Income Tax Act

Marginal note:Definitions

• 120.31 (1) The definitions in subsection 110.2(1) apply in this section.

• Marginal note:Addition to tax payable

  (2) There shall be added in computing an individual’s tax payable under this Part for a particular taxation year the total of all amounts each of which is the amount, if any, by which

  • (a) the individual’s notional tax payable for an eligible taxation year to which a specified portion of a qualifying amount received by the individual relates and in respect of which an amount is deducted under section 110.2 in computing the individual’s taxable income for the particular year

  exceeds

  • (b) the individual’s tax payable under this Part for the eligible taxation year.

• Marginal note:Notional tax payable

  (3) For the purpose of subsection (2), an individual’s notional tax payable for an eligible taxation year, calculated for the purpose of computing the individual’s tax payable under this Part for a taxation year (in this subsection referred to as “the year of receipt”) in which the individual received a qualifying amount, is the total of

  • (a) the amount, if any, by which

    • (i) the amount that would be the individual’s tax payable under this Part for the eligible taxation year if the total of all amounts, each of which is the specified portion, in relation to the eligible taxation year, of a qualifying amount received by the individual before the end of the year of receipt, were added in computing the individual’s taxable income for the eligible taxation year

    exceeds

    • (ii) the total of all amounts each of which is an amount, in respect of a qualifying amount received by the individual before the year of receipt, that was included because of this paragraph in computing the individual’s notional tax payable under this Part for the eligible taxation year, and

  • (b) if the eligible taxation year ended before the taxation year preceding the year of receipt, an amount equal to the amount that would be calculated as interest payable on the amount, if any, by which the amount determined under paragraph (a) in respect of the eligible taxation year exceeds the taxpayer’s tax payable under this Part for that year, if the amount that would be calculated as interest payable on that excess were calculated

    • (i) for the period that began on May 1 of the year following the eligible taxation year and that ended immediately before the year of receipt, and

    • (ii) at the prescribed rate that is applicable for the purpose of subsection 164(3) with respect to the period.