Income Tax Act

Marginal note:Additional tax

• 219 (1) Every corporation that is non-resident in a taxation year shall, on or before its balance-due day for the year, pay a tax under this Part for the year equal to 25% of the amount, if any, by which the total of

  • (a) the corporation’s taxable income earned in Canada for the year (in this subsection referred to as the corporation’s “base amount”),

  • (b) the amount deducted because of section 112 and paragraph 115(1)(e) in computing the corporation’s base amount,

  • (c) [Repealed, 2003, c. 28, s. 17]

  • (d) the amount, if any, by which the total of all amounts each of which is a taxable capital gain of the corporation for the year from a disposition of a taxable Canadian property exceeds the total of all amounts each of which is

    • (i) an allowable capital loss of the corporation for the year from a disposition of a taxable Canadian property, or

    • (ii) an amount deductible because of paragraphs 111(1)(b) and 115(1)(e) in computing the corporation’s base amount,

  • (e) the total of all amounts each of which is an amount in respect of a grant or credit that

    • (i) can reasonably be considered to have been received by the corporation in the year as a reimbursement or repayment of, or as indemnification or compensation for, an amount deducted because of paragraph (j), as it read in its application to the 1995 taxation year, in computing the amount determined under this subsection for a preceding taxation year that began before 1996, and

    • (ii) was not included in computing the corporation’s base amount for any taxation year,

  • (f) where, at any time in the year, the corporation has made one or more dispositions described in paragraph 219(219)(l) of qualified property, the total of all amounts each of which is an amount in respect of one of those dispositions equal to the amount, if any, by which the fair market value of the qualified property at the time of the disposition exceeds the corporation’s proceeds of disposition of the property, and

  • (g) the amount, if any, claimed for the immediately preceding taxation year under paragraph 219(1)(j) by the corporation,

  exceeds the total of

  • (h) that proportion of the total of

    • (i) the total of the taxes payable under Parts I, I.3 and VI for the year by the corporation, determined without reference to subsection 219(1.1), and

    • (ii) the total of the income taxes payable to the government of a province for the year by the corporation, determined without reference to subsection 219(1.1),

    that the corporation’s base amount is of the amount that would, if this Act were read without reference to subsection 219(1.1), be the corporation’s base amount,

  • (i) the total of all amounts each of which is the amount of interest or a penalty paid by the corporation in the year

    • (i) under this Act, or

    • (ii) on or in respect of an income tax payable by it to the government of a province under a law of the province relating to income tax,

    to the extent that the interest or penalty was not deductible in computing its base amount for any taxation year,

  • (j) where the corporation was carrying on business in Canada at the end of the year, the amount claimed by the corporation for the year, not exceeding the amount prescribed to be its allowance for the year in respect of its investment in property in Canada, and

  • (k) [Repealed, 2003, c. 28, s. 17]

  • (l) where the corporation has at any time in the year disposed of property (in this paragraph and paragraph 219(1)(f) referred to as “qualified property”) used by it immediately before that time for the purpose of gaining or producing income from a business carried on by it in Canada to a Canadian corporation (in this paragraph referred to as the “purchaser corporation”) that was, immediately after the disposition, a qualified related corporation of the corporation for consideration that includes a share of the capital stock of the purchaser corporation, the total of all amounts each of which is an amount in respect of a disposition in the year of a qualified property equal to the amount, if any, by which

    • (i) the fair market value of the qualified property at the time of the disposition

    exceeds the total of

    • (ii) the amount, if any, by which the paid-up capital in respect of the issued and outstanding shares of the capital stock of the purchaser corporation increased because of the disposition, and

    • (iii) the fair market value, at the time of receipt, of the consideration (other than shares) given by the purchaser corporation for the qualified property.

• Marginal note:Excluded gains

  (1.1) For the purpose of subsection (1), the definition taxable Canadian property in subsection 248(1) shall be read without reference to paragraphs (a) and (c) to (k) of that definition and as if the only options, interests or rights referred to in paragraph (l) of that definition were those in respect of property described in paragraph (b) of that definition.

• Marginal note:Exempt corporations

  (2) No tax is payable under this Part for a taxation year by a corporation that was, throughout the year,

  • (a) [Repealed, 2001, c. 17, s. 177]

  • (b) a corporation whose principal business was

    • (i) the transportation of persons or goods,

    • (ii) communications, or

    • (iii) mining iron ore in Canada; or

  • (c) a corporation exempt from tax under section 149.

• Marginal note:Provisions applicable to Part

  (3) Sections 150 to 152, 154, 158, 159 and 161 to 167 and Division J of Part I are applicable to this Part with such modifications as the circumstances require.

• Marginal note:Non-resident insurers

  (4) No tax is payable under subsection 219(1) for a taxation year by a non-resident insurer, but where it elects, in prescribed manner and within the prescribed time, to deduct, in computing its Canadian investment fund as of the end of the immediately following taxation year, an amount not greater than the amount, if any, by which

  • (a) the amount, if any, by which the total of

    • (i) the insurer’s surplus funds derived from operations as of the end of the year, and

    • (i.1) where, in any particular taxation year that began before the end of the year, the insurer transferred to a taxable Canadian corporation with which it did not deal at arm’s length any designated insurance property of the insurer for the particular year, and

      • (A) the property was transferred before December 16, 1987 and subsection 138(11.5) of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, applied in respect of the transfer, or

      • (B) the property was transferred before November 22, 1985 and subsection 85(1) of that Act applied in respect of the transfer,

      the amount, if any, by which

      • (C) the total of the fair market value, at the time of the transfer, of all such property

      exceeds

      • (D) the total of the insurer’s proceeds of disposition of all such property,

    exceeds the total of

    • (ii) each amount on which the insurer has paid tax under this Part for a previous taxation year,

    • (iii) the amount, if any, by which the insurer’s accumulated 1968 deficit exceeds the amount of the insurer’s maximum tax actuarial reserves for its 1968 taxation year for its life insurance policies in Canada,

    • (iv) the insurer’s loss, if any, for each of its 5 consecutive taxation years ending with its 1968 taxation year, from all insurance businesses (other than its life insurance business) carried on by it in Canada (computed without reference to section 30 of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, as it read in its application to those years), except to the extent that any such loss was deductible in computing its taxable income for any of its taxation years ending before 1969, and

    • (v) the total of all amounts in respect of which the insurer has filed an election under subsection 219(5.2) for a previous taxation year in accordance with that subsection,

  exceeds

  • (b) the amount of the insurer’s attributed surplus for the year,

  the insurer shall, on or before the day on or before which it is required to file a return under Part I for the year, pay a tax for the year equal to 25% of the amount, if any, by which the amount it has so elected to deduct exceeds the amount in respect of which it filed an election under subsection 219(5.2) for the year in accordance with that subsection.

• Marginal note:Additional tax on insurer

  (5.1) Where a non-resident insurer ceases in a taxation year to carry on all or substantially all of an insurance business in Canada, it shall, on or before its filing-due date for the year, pay a tax for the year equal to 25% of the amount, if any, by which

  • (a) that portion of the amount determined under paragraph 219(4)(a) for the year in respect of the insurer that can reasonably be attributed to the business, including the disposition by it of property that was its designated insurance property in respect of the business for the year in which the disposition occurred,

  exceeds

  • (b) the amount the insurer and a qualified related corporation of the insurer jointly elect in accordance with subsection 219(5.2) for the year in respect of the business.

• Marginal note:Election by non-resident insurer

  (5.2) Where

  • (a) a non-resident insurer has ceased to carry on all or substantially all of an insurance business in Canada in a taxation year, and

  • (b) the insurer has transferred the business to a qualified related corporation of the insurer and the insurer and the corporation have elected to have subsection 138(11.5) apply in respect of the transfer,

  the insurer and the corporation may elect, in prescribed manner and within prescribed time, to reduce the amount in respect of which the insurer would otherwise be liable to pay tax under subsection 219(5.1) by an amount not exceeding the lesser of

  • (c) the amount determined under paragraph 219(5.1)(a) in respect of the insurer in respect of the business, and

  • (d) the total of the paid-up capital of the shares of the capital stock of the corporation received by the insurer as consideration for the transfer of the business and any contributed surplus arising on the issue of those shares.

• Marginal note:Deemed payment of dividend

  (5.3) Where, at any time in a taxation year,

  • (a) a qualified related corporation of a non-resident insurer ceases to be a qualified related corporation of that insurer, or

  • (b) the tax deferred account of a qualified related corporation of a non-resident insurer exceeds the total of the paid-up capital in respect of all the shares of the capital stock of the corporation and its contributed surplus,

  the corporation shall be deemed to have paid, immediately before that time, a dividend to the insurer in an amount equal to

  • (c) where paragraph 219(5.3)(a) is applicable, the balance of the tax deferred account of the corporation at that time, or

  • (d) where paragraph 219(5.3)(b) is applicable, the amount of the excess referred to in that paragraph at that time.

• Marginal note:Definitions

  (7) In this Part,

  accumulated 1968 deficit

  déficit accumulé pour 1968

  accumulated 1968 deficit of a life insurer means such amount as can be established by the insurer to be its deficit as of the end of its 1968 taxation year from carrying on its life insurance business in Canada on the assumption that the amounts of its assets and liabilities (including reserves of any kind)

  • (a) as of the end of any taxation year before its 1968 taxation year, were the amounts thereof determined for the purposes of the Superintendent of Insurance for Canada or other similar officer, and

  • (b) as of the end of its 1968 taxation year, were

    • (i) in respect of depreciable property, the capital cost thereof as of the first day of its 1969 taxation year,

    • (ii) in respect of policy reserves, the insurer’s maximum tax actuarial reserves for its 1968 taxation year for life insurance policies issued by it in the course of carrying on its life insurance business in Canada, and

    • (iii) in respect of other assets and liabilities, the amounts thereof determined as of the end of that year for the purpose of computing its income for its 1969 taxation year; (déficit accumulé pour 1968)

  attributed surplus

  surplus attribué

  attributed surplus of an insurer for a taxation year has the meaning assigned by regulation; (surplus attribué)

  Canadian investment fund

  fonds de placement canadien

  Canadian investment fund has the meaning prescribed for that expression; (fonds de placement canadien)

  maximum tax actuarial reserves

  provision actuarielle maximale aux fins d’impôt

  maximum tax actuarial reserves has the meaning assigned by subsection 138(12); (provision actuarielle maximale aux fins d’impôt)

  surplus funds derived from operations

  fonds excédentaire résultant de l’activité

  surplus funds derived from operations has the meaning assigned by subsection 138(12); (fonds excédentaire résultant de l’activité)

  tax deferred account

  compte d’impôt différé

  tax deferred account of a qualified related corporation at any time means the amount determined by the formula

  A - B

  where

  A

  is the total of all amounts each of which is an amount in respect of which the qualified related corporation and a non-resident insurer have elected jointly before that time in accordance with subsection 219(5.2), and

  B

  is the total of all amounts each of which is the amount of a dividend deemed by subsection 219(5.3) to have been paid by the qualified related corporation before that time.

• Meaning of qualified related corporation

  (8) For the purposes of this Part, a corporation is a qualified related corporation of a particular corporation if it is resident in Canada and all of the issued and outstanding shares (other than directors’ qualifying shares) of its capital stock (having full voting rights under all circumstances) are owned by

  • (a) the particular corporation,

  • (b) a subsidiary wholly-owned corporation of the particular corporation,

  • (c) a corporation of which the particular corporation is a subsidiary wholly-owned corporation,

  • (d) a subsidiary wholly-owned corporation of a corporation of which the particular corporation is also a subsidiary wholly-owned corporation, or

  • (e) any combination of corporations each of which is a corporation described in paragraph 219(8)(a), 219(8)(b), 219(8)(c) or 219(8)(d),

  and, for the purpose of this subsection, a subsidiary wholly-owned corporation of a particular corporation includes any subsidiary wholly-owned corporation of a corporation that is a subsidiary wholly-owned corporation of the particular corporation.