Income Tax Act
Marginal note:Definitions
89 (1) In this Subdivision,
- adjusted taxable income
adjusted taxable income of a corporation for a taxation year is the amount determined by the formula
A – B – C
where
- A
- is
(a) unless paragraph (b) applies, the corporation’s taxable income for the taxation year, and
(b) if the corporation is a deposit insurance corporation in the taxation year, nil,
- B
- is the amount determined by multiplying the amount, if any, deducted by the corporation under subsection 125(1) for the taxation year by the quotient obtained by dividing 100 by the rate of the deduction provided under that subsection for the taxation year, and
- C
- is
(a) if the corporation is a Canadian-controlled private corporation in the taxation year, the lesser of the corporation’s aggregate investment income for the taxation year and the corporation’s taxable income for the taxation year, and
(b) in any other case, nil; (revenu imposable rajusté)
- Canadian corporation
Canadian corporation at any time means a corporation that is resident in Canada at that time and was
(a) incorporated in Canada, or
(b) resident in Canada throughout the period that began on June 18, 1971 and that ends at that time,
and for greater certainty, a corporation formed at any particular time by the amalgamation or merger of, or by a plan of arrangement or other corporate reorganization in respect of, 2 or more corporations (otherwise than as a result of the acquisition of property of one corporation by another corporation, pursuant to the purchase of the property by the other corporation or as a result of the distribution of the property to the other corporation on the winding-up of the corporation) is a Canadian corporation because of paragraph (a) only if
(c) that reorganization took place under the laws of Canada or a province, and
(d) each of those corporations was, immediately before the particular time, a Canadian corporation; (société canadienne)
- capital dividend account
capital dividend account of a corporation at any particular time means the amount, if any, by which the total of
(a) the amount, if any, by which the total of
(i) the total of all amounts each of which is the amount if any, by which
(A) the amount of the corporation’s capital gain — computed without reference to subclause 52(3)(a)(ii)(A)(II) and subparagraph 53(1)(b)(ii) — from the disposition (other than a disposition under paragraph 40(3.1)(a) or subsection 40(12) or a disposition that is the making of a gift after December 8, 1997 that is not a gift described in subsection 110.1(1)) of a property in the period beginning at the beginning of its first taxation year that began after the corporation last became a private corporation and that ended after 1971 and ending immediately before the particular time (in this definition referred to as the period)
exceeds the total of
(B) the portion of the capital gain referred to in clause (A) that is the corporation’s taxable capital gain,
(B.1) the corporation’s taxable capital gain from a disposition in the period under subsection 40(12), and
(C) the portion of the amount, if any, by which the amount determined under clause (A) exceeds the amount determined under clause (B) from the disposition by it of a property that can reasonably be regarded as having accrued while the property, or a property for which it was substituted,
(I) except in the case of a disposition of a designated property, was a property of a corporation (other than a private corporation, an investment corporation, a mortgage investment corporation or a mutual fund corporation),
(II) where, after November 26, 1987, the property became a property of a Canadian-controlled private corporation (otherwise than by reason of a change in the residence of one or more shareholders of the corporation), was a property of a corporation controlled directly or indirectly in any manner whatever by one or more non-resident persons, or
(III) where, after November 26, 1987, the property became a property of a private corporation that was not exempt from tax under this Part on its taxable income, was a property of a corporation exempt from tax under this Part on its taxable income, and
(i.1) all amounts each of which is an amount in respect of a distribution made, in the period and after September 15, 2016, by a trust to the corporation in respect of capital gains of the trust equal to the lesser of
(A) the amount, if any, by which
(I) the amount of the distribution
exceeds
(II) the amount designated under subsection 104(21) by the trust in respect of the net taxable capital gains of the trust attributable to those capital gains, and
(B) the amount determined by the formula
A × B
where
- A
- is the fraction or whole number determined when 1 is subtracted from the reciprocal of the fraction under paragraph 38(a) applicable to the trust for the year, and
- B
- is the amount referred to in subclause (A)(II),
exceeds
(ii) the total of all amounts each of which is the amount, if any, by which
(A) the amount of the corporation’s capital loss — computed without reference to subclause 52(3)(a)(ii)(A)(II) and subparagraph 53(1)(b)(ii) — from the disposition (other than a disposition under subsection 40(3.12) or a disposition that is the making of a gift after December 8, 1997 that is not a gift described in subsection 110.1(1)) of a property in the period
exceeds the total of
(B) the part of the capital loss referred to in clause (A) that is the corporation’s allowable capital loss, and
(C) the portion of the amount, if any, by which the amount determined under clause (A) exceeds the amount determined under clause (B) from the disposition by it of a property that can reasonably be regarded as having accrued while the property, or a property for which it was substituted,
(I) except in the case of a disposition of a designated property, was a property of a corporation (other than a private corporation, an investment corporation, a mortgage investment corporation or a mutual fund corporation),
(II) where, after November 26, 1987, the property became a property of a Canadian-controlled private corporation (otherwise than by reason of a change in the residence of one or more shareholders of the corporation), was a property of a corporation controlled directly or indirectly in any manner whatever by one or more non-resident persons, or
(III) where, after November 26, 1987, the property became a property of a private corporation that was not exempt from tax under this Part on its taxable income, was a property of a corporation exempt from tax under this Part on its taxable income,
(b) all amounts each of which is an amount in respect of a dividend received by the corporation on a share of the capital stock of another corporation in the period, which amount was, by virtue of subsection 83(2), not included in computing the income of the corporation,
(c) the total of all amounts each of which is an amount required to have been included under this paragraph as it read in its application to a taxation year that ended before February 28, 2000,
(c.1) the amount, if any, by which
(i) 1/2 of the total of all amounts each of which is an amount required by paragraph 14(1)(b) (as it read before 2017) to be included in computing the corporation’s income in respect of a business carried on by the corporation for a taxation year that is included in the period and that ended after February 27, 2000 and before October 18, 2000,
exceeds
(ii) where the corporation has deducted an amount under subsection 20(4.2) in respect of a debt established by it to have become a bad debt in a taxation year that is included in the period and that ended after February 27, 2000 and before October 18, 2000, or has an allowable capital loss for such a year because of the application of subsection 20(4.3), the amount determined by the formula
V + W
where
- V
- is 1/2 of the value determined for A under subsection 20(4.2) in respect of the corporation for the last such taxation year that ended in the period, and
- W
- is 1/3 of the value determined for B under subsection 20(4.2) in respect of the corporation for the last such taxation year that ended in the period, and
(iii) in any other case, nil,
(c.2) the amount, if any, by which
(i) the total of all amounts each of which is an amount required by paragraph 14(1)(b) (as it read before 2017) or subparagraph 13(38)(d)(iii) to be included in computing the corporation’s income in respect of a business carried on by the corporation for a taxation year that is included in the period and that ends after October 17, 2000,
exceeds
(ii) where the corporation has deducted an amount under subsection 20(4.2) in respect of a debt established by it to have become a bad debt in a taxation year that is included in the period and that ends after October 17, 2000, or has an allowable capital loss for such a year because of the application of subsection 20(4.3), the amount determined by the formula
X + Y
where
- X
- is the value determined for A under subsection 20(4.2) in respect of the corporation for the last such taxation year that ended in the period, and
- Y
- is 1/3 of the value determined for B under subsection 20(4.2) in respect of the corporation for the last such taxation year that ended in the period, and
(iii) in any other case, nil,
(d) the amount, if any, by which the total of
(i) all amounts each of which is the proceeds of a life insurance policy of which the corporation was a beneficiary on or before June 28, 1982 received by the corporation in the period and after 1971 in consequence of the death of any person, and
(ii) all amounts each of which is the proceeds of a life insurance policy (other than an LIA policy) of which the corporation was not a beneficiary on or before June 28, 1982 received by the corporation in the period and after May 23, 1985 in consequence of the death of any person
exceeds the total of all amounts each of which is
(iii) the adjusted cost basis (in this paragraph as defined in subsection 148(9)), immediately before the death, of
(A) if the death occurs before March 22, 2016, a policy referred to in subparagraph (i) or (ii) to the corporation, and
(B) if the death occurs after March 21, 2016, a policyholder’s interest in a policy referred to in subparagraph (i) or (ii),
(iv) if the policy is a 10/8 policy immediately before the death and the death occurs after 2013, the amount outstanding, immediately before the death, of the borrowing that is described in subparagraph (a)(i) of the definition 10/8 policy in subsection 248(1) in respect of the policy,
(v) if the death occurs after March 21, 2016, an interest in the policy was disposed of by a policyholder (other than a taxable Canadian corporation) after 1999 and before March 22, 2016 and subsection 148(7) applied to the disposition, the total of
(A) the amount, if any, by which the fair market value of consideration given in respect of the disposition exceeds the total of
(I) the greater of the amount determined under subparagraph 148(7)(a)(i) in respect of the disposition and the adjusted cost basis to the policyholder of the interest immediately before the disposition, and
(II) the amount by which the paid-up capital of any class of the capital stock of a corporation resulting from the disposition is reduced at the beginning of March 22, 2016 because of the application of paragraphs 148(7)(c) and (f) in respect of the disposition, and
(B) if the paid-up capital in respect of a class of shares of the capital stock of a corporation was increased before March 22, 2016 as described in subparagraph 148(7)(f)(iii) in respect of the disposition, the amount, if any, by which the total reduction in the paid-up capital in respect of that class — not exceeding the amount of that increase — after that increase and before March 22, 2016 (except to the extent that the amount of the reduction was deemed by subsection 84(4) or (4.1) to be a dividend received by a taxpayer) exceeds the amount determined under subparagraph 148(7)(a)(i) in respect of the disposition, or
(vi) if the death occurs after March 21, 2016, an interest in the policy was disposed of by a policyholder (other than a taxable Canadian corporation) after 1999 and before March 22, 2016 and subsection 148(7) applied to the disposition, the amount, if any, determined by the formula
A − B
where
- A
- is the amount, if any, by which the lesser of the adjusted cost basis to the policyholder of the interest immediately before the disposition and the fair market value of consideration given in respect of the disposition exceeds the amount determined under subparagraph 148(7)(a)(i) in respect of the disposition, and
- B
- is the absolute value of the negative amount, if any, that would be, in the absence of section 257, the adjusted cost basis, immediately before the death, of the interest in the policy,
(e) the amount of the corporation’s life insurance capital dividend account immediately before May 24, 1985, and
(f) all amounts each of which is an amount in respect of a distribution made, in the period and before September 16, 2016, by a trust to the corporation in respect of capital gains of the trust equal to the lesser of
(i) the amount, if any, by which
(A) the amount of the distribution
exceeds
(B) the amount designated under subsection 104(21) by the trust (other than a designation to which subsection 104(21.4), as it read in its application to the corporation’s last taxation year that began before November 2011, applied) in respect of the net taxable capital gains of the trust attributable to those capital gains, and
(ii) the amount determined by the formula
A × B
where
- A
- is the fraction or whole number determined when 1 is subtracted from the reciprocal of the fraction under paragraph 38(a) applicable to the trust for the year, and
- B
- is the amount referred to in clause (i) (B), and
(g) all amounts each of which is an amount in respect of a distribution made by a trust to the corporation in the period in respect of a dividend (other than a taxable dividend) paid on a share of the capital stock of another corporation resident in Canada to the trust during a taxation year of the trust throughout which the trust was resident in Canada equal to the lesser of
(i) the amount of the distribution, and
(ii) the amount designated under subsection 104(20) by the trust in respect of the corporation in respect of that dividend,
exceeds the total of all capital dividends that became payable by the corporation after the commencement of the period and before the particular time; (compte de dividendes en capital)
- designated property
designated property means
(a) any property of a private corporation that last became a private corporation before November 13, 1981 and that was acquired by it
(i) before November 13, 1981, or
(ii) after November 12, 1981 pursuant to an agreement in writing entered into on or before that date,
(b) any property of a private corporation that was acquired by it from another private corporation with which the private corporation was not dealing at arm’s length (otherwise than by virtue of a right referred to in paragraph 251(5)(b)) at the time the property was acquired, where the property was a designated property of the other private corporation,
(c) a share acquired by a private corporation in a transaction to which section 51, subsection 85(1) or section 85.1, 86 or 87 applied in exchange for another share that was a designated property of the corporation, or
(d) a replacement property (within the meaning assigned by section 44) for a designated property disposed of by virtue of an event referred to in paragraph (b), (c) or (d) of the definition proceeds of disposition in section 54; (bien désigné)
- eligible dividend
eligible dividend means
(a) an amount that is equal to the portion of a taxable dividend that is received by a person resident in Canada, paid by a corporation resident in Canada and designated under subsection (14) to be an eligible dividend, and
(b) in respect of a person resident in Canada, an amount that is deemed by subsection 96(1.11) or 104(16) to be a taxable dividend that is received by the person; (dividende déterminé)
- excessive eligible dividend designation
excessive eligible dividend designation, made by a corporation in respect of an eligible dividend paid by the corporation at any time in a taxation year, means
(a) unless paragraph (c) applies to the dividend, if the corporation is in the taxation year a Canadian-controlled private corporation or a deposit insurance corporation, the amount, if any, determined by the formula
(A - B) × C/A
where
- A
- is the total of all amounts each of which is the amount of an eligible dividend paid by the corporation in the taxation year,
- B
- is the greater of nil and the corporation’s general rate income pool at the end of the taxation year, and
- C
- is the amount of the eligible dividend,
(b) unless paragraph (c) applies to the dividend, if the corporation is not a corporation described in paragraph (a), the amount, if any, determined by the formula
A × B/C
where
- A
- is the lesser of
(i) the total of all amounts each of which is an eligible dividend paid by the corporation at that time, and
(ii) the corporation’s low rate income pool at that time,
- B
- is the amount of the eligible dividend, and
- C
- is the amount determined under subparagraph (i) of the description of A, and
(c) an amount equal to the amount of the eligible dividend, if it is reasonable to consider that the eligible dividend was paid in a transaction, or as part of a series of transactions, one of the main purposes of which was to artificially maintain or increase the corporation’s general rate income pool, or to artificially maintain or decrease the corporation’s low rate income pool; (désignation excessive de dividende déterminé)
- general rate factor
general rate factor of a corporation for a taxation year is the total of
(a) that proportion of 0.68 that the number of days in the taxation year that are before 2010 is of the number of days in the taxation year,
(b) that proportion of 0.69 that the number of days in the taxation year that are in 2010 is of the number of days in the taxation year,
(c) that proportion of 0.70 that the number of days in the taxation year that are in 2011 is of the number of days in the taxation year, and
(d) that proportion of 0.72 that the number of days in the taxation year that are after 2011 is of the number of days in the taxation year; (facteur du taux géneral)
- general rate income pool
general rate income pool at the end of a particular taxation year, of a taxable Canadian corporation that is a Canadian-controlled private corporation or a deposit insurance corporation in the particular taxation year, is the positive or negative amount determined by the formula
A – B
where
- A
- is the positive or negative amount that would, before taking into consideration the specified future tax consequences for the particular taxation year, be determined by the formula
C + D + E + F – G
where
- C
- is the corporation’s general rate income pool at the end of its preceding taxation year,
- D
- is the amount, if any, that is the product of the corporation’s general rate factor for the particular taxation year multiplied by its adjusted taxable income for the particular taxation year,
- E
- is the total of all amounts each of which is
(a) an eligible dividend received by the corporation in the particular taxation year, or
(b) an amount deductible under section 113 in computing the taxable income of the corporation for the particular taxation year,
- F
- is the total of all amounts determined under subsections (4) to (6) in respect of the corporation for the particular taxation year, and
- G
- is
(a) unless paragraph (b) applies, the amount, if any, by which
(i) the total of all amounts each of which is the amount of an eligible dividend paid by the corporation in its preceding taxation year
exceeds
(ii) the total of all amounts each of which is an excessive eligible dividend designation made by the corporation in its preceding taxation year, or
(b) if subsection (4) applies to the corporation in the particular taxation year, nil, and
- B
- is the amount determined by the formula
H × (I – J)
where
- H
- is the corporation’s general rate factor for the particular taxation year,
- I
- is the total of the corporation’s full rate taxable incomes (as would be defined in the definition full rate taxable income in subsection 123.4(1), if that definition were read without reference to its subparagraphs (a)(i) to (iii)) for the corporation’s preceding three taxation years, determined without taking into consideration the specified future tax consequences, for those preceding taxation years, that arise in respect of the particular taxation year, and
- J
- is the total of the corporation’s full rate taxable incomes (as would be defined in the definition full rate taxable income in subsection 123.4(1), if that definition were read without reference to its subparagraphs (a)(i) to (iii)) for those preceding taxation years; (compte de revenu à taux général)
- low rate income pool
low rate income pool, at any particular time in a particular taxation year, of a corporation (in this definition referred to as the “non-CCPC”) that is resident in Canada and is in the particular taxation year neither a Canadian-controlled private corporation nor a deposit insurance corporation, is the amount determined by the formula
(A + B + C + D + E + F) - (G + H)
where
- A
- is the non-CCPC’s low rate income pool at the end of its preceding taxation year,
- B
- is the total of all amounts each of which is an amount deductible under section 112 in computing the non-CCPC’s taxable income for the year in respect of a taxable dividend (other than an eligible dividend) that became payable, in the particular taxation year but before the particular time, to the non-CCPC by a corporation resident in Canada,
- C
- is the total of all amounts determined under subsections (8) to (10) in respect of the non-CCPC for the particular taxation year,
- D
- is
(a) if the non-CCPC would, but for paragraph (d) of the definition Canadian-controlled private corporation in subsection 125(7), be a Canadian-controlled private corporation in its preceding taxation year, 80% of its aggregate investment income for its preceding taxation year, and
(b) in any other case, nil,
- E
- is
(a) if the non-CCPC was not a Canadian-controlled private corporation in its preceding taxation year, 80% of the amount determined by multiplying the amount, if any, deducted by the corporation under subsection 125(1) for that preceding taxation year by the quotient obtained by dividing 100 by the rate of the deduction provided under that subsection for that preceding taxation year, and
(b) in any other case, nil,
- F
- is
(a) if the non-CCPC was an investment corporation in its preceding taxation year, four times the amount, if any, deducted by it under subsection 130(1) for its preceding taxation year, and
(b) in any other case, nil,
- G
- is the total of all amounts each of which is a taxable dividend (other than an eligible dividend, a capital gains dividend within the meaning assigned by subsection 130.1(4) or 131(1) or a taxable dividend deductible by the non-CCPC under subsection 130.1(1) in computing its income for the particular taxation year or for its preceding taxation year) that became payable, in the particular taxation year but before the particular time, by the non-CCPC, and
- H
- is the total of all amounts each of which is an excessive eligible dividend designation made by the non-CCPC in the particular taxation year but before the particular time; (compte de revenu à taux réduit)
- paid-up capital
paid-up capital at any particular time means,
(a) in respect of a share of any class of the capital stock of a corporation, an amount equal to the paid-up capital at that time, in respect of the class of shares of the capital stock of the corporation to which that share belongs, divided by the number of issued shares of that class outstanding at that time,
(b) in respect of a class of shares of the capital stock of a corporation,
(i) where the particular time is before May 7, 1974, an amount equal to the paid-up capital in respect of that class of shares at the particular time, computed without reference to the provisions of this Act,
(ii) where the particular time is after May 6, 1974, and before April 1, 1977, an amount equal to the paid-up capital in respect of that class of shares at the particular time, computed in accordance with the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, as it read on March 31, 1977, and
(iii) if the particular time is after March 31, 1977, an amount equal to the paid-up capital in respect of that class of shares at the particular time, computed without reference to the provisions of this Act except subsections 51(3) and 66.3(2) and (4), sections 84.1 and 84.2, subsections 85(2.1), 85.1(2.1) and (8), 86(2.1), 87(3) and (9), paragraph 128.1(1)(c.3), subsections 128.1(2) and (3), section 135.2, subsections 138(11.7), 139.1(6) and (7), 148(7), 192(4.1) and 194(4.1) and sections 212.1 and 212.3,
except that, where the corporation is a cooperative corporation (within the meaning assigned by subsection 136(2)) or a credit union and the statute by or under which it was incorporated does not provide for paid-up capital in respect of a class of shares, the paid-up capital in respect of that class of shares at the particular time, computed without reference to the provisions of this Act, shall be deemed to be the amount, if any, by which
(iv) the total of the amounts received by the corporation in respect of shares of that class issued and outstanding at that time
exceeds
(v) the total of all amounts each of which is an amount or part thereof described in subparagraph (iv) repaid by the corporation to persons who held any of the issued shares of that class before that time, and
(c) in respect of all the shares of the capital stock of a corporation, an amount equal to the total of all amounts each of which is an amount equal to the paid-up capital in respect of any class of shares of the capital stock of the corporation at the particular time; (capital versé)
- private corporation
private corporation at any particular time means a corporation that, at the particular time, is resident in Canada, is not a public corporation and is not controlled by one or more public corporations (other than prescribed venture capital corporations) or prescribed federal Crown corporations or by any combination thereof and, for greater certainty, for the purposes of determining at any particular time when a corporation last became a private corporation,
(a) a corporation that was a private corporation at the commencement of its 1972 taxation year and thereafter without interruption until the particular time shall be deemed to have last become a private corporation at the end of its 1971 taxation year, and
(b) a corporation incorporated after 1971 that was a private corporation at the time of its incorporation and thereafter without interruption until the particular time shall be deemed to have last become a private corporation immediately before the time of its incorporation; (société privée)
- public corporation
public corporation at any particular time means
(a) a corporation that is resident in Canada at the particular time if at that time a class of shares of the capital stock of the corporation is listed on a designated stock exchange in Canada,
(b) a corporation (other than a prescribed labour-sponsored venture capital corporation) that is resident in Canada at the particular time if at any time after June 18, 1971 and
(i) before the particular time, it elected in prescribed manner to be a public corporation, and at the time of the election it complied with prescribed conditions relating to the number of its shareholders, the dispersal of ownership of its shares and the public trading of its shares, or
(ii) before the day that is 30 days before the day that includes the particular time it was, by notice in writing to the corporation, designated by the Minister to be a public corporation and at the time it was so designated it complied with the conditions referred to in subparagraph (i),
unless after the election or designation, as the case may be, was made and before the particular time, it ceased to be a public corporation because of an election or designation under paragraph (c), or
(c) a corporation (other than a prescribed labour-sponsored venture capital corporation) that is resident in Canada at the particular time if, at any time after June 18, 1971 and before the particular time it was a public corporation, unless after the time it last became a public corporation and
(i) before the particular time, it elected in prescribed manner not to be a public corporation, and at the time it so elected it complied with prescribed conditions relating to the number of its shareholders, the dispersal of ownership of its shares and the public trading of its shares, or
(ii) before the day that is 30 days before the day that includes the particular time, it was, by notice in writing to the corporation, designated by the Minister not to be a public corporation and at the time it was so designated it complied with the conditions referred to in subparagraph (i),
and where a corporation has, on or before its filing-due date for its first taxation year, become a public corporation, it is, if it so elects in its return of income for the year, deemed to have been a public corporation from the beginning of the year until the time when it so became a public corporation; (société publique)
- taxable Canadian corporation
taxable Canadian corporation means a corporation that, at the time the expression is relevant,
(a) was a Canadian corporation, and
(b) was not, by reason of a statutory provision, exempt from tax under this Part; (société canadienne imposable)
- taxable dividend
taxable dividend means a dividend other than
(a) a dividend in respect of which the corporation paying the dividend has elected in accordance with subsection 83(1) as it read prior to 1979 or in accordance with subsection 83(2), and
(b) a qualifying dividend paid by a public corporation to shareholders of a prescribed class of tax-deferred preferred shares of the corporation within the meaning of subsection 83(1). (dividende imposable)
Marginal note:Application of s. 138(12)
(1.01) The definitions in subsection 138(12) apply to this section.
Marginal note:Capital dividend account where control acquired
(1.1) Where at any particular time after March 31, 1977 a corporation that was, at a previous time, a private corporation controlled directly or indirectly in any manner whatever by one or more non-resident persons becomes a Canadian-controlled private corporation (otherwise than by reason of a change in the residence of one or more of its shareholders), in computing the corporation’s capital dividend account at and after the particular time there shall be deducted the amount of the corporation’s capital dividend account immediately before the particular time.
Marginal note:Capital dividend account of tax-exempt corporation
(1.2) Where at any particular time after November 26, 1987 a corporation ceases to be exempt from tax under this Part on its taxable income, in computing the corporation’s capital dividend account at and after the particular time there shall be deducted the amount of the corporation’s capital dividend account (computed without reference to this subsection) immediately after the particular time.
Marginal note:Where corporation is beneficiary
(2) For the purposes of this section,
(a) where a corporation was a beneficiary under a life insurance policy on June 28, 1982, it shall be deemed not to have been a beneficiary under such a policy on or before June 28, 1982 where at any time after December 1, 1982 a prescribed premium has been paid under the policy or there has been a prescribed increase in any benefit on death under the policy; and
(b) where a corporation becomes a beneficiary under a life insurance policy by virtue of an amalgamation or a winding-up to which subsection 87(1) or 88(1) applies, it shall be deemed to have been a beneficiary under the policy throughout the period during which its predecessor or subsidiary, as the case may be, was a beneficiary under the policy.
Marginal note:Simultaneous dividends
(3) Where a dividend becomes payable at the same time on more than one class of shares of the capital stock of a corporation, for the purposes of sections 83, 84 and 88, the dividend on any such class of shares shall be deemed to become payable at a different time than the dividend on the other class or classes of shares and to become payable in the order designated
(a) by the corporation on or before the day on or before which its return of income for its taxation year in which such dividends become payable is required to be filed; or
(b) in any other case, by the Minister.
Marginal note:GRIP addition — becoming CCPC
(4) If, in a particular taxation year, a corporation is a Canadian-controlled private corporation or a deposit insurance corporation but was, in its preceding taxation year, a corporation resident in Canada other than a Canadian-controlled private corporation or a deposit insurance corporation, there may be included in computing the corporation’s general rate income pool at the end of the particular taxation year, the amount determined by the formula
A + B + C - D - E - F - G - H
where
- A
- is the total of all amounts each of which is the cost amount to the corporation of a property immediately before the end of its preceding taxation year;
- B
- is the amount of any money of the corporation on hand immediately before the end of its preceding taxation year;
- C
- is the amount, if any, by which
(a) the total of all amounts that, if the corporation had had unlimited income for its preceding taxation year from each business carried on, and from each property held, by it in that preceding taxation year and had realized an unlimited amount of capital gains for that preceding taxation year, would have been deductible under subsection 111(1) in computing its taxable income for that preceding taxation year
exceeds
(b) the total of all amounts deducted under subsection 111(1) in computing the corporation’s taxable income for that preceding taxation year;
- D
- is the total of all amounts each of which is the amount of any debt owing by the corporation, or of any other obligation of the corporation to pay any amount, that was outstanding immediately before the end of its preceding taxation year;
- E
- is the paid up capital, immediately before the end of its preceding taxation year, of all of the issued and outstanding shares of the capital stock of the corporation;
- F
- is the total of all amounts each of which is a reserve deducted in computing the corporation’s income for its preceding taxation year;
- G
- is the corporation’s capital dividend account, if any, immediately before the end of its preceding taxation year; and
- H
- is the corporation’s low rate income pool immediately before the end of its preceding taxation year.
Marginal note:GRIP addition — post-amalgamation
(5) If a Canadian-controlled private corporation or a deposit insurance corporation (in this subsection referred to as the “new corporation”) is formed as a result of an amalgamation (within the meaning assigned by subsection 87(1)), there shall be included in computing the new corporation’s general rate income pool at the end of its first taxation year the total of all amounts each of which is
(a) in respect of a predecessor corporation that was, in its taxation year that ended immediately before the amalgamation (in this paragraph referred to as its “last taxation year”), a Canadian-controlled private corporation or a deposit insurance corporation, the positive or negative amount determined in respect of the predecessor corporation by the formula
A - B
where
- A
- is the predecessor corporation’s general rate income pool at the end of its last taxation year, and
- B
- is the amount, if any, by which
(i) the total of all amounts each of which is an eligible dividend paid by the predecessor corporation in its last taxation year
exceeds
(ii) the total of all amounts each of which is an excessive eligible dividend designation made by the predecessor corporation in its last taxation year; or
(b) in respect of a predecessor corporation (in this paragraph referred to as the “non-CCPC predecessor”) that was, in its taxation year that ended immediately before the amalgamation (in this paragraph referred to as its “last taxation year”), not a Canadian-controlled private corporation or a deposit insurance corporation, the amount determined by the formula
A + B + C - D - E - F - G - H
where
- A
- is the total of all amounts each of which is the cost amount to the non-CCPC predecessor of a property immediately before the end of its last taxation year,
- B
- is the amount of any money of the non-CCPC predecessor on hand immediately before the end of its last taxation year,
- C
- is the amount, if any, by which
(i) the total of all amounts that, if the non-CCPC predecessor had had unlimited income for its last taxation year from each business carried on, and from each property held, by it in that last taxation year and had realized an unlimited amount of capital gains for that last taxation year, would have been deductible under subsection 111(1) in computing its taxable income for that last taxation year
exceeds
(ii) the total of all amounts deducted under subsection 111(1) in computing the non-CCPC predecessor’s taxable income for its last taxation year,
- D
- is the total of all amounts each of which is the amount of any debt owing by the non-CCPC predecessor, or of any other obligation of the non-CCPC predecessor to pay any amount, that was outstanding immediately before the end of its last taxation year,
- E
- is the paid up capital, immediately before the end of its last taxation year, of all of the issued and outstanding shares of the capital stock of the non-CCPC predecessor,
- F
- is the total of all amounts each of which is a reserve deducted in computing the non-CCPC predecessor’s income for its last taxation year,
- G
- is the non-CCPC predecessor’s capital dividend account, if any, immediately before the end of its last taxation year, and
- H
- is the non-CCPC predecessor’s low rate income pool immediately before the end of its last taxation year.
Marginal note:GRIP addition — post-winding-up
(6) If subsection 88(1) applies to the winding-up of a subsidiary into a parent (within the meanings assigned by that subsection) that is a Canadian-controlled private corporation or a deposit insurance corporation, there shall be included in computing the parent’s general rate income pool at the end of its taxation year that immediately follows the taxation year during which it receives the assets of the subsidiary on the winding-up
(a) if the subsidiary was, in its taxation year during which its assets were distributed to the parent on the winding-up (in this paragraph referred to as its “last taxation year”), a Canadian-controlled private corporation or a deposit insurance corporation, the positive or negative amount determined by the formula
A - B
where
- A
- is the subsidiary’s general rate income pool at the end of its last taxation year, and
- B
- is the amount, if any, by which
(i) the total of all amounts each of which is an eligible dividend paid by the subsidiary in its last taxation year
exceeds
(ii) the total of all amounts each of which is an excessive eligible dividend designation made by the subsidiary in its last taxation year; and
(b) in any other case, the amount determined by the formula
A + B + C - D - E - F - G - H
where
- A
- is the total of all amounts each of which is the cost amount to the subsidiary of a property immediately before the end of its taxation year during which its assets were distributed to the parent on the winding-up (in this paragraph referred to as its “last taxation year”),
- B
- is the amount of any money of the subsidiary on hand immediately before the end of its last taxation year,
- C
- is the amount, if any, by which
(i) the total of all amounts that, if the subsidiary had had unlimited income for its last taxation year from each business carried on, and from each property held, by it in that last taxation year and had realized an unlimited amount of capital gains for that last taxation year, would have been deductible under subsection 111(1) in computing its taxable income for that last taxation year
exceeds
(ii) the total of all amounts deducted under subsection 111(1) in computing the subsidiary’s taxable income for its last taxation year,
- D
- is the total of all amounts each of which is the amount of any debt owing by the subsidiary, or of any other obligation of the subsidiary to pay any amount, that was outstanding immediately before the end of its last taxation year,
- E
- is the paid up capital, immediately before the end of its last taxation year, of all of the issued and outstanding shares of the capital stock of the subsidiary,
- F
- is the total of all amounts each of which is a reserve deducted in computing the subsidiary’s income for its last taxation year,
- G
- is the subsidiary’s capital dividend account, if any, immediately before the end of its last taxation year, and
- H
- is the subsidiary’s low rate income pool immediately before the end of its last taxation year.
Marginal note:GRIP addition for 2006
(7) If a corporation was (or, but for an election under subsection (11), would have been), throughout its first taxation year that includes any part of January 1, 2006, a Canadian-controlled private corporation, its general rate income pool at the end of its immediately preceding taxation year is deemed to be the greater of nil and the amount determined by the formula
A - B
where
- A
- is the total of
(a) 63% of the total of all amounts each of which is the corporation’s full rate taxable income (as defined in subsection 123.4(1)), for a taxation year of the corporation that ended after 2000 and before 2004, determined before taking into consideration the specified future tax consequences for that taxation year,
(b) 63% of the total of all amounts each of which is the corporation’s full rate taxable income (as would be defined in subsection 123.4(1), if that definition were read without reference to its subparagraphs (a)(i) and (ii)), for a taxation year of the corporation that ended after 2003 and before 2006, determined before taking into consideration the specified future tax consequences for that taxation year, and
(c) all amounts each of which was deductible under subsection 112(1) in computing the corporation’s taxable income for a taxation year of the corporation (in this paragraph referred to as the “particular corporation”) that ended after 2000 and before 2006, and is in respect of a dividend received from a corporation (in this paragraph referred to as the “payer corporation”) that was, at the time it paid the dividend, connected (within the meaning assigned by subsection 186(4)) with the particular corporation, to the extent that it is reasonable to consider, having regard to all the circumstances (including but not limited to other shareholders having received dividends from the payer corporation), that the dividend was attributable to an amount that is, or if this subsection applied to the payer corporation would be, described in this paragraph or in paragraph (a) or (b) in respect of the payer corporation; and
- B
- is the total of all amounts each of which is a taxable dividend paid by the corporation in those taxation years.
Marginal note:LRIP addition — ceasing to be CCPC
(8) If, in a particular taxation year, a corporation is neither a Canadian-controlled private corporation nor a deposit insurance corporation but was, in its preceding taxation year, a Canadian-controlled private corporation or a deposit insurance corporation, there shall be included in computing the corporation’s low rate income pool at any time in the particular taxation year the amount determined by the formula
A + B + C - D - E - F - G - H
where
- A
- is the total of all amounts each of which is the cost amount to the corporation of a property immediately before the end of its preceding taxation year;
- B
- is the amount of any money of the corporation on hand immediately before the end of its preceding taxation year;
- C
- is the amount, if any, by which
(a) the total of all amounts that, if the corporation had had unlimited income for its preceding taxation year from each business carried on, and from each property held, by it in that preceding taxation year and had realized an unlimited amount of capital gains for that preceding taxation year, would have been deductible under subsection 111(1) in computing its taxable income for that preceding taxation year
exceeds
(b) the total of all amounts deducted under subsection 111(1) in computing the corporation’s taxable income for its preceding taxation year;
- D
- is the total of all amounts each of which is the amount of any debt owing by the corporation, or of any other obligation of the corporation to pay any amount, that was outstanding immediately before the end of its preceding taxation year;
- E
- is the paid up capital, immediately before the end of its preceding taxation year, of all of the issued and outstanding shares of the capital stock of the corporation;
- F
- is the total of all amounts each of which is a reserve deducted in computing the corporation’s income for its preceding taxation year;
- G
- is
(a) if the corporation is not a private corporation in the particular taxation year, the corporation’s capital dividend account, if any, immediately before the end of its preceding taxation year, and
(b) in any other case, nil; and
- H
- is the positive or negative amount determined by the formula
I - J
where
- I
- is the corporation’s general rate income pool at the end of its preceding taxation year, and
- J
- is the amount, if any, by which
(a) the total of all amounts each of which is an eligible dividend paid by the corporation in its preceding taxation year
exceeds
(b) the total of all amounts each of which is an excessive eligible dividend designation made by the corporation in its preceding taxation year.
Marginal note:LRIP addition — amalgamation
(9) If a corporation that is resident in Canada and that is neither a Canadian-controlled private corporation nor a deposit insurance corporation (in this subsection referred to as the “new corporation”) is formed as a result of the amalgamation or merger of two or more corporations one or more of which is a taxable Canadian corporation, there shall be included in computing the new corporation’s low rate income pool at any time in its first taxation year the total of all amounts each of which is
(a) in respect of a predecessor corporation that was, in its taxation year that ended immediately before the amalgamation, neither a Canadian-controlled private corporation nor a deposit insurance corporation, the predecessor corporation’s low rate income pool at the end of that taxation year; and
(b) in respect of a predecessor corporation (in this paragraph referred to as the “CCPC predecessor”) that was, throughout its taxation year that ended immediately before the amalgamation (in this paragraph referred to as its “last taxation year”), a Canadian-controlled private corporation or a deposit insurance corporation, the amount determined by the formula
A + B + C - D - E - F - G - H
where
- A
- is the total of all amounts each of which is the cost amount to the CCPC predecessor of a property immediately before the end of its last taxation year,
- B
- is the amount of any money of the CCPC predecessor on hand immediately before the end of its last taxation year,
- C
- is the amount, if any, by which
(i) the total of all amounts that, if the CCPC predecessor had had unlimited income for its last taxation year from each business carried on, and from each property held, by it in that last taxation year and had realized an unlimited amount of capital gains for that last taxation year, would have been deductible under subsection 111(1) in computing its taxable income for that last taxation year
exceeds
(ii) the total of all amounts deducted under subsection 111(1) in computing the CCPC predecessor’s taxable income for its last taxation year,
- D
- is the total of all amounts each of which is the amount of any debt owing by the CCPC predecessor, or of any other obligation of the CCPC predecessor to pay any amount, that was outstanding immediately before the end of its last taxation year,
- E
- is the paid up capital, immediately before the end of its last taxation year, of all of the issued and outstanding shares of the capital stock of the CCPC predecessor,
- F
- is the total of all amounts each of which is a reserve deducted in computing the CCPC predecessor’s income for its last taxation year,
- G
- is
(i) if the new corporation is not a private corporation in its first taxation year, the CCPC predecessor’s capital dividend account, if any, immediately before the end of its last taxation year, and
(ii) in any other case, nil, and
- H
- is the positive or negative amount determined by the formula
I - J
where
- I
- is the CCPC predecessor’s general rate income pool at the end of its last taxation year, and
- J
- is the amount, if any, by which
(i) the total of all amounts each of which is an eligible dividend paid by the CCPC predecessor in its last taxation year
exceeds
(ii) the total of all amounts each of which is an excessive eligible dividend designation made by the CCPC predecessor in its last taxation year.
Marginal note:LRIP addition — winding-up
(10) If, in a particular taxation year, a corporation (in this subsection referred to as the “parent”) is neither a Canadian-controlled private corporation nor a deposit insurance corporation and in the particular taxation year all or substantially all of the assets of another corporation (in this subsection referred to as the “subsidiary”) were distributed to the parent on a dissolution or winding-up of the subsidiary, there shall be included in computing the parent’s low rate income pool at any time in the particular taxation year that is at or after the end of the subsidiary’s taxation year (in this subsection referred to as the subsidiary’s “last taxation year”) during which its assets were distributed to the parent on the winding-up,
(a) if the subsidiary was, in its last taxation year, neither a Canadian-controlled private corporation nor a deposit insurance corporation, the subsidiary’s low rate income pool immediately before the end of that taxation year; and
(b) in any other case, the amount determined by the formula
A + B + C - D - E - F - G - H
where
- A
- is the total of all amounts each of which is the cost amount to the subsidiary of a property immediately before the end of its last taxation year,
- B
- is the amount of any money of the subsidiary on hand immediately before the end of its last taxation year,
- C
- is the amount, if any, by which
(i) the total of all amounts that, if the subsidiary had had unlimited income for its last taxation year from each business carried on, and from each property held, by it in that last taxation year and had realized an unlimited amount of capital gains for that last taxation year, would have been deductible under subsection 111(1) in computing its taxable income for that last taxation year
exceeds
(ii) the total of all amounts deducted under subsection 111(1) in computing the subsidiary’s taxable income for its last taxation year,
- D
- is the total of all amounts each of which is the amount of any debt owing by the subsidiary, or of any other obligation of the subsidiary to pay any amount, that was outstanding immediately before the end of its last taxation year,
- E
- is the paid up capital, immediately before the end of its last taxation year, of all of the issued and outstanding shares of the capital stock of the subsidiary,
- F
- is the total of all amounts each of which is a reserve deducted in computing the subsidiary’s income for its last taxation year,
- G
- is
(i) if the parent is not a private corporation in the particular taxation year, the subsidiary’s capital dividend account, if any, immediately before the end of its last taxation year, and
(ii) in any other case, nil, and
- H
- is the positive or negative amount determined by the formula
I - J
where
- I
- is the subsidiary’s general rate income pool at the end of its last taxation year, and
- J
- is the amount, if any, by which
(i) the total of all amounts each of which is an eligible dividend paid by the subsidiary in its last taxation year
exceeds
(ii) the total of all amounts each of which is an excessive eligible dividend designation made by the subsidiary in its last taxation year.
Marginal note:Election: non-CCPC
(11) Subject to subsection (12), a corporation that files with the Minister on or before its filing-due date for a particular taxation year an election in prescribed form to have this subsection apply is deemed for the purposes described in paragraph (d) of the definition Canadian-controlled private corporation in subsection 125(7) not to be a Canadian-controlled private corporation at any time in or after the particular taxation year.
Marginal note:Revoking election
(12) If a corporation files with the Minister on or before its filing-due date for a particular taxation year a notice in prescribed form revoking, as of the end of the particular taxation year, an election described in subsection (11), the election ceases to apply to the corporation at the end of the particular taxation year.
Marginal note:Repeated elections — consent required
(13) If a corporation has, under subsection (12), revoked an election, any subsequent election under subsection (11) or subsequent revocation under subsection (12) is invalid unless
(a) the Minister consents in writing to the subsequent election or the subsequent revocation, as the case may be; and
(b) the corporation complies with any conditions imposed by the Minister.
Marginal note:Dividend designation
(14) A corporation designates a portion of a dividend it pays at any time to be an eligible dividend by notifying in writing at that time each person or partnership to whom the dividend is paid that the portion of the dividend is an eligible dividend.
Marginal note:Late designation
(14.1) If, in the opinion of the Minister, the circumstances are such that it would be just and equitable to permit a designation under subsection (14) to be made before the day that is three years after the day on which the designation was required to be made, the designation is deemed to have been made at the time the designation was required to be made.
Meaning of expression deposit insurance corporation
(15) For the purposes of paragraphs 87(2)(vv) and (ww) (including, for greater certainty, in applying those paragraphs as provided under paragraph 88(1)(e.2)), the definitions excessive eligible dividend designation, general rate income pool, and low rate income pool in subsection (1) and subsections (4) to (6) and (8) to (10), a corporation is a deposit insurance corporation if it would be a deposit insurance corporation as defined in the definition deposit insurance corporation in subsection 137.1(5) were that definition read without reference to its paragraph (b) and were this Act read without reference to subsection 137.1(5.1).
- [NOTE: Application provisions are not included in the consolidated text
- see relevant amending Acts and regulations.]
- R.S., 1985, c. 1 (5th Supp.), s. 89
- 1994, c. 7, Sch. II, s. 67, c. 21, s. 42
- 1998, c. 19, ss. 17, 119
- 2000, c. 19, s. 14
- 2001, c. 17, s. 67
- 2007, c. 2, s. 47, c. 29, s. 6, c. 35, s. 23
- 2009, c. 2, s. 22
- 2011, c. 24, s. 19
- 2012, c. 19, s. 4, c. 31, s. 19
- 2013, c. 34, s. 225, c. 40, s. 41
- 2016, c. 7, s. 10, c. 12, s. 29
- 2017, c. 20, s. 7, c. 33, s. 26
- Date modified: