Technical Tax Amendments Act, 2012 (S.C. 2013, c. 34)
Full Document:
Assented to 2013-06-26
357. (1) Subparagraph 241(4)(e)(xii) of the Act is replaced by the following:
(xii) a provision contained in a tax treaty with another country or in a listed international agreement;
(2) Subsection 241(11) of the Act is replaced by the following:
Marginal note:References to “this Act”
(11) The references in subsections (1), (3), (4) and (10) to “this Act” shall be read as references to “this Act or the Federal-Provincial Fiscal Arrangements Act”.
358. (1) The definition “common-law partner” in subsection 248(1) of the Act is replaced by the following:
“common-law partner”
« conjoint de fait »
“common-law partner”, with respect to a taxpayer at any time, means a person who cohabits at that time in a conjugal relationship with the taxpayer and
(a) has so cohabited throughout the 12-month period that ends at that time, or
(b) would be the parent of a child of whom the taxpayer is a parent, if this Act were read without reference to paragraphs 252(1)(c) and (e) and subparagraph 252(2)(a)(iii),
and, for the purpose of this definition, where at any time the taxpayer and the person cohabit in a conjugal relationship, they are, at any particular time after that time, deemed to be cohabiting in a conjugal relationship unless they were living separate and apart at the particular time for a period of at least 90 days that includes the particular time because of a breakdown of their conjugal relationship;
(2) The definition “controlled foreign affiliate” in subsection 248(1) of the Act is replaced by the following:
“controlled foreign affiliate”
« société étrangère affiliée contrôlée »
“controlled foreign affiliate” has, except as expressly otherwise provided in this Act, the meaning assigned by subsection 95(1);
(3) The definition “dividend rental arrangement” in subsection 248(1) of the Act, as amended by subsection (13), is replaced by the following:
“dividend rental arrangement”
« mécanisme de transfert de dividendes »
“dividend rental arrangement”, of a person or a partnership (each of which is referred to in this definition as the “person”),
(a) means any arrangement entered into by the person where it can reasonably be considered that
(i) the main reason for the person entering into the arrangement was to enable the person to receive a dividend on a share of the capital stock of a corporation, other than a dividend on a prescribed share or on a share described in paragraph (e) of the definition “term preferred share” in this subsection or an amount deemed by subsection 15(3) to be received as a dividend on a share of the capital stock of a corporation, and
(ii) under the arrangement someone other than that person bears the risk of loss or enjoys the opportunity for gain or profit with respect to the share in any material respect, and
(b) includes, for greater certainty, any arrangement under which
(i) a corporation at any time receives on a particular share a taxable dividend that would, if this Act were read without reference to subsection 112(2.3), be deductible in computing its taxable income or taxable income earned in Canada for the taxation year that includes that time, and
(ii) the corporation or a partnership of which the corporation is a member is obligated to pay to another person or partnership an amount
(A) that is compensation for
(I) the dividend described in subparagraph (i),
(II) a dividend on a share that is identical to the particular share, or
(III) a dividend on a share that, during the term of the arrangement, can reasonably be expected to provide to a holder of the share the same or substantially the same proportionate risk of loss or opportunity for gain as the particular share, and
(B) that, if paid, would be deemed by subsection 260(5.1) to have been received by that other person or partnership, as the case may be, as a taxable dividend;
(4) The definition “eligible relocation” in subsection 248(1) of the Act is replaced by the following:
“eligible relocation”
« réinstallation admissible »
“eligible relocation” means a relocation of a taxpayer in respect of which the following apply:
(a) the relocation occurs to enable the taxpayer
(i) to carry on a business or to be employed at a location (in section 62 and this definition referred to as “the new work location”) that is, except if the taxpayer is absent from but resident in Canada, in Canada, or
(ii) to be a student in full-time attendance enrolled in a program at a post-secondary level at a location of a university, college or other educational institution (in section 62 and this definition referred to as “the new work location”),
(b) the taxpayer ordinarily resided before the relocation at a residence (in section 62 and this definition referred to as “the old residence”) and ordinarily resided after the relocation at a residence (in section 62 and this definition referred to as “the new residence”),
(c) except if the taxpayer is absent from but resident in Canada, both the old residence and the new residence are in Canada, and
(d) the distance between the old residence and the new work location is not less than 40 kilometres greater than the distance between the new residence and the new work location;
(5) The definition “share” in subsection 248(1) of the Act is replaced by the following:
“share”
« action »
“share”, except as the context otherwise requires, means a share or a fraction of a share of the capital stock of a corporation and, for greater certainty, a share of the capital stock of a corporation includes a share of the capital of a cooperative corporation (within the meaning assigned by subsection 136(2)), a share of the capital of an agricultural cooperative corporation (within the meaning assigned by subsection 135.1(1)) and a share of the capital of a credit union;
(6) The definition “amount” in subsection 248(1) of the Act is amended by striking out “and” at the end of paragraph (b) and by adding the following after that paragraph:
(b.1) if a taxpayer files an election in writing with the Minister of National Revenue on or before the taxpayer’s filing-due date for the 2012 taxation year, then in the case of each stock dividend declared after July 17, 2005 and paid to the taxpayer before 2013 by a corporation that is, when the dividend is paid, a non-resident corporation, the “amount” of the stock dividend is, except where subsection 95(7) applies to the dividend, the greater of
(i) the amount by which the paid-up capital of the corporation that paid the dividend is increased by reason of the payment of the dividend, and
(ii) the fair market value of the share or shares paid as a stock dividend at the time of payment, and
(7) The definition “amount” in subsection 248(1) of the Act, as amended by subsection (6), is amended by adding “and” at the end of paragraph (b) and by repealing paragraph (b.1).
(8) Paragraph (d) of the definition “Canadian real, immovable or resource property” in subsection 248(1) of the Act is replaced by the following:
(d) a share of the capital stock of a corporation, an income or a capital interest in a trust or an interest in a partnership — other than a taxable Canadian corporation, a SIFT trust (determined without reference to subsection 122.1(2)), a SIFT partnership (determined without reference to subsection 197(8)) or a real estate investment trust (as defined in subsection 122.1(1)) — if more than 50% of the fair market value of the share or interest is derived directly or indirectly from one or any combination of properties described in paragraphs (a) to (c), or
(9) Subparagraph (b)(i) of the definition “disposition” in subsection 248(1) of the Act is replaced by the following:
(i) where the property is a share, bond, debenture, note, certificate, mortgage, hypothecary claim, agreement of sale or similar property, or interest, or for civil law a right, in it, the property is in whole or in part redeemed, acquired or cancelled,
(10) The definition “disposition” in subsection 248(1) of the Act is amended by adding the following after paragraph (b):
(b.1) where the property is an interest in a life insurance policy, a disposition within the meaning of section 148,
(11) Subparagraphs (f)(i) and (ii) of the definition “disposition” in subsection 248(1) of the Act are replaced by the following:
(i) the transferor and the transferee are trusts that are, at the time of the transfer, resident in Canada,
(12) The definition “disposition” in subsection 248(1) of the Act is amended by striking out “and” at the end of paragraph (l), by adding “and” at the end of paragraph (m) and by adding the following after paragraph (m):
(n) a redemption, an acquisition or a cancellation of a share or of a right to acquire a share (which share or which right, as the case may be, is referred to in this paragraph as the “security”) of the capital stock of a corporation (referred to in this paragraph as the “issuing corporation”) held by another corporation (referred to in this paragraph as the “disposing corporation”) if
(i) the redemption, acquisition or cancellation occurs as part of a merger or combination of two or more corporations (including the issuing corporation and the disposing corporation) to form one corporate entity (referred to in this paragraph as the “new corporation”),
(ii) the merger or combination
(A) is an amalgamation (within the meaning assigned by subsection 87(1)) to which subsection 87(11) does not apply,
(B) is an amalgamation (within the meaning assigned by subsection 87(1)) to which subsection 87(11) applies, if the issuing corporation and the disposing corporation are described by subsection 87(11) as the parent and the subsidiary, respectively,
(C) is a foreign merger (within the meaning assigned by subsection 87(8.1)), or
(D) would be a foreign merger (within the meaning assigned by subsection 87(8.1)) if subparagraph 87(8.1)(c)(ii) were read without reference to the words “that was resident in a country other than Canada”, and
(iii) either
(A) the disposing corporation receives no consideration for the security, or
(B) in the case where the merger or combination is described by clause (ii)(C) or (D), the disposing corporation receives no consideration for the security other than property that was, immediately before the merger or combination, owned by the issuing corporation and that, on the merger or combination, becomes property of the new corporation;
(13) The portion of paragraph (d) of the definition “dividend rental arrangement” in subsection 248(1) of the Act after subparagraph (iii) is replaced by the following:
that, if paid, would be deemed by subsection 260(5.1) to have been received by that other person as a taxable dividend;
(14) The portion of the definition “employee benefit plan” in subsection 248(1) of the Act before paragraph (a) is replaced by the following:
“employee benefit plan”
« régime de prestations aux employés »
“employee benefit plan” means an arrangement under which contributions are made by an employer or by any person with whom the employer does not deal at arm’s length to another person (in this Act referred to as the “custodian” of an employee benefit plan) and under which one or more payments are to be made to or for the benefit of employees or former employees of the employer or persons who do not deal at arm’s length with any such employee or former employee (other than a payment that, if section 6 were read without reference to subparagraph 6(1)(a)(ii) and paragraph 6(1)(g), would not be required to be included in computing the income of the recipient or of an employee or former employee), but does not include any portion of the arrangement that is
(15) Paragraphs (d) and (e) of the definition “foreign resource property” in subsection 248(1) of the Act are replaced by the following:
(d) any right to a rental or royalty computed by reference to the amount or value of production from an oil or gas well in that country, or from a natural accumulation of petroleum or natural gas in that country, if the payer of the rental or royalty has an interest in, or for civil law a right in, the well or accumulation, as the case may be, and 90% or more of the rental or royalty is payable out of, or from the proceeds of, the production from the well or accumulation,
(e) any right to a rental or royalty computed by reference to the amount or value of production from a mineral resource in that country, if the payer of the rental or royalty has an interest in, or for civil law a right in, the mineral resource and 90% or more of the rental or royalty is payable out of, or from the proceeds of, the production from the mineral resource,
(16) The portion of the definition “former business property” in subsection 248(1) of the Act before paragraph (a) is replaced by the following:
“former business property”
« ancien bien d’entreprise »
“former business property”, in respect of a taxpayer, means a capital property of the taxpayer that was used by the taxpayer or a person related to the taxpayer primarily for the purpose of gaining or producing income from a business, and that was real or immovable property of the taxpayer, an interest of the taxpayer in real property, a right of the taxpayer in an immovable or a property that is the subject of an election under subsection 13(4.2), but does not include
(17) Paragraph (f) of the definition “short-term preferred share” in subsection 248(1) of the Act is replaced with the following:
(f) if a share of the capital stock of a corporation was issued after December 15, 1987 and at the time the share was issued the existence of the corporation was, or there was an arrangement under which it could be, limited to a period that was within five years from the date of its issue, the share is deemed to be a short-term preferred share of the corporation unless
(i) the share is a grandfathered share and the arrangement is a written arrangement entered into before December 16, 1987, or
(ii) the share is issued to an individual after April 14, 2005 under an agreement referred to in subsection 7(1), if when the individual last acquired a right under the agreement to acquire a share of the capital stock of the corporation, the existence of the corporation was not, and no arrangement was in effect under which it could be, limited to a period that was within five years from the date of that last acquisition,
(18) The portion of paragraph (d) of the definition “taxable Canadian property” in subsection 248(1) of the Act before subparagraph (i) is replaced by the following:
(d) a share of the capital stock of a corporation (other than a mutual fund corporation) that is not listed on a designated stock exchange, an interest in a partnership or an interest in a trust (other than a unit of a mutual fund trust or an income interest in a trust resident in Canada), if, at any particular time during the 60-month period that ends at that time, more than 50% of the fair market value of the share or interest, as the case may be, was derived directly or indirectly (otherwise than through a corporation, partnership or trust the shares or interests in which were not themselves taxable Canadian property at the particular time) from one or any combination of
(19) Paragraph (d) of the definition activités de recherche scientifique et de développement expérimental in subsection 248(1) of the French version of the Act is replaced by the following:
d) les travaux entrepris par le contribuable ou pour son compte relativement aux travaux de génie, à la conception, à la recherche opérationnelle, à l’analyse mathématique, à la programmation informatique, à la collecte de données, aux essais et à la recherche psychologique, lorsque ces travaux sont proportionnels aux besoins des travaux visés aux alinéas a), b) ou c) qui sont entrepris au Canada par le contribuable ou pour son compte et servent à les appuyer directement.
(20) Subsection 248(1) of the Act is amended by adding the following in alphabetical order:
“listed international agreement”
« accord international désigné »
“listed international agreement” means
(a) the Convention on Mutual Administrative Assistance in Tax Matters, concluded at Strasbourg on January 25, 1988, as amended from time to time by a protocol, or other international instrument, as ratified by Canada, or
(b) a comprehensive tax information exchange agreement that Canada has entered into and that has effect, in respect of another country or jurisdiction;
“qualifying trust annuity”
« rente admissible de fiducie »
“qualifying trust annuity” has the meaning assigned by subsection 60.011(2);
“relevant factor”
« facteur de référence »
“relevant factor” means
(a) for taxation years that end before 2010, 3, and
(b) for taxation years that end after 2009, the amount determined by the formula
1/(A – B)
where
- A
- is the percentage set out in paragraph 123(1)(a), and
- B
- is the percentage that is the corporation’s general rate reduction percentage (as defined by section 123.4) for the taxation year;
“specified proportion”
« proportion déterminée »
“specified proportion”, of a member of a partnership for a fiscal period of the partnership, means the proportion that the member’s share of the total income or loss of the partnership for the partnership’s fiscal period is of the partnership’s total income or loss for that period and, for the purpose of this definition, where that income or loss for a period is nil, that proportion shall be computed as if the partnership had income for that period in the amount of $1,000,000;
(21) Section 248 of the Act is amended by adding the following after subsection (1):
Marginal note:Non-disposition before December 24, 1998
(1.1) A redemption, an acquisition or a cancellation, at any particular time after 1971 and before December 24, 1998, of a share or of a right to acquire a share (which share or which right, as the case may be, is referred to in this subsection as the “security”) of the capital stock of a corporation (referred to in this subsection as the “issuing corporation”) held by another corporation (referred to in this subsection as the “disposing corporation”) is not a disposition (within the meaning of the definition “disposition” in section 54 as that section read in its application to transactions and events that occurred at the particular time) of the security if
(a) the redemption, acquisition or cancellation occurred as part of a merger or combination of two or more corporations (including the issuing corporation and the disposing corporation) to form one corporate entity (referred to in this subsection as the “new corporation”);
(b) the merger or combination
(i) is an amalgamation (within the meaning assigned by subsection 87(1) as it read at the particular time) to which subsection 87(11) if in force, and as it read, at the particular time did not apply,
(ii) is an amalgamation (within the meaning assigned by subsection 87(1) as it read at the particular time) to which subsection 87(11) if in force, and as it read, at the particular time applies, if the issuing corporation and the disposing corporation are described by subsection 87(11) (if in force, and as it read, at the particular time) as the parent and the subsidiary, respectively,
(iii) occurred before November 13, 1981 and is a merger of corporations that is described by subsection 87(8) (as it read in respect of the merger or combination), or
(iv) occurred after November 12, 1981 and
(A) is a foreign merger (within the meaning assigned by subsection 87(8.1) as it read in respect of the merger or combination), or
(B) all of the following conditions are met:
(I) the merger or combination is not a foreign merger (within the meaning assigned by subsection 87(8.1) as it read in respect of the merger or combination),
(II) subsection 87(8.1), as it read in respect of the merger or combination, contained a subparagraph (c)(ii), and
(III) the merger or combination would be a foreign merger (within the meaning of subsection 87(8.1), as it read in respect of the merger or combination) if that subparagraph 87(8.1)(c)(ii) were read as follows:
“(ii) if, immediately after the merger, the new foreign corporation was controlled by another foreign corporation (in this subsection referred to as the “parent corporation”), shares of the capital stock of the parent corporation,”;
and
(c) either
(i) the disposing corporation received no consideration for the security, or
(ii) in the case where the merger or combination is described by subparagraph (b)(iv), the disposing corporation received no consideration for the security other than property that was, immediately before the merger or combination, owned by the issuing corporation and that, on the merger or combination, became property of the new corporation.
(22) Paragraphs 248(8)(a) and (b) of the French version of the Act are replaced by the following:
a) un transfert, une distribution ou une acquisition de biens effectué en vertu du testament ou autre acte testamentaire d’un contribuable ou de son époux ou conjoint de fait, par suite d’un tel testament ou acte ou par l’effet de la loi en cas de succession ab intestat du contribuable ou de son époux ou conjoint de fait, est considéré comme un transfert, une distribution ou une acquisition de biens effectué par suite du décès du contribuable ou de son époux ou conjoint de fait, selon le cas;
b) un transfert, une distribution ou une acquisition de biens effectué par suite d’une renonciation ou d’un abandon par une personne qui était bénéficiaire en vertu du testament ou autre acte testamentaire d’un contribuable ou de son époux ou conjoint de fait, ou qui était héritier ab intestat de l’un ou l’autre, est considéré comme un transfert, une distribution ou une acquisition de biens effectué par suite du décès du contribuable ou de son époux ou conjoint de fait, selon le cas;
(23) Subsection 248(16) of the Act is replaced by the following:
Marginal note:Goods and services tax — input tax credit and rebate
(16) For the purposes of this Act, other than this subsection and subsection 6(8), an amount claimed by a taxpayer as an input tax credit or rebate with respect to the goods and services tax in respect of a property or service is deemed to be assistance from a government in respect of the property or service that is received by the taxpayer
(a) where the amount was claimed by the taxpayer as an input tax credit in a return under Part IX of the Excise Tax Act for a reporting period under that Act,
(i) at the particular time that is the earlier of the time that the goods and services tax in respect of the input tax credit was paid and the time that it became payable,
(A) if the particular time is in the reporting period, or
(B) if,
(I) the taxpayer’s threshold amount, determined in accordance with subsection 249(1) of the Excise Tax Act, is greater than $500,000 for the taxpayer’s fiscal year (within the meaning assigned by that Act) that includes the particular time, and
(II) the taxpayer claimed the input tax credit at least 120 days before the end of the normal reassessment period, as determined under subsection 152(3.1), for the taxpayer in respect of the taxation year that includes the particular time,
(ii) at the end of the reporting period, if
(A) subparagraph (i) does not apply, and
(B) the taxpayer’s threshold amount, determined in accordance with subsection 249(1) of the Excise Tax Act, is $500,000 or less for the fiscal year (within the meaning assigned by that Act) of the taxpayer that includes the particular time, and
(iii) in any other case, on the last day of the taxpayer’s earliest taxation year
(A) that begins after the taxation year that includes the particular time, and
(B) for which the normal reassessment period, as determined under subsection 152(3.1), for the taxpayer ends at least 120 days after the time that the input tax credit was claimed; or
(b) where the amount was claimed as a rebate with respect to the goods and services tax, at the time the amount was received or credited.
(24) Section 248 of the Act is amended by adding the following after subsection (16):
Marginal note:Quebec input tax refund and rebate
(16.1) For the purpose of this Act, other than this subsection and subsection 6(8), an amount claimed by a taxpayer as an input tax refund or a rebate with respect to the Quebec sales tax in respect of a property or service is deemed to be assistance from a government in respect of the property or service that is received by the taxpayer
(a) where the amount was claimed by the taxpayer as an input tax refund in a return under An Act respecting the Québec sales tax, R.S.Q., c. T-0.1, for a reporting period under that Act,
(i) at the particular time that is the earlier of the time that the Quebec sales tax in respect of the input tax refund was paid and the time that it became payable,
(A) if the particular time is in the reporting period, or
(B) if,
(I) the taxpayer’s threshold amount, determined in accordance with section 462 of that Act is greater than $500,000 for the taxpayer’s fiscal year (within the meaning assigned by that Act) that includes the particular time, and
(II) the taxpayer claimed the input tax refund at least 120 days before the end of the normal reassessment period, as determined under subsection 152(3.1), for the taxpayer in respect of the taxation year that includes the particular time,
(ii) at the end of the reporting period, if
(A) subparagraph (i) does not apply, and
(B) the taxpayer’s threshold amount, determined in accordance with section 462 of that Act is $500,000 or less for the fiscal year (within the meaning assigned by that Act) of the taxpayer that includes the particular time, and
(iii) in any other case, on the last day of the taxpayer’s earliest taxation year
(A) that begins after the taxation year that includes the particular time, and
(B) for which the normal reassessment period, as determined under subsection 152(3.1), for the taxpayer ends at least 120 days after the time that the input tax refund was claimed; or
(b) where the amount was claimed as a rebate with respect to the Quebec sales tax, at the time the amount was received or credited.
(25) The portion of subsection 248(17) of the Act before the portion enclosed by quotation marks is replaced by the following:
Marginal note:Application of subsection (16) to passenger vehicles and aircraft
(17) If the input tax credit of a taxpayer under Part IX of the Excise Tax Act in respect of a passenger vehicle or aircraft is determined with reference to subsection 202(4) of that Act, subparagraphs (16)(a)(i) to (iii) are to be read as they apply in respect of the passenger vehicle or aircraft, as the case may be, as follows:
(26) Section 248 of the Act is amended by adding the following after subsection (17):
Marginal note:Application of subsection (16.1) to passenger vehicles and aircraft
(17.1) If the input tax refund of a taxpayer under An Act respecting the Québec sales tax, R.S.Q., c. T-0.1, in respect of a passenger vehicle or aircraft is determined with reference to section 252 of that Act, subparagraphs (16.1)(a)(i) to (iii) are to be read as they apply in respect of the passenger vehicle or aircraft, as the case may be, as follows:
“(i) at the beginning of the first taxation year or fiscal period of the taxpayer that begins after the end of the taxation year or fiscal period, as the case may be, in which the Quebec sales tax in respect of such property was considered for the purposes of determining the input tax refund to be payable, if the tax was considered for the purposes of determining the input tax refund to have become payable in the reporting period, or
(ii) if no such tax was considered for the purposes of determining the input tax refund to have become payable in the reporting period, at the end of the reporting period; or”.
Marginal note:Input tax credit on assessment
(17.2) An amount in respect of an input tax credit that is deemed by subsection 296(5) of the Excise Tax Act to have been claimed in a return or application filed under Part IX of that Act is deemed to have been so claimed for the reporting period under that Act that includes the time when the Minister makes the assessment referred to in that subsection.
Marginal note:Quebec input tax refund on assessment
(17.3) An amount in respect of an input tax refund that is deemed by section 30.5 of the Tax Administration Act, R.S.Q., c. A-6.002, to have been claimed is deemed to have been so claimed for the reporting period under An Act respecting the Québec sales tax, R.S.Q., c. T-0.1, that includes the day on which an assessment is issued to the taxpayer indicating that the refund has been allocated under that section 30.5.
(27) Section 248 of the Act is amended by adding the following after subsection (18):
Marginal note:Repayment of Quebec input tax refund
(18.1) For the purposes of this Act, if an amount is added at a particular time in determining the net tax of a taxpayer under An Act respecting the Québec sales tax, R.S.Q., c. T-0.1, in respect of an input tax refund relating to property or service that had been previously deducted in determining the net tax of the taxpayer, that amount is deemed to be assistance repaid at the particular time in respect of the property or service under a legal obligation to repay all or part of that assistance.
(28) Paragraphs 248(23.1)(a) and (b) of the French version of the Act are replaced by the following:
a) soit transféré ou distribué à la personne qui était l’époux ou le conjoint de fait du contribuable au moment du décès de celui-ci, ou acquis par cette personne, le bien est réputé avoir été ainsi transféré, distribué ou acquis, selon le cas, par suite de ce décès;
b) soit transféré ou distribué à la succession du contribuable, ou acquis par celle-ci, le bien est réputé avoir été ainsi transféré, distribué ou acquis, selon le cas, immédiatement avant le moment immédiatement avant le décès.
(29) Subparagraph 248(25.3)(c)(i) of the Act is replaced by the following:
(i) the particular unit is capital property and the amount is not proceeds of disposition of a capital interest in the trust, or
(30) Section 248 of the Act is amended by adding the following after subsection (29):
Marginal note:Intention to give
(30) The existence of an amount of an advantage in respect of a transfer of property does not in and by itself disqualify the transfer from being a gift to a qualified donee if
(a) the amount of the advantage does not exceed 80% of the fair market value of the transferred property; or
(b) the transferor of the property establishes to the satisfaction of the Minister that the transfer was made with the intention to make a gift.
Marginal note:Eligible amount of gift or monetary contribution
(31) The eligible amount of a gift or monetary contribution is the amount by which the fair market value of the property that is the subject of the gift or monetary contribution exceeds the amount of the advantage, if any, in respect of the gift or monetary contribution.
Marginal note:Amount of advantage
(32) The amount of the advantage in respect of a gift or monetary contribution by a taxpayer is the total of
(a) the total of all amounts, other than an amount referred to in paragraph (b), each of which is the value, at the time the gift or monetary contribution is made, of any property, service, compensation, use or other benefit that the taxpayer, or a person or partnership who does not deal at arm’s length with the taxpayer, has received, obtained or enjoyed, or is entitled, either immediately or in the future and either absolutely or contingently, to receive, obtain, or enjoy
(i) that is consideration for the gift or monetary contribution,
(ii) that is in gratitude for the gift or monetary contribution, or
(iii) that is in any other way related to the gift or monetary contribution, and
(b) the limited-recourse debt, determined under subsection 143.2(6.1), in respect of the gift or monetary contribution at the time the gift or monetary contribution is made.
Marginal note:Cost of property acquired by donor
(33) The cost to a taxpayer of a property, acquired by the taxpayer in circumstances where subsection (32) applies to include the value of the property in computing the amount of the advantage in respect of a gift or monetary contribution, is equal to the fair market value of the property at the time the gift or monetary contribution is made.
Marginal note:Repayment of limited-recourse debt
(34) If at any time in a taxation year a taxpayer has paid an amount (in this subsection referred to as the “repaid amount”) on account of the principal amount of an indebtedness which was, before that time, an unpaid principal amount that was a limited-recourse debt referred to in subsection 143.2(6.1) (in this subsection referred to as the “former limited-recourse debt”) in respect of a gift or monetary contribution (in this subsection referred to as the “original gift” or “original monetary contribution”, respectively, as the case may be) of the taxpayer (otherwise than by way of an assignment or transfer of a guarantee, security or similar indemnity or covenant, or by way of a payment in respect of which any taxpayer referred to in subsection 143.2(6.1) has incurred an indebtedness that would be a limited-recourse debt referred to in that subsection if that indebtedness were in respect of a gift or monetary contribution made at the time that that indebtedness was incurred), the following rules apply:
(a) if the former limited-recourse debt is in respect of the original gift, for the purposes of sections 110.1 and 118.1, the taxpayer is deemed to have made in the taxation year a gift to a qualified donee, the eligible amount of which deemed gift is the amount, if any, by which
(i) the amount that would have been the eligible amount of the original gift, if the total of all such repaid amounts paid at or before that time were paid immediately before the original gift was made,
exceeds
(ii) the total of
(A) the eligible amount of the original gift, and
(B) the eligible amount of all other gifts deemed by this paragraph to have been made before that time in respect of the original gift; and
(b) if the former limited-recourse debt is in respect of the original monetary contribution, for the purposes of subsection 127(3), the taxpayer is deemed to have made in the taxation year a monetary contribution referred to in that subsection, the eligible amount of which is the amount, if any, by which
(i) the amount that would have been the eligible amount of the original monetary contribution, if the total of all such repaid amounts paid at or before that time were paid immediately before the original monetary contribution was made,
exceeds
(ii) the total of
(A) the eligible amount of the original monetary contribution, and
(B) the eligible amount of all other monetary contributions deemed by this paragraph to have been made before that time in respect of the original monetary contribution.
Marginal note:Deemed fair market value
(35) For the purposes of subsection (31), paragraph 69(1)(b) and subsections 110.1(2.1) and (3) and 118.1(5.4) and (6), the fair market value of a property that is the subject of a gift made by a taxpayer to a qualified donee is deemed to be the lesser of the fair market value of the property otherwise determined and the cost or, in the case of capital property, the adjusted cost base or, in the case of a life insurance policy in respect of which the taxpayer is a policyholder, the adjusted cost basis (as defined in subsection 148(9)), of the property to the taxpayer immediately before the gift is made if
(a) the taxpayer acquired the property under a gifting arrangement that is a tax shelter as defined in subsection 237.1(1); or
(b) except where the gift is made as a consequence of the taxpayer’s death,
(i) the taxpayer acquired the property less than three years before the day that the gift is made, or
(ii) the taxpayer acquired the property less than 10 years before the day that the gift is made and it is reasonable to conclude that, at the time the taxpayer acquired the property, one of the main reasons for the acquisition was to make a gift of the property to a qualified donee.
Marginal note:Non-arm’s length transaction
(36) If a taxpayer acquired a property, otherwise than by reason of the death of an individual, that is the subject of a gift to which subsection (35) applies because of subparagraph (35)(b)(i) or (ii) and the property was, at any time within the 3-year or 10-year period, respectively, that ends when the gift was made, acquired by a person or partnership with whom the taxpayer does not deal at arm’s length, for the purpose of applying subsection (35) to the taxpayer, the cost, or in the case of capital property, the adjusted cost base, of the property to the taxpayer immediately before the gift is made is deemed to be equal to the lowest amount that is the cost, or in the case of capital property, the adjusted cost base, to the taxpayer or any of those persons or partnerships immediately before the property was disposed of by that person or partnership.
Marginal note:Non-application of subsection (35)
(37) Subsection (35) does not apply to a gift
(a) of inventory;
(b) of real property or an immovable situated in Canada;
(c) of an object referred to in subparagraph 39(1)(a)(i.1);
(d) of property to which paragraph 38(a.1) or (a.2) applies;
(e) of a share of the capital stock of a corporation if
(i) the share was issued by the corporation to the donor,
(ii) immediately before the gift, the corporation was controlled by the donor, a person related to the donor or a group of persons each of whom is related to the donor, and
(iii) subsection (35) would not have applied in respect of the consideration for which the share was issued had that consideration been donated by the donor to the qualified donee when the share was so donated;
(f) by a corporation of property if
(i) the property was acquired by the corporation in circumstances to which subsection 85(1) or (2) applied,
(ii) immediately before the gift, the shareholder from whom the corporation acquired the property controlled the corporation or was related to a person or each member of a group of persons that controlled the corporation, and
(iii) subsection (35) would not have applied in respect of the property had the property not been transferred to the corporation and had the shareholder made the gift to the qualified donee when the corporation so made the gift; or
(g) of a property that was acquired in circumstances where subsection 70(6) or (9) or 73(1), (3) or (4) applied, unless subsection (36) would have applied if this subsection were read without reference to this paragraph.
Marginal note:Artificial transactions
(38) The eligible amount of a particular gift of property by a taxpayer is nil if it can reasonably be concluded that the particular gift relates to a transaction or series of transactions
(a) one of the purposes of which is to avoid the application of subsection (35) to a gift of any property; or
(b) that would, if this Act were read without reference to this paragraph, result in a tax benefit to which subsection 245(2) applies.
Marginal note:Substantive gift
(39) If a taxpayer disposes of a property (in this subsection referred to as the “substantive gift”) that is a capital property or an eligible capital property of the taxpayer, to a recipient that is a registered party, a registered association or a candidate, as those terms are defined in the Canada Elections Act, or that is a qualified donee, subsection (35) would have applied in respect of the substantive gift if it had been the subject of a gift by the taxpayer to a qualified donee, and all or a part of the proceeds of disposition of the substantive gift are (or are substituted, directly or indirectly in any manner whatever, for) property that is the subject of a gift or monetary contribution by the taxpayer to the recipient or any person dealing not at arm’s length with the recipient, the following rules apply:
(a) for the purpose of subsection (31), the fair market value of the property that is the subject of the gift or monetary contribution made by the taxpayer is deemed to be that proportion of the lesser of the fair market value of the substantive gift and the cost, or if the substantive gift is capital property of the taxpayer, the adjusted cost base, of the substantive gift to the taxpayer immediately before the disposition to the recipient, that the fair market value otherwise determined of the property that is the subject of the gift or monetary contribution is of the proceeds of disposition of the substantive gift;
(b) if the substantive gift is capital property of the taxpayer, for the purpose of the definitions “proceeds of disposition” of property in subsection 13(21) and section 54, the sale price of the substantive gift is to be reduced by the amount by which the fair market value of the property that is the subject of the gift (determined without reference to this section) exceeds the fair market value determined under paragraph (a); and
(c) if the substantive gift is eligible capital property of the taxpayer, the amount determined under paragraph (a) in the description of E in the definition “cumulative eligible capital” in subsection 14(5) in respect of the substantive gift is to be reduced by the amount by which the fair market value of the property that is the subject of the gift (determined without reference to this section) exceeds the fair market value determined under paragraph (a).
Marginal note:Inter-charity gifts
(40) Subsection (30) does not apply in respect of a gift received by a qualified donee from a registered charity.
Marginal note:Information not provided
(41) Notwithstanding subsection (31), the eligible amount of a gift or monetary contribution made by a taxpayer is nil if the taxpayer does not — before a receipt referred to in subsection 110.1(2), 118.1(2) or 127(3), as the case may be, is issued in respect of the gift or monetary contribution — inform the qualified donee or the recipient, as the case may be, of any circumstances in respect of which subsection (31), (35), (36), (38) or (39) requires that the eligible amount of the gift or monetary contribution be less than the fair market value, determined without reference to subsections (35), 110.1(3) and 118.1(6), of the property that is the subject of the gift or monetary contribution.
(31) The portion of subsection 248(35) of the Act before paragraph (a), as enacted by subsection (30), is replaced by the following:
Marginal note:Deemed fair market value
(35) For the purposes of subsection (31), paragraph 69(1)(b) and subsections 110.1(2.1) and (3) and 118.1(5.4), (6) and (13.2), the fair market value of a property that is the subject of a gift made by a taxpayer to a qualified donee is deemed to be the lesser of the fair market value of the property otherwise determined and the cost or, in the case of capital property, the adjusted cost base or, in the case of a life insurance policy in respect of which the taxpayer is a policyholder, the adjusted cost basis (as defined in subsection 148(9)), of the property to the taxpayer immediately before the gift is made if
(32) Subsection (1) applies in determining whether a person is, for the 2001 and subsequent taxation years, a common-law partner of a taxpayer, except that subsection does not apply to so determine whether a person is a common-law partner of a taxpayer for a taxation year to which an election, made under section 144 of the Modernization of Benefits and Obligations Act, applied before February 27, 2004. However, on and after February 27, 2004, no such election may be made to affect a current or subsequent taxation year.
(33) Subsections (2), (5) and (10) apply to taxation years that begin after 2006.
(34) Subsection (3) applies
(a) to arrangements made after December 20, 2002; and
(b) to an arrangement made after November 2, 1998 and before December 21, 2002 if the parties to the arrangement jointly so elect in writing and file the election with the Minister of National Revenue within 90 days after the day on which this Act receives royal assent, except that the reference to “subsection 260(5.1)” in clause (b)(ii)(B) of the definition “dividend rental arrangement” in subsection 248(1) of the Act, as enacted by subsection (3), is to be, in the application of that definition to any of those arrangements made before 2002, read as a reference to “subsection 260(5)”.
(35) Subsection (4) applies to taxation years that end after October 31, 2011.
(36) Subsection (6) is deemed to have come into force on July 17, 2005 and, if a taxpayer files an election referred to in paragraph (b.1) of the definition “amount” in subsection 248(1) of the Act, as enacted by subsection (6), on or before the taxpayer’s filing-due date for the taxation year in which this Act receives royal assent, the election is deemed to have been filed on time.
(37) Subsection (7) applies to taxation years that begin after 2012.
(38) Subsection (8) applies to taxation years to which subsections 258(1) to (10) of this Act apply.
(39) Subsections (9) and (12) apply to redemptions, acquisitions and cancellations that occur after December 23, 1998.
(40) Subsection (11) applies to transfers that occur after February 27, 2004.
(41) Subsection (13) applies to arrangements made after 2001 and before December 21, 2002, other than an arrangement to which paragraph (34)(b) applies.
(42) Subsection (14) is deemed to have come into force on November 1, 2011.
(43) Subsection (15) applies to property acquired after December 20, 2002.
(44) Subsection (16) applies in respect of dispositions and terminations that occur after December 20, 2002.
(45) Subsection (17) applies to shares issued after April 14, 2005.
(46) Subsection (18) applies in determining after March 4, 2010 whether a property is taxable Canadian property of a taxpayer.
(47) The definition “qualifying trust annuity” in subsection 248(1) of the Act, as enacted by subsection (20), is deemed to have come into force on January 1, 1989.
(48) The definition “relevant factor” in subsection 248(1) of the Act, as enacted by subsection (20), applies to the 2003 and subsequent taxation years.
(49) The definition “specified proportion” in subsection 248(1) of the Act, as enacted by subsection (20), applies after December 20, 2002.
(50) Subsections (23) and (25) and subsection 248(17.2) of the Act, as enacted by subsection (26), apply in respect of input tax credits that become eligible to be claimed in taxation years that begin after December 20, 2002.
(51) Subsection (24) and subsections 248(17.1) and (17.3) of the Act, as enacted by subsection (26), apply in respect of input tax refunds and rebates that become eligible to be claimed in taxation years that begin after February 27, 2004, except that, before April 1, 2011, the reference to “the Tax Administration Act, R.S.Q., c. A-6.002” in subsection 248(17.3) of the Act, as enacted by subsection (26), is to be read as a reference to “An Act respecting the Ministère du Revenu, R.S.Q., c. M-31”.
(52) Subsection (27) is deemed to have come into force on February 28, 2004.
(53) Subsection (29) applies to units issued after December 20, 2002.
(54) Subsection (30) applies in respect of gifts and monetary contributions made after December 20, 2002, except that
(a) subsection 248(32) of the Act, as enacted by subsection (30), is to be read without reference to
(i) its paragraph (b) in respect of gifts and monetary contributions made before February 19, 2003, and
(ii) its subparagraph (a)(iii) in respect of gifts and monetary contributions made before 6:00 p.m. (Eastern Standard Time) on December 5, 2003;
(b) subsection 248(34) of the Act, as enacted by subsection (30), does not apply in respect of gifts and monetary contributions made before February 19, 2003;
(c) subsections 248(35), (37) and (38) of the Act, as enacted by subsection (30), apply only in respect of gifts made on or after 6:00 p.m. (Eastern Standard Time) on December 5, 2003 but
(i) in respect of gifts made after that time but before March 18, 2007, paragraph 248(37)(d) of the Act, as enacted by subsection (30), is to be read as follows:
(d) of property to which paragraph 38(a.1) or (a.2) would apply, if those paragraphs were read without reference to “other than a private foundation”;
(ii) in respect of gifts made after that time but before July 18, 2005, subsection 248(38) of the Act, as enacted by subsection (30), is to be read as follows:
(38) If it can reasonably be concluded that one of the reasons for a series of transactions, that includes a disposition or acquisition of a property of a taxpayer that is the subject of a gift by the taxpayer, is to increase the amount that would be deemed by subsection (35) to be the fair market value of the property, the cost of the property for the purpose of that subsection is deemed to be the lowest cost to the taxpayer to acquire that property or an identical property at any time.
(d) subsection 248(36) of the Act, as enacted by subsection (30), does not apply in respect of gifts or monetary contributions made before July 18, 2005;
(e) subsection 248(39) of the Act, as enacted by subsection (30), does not apply in respect of gifts or monetary contributions made before February 27, 2004;
(f) subsection 248(40) of the Act, as enacted by subsection (30), does not apply in respect of gifts made before November 9, 2006; and
(g) subsection 248(41) of the Act, as enacted by subsection (30), does not apply in respect of gifts and monetary contributions made before 2006.
(55) Subsection (31) is deemed to have come into force on October 24, 2012.
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