Budget Implementation Act, 2018, No. 1 (S.C. 2018, c. 12)
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Assented to 2018-06-21
PART 1Amendments to the Income Tax Act and to Related Legislation (continued)
R.S., c. 1 (5th Supp.)Income Tax Act (continued)
14 (1) Paragraph 121(a) of the Act is replaced by the following:
(2) Subsection (1) applies to the 2018 and subsequent taxation years.
15 (1) Paragraph (b) of the definition adjusted income in subsection 122.5(1) of the Act is replaced by the following:
(b) deductible under paragraph 20(1)(ww) or 60(y) or (z). (revenu rajusté)
(2) Subsection (1) applies to the 2018 and subsequent taxation years.
16 (1) Paragraph (b) of the definition adjusted income in section 122.6 of the Act is replaced by the following:
(b) deductible under paragraph 20(1)(ww) or 60(y) or (z); (revenu modifié)
(2) Subsection (1) applies to the 2018 and subsequent taxation years.
17 The portion of subsection 122.61(5) of the Act before paragraph (a) is replaced by the following:
Marginal note:Annual adjustment
(5) Each amount expressed in dollars in subsection (1) shall be adjusted so that, where the base taxation year in relation to a particular month is after 2016, the amount to be used under that subsection for the month is the total of
18 (1) The heading of Subdivision A.2 of Division E of Part I of the Act is replaced by the following:
Canada Workers Benefit
(2) Subsection (1) comes into force on January 1, 2019.
19 (1) Paragraph (c) of the definition adjusted net income in subsection 122.7(1) of the Act is replaced by the following:
(c) in computing that income, no amount were deductible under paragraph 20(1)(ww) or 60(y) or (z). (revenu net rajusté)
(2) The descriptions of A and B in subsection 122.7(2) of the Act are replaced by the following:
- A
- is
(a) if the individual had neither an eligible spouse nor an eligible dependant, for the taxation year, the lesser of $1,355 and 26% of the amount, if any, by which the individual’s working income for the taxation year exceeds $3,000, or
(b) if the individual had an eligible spouse or an eligible dependant, for the taxation year, the lesser of $2,335 and 26% of the amount, if any, by which the total of the working incomes of the individual and, if applicable, of the eligible spouse, for the taxation year, exceeds $3,000; and
- B
- is
(a) if the individual had neither an eligible spouse nor an eligible dependant, for the taxation year, 12% of the amount, if any, by which the adjusted net income of the individual for the taxation year exceeds $12,820, or
(b) if the individual had an eligible spouse or an eligible dependant, for the taxation year, 12% of the amount, if any, by which the total of the adjusted net incomes of the individual and, if applicable, of the eligible spouse, for the taxation year, exceeds $17,025.
(3) The descriptions of C and D in subsection 122.7(3) of the Act are replaced by the following:
- C
- is the lesser of $700 and 26% of the amount, if any, by which the individual’s working income for the taxation year exceeds $1,150; and
- D
- is
(a) if the individual had neither an eligible spouse nor an eligible dependant, for the taxation year, 12% of the amount, if any, by which the individual’s adjusted net income for the taxation year exceeds $24,111,
(b) if the individual had an eligible spouse for the taxation year who was not entitled to deduct an amount under subsection 118.3(1) for the taxation year, or had an eligible dependant for the taxation year, 12% of the amount, if any, by which the total of the adjusted net incomes of the individual and, if applicable, of the eligible spouse, for the taxation year, exceeds $36,483, or
(c) if the individual had an eligible spouse for the taxation year who was entitled to deduct an amount under subsection 118.3(1) for the taxation year, 6% of the amount, if any, by which the total of the adjusted net incomes of the individual and of the eligible spouse, for the taxation year, exceeds $36,483.
(4) Subsection (1) applies to the 2018 and subsequent taxation years.
(5) Subsections (2) and (3) come into force on January 1, 2019.
20 (1) Paragraphs 125(1.1)(a) and (b) of the Act are replaced by the following:
(a) that proportion of 17.5% that the number of days in the taxation year that are before 2018 is of the number of days in the taxation year,
(b) that proportion of 18% that the number of days in the taxation year that are in 2018 is of the number of days in the taxation year, and
(c) that proportion of 19% that the number of days in the taxation year that are after 2018 is of the number of days in the taxation year.
(2) Subsection 125(5.1) of the Act is replaced by the following:
Marginal note:Business limit reduction
(5.1) Notwithstanding subsections (2), (3), (4) and (5), a Canadian-controlled private corporation’s business limit for a particular taxation year ending in a calendar year is the amount, if any, by which its business limit otherwise determined for the particular taxation year exceeds the greater of
(a) the amount determined by the formula
A × B/$11,250
where
- A
- is the amount that would, but for this subsection, be the corporation’s business limit for the particular taxation year, and
- B
- is the amount determined by the formula
0.225% × (C – $10 million)
where
- C
- is
(i) if, in both the particular taxation year and the preceding taxation year, the corporation is not associated with any corporation, the taxable capital employed in Canada (within the meaning assigned by subsection 181.2(1) or 181.3(1) or section 181.4, as the case may be) of the corporation for the preceding taxation year,
(ii) if, in the particular taxation year, the corporation is not associated with any corporation but was associated with one or more corporations in the preceding taxation year, the taxable capital employed in Canada (within the meaning assigned by subsection 181.2(1) or 181.3(1) or section 181.4, as the case may be) of the corporation for the particular taxation year, or
(iii) if, in the particular taxation year, the corporation is associated with one or more particular corporations, the total of all amounts each of which is the taxable capital employed in Canada (within the meaning assigned by subsection 181.2(1) or 181.3(1) or section 181.4, as the case may be) of the corporation or of any of the particular corporations for its last taxation year that ended in the preceding calendar year, and
(b) the amount determined by the formula
D/$500,000 × 5(E − $50,000)
where
- D
- is the amount determined for A in paragraph (a), and
- E
- is the total of all amounts each of which is the adjusted aggregate investment income of the corporation, or of any corporation with which it is associated at any time in the particular taxation year, for each taxation year of the corporation, or associated corporation, as the case may be, that ended in the preceding calendar year.
Marginal note:Anti-avoidance
(5.2) A particular corporation and another corporation are deemed to be associated with each other at a particular time for the purposes of paragraph (5.1)(b) if
(a) the particular corporation lends or transfers property at any time, either directly or indirectly, by means of a trust or by any other means whatever, to the other corporation;
(b) the other corporation is, at the particular time, related to the particular corporation but is not associated with it; and
(c) it may reasonably be considered that one of the reasons the loan or transfer was made was to reduce the amount determined for E in paragraph (5.1)(b) in respect of the particular corporation, or of any corporation with which it is associated, for a taxation year.
(3) Subsection 125(7) of the Act is amended by adding the following in alphabetical order:
- active asset
active asset, of a particular corporation at any time, means property that is
(a) used at that time principally in an active business carried on primarily in Canada by the particular corporation or by a Canadian-controlled private corporation that is related to the particular corporation,
(b) a share of the capital stock of another corporation if, at that time,
(i) the other corporation is connected with the particular corporation (within the meaning assigned by subsection 186(4) on the assumption that the other corporation is at that time a payer corporation within the meaning of that subsection), and
(ii) the share would be a qualified small business corporation share (as defined in subsection 110.6(1)) if
(c) an interest in a partnership, if
(i) at that time, the fair market value of the particular corporation’s interest in the partnership is equal to or greater than 10% of the total fair market value of all interests in the partnership,
(ii) throughout the 24–month period ending before that time, more than 50% of the fair market value of the property of the partnership was attributable to property described in this paragraph or in paragraph (a) or (b), and
(iii) at that time, all or substantially all of the fair market value of the property of the partnership was attributable to property described in this paragraph or in paragraph (a) or (b); (bien actif)
- adjusted aggregate investment income
adjusted aggregate investment income, of a corporation (other than a corporation that is deemed not to be a private corporation by subsection 136(1) or 137(7) or section 141.1) for a taxation year, means the amount that would be the aggregate investment income (as defined in subsection 129(4)) of the corporation for the year, if
(a) paragraph (a) of that definition read as follows:
(a) the amount, if any, by which
(i) the eligible portion of the corporation’s taxable capital gains (other than taxable capital gains from the disposition of property that is, at the time of disposition, an active asset of the corporation) for the year
exceeds
(ii) the eligible portion of its allowable capital losses (other than allowable capital losses from the disposition of property that is, at the time of disposition, an active asset of the corporation) for the year, or
(b) subparagraph (b)(iii) of that definition read as follows:
(iii) a dividend from a corporation connected with it (within the meaning assigned by subsection 186(4) on the assumption that the corporation is at that time a payer corporation within the meaning of that subsection), and
(c) paragraph (a) of the definition income or loss in subsection 129(4) read as follows:
(a) includes
(i) the income or loss from a specified investment business carried on by it, and
(ii) amounts in respect of a life insurance policy that are included in computing the corporation’s income for the year, to the extent that the amounts would not otherwise be included in the computation of the corporation’s aggregate investment income, but
and
(d) no amount were deducted under subsection 91(4) by the corporation in computing its income for the year; (revenu de placement total ajusté)
(4) Subsection (1) applies to the 2018 and subsequent taxation years.
(5) Subsections (2) and (3) apply to taxation years that begin after 2018. However, subsections (2) and (3), 7(1), 22(1) to (5), 23(1) and (2) and 29(1) also apply to a taxation year of a corporation that begins before 2019 and ends after 2018 if
(a) the corporation’s preceding taxation year was, because of a transaction or event or a series of transactions or events, shorter than it would have been in the absence of that transaction, event or series; and
(b) one of the reasons for the transaction, event or series was to defer the application of subsections (2) and (3) or 22(1) to (5) to the corporation.
- Date modified: