Sustaining Canada’s Economic Recovery Act (S.C. 2010, c. 25)
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Assented to 2010-12-15
PART 1AMENDMENTS TO THE INCOME TAX ACT AND RELATED ACTS AND REGULATIONS
R.S., c. 1 (5th Supp.)Income Tax Act
47. (1) The definition “adjusted income” in subsection 180.2(1) of the Act is replaced by the following:
“adjusted income”
« revenu modifié »
“adjusted income” of an individual for a taxation year means the amount that would be the individual’s income under Part I for the year if in computing that income no amount were
(a) included
(i) under paragraph 56(1)(q.1) or subsection 56(6),
(ii) in respect of a gain from a disposition of property to which section 79 applies, or
(iii) in respect of a gain described in subsection 40(3.21), or
(b) deductible under paragraph 60(w), (y) or (z);
(2) Subsection (1) applies to the 2000 and subsequent taxation years.
48. The portion of subsection 184(3) of the Act before paragraph (a) is replaced by the following:
Marginal note:Election to treat excess as separate dividend
(3) If, in respect of a dividend payable at a particular time after 1971, a corporation would, but for this subsection, be required to pay a tax under this Part equal to all or a portion of an excess referred to in subsection (2) of this section or subsection 184(1) of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, it may elect in prescribed manner on or before a day that is not later than 90 days after the day of sending of the notice of assessment in respect of the tax that would otherwise be payable under this Part, and on such an election being made, subject to subsection (4), the following rules apply:
49. The portion of subsection 185.1(2) of the Act before paragraph (a) is replaced by the following:
Marginal note:Election to treat excessive eligible dividend designation as an ordinary dividend
(2) If, in respect of an excessive eligible dividend designation that is not described in paragraph (1)(b) and that is made by a corporation in respect of an eligible dividend (in this subsection and subsection (3) referred to as the “original dividend”) paid by it at a particular time, the corporation would, if this Act were read without reference to this subsection, be required to pay a tax under subsection (1), and it elects in prescribed manner on or before the day that is 90 days after the day of sending the notice of assessment in respect of that tax that would otherwise be payable under subsection (1), the following rules apply:
50. (1) Subsection 188(3.1) of the Act is replaced by the following:
Marginal note:Non-application of subsection (3)
(3.1) Subsection (3) does not apply to a transfer that is a gift to which subsection 188.1(11) or (12) applies.
(2) Subsection (1) applies to taxation years that end on or after March 4, 2010.
51. (1) Subsection 188.1(11) of the Act is replaced by the following:
Marginal note:Delay of expenditure
(11) If, in a taxation year, a registered charity has entered into a transaction (including a gift to another registered charity) and it may reasonably be considered that a purpose of the transaction was to avoid or unduly delay the expenditure of amounts on charitable activities, the registered charity is liable to a penalty under this Act for its taxation year equal to 110% of the amount of expenditure avoided or delayed, and in the case of a gift to another registered charity, both charities are jointly and severally, or solidarily, liable to the penalty.
Marginal note:Gifts not at arm’s length
(12) If a registered charity has in a taxation year received a gift of property (other than a designated gift) from another registered charity with which it does not deal at arm’s length and it has expended, before the end of the next taxation year, in addition to its disbursement quota for each of those taxation years, an amount that is less than the fair market value of the property, on charitable activities carried on by it or by way of gifts made to qualified donees with which it deals at arm’s length, the registered charity is liable to a penalty under this Act for that subsequent taxation year equal to 110% of the difference between the fair market value of the property and the additional amount expended.
(2) Subsection (1) applies to taxation years that end on or after March 4, 2010.
52. Subparagraph 189(6.2)(a)(i) of the Act is replaced by the following:
(i) the total of all amounts, each of which is an expenditure made by the charity, on charitable activities carried on by it, before the particular time and during the period (referred to in this subsection as the “post-assessment period”) that begins immediately after a notice of the latest such assessment was sent and ends at the end of the one-year period
53. Subparagraphs 191.2(1)(b)(i) and (ii) of the Act are replaced by the following:
(i) the day of sending of any notice of assessment of tax payable under this Part or Part I by the corporation for that year,
(ii) where the corporation has served a notice of objection to an assessment described in subparagraph (i), the day of sending of a notice that the Minister has confirmed or varied the assessment,
54. Paragraph 191.3(2)(b) of the Act is replaced by the following:
(b) it is filed on or before the day on or before which the transferor corporation’s return for the year in respect of which the agreement is filed is required to be filed under this Part or within the 90-day period beginning on the day of sending of a notice of assessment of tax payable under this Part or Part I by the transferor corporation for the year or by the transferee corporation for its taxation year ending in the calendar year in which the taxation year of the transferor corporation ends or the sending of a notification that no tax is payable under this Part or Part I for that taxation year;
55. (1) The portion of clause 204.81(1)(c)(v)(A) of the Act before subclause (I) is replaced by the following:
(A) if the share is held by the specified individual in respect of the share, a spouse or common-law partner or former spouse or common-law partner of that individual or a trust governed by a registered retirement savings plan, TFSA or registered retirement income fund under which that individual, spouse or common-law partner is the annuitant,
(2) Subclause 204.81(1)(c)(v)(D)(II) of the Act is replaced by the following:
(II) an annuitant under a trust governed by a registered retirement savings plan, TFSA or registered retirement income fund that was a holder of the share,
(3) The portion of subparagraph 204.81(1)(c)(vii) of the Act before clause (A) is replaced by the following:
(vii) the corporation shall not register a transfer of a Class A share by the specified individual in respect of the share, a spouse or common-law partner of the specified individual or a trust governed by a registered retirement savings plan, TFSA or registered retirement income fund under which the specified individual or spouse or common-law partner is the annuitant, unless
(4) Clause 204.81(1)(c)(vii)(C) of the Act is replaced by the following:
(C) the transfer is to the specified individual, a spouse or common-law partner or former spouse or common-law partner of the specified individual or a trust governed by a registered retirement savings plan, TFSA or registered retirement income fund under which the specified individual or the spouse or common-law partner or former spouse or common-law partner of the specified individual is the annuitant,
(5) Subsections (1) to (4) apply to the 2009 and subsequent taxation years.
56. Paragraphs 207(2)(a) and (b) of the Act are replaced by the following:
(a) may, on sending the notice of assessment for the year, refund without application any allowable refund of the person for the year, to the extent that it was not applied against the person’s tax payable under paragraph (1)(b); and
(b) shall, with all due dispatch, make the refund referred to in paragraph (a) after sending the notice of assessment if an application for it has been made in writing by the person within three years after the sending of an original notice of assessment for the year.
57. (1) Paragraph (b) of the definition “advantage” in subsection 207.01(1) of the Act is amended by striking out “or” at the end of subparagraph (i), by striking out “and” at the end of subparagraph (ii) and by adding the following after subparagraph (ii):
(iii) a swap transaction, or
(iv) specified non-qualified investment income that has not been distributed under the TFSA within 90 days of receipt by the holder of the TFSA of a notice issued by the Minister under subsection 207.06(4); and
(2) Paragraph (c) of the definition “advantage” in subsection 207.01(1) of the Act is replaced by the following:
(c) a benefit that is income (including a capital gain) that is reasonably attributable, directly or indirectly, to
(i) a deliberate over-contribution, or
(ii) a prohibited investment in respect of the TFSA or any other TFSA of the holder; and
(d) a prescribed benefit.
(3) Paragraph (b) of the description of C in the definition “excess TFSA amount” in subsection 207.01(1) of the Act is replaced by the following:
(b) a specified distribution;
(4) Paragraph (a) of the description of E in the definition “excess TFSA amount” in subsection 207.01(1) of the Act is replaced by the following:
(a) nil, if the distribution is a qualifying transfer or a specified distribution, and
(5) The definition “unused TFSA contribution room” in subsection 207.01(1) of the Act is amended by striking out “and” at the end of paragraph (a) and by adding the following after that paragraph:
(a.1) in circumstances where the Minister has, in accordance with section 207.06, waived or cancelled all or part of the liability imposed on the individual, the amount determined by the Minister; and
(6) Subparagraph (ii) of the description of B in the definition “unused TFSA contribution room” in subsection 207.01(1) of the Act is replaced by the following:
(ii) a specified distribution,
(7) Subsection 207.01(1) of the Act is amended by adding the following in alphabetical order:
“deliberate over-contribution”
« cotisation excédentaire intentionnelle »
“deliberate over-contribution” of an individual means a contribution made under a TFSA by the individual that results in, or increases, an excess TFSA amount, unless it is reasonable to conclude that the individual neither knew nor ought to have known that the contribution could result in liability for a penalty, tax or similar consequence under this Act.
“specified distribution”
« distribution déterminée »
“specified distribution” means
(a) a distribution made under a TFSA to the extent that it is, or is reasonably attributable to, an amount that is
(i) an advantage in respect of the TFSA or any other TFSA of the holder,
(ii) specified non-qualified investment income,
(iii) an amount in respect of which tax was payable under Part I by a trust governed by the TFSA or any other TFSA of the holder, or
(iv) an amount described in subparagraph 207.06(1)(b)(ii); or
(b) a prescribed distribution.
“specified non-qualified investment income”
« revenu de placement non admissible déterminé »
“specified non-qualified investment income”, in respect of a TFSA and its holder, means income (including a capital gain) that is reasonably attributable, directly or indirectly, to an amount in respect of which tax was payable under Part I by a trust governed by the TFSA or any other TFSA of the holder.
“swap transaction”
« opération de swap »
“swap transaction”, in respect of a trust governed by a TFSA, means a transfer of property (other than a transfer that is a distribution or a contribution) occurring between the trust and the holder of the TFSA or a person with whom the holder does not deal at arm’s length.
(8) Subsections (1) to (6) apply after October 16, 2009, except that subparagraph (c)(ii) of the definition “advantage” in subsection 207.01(1) of the Act, as enacted by subsection (2), does not apply in respect of income (including a capital gain) earned before October 17, 2009.
(9) The definition “deliberate over-contribution” in subsection 207.01(1) of the Act, as enacted by subsection (7), applies to contributions made after October 16, 2009.
(10) The definition “specified distribution” in subsection 207.01(1) of the Act, as enacted by subsection (7), applies to distributions that occur after October 16, 2009, other than the portion of a distribution that is, or is reasonably attributable to, an advantage that was extended, or income earned, before October 17, 2009.
(11) The definition “specified non-qualified investment income” in subsection 207.01(1) of the Act, as enacted by subsection (7), applies to the 2010 and subsequent taxation years.
(12) The definition “swap transaction” in subsection 207.01(1) of the Act, as enacted by subsection (7), applies to transfers of property that occur after October 16, 2009.
58. (1) Subsections 207.04(6) and (7) of the Act are repealed.
(2) Subsection (1) applies after October 16, 2009.
59. (1) Subsection 207.05(1) of the Act is replaced by the following:
Marginal note:Tax payable in respect of advantage
207.05 (1) A tax is payable under this Part for a calendar year if, in the year, an advantage in relation to a TFSA is extended to, or is received or receivable by, a holder of the TFSA, a trust governed by the TFSA, or any other person who does not deal at arm’s length with the holder of the TFSA.
(2) Subsection (1) applies after October 16, 2009.
60. (1) Paragraph 207.06(1)(b) of the Act is replaced by the following:
(b) one or more distributions are made without delay under a TFSA of which the individual is the holder, the total amount of which is not less than the total of
(i) the amount in respect of which the individual would otherwise be liable to pay the tax, and
(ii) income (including a capital gain) that is reasonably attributable, directly or indirectly, to the amount described in subparagraph (i).
(2) Section 207.06 of the Act is amended by adding the following after subsection (2):
Marginal note:Waiver of tax payable — advantage
(3) The Minister shall not waive or cancel a liability imposed under subsection 207.05(3) on an individual unless one or more distributions are made without delay under a TFSA of which the individual is the holder, the total amount of which is not less than the amount of the liability waived or cancelled.
Marginal note:Other powers of Minister
(4) The Minister may notify the holder of a TFSA that the holder must cause a distribution to be made under the TFSA within 90 days of receipt of the notice, the amount of which is not less than the amount of the specified non-qualified investment income.
(3) Subsections (1) and (2) apply after October 16, 2009.
61. (1) The Act is amended by adding the following after section 207.06:
Marginal note:Income inclusion
207.061 A holder of a TFSA shall include in computing the holder’s income for a taxation year under Part I the total of all amounts each of which is the portion of a distribution made in the year that is described in
(a) subparagraph 207.06(1)(b)(ii);
(b) subsection 207.06(3); or
(c) subparagraph (a)(ii) of the definition “specified distribution”.
Marginal note:Special limit on tax payable
207.062 If an individual is liable to pay an amount of tax under section 207.05 and under sections 207.02 or 207.03 in respect of the same contribution for the same calendar year, the tax payable under section 207.05 for the year shall be reduced by the amount of the tax payable under section 207.02 or 207.03, as the case may be, for the year.
(2) Subsection (1) applies after October 16, 2009.
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