Technical Tax Amendments Act, 2012 (S.C. 2013, c. 34)
Full Document:
Assented to 2013-06-26
52. (1) Subsection (2) applies if
(a) a corporation has made an election under section 51;
(b) the corporation has made an election under subsection 93(1) or (1.2) of the Income Tax Act in respect of a disposition of a share of the capital stock of a foreign affiliate of the corporation that occurs after December 20, 2002 and on or before February 27, 2004 (other than a disposition required to be made under an agreement in writing made by a vendor on or before December 20, 2002), or in respect of a disposition that occurs after February 27, 2004 and that is required to be made under an agreement in writing made by a vendor after December 20, 2002 and before February 28, 2004; and
(c) the corporation elects in writing under this paragraph to apply subsection (2) in respect of all of its foreign affiliates and files the election with the Minister of National Revenue on or before the day that is the later of the corporation’s filing-due date for the corporation’s taxation year that includes the day on which this Act receives royal assent and the day that is one year after the day on which this Act receives royal assent.
(2) If this subsection applies, section 51 does not apply in respect of dispositions referred to in paragraph (1)(b) and the Regulations are, in respect of the dispositions, to be read as if section 5902 of the Regulations also contained the following subsection:
(6.1) If an election under subsection 93(1) of the Act is made at any time by a particular corporation resident in Canada in respect of a share of the capital stock of a foreign affiliate (in this subsection referred to as the “particular affiliate”) of the particular corporation that is disposed of to the particular corporation, to another corporation resident in Canada with which the particular corporation does not deal at arm’s length or to another foreign affiliate of the particular corporation, the amount of the particular affiliate’s exempt surplus or exempt deficit, taxable surplus or taxable deficit, underlying foreign tax and net surplus in respect of the particular corporation at that time is to be determined under paragraph (1)(a) as if the amount of any dividend referred to in subparagraph (1)(a)(i) or (ii) were nil.
Assessments
53. Any assessment of a taxpayer’s tax, interest and penalties payable under the Income Tax Act for any taxation year that ends before the day on which this Act receives royal assent that would, in the absence of this section, be precluded because of subsections 152(4) to (5) of the Income Tax Act is to be made to the extent necessary to take into account any of the following:
(a) sections 50 to 52 or any provision of section 46 in respect of which section 50 applies to the taxpayer; or
(b) any provision of sections 29 to 38 and 40 to 49 (other than a provision of section 46 that is described under paragraph (a)), if the taxpayer
(i) elects in writing in respect of all of its foreign affiliates that this section apply in respect of that provision, and
(ii) files that election with the Minister of National Revenue on or before the day that is six months after the day on which this Act receives royal assent.
PART 3AMENDMENTS IN RESPECT OF FOREIGN AFFILIATES: REORGANIZATIONS AND DISTRIBUTIONS AND OTHER TECHNICAL AMENDMENTS
R.S., c. 1 (5th Supp.)Income Tax Act
54. (1) Paragraph 13(21.2)(a) of the Income Tax Act is replaced by the following:
(a) a person or partnership (in this subsection referred to as the “transferor”) disposes at a particular time (otherwise than in a disposition described in any of paragraphs (c) to (g) of the definition “superficial loss” in section 54) of a depreciable property — other than, for the purposes of computing the exempt surplus or exempt deficit and taxable surplus or taxable deficit of a foreign affiliate of a taxpayer, in respect of the taxpayer, where the transferor is the affiliate or is a partnership of which the affiliate is a member, depreciable property that is, or would be, if the transferor were a foreign affiliate of the taxpayer, excluded property (within the meaning assigned by subsection 95(1)) of the transferor — of a particular prescribed class of the transferor,
(2) Clause 13(21.2)(e)(iii)(E) of the Act is replaced by the following:
(E) if the transferor is a corporation,
(I) for the purposes of computing the transferor’s foreign accrual property income, exempt surplus or exempt deficit, and taxable surplus or taxable deficit, in respect of a taxpayer for a taxation year of the transferor where the transferor is a foreign affiliate of the taxpayer, at which the liquidation and dissolution of the transferor begins, unless the liquidation and dissolution is
1. a qualifying liquidation and dissolution (within the meaning assigned by subsection 88(3.1)) of the transferor, or
2. a designated liquidation and dissolution (within the meaning assigned by subsection 95(1)) of the transferor, and
(II) for any other purposes, at which the winding-up (other than a winding-up to which subsection 88(1) applies) of the transferor begins, and
(3) Subsection (1) applies to dispositions that occur after August 19, 2011.
(4) Subsection (2) applies to windings-up and liquidations and dissolutions that begin after August 19, 2011.
55. (1) Paragraph 14(12)(a) of the Act is replaced by the following:
(a) a corporation, trust or partnership (in this subsection referred to as the “transferor”) disposes at any time in a taxation year of a particular eligible capital property — other than, for the purposes of computing the exempt surplus or exempt deficit and taxable surplus or taxable deficit of a foreign affiliate of a taxpayer, in respect of the taxpayer, where the transferor is the affiliate or is a partnership of which the affiliate is a member, eligible capital property that is, or would be, if the transferor were a foreign affiliate of the taxpayer, excluded property (within the meaning assigned by subsection 95(1)) of the transferor — in respect of a business of the transferor in respect of which it would, but for this subsection, be permitted a deduction under paragraph 24(1)(a) as a consequence of the disposition, and
(2) Paragraph 14(12)(g) of the Act is replaced by the following:
(g) if the transferor is a corporation,
(i) for the purposes of computing the transferor’s foreign accrual property income, exempt surplus or exempt deficit, and taxable surplus or taxable deficit, in respect of a taxpayer for a taxation year of the transferor where the transferor is a foreign affiliate of the taxpayer, at which the liquidation and dissolution of the transferor begins, unless the liquidation and dissolution is
(A) a qualifying liquidation and dissolution (within the meaning assigned by subsection 88(3.1)) of the transferor, or
(B) a designated liquidation and dissolution (within the meaning assigned by subsection 95(1)) of the transferor, and
(ii) for any other purposes, at which the winding-up (other than a winding-up to which subsection 88(1) applies) of the transferor begins.
(3) Subsection (1) applies to dispositions that occur after August 19, 2011.
(4) Subsection (2) applies to windings-up and liquidations and dissolutions that begin after August 19, 2011.
56. (1) Paragraph 18(13)(a) of the Act is replaced by the following:
(a) a taxpayer (in this subsection and subsection (15) referred to as the “transferor”) disposes of a particular property (other than, for the purposes of computing the exempt surplus or exempt deficit and taxable surplus or taxable deficit of a foreign affiliate of a taxpayer, in respect of the taxpayer, where the transferor is the affiliate or is a partnership of which the affiliate is a member, property that is, or would be, if the transferor were a foreign affiliate of the taxpayer, excluded property (within the meaning assigned by subsection 95(1)) of the transferor);
(2) Subparagraph 18(15)(b)(iv) of the Act is replaced by the following:
(iv) if the transferor is a corporation,
(A) for the purposes of computing the transferor’s foreign accrual property income, exempt surplus or exempt deficit, and taxable surplus or taxable deficit, in respect of a taxpayer for a taxation year of the transferor where the transferor is a foreign affiliate of the taxpayer, at which the liquidation and dissolution of the transferor begins, unless the liquidation and dissolution is
(I) a qualifying liquidation and dissolution (within the meaning assigned by subsection 88(3.1)) of the transferor, or
(II) a designated liquidation and dissolution (within the meaning assigned by subsection 95(1)) of the transferor, and
(B) for any other purposes, at which the winding-up (other than a winding-up to which subsection 88(1) applies) of the transferor begins, and
(3) Subsection (1) applies to dispositions that occur after August 19, 2011.
(4) Subsection (2) applies to windings-up and liquidations and dissolutions that begin after August 19, 2011.
57. (1) Subsection 20(13) of the Act is replaced by the following:
Marginal note:Deductions under subdivision i
(13) In computing the income for a taxation year of a taxpayer resident in Canada, there may be deducted such amounts as are provided by subdivision i.
(2) Subsection (1) applies to taxation years that end after 1994.
58. (1) Paragraph 34.2(8)(b) of the Act is replaced by the following:
(b) except to the extent that the context otherwise requires, the exempt surplus or exempt deficit, the hybrid surplus or hybrid deficit, and the taxable surplus or taxable deficit (as those terms are defined in subsection 5907(1) of the Income Tax Regulations) of the affiliate in respect of the corporation.
(2) Subsection (1) applies to taxation years that end after August 19, 2011.
59. (1) Subsection 39(2) of the Act is replaced by the following:
Marginal note:Foreign currency dispositions by an individual
(1.1) If, because of any fluctuation after 1971 in the value of one or more currencies other than Canadian currency relative to Canadian currency, an individual (other than a trust) has made one or more particular gains or sustained one or more particular losses in a taxation year from dispositions of currency other than Canadian currency and the particular gains or losses would, in the absence of this subsection, be capital gains or losses described under subsection (1)
(a) subsection (1) does not apply to any of the particular gains or losses;
(b) the amount determined by the following formula is deemed to be a capital gain of the individual for the year from the disposition of currency other than Canadian currency:
A – (B + C)
where
- A
- is the total of all the particular gains made by the individual in the year,
- B
- is the total of all the particular losses sustained by the individual in the year, and
- C
- is $200; and
(c) the amount determined by the following formula is deemed to be a capital loss of the individual for the year from the disposition of currency other than Canadian currency:
D – (E + F)
where
- D
- is the total of all the particular losses sustained by the individual in the year,
- E
- is the total of all the particular gains made by the individual in the year, and
- F
- is $200.
Marginal note:Foreign exchange capital gains and losses
(2) If, because of any fluctuation after 1971 in the value of a currency other than Canadian currency relative to Canadian currency, a taxpayer has made a gain or sustained a loss in a taxation year (other than a gain or loss that would, in the absence of this subsection, be a capital gain or capital loss to which subsection (1) or (1.1) applies, or a gain or loss in respect of a transaction or event in respect of shares of the capital stock of the taxpayer)
(a) the amount of the gain (to the extent of the amount of that gain that would not, if section 3 were read in the manner described in paragraph (1)(a), be included in computing the taxpayer’s income for the year or any other taxation year), if any, is deemed to be a capital gain of the taxpayer for the year from the disposition of currency other than Canadian currency; and
(b) the amount of the loss (to the extent of the amount of that loss that would not, if section 3 were read in the manner described in paragraph (1)(a), be deductible in computing the taxpayer’s income for the year or any other taxation year), if any, is deemed to be a capital loss of the taxpayer for the year from the disposition of currency other than Canadian currency.
Marginal note:Upstream loans — transitional set-off
(2.1) If at any time a corporation resident in Canada or a partnership of which such a corporation is a member (such corporation or partnership referred to in this subsection as the “borrowing party”) has received a loan from, or become indebted to, a creditor that is a foreign affiliate (referred to in this subsection as a “creditor affiliate”) of the borrowing party or that is a partnership (referred to in this subsection as a “creditor partnership”) of which such an affiliate is a member, the loan or indebtedness is at a later time repaid, in whole or in part, and the amount of the borrowing party’s capital gain or capital loss determined, in the absence of this subsection, under subsection (2) in respect of the repayment is equal to the amount of the creditor affiliate’s or creditor partnership’s capital loss or capital gain, as the case may be, determined, in the absence of paragraph 95(2)(g.04), in respect of the repayment, then the borrowing party’s capital gain or capital loss so determined is to be reduced
(a) in the case of a capital gain
(i) if the creditor is a creditor affiliate, by an amount, not exceeding that capital gain, that is equal to twice the amount that would — in the absence of paragraph 95(2)(g.04) and on the assumption that the creditor affiliate’s capital loss in respect of the repayment of the loan or indebtedness were a capital gain of the creditor affiliate, the creditor affiliate had no other income, loss, capital gain or capital loss for any taxation year, and no other foreign affiliate of the borrowing party had any income, loss, capital gain or capital loss for any taxation year — be included in computing the borrowing party’s income under subsection 91(1) for its taxation year that includes the last day of the taxation year of the creditor affiliate that includes the later time, or
(ii) if the creditor is a creditor partnership, by an amount, not exceeding that capital gain, that is equal to twice the amount that is the total of each amount, determined in respect of a particular member of the creditor partnership that is a foreign affiliate of the borrowing party, that would — in the absence of paragraph 95(2)(g.04) and on the assumption that the creditor partnership’s capital loss in respect of the repayment of the loan or indebtedness were a capital gain of the creditor partnership, the particular member had no other income, loss, capital gain or capital loss for any taxation year, and no other foreign affiliate of the borrowing party had any income, loss, capital gain or capital loss for any taxation year — be included in computing the borrowing party’s income under subsection 91(1) for its taxation year that includes the last day of the taxation year of the particular member that includes the last day of the creditor partnership’s fiscal period that includes the later time, and
(b) in the case of a capital loss
(i) if the creditor is a creditor affiliate, by an amount, not exceeding that capital loss, that is equal to twice the amount, in respect of the creditor affiliate’s capital gain in respect of the repayment of the loan or indebtedness, that would — in the absence of paragraph 95(2)(g.04) and on the assumption that the creditor affiliate had no other income, loss, capital gain or capital loss for any taxation year, and no other foreign affiliate of the borrowing party had any income, loss, capital gain or capital loss for any taxation year — be included in computing the borrowing party’s income under subsection 91(1) for its taxation year that includes the last day of the taxation year of the creditor affiliate that includes the later time, or
(ii) if the creditor is a creditor partnership, by an amount, not exceeding that capital loss, that is equal to twice the amount, in respect of the creditor partnership’s capital gain in respect of the repayment of the loan or indebtedness, that is the total of each amount, determined in respect of a particular member of the creditor partnership that is a foreign affiliate of the borrowing party, that would — in the absence of paragraph 95(2)(g.04) and on the assumption that the particular member had no other income, loss, capital gain or capital loss for any taxation year, and no other foreign affiliate of the borrowing party had any income, loss, capital gain or capital loss for any taxation year — be included in computing the borrowing party’s income under subsection 91(1) for its taxation year that includes the last day of the taxation year of the particular member that includes the last day of the creditor partnership’s fiscal period that includes the later time.
(2) Subsections 39(1.1) and (2) of the Act, as enacted by subsection (1), apply
(a) in determining the capital gain or capital loss of a foreign affiliate of a taxpayer, in respect of taxation years of the foreign affiliate that end after August 19, 2011, except that, if the taxpayer has elected under subsection 70(32), those subsections 39(1.1) and (2) apply in respect of taxation years of all foreign affiliates of the taxpayer that end after June 2011; and
(b) in any other case, in respect of gains made and losses sustained in taxation years that begin after August 19, 2011.
(3) Subsection 39(2.1) of the Act, as enacted by subsection (1), applies in respect of the portions of loans received and indebtedness incurred on or before August 19, 2011 that remain outstanding on that date and that are repaid, in whole or in part, on or before August 19, 2016.
- Date modified: