Technical Tax Amendments Act, 2012 (S.C. 2013, c. 34)
Full Document:
Assented to 2013-06-26
228. (1) Section 96 of the Act is amended by adding the following after subsection (1):
Marginal note:Income allocation to former member
(1.01) If, at any time in a fiscal period of a partnership, a taxpayer ceases to be a member of the partnership
(a) for the purposes of subsection (1) and sections 34.1, 34.2, 101, 103 and 249.1, and notwithstanding paragraph 98.1(1)(d), the taxpayer is deemed to be a member of the partnership at the end of the fiscal period; and
(b) for the purposes of the application of paragraph (2.1)(b) and subparagraphs 53(1)(e)(i) and (viii) and (2)(c)(i) to the taxpayer, the fiscal period of the partnership is deemed to end
(i) immediately before the time at which the taxpayer is deemed by subsection 70(5) to have disposed of the interest in the partnership, where the taxpayer ceased to be a member of the partnership because of the taxpayer’s death, and
(ii) immediately before the time that is immediately before the time that the taxpayer ceased to be a member of the partnership, in any other case.
(2) Paragraph 96(1.01)(a) of the Act, as enacted by subsection (1), is replaced with the following:
(a) for the purposes of subsection (1), sections 34.1, 101 and 103 and paragraph 249.1(1)(b), and notwithstanding paragraph 98.1(1)(d), the taxpayer is deemed to be a member of the partnership at the end of the fiscal period; and
(3) The portion of paragraph 96(1.01)(b) of the Act before subparagraph (i), as enacted by subsection (1), is replaced by the following:
(b) for the purposes of the application of paragraph (2.1)(b), subsection 40(3.12) and subparagraphs 53(1)(e)(i) and (viii) and (2)(c)(i) to the taxpayer, the fiscal period of the partnership is deemed to end
(4) Paragraph 96(2.4)(a) of the English version of the Act is replaced by the following:
(a) by operation of any law governing the partnership arrangement, the liability of the member as a member of the partnership is limited (except by operation of a provision of a statute of Canada or a province that limits the member’s liability only for debts, obligations and liabilities of the partnership, or any member of the partnership, arising from negligent acts or omissions, from misconduct or from fault of another member of the partnership or an employee, an agent or a representative of the partnership in the course of the partnership business while the partnership is a limited liability partnership);
(5) The portion of subsection 96(3) of the Act before paragraph (a) is replaced by the following:
Marginal note:Agreement or election of partnership members
(3) If a taxpayer who was a member of a partnership at any time in a fiscal period has, for any purpose relevant to the computation of the taxpayer’s income from the partnership for the fiscal period, made or executed an agreement, designation or election under or in respect of the application of any of subsections 13(4), (4.2) and (16) and 14(1.01), (1.02) and (6), section 15.2, subsections 20(9) and 21(1) to (4), section 22, subsection 29(1), section 34, clause 37(8)(a)(ii)(B), subsections 44(1) and (6), 50(1) and 80(5) and (9) to (11), section 80.04 and subsections 86.1(2), 97(2), 139.1(16) and (17) and 249.1(4) and (6) that, if this Act were read without reference to this subsection, would be a valid agreement, designation or election,
(6) Subsection 96(9) of the Act is replaced by the following:
Marginal note:Application of foreign partnership rule
(9) For the purposes of applying subsection (8) and this subsection,
(a) where it can reasonably be considered that one of the main reasons that a member of a partnership is resident in Canada is to avoid the application of subsection (8), the member is deemed not to be resident in Canada; and
(b) where at any time a particular partnership is a member of another partnership,
(i) each person or partnership that is, at that time, a member of the particular partnership is deemed to be a member of the other partnership at that time,
(ii) each person or partnership that becomes a member of the particular partnership at that time is deemed to become a member of the other partnership at that time, and
(iii) each person or partnership that ceases to be a member of the particular partnership at that time is deemed to cease to be a member of the other partnership at that time.
(7) Subsection (1) applies in respect of a taxpayer
(a) in the case where the taxpayer ceases to be a member of a partnership because of the taxpayer’s death, to the 2003 and subsequent taxation years; and
(b) in any other case, to the 1995 and subsequent taxation years.
(8) Subsection (2) applies in respect of a taxpayer to taxation years that end after March 22, 2011.
(9) Subsection (3) applies in respect of a taxpayer to taxation years that end after October 31, 2011.
(10) Subsection (4) is deemed to have come into force on June 21, 2001.
(11) If a taxpayer, who is a member of a partnership at the end of a particular fiscal period, of the partnership, that ends in the taxpayer’s 2000 taxation year, 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 taxpayer’s taxation year in which this Act receives royal assent,
(a) subsection 96(1.7) of the Act does not apply to the taxpayer’s 2000 taxation year;
(b) the taxpayer is deemed to have a capital gain, a capital loss or a business investment loss in respect of the partnership for the particular fiscal period equal to the amount of the taxable capital gain, the allowable capital loss or the allowable business investment loss in respect of the partnership for the particular fiscal period, as the case may be, multiplied by the reciprocal of the fraction in paragraph 38(a) of the Act that applies to the partnership for the particular fiscal period;
(c) the amount of a capital gain, a capital loss or a business investment loss determined under paragraph (b) is deemed to be a capital gain, a capital loss or a business investment loss, as the case may be, of the taxpayer from a disposition of a capital property on the day that the particular fiscal period ends; and
(d) except as provided by this subsection, no amount shall be included in computing the taxpayer’s taxable capital gains, allowable capital losses and allowable business investment losses in respect of the taxable capital gains, allowable capital losses and allowable business investment losses of the partnership for the particular fiscal period.
(12) Subsection (5) applies to taxation years that end after February 27, 2000. However, subsection 96(3) of the Act, as enacted by subsection (5), is before December 21, 2002 to be read without reference to “, (4.2)” and “, (1.02)”.
(13) Subsection (6) applies to fiscal periods that begin after June 22, 2000.
229. Subsection 99(1) of the Act is replaced by the following:
Marginal note:Fiscal period of terminated partnership
99. (1) Subject to subsection (2), if, at any particular time in a fiscal period of a partnership, the partnership would, if this Act were read without reference to subsection 98(1), have ceased to exist, the fiscal period is deemed to have ended immediately before the time that is immediately before that particular time.
230. (1) Section 100 of the Act is amended by adding the following after subsection (4):
Marginal note:Replacement of partnership capital
(5) A taxpayer who pays an amount at any time in a taxation year is deemed to have a capital loss from a disposition of property for the year if
(a) the taxpayer disposed of an interest in a partnership before that time or, because of subsection (3), acquired before that time a right to receive property of a partnership;
(b) that time is after the disposition or acquisition, as the case may be;
(c) the amount would have been described in subparagraph 53(1)(e)(iv) had the taxpayer been a member of the partnership at that time; and
(d) the amount is paid pursuant to a legal obligation of the taxpayer to pay the amount.
(2) Subsection (1) applies to the 1995 and subsequent taxation years.
231. (1) The portion of subsection 104(1.1) of the Act before paragraph (a) is replaced by the following:
Restricted meaning of “beneficiary”
(1.1) Notwithstanding subsection 248(25), for the purposes of subsection (1), paragraph (4)(a.4), subparagraph 73(1.02)(b)(ii) and paragraph 107.4(1)(e), a person or partnership is deemed not to be a beneficiary under a trust at a particular time if the person or partnership is beneficially interested in the trust at the particular time solely because of
(2) Subparagraph 104(4)(a)(i.1) of the Act is replaced by the following:
(i.1) is a trust that was created by the will of a taxpayer who died after 1971 to which property was transferred in circumstances to which paragraph 70(5.2)(c) (or, in the case of a transfer that occurred in a taxation year before 2007, (b) or (d), as those paragraphs read in their application to that taxation year) or (6)(d) applied, and that, immediately after any such property vested indefeasibly in the trust as a consequence of the death of the taxpayer, was a trust,
(3) Paragraph 104(4)(a.2) of the French version of the Act is replaced by the following:
a.2) lorsque la fiducie effectue une distribution à un bénéficiaire au titre de la participation de celui-ci à son capital, qu’il est raisonnable de conclure que la distribution a été financée par une dette de la fiducie et que l’une des raisons pour lesquelles la dette a été contractée était d’éviter des impôts payables par ailleurs en vertu de la présente partie par suite du décès d’un particulier, le jour où la distribution est effectuée (déterminé comme si, pour la fiducie, la fin d’un jour correspondait au moment immédiatement après celui où elle distribue un bien à un bénéficiaire au titre de la participation de celui-ci à son capital);
(4) Subsections 104(5.3) to (5.7) of the Act are repealed.
(5) Subsections 104(10) and (11) of the Act are repealed.
(6) Paragraph 104(13.2)(a) of the Act is replaced by the following:
(a) for the purposes of subsections (13) and 105(2) (except in the application of subsection (13) for the purposes of subsection (21)), be deemed not to have been paid or to have become payable in the year to or for the benefit of the beneficiary or out of income of the trust; and
(7) Subsection 104(19) of the Act is replaced by the following:
Marginal note:Designation in respect of taxable dividends
(19) A portion of a taxable dividend received by a trust, in a particular taxation year of the trust, on a share of the capital stock of a taxable Canadian corporation is, for the purposes of this Act other than Part XIII, deemed to be a taxable dividend on the share received by a taxpayer, in the taxpayer’s taxation year in which the particular taxation year ends, and is, for the purposes of paragraphs 82(1)(b) and 107(1)(c) and (d) and section 112, deemed not to have been received by the trust, if
(a) an amount equal to that portion
(i) is designated by the trust, in respect of the taxpayer, in the trust’s return of income under this Part for the particular taxation year, and
(ii) may reasonably be considered (having regard to all the circumstances including the terms and conditions of the trust) to be part of the amount that, because of paragraph (13)(a), subsection (14) or section 105, was included in computing the income for that taxation year of the taxpayer;
(b) the taxpayer is in the particular taxation year a beneficiary under the trust;
(c) the trust is, throughout the particular taxation year, resident in Canada; and
(d) the total of all amounts each of which is an amount designated, under this subsection, by the trust in respect of a beneficiary under the trust in the trust’s return of income under this Part for the particular taxation year is not greater than the total of all amounts each of which is the amount of a taxable dividend, received by the trust in the particular taxation year, on a share of the capital stock of a taxable Canadian corporation.
(8) Subsection 104(21) of the Act is replaced by the following:
Marginal note:Designation in respect of taxable capital gains
(21) For the purposes of sections 3 and 111, except as they apply for the purposes of section 110.6, and subject to paragraph 132(5.1)(b), an amount in respect of a trust’s net taxable capital gains for a particular taxation year of the trust is deemed to be a taxable capital gain, for the taxation year of a taxpayer in which the particular taxation year ends, from the disposition by the taxpayer of capital property if
(a) the amount
(i) is designated by the trust, in respect of the taxpayer, in the trust’s return of income under this Part for the particular taxation year, and
(ii) may reasonably be considered (having regard to all the circumstances including the terms and conditions of the trust) to be part of the amount that, because of paragraph (13)(a), subsection (14) or section 105, was included in computing the income for that taxation year of the taxpayer;
(b) the taxpayer is
(i) in the particular taxation year, a beneficiary under the trust, and
(ii) resident in Canada, unless the trust is, throughout the particular taxation year, a mutual fund trust;
(c) the trust is, throughout the particular taxation year, resident in Canada; and
(d) the total of all amounts each of which is an amount designated, under this subsection, by the trust in respect of a beneficiary under the trust in the trust’s return of income under this Part for the particular taxation year is not greater than the trust’s net taxable capital gains for the particular taxation year.
(9) Subsection 104(21.1) of the Act is repealed.
(10) Paragraph 104(21.3)(a) of the Act is replaced by the following:
(a) the total of all amounts each of which is an allowable capital loss (other than an allowable business investment loss) of the trust for the year from the disposition of a capital property, and
(11) Subsection 104(21.3) of the Act, as amended by subsection (10), is replaced by the following:
Marginal note:Net taxable capital gains of trust determined
(21.3) For the purposes of this section, the net taxable capital gains of a trust for a taxation year is the amount, if any, determined by the formula
A + B – C – D
where
- A
- is the total of all amounts each of which is a taxable capital gain of the trust for the year from the disposition of a capital property that was held by the trust immediately before the disposition,
- B
- is the total of all amounts each of which is deemed by subsection (21) to be a taxable capital gain of the trust for the year,
- C
- is the total of all amounts each of which is an allowable capital loss (other than an allowable business investment loss) of the trust for the year from the disposition of a capital property, and
- D
- is the amount, if any, deducted under paragraph 111(1)(b) in computing the trust’s taxable income for the year.
(12) Subsections 104(21.4) and (21.5) of the Act are repealed.
(13) Paragraph 104(21.6)(g) of the Act is replaced by the following:
(f.1) if the deemed gains are in respect of capital gains of the trust from dispositions of property after February 27, 2000 and before October 17, 2000 and the taxation year of the taxpayer began after February 27, 2000 and ended after October 17, 2000, the deemed gains are deemed to be a capital gain of the taxpayer from the disposition by the taxpayer of capital property in the taxpayer’s taxation year and in the period that began after February 27, 2000 and ended before October 18, 2000;
(g) if the deemed gains are in respect of capital gains of the trust from dispositions of property after February 27, 2000 and before October 17, 2000 and the taxation year of the taxpayer began after February 27, 2000 and ended before October 18, 2000, the deemed gains are deemed to be a capital gain of the taxpayer from the disposition by the taxpayer of capital property in the taxpayer’s taxation year; and
(14) Subsection 104(21.6), as amended by subsection (13), and subsection (21.7) of the Act are repealed.
(15) Subsection 104(22) of the Act is replaced by the following:
Marginal note:Designation in respect of foreign source income
(22) For the purposes of this subsection, subsection (22.1) and section 126, an amount in respect of a trust’s income for a particular taxation year of the trust from a source in a country other than Canada is deemed to be income of a taxpayer, for the taxation year of the taxpayer in which the particular taxation year ends, from that source if
(a) the amount
(i) is designated by the trust, in respect of the taxpayer, in the trust’s return of income under this Part for the particular taxation year, and
(ii) may reasonably be considered (having regard to all the circumstances including the terms and conditions of the trust) to be part of the amount that, because of paragraph (13)(a) or subsection (14), was included in computing the income for that taxation year of the taxpayer;
(b) the taxpayer is in the particular taxation year a beneficiary under the trust;
(c) the trust is, throughout the particular taxation year, resident in Canada; and
(d) the total of all amounts each of which is an amount designated, under this subsection in respect of that source, by the trust in respect of a beneficiary under the trust in the trust’s return of income under this Part for the particular taxation year is not greater than the trust’s income for the particular taxation year from that source.
(16) Paragraphs 104(23)(a) and (b) of the Act are repealed.
(17) Subsection (1) applies to the 1998 and subsequent taxation years.
(18) Subsection (2) applies to trust taxation years that begin after 2006.
(19) Subsections (4), (9), (11), (12) and (14) apply to taxation years that begin after October 31, 2011.
(20) Subsection (5) applies to the 2005 and subsequent taxation years.
(21) Subsections (7), (8) and (15) apply to taxation years that end after February 27, 2004, except that, for taxation years that end on or before July 18, 2005, the reference to “paragraph (13)(a)” in subparagraph 104(19)(a)(ii) of the Act, as enacted by subsection (7), in subparagraph 104(21)(a)(ii) of the Act, as enacted by subsection (8), and in subparagraph 104(22)(a)(ii) of the Act, as enacted by subsection (15), is to be read as a reference to “subsection (13)”.
(22) Subsection (10) applies to trust taxation years that begin after 2000.
(23) Paragraph 104(21.6)(f.1) of the Act, as enacted by subsection (13), applies to taxation years that end after February 27, 2000.
(24) Paragraph 104(21.6)(g) of the Act, as enacted by subsection (13), applies to trust taxation years that end after December 20, 2002.
(25) Subsection (16) is deemed to have come into force on December 21, 2002.
- Date modified: