Budget and Economic Statement Implementation Act, 2007 (S.C. 2007, c. 35)
Full Document:
- HTMLFull Document: Budget and Economic Statement Implementation Act, 2007 (Accessibility Buttons available) |
- PDFFull Document: Budget and Economic Statement Implementation Act, 2007 [1490 KB]
Assented to 2007-12-14
PART 3AMENDMENTS RELATING TO INCOME TAX
R.S., c. 1 (5th Supp.)Income Tax Act
44. (1) The portion of subsection 141(5) of the Act before paragraph (a) is replaced by the following:
Marginal note:Exclusion from taxable Canadian property
(5) For the purpose of paragraph (d) of the definition “taxable Canadian property” in subsection 248(1), a share of the capital stock of a corporation is deemed to be listed at any time on a designated stock exchange if
(2) Subsection (1) applies on and after the day on which this Act is assented to.
45. (1) The definition “contribution” in subsection 146.1(1) of the Act is replaced by the following:
“contribution”
« cotisation »
“contribution”, into an education savings plan, does not include an amount paid into the plan under the Canada Education Savings Act or under a designated provincial program;
(2) Paragraph (c.1) of the definition “trust” in subsection 146.1(1) of the Act is replaced by the following:
(c.1) the repayment of amounts (and the payment of amounts related to that repayment) under the Canada Education Savings Act or under a designated provincial program,
(3) Subsection 146.1(1) of the Act is amended by adding the following in alphabetical order:
“designated provincial program”
« programme provincial désigné »
“designated provincial program” means
(a) a program administered pursuant to an agreement entered into under section 12 of the Canada Education Savings Act, or
(b) a prescribed program;
(4) Subsections (1) to (3) apply to the 2007 and subsequent taxation years.
46. (1) The portion of subsection 149.1(1) of the Act before the definition “capital gains pool” is replaced by the following:
Marginal note:Definitions
149.1 (1) In this section and section 149.2,
(2) Subsection 149.1(1) of the Act is amended by adding the following in alphabetical order:
“divestment obligation percentage”
« pourcentage de dessaisissement »
“divestment obligation percentage” of a private foundation for a particular taxation year, in respect of a class of shares of the capital stock of a corporation, is the percentage, if any, greater than 0%, determined by the formula
A + B - C
where
- A
- is the percentage determined under this definition in respect of the private foundation in respect of the class for the preceding taxation year,
- B
- is the total of all percentages, each of which is the portion of a net increase in the excess corporate holdings percentage of the private foundation in respect of the class for the particular taxation year or for a preceding taxation year that is allocated to the particular taxation year in accordance with subsection 149.2(5), and
- C
- is the total of all percentages, each of which is the portion of a net decrease in the excess corporate holdings percentage of the private foundation in respect of the class for the particular taxation year or for a preceding taxation year that is allocated to the particular taxation year in accordance with subsection 149.2(7);
“entrusted shares percentage”
« pourcentage d’actions visées par une stipulation »
“entrusted shares percentage” of a private foundation, in respect of a class of shares of the capital stock of a corporation, at any particular time means the percentage of the issued and outstanding shares of that class that are held at the particular time by the private foundation that are shares that were acquired by the private foundation by way of a gift that was subject to a trust or direction that the shares are to be held by the private foundation for a period ending not earlier than the particular time, if the gift was made
(a) before March 19, 2007,
(b) on or after March 19, 2007 and before March 19, 2012
(i) under the terms of a will that was executed by a taxpayer before March 19, 2007 and not amended, by codicil or otherwise, on or after March 19, 2007, and
(ii) in circumstances where no other will of the taxpayer was executed or amended on or after March 19, 2007, or
(c) on or after March 19, 2007, under the terms of a testamentary or inter vivos trust created before March 19, 2007, and not amended on or after March 19, 2007;
“excess corporate holdings percentage”
« pourcentage de participation excédentaire »
“excess corporate holdings percentage” of a private foundation, in respect of a class of shares of the capital stock of a corporation, at any time means
(a) if the private foundation is not, at that time, a registered charity, 0%,
(b) if the private foundation holds, at that time, an insignificant interest in respect of the class, 0%, and
(c) in any other case, the number of percent-age points, if any, by which the total corporate holdings percentage of the private foundation in respect of the class, at that time, exceeds the greater of 20% and the entrusted shares percentage, at that time, of the private foundation in respect of the class;
“material transaction”
« opération importante »
“material transaction” of a private foundation, in respect of a class of shares of the capital stock of a corporation, means a transaction or a series of transactions or events in shares of the class, in respect of which the total fair market value of the shares of the class that are acquired or disposed of by the private foundation or any relevant person in respect of the private foundation as part of the transaction or series (determined at the time of the transaction, or at the end of the series, as the case may be) exceeds the lesser of
(a) $100,000, and
(b) 0.5% of the total fair market value of all of the issued and outstanding shares of the class;
“original corporate holdings percentage”
« pourcentage de participation initiale »
“original corporate holdings percentage” of a private foundation, in respect of a class of shares of the capital stock of a corporation, means the total corporate holdings percentage of the private foundation, in respect of that class, held on March 18, 2007;
“relevant person”
« personne intéressée »
“relevant person” in respect of a private foundation means a person who, at any time in respect of which the expression is relevant, deals not at arm’s length with the private foundation (determined as if subsection 251(2) were applied as if the private foundation were a corporation), but does not include
(a) a person who at that time is considered to deal not at arm’s length with the private foundation solely because of a right referred to in paragraph 251(5)(b), or
(b) an individual
(i) who at that time has attained the age of 18 years and lives separate and apart from any other individual (referred to in this definition as a “controlling individual”) who would, if the private foundation were a corporation, control, or be a member of a related group that controls, the private foundation, and
(ii) in respect of whom the Minister is satisfied, upon review of an application by the private foundation, that the individual would, if subsection 251(1) were read without reference to its paragraphs (a) and (b), at that time, deal at arm’s length with all controlling individuals;
“total corporate holdings percentage”
« pourcentage de participation totale »
“total corporate holdings percentage” of a private foundation, in respect of a class of shares of the capital stock of a corporation, at any particular time means the percentage of the issued and outstanding shares of that class that are held at that time by the private foundation, or by a relevant person in respect of the private foundation who holds a material interest in respect of that class;
(3) Paragraph 149.1(4)(c) of the Act is replaced by the following:
(c) has, in respect of a class of shares of the capital stock of a corporation, a divestment obligation percentage at the end of any taxation year;
(4) The portion of paragraph 149.1(12)(a) of the Act after subparagraph (ii) is replaced by the following:
but, for the purpose of paragraph (3)(c), a charitable foundation is deemed not to have acquired control of a corporation if it has not purchased or otherwise acquired for consideration more than 5% of the issued shares of any class of the capital stock of that corporation;
(5) Subsection 149.1(15) of the Act is amended by striking out the word “and” at the end of paragraph (a), by adding the word “and” at the end of paragraph (b) and by adding the following after paragraph (b):
(c) if, at any time during a taxation year of a private foundation that is a registered charity, the private foundation holds more than an insignificant interest in respect of a class of shares of the capital stock of a corporation, the Minister shall make available to the public in such manner as the Minister deems appropriate,
(i) the name of the corporation, and
(ii) in respect of each class of shares of the corporation, that portion of the total corporate holdings percentage of the private foundation in respect of the class that is attributable to
(A) holdings of shares of that class by the private foundation, and
(B) the total of all holdings of shares of that class by relevant persons in respect of the private foundation.
(6) Subsections (1) and (2) apply on and after March 19, 2007.
(7) Subsections (3) to (5) apply to taxation years, of foundations, that begin after March 18, 2007, except that subsections (3) and (4) do not apply to a taxation year of a private foundation if subsection 149.2(8) of the Act, as enacted by clause 47(1), applies to the private foundation in respect of any class of shares of the capital stock of a corporation.
47. (1) The Act is amended by adding the following after section 149.1:
Marginal note:Material and insignificant interests
149.2 (1) In this section and section 149.1,
(a) a person has, at any time, a material interest in respect of a class of shares of the capital stock of a corporation if, at that time,
(i) the percentage of the shares of that class held by the person exceeds 0.5% of all the issued and outstanding shares of that class, or
(ii) the fair market value of the shares so held exceeds $100,000; and
(b) a private foundation has, at any time, an insignificant interest in respect of a class of shares of the capital stock of a corporation if, at that time, the percentage of shares of that class held by the private foundation does not exceed 2% of all the issued and outstanding shares of that class.
Marginal note:Material transaction — anti-avoidance
(2) If a private foundation or a relevant person in respect of the private foundation has engaged in one or more transactions or series of transactions or events, a purpose of which may reasonably be considered to be to avoid the application of the definition “material transaction”, each of those transactions or series of transactions or events is deemed to be a material transaction.
Marginal note:Net increase in excess corporate holdings percentage
(3) The net increase in the excess corporate holdings percentage of a private foundation for a taxation year, in respect of a class of shares of the capital stock of a corporation, is the number of percentage points, if any, determined by the formula
A - B
where
- A
- is the excess corporate holdings percentage of the private foundation at the end of the taxation year, in respect of the class, and
- B
- is
(a) 0%, if
(i) at the beginning of the taxation year the private foundation was not both a private foundation and a registered charity, or
(ii) the private foundation was both a registered charity and a private foundation on March 18, 2007 and the taxation year is the first taxation year of the private foundation that begins after that date; and
(b) in any other case, the excess corporate holdings percentage of the private foundation in respect of the class at the end of its preceding taxation year.
Marginal note:Net decrease in excess corporate holdings percentage
(4) The net decrease in the excess corporate holdings percentage of a private foundation for a taxation year, in respect of a class of shares of the capital stock of a corporation, is the number of percentage points, if any, by which the percentage determined for B in the formula in subsection (3) for the taxation year exceeds the percentage determined for A in that formula for the taxation year.
Marginal note:Allocation of net increase in excess corporate holdings percentage
(5) For the purpose of the description of B in the definition “divestment obligation percent-age” in subsection 149.1(1), the net increase in the excess corporate holdings percentage of a private foundation in respect of a class of shares of the capital stock of a corporation, for a taxation year (in this subsection referred to as the “current year”) is to be allocated in the following order:
(a) first to the divestment obligation percent-age of the private foundation in respect of that class for the current year, to the extent that the private foundation has in the current year acquired for consideration shares of that class;
(b) then to the divestment obligation percent-age of the private foundation in respect of that class for its fifth subsequent taxation year, to the extent of the lesser of
(i) that portion of the net increase in the excess corporate holdings percentage of the private foundation in respect of that class for the current year that is not allocated under paragraph (a), and
(ii) the percentage of the issued and outstanding shares of that class that were acquired by the private foundation in the current year by way of bequest;
(c) then to the divestment obligation percent-age of the private foundation in respect of that class for its second subsequent taxation year, to the extent of the lesser of
(i) that portion of the net increase in the excess corporate holdings percentage of the private foundation in respect of that class for the current year that is not allocated under paragraph (a) or (b), and
(ii) the total of
(A) the percentage of the issued and outstanding shares of that class that were acquired by the private foundation in the current year by way of gift, other than from a relevant person or by way of bequest, and
(B) the portion of the net increase in the excess corporate holdings percentage of the private foundation that is attributable to the redemption, acquisition or cancellation of any of the issued and outstanding shares of that class in the current year by the corporation; and
(d) then to the divestment obligation percent-age of the private foundation in respect of that class for its subsequent taxation year, to the extent of that portion of the net increase in the excess corporate holdings percentage of the private foundation in respect of that class for the current year that is not allocated under paragraph (a), (b) or (c).
Marginal note:Minister’s discretion
(6) Notwithstanding subsection (5), on application by a private foundation, the Minister may, if the Minister believes it would be just and equitable to do so, reallocate any portion of the net increase in the excess corporate holdings percentage of the private foundation in respect of a class of shares of the capital stock of a corporation for a taxation year, that would otherwise be allocated under subsection (5) to the private foundation’s divestment obligation percentage in respect of that class for a particular taxation year, to the private foundation’s divestment obligation percentage in respect of that class for any of the ten taxation years subsequent to the particular taxation year.
Marginal note:Allocation of net decrease in excess corporate holdings percentage
(7) For the purpose of the description of C in the definition “divestment obligation percent-age” in subsection 149.1(1), the net decrease in the excess corporate holdings percentage of a private foundation in respect of a class of shares of the capital stock of a corporation for a taxation year (in this subsection referred to as the “current year”) is to be allocated in the following order:
(a) first, to the divestment obligation percentage of the private foundation in respect of that class for the current year, to the extent of that divestment obligation percentage; and
(b) then to the divestment obligation percent-age of the private foundation in respect of that class for a subsequent taxation year of the private foundation (referred to in this paragraph as the “subject year”), to the extent of the lesser of
(i) that portion of the net decrease in the excess corporate holdings percentage of the private foundation in respect of that class for the current year that is not allocated under paragraph (a), or under this paragraph, to the divestment obligation percentage of the private foundation in respect of that class for a taxation year of the private foundation that precedes the subject year, and
(ii) the amount of the divestment obligation percentage of the private foundation in respect of that class for the subject year, calculated as at the end of the current year and without reference to this subsection.
Marginal note:Transitional rule
(8) If the original corporate holdings percent-age of a private foundation in respect of a class of shares of the capital stock of a corporation exceeds 20%, for the purpose of applying the definition “excess corporate holdings percent-age” in subsection 149.1(1) to
(a) the first taxation year of the private foundation that begins after March 18, 2007, the reference to 20% in that definition in respect of that class is to be read as the original corporate holdings percentage of the private foundation in respect of that class;
(b) taxation years of the private foundation that are after the taxation year referred to in paragraph (a) and that begin before March 19, 2012, the reference to 20% in that definition in respect of that class is to be read as the greater of
(i) 20%, and
(ii) the lesser of
(A) the total corporate holdings percent-age of the private foundation in respect of the class at the end of the immediately preceding taxation year, and
(B) the original corporate holdings percentage in respect of that class;
(c) taxation years of the private foundation that begin after March 18, 2012 and before March 19, 2017, the reference to 20% in that definition in respect of that class is to be read as the greater of
(i) 20%, and
(ii) the lesser of
(A) the total corporate holdings percentage of the private foundation in respect of the class at the end of the preceding taxation year, and
(B) the number of percentage points, if any, by which the private foundation’s original corporate holdings percentage in respect of that class exceeds 20%;
(d) taxation years of the private foundation that begin after March 18, 2017 and before March 19, 2022, the reference to 20% in that definition in respect of that class is to be read as the greater of
(i) 20%, and
(ii) the lesser of
(A) the total corporate holdings percent-age of the private foundation in respect of the class at the end of the preceding taxation year, and
(B) the number of percentage points, if any, by which the private foundation’s original corporate holdings percentage in respect of that class exceeds 40%; and
(e) taxation years of the private foundation that begin after March 18, 2022 and before March 19, 2027, the reference to 20% in that definition in respect of that class is to be read as the greater of
(i) 20%, and
(ii) the lesser of
(A) the total corporate holdings percentage of the private foundation in respect of the class at the end of the preceding taxation year, and
(B) the number of percentage points, if any, by which the private foundation’s original corporate holdings percentage in respect of that class exceeds 60%.
(2) Subsection (1) applies to taxation years, of private foundations, that begin on or after March 19, 2007.
Page Details
- Date modified: