Government of Canada / Gouvernement du Canada
Symbol of the Government of Canada

Search

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

Full Document:  

Act current to 2022-11-16 and last amended on 2022-10-18. Previous Versions

PART XI.2Tax in Respect of Dispositions of Certain Properties

Marginal note:Tax Payable by institution or public authority

 Every institution or public authority that, at any time in a year, disposes of an object within 10 years after the object became an object described in subparagraph 39(1)(a)(i.1) shall pay a tax under this Part, in respect of the year, equal to 30% of the object’s fair market value at that time, unless the disposition was made to another institution or public authority that was, at that time, designated under subsection 32(2) of the Cultural Property Export and Import Act either generally or for a specified purpose related to that object.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • R.S., 1985, c. 1 (5th Supp.), s. 207.3
  • 1994, c. 7, Sch. II, s. 168
  • 1999, c. 22, s. 74

Marginal note:Ecological gift — tax payable

  •  (1) A charity, municipality in Canada or municipal or public body performing a function of government in Canada (each of which is referred to in this section as the “recipient”) shall, in respect of a property, pay a tax under this Part in respect of a taxation year if

    • (a) at any time in the year, the recipient

      • (i) disposes of the property, or

      • (ii) in the opinion of the Minister of the Environment, or a person designated by that Minister, changes the use of the property;

    • (b) the property is described in paragraph 110.1(1)(d) or in the definition total ecological gifts in subsection 118.1(1); and

    • (c) the disposition or change is made without the authorization of the Minister of the Environment or a person designated by that Minister.

  • Marginal note:Ecological gift — amount of tax

    (2) The amount of tax to be paid under subsection (1) is equal to 50% of the amount that would be determined for the purposes of section 110.1 or 118.1, if this Act were read without reference to subsections 110.1(3) and 118.1(6), to be the fair market value of the property referred to in subsection (1) if the property were given to the recipient immediately before the disposition or change referred to in paragraph (1)(a).

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1996, c. 21, s. 53
  • 2001, c. 17, s. 170
  • 2013, c. 34, s. 340
  • 2017, c. 33, s. 73

Marginal note:Return and payment of tax

  •  (1) Any institution, public authority, charity or municipality that is liable to pay a tax under subsection 207.3 or 207.31 in respect of a year shall, within 90 days after the end of the year,

    • (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 payable by it under this Part in respect of the year; and

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

  • Marginal note:Provisions applicable to Part

    (2) 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.]
  • R.S., 1985, c. 1 (5th Supp.), s. 207.4
  • 1996, c. 21, s. 54

PART XI.3Tax in Respect of Retirement Compensation Arrangements

Marginal note:Definitions

  •  (1) In this Part,

    advantage

    advantage, in relation to a retirement compensation arrangement, means

    • (a) any benefit, loan or indebtedness that is conditional in any way on the existence of the arrangement, other than

      • (i) a benefit derived from the provision of administrative or investment services in respect of the arrangement,

      • (ii) a loan or an indebtedness the terms and conditions of which are terms and conditions that persons dealing at arm’s length with each other would have entered into, and

      • (iii) a payment out of or under the arrangement that is included in computing a taxpayer’s income under Part I, and

    • (b) a benefit that is an increase in the total fair market value of the subject property of the arrangement if it is reasonable to consider, having regard to all the circumstances, that the increase is attributable, directly or indirectly, to a transaction or event or a series of transactions or events one of the main purposes of which was to enable a person or a partnership to benefit from a provision of this Part, or from the exemption from tax under paragraph 149(1)(q.1), if the transaction, event or series

      • (i) would not have occurred in a normal commercial or investment context in which parties deal with each other at arm’s length and act prudently, knowledgeably and willingly, or

      • (ii) included a payment received as, on account or in lieu of, or in satisfaction of, a payment

        • (A) for services provided by a person who is, or does not deal at arm’s length with, a specified beneficiary of the arrangement, or

        • (B) of interest, of a dividend, of rent, of a royalty or of any other return on investment, or of proceeds of disposition, in respect of property (other than subject property of the arrangement) held by a person who is, or does not deal at arm’s length with, a specified beneficiary of the arrangement,

    • (c) a benefit that is income or a capital gain that is reasonably attributable, directly or indirectly, to

      • (i) a prohibited investment in respect of the arrangement,

      • (ii) an amount received by a specified beneficiary of the arrangement, or by a person who does not deal at arm’s length with the specified beneficiary, if it is reasonable to consider, having regard to all the circumstances, that the amount was paid in relation to, or would not have been paid but for, subject property of the arrangement and the amount was paid as, on account or in lieu of, or in satisfaction of, a payment

        • (A) for services provided by a person who is, or who does not deal at arm’s length with, the specified beneficiary, or

        • (B) of interest, of a dividend, of rent, of a royalty or of any other return on investment, or of proceeds of disposition,

    • (d) an RCA strip in respect of the arrangement, and

    • (e) a prescribed benefit; (avantage)

    prohibited investment

    prohibited investment, for a retirement compensation arrangement at any time, means property (other than prescribed excluded property) that is at that time

    • (a) a debt of a specified beneficiary of the arrangement,

    • (b) a share of the capital stock of, an interest in, or a debt of

      • (i) a corporation, partnership or trust in which the specified beneficiary has a significant interest, or

      • (ii) a person or partnership that does not deal at arm’s length with, or is affiliated with, the specified beneficiary,

    • (c) an interest (or, for civil law, a right) in, or a right to acquire, a share, interest or debt described in paragraph (a) or (b), or

    • (d) prescribed property; (placement interdit)

    RCA strip

    RCA strip, in respect of a retirement compensation arrangement, means the amount of a reduction in the fair market value of subject property of the arrangement, if the value is reduced as part of a transaction or event or a series of transactions or events one of the main purposes of which is to enable a specified beneficiary of the arrangement, or a person or a partnership who does not deal at arm’s length with the specified beneficiary, to benefit from a provision of this Part or to obtain a benefit in respect of subject property of the arrangement or as a result of the reduction, but does not include an amount that is included in computing the income of the specified beneficiary or of an employer or former employer of the specified beneficiary; (somme découlant d’un dépouillement de CR)

    RCA trust

    RCA trust under a retirement compensation arrangement means

    • (a) any trust deemed by subsection 207.6(1) to be created in respect of subject property of the arrangement, and

    • (b) any trust governed by the arrangement; (fiducie de convention de retraite)

    refundable tax

    refundable tax of a retirement compensation arrangement at the end of a taxation year of an RCA trust under the arrangement means the amount, if any, by which the total of

    • (a) 50% of all contributions made under the arrangement while it was a retirement compensation arrangement and before the end of the year, and

    • (b) 50% of the amount, if any, by which

      • (i) the total of all amounts each of which is the income (determined as if this Act were read without reference to paragraph 82(1)(b)) of an RCA trust under the arrangement from a business or property for the year or a preceding taxation year or a capital gain of the trust for the year or a preceding taxation year,

      exceeds

      • (ii) the total of all amounts each of which is a loss of an RCA trust under the arrangement from a business or property for the year or a preceding taxation year or a capital loss of the trust for the year or a preceding taxation year,

    exceeds

    • (c) 50% of all amounts paid as distributions to one or more persons (including amounts that are required by paragraph 12(1)(n.3) to be included in computing the recipient’s income) under the arrangement while it was a retirement compensation arrangement and before the end of the year, other than a distribution paid where it is established, by subsequent events or otherwise, that the distribution was paid as part of a series of payments and refunds of contributions under the arrangement; (impôt remboursable)

    significant interest

    significant interest has the same meaning as in subsection 207.01(4); (participation notable)

    specified beneficiary

    specified beneficiary, of a retirement compensation arrangement, means an individual who has an interest or a right in respect of the arrangement and who has or had a significant interest in an employer or former employer in respect of the arrangement; (bénéficiaire déterminé)

    subject property of a retirement compensation arrangement

    subject property of a retirement compensation arrangement means property that is held in connection with the arrangement. (bien déterminé d’une convention de retraite)

  • Marginal note:Election

    (2) Notwithstanding the definition refundable tax in subsection 207.5(1), where the custodian of a retirement compensation arrangement so elects in the return under this Part for a taxation year of an RCA trust under the arrangement and all the subject property, if any, of the arrangement (other than a right to claim a refund under subsection 164(1) or 207.7(2)) at the end of the year consists only of cash, debt obligations, shares listed on a designated stock exchange, or any combination thereof, an amount equal to the total of

    • (a) the amount of that cash at the end of the year,

    • (b) the total of all amounts each of which is the greater of the principal amount of such a debt obligation outstanding at the end of the year and the fair market value of the obligation at the end of the year, and

    • (c) the fair market value of those shares at the end of the year

    shall be deemed for the purposes of this Part to be the refundable tax of the arrangement at the end of the year.

  • Marginal note:Limitation on election

    (3) Subsection (2) does not apply in respect of an RCA trust if any part of a decline in the fair market value of subject property of the retirement compensation arrangement is reasonably attributable to a prohibited investment for, or an advantage in relation to, the RCA trust unless the Minister is satisfied that it is just and equitable to allow the election to be made, having regard to all the circumstances, in which case, the Minister may adjust the amount deemed by subsection (2) to be the refundable tax of the arrangement to take into account all or part of the decline in the fair market value of the subject property.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1987, c. 46, s. 62
  • 2007, c. 35, s. 68
  • 2012, c. 31, s. 44

Marginal note:Creation of trust

  •  (1) In respect of the subject property of a retirement compensation arrangement, other than subject property of the arrangement held by a trust governed by a retirement compensation arrangement, for the purposes of this Part and Part I, the following rules apply:

    • (a) a trust is deemed to be created on the day that the arrangement is established;

    • (b) the subject property of the arrangement is deemed to be property of the trust and not to be property of any other person; and

    • (c) the custodian of the arrangement is deemed to be the trustee having ownership or control of the trust property.

  • Marginal note:Life insurance policies

    (2) For the purposes of this Part and Part I, where by virtue of a plan or arrangement an employer is obliged to provide benefits that are to be received or enjoyed by any person on, after or in contemplation of any substantial change in the services rendered by a taxpayer, the retirement of a taxpayer or the loss of an office or employment of a taxpayer, and where the employer, former employer or a person or partnership with whom or which the employer or former employer does not deal at arm’s length acquires an interest in a life insurance policy that may reasonably be considered to be acquired to fund, in whole or in part, those benefits, the following rules apply in respect of the plan or arrangement if it is not otherwise a retirement compensation arrangement and is not excluded from the definition retirement compensation arrangement, in subsection 248(1), by any of paragraphs (a) to (l) and (n) thereof:

    • (a) the person or partnership that acquired the interest is deemed to be the custodian of a retirement compensation arrangement;

    • (b) the interest is deemed to be subject property of the retirement compensation arrangement;

    • (c) an amount equal to twice the amount of any premium paid in respect of the interest or any repayment of a policy loan thereunder is deemed to be a contribution under the retirement compensation arrangement; and

    • (d) any payment received in respect of the interest, including a policy loan, and any amount received as a refund of refundable tax is deemed to be an amount received out of or under the retirement compensation arrangement by the recipient and not to be a payment of any other amount.

  • Marginal note:Incorporated employee

    (3) For the purpose of the provisions of this Act relating to retirement compensation arrangements, where

    • (a) a corporation that at any time carried on a personal services business, or an employee of the corporation, enters into a plan or arrangement with a person or partnership (referred to in this subsection as the “employer”) to whom or which the corporation renders services, and

    • (b) the plan or arrangement provides for benefits to be received or enjoyed by any person on, after or in contemplation of the cessation of, or any substantial change in, the services rendered by the corporation, or an employee of the corporation, to the employer,

    the following rules apply:

    • (c) the employer and the corporation are deemed to be an employer and employee, respectively, in relation to each other, and

    • (d) any benefits to be received or enjoyed by any person under the plan or arrangement are deemed to be benefits to be received or enjoyed by the person on, after or in contemplation of a substantial change in the services rendered by the corporation.

  • Marginal note:Deemed contribution

    (4) Where at any time an employee benefit plan becomes a retirement compensation arrangement as a consequence of a change of the custodian of the plan or as a consequence of the custodian ceasing either to carry on business through a fixed place of business in Canada or to be licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada the business of offering to the public its services as trustee,

    • (a) for the purposes of this Part and Part I, the custodian of the plan is deemed to have made a contribution to the arrangement immediately after that time, in an amount equal to the fair market value at that time of all the properties of the plan; and

    • (b) for the purposes of section 32.1, that amount is deemed to be a payment made at that time out of or under the plan to or for the benefit of employees or former employees of the employers who contributed to the plan.

  • Marginal note:Residents’ arrangement

    (5) For the purposes of this Act, where a resident’s contribution has been made under a plan or arrangement (in this subsection referred to as the “plan”),

    • (a) the plan is deemed, in respect of its application to all resident’s contributions made under the plan and all property that can reasonably be considered to be derived from those contributions, to be a separate arrangement (in this subsection referred to as the “residents’ arrangement”) independent of the plan in respect of its application to all other contributions and property that can reasonably be considered to derive from those other contributions;

    • (b) the residents’ arrangement is deemed to be a retirement compensation arrangement; and

    • (c) each person and partnership to whom a contribution is made under the residents’ arrangement is deemed to be a custodian of the residents’ arrangement.

  • Marginal note:Resident’s contribution

    (5.1) For the purpose of subsection 207.6(5), resident’s contribution means such part of a contribution made under a plan or arrangement (in this subsection referred to as the “plan”) at a time when the plan would, but for paragraph (l) of the definition retirement compensation arrangement in subsection 248(1), be a retirement compensation arrangement as

    • (a) is not a prescribed contribution; and

    • (b) can reasonably be considered to have been made in respect of services rendered by an individual to an employer in a period

      • (i) throughout which the individual was resident in Canada and rendered services to the employer that were primarily services rendered in Canada or services rendered in connection with a business carried on by the employer in Canada (or a combination of such services), and

      • (ii) at the beginning of which the individual had been resident in Canada throughout at least 60 of the 72 preceding calendar months, where the individual was non-resident at any time before the period and became a member of the plan before the end of the month after the month in which the individual became resident in Canada,

      and, for the purpose of this paragraph, where benefits provided to an individual under a particular plan or arrangement are replaced by benefits under another plan or arrangement, the other plan or arrangement shall be deemed, in respect of the individual, to be the same plan or arrangement as the particular plan or arrangement.

  • Marginal note:Prescribed plan or arrangement

    (6) For the purposes of the provisions of this Act relating to retirement compensation arrangements, the following rules apply in respect of a prescribed plan or arrangement:

    • (a) the plan or arrangement shall be deemed to be a retirement compensation arrangement;

    • (b) an amount credited at any time to the account established in the accounts of Canada or a province in connection with the plan or arrangement shall be, except to the extent that it is in respect of a refund determined under subsection 207.7(2), deemed to be a contribution under the plan or arrangement at that time;

    • (c) the custodian of the plan or arrangement shall be deemed to be

      • (i) where the account is established in the accounts of Canada, Her Majesty in right of Canada, and

      • (ii) where the account is established in the accounts of a province, Her Majesty in right of that province; and

    • (d) the subject property of the plan or arrangement, at any time, shall be deemed to include an amount of cash equal to the balance at that time in the account.

  • Marginal note:Transfers

    (7) Where an amount (other than an amount that is part of a series of periodic payments) is transferred directly to a retirement compensation arrangement (other than an arrangement the custodian of which is non-resident or which is deemed by subsection 207.6(5) to be a retirement compensation arrangement) from another retirement compensation arrangement,

    • (a) the amount shall not, solely because of the transfer, be included in computing a taxpayer’s income under Part I;

    • (b) no deduction may be made in respect of the amount in computing a taxpayer’s income under Part I; and

    • (c) the amount is considered, for the purpose of the definition refundable tax in subsection 207.5(1), to be paid as a distribution to one or more persons under the arrangement from which the amount is transferred and to be a contribution made under the arrangement to which the amount is transferred.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • R.S., 1985, c. 1 (5th Supp.), s. 207.6
  • 1994, c. 7, Sch. VIII, s. 121, c. 21, s. 94
  • 1998, c. 19, s. 212
  • 2014, c. 39, s. 62
 
Date modified: