LEGISLATIVE PROPOSALS RELATING TO INCOME TAX

income tax act

1. (1) Subsection 11(1) of the Income Tax Act is replaced by the following:

Proprietor of business

11. (1) Subject to section 34.1, if an individual is a proprietor of a business, the individual's income from the business for a taxation year is deemed to be the individual's income from the business for the fiscal periods of the business that end in the year.

(2) Subsection (1) applies to taxation years that end after March 22, 2011.

2. (1) Subsection 13(18.1) of the Act is replaced by the following:

Ascertainment of certain property

(18.1) For the purpose of determining whether property meets the criteria set out in the Income Tax Regulations in respect of prescribed energy conservation property, the Technical Guide to Class 43.1 and 43.2 , as amended from time to time and published by the Department of Natural Resources, shall apply conclusively with respect to engineering and scientific matters.

(2) Subsection (1) comes into force or is deemed to have come into force on the day on which the Technical Guide to Class 43.1 and 43.2 is first published by the Department of Natural Resources.

3. Subparagraph 28(1)(a)(ii) of the English version of the Act is replaced by the following:

(ii) were in payment of or on account of an amount that would, if the income from the business were not computed in accordance with the cash method, be included in computing income from the business for that or any other year,

4. Subsections 34.1(4) to (7) of the Act are repealed.

5. (1) Subparagraph (iii) of the description of B in paragraph 34.2(5)(b) of the Act is replaced by the following:

(iii)  the amount, if any, by which the amount included in the corporation's income under subsection (12) for the year in respect of taxable capital gains of the partnership exceeds the amount deducted by the corporation under subsection (11) for the year in respect of taxable capital gains of the partnership , and

(2) Paragraph 34.2(11)(c) of the Act is replaced by the following:

(cis the amount determined by the formula

A – B
where A

is the corporation's income for the particular year computed before deducting any amount under this subsection in respect of the partnership or under sections 61.3 and 61.4, and

B

is the total of all amounts each of which is an amount deductible by the corporation for the year under section 112 or 113 in respect of a dividend received by the corporation on or after Announcement Date.

(3) The description of C in the read as text in paragraph 34.2(17)(b) of the Act is replaced by the following:

C

is nil ,

(4) Subsections (1) and (3) apply to taxation years that end after March 22, 2011.

(5) Subsection (2) applies to taxation years that end on or after Announcement Date.

6. (1) Section 36 of the Act is repealed.

(2) Subsection (1) applies in respect of expenditures incurred in taxation years that begin after Announcement Date.

7. (1) Subparagraph 50(1)(b)(i) of the Act is replaced by the following:

(i) the corporation has during the year become a bankrupt,

(2) Subsection (1) is deemed to have come into force on Announcement Date.

8. (1) Clause 53(1)(e)(i)(A) of the Act is replaced by the following:

(A) paragraphs 38(a.1) to (a.3) and the fractions set out in the formula in paragraph 14(1)(b) and in subsection 14(5), paragraph 38(a) and subsection 41(1),

(2) The portion of paragraph 53(1)(r) of the Act before the formula is replaced by the following:

(rwhere the time is before 2005, the property is an interest in, or a share of the capital stock of, a flow-through entity described in any of paragraphs (a) to (f) and (h) of the definition "flow-through entity" in subsection 39.1(1) and immediately after that time the taxpayer disposed of all the taxpayer's interests in, and shares of the capital stock of, the entity, the amount determined by the formula

(3) Section 53 of the Act is amended by adding the following after subsection (1.1):

Flow-through entity before 2005

(1.2) For the purposes of paragraph (1)(r), if the fair market value of all a taxpayer's interests in, and shares of the capital stock of, a flow-through entity is nil when the taxpayer disposes of those interests and shares, the fair market value of each such interest or share at that time is deemed to be $1.

(4) Subsection (1) applies in respect of gifts made after February 25, 2008.

(5) Subsections (2) and (3) apply to dispositions that occur after 2001.

9. (1) Clause 55(3)(a)(iii)(B) of the Act is replaced by the following:

(B) property (other than shares of the capital stock of the dividend recipient) more than 10% of the fair market value of which was, at any time during the series, derived from any combination of shares of the capital stock and debt of the dividend payer,

(2) Clause 55(3)(a)(iv)(B) of the Act is replaced by the following:

(B) property more than 10% of the fair market value of which was, at any time during the series, derived from any combination of shares of the capital stock and debt of the dividend recipient, and

(3) Subsection 55(3.01) of the Act is amended by striking out "and" at the end of paragraph (d) and by adding the following after paragraph (e):

(fa significant increase in the total direct interest in a corporation that would, but for this paragraph, be described in subparagraph (3)(a)(ii) is deemed not to be described in that subparagraph if the increase was the result of the issuance of shares of the capital stock of the corporation solely for money and the shares were redeemed, acquired or cancelled by the corporation before the dividend was received;

(ga disposition of property that would, but for this paragraph, be described in subparagraph (3)(a)(i), or a significant increase in the total direct interest in a corporation that would, but for this paragraph, be described in subparagraph (3)(a)(ii), is deemed not to be described in those subparagraphs if

(i) the dividend payer was related to the dividend recipient immediately before the dividend was received,

(ii) the dividend payer did not, as part of the series of transactions or events that includes the receipt of the dividend, cease to be related to the dividend recipient,

(iii) the disposition or increase occurred before the dividend was received,

(iv) the disposition or increase was the result of the disposition of shares to, or the acquisition of shares of, a particular corporation, and

(v) at the time the dividend was received, all the shares of the capital stock of the dividend recipient and the dividend payer were owned by the particular corporation, a corporation that controlled the particular corporation, a corporation controlled by the particular corporation or any combination of those corporations; and

(ha winding-up of a subsidiary wholly-owned corporation to which subsection 88(1) applies, or an amalgamation to which subsection 87(11) applies of a corporation with one or more subsidiary wholly-owned corporations, is deemed not to result in a significant increase in the total direct interest, or in the total of all direct interests, in the subsidiary or subsidiaries, as the case may be.

(4) The portion of paragraph 55(3.1)(a) of the Act before subparagraph (i) is replaced by the following:

(ain contemplation of and before a distribution (other than a distribution by a specified corporation) made in the course of the reorganization in which the dividend was received, property became property of the distributing corporation, a corporation controlled by it or a predecessor corporation of any such corporation otherwise than as a result of

(5) Clause 55(3.1)(c)(i)(A) of the Act is replaced by the following:

(A) as a result of a disposition

(I)  in the ordinary course of business, or

(II) before the distribution for consideration that consists only of money or indebtedness that is not convertible into other property, or of any combination thereof,

(6) Clause 55(3.1)(d)(i)(A) of the Act is replaced by the following:

(A) as a result of a disposition

(I) in the ordinary course of business, or

(II) before the distribution for consideration that consists only of money or indebtedness that is not convertible into other property, or any combination thereof,

(7) Subsections (1) and (2) apply in respect of dividends received on or after Announcement Date.

(8) Subsections (3) to (6) apply in respect of dividends received after 2003.

10. (1) Subsection 56(8) of the French version of the Act is replaced by the following:

Prestations du RPC/RRQ pour années antérieures

(8) Malgré les paragraphes (1) et (6), dans le cas oł une ou plusieurs sommes sont reçues par un particulier (sauf une fiducie) au cours d'une année d'imposition au titre ou en paiement intégral ou partiel d'une prestation prévue par le Régime de pensions du Canada ou par un régime provincial de pensions au sens de l'article 3 du Régime de pensions du Canada ou seraient incluses, en l'absence du présent paragraphe, dans le calcul de son revenu pour une année d'imposition en application du paragraphe (6) et qu 'une partie d'au moins 300 $ du total de ces sommes se rapporte à une ou plusieurs années d'imposition antérieures, le particulier n'a pas à inclure cette partie dans son revenu, s'il en fait le choix.

(2) Paragraph 56(8)(a) of the English version of the Act is replaced by the following:

(aone or more amounts

(i)  are received by an individual (other than a trust) in a taxation year as, on account of, in lieu of payment of or in satisfaction of, any benefit under the Canada Pension Plan or a provincial pension plan as defined in section 3 of the Canada Pension Plan , or

(ii) would be, but for this subsection, included in computing the income of an individual for a taxation year under subsection (6), and

(3) Subsections (1) and (2) apply to the 2006 and subsequent taxation years.

11. (1) Subparagraph 60(q)(i) of the Act is replaced by the following:

(i) the amount has been included in computing the income of the taxpayer for the year or a preceding taxation year as an amount described in subparagraph 56(1)(n)(i) or paragraph 56(1)(o) paid to the taxpayer by the payer,

(2) Subsection (1) is deemed to have come into force on March 1, 1994.

12. (1) Section 60.001 of the Act is repealed.

(2) Subsection (1) applies to orders made after this Act receives royal assent.

13. The portion of subsection 60.1(1) of the French version of the Act before paragraph (a) is replaced by the following:

Pension alimentaire

60.1 (1) Pour l'application de l'alinéa 60b) et du paragraphe 118(5), dans le cas oł une ordonnance ou un accord, ou une modification s'y rapportant, prévoit le paiement d'un montant par un contribuable à une personne ou à son profit, au profit d'enfants confiés à sa garde ou à la fois au profit de la personne et de ces enfants, le montant ou une partie de celui-ci est réputé :

14. Section 60.11 of the Act is repealed.

15. (1) The definition "Canadian renewable and conservation expense" in subsection 66.1(6) of the Act is replaced by the following:

"Canadian renewable and conservation expense"

« frais liés aux énergies renouvelables et à l'économie d'énergie au Canada »

"Canadian renewable and conservation expense" has the meaning assigned by regulation, and for the purpose of determining whether an outlay or expense in respect of a prescribed energy conservation property is a Canadian renewable and conservation expense, the Technical Guide to Canadian Renewable and Conservation Expenses (CRCE) , as amended from time to time and published by the Department of Natural Resources, shall apply conclusively with respect to engineering and scientific matters;

(2) Subsection (1) is deemed to have come into force on Announcement Date.

16. (1) Subparagraph 67.1(2)(e)(iii) of the Act is replaced by the following:

(iii) is paid or payable in respect of the taxpayer's duties performed at a work site in Canada that is

(A) outside any population centre , as defined by the last Census Dictionary published by Statistics Canada before the year, that has a population of at least 40,000 individuals as determined in the last census published by Statistics Canada before the year, and

(B) at least 30 kilometres from the nearest point on the boundary of the nearest such population centre ;

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

17. (1) Paragraph 87(2)(oo.1) of the Act is amended by striking out "and" at the end of subparagraph (ii), by adding "and" at the end of subparagraph (iii) and by adding the following after subparagraph (iii):

(iv) a qualifying income limit for the particular year equal to the total of all amounts each of which is a predecessor corporation's qualifying income limit for its taxation year that ended immediately before the amalgamation;

(2) Subsection (1) applies to amalgamations that occur after February 25, 2008.

18. (1) Subparagraph 88(1)(c.2)(i) of the Act is replaced by the following:

(i) "specified person" , at any time, means

(A)  the parent,

(B)  each person who would be related to the parent at that time if

(I)  this Act were read without reference to paragraph 251(5)(b), and

(II) each person who is the child of a deceased individual were related to each brother or sister of the individual and to each child of a deceased brother or sister of the individual, and

(C)  if the time is before the incorporation of the parent, each person who is described in clause (B) throughout the period that begins at the time the parent is incorporated and ends at the time that is immediately before the beginning of the winding-up,

(i.1)  a person described in clause (i)(B) or (C) is deemed not to be a specified person if it can reasonably be considered that one of the main purposes of one or more transactions or events is to cause the person to be a specified person so as to prevent a property that is distributed to the parent on the winding-up from being an ineligible property for the purposes of paragraph (c),

(2) Subparagraph 88(1)(c.2)(iii) of the Act is amended by striking out "and" at the end of clause (A) and by adding the following after clause (A):

(A.1) a corporation controlled by another corporation is, at any time, deemed not to own any shares of the capital stock of the other corporation if, at that time, the corporation does not have a direct or an indirect interest in any of the shares of the capital stock of the other corporation,

(A.2) the definition "specified shareholder" in subsection 248(1) is to be read without reference to its paragraph (a) in respect of any share of the capital stock of the subsidiary that the person would, but for this clause, be deemed to own solely because the person has a right described in paragraph 251(5)(b) to acquire shares of the capital stock of a corporation that

(I) is controlled by the subsidiary, and

(II) does not have a direct or an indirect interest in the subsidiary, and

(3) Paragraph 88(1)(c.2) of the Act is amended by striking out "and" at the end of subparagraph (ii), by adding "and" at the end of subparagraph (iii) and by adding the following after subparagraph (iii):

(iv) property that is distributed to the parent on the winding-up is deemed not to be acquired by a person if the person acquired the property before the acquisition of control referred to in clause (c)(vi)(A) and the property is not owned by the person at any time after that acquisition of control;

(4) Subparagraph 88(1)(c.3)(i) of the Act is replaced by the following:

(i) property (other than a specified property) owned by the person at any time after the acquisition of control referred to in clause (c)(vi)(A) more than 10% of the fair market value of which is, at that time, attributable to the particular property or properties, and

(5) Subparagraph 88(1)(c.4)(ii) of the Act is replaced by the following:

(ii) an indebtedness that was issued

(A)  by the parent as consideration for the acquisition of a share of the capital stock of the subsidiary by the parent, or

(B) for consideration that consists solely of money,

(6) Subparagraphs 88(1)(c.4)(v) and (vi) of the Act are replaced by the following:

(v) where the subsidiary was formed on the amalgamation of two or more predecessor corporations at least one of which was a subsidiary wholly-owned corporation of the parent,

(A) a share of the capital stock of the subsidiary that was issued on the amalgamation and that is, before the beginning of the winding-up,

(I) redeemed, acquired or cancelled by the subsidiary for consideration that consists solely of money, or

(II) exchanged for shares of the capital stock of the parent, or

(B) a share of the capital stock of the parent issued on the amalgamation in exchange for a share of the capital stock of a predecessor corporation, and

(vi) a share of the capital stock of a corporation issued to a person described in clause (c)(vi)(B) if all the shares of the capital stock of the subsidiary were acquired by the parent for consideration that consists solely of money;

(7) Paragraph 88(1)(c.4) of the Act, as amended by subsection (6), is amended by adding "and" at the end of subparagraph (iv), by striking out "and" at the end of subparagraph (v) and by repealing subparagraph (vi).

(8) Subsection 88(1) of the Act is amended by adding the following after paragraph (c.8):

(c.9for the purposes of paragraph (c.4), a reference to a share of the capital stock of a corporation includes a right to acquire a share of the capital stock of the corporation;

(9) Subparagraph 88(1)(d)(ii) of the Act is replaced by the following:

(ii) the amount designated in respect of any such capital property may not exceed the amount determined by the formula

A – (B + C)
where A

is the fair market value of the property at the time the parent last acquired control of the subsidiary,

B

is the greater of the cost amount to the subsidiary of the property at the time the parent last acquired control of the subsidiary and the cost amount to the subsidiary of the property immediately before the winding-up, and

C

is the prescribed amount, and

(10) Subparagraph 88(1)(e.9)(i) of the Act is amended by striking out "and" at the end of clause (A), by adding "and" at the end of clause (B) and by adding the following after clause (B):

(C) the parent's qualifying income limit for that last year is deemed to be the total of

(I) its qualifying income limit (determined before applying this paragraph to the winding-up) for that last year, and

(II) the total of the subsidiary's qualifying income limits (determined without reference to subparagraph (iii)) for its taxation years that ended in that preceding calendar year,

(11) Subparagraph 88(1)(e.9)(ii) of the Act is amended by striking out "and" at the end of clause (A) and by adding the following after clause (B):

(C) the parent's qualifying income limit for that preceding taxation year is deemed to be the total of

(I) its qualifying income limit (determined before applying this paragraph to the winding-up) for that preceding taxation year, and

(II) the total of the subsidiary's qualifying income limits (determined without reference to subparagraph (iii)) for the subsidiary's taxation years that end in the calendar year in which that preceding taxation year ended, and

(12) Subparagraph 88(1)(e.9)(iii) of the Act is replaced by the following:

(iii) where the parent and the subsidiary are associated with each other in the current year, the subsidiary's taxable income, the subsidiary's business limit and the subsidiary's qualifying income limit for each taxation year that ends after the first time that the parent receives an asset of the subsidiary on the winding-up are deemed to be nil;

(13) Subsections (1) to (3), (5), (6) and (8) apply to windings-up that begin, and amalgamations that occur, after 2001.

(14) Subsection (4) applies to windings-up that begin, and amalgamations that occur, on or after Announcement Date.

(15) Subsections (7) and (9) apply to windings-up that begin, and amalgamations that occur, on or after Announcement Date other than – if a taxable Canadian corporation (in this subsection referred to as the "parent corporation") has acquired control of another taxable Canadian corporation (in this subsection referred to as the "subsidiary corporation") – an amalgamation of the parent corporation and the subsidiary corporation that occurs, or a winding-up of the subsidiary corporation into the parent corporation that begins, before July 2013 if

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

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

(16) Subsections (10) to (12) apply to windings-up that begin after February 25, 2008.

19. (1) Subsection 96(1.6) of the Act is replaced by the following:

Members deemed carrying on business

(1.6) If a partnership carries on a business in Canada at any time, each taxpayer who is deemed by paragraph (1.1)(a) to be a member of the partnership at that time is deemed to carry on the business in Canada at that time for the purposes of subsection 2(3), sections 34.1 and 150 and (subject to subsection 34.2(18) ) section 34.2.

(2) Subsection (1) applies to taxation years that end after March 22, 2011.

20. Paragraph (b) of the description of A in the definition "farm loss" in subsection 111(8) of the Act is replaced by the following:

(bthe amount that would be the taxpayer's non-capital loss for the year if the amount determined for D in the definition "non-capital loss" in this subsection were nil , and

21. (1) Section 115 of the Act is amended by adding the following after subsection (2.3):

Non-resident employed as aircraft pilot

(3) For the purpose of applying subparagraph (1)(a)(i) to a non-resident person employed as an aircraft pilot, income of the non-resident person that is attributable to a flight (including a leg of a flight) and paid directly or indirectly by a person resident in Canada is attributable to duties performed in Canada in the following proportions:

(aall of the income attributable to the flight if the flight departs from a location in Canada and arrives at a location in Canada;

(bone-half of the income attributable to the flight if the flight departs from a location in Canada and arrives at a location outside Canada;

(cone-half of the income attributable to the flight if the flight departs from a location outside Canada and arrives at a location in Canada; and

(dnone of the income attributable to the flight if the flight departs from a location outside Canada and arrives at a location outside Canada.

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

22. (1) Subparagraph 118.5(3)(c)(iv) of the Act is replaced by the following:

(iv) the provision of financial assistance to students, except to the extent that, if this Act were read without reference to subsection 56(3), the amount of the assistance would be required to be included in computing the income, and not be deductible in computing the taxable income, of the students to whom the assistance is provided, or

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

23. Subsection 122.61(3) of the Act is replaced by the following:

Non-residents and part-year residents

(3) For the purposes of this section, if a person was non-resident at any time in a taxation year, the person's income for the year is , for greater certainty, deemed to be the amount that would have been the person's income for the year had the person been resident in Canada throughout the year.

24. Section 122.64 of the Act is repealed.

25. (1) The descriptions of G and H in the definition "specified partnership income" in subsection 125(7) of the Act are replaced by the following:

G

is the total of all amounts each of which is the corporation's share of the income (determined in accordance with subdivision j of Division B) of the partnership for a fiscal period of the business that ends in the year, or an amount included in the corporation's income for the year in respect of the business under any of subsections 34.2(2), (3) and (12) , and

H

is the total of all amounts deducted in computing the corporation's income for the year from the business (other than amounts that were deducted in computing the income of the partnership from the business) or in respect of the business under subsection 34.2(4) or (11) , and

(2) Subsection (1) applies to taxation years that end after March 22, 2011.

26. (1) The definition "non-government assistance" in subsection 127(9) of the Act is replaced by the following:

"non-government assistance"

« aide non gouvernementale »

"non-government assistance" means an amount that would be included in income under paragraph 12(1)(x) if that paragraph were read without reference to subparagraphs 12(1)(x)(v) to (vii);

(2) Subsection (1) is deemed to have come into force on Announcement Date.

27. (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, if any, of the particular corporation for the particular taxation year;

(2) Subsection (1) applies to taxation years that begin after Announcement Date.

28. (1) The portion of paragraph 127.52(1)(c.1) of the Act before subparagraph (i) is replaced by the following:

(c.1if, during a partnership's fiscal period that ends in the year (other than a fiscal period that ends because of subsection 99(1)), the individual's interest in the partnership is an interest for which an identification number is required to be, or has been, obtained under section 237.1,

(2) Clause 127.52(1)(i)(i)(B) of the Act is amended by striking out "and" at the end of subclause (I) and by replacing subclause (II) with the following:

(II) paragraphs (b) to (c.3), (e) and (e.1) of this subsection, as they read in respect of taxation years that began after 1994 and ended before 2012 , applied in computing the individual's non-capital loss, restricted farm loss, farm loss and limited partnership loss for any of those years , and

(III) paragraphs (b) to (c.3), (e) and (e.1) of this subsection applied in computing the individual's non-capital loss, restricted farm loss, farm loss and limited partnership loss for any taxation year that ends after 2011, and

(3) Clause 127.52(1)(i)(ii)(B) of the Act is amended by striking out "and" at the end of subclause (I) and by replacing subclause (II) with the following:

(II) paragraphs (c.1) and (d) of this subsection, as they read in respect of taxation years that began after 1994 and ended before 2012, applied in computing the individual's net capital loss for any of those years , and

(III) paragraphs (c.1) and (d) of this subsection applied in computing the individual's net capital loss for any taxation year that ends after 2011; and

(4) Subsections (1) to (3) apply to the 2012 and subsequent taxation years and, if an individual files an election in writing with the Minister of National Revenue before the day that is 90 days after the day on which this Act receives royal assent, for the individual

(asubsections (1) to (3) also apply to the 2006 to 2011 taxation years; and

(bthe references in clauses 127.52(1)(i)(i)(B) and (ii)(B) of the Act, as amended by subsections (2) and (3), to "2011" and "2012" are to be read as "2005" and "2006", respectively.

(5) Notwithstanding subsection 152(4) of the Act, the Minister of National Revenue may make such assessments, reassessments and determinations under Part I of the Act as are necessary to give effect to an election under subsection (4).

29. (1) Subsection 136(1) of the Act is replaced by the following:

Cooperative not private corporation

136. (1) Notwithstanding any other provision of this Act, a cooperative corporation that would, but for this section, be a private corporation is deemed not to be a private corporation except for the purposes of section 15.1, paragraphs 87(2)(vv) and (ww) (including, for greater certainty, in applying those paragraphs as provided under paragraph 88(1)(e.2)), the definitions "excessive eligible dividend designation" , "general rate income pool" and "low rate income pool" in subsection 89(1), subsections 89(4) to (6) and (8) to (10), sections 123.4, 125, 125.1, 127 and 127.1, the definition "mark-to-market property" in subsection 142.2(1), sections 152 and 157, subsection 185.2(3) , the definition "small business corporation" in subsection 248(1) (as it applies for the purposes of paragraph 39(1)(c)) and subsection 249(3.1) .

(2) Subsection (1) applies to taxation years that begin after Announcement Date.

30. (1) Subsection 137(4.1) of the Act is replaced by the following:

Payments in respect of shares

(4.1) Notwithstanding any other provision of this Act, an amount paid or payable by a credit union to a person is deemed to be paid or payable, as the case may be, by the credit union as interest and to be received or receivable, as the case may be, by the person as interest, if

(athe amount is in respect of a share held by the person of the capital stock of the credit union, other than an amount paid or payable as or on account of a reduction of the paid-up capital, redemption, acquisition or cancellation of the share by the credit union to the extent of the paid-up capital of the share;

(bthe share is not listed on a stock exchange; and

(cthe person is

(i) a member of the credit union , or

(ii) if the share is issued by the credit union after March 28, 2012, a member of another credit union that is a member of the credit union.

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

31. 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" and "specified debt obligation" in subsection (1) and subsection 142.6(1.6), a taxpayer has a significant interest in a corporation at any time if

32. (1) Clause 157(1.5)(a)(ii)(B) of the English version of the Act is replaced by the following:

(B) the amount obtained when the estimated tax payable by the corporation, if any, under Parts VI and XIII.1 for the taxation year is divided by the number of months that end in the taxation year and after the particular time; and

(2) Paragraph 157(1.5)(b) of the English version of the Act is replaced by the following:

(bthe remainder of the taxes payable by it under this Part and Parts VI, VI.1 and XIII.1 for the taxation year on or before its balance-due day for the year.

(3) Subsections (1) and (2) apply to taxation years that begin after 2007.

33. (1) The portion of subsection 207.01(1) of the Act before the definition "advantage" is replaced by the following:

Definitions

207.01 (1) The following definitions and the definitions in subsections 146(1) (other than the definition "benefit" ), 146.2(1) and 146.3(1) apply in this Part and Part XLIX of the Income Tax Regulations .

(2) The definition "specified non-qualified investment income" in subsection 207.01(1) of the Act is replaced by the following:

"specified non-qualified investment income"

« revenu de placement non admissible déterminé »

"specified non-qualified investment income" , in respect of a registered plan and its controlling individual, means income (determined without reference to paragraph 82(1)(b)), or a capital gain, that is reasonably attributable, directly or indirectly, to an amount in respect of which tax was payable under Part I by a trust governed by the registered plan or by any other registered plan of the controlling individual.

(3) 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 (iii), by adding "and" at the end of subparagraph (iv) and by adding the following after subparagraph (iv):

(v) a benefit provided under an incentive program offered to a broad class of clients of a person who is, or is related to, the issuer or carrier of the plan, if it is reasonable to conclude that none of the main purposes of the program is to enable a person or partnership to benefit from the exemption from tax under Part I of any amount in respect of the plan;

(4)  Clause (b)(i)(A) of the definition "advantage" in subsection 207.01(1) of the Act is replaced by the following:

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

(5) The portion of paragraph (c) of the definition "advantage" in subsection 207.01(1) of the Act before subparagraph (i) is replaced by the following:

(ca benefit that is income (determined without reference to paragraph 82(1)(b)), or a capital gain, that is reasonably attributable, directly or indirectly, to

(6) Paragraph (c) of the definition "exempt contribution" in subsection 207.01(1) of the Act is replaced by the following:

(cthe survivor designates, in prescribed form filed in prescribed manner within 30 days after the day on which the contribution is made (or at any later time that is acceptable to the Minister) , the contribution in relation to the survivor payment; and

(7) 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 registered plan, means property (other than excluded property for the trust ) that is at that time

(8)  Subparagraph (b)(ii) of the definition "prohibited investment" in subsection 207.01(1) of the Act is replaced by the following:

(ii)  a person or partnership that does not deal at arm's length with the controlling individual;

(9) The portion of the definition "RRSP strip" in subsection 207.01(1) of the Act before paragraph (a) is replaced by the following:

"RRSP strip"

« sommme découlant d'un dépouillement de REER »

"RRSP strip" , in respect of a RRIF or RRSP, means the amount of a reduction in the fair market value of property held in connection with the RRIF or RRSP, if the value is reduced as part of a transaction or event or a series of transactions or events one of the main purposes of which is to enable the controlling individual of the RRIF or RRSP, or a person who does not deal at arm's length with the controlling individual, to obtain a benefit in respect of property held in connection with the RRIF or RRSP or to obtain a benefit as a result of the reduction, but does not include an amount that is

(10)  Paragraph (d) of the definition "RRSP strip" in subsection 207.01(1) of the Act is replaced by the following:

(dthe principal amount of a debt obligation that is an excluded property.

(11)  Paragraph (c) of the definition "swap transaction" in subsection 207.01(1) of the Act is replaced by the following:

(c a transfer of a prohibited investment or a non-qualified investment from the registered plan for consideration , in circumstances where the controlling individual is entitled to a refund under subsection 207.04(4) on the transfer; or

(12)  The descriptions of A and B in the definition "transitional prohibited investment benefit" in subsection 207.01(1) of the Act are replaced by the following:

A

is the total of all amounts each of which is income (determined without reference to paragraph 82(1)(b)) earned, or a capital gain realized, in the taxation year by a trust governed by a RRIF or RRSP of the controlling individual that

(a is attributable to a property that was, on March 23, 2011, a prohibited investment for a trust governed by a RRIF or RRSP of the controlling individual, and

(b in the case of income, is earned after March 22, 2011 and, in the case of a capital gain, accrues after March 22, 2011; and

B

is the total of all amounts each of which is a capital loss (determined without reference to subparagraph 40(2)(g)(i) and subsection 40(3.4)) realized in the taxation year by a trust governed by a RRIF or RRSP of the controlling individual that

(a is attributable to a property that was, on March 23, 2011, a prohibited investment for a trust governed by a RRIF or RRSP of the controlling individual, and

(b accrues after March 22, 2011.

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

"equity"

« droit sur l'actif »

"equity" , of a corporation, trust or partnership, means

(ain the case of a corporation, a share of the capital stock of the corporation;

(bin the case of a trust, an income or capital interest in the trust; and

(cin the case of a partnership, an interest as a member of the partnership.

"excluded property"

« bien exclu »

"excluded property" , at any time for a trust governed by a registered plan, means

(a)  property described in paragraph 4900(1)(j.1) of the Income Tax Regulations;

(b equity of a mutual fund corporation, mutual fund trust or registered investment if

(i)  either

(A)  the equity is equity of a mutual fund corporation or mutual fund trust that derives its value from a mutual fund that is subject to, and substantially complies with, the requirements of National Instrument 81–102 Mutual Funds , as amended from time to time, of the Canadian Securities Administrators, or

(B) the corporation, trust or registered investment follows a reasonable policy of investment diversification,

(ii) the time is

(A) during the 24-month period that begins on the day on which the first taxation year of the corporation, trust or registered investment begins, or

(B) during the 24-month period that ends on the day on which the last taxation year of the corporation, trust or registered investment ends,

(iii) it is reasonable to conclude that none of the main purposes of the structure of the corporation, trust or registered investment, or of the terms and conditions of the equity, is to accommodate transactions or events that could affect the fair market value of the property held by the trust governed by the registered plan in a manner that would not occur in a normal commercial or investment context in which parties deal with each other at arm's length and act prudently, knowledgeably and willingly, and

(iv) it is reasonable to conclude that none of the main purposes of the incorporation, establishment, winding-up or cessation of existence of the corporation, trust or registered investment is to benefit from this paragraph; or

(cequity of a corporation, partnership or trust (in this paragraph referred to as the "investment entity") if at that time

(i) the fair market value of the equity (in this paragraph referred to as the "arm's length equity") of the investment entity that is owned by persons who deal at arm's length with the controlling individual of the registered plan is at least 90% of the fair market value of all the equity of the investment entity,

(ii) the total fair market value of the arm's length equity and the debt of the investment entity that is owned by persons who deal at arm's length with the controlling individual of the registered plan is at least 90% of the total fair market value of all the equity and debt of the investment entity,

(iii) the owners of the arm's length equity have the right to cast at least 90% of the votes that could be cast at an annual meeting of the investment entity,

(iv) the specific terms and conditions of each share or unit of equity of the investment entity held by the trust governed by the registered plan are the same as, or substantially similar to, the terms and conditions of particular equity that is included in the arm's length equity,

(v) the fair market value of the particular equity referred to in subparagraph (iv) is equal to at least 10% of the total fair market value of all equity of the investment entity having the specific terms and conditions referred to in subparagraph (iv) or terms and conditions that are substantially similar to those terms and conditions,

(vi)  the controlling individual deals at arm's length with the investment entity, and

(vii) it is reasonable to conclude that none of the main purposes of the structure of the investment entity, or of the terms and conditions of the equity, is to accommodate transactions or events that could affect the fair market value of the property held by the trust governed by the registered plan in a manner that would not occur in a normal commercial or investment context in which parties deal with each other at arm's length and act prudently, knowledgeably and willingly.

(14)  Section 207.01 of the Act is amended by adding the following after subsection (5):

Deemed disposition and re-acquisition of investments

(6) If, at any time, a property held by a trust governed by a registered plan becomes, or ceases to be, a prohibited investment or non-qualified investment for the trust, the trust is deemed to have disposed of the property immediately before that time for proceeds of disposition equal to the fair market value of the property at that time and to have re-acquired the property at that time at a cost equal to that fair market value.

March 23, 2011 cost

(7) For the purposes of computing the adjusted cost base to a trust governed by a RRSP or RRIF of a property that was, on March 23, 2011, a prohibited investment for the trust, the fair market value of the property at the end of March 22, 2011 is deemed to be the cost of the property to the trust until the property is disposed of by the trust.

(15) Subsections (1) to (6), (9), (10) and (12) to (14) are deemed to have come into force on March 23, 2011.

(16) Subsections (7) and (8) apply after March 22, 2011 in respect of investments acquired at any time.

(17) Subsection (11) is deemed to have come into force on July 1, 2011, except that it comes into force on January 1, 2022 in relation to a swap transaction undertaken to remove a property from a RRIF or RRSP if it is reasonable to conclude that the retention of the property in the RRIF or RRSP would result in a tax being payable under Part XI.01 of the Act.

34. (1) Subsection 207.04(5) of the Act is repealed.

(2) Subsection (1) is deemed to have come into force on March 23, 2011.

35. (1) The portion of subsection 207.05(4) of the Act before paragraph (a) is replaced by the following:

Transitional rule

(4) If an individual so elects before March 2, 2013 in prescribed form, subsection (1) does not apply in respect of any advantage that is an amount included in the calculation of the transitional prohibited investment benefit of the individual for a taxation year provided that the transitional prohibited investment benefit

(2) Subsection (1) is deemed to have come into force on March 23, 2011.

36.  (1) Subsection 207.06(2) of the Act is amended by striking out "and" at the end of paragraph (a), by adding "and" at the end of paragraph (b) and by adding the following after paragraph (b):

(cthe extent to which payments have been made from the person's registered plan.

(2) Subsection 207.06(3) of the Act is repealed.

(3) Subsections (1) and (2) are deemed to have come into force on March 23, 2011.

37. (1) Section 207.061 of the Act is replaced by the following:

Income inclusion

207.061 A holder of a TFSA shall include in computing the holder's income for a taxation year under Part I any portion of a distribution made in the year that is described in subparagraph (a)(ii) of the definition "specified distribution" in subsection 207.01(1) or subparagraph 207.06(1)(b)(ii) or that is specified by the Minister as part of an agreement to waive or cancel a liability for tax under this Part.

(2) Subsection (1) is deemed to have come into force on March 23, 2011.

38. (1) The portion of subsection 207.07(1) of the Act before paragraph (a) is replaced by the following:

Return and payment of tax

207.07 (1) A person who is liable to pay tax under this Part for all or any part of a calendar year shall before July of the following calendar year

(2) Subsection (1) comes into force on royal assent.

39. (1) Subparagraph 219(1)(d)(ii) of the Act is replaced by the following:

(ii) an amount deductible because of paragraphs 111(1)(b) and 115(1)(d) in computing the corporation's base amount,

(2) Subsection 219(1.1) of the Act is replaced by the following:

Excluded gains

(1.1) For the purposes of subsection (1), the definition "taxable Canadian property" in subsection 248(1) shall be read without reference to paragraphs (a) and (c) to (e ) of that definition and as if the only options, interests or rights referred to in paragraph (f ) of that definition were those in respect of property described in paragraph (b) of that definition.

(3) Subsection (1) applies to the 1998 and subsequent taxation years.

(4) Subsection (2) is deemed to have come into force on March 5, 2010.

40. Paragraph 239(2.21)(b) of the Act is replaced by the following:

(bwho is an official to whom taxpayer information has been provided for a particular purpose under paragraph 241(4)(a), (d), (f), (f.1), (i), (j.1) or (j.2)

41. (1) Subparagraph 241(4)(d)(ix) of the Act is replaced by the following:

(ix) to an official of a department or agency of the Government of Canada or of a province as to the name, address, telephone number, occupation, size or type of business of a taxpayer, solely for the purpose of enabling that department or agency to obtain statistical data for research and analysis,

(2) Paragraph 241(4)(j.1) of the Act is replaced by the following:

(j.1provide taxpayer information to an official or a designated person solely for the purpose of permitting the making of an adjustment to a social assistance payment made on the basis of a means, needs or income test where the purpose of the adjustment is to take into account the amount determined for C in subsection 122.61(1) in respect of a person for a taxation year;

(j.2provide information obtained under section 122.62 to an official of the government of a province solely for the purposes of the administration or enforcement of a prescribed law of the province;

42. (1) Section 247 of the Act is amended by adding the following after subsection (7):

Exclusion — certain guarantees

(7.1) Subsection (2) does not apply to adjust an amount of consideration paid, payable or accruing to a corporation resident in Canada (in this subsection referred to as the "parent") in a taxation year of the parent for the provision of a guarantee to a person or partnership (in this subsection referred to as the "lender") for the repayment, in whole or in part, of a particular amount owing to the lender by a non-resident person, if

(athe non-resident person is a controlled foreign affiliate of the parent for the purposes of section 17 throughout the period in the year during which the particular amount is owing; and

(bit is established that the particular amount would be an amount owing described in paragraph 17(8)(a) or (b) if it were owed to the parent.

(2) Subsection (1) applies to taxation years that begin after 1997 and in applying subsection 247(7.1) of the Act, as enacted by subsection (1), to taxation years that begin before February 24, 1998, section 17 of the Act is to be read as it read on January 24, 2005, except that if a taxpayer so elects in writing and files the election with the Minister of National Revenue on or before the taxpayer's filing-due date for the taxation year that includes the day on which this Act receives royal assent,

(asubsection (1) does not apply to taxation years of the taxpayer that begin on or before Announcement Date; and

(bnotwithstanding the time limitations in subsection 152(4) of the Act, the Minister of National Revenue may make such assessments, reassessments and determinations under Part I of the Act as are necessary to give effect to an election under this subsection.

43. (1) Clause (e)(iii)(B) of the definition "automobile" in subsection 248(1) of the Act is replaced by the following:

(B) at least 30 kilometres outside the nearest point on the boundary of the nearest population centre , as defined by the last census dictionary published by Statistics Canada before the year, that has a population of at least 40,000 individuals as determined in the last census published by Statistics Canada before the year.

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

income tax regulations

44. (1) The portion of section 806.2 of the Income Tax Regulations before paragraph (a) is replaced by the following:

806.2 For the purposes of the definition "participating debt interest" in subsection 212(3) of the Act, an obligation is a prescribed obligation if it is an indexed debt obligation and no amount payable in respect of it is

(2) Subsection (1) is deemed to have come into force on January 1, 2008.

45. (1) Paragraph 1100(12)(b) of the Regulations is replaced by the following:

(ba partnership each member of which was

(i)  a corporation described in paragraph (a), or

(ii) another partnership described in this paragraph.

(2) Paragraph 1100(16)(b) of the Regulations is replaced by the following:

(ba partnership each member of which was

(i)  a corporation described in paragraph (a), or

(ii) another partnership described in this paragraph.

(3) Subparagraph 1100(25)(b)(iv) of the Regulations is replaced by the following:

(iv) a partnership each member of which was

(A)  a corporation described in subparagraph (iii) or paragraph (26)(a), or

(B) another partnership described in this subparagraph.

(4) Paragraph 1100(26)(b) of the Regulations is replaced by the following:

(ba partnership each member of which was

(i)  a corporation described in paragraph (a), or

(ii) another partnership described in this paragraph.

(5) Subsections (1) to (4) apply to fiscal periods that end after October 2010.

46. (1) Subsection 1102(10) of the Regulations and the heading before it are repealed.

(2) Subsection (1) applies in respect of expenditures incurred in taxation years that begin after Announcement Date.

47. (1) Paragraph 3003(c) of the Regulations is replaced by the following:

(cIndividual and Family Assistance Act , R.S.Q., c. A-13.1.1, as it relates to the additional amounts for dependent children.

(2) Subsection (1) is deemed to have come into force on January 1, 2007.

48. Part XXX of the Regulations, as amended by section 47, is repealed.

49. (1) The heading "Deferred Income Plans, Qualified Investments" before section 4900 of the Regulations is replaced by the following:

REGISTERED PLANS – INVESTMENTS

(2) Subsection (1) is deemed to have come into force on March 23, 2011.

50. (1) Section 4900 of the Regulations is amended by adding the following after subsection (14):

(15) For the purposes 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 RRIF, RRSP or TFSA solely because of subsection (14) is prescribed property for the trust at any time if, at that time, the property is not described in any of subparagraphs (14)(a)(i) to (iii).

(2) Subsection (1) is deemed to have come into force on March 23, 2011.

51. (1) Part L of the Regulations is repealed.

(2) Subsection (1) is deemed to have come into force on March 23, 2011.

52. (1) Subsection 5600(1) of the Regulations is amended by striking out "and" at the end of paragraph (b), by adding "and" at the end of paragraph (c) and by adding the following after paragraph (c):

(dthe distribution by Fiat S.p.A. of common shares of Fiat Industrial S.p.A. on January 1, 2011;

(ethe distribution by Foster's Group Limited of common shares of Treasury Wine Estates Limited on May 9, 2011; and

(fthe distribution by Telecom Corporation of New Zealand Limited of common shares of Chorus Limited on November 30, 2011.

(2) Subsection (1) is deemed to have come into force on January 1, 2011.

53. The Regulations are amended by adding the following before section 6501:

6500. For the purposes of paragraph 241(4)(j.2) of the Act, the following are prescribed laws of the Province of Quebec:

(aAn Act respecting the Québec Pension Plan , R.S.Q., c. R-9; and

(bIndividual and Family Assistance Act , R.S.Q., c. A-13.1.1, as it relates to the additional amounts for dependent children.

54. (1) Section 8200.1 of the Regulations is replaced by the following:

8200.1 For the purposes of subsection 13(18.1), the definition "Canadian renewable and conservation expense" in subsection 66.1(6) and subparagraph 241(4)(d)(vi.1) of the Act, "prescribed energy conservation property" means property described in Class 43.1 or 43.2 in Schedule II.

(2) Subsection (1) is deemed to have come into force on Announcement Date.

55. (1) The portion of subsection 8900(1) of the Regulations before paragraph (a) is replaced by the following:

8900. (1) For the purposes of subparagraph 110(1)(f)(iii) and paragraph 126(3)(a) of the Act, the following international organizations are prescribed:

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