Income Tax Conventions Interpretation Act (R.S.C., 1985, c. I-4)

Short Title

Marginal note:Short title

1 This Act may be cited as the Income Tax Conventions Interpretation Act.

Definition

Definition of convention

2 In this Act, convention means any convention or agreement between Canada and another state relating to tax on income, and includes any protocol or supplementary convention or agreement relating thereto.

Interpretation

Marginal note:Meaning of undefined terms

3 Notwithstanding the provisions of a convention or the Act giving the convention the force of law in Canada, it is hereby declared that the law of Canada is that, to the extent that a term in the convention is

• (a) not defined in the convention,

• (b) not fully defined in the convention, or

• (c) to be defined by reference to the laws of Canada,

that term has, except to the extent that the context otherwise requires, the meaning it has for the purposes of the Income Tax Act, as amended from time to time, and not the meaning it had for the purposes of the Income Tax Act on the date the convention was entered into or given the force of law in Canada if, after that date, its meaning for the purposes of the Income Tax Act has changed.

Marginal note:Permanent establishments in Canada

4 Notwithstanding the provisions of a convention or the Act giving the convention the force of law in Canada, it is hereby declared that the law of Canada is that where, for the purposes of the application of the convention, the profits from a business activity, including an industrial or commercial activity, attributable or allocable to a permanent establishment in Canada are to be determined for any period,

• (a) there shall, except where the convention expressly otherwise provides, be included in the determination of those profits all amounts with respect to that activity that are attributable or allocable to the permanent establishment and that would be required to be included under the Income Tax Act, as amended from time to time, by a person resident in Canada carrying on the activity in Canada in the computation of his income from a business for that period; and

• (b) there shall, except to the extent that an agreement between the competent authorities of the parties to the convention expressly otherwise provides, not be deducted in the determination of those profits any amount with respect to that activity that is attributable or allocable to the permanent establishment and that would not be deductible under the Income Tax Act, as amended from time to time, by a person resident in Canada carrying on the activity in Canada in the computation of his income from a business for that period.

Marginal note:Application of section 245 of the Income Tax Act

4.1 Notwithstanding the provisions of a convention or the Act giving the convention the force of law in Canada, it is hereby declared that the law of Canada is that section 245 of the Income Tax Act applies to any benefit provided under the convention.

Marginal note:Stock exchanges

4.2 Notwithstanding the provisions of a convention or the Act giving the convention the force of law in Canada, each reference in a convention to a stock exchange that is prescribed under, or for the purposes of, the Income Tax Act shall be read as a reference to a designated stock exchange, as defined in the Income Tax Act.

Marginal note:Application of section 94 of the Income Tax Act

4.3 Notwithstanding the provisions of a convention or the Act giving the convention the force of law in Canada, if a trust is deemed by subsection 94(3) of the Income Tax Act to be resident in Canada for a taxation year for the purposes of computing its income, the trust is deemed to be a resident of Canada, and not a resident of the other contracting state, for the purposes of applying the convention

• (a) in respect of the trust for that taxation year; and

• (b) in respect of any other person for any period that includes all or part of that taxation year.

Marginal note:Definitions

5 Notwithstanding the provisions of a convention or the Act giving the convention the force of law in Canada, in this section and in the convention,

annuity

annuity does not include any pension payment or any payment under a plan, arrangement or contract described in subparagraphs (a)(i) to (ix) of the definition pension; (rente)

Canada

Canada means the territory of Canada, and includes

• (a) every area beyond the territorial seas of Canada that, in accordance with international law and the laws of Canada, is an area in respect of which Canada may exercise rights with respect to the seabed and subsoil and their natural resources, and

• (b) the seas and airspace above every area described in paragraph (a); (Canada)

immovable property

immovable property and real property, with respect to property in Canada, are hereby declared to include

• (a) any right to explore for or exploit mineral deposits and sources in Canada and other natural resources in Canada, and

• (b) any right to an amount computed by reference to the production, including profit, from, or to the value of production from, mineral deposits and sources in Canada and other natural resources in Canada; (biens immobiliers et biens immeubles)

pension

pension means, in respect of payments that arise in Canada,

• (a) if the convention does not include a definition pension, a payment under any plan, arrangement or contract that is

  • (i) a registered pension plan,

  • (ii) a registered retirement savings plan,

  • (iii) a registered retirement income fund,

  • (iv) a retirement compensation arrangement,

  • (v) a deferred profit sharing plan,

  • (vi) a plan that is deemed by subsection 147(15) of the Income Tax Act not to be a deferred profit sharing plan,

  • (vii) an annuity contract purchased under a plan referred to in subparagraph (v) or (vi),

  • (viii) an annuity contract where the amount paid by or on behalf of an individual to acquire the contract was deductible under paragraph 60(l) of the Income Tax Act in computing the individual’s income for any taxation year (or would have been so deductible if the individual had been resident in Canada), or

  • (ix) a superannuation, pension or retirement plan not otherwise referred to in this paragraph, and

• (b) if the convention includes a definition pension, a payment that is a pension for the purposes of the convention or a payment (other than a payment of social security benefits) that would be a periodic pension payment if the convention did not include a definition pension; (pension)

periodic pension payment

periodic pension payment means, in respect of payments that arise in Canada, a pension payment other than

• (a) a lump sum payment, or a payment that can reasonably be considered to be an instalment of a lump sum amount, under a registered pension plan,

• (b) a payment before maturity, or a payment in full or partial commutation of the retirement income, under a registered retirement savings plan,

• (c) a payment at any time in a calendar year under a registered retirement income fund, where the total of all payments (other than the specified portion of each such payment) made under the fund at or before that time and in the year exceeds the total of

  • (i) the amount that would be the greater of

    • (A) twice the amount that, if the value of C in the definition minimum amount in subsection 146.3(1) of the Income Tax Act were nil, would be the minimum amount under the fund for the year, and

    • (B) 10% of the fair market value of the property (other than annuity contracts that, at the beginning of the year, are not described in paragraph (b.1) of the definition qualified investment in subsection 146.3(1) of the Income Tax Act) held in connection with the fund at the beginning of the year

    if all property transferred in the year and before that time to the carrier of the fund as consideration for the carrier’s undertaking to make payments under the fund had been so transferred immediately before the beginning of the year and if the definition minimum amount in subsection 146.3(1) of the Income Tax Act applied with respect to all registered retirement income funds, and

  • (ii) the total of all amounts each of which is an annual or more frequent periodic payment under an annuity contract that is a qualified investment, as defined in subsection 146.3(1) of the Income Tax Act, (other than an annuity contract the fair market value of which is taken into account under clause (i)(B)) held by a trust governed by the fund that was paid into the trust in the year and before that time, or

• (d) a payment to a recipient at any time in a calendar year under an arrangement, other than a plan or fund referred to in paragraphs (a) to (c), where

  • (i) the payment is not

    • (A) one of a series of annual or more frequent payments to be made over the lifetime of the recipient or over a period of at least 10 years,

    • (B) one of a series of annual or more frequent payments each of which is contingent on the recipient continuing to suffer from a physical or mental impairment, or

    • (C) a payment to which the recipient is entitled as a consequence of the death of an individual who was in receipt of periodic pension payments under the arrangement, and that is made under a guarantee that a minimum number of payments will be made in respect of the individual, or

  • (ii) at the time the payment is made, it can reasonably be concluded that

    • (A) the total amount of payments (other than excluded payments) under the arrangement to the recipient in the year will exceed twice the total amount of payments (other than excluded payments) made under the arrangement to the recipient in the immediately preceding year, otherwise than because of the fact that payments commenced to be made to the recipient in the preceding year and were made for a period of less than twelve months in that year, or

    • (B) the total amount of payments (other than excluded payments) under the arrangement to the recipient in the year will exceed twice the total amount of payments (other than excluded payments) to be made under the arrangement to the recipient in any subsequent year, otherwise than because of the termination of the series of payments or the reduction in the amount of payments to be made after the death of any individual,

    and, for the purposes of this subparagraph, excluded payment means a payment that is neither a periodic payment nor a payment described in any of clauses (i)(A) to (C). (paiement périodique de pension)

• 5.1 (1) [Repealed, 1999, c. 22, s. 85]

• Definition of specified portion

  (2) For the purpose of the definition periodic pension payment in section 5, the specified portion of a payment means the total of

  • (a) the portion of the payment that is not required by section 146.3 of the Income Tax Act to be included in computing the income of any person and that is not included under paragraph 212(1)(q) of that Act in respect of any person; and

  • (b) the portion of the payment in respect of which a deduction is available under paragraph 60(l) of the Income Tax Act in computing the income of any person.

Meaning of interest

6 Notwithstanding section 3, the meaning of the term interest in any convention given the force of law in Canada before November 19, 1974 does not include any amount paid or credited, pursuant to an agreement in writing entered into before June 23, 1983, as consideration for a guarantee referred to in paragraph 214(15)(a) of the Income Tax Act.

Marginal note:Transitional

6.1 Where a taxation year of a taxpayer includes June 23, 1983, the additional tax payable under the Income Tax Act (except Part XIII thereof) by the taxpayer for the taxation year by virtue of this Act shall be calculated in accordance with the following formula:

Marginal note:Partnerships

6.2 Notwithstanding the provisions of a convention between Canada and another state or the Act giving it the force of law in Canada, it is hereby declared that the law of Canada is that, for the purposes of the application of the convention and the Income Tax Act to a person who is a resident of Canada, a partnership of which that person is a member is neither a resident nor an enterprise of that other state.

Marginal note:Gains arising in Canada

6.3 Except where a convention expressly otherwise provides, any amount of income, gain or loss in respect of the disposition of a property that is taxable Canadian property within the meaning assigned by the Income Tax Act is deemed to arise in Canada.

Application

Marginal note:Application

7 This Act applies

• (a) in the case of tax under Part XIII of the Income Tax Act, to amounts paid or credited after June 23, 1983; and

• (b) in all other cases, to taxation years ending after June 23, 1983.