a registered education savings plan, a registered retirement income fund, a registered retirement savings plan or a TFSA;

"qualifying share"
« part admissible »

"qualifying share" in respect of a specified cooperative corporation and a governing plan, means a share of the capital or capital stock of the corporation where

(a)  ownership of the share or a share identical to the share is not a condition of membership in the corporation, or

(b)  a connected person under the governing plan

(i)  has not received a payment from the corporation pursuant to an allocation in proportion to patronage in respect of consumer goods or services, and

(ii)  can reasonably be expected not to receive a payment, after the acquisition of the share by the plan trust, from the corporation pursuant to an allocation in proportion to patronage in respect of consumer goods or services;

  (2)  Subsection 4901(2) of the Regulations is amended by adding the following in alphabetical order:

"specified small business corporation"
« société déterminée exploitant une petite entreprise »

"specified small business corporation", at any time, means a corporation (other than a cooperative corporation) that would, at that time or at the end of the last taxation year of the corporation that ended before that time, be a small business corporation if the expression "Canadian-controlled private corporation" in the definition "small business corporation" in subsection 248(1) of the Act were read as "Canadian corporation (other than a corporation controlled at that time, directly or indirectly in any manner whatever, by one or more non-resident persons)";

  (3)  Subsections (1) and (2) apply to the 2009 and subsequent taxation years.

  64.  (1)  The Regulations are amended by adding the following after Part XLIX:

Part L
Tax-free Savings Accounts

Prohibited investment

  5000.  (1)  For the purpose of the definition "prohibited investment" in subsection 207.01(1) of the Act, property described in paragraph 4900(1)(j.1) is prescribed excluded property.

  (2)  For the purpose of paragraph (d) of the definition "prohibited investment" in subsection 207.01(1) of the Act, property that is a qualified investment for a trust governed by a TFSA solely because of subsection 4900(14) is prescribed property for the trust at any time if, at that time, it is not described in any of subparagraphs 4900(14)(a)(i) to (iii).

  (2)  Subsection (1) applies to the 2009 and subsequent taxation years.

  65.  (1)  The heading before section 5700 of Regulations is replaced by the following:

Part LVII
Medical Expense Tax Credit

  (2)  Subsection (1) is deemed to have come into force on February 27, 2008.

  66.  (1)  The Regulations are amended by adding the following after section 5700:

  5701.  For the purpose of subparagraph 118.2(2)(n)(ii) of the Act, a drug, medicament or other preparation or substance is prescribed if it

(a)  is manufactured, sold or represented for use in the diagnosis, treatment or prevention of a disease, disorder or abnormal physical state, or its symptoms, or in restoring, correcting or modifying an organic function;

(b)  is prescribed for a patient by a medical practitioner; and

(c)  may, in the province in which it is acquired, be lawfully acquired for use by the patient only with the intervention of a medical practitioner.

  (2)  Subsection (1) is deemed to have come into force on February 27, 2008.

  67.  (1)  Subsection 5907(11) of the Regulations is replaced by the following:

  (11)  For the purposes of this Part, a sovereign state or other jurisdiction is a "designated treaty country" for a taxation year of a foreign affiliate of a corporation if Canada has entered into a comprehensive agreement or convention for the elimination of double taxation on income, or a comprehensive tax information exchange agreement, in respect of that sovereign state or jurisdiction, that has entered into force and has effect for that taxation year, but any territory, possession, department, dependency or area of that sovereign state or jurisdiction to which that agreement or convention does not apply is not considered to be part of that sovereign state or jurisdiction for the purpose of determining whether it is a designated treaty country.

  (2)  Section 5907 of the Regulations is further amended by adding the following after subsection (11.1):

  (11.11) For the purpose of applying subsection (11) in respect of a foreign affiliate of a corporation, where a comprehensive tax information exchange agreement enters into force on a particular day, the agreement is deemed to enter into force and to come into effect on the first day of the foreign affiliate’s taxation year that includes the particular day.    

  (3)  Subsections (1) and (2) apply after 2007.

  68.  (1)  Paragraphs 7305.1(a) and (b) of the Regulations are replaced by the following:

(a)  if a taxpayer is employed in a taxation year by a particular person principally in selling or leasing automobiles and an automobile is made available in the year to the taxpayer or a person related to the taxpayer by the particular person or a person related to the particular person, 21 cents; and

(b)  in any other case, 24 cents.

  (2)  Subsection (1) applies to taxation years that end after 2007.

  69.  (1)  Paragraph 7306(a) of the Regulations is replaced by the following:

(a)  the product of 46 cents multiplied by the number of those kilometres;

  (2)  Subsection (1) applies to kilometres driven after 2007.

  70.  (1)  Subsections 9001(2) and 9002(1) to (3) of the Regulations are amended by replacing each reference in those subsections to "mark-to-market property" with a reference to "excluded property".

  (2)  Subsection (1) applies to taxation years that begin on or after October 1, 2006.

  71.  (1)  The Regulations are amended by adding the following immediately before section 9004:

  9002.1  For the purpose of paragraph (b) of the definition "excluded property" in subsection 142.2(1) of the Act, a prescribed payment card corporation share of a taxpayer at any time means a share of the capital stock of a particular corporation if, at that time,

(a)  the particular corporation is any one of the following

(i)  MasterCard International Incorporated,

(ii)  MasterCard Incorporated, or

(iii)  Visa Inc.; and

(b)  the share

(i)  is of a class of shares that is not listed on a stock exchange,

(ii)  is not convertible into or exchangeable for a share of the class of the capital stock of a corporation that is listed on a stock exchange, and

(iii)  was issued by the particular corporation to the taxpayer or to a person related to the taxpayer.

  9002.2  For the purpose of paragraph (c) of the definition "excluded property" in subsection 142.2(1) of the Act, a prescribed securities exchange investment of a taxpayer at any time means a share of the capital stock of a corporation if, at that time, the corporation is not a public corporation and is

(a)  The Toronto Stock Exchange Inc.,

(b)  TSX Inc.;

(c)  TSX Group Inc.;

(d)  Bourse de Montréal Inc.; or

(e)  Canadian Venture Exchange Inc.

  (2)  Section 9002.1 of the Regulations, as enacted by subsection (1), applies to taxation years that end after February 22, 1994, except that, for taxation years that begin before October 1, 2006, the portion of that section before paragraph (a), as enacted by subsection (1), is to be read as follows:

  9002.1  For the purpose of paragraph (d.1) of the definition "mark-to-market property" in subsection 142.2(1) of the Act, a prescribed payment card corporation share of a taxpayer at any time means a share of the capital stock of a particular corporation if, at that time,

  (3)  Section 9002.2 of the Regulations, as enacted by subsection (1), applies to taxation years that begin after 1998 and before 2008, except that, for taxation years that begin before October 1, 2006, the portion of that section before paragraph (a), as enacted by subsection (1), is to be read as follows:

  9002.2  For the purpose of paragraph (d.2) of the definition "mark-to-market property" in subsection 142.2(1) of the Act, a prescribed securities exchange investment of a taxpayer at any time means a share of the capital stock of a corporation if, at that time, the corporation is not a public corporation and is


Part 2
Amendments in Respect of Sales and Excise Taxes

Excise Act, 2001 

  72.  The portion of the definition "officer" in section 2 of the English version of the Excise Act, 2001 before paragraph (a) is replaced by the following:

"officer"
« préposé »

"officer" means, except in section 167, in the definition "contact information" in subsection 211(1) and in sections 226 and 296,

  73.  (1)  The portion of the definition "confidential information" in subsection 211(1) of the Act after paragraph (b) is replaced by the following:

It excludes information that does not directly or indirectly reveal the identity of the person to whom it relates and, for the purposes of applying subsections (3), (8) and (9) to a representative of a government entity that is not an official, it includes only the information referred to in paragraph 211(6)(j).

  (2)  Subsection 211(1) of the Act is amended by adding the following in alphabetical order:

"aboriginal government"
« gouvernement autochtone »

"aboriginal government" means an aboriginal government as defined in subsection 2(1) of the Federal-Provincial Fiscal Arrangements Act.

"contact information"
« coordonnées »

"contact information", in respect of a holder of a business number, means the name, address, telephone number, facsimile number and preferred language of communication of the holder, or similar information as specified by the Minister in respect of the holder, and includes such information in respect of one or more

(a)  trustees of the holder, if the holder is a trust;

(b)  members of the holder, if the holder is a partnership;

(c)  officers of the holder, if the holder is a corporation; or

(d)  officers or members of the holder, in any other case.

"corporate information"
« renseignements d’entreprise »

"corporate information", in respect of a holder of a business number that is a corporation, means the name (including the number assigned by the incorporating authority), date of incorporation, jurisdiction of incorporation and any information on the dissolution, reorganization, amalgamation, winding-up or revival of the corporation.

"government entity"
« entité gouvernementale »

"government entity" means

(a)  a department or agency of the Government of Canada or of a province;

(b)  a municipality;

(c)  an aboriginal government;

(d)  a corporation all of the shares (except directors’ qualifying shares) of the capital stock of which are owned by one or more persons each of which is

(i)  Her Majesty,

(ii)  Her Majesty in right of a province,

(iii)  a municipality, or

(iv)  a corporation described in this paragraph; or

(e)  a board or commission, established by Her Majesty or Her Majesty in right of a province, that performs an administrative or regulatory function of government, or by a municipality, that performs an administrative or regulatory function of a municipality.

"municipality"
« municipalité »

"municipality" means an incorporated city, town, village, metropolitan authority, township, district, county or rural municipality or other incorporated municipal body however designated.

"registration information"
« renseignements relatifs à l’inscription »

"registration information", in respect of a holder of a business number, means

(a)  any information pertaining to the legal form of the holder,

(b)  the type of activities carried on or proposed to be carried on by the holder,

(c)  each date on which

(i)  the business number was issued to the holder,

(ii)  the holder began activities,

(iii)  the holder ceased or resumed activities, or

(iv)  the business number assigned to the holder was changed, and

(d)  the reasons for the cessation, resumption or change referred to in subparagraph (c)(iii) or (iv).

"representative"
« représentant »

"representative" of a government entity means a person who is employed in the service of, who occupies a position of responsibility in the service of, or who is engaged by or on behalf of, a government entity, and includes, for the purposes of subsections 211(2), (3), (8) and (9), a person who was formerly so employed, who formerly occupied such a position or who formerly was so engaged.

  (3)  The portion of subsection 211(2) of the Act before paragraph (a) is replaced by the following:

Provision of information

  (2)  Except as authorized under this section, no official or other representative of a government entity shall knowingly

  (4)  Subsection 211(3) of the Act is replaced by the following:

Confidential information evidence not compellable

  (3)  Despite any other Act of Parliament or other law, no official or other representative of a government entity shall be required, in connection with any legal proceedings, to give or produce evidence relating to any confidential information.

  (5)  Paragraph 211(6)(j) of the Act is replaced by the following:

(j)  subject to subsection (6.1), provide to a representative of a government entity the business number of, the name of (including any trade name or other name used by), and any contact information, corporate information and registration information in respect of, the holder of a business number, if the information is provided solely for the purpose of the administration or enforcement of

(i)  an Act of Parliament or of a legislature of a province, or

(ii)  a by-law of a municipality or a law of an aboriginal government;

  (6)  Section 211 of the Act is amended by adding the following after subsection (6):

Restrictions on information sharing

  (6.1)  No information may be provided to a representative of a government entity under paragraph (6)(j) in connection with a program, activity or service provided or undertaken by the government entity unless the government entity uses the business number as an identifier in connection with the program, activity or service.

Public disclosure

  (6.2)  The Minister may, in connection with a program, activity or service provided or undertaken by the Minister, make available to the public the business number of, and the name of (including any trade name or other name used by), the holder of a business number.

Public disclosure by representative of government entity

  (6.3)  A representative of a government entity may, in connection with a program, activity or service provided or undertaken by the government entity, make available to the public the business number of, and the name of (including any trade name or other name used by), the holder of a business number, if

(a)  a representative of the government entity was provided with that information pursuant to paragraph 6(j); and

(b)  the government entity uses the business number as an identifier in connection with the program, activity or service.

  (7)  The portion of subsection 211(8) of the Act before paragraph (a) is replaced by the following:

Disclosure to person or on consent

  (8)  An official or other representative of a government entity may provide confidential information relating to a person

  (8)  The portion of subsection 211(9) of the Act before paragraph (a) is replaced by the following:

Appeal from order or direction

  (9)  An order or direction that is made in the course of or in connection with any legal proceedings and that requires an official or other representative of a government entity to give or produce evidence relating to any confidential information may, by notice served on all interested parties, be appealed immediately by the Minister or by the person against whom it is made to

Excise Tax Act 

  74.  (1)  The portion of the definition "confidential information" in subsection 295(1) of the Excise Tax Act after paragraph (b) is replaced by the following:

but does not include information that does not directly or indirectly reveal the identity of the person to whom it relates and, for the purposes of applying subsections 295 (3), (6) and (7) to representative of a government entity who is not an official, includes only the information described in paragraph 295(5)(j);

  (2)  Subsection 295(1) of the Act is amended by adding the following in alphabetical order:

"aboriginal government"
« gouvernement autochtone »

"aboriginal government" means an aboriginal government as defined in subsection 2(1) of the Federal-Provincial Fiscal Arrangements Act;

"contact information"
« coordonnées »

"contact information", in respect of a holder of a business number, means the name, address, telephone number, facsimile number and preferred language of communication of the holder, or similar information as specified by the Minister in respect of the holder, and includes such information in respect of one or more

(a)  trustees of the holder, if the holder is a trust,

(b)  members of the holder, if the holder is a partnership,

(c)  officers of the holder, if the holder is a corporation, or

(d)  officers or members of the holder, in any other case;

"corporate information"
« renseignements d’entreprise »

"corporate information", in respect of a holder of a business number that is a corporation, means the name (including the number assigned by the incorporating authority), date of incorporation, jurisdiction of incorporation and any information on the dissolution, reorganization, amalgamation, winding-up or revival of the corporation;

"government entity"
« entité gouvernementale »

"government entity" means

(a)  a department or agency of the Government of Canada or of a province,

(b)  a municipality,

(c)  an aboriginal government,

(d)  a corporation all of the shares (except directors’ qualifying shares) of the capital stock of which are owned by one or more persons each of which is

(i)  Her Majesty in right of Canada,

(ii)  Her Majesty in right of a province,

(iii)  a municipality, or

(iv)  a corporation described in this paragraph, or

(e)  a board or commission, established by Her Majesty in right of Canada or Her Majesty in right of a province, that performs an administrative or regulatory function of government, or by a municipality, that performs an administrative or regulatory function of a municipality;

"municipality"
« municipalité »

"municipality" does not include a local authority determined by the Minister to be a municipality under paragraph (b) of the definition of "municipality" in section 123(1);

"registration information"
« renseignements relatifs à l’inscription »

"registration information", in respect of a holder of a business number, means

(a)  any information pertaining to the legal form of the holder,

(b)  the type of activities carried on or proposed to be carried on by the holder,

(c)  each date on which

(i)  the business number was issued to the holder,

(ii)  the holder began activities,

(iii)  the holder ceased or resumed activities, or

(iv)  the business number assigned to the holder was changed, and

(d)  the reasons for the cessation, resumption or change referred to in subparagraph (c)(iii) or (iv);

"representative"
« représentant »

"representative" of a government entity means a person who is employed in the service of, who occupies a position of responsibility in the service of, or who is engaged by or on behalf of, a government entity, and includes, for the purposes of subsection 295(2), (3), (6) and (7), a person who was formerly so employed, who formerly occupied such a position or who formerly was so engaged.

  (3)  The portion of subsection 295(2) of the Act before paragraph (a) is replaced by the following:

Provision of information

  (2)  Except as authorized under this section, no official or other representative of a government entity shall knowingly

  (4)  Subsection 295(3) of the Act is replaced by the following:

Idem

  (3)  Notwithstanding any other Act of Parliament or other law, no official or other representative of a government entity shall be required, in connection with any legal proceedings, to give or produce evidence relating to any confidential information.

  (5)  Subparagraph 295(5)(d)(i) of the Act is replaced by the following:

(i)  to an official of the Department of Finance solely for the purposes of

(A)  the formulation or evaluation of fiscal policy,

(B)  an administration agreement, as defined in subsection 2(1) of the Federal-Provincial Fiscal Arrangements Act, entered into with an aboriginal government, or

(C)  an administration agreement, as defined in subsection 2(1) of the First Nations Goods and Services Tax Act,

  (6)  Paragraph 295(5)(j) of the Act is replaced by the following:

(j)  subject to subsection (5.01), provide to a representative of a government entity the business number of, the name of (including any trade name or other name used by), and any contact information, corporate information and registration information in respect of, the holder of a business number, if the information is provided solely for the purpose of the administration or enforcement of

(i)  an Act of Parliament or of a legislature of a province, or

(ii)  a by-law of a municipality or a law of an aboriginal government;

  (7)  Section 295 of the Act is amended by adding the following after subsection (5):

Restrictions on information sharing

  (5.01)  No information may be provided to a representative of a government entity under paragraph (5)(j) in connection with a program, activity or service provided or undertaken by the government entity unless the government entity uses the business number as an identifier in connection with the program, activity or service.

Public disclosure

  (5.02)  The Minister may, in connection with a program, activity or service provided or undertaken by the Minister, make available to the public the business number of, and the name of (including any trade name or other name used by), the holder of a business number.

Public disclosure by representative of government entity

  (5.03)  A representative of a government entity may, in connection with a program, activity or service provided or undertaken by the government entity, make available to the public the business number of, and the name of (including any trade name or other name used by), the holder of a business number, if

(a)  a representative of the government entity was provided with that information pursuant to paragraph (5)(j); and

(b)  the government entity uses the business number as an identifier in connection with the program, activity or service.

  (8)  The portion of subsection 295(6) of the Act before paragraph (a) is replaced by the following:

Disclosure to taxpayer or on consent

  (6)  An official or other representative of a government entity may provide confidential information relating to a person

  (9)  The portion of subsection 295(7) of the Act before paragraph (a) is replaced by the following:

Appeal from order or direction

  (7)  An order or direction that is made in the course of or in connection with any legal proceedings and that requires an official or other representative of a government entity to give or produce evidence relating to any confidential information may, by notice served on all interested parties, be appealed forthwith by the Minister or by the person against whom the order or direction is made to