Budget and Economic Statement Implementation Act, 2007 (S.C. 2007, c. 35)
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Assented to 2007-12-14
PART 3AMENDMENTS RELATING TO INCOME TAX
R.S., c. 1 (5th Supp.)Income Tax Act
57. (1) Paragraph (b) of the definition “qualified investment” in section 204 of the Act is replaced by the following:
(b) debt obligations described in paragraph (a) of the definition “fully exempt interest” in subsection 212(3),
(2) Subparagraphs (c)(i) and (ii) of the definition “qualified investment” in section 204 of the Act are replaced by the following:
(i) a corporation, mutual fund trust or limited partnership the shares or units of which are listed on a designated stock exchange in Canada,
(ii) a corporation the shares of which are listed on a designated stock exchange outside Canada, or
(3) Paragraph (d) of the definition “qualified investment” in section 204 of the Act is replaced by the following:
(d) securities (other than futures contracts or other derivative instruments in respect of which the holder’s risk of loss may exceed the holder’s cost) that are listed on a designated stock exchange,
(4) Subsection (1) applies after 2007.
(5) Subsections (2) and (3) apply on and after the day on which this Act is assented to.
58. (1) Subsection 207.1(5) of the Act is replaced by the following:
Marginal note:Tax payable in respect of agreement to acquire shares
(5) Where at any time a taxpayer whose taxable income is exempt from tax under Part I makes an agreement (otherwise than as a consequence of the acquisition or writing by it of an option listed on a designated stock exchange) to acquire a share of the capital stock of a corporation (otherwise than from the corporation) at a price that may differ from the fair market value of the share at the time the share may be acquired, the taxpayer shall, in respect of each month during which the taxpayer is a party to the agreement, pay a tax under this Part equal to the total of all amounts each of which is the amount, if any, by which the amount of a dividend paid on the share at a time in the month at which the taxpayer is a party to the agreement exceeds the amount, if any, of the dividend that is received by the taxpayer.
(2) Subsection (1) applies on and after the day on which this Act is assented to.
59. (1) Subparagraph 212(1)(b)(vii) of the Act is amended by striking out the word “or” at the end of clause (E), by adding the word “or” at the end of clause (F) and by adding the following after clause (F):
(G) in the event that a change to this Act or to a tax treaty has the effect of relieving the non-resident person from liability for tax under this Part in respect of the interest;
(2) Paragraph 212(1)(b) of the Act is replaced by the following:
(b) interest that
(i) is not fully exempt interest, and is paid or payable to a person with whom the payer is not dealing at arm’s length, or
(ii) is participating debt interest;
(3) Subsection 212(3) of the Act is replaced by the following:
Marginal note:Interest — definitions
(3) The following definitions apply for the purpose of paragraph (1)(b).
“fully exempt interest”
« intérêts entièrement exonérés »
“fully exempt interest” means
(a) interest that is paid or payable on a bond, debenture, note, mortgage, hypothecary claim or similar debt obligation
(i) of, or guaranteed (otherwise than by being insured by the Canada Deposit Insurance Corporation) by, the Government of Canada,
(ii) of the government of a province,
(iii) of an agent of a province,
(iv) of a municipality in Canada or a municipal or public body performing a function of government in Canada,
(v) of a corporation, commission or association to which any of paragraphs 149(1)(d) to (d.6) applies, or
(vi) of an educational institution or a hospital if repayment of the principal amount of the obligation and payment of the interest is to be made, or is guaranteed, assured or otherwise specifically provided for or secured by the government of a province;
(b) interest that is paid or payable on a mortgage, hypothecary claim or similar debt obligation secured by, or on an agreement for sale or similar obligation with respect to, real property situated outside Canada or an interest in any such real property, or to immovables situated outside Canada or a real right in any such immovable, except to the extent that the interest payable on the obligation is deductible in computing the income of the payer under Part I from a business carried on by the payer in Canada or from property other than real or immovable property situated outside Canada;
(c) interest that is paid or payable to a prescribed international organization or agency; or
(d) an amount paid or payable or credited under a securities lending arrangement that is deemed by subparagraph 260(8)(a)(i) to be a payment made by a borrower to a lender of interest, if
(i) the securities lending arrangement was entered into by the borrower in the course of carrying on a business outside Canada, and
(ii) the security that is transferred or lent to the borrower under the securities lending arrangement is described in paragraph (b) or (c) of the definition “qualified security” in subsection 260(1) and issued by a non-resident issuer.
“participating debt interest”
« intérêts sur des créances participatives »
“participating debt interest” means interest (other than interest described in any of paragraphs (b) to (d) of the definition “fully exempt interest”) that is paid or payable on an obligation, other than a prescribed obligation, all or any portion of which interest is contingent or dependent on the use of or production from property in Canada or is computed by reference to revenue, profit, cash flow, commodity price or any other similar criterion or by reference to dividends paid or payable to shareholders of any class of shares of the capital stock of a corporation.
(4) Subsection 212(14) of the Act is repealed.
(5) Section 212 of the Act is amended by adding the following after subsection (17):
Marginal note:Payments to the International Olympic Committee and the International Paralympic Committee
(17.1) Notwithstanding subsections (1) and (2),
(a) the International Olympic Committee is not taxable under this Part on any amount paid or credited to it, after 2005 and before 2011, in respect of the 2010 Olympic Winter Games, and
(b) the International Paralympic Committee is not taxable under this Part on any amount paid or credited to it, after 2005 and before 2011, in respect of the 2010 Paralympic Winter Games.
(6) Subsections 212(18) and (19) of the Act are replaced by the following:
Marginal note:Undertaking
(18) Every person who in a taxation year is a prescribed financial institution or a person resident in Canada who is a registered securities dealer shall on demand from the Minister, served personally or by registered letter, file within such reasonable time as may be stipulated in the demand, an undertaking in prescribed form relating to the avoidance of payment of tax under this Part.
Marginal note:Tax on registered securities dealers
(19) Every taxpayer who is a registered securities dealer resident in Canada shall pay a tax under this Part equal to the amount determined by the formula
1/365 × .25 × (A - B) × C
where
- A
- is the total of all amounts each of which is the amount of money provided before the end of a day to the taxpayer (and not returned or repaid before the end of the day) by or on behalf of a non-resident person as collateral or as consideration for a security that was lent or transferred under a designated securities lending arrangement,
- B
- is the total of
(a) all amounts each of which is the amount of money provided before the end of the day by or on behalf of the taxpayer (and not returned or repaid before the end of the day) to a non-resident person as collateral or as consideration for a security that is described in paragraph (a) of the definition “fully exempt interest” in subsection (3), or that is an obligation of the government of any country, province, state, municipality or other political subdivision, and that was lent or transferred under a securities lending arrangement, and
(b) the greater of
(i) 10 times the greatest amount determined, under the laws of the province or provinces in which the taxpayer is a registered securities dealer, to be the capital employed by the taxpayer at the end of the day, and
(ii) 20 times the greatest amount of capital required, under the laws of the province or provinces in which the taxpayer is a registered securities dealer, to be maintained by the taxpayer as a margin in respect of securities described in paragraph (a) of the definition “fully exempt interest” in subsection (3), or that is an obligation of the government of any country, province, state, municipality or other political subdivision, at the end of the day, and
- C
- is the prescribed rate of interest in effect for the day,
and shall remit that amount to the Receiver General on or before the 15th day of the month after the month in which the day occurs.
Marginal note:Designated SLA
(20) For the purpose of subsection (19), a designated securities lending arrangement is a securities lending arrangement
(a) under which
(i) the lender is a prescribed financial institution or a registered securities dealer resident in Canada,
(ii) the particular security lent or transferred is an obligation described in paragraph (a) of the definition “fully exempt interest” in subsection (3) or an obligation of the government of any country, prov- ince, state, municipality or other political subdivision,
(iii) the amount of money provided to the lender at any time during the term of the arrangement either as collateral or as consideration for the particular security does not exceed 110% of the fair market value at that time of the particular security; and
(b) that was neither intended, nor made as a part of a series of securities lending arrangements, loans or other transactions that was intended, to be in effect for more than 270 days.
(7) Subsection (1) applies to obligations entered into on or after March 19, 2007.
(8) Subsections (2) to (4) and (6) apply after 2007.
60. (1) Paragraph 214(8)(a) of the Act is replaced by the following:
(a) that is described in paragraph (a) of the definition “fully exempt interest” in subsection 212(3), or on which the interest would have been exempt under subparagraph 212(1)(b)(iii) or (vii) as they applied to the 2007 taxation year;
(2) Subsection 214(11) of the Act is repealed.
(3) Subsections (1) and (2) apply after 2007.
61. (1) Section 220 of the Act is amended by adding the following after subsection (3.2):
Marginal note:Joint election — pension income split
(3.201) On application by a taxpayer, the Minister may extend the time for making an election, or grant permission to amend or revoke an election, under section 60.03 if
(a) the application is made on or before the day that is three calendar years after the taxpayer’s filing-due date for the taxation year to which the election applies; and
(b) the taxpayer is resident in Canada
(i) if the taxpayer is deceased at the time of the application, at the time that is immediately before the taxpayer’s death, or
(ii) in any other case, at the time of the application.
(2) The portion of subsection 220(3.5) of the Act before paragraph (a) is replaced by the following:
Marginal note:Penalty for late filed, amended or revoked elections
(3.5) Where, on application by a taxpayer or a partnership, the Minister extends the time for making an election or grants permission to amend or revoke an election (other than an extension or permission under subsection (3.201)), the taxpayer or the partnership, as the case may be, is liable to a penalty equal to the lesser of
(3) Subsections (1) and (2) applies to the 2007 and subsequent taxation years.
62. (1) Subsection 221(1) of the Act is amended by adding the following after paragraph (d.1):
(d.2) requiring any class of persons to make information available to the public for the purpose of making information returns respecting any class of information required in connection with assessments under this Act;
(2) Subsection (1) applies to information in respect of taxation years of taxpayers and fiscal periods of partnerships that end on or after July 4, 2007.
63. The portion of subsection 231.2(1) of the Act before paragraph (a) is replaced by the following:
Marginal note:Requirement to provide documents or information
231.2 (1) Notwithstanding any other provision of this Act, the Minister may, subject to subsection (2), for any purpose related to the administration or enforcement of this Act (including the collection of any amount payable under this Act by any person), of a comprehensive tax information exchange agreement between Canada and another country or jurisdiction that is in force and has effect or, for greater certainty, of a tax treaty with another country, by notice served personally or by registered or certified mail, require that any person provide, within such reasonable time as stipulated in the notice,
64. (1) Subparagraph 241(4)(e)(xii) of the Act is replaced by the following:
(xii) a provision contained in a tax treaty with another country or in a comprehensive tax information exchange agreement between Canada and another country or jurisdiction that is in force and has effect;
(2) Subsection 241(4) of the Act is amended by striking out the word “or” at the end of paragraph (o), by adding the word “or” at the end of paragraph (p) and by adding the following after paragraph (p):
(q) provide taxpayer information to an official of the government of a province solely for the use in the management or administration by that government of a program relating to earning supplementation or income support.
65. (1) The definition “NISA Fund No. 2” in subsection 248(1) of the Act is replaced by the following:
“NISA Fund No. 2”
« second fonds du compte de stabilisation du revenu net »
“NISA Fund No. 2” means the portion of a taxpayer’s net income stabilization account
(a) that is described in paragraph 8(2)(b) of the Farm Income Protection Act, and
(b) that can reasonably be considered to be attributable to a program that allows the funds in the account to accumulate;
(2) Subsection 248(1) of the Act is amended by adding the following definitions in alphabetical order:
“designated stock exchange”
« bourse de valeurs désignée »
“designated stock exchange” means a stock exchange, or that part of a stock exchange, for which a designation by the Minister of Finance under section 262 is in effect;
“functional currency”
« monnaie fonctionnelle »
“functional currency” of a taxpayer for a particular taxation year has the meaning assigned by section 261;
“recognized stock exchange”
« bourse de valeurs reconnue »
“recognized stock exchange” means
(a) a designated stock exchange, and
(b) any other stock exchange, if that other stock exchange is located in Canada or in a country that is a member of the Organisation for Economic Co-operation and Development and that has a tax treaty with Canada;
(3) Subsection 248(29) of the Act is repealed.
(4) Subsection (1) applies to the 2008 and subsequent taxation years.
(5) The definitions “designated stock exchange” and “recognized stock exchange” in subsection 248(1) of the Act, as enacted by subsection (2), and subsection (3) apply on and after the day on which this Act is assented to.
(6) The definition “functional currency” in subsection 248(1) of the Act, as enacted by subsection (2), applies in respect of taxation years that begin on or after the day on which this Act is assented to.
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