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Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.))

Full Document:  

Act current to 2022-09-22 and last amended on 2022-09-01. Previous Versions

PART XI.01Taxes in Respect of Registered Plans (continued)

Marginal note:Tax payable on excess TFSA amount

 If, at any time in a calendar month, an individual has an excess TFSA amount, the individual shall, in respect of that month, pay a tax under this Part equal to 1% of the highest such amount in that month.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 2008, c. 28, s. 31

Marginal note:Tax payable on non-resident contributions

 If, at a particular time, a non-resident individual makes a contribution under a TFSA (other than a contribution that is a qualifying transfer or an exempt contribution), the individual shall pay a tax under this Part equal to 1% of the amount of the contribution in respect of each month that ends after the particular time and before the earlier of

  • (a) the first time after the particular time at which the amount of the contribution is equalled or exceeded by the total of all amounts each of which is a distribution

    • (i) that is made after the particular time under a TFSA of which the individual is the holder, and

    • (ii) that the individual designates in prescribed manner to be a distribution in connection with the contribution and not in connection with any other contribution, and

  • (b) the time at which the individual becomes resident in Canada.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 2008, c. 28, s. 31
  • 2009, c. 2, s. 69

Marginal note:Tax payable on prohibited or non-qualified investment

  •  (1) The controlling individual of a registered plan that governs a trust shall pay a tax under this Part for a calendar year if, at any time in the year, the trust acquires property that is a prohibited investment, or a non-qualified investment, for the trust.

  • Marginal note:Amount of tax payable

    (2) The amount of tax payable in respect of each property described in subsection (1) is 50% of the fair market value of the property at the time referred to in that subsection.

  • Marginal note:Both prohibited and non-qualified investment

    (3) For the purposes of this section and subsections 146(10.1), 146.1(5), 146.2(6), 146.3(9), 146.4(5) and 207.01(6), if a trust governed by a registered plan holds property at any time that is, for the trust, both a prohibited investment and a non-qualified investment, the property is deemed at that time not to be a non-qualified investment, but remains a prohibited investment, for the trust.

  • Marginal note:Refund of tax on disposition of investment

    (4) If in a calendar year a trust governed by a registered plan disposes of a property in respect of which a tax is imposed under subsection (1) on the controlling individual of the registered plan, the controlling individual is entitled to a refund for the year of an amount equal to

    • (a) except where paragraph (b) applies, the amount of the tax so imposed; or

    • (b) nil,

      • (i) if it is reasonable to consider that the controlling individual knew, or ought to have known, at the time the property was acquired by the trust, that it was, or would become, a property described in subsection (1), or

      • (ii) if the property is not disposed of by the trust before the end of the calendar year following the calendar year in which the tax arose, or any later time that the Minister considers reasonable in the circumstances.

  • Marginal note:Apportionment of refund

    (5) If more than one person is entitled to a refund under subsection (4) for a calendar year in respect of the disposition of a property, the total of all amounts so refundable shall not exceed the amount that would be so refundable for the year to any one of those persons in respect of that disposition if that person were the only person entitled to a refund for the year under that subsection in respect of the disposition. If the persons cannot agree as to what portion of the refund each can so claim, the Minister may fix the portions.

  • Marginal note:Liability for tax

    (6) Each person who is a holder of a RDSP or a subscriber of a RESP at the time that a tax is imposed under subsection (1) in connection with the plan is jointly and severally, or solidarily, liable to pay the tax.

  • (7) [Repealed, 2010, c. 25, s. 58]

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 2008, c. 28, s. 31
  • 2009, c. 2, s. 70
  • 2010, c. 25, s. 58
  • 2011, c. 24, s. 65
  • 2013, c. 40, s. 75
  • 2017, c. 33, s. 69

Marginal note:Tax payable in respect of advantage

  •  (1) A tax is payable under this Part for a calendar year if, in the year, an advantage in relation to a registered plan is extended to, or is received or receivable by, the controlling individual of the registered plan, a trust governed by the registered plan, or any other person who does not deal at arm’s length with the controlling individual.

  • Marginal note:Amount of tax payable

    (2) The amount of tax payable in respect of an advantage described in subsection (1) is

    • (a) in the case of a benefit, the fair market value of the benefit;

    • (b) in the case of a loan or an indebtedness, the amount of the loan or indebtedness; and

    • (c) in the case of a registered plan strip, the amount of the registered plan strip.

  • Marginal note:Liability for tax

    (3) Each controlling individual of a registered plan in connection with which a tax is imposed under subsection (1) is jointly and severally, or solidarily, liable to pay the tax except that, if the advantage is extended by the issuer, carrier or promoter of the registered plan or by a person with whom the issuer, carrier or promoter is not dealing at arm’s length, the issuer, carrier or promoter, and not the controlling individual, is liable to pay the tax.

  • Marginal note:Transitional rule

    (4) If an individual so elects before March 2, 2013 in prescribed form, subsection (1) does not apply in respect of any advantage that is an amount included in the calculation of the transitional prohibited investment benefit of the individual for a taxation year provided that the transitional prohibited investment benefit

    • (a) is paid to the individual, from a RRIF or RRSP of the individual, on or before the later of April 2, 2013 and the day that is 90 days after the end of the taxation year; and

    • (b) is not paid by way of transfer to another RRIF or RRSP of the individual.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 2008, c. 28, s. 31
  • 2010, c. 25, s. 59
  • 2011, c. 24, s. 66
  • 2013, c. 40, s. 76
  • 2017, c. 33, s. 70

Marginal note:Waiver of tax payable

  •  (1) If an individual would otherwise be liable to pay a tax under this Part because of section 207.02 or 207.03, the Minister may waive or cancel all or part of the liability if

    • (a) the individual establishes to the satisfaction of the Minister that the liability arose as a consequence of a reasonable error; and

    • (b) one or more distributions are made without delay under a TFSA of which the individual is the holder, the total amount of which is not less than the total of

      • (i) the amount in respect of which the individual would otherwise be liable to pay the tax, and

      • (ii) income (including a capital gain) that is reasonably attributable, directly or indirectly, to the amount described in subparagraph (i).

  • Marginal note:Waiver of tax payable

    (2) If a person would otherwise be liable to pay a tax under this Part because of subsection 207.04(1) or section 207.05, the Minister may waive or cancel all or part of the liability where the Minister considers it just and equitable to do so having regard to all the circumstances, including

    • (a) whether the tax arose as a consequence of reasonable error;

    • (b) the extent to which the transaction or series of transactions that gave rise to the tax also gave rise to another tax under this Act; and

    • (c) the extent to which payments have been made from the person’s registered plan.

  • (3) [Repealed, 2013, c. 40, s. 77]

  • Marginal note:Other powers of Minister

    (4) The Minister may notify the controlling individual of a registered plan that the controlling individual must cause a payment to be made from the registered plan to the controlling individual within 90 days of receipt of the notice, the amount of which is not less than the amount of specified non-qualified investment income in respect of the registered plan.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 2008, c. 28, s. 31
  • 2009, c. 2, s. 71
  • 2010, c. 25, s. 60
  • 2011, c. 24, s. 67
  • 2013, c. 40, s. 77

Marginal note:Income inclusion

 A holder of a TFSA shall include in computing the holder’s income for a taxation year under Part I any portion of a distribution made in the year that is described in subparagraph (a)(ii) of the definition specified distribution in subsection 207.01(1) or subparagraph 207.06(1)(b)(ii) or that is specified by the Minister as part of an agreement to waive or cancel a liability for tax under this Part.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 2010, c. 25, s. 61
  • 2013, c. 40, s. 78

Marginal note:Special limit on tax payable

 If an individual is liable to pay an amount of tax under section 207.05 and under sections 207.02 or 207.03 in respect of the same contribution for the same calendar year, the tax payable under section 207.05 for the year shall be reduced by the amount of the tax payable under section 207.02 or 207.03, as the case may be, for the year.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 2010, c. 25, s. 61

Marginal note:Return and payment of tax

  •  (1) A person who is liable to pay tax under this Part for all or any part of a calendar year shall before July of the following calendar year

    • (a) file with the Minister a return for the year under this subsection in prescribed form and containing prescribed information including

      • (i) an estimate of the amount of tax payable under this Part by the person in respect of the year, and

      • (ii) an estimate of the amount of the person’s allowable refund, if any, for the year; and

    • (b) pay to the Receiver General the amount, if any, by which the amount of the person’s tax payable under this Part in respect of the year exceeds the person’s allowable refund, if any, for the year.

  • Marginal note:Multiple holders or subscribers

    (1.1) If two or more holders of a RDSP, or two or more subscribers of a RESP, are jointly and severally, or solidarily, liable with each other to pay a tax under this Part for a calendar year in connection with the plan,

    • (a) a payment by any of the holders, or any of the subscribers, on account of that tax liability shall to the extent of the payment discharge the joint liability; and

    • (b) a return filed by one of the holders, or one of the subscribers, as required by this Part for the year is deemed to have been filed by each other holder, or each other subscriber, in respect of the joint liability to which the return relates.

  • Marginal note:Refund

    (2) If a person has filed a return under this Part for a calendar year within three years after the end of the year, the Minister

    • (a) may, on sending the notice of assessment for the year, refund without application any allowable refund of the person for the year, to the extent that it was not applied against the person’s tax payable under paragraph (1)(b); and

    • (b) shall, with all due dispatch, make the refund referred to in paragraph (a) after sending the notice of assessment if an application for it has been made in writing by the person within three years after the sending of an original notice of assessment for the year.

  • Marginal note:Provisions applicable to Part

    (3) Subsections 150(2) and (3), sections 152 and 158 to 167 and Division J of Part I apply to this Part with any modifications that the circumstances require.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 2008, c. 28, s. 31
  • 2010, c. 25, s. 62
  • 2013, c. 40, s. 79
  • 2017, c. 33, s. 71

PART XI.1Tax in Respect of Deferred Income Plans and Other Tax Exempt Persons

  •  (1) [Repealed, 2011, c. 24, s. 68]

  • Marginal note:Tax payable by trust under deferred profit sharing plan

    (2) Where, at the end of any month, a trust governed by a deferred profit sharing plan holds property that is neither a qualified investment (within the meaning assigned by section 204) nor a life insurance policy (referred to in paragraphs 198(6)(c) to 198(6)(e) or subsection 198(6.1)), the trust shall, in respect of that month, pay a tax under this Part equal to 1% of the fair market value of the property at the time it was acquired by the trust of all such property held by it at the end of the month, other than

    • (a) property in respect of the acquisition of which the trust has paid or is liable to pay a tax under subsection 198(1); and

    • (b) property acquired by the trust before August 25, 1972.

  • (3) [Repealed, 2017, c. 33, s. 72]

  • (4) [Repealed, 2011, c. 24, s. 68]

  • Marginal note:Tax payable in respect of agreement to acquire shares

    (5) Where at any time a taxpayer whose taxable income is exempt from tax under Part I makes an agreement (otherwise than as a consequence of the acquisition or writing by it of an option listed on a designated stock exchange) to acquire a share of the capital stock of a corporation (otherwise than from the corporation) at a price that may differ from the fair market value of the share at the time the share may be acquired, the taxpayer shall, in respect of each month during which the taxpayer is a party to the agreement, pay a tax under this Part equal to the total of all amounts each of which is the amount, if any, by which the amount of a dividend paid on the share at a time in the month at which the taxpayer is a party to the agreement exceeds the amount, if any, of the dividend that is received by the taxpayer.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • R.S., 1985, c. 1 (5th Supp.), s. 207.1
  • 1994, c. 8, s. 31
  • 1999, c. 22, s. 73
  • 2005, c. 30, s. 16
  • 2007, c. 35, s. 58
  • 2011, c. 24, s. 68
  • 2017, c. 33, s. 72

Marginal note:Return and payment of tax

  •  (1) Within 90 days after the end of each year, a taxpayer to whom this Part applies shall

    • (a) file with the Minister a return for the year under this Part in prescribed form and containing prescribed information, without notice or demand therefor;

    • (b) estimate in the return the amount of tax, if any, payable by it under this Part in respect of each month in the year; and

    • (c) pay to the Receiver General the amount of tax, if any, payable by it under this Part in respect of each month in the year.

  • Marginal note:Liability of trustee

    (2) Where the trustee of a trust that is liable to pay tax under this Part does not remit to the Receiver General the amount of the tax within the time specified in subsection 207.2(1), the trustee is personally liable to pay on behalf of the trust the full amount of the tax and is entitled to recover from the trust any amount paid by the trustee as tax under this section.

  • Marginal note:Provisions applicable to Part

    (3) Subsections 150(2) and 150(3), sections 152 and 158, subsections 161(1) and 161(11), sections 162 to 167 and Division J of Part I are applicable to this Part with such modifications as the circumstances require.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1973-74, c. 30, s. 23
  • 1974-75-76, c. 26, s. 116
  • 1979, c. 5, s. 60
  • 1980-81-82-83, c. 48, s. 115
  • 1985, c. 45, s. 126(F)
  • 1986, c. 6, s. 113
 
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