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

Marginal note:Limitation re cost of leasing passenger vehicle

67.3 Notwithstanding any other section of this Act, where

• (a) in a taxation year all or part of the actual lease charges in respect of a passenger vehicle are paid or payable, directly or indirectly, by a taxpayer, and

• (b) in computing the taxpayer’s income for the year an amount may be deducted in respect of those charges,

in determining the amount that may be so deducted, the total of those charges shall be deemed not to exceed the lesser of

• (c) the amount determined by the formula

  (A × B)/30 - C - D - E

  where

  A

  is $600 or such other amount as is prescribed,

  B

  is the number of days in the period commencing at the beginning of the term of the lease and ending at the earlier of the end of the year and the end of the lease,

  C

  is the total of all amounts deducted in computing the taxpayer’s income for preceding taxation years in respect of the actual lease charges in respect of the vehicle,

  D

  is the amount of interest that would be earned on the part of the total of all refundable amounts in respect of the lease that exceeds $1,000 if interest were

  • (i) payable on the refundable amounts at the prescribed rate, and

  • (ii) computed for the period before the end of the year during which the refundable amounts were outstanding, and

  E

  is the total of all reimbursements that became receivable before the end of the year by the taxpayer in respect of the lease, and

• (d) the amount determined by the formula

  (A × B)/0.85C - D - E

  where

  A

  is the total of the actual lease charges in respect of the lease incurred in respect of the year or the total of the actual lease charges in respect of the lease paid in the year (depending on the method regularly followed by the taxpayer in computing income),

  B

  is $20,000 or such other amount as is prescribed,

  C

  is the greater of $23,529 (or such other amount as is prescribed) and the manufacturer’s list price for the vehicle,

  D

  is the amount of interest that would be earned on that part of the total of all refundable amounts paid in respect of the lease that exceeds $1,000 if interest were

  • (i) payable on the refundable amounts at the prescribed rate, and

  • (ii) computed for the period in the year during which the refundable amounts are outstanding, and

  E

  is the total of all reimbursements that became receivable during the year by the taxpayer in respect of the lease.

Marginal note:More than one owner or lessee

67.4 Where a person owns or leases a motor vehicle jointly with one or more other persons, the reference in paragraph 13(7)(g) to the amount of $20,000, in section 67.2 to the amount of $250 and in section 67.3 to the amounts of $600, $20,000 and $23,529 shall be read as a reference to that proportion of each of those amounts or such other amounts as may be prescribed for the purposes thereof that the fair market value of the first-mentioned person’s interest in the vehicle is of the fair market value of the interests in the vehicle of all those persons.

Marginal note:More than one owner

67.41 If a person owns a zero-emission passenger vehicle jointly with one or more other persons, any reference in paragraph 13(7)(i) to the prescribed amount and in section 67.2 to the amount of $250 or such other amount as may be prescribed is to be read as a reference to that proportion of each of those amounts that the fair market value of the first-mentioned person’s interest in the vehicle is of the fair market value of the interests in the vehicle of all those persons.

Marginal note:Non-deductibility of illegal payments

• 67.5 (1) In computing income, no deduction shall be made in respect of an outlay made or expense incurred for the purpose of doing anything that is an offence under section 3 of the Corruption of Foreign Public Officials Act or under any of sections 119 to 121, 123 to 125, 393 and 426 of the Criminal Code, or an offence under section 465 of the Criminal Code as it relates to an offence described in any of those sections.

• Marginal note:Reassessments

  (2) Notwithstanding subsections 152(4) to (5), the Minister may make such assessments, reassessments and additional assessments of tax, interest and penalties and such determinations and redeterminations as are necessary to give effect to subsection (1) for any taxation year.

Marginal note:Non-deductibility of fines and penalties

67.6 In computing income, no deduction shall be made in respect of any amount that is a fine or penalty (other than a prescribed fine or penalty) imposed under a law of a country or of a political subdivision of a country (including a state, province or territory) by any person or public body that has authority to impose the fine or penalty.

Marginal note:Definitions

• 67.7 (1) The following definitions apply in this section.

  non-compliant amount

  non-compliant amount, for a taxation year, means the amount determined by the formula

  A × B ÷ C

  where

  A

  is the total of all amounts that would, if subsection (2) did not apply, be deductible in computing income in the taxation year in respect of the use of a residential property as a short-term rental in the taxation year;

  B

  is the number of days in the taxation year that the residential property was a non-compliant short-term rental; and

  C

  is the number of days in the taxation year that the residential property was a short-term rental. (montant non conforme)

  non-compliant short-term rental

  non-compliant short-term rental means, at any time, a short-term rental that is located in a province or municipality that, at that time,

  • (a) does not permit the operation of the short-term rental at the location of the short-term rental; or

  • (b) requires registration, a licence or a permit to operate the short-term rental, and the short-term rental does not comply with all applicable registration, licensing and permit requirements. (location à court terme non conforme)

  residential property

  residential property means all or any part of a house, apartment, condominium unit, cottage, mobile home, trailer, houseboat or other property, located in Canada, the use of which is permitted for residential purposes under applicable law. (bien résidentiel)

  short-term rental

  short-term rental means a residential property that is rented or offered for rent for a period of less than 90 consecutive days. (location à court terme)

• Marginal note:Non-deductibility of expenses — short-term rental

  (2) Notwithstanding any other provision of this Act, no amount is deductible in computing income in respect of a short-term rental for a taxation year, to the extent the amount is a non-compliant amount for the taxation year.

• Marginal note:Deemed compliance

  (3) For the purposes of subsection (1), a short-term rental of a person or partnership is deemed not to be a non-compliant short-term rental for the 2024 taxation year of the person or partnership if

  • (a) the short-term rental is located in a province or municipality that requires registration, a licence or a permit to operate as a short-term rental; and

  • (b) the short-term rental complies with all applicable registration, licensing and permit requirements by December 31, 2024.

• Marginal note:Reassessments

  (4) Notwithstanding subsections 152(4) to (5), the Minister may make any assessments, reassessments and additional assessments of tax, interest and penalties and any determinations and redeterminations that are necessary to give effect to subsection (2) for any taxation year.

Marginal note:Allocation of amounts in consideration for property, services or restrictive covenants

68 If an amount received or receivable from a person can reasonably be regarded as being in part the consideration for the disposition of a particular property of a taxpayer, for the provision of particular services by a taxpayer or for a restrictive covenant as defined by subsection 56.4(1) granted by a taxpayer,

• (a) the part of the amount that can reasonably be regarded as being the consideration for the disposition shall be deemed to be proceeds of disposition of the particular property irrespective of the form or legal effect of the contract or agreement, and the person to whom the property was disposed of shall be deemed to have acquired it for an amount equal to that part;

• (b) the part of the amount that can reasonably be regarded as being consideration for the provision of particular services shall be deemed to be an amount received or receivable by the taxpayer in respect of those services irrespective of the form or legal effect of the contract or agreement, and that part shall be deemed to be an amount paid or payable to the taxpayer by the person to whom the services were rendered in respect of those services; and

• (c) the part of the amount that can reasonably be regarded as being consideration for the restrictive covenant is deemed to be an amount received or receivable by the taxpayer in respect of the restrictive covenant irrespective of the form or legal effect of the contract or agreement, and that part is deemed to be an amount paid or payable to the taxpayer by the person to whom the restrictive covenant was granted.

Marginal note:Inadequate considerations

• 69 (1) Except as expressly otherwise provided in this Act,

  • (a) where a taxpayer has acquired anything from a person with whom the taxpayer was not dealing at arm’s length at an amount in excess of the fair market value thereof at the time the taxpayer so acquired it, the taxpayer shall be deemed to have acquired it at that fair market value;

  • (b) where a taxpayer has disposed of anything

    • (i) to a person with whom the taxpayer was not dealing at arm’s length for no proceeds or for proceeds less than the fair market value thereof at the time the taxpayer so disposed of it,

    • (ii) to any person by way of gift, or

    • (iii) to a trust because of a disposition of a property that does not result in a change in the beneficial ownership of the property;

    the taxpayer shall be deemed to have received proceeds of disposition therefor equal to that fair market value; and

  • (c) where a taxpayer acquires a property by way of gift, bequest or inheritance or because of a disposition that does not result in a change in the beneficial ownership of the property, the taxpayer is deemed to acquire the property at its fair market value.

• Marginal note:Idem, where s. 70(3) applies

  (1.1) Where a taxpayer has acquired property that is a right or thing to which subsection 70(3) applies, the following rules apply:

  • (a) paragraph 69(1)(c) is not applicable to that property; and

  • (b) the taxpayer shall be deemed to have acquired the property at a cost equal to the total of

    • (i) such part, if any, of the cost thereof to the taxpayer who has died as had not been deducted by the taxpayer in computing the taxpayer’s income for any year, and

    • (ii) any expenditures made or incurred by the taxpayer to acquire the property.

• Marginal note:Idem

  (1.2) Where, at any time,

  • (a) a taxpayer disposed of property for proceeds of disposition (determined without reference to this subsection) equal to or greater than the fair market value at that time of the property, and

  • (b) there existed at that time an agreement under which a person with whom the taxpayer was not dealing at arm’s length agreed to pay as rent, royalty or other payment for the use of or the right to use the property an amount less than the amount that would have been reasonable in the circumstances if the taxpayer and the person had been dealing at arm’s length at the time the agreement was entered into,

  the taxpayer’s proceeds of disposition of the property shall be deemed to be the greater of

  • (c) those proceeds determined without reference to this subsection, and

  • (d) the fair market value of the property at the time of the disposition, determined without reference to the existence of the agreement.

• (2) and (3) [Repealed, 1998, c. 19, s. 107]

• Marginal note:Shareholder appropriations

  (4) Where at any time property of a corporation has been appropriated in any manner whatever to or for the benefit of a shareholder of the corporation for no consideration or for consideration that is less than the property’s fair market value and a sale of the property at its fair market value would have increased the corporation’s income or reduced a loss of the corporation, the corporation shall be deemed to have disposed of the property, and to have received proceeds of disposition therefor equal to its fair market value, at that time.

• Marginal note:Idem

  (5) Where in a taxation year of a corporation property of the corporation has been appropriated in any manner whatever to, or for the benefit of, a shareholder, on the winding-up of the corporation, the following rules apply:

  • (a) the corporation is deemed, for the purpose of computing its income for the year, to have disposed of the property immediately before the winding-up for proceeds equal to its fair market value at that time;

  • (b) the shareholder shall be deemed to have acquired the property at a cost equal to its fair market value immediately before the winding-up;

  • (c) subsections 52(1) and (2) do not apply for the purposes of determining the cost to the shareholder of the property; and

  • (d) subsections 13(21.2), 18(15) and 40(3.4) and (3.6) do not apply in respect of any property disposed of on the winding-up.

  • (e) [Repealed, 1998, c. 19, s. 107]

• (6) to (10) [Repealed, 2003, c. 28, s. 8]

• Marginal note:Deemed proceeds of disposition

  (11) Where, at any particular time as part of a series of transactions or events, a taxpayer disposes of property for proceeds of disposition that are less than its fair market value and it can reasonably be considered that one of the main purposes of the series is

  • (a) to obtain the benefit of

    • (i) any deduction (other than a deduction under subsection 110.6(2.1) in respect of a capital gain from a disposition of a share acquired by the taxpayer in an acquisition to which subsection 85(3) or 98(3) applied) in computing income, taxable income, taxable income earned in Canada or tax payable under this Act, or

    • (ii) any balance of undeducted outlays, expenses or other amounts

    available to a person (other than a person that would be affiliated with the taxpayer immediately before the series began, if section 251.1 were read without reference to the definition controlled in subsection 251.1(3)) in respect of a subsequent disposition of the property or property substituted for the property, or

  • (b) to obtain the benefit of an exemption available to any person from tax payable under this Act on any income arising on a subsequent disposition of the property or property substituted for the property,

  notwithstanding any other provision of this Act, where the subsequent disposition occurs, or arrangements for the subsequent disposition are made, before the day that is 3 years after the particular time, the taxpayer is deemed to have disposed of the property at the particular time for proceeds of disposition equal to its fair market value at the particular time.

• Marginal note:Reassessments

  (12) Notwithstanding subsections 152(4) to 152(5), the Minister may at any time make any assessments or reassessments of the tax, interest and penalties payable by the taxpayer that are necessary to give effect to subsection 69(11).

• (12.1) and (12.2) [Repealed, 1998, c. 19, s. 107]

• Marginal note:Amalgamation or merger

  (13) Where there is an amalgamation or merger of a corporation with one or more other corporations to form one corporate entity (in this subsection referred to as the “new corporation”), each property of the corporation that becomes property of the new corporation as a result of the amalgamation or merger is deemed, for the purpose of determining whether subsection 69(11) applies to the amalgamation or merger, to have been disposed of by the corporation immediately before the amalgamation or merger for proceeds equal to

  • (a) in the case of a Canadian resource property or a foreign resource property, nil; and

  • (b) in the case of any other property, the cost amount to the corporation of the property immediately before the amalgamation or merger.

• Marginal note:New taxpayer

  (14) For the purpose of subsection 69(11), where a taxpayer is incorporated or otherwise comes into existence at a particular time during a series of transactions or events, the taxpayer is deemed

  • (a) to have existed at the time that was immediately before the series began; and

  • (b) to have been affiliated at that time with every person with whom the taxpayer is affiliated (otherwise than because of a right referred to in paragraph 251(5)(b)) at the particular time.