Technical Tax Amendments Act, 2012 (S.C. 2013, c. 34)
Full Document:
Assented to 2013-06-26
256. (1) The portion of subparagraph (b)(ii) of the definition “split income” in subsection 120.4(1) of the English version of the Act before clause (A) is replaced by the following:
(ii) can reasonably be considered to be income derived from the provision of property or services by a partnership or trust to, or in support of, a business carried on by
(2) The portion of clause (c)(ii)(C) of the definition “split income” in subsection 120.4(1) of the English version of the Act before subclause (I) is replaced by the following:
(C) to be income derived from the provision of property or services by a partnership or trust to, or in support of, a business carried on by
(3) Subsections (1) and (2) apply in computing split income of a specified individual for taxation years that begin after December 20, 2002, other than in computing an amount included in that income that is from a trust or partnership for a taxation year or fiscal period of the trust or partnership that began before December 21, 2002.
257. (1) The portion of subsection 122(2) of the Act before paragraph (a) is replaced by the following:
Marginal note:Where subsection (1) does not apply
(2) Subsection (1) does not apply for a taxation year of an inter vivos trust that is not a mutual fund trust and that
(2) Subsection (1) applies to trust taxation years that begin after 2002.
258. (1) The portion of the definition “qualified REIT property” before paragraph (c) in subsection 122.1(1) of the Act is replaced by the following:
“qualified REIT property”
« bien admissible de FPI »
“qualified REIT property”, of a trust at any time, means a property that, at that time, is held by the trust and is
(a) a real or immovable property that is capital property, an eligible resale property, an indebtedness of a Canadian corporation represented by a bankers’ acceptance, a property described by paragraph (a) or (b) of the definition “qualified investment” in section 204 or a deposit with a credit union;
(b) a security of a subject entity all or substantially all of the gross REIT revenue of which, for its taxation year that ends in the trust’s taxation year that includes that time, is from maintaining, improving, leasing or managing real or immovable properties that are capital properties of the trust or of an entity of which the trust holds a share or an interest, including real or immovable properties that the trust, or an entity of which the trust holds a share or an interest, holds together with one or more other persons or partnerships;
(2) Paragraph (d) of the definition “qualified REIT property” in subsection 122.1(1) of the Act is replaced by the following:
(d) ancillary to the earning by the trust of amounts described in subparagraphs (b)(i) and (iii) of the definition “real estate investment trust”, other than
(i) an equity of an entity, or
(ii) a mortgage, hypothecary claim, mezzanine loan or similar obligation.
(3) Paragraph (a) of the definition “real estate investment trust” in subsection 122.1(1) of the Act is replaced by the following:
(a) at each time in the taxation year the total fair market value at that time of all non-portfolio properties that are qualified REIT properties held by the trust is at least 90% of the total fair market value at that time of all non-portfolio properties held by the trust;
(4) The portion of paragraph (b) of the definition “real estate investment trust” in subsection 122.1(1) of the Act before subparagraph (i) is replaced by the following:
(b) not less than 90% of the trust’s gross REIT revenue for the taxation year is from one or more of the following:
(5) Subparagraph (b)(iii) of the definition “real estate investment trust” in subsection 122.1(1) of the Act is replaced by the following:
(iii) dispositions of real or immovable properties that are capital properties,
(6) Paragraph (b) of the definition “real estate investment trust” in subsection 122.1(1) of the Act is amended by striking out “and” at the end of subparagraph (iv), by adding “and” at the end of subparagraph (v) and by adding the following after subparagraph (v):
(vi) dispositions of eligible resale properties;
(7) The portion of paragraph (c) of the definition “real estate investment trust” in subsection 122.1(1) of the Act before subparagraph (i) is replaced by the following:
(c) not less than 75% of the trust’s gross REIT revenue for the taxation year is from one or more of the following:
(8) Subparagraph (c)(iii) of the definition “real estate investment trust” in subsection 122.1(1) of the Act is replaced by the following:
(iii) dispositions of real or immovable properties that are capital properties;
(9) The definition “real estate investment trust” in subsection 122.1(1) of the Act is amended by striking out “and” at the end of paragraph (c) and by replacing paragraph (d) with the following:
(d) at each time in the taxation year an amount, that is equal to 75% or more of the equity value of the trust at that time, is the amount that is the total fair market value of all properties held by the trust each of which is a real or immovable property that is capital property, an eligible resale property, an indebtedness of a Canadian corporation represented by a bankers’ acceptance, a property described by paragraph (a) or (b) of the definition “qualified investment” in section 204 or a deposit with a credit union; and
(e) investments in the trust are, at any time in the taxation year, listed or traded on a stock exchange or other public market.
(10) Paragraph (a) of the definition “rent from real or immovable properties” in subsection 122.1(1) of the Act is amended by adding “and” at the end of subparagraph (i), by replacing “and” at the end of subparagraph (ii) with “but” and by repealing subparagraph (iii).
(11) Subsection 122.1(1) of the Act is amended by adding the following in alphabetical order:
“eligible resale property”
« bien de revente admissible »
“eligible resale property”, of an entity, means real or immovable property (other than capital property) of the entity
(a) that is contiguous to a particular real or immovable property that is capital property or eligible resale property, held by
(i) the entity, or
(ii) another entity affiliated with the entity; and
(b) the holding of which is ancillary to the holding of the particular property.
“gross REIT revenue”
« revenu brut de FPI »
“gross REIT revenue”, of an entity for a taxation year, means the amount, if any, by which the total of all amounts received or receivable in the year (depending on the method regularly followed by the entity in computing the entity’s income) by the entity exceeds the total of all amounts each of which is the cost to the entity of a property disposed of in the year.
(12) Section 122.1 of the Act is amended by adding the following after subsection (1):
Marginal note:Application of subsection (1.2)
(1.1) Subsection (1.2) applies to an entity for a taxation year in respect of an amount and another entity (referred to in this subsection and subsection (1.2) as the “parent entity”, “specified amount” and “source entity”, respectively), if
(a) at any time in the taxation year the parent entity
(i) is affiliated with the source entity, or
(ii) holds securities of the source entity that
(A) are described by any of paragraphs (a) to (c) of the definition “equity” in subsection (1), and
(B) have a total fair market value that is greater than 10% of the equity value of the source entity;
(b) the specified amount is included in computing the parent entity’s gross REIT revenue for the taxation year in respect of a security of the source entity held by the parent entity; and
(c) in the case of a source entity that is a subject entity described in paragraph (b) of the definition “qualified REIT property” in subsection (1) in respect of the parent entity at each time during the taxation year at which the parent entity holds securities of the source entity, the specified amount cannot reasonably be considered to be derived from the source entity’s gross REIT revenue from maintaining, improving, leasing or managing real or immovable properties that are capital properties of the parent entity or of an entity of which the parent entity holds a share or an interest, including real or immovable properties that the parent entity, or an entity of which the parent entity holds a share or an interest, holds together with one or more other persons or partnerships.
Marginal note:Character preservation rule
(1.2) If this subsection applies to a parent entity for a taxation year in respect of a specified amount and a source entity, then for the purposes of the definition “real estate investment trust” in subsection (1), to the extent that the specified amount can reasonably be considered to be derived from gross REIT revenue of the source entity having a particular character, the specified amount is deemed to be gross REIT revenue of the parent entity having the same character and not having any other character.
Marginal note:Character of revenue — hedging arrangements
(1.3) For the purposes of the definition “real estate investment trust” in subsection (1),
(a) if an amount is included in gross REIT revenue of a trust for a taxation year and it results from an agreement that can reasonably be considered to have been made by the trust to reduce its risk from fluctuations in interest rates in respect of debt incurred by the trust to acquire or refinance real or immovable property, the amount is deemed to have the same character as gross REIT revenue in respect of the real or immovable property and not any other character; and
(b) if a real or immovable property is situated in a country other than Canada and an amount included in gross REIT revenue of a trust for a taxation year
(i) is a gain from fluctuations in the value of the currency of that country relative to Canadian currency recognized on
(A) revenue in respect of the real or immovable property, or
(B) debt incurred by the trust for the purpose of earning revenue in respect of the real or immovable property, or
(ii) results from an agreement that
(A) provides for the purchase, sale or exchange of currency, and
(B) can reasonably be considered to have been made by the trust to reduce its risk from currency fluctuations described in subparagraph (i),
the amount is deemed to have the same character as gross REIT revenue in respect of the real or immovable property and not any other character.
(13) Subsections (1) to (12) apply to
(a) taxation years of a trust that end after 2006 and before 2011 if
(i) investments in the trust are, in one or more of those taxation years, listed or traded on a stock exchange or other public market, and
(ii) the trust elects, by notifying the Minister of National Revenue in writing on or before its filing due-date for its taxation year that includes the day on which this Act receives royal assent, to have those subsections so apply; and
(b) the 2011 and subsequent taxation years, except that paragraph (d) of the definition “real estate investment trust” in subsection 122.1(1) of the Act, as enacted by subsection (9), is to be read as follows for taxation years that end before 2013:
(d) at each time in the taxation year an amount, that is equal to 75% or more of the equity value of the trust at that time, is the amount that is the total fair market value of all properties held by the trust each of which is real or immovable property, indebtedness of a Canadian corporation represented by a bankers’ acceptance, property described by either paragraph (a) or (b) of the definition “qualified investment” in section 204, or a deposit with a credit union; and
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