Budget Implementation Act, 2004, No. 2 (S.C. 2005, c. 19)
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Assented to 2005-05-13
PART 3AMENDMENTS TO THE INCOME TAX ACT AND CERTAIN OTHER ACTS AS A CONSEQUENCE AND A COORDINATING AMENDMENT
R.S., c. 1 (5th Supp.)Income Tax Act
50. Section 239 of the Act is amended by adding the following after subsection (4):
Marginal note:Offence and punishment without reference to subsection 120(2.2)
(5) In determining whether an offence under this Act, for which a person may on summary conviction or indictment be liable for a fine or imprisonment, has been committed, and in determining the punishment for such an offence, this Act is to be read without reference to subsection 120(2.2).
51. (1) Subsection 241(3.2) of the Act is amended by striking out the word “and” at the end of paragraph (d) and by replacing paragraph (e) with the following:
(e) if the registration of the charity has been revoked or annulled, a copy of the entirety of or any part of any letter sent by or on behalf of the Minister to the charity relating to the grounds for the revocation or annulment;
(f) financial statements required to be filed with an information return referred to in subsection 149.1(14);
(g) a copy of the entirety of or any part of any letter or notice by the Minister to the charity relating to a suspension under section 188.2 or an assessment of tax or penalty under this Act (other than the amount of a liability under subsection 188(1.1)); and
(h) an application by the charity, and information filed in support of the application, for a designation, determination or decision by the Minister under subsection 149.1(6.3), (7), (8) or (13).
(2) Subsection (1) applies to documents that are sent by the Minister of National Revenue, or that are filed or required to be filed with that Minister, after the day on which this Act is assented to.
52. (1) The definition “tax benefit” in subsection 245(1) of the Act is replaced by the following:
“tax benefit”
« avantage fiscal »
“tax benefit” means a reduction, avoidance or deferral of tax or other amount payable under this Act or an increase in a refund of tax or other amount under this Act, and includes a reduction, avoidance or deferral of tax or other amount that would be payable under this Act but for a tax treaty or an increase in a refund of tax or other amount under this Act as a result of a tax treaty;
(2) Subsection 245(4) of the Act is replaced by the following:
Marginal note:Application of subsection (2)
(4) Subsection (2) applies to a transaction only if it may reasonably be considered that the transaction
(a) would, if this Act were read without reference to this section, result directly or indirectly in a misuse of the provisions of any one or more of
(i) this Act,
(ii) the Income Tax Regulations,
(iii) the Income Tax Application Rules,
(iv) a tax treaty, or
(v) any other enactment that is relevant in computing tax or any other amount payable by or refundable to a person under this Act or in determining any amount that is relevant for the purposes of that computation; or
(b) would result directly or indirectly in an abuse having regard to those provisions, other than this section, read as a whole.
(3) The portion of subsection 245(5) of the Act before paragraph (c) is replaced by the following:
Marginal note:Determination of tax consequences
(5) Without restricting the generality of subsection (2), and notwithstanding any other enactment,
(a) any deduction, exemption or exclusion in computing income, taxable income, taxable income earned in Canada or tax payable or any part thereof may be allowed or disallowed in whole or in part,
(b) any such deduction, exemption or exclusion, any income, loss or other amount or part thereof may be allocated to any person,
(4) The definition “tax treaty” in subsection 248(1) of the Act is deemed, for the purpose of section 245 of the Act, to have come into force on September 13, 1988.
(5) Subsections (1) to (3) apply with respect to transactions entered into after September 12, 1988.
53. (1) The definition “tax benefit” in subsection 247(1) of the Act is replaced by the following:
“tax benefit”
« avantage fiscal »
“tax benefit” has the meaning assigned by subsection 245(1).
(2) Subsection (1) applies to taxation years and fiscal periods that begin after 1997.
54. (1) Subsection 251.1(1) of the Act is amended by striking out the word “and” at the end of paragraph (e) and by adding the following after paragraph (f):
(g) a person and a trust, if the person
(i) is a majority-interest beneficiary of the trust, or
(ii) would, if this subsection were read without reference to this paragraph, be affiliated with a majority-interest beneficiary of the trust; and
(h) two trusts, if a contributor to one of the trusts is affiliated with a contributor to the other trust and
(i) a majority-interest beneficiary of one of the trusts is affiliated with a majority-interest beneficiary of the other trust,
(ii) a majority-interest beneficiary of one of the trusts is affiliated with each member of a majority-interest group of beneficiaries of the other trust, or
(iii) each member of a majority-interest group of beneficiaries of each of the trusts is affiliated with at least one member of a majority-interest group of beneficiaries of the other trust.
(2) Subsection 251.1(3) of the Act is amended by adding the following in alphabetical order:
“beneficiary”
« bénéficiaire »
“beneficiary”, under a trust, includes a person beneficially interested in the trust.
“contributor”
« cotisant »
“contributor”, to a trust, means a person who has at any time made a loan or transfer of property, either directly or indirectly, in any manner whatever, to or for the benefit of the trust other than, if the person deals at arm’s length with the trust at that time and is not immediately after that time a majority-interest beneficiary of the trust,
(a) a loan made at a reasonable rate of interest; or
(b) a transfer made for fair market value consideration.
“majority-interest beneficiary”
« bénéficiaire détenant une participation majoritaire »
“majority-interest beneficiary”, of a trust at any time, means a person whose interest as a beneficiary, if any, at that time
(a) in the income of the trust has, together with the interests as a beneficiary in the income of the trust of all persons with whom the person is affiliated, a fair market value that is greater than 50% of the fair market value of all the interests as a beneficiary in the income of the trust; or
(b) in the capital of the trust has, together with the interests as a beneficiary in the capital of the trust of all persons with whom the person is affiliated, a fair market value that is greater than 50% of the fair market value of all the interests as a beneficiary in the capital of the trust.
“majority-interest group of beneficiaries”
« groupe de bénéficiaires détenant une participation majoritaire »
“majority-interest group of beneficiaries”, of a trust at any time, means a group of persons each of whom is a beneficiary under the trust at that time such that
(a) if one person held the interests as a beneficiary of all of the members of the group, that person would be a majority-interest beneficiary of the trust; and
(b) if any member of the group were not a member, the test described in paragraph (a) would not be met.
(3) Subsection 251.1(4) of the Act is amended by striking out the word “and” at the end of paragraph (a) and by adding the following after paragraph (b):
(c) notwithstanding subsection 104(1), a reference to a trust does not include a reference to the trustee or other persons who own or control the trust property; and
(d) in determining whether a person is affiliated with a trust,
(i) 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,
(ii) the interest of a person in a trust as a beneficiary is disregarded in determining whether the person deals at arm’s length with the trust if the person would, in the absence of the interest as a beneficiary, be considered to deal at arm’s length with the trust,
(iii) a trust is not a majority interest beneficiary of another trust unless the trust has an interest as a beneficiary in the income or capital, as the case may be, of the other trust, and
(iv) in determining whether a contributor to one trust is affiliated with a contributor to another trust, individuals connected by blood, marriage, common-law partnership or adoption are deemed to be affiliated with one another.
(4) Subsections (1) to (3) apply in determining whether persons are, at any time after March 22, 2004, affiliated, except that paragraph 251.1(4)(d) of the Act, as enacted by subsection (3), is to be read without reference to subparagraph (iv) in determining whether persons are, before September 16, 2004, affiliated.
55. (1) The portion of subsection 256(7) of the Act before paragraph (a) is replaced by the following:
Marginal note:Acquiring control
(7) For the purposes of subsections 10(10), 13(21.2) and (24), 14(12) and 18(15), sections 18.1 and 37, subsection 40(3.4), the definition “superficial loss” in section 54, section 55, subsections 66(11), (11.4) and (11.5), 66.5(3) and 66.7(10) and (11), section 80, paragraph 80.04(4)(h), subsections 85(1.2), 88(1.1) and (1.2) and 110.1(1.2), sections 111 and 127, subsection 249(4) and this subsection,
(2) Subsection (1) applies in respect of gifts made after March 22, 2004.
2003, c. 15Budget Implementation Act, 2003
56. (1) The portion of subsection 79(3) of the Budget Implementation Act, 2003 before paragraph (a) is replaced by the following:
(3) Subsection (1) applies to the 2003 and subsequent taxation years except that for taxation years that begin before 2005
(2) Paragraph 79(3)(a) of the Act is amended by adding the word “and” at the end of subparagraph (iii) and by replacing subparagraphs (iv) and (v) with the following:
(iv) that proportion of $300,000 that the number of days in the taxation year that are after 2004 is of the number of days in the taxation year; and
(3) The portion of subsection 79(4) of the Act before paragraph (a) is replaced by the following:
(4) Subsection (2) applies to the 2003 and subsequent taxation years except that, for taxation years that begin before 2005, the references in the description of M in the definition “specified partnership income” in subsection 125(7) of the Act, as enacted by subsection (2), to “$300,000” and “$822”, are to be read
(4) Subsection 79(4) of the Act is amended by adding the word “and” at the end of paragraph (a), by striking out the word “and” at the end of paragraph (b) and by repealing paragraph (c).
(5) Subsections (1) to (4) are deemed to have come into force on June 19, 2003.
1991, c. 46Bank Act
57. Section 462 of the Bank Act is amended by adding the following after subsection (2):
Marginal note:Notices: Minister of National Revenue
(2.1) Despite subsections (1) and (2), a notice, demand, order or other document issued with respect to a customer of a bank constitutes notice to the bank and fixes the bank with knowledge of its contents and, where applicable, is binding on property belonging to the customer and in the possession of the bank or on money owing to the customer by reason of an account in the bank, if it is sent to the branch of the bank referred to in subsection (1) or (2), an office of the bank referred to in paragraph (3)(a) or any other office agreed to by the bank and the Minister of National Revenue and it relates to
(a) the administration of an Act of Parliament by the Minister of National Revenue; or
(b) the administration of an Act of the legislature of a province or legislation made by an aboriginal government, where the Minister or the Minister of National Revenue has entered into a tax collection agreement under an Act of Parliament with the government of the province or the aboriginal government.
58. Section 579 of the Act is amended by adding the following after subsection (2):
Marginal note:Notices: Minister of National Revenue
(2.1) Despite subsections (1) and (2), a notice, demand, order or other document issued with respect to a customer of an authorized foreign bank constitutes notice to the authorized foreign bank and fixes the authorized foreign bank with knowledge of its contents and, where applicable, is binding on property belonging to the customer and in the possession of the authorized foreign bank or on money owing to the customer by reason of an account in the authorized foreign bank, if it is sent to the branch of the authorized foreign bank referred to in subsection (1) or (2), an office of the authorized foreign bank referred to in paragraph (3)(a) or any other office agreed to by the authorized foreign bank and the Minister of National Revenue and it relates to
(a) the administration of an Act of Parliament by the Minister of National Revenue; or
(b) the administration of an Act of the legislature of a province or legislation made by an aboriginal government, where the Minister or the Minister of National Revenue has entered into a tax collection agreement under an Act of Parliament with the government of the province or the aboriginal government.
1991, c. 48Cooperative Credit Associations Act
59. Section 385.32 of the Cooperative Credit Associations Act is amended by adding the following after subsection (2):
Marginal note:Notices: Minister of National Revenue
(2.1) Despite subsections (1) and (2), a notice, demand, order or other document issued with respect to a customer of an association constitutes notice to the association and fixes the association with knowledge of its contents and, where applicable, is binding on property belonging to the customer and in the possession of the association or on money owing to the customer by reason of an account in the association, if it is sent to the branch of the association referred to in subsection (1) or (2), an office of the association referred to in paragraph (3)(a) or any other office agreed to by the association and the Minister of National Revenue and it relates to
(a) the administration of an Act of Parliament by the Minister of National Revenue; or
(b) the administration of an Act of the legislature of a province or legislation made by an aboriginal government, where the Minister or the Minister of National Revenue has entered into a tax collection agreement under an Act of Parliament with the government of the province or the aboriginal government.
R.S., c. I-4Income Tax Conventions Interpretation Act
60. (1) The Income Tax Conventions Interpretation Act is amended by adding the following after section 4:
Marginal note:Application of section 245 of the Income Tax Act
4.1 Notwithstanding the provisions of a convention or the Act giving the convention the force of law in Canada, it is hereby declared that the law of Canada is that section 245 of the Income Tax Act applies to any benefit provided under the convention.
(2) Subsection (1) applies with respect to transactions entered into after September 12, 1988.
R.S., c. T-2Tax Court of Canada Act
61. Section 12 of the Tax Court of Canada Act is amended by adding the following after subsection (4):
Marginal note:Postponements of suspensions to issue tax receipts
(5) The Court has exclusive original jurisdiction to hear and determine applications referred to in subsection 188.2(4) of the Income Tax Act by a registered charity for a postponement of a period of suspension of the authority of the charity to issue official receipts referred to in Part XXXV of the Income Tax Regulations.
Marginal note:R.S., c. 51 (4th Supp.), s. 5
62. Subsection 18(2) of the Act is replaced by the following:
Marginal note:Other appeals — Income Tax Act
(2) The provisions of sections 18.1 to 18.28 also apply in respect of an appeal, on a taxpayer’s election in the taxpayer’s notice of appeal or at any later time as may be provided in the rules of the Court, if the only subject-matter of the appeal is
(a) an amount of interest assessed under the Income Tax Act; or
(b) the validity of a suspension referred to in subsection 188.2(2) of that Act.
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