Budget Implementation Act, 2018, No. 2 (S.C. 2018, c. 27)
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Assented to 2018-12-13
PART 1Amendments to the Income Tax Act and to Other Legislation (continued)
R.S., c. 1 (5th Supp.)Income Tax Act (continued)
14 (1) Section 128.1 of the Act is amended by adding the following after subsection (1.1):
Marginal note:Trusts and partnerships look-through rule
(1.2) For the purposes of this subsection and paragraph (1)(c.1), if at any time shares of the capital stock of a corporation resident in Canada are owned by a trust or a partnership (each referred to in this subsection as a “conduit”), each person or partnership with an interest as a beneficiary under the conduit or that is a member of the conduit (each referred to in this subsection as a “holder”), as the case may be, is deemed to own the shares of each class of the capital stock of the corporation that are owned by the conduit the number of which is determined by the formula
A × B/C
where
- A
- is the total number of shares of the class of the capital stock of the corporation that is owned by the conduit at that time;
- B
- is the fair market value, at that time, of the holder’s interest in the conduit; and
- C
- is the total fair market value, at that time, of all interests in the conduit.
(2) Subsection (1) applies in respect of transactions or events that occur after February 26, 2018.
15 (1) Section 129 of the Act is amended by adding the following after subsection (4):
Marginal note:Conditions for subsection (4.2)
(4.1) Subsection (4.2) applies in respect of a particular taxation year of a particular corporation if the following conditions are met:
(a) the particular corporation has an amount of tax payable for the year under Part IV;
(b) the particular corporation has claimed amounts under paragraph 186(1)(c) or (d) in respect of the year; and
(c) the particular corporation would, in the absence of paragraphs 186(1)(c) and (d), have an amount determined, at the end of the year, under both paragraph (a) of the definition eligible refundable dividend tax on hand and paragraph (b) of the definition non-eligible refundable dividend tax on hand in subsection (4).
Marginal note:Part IV tax — allocation of losses
(4.2) If this subsection applies in respect of a particular taxation year of a corporation, for the purpose of determining the amount under paragraph (a) of the definition eligible refundable dividend tax on hand in subsection (4), in respect of the corporation at the end of the year, the amount determined under subsection 186(1) in respect of the corporation for the year is deemed to be the amount determined by the formula
A + B − C
where
- A
- is the amount determined under paragraph 186(1)(a) in respect of the corporation for the year in respect of eligible dividends;
- B
- is the amount determined under paragraph 186(1)(b) in respect of the corporation for the year in respect of dividends that resulted in dividend refunds from the eligible refundable dividend tax on hand of other corporations; and
- C
- is the amount determined by the formula
38 1/3% (D + E) − (F + G)
where
- D
- is the amount claimed by the corporation under paragraph 186(1)(c) for the year,
- E
- is the amount claimed by the corporation under paragraph 186(1)(d) for the year,
- F
- is the amount determined under paragraph 186(1)(a) in respect of the corporation for the year in respect of taxable dividends (other than eligible dividends), and
- G
- is the amount determined under paragraph 186(1)(b) in respect of the corporation for the year in respect of dividends that resulted in dividend refunds from the non-eligible refundable dividend tax on hand of other corporations.
(2) Subsection (1) applies to taxation years that begin after 2018.
16 (1) Section 142.5 of the Act is amended by adding the following after subsection (3):
Marginal note:Proceeds — mark-to-market property
(4) For greater certainty, if a taxpayer is a financial institution in a taxation year and disposes of a share that is mark-to-market property of the taxpayer for the year, the taxpayer’s proceeds from the disposition do not include any amount that would otherwise be proceeds from the disposition to the extent that the amount is deemed by subsection 84(2) or (3) to be a dividend received except to the extent the dividend is deemed by subparagraph 88(2)(b)(ii) not to be a dividend.
(2) Subsection (1) applies in respect of dispositions that occur after February 26, 2018.
17 (1) The definition political activity in subsection 149.1(1) of the Act is repealed.
(2) The definition charitable purposes in subsection 149.1(1) of the Act is replaced by the following:
- charitable purposes
charitable purposes includes the disbursement of funds to a qualified donee; (fins de bienfaisance)
(3) Paragraph (a) of the definition charitable organization in subsection 149.1(1) of the Act is replaced by the following:
(a) constituted and operated exclusively for charitable purposes,
(a.1) all the resources of which are devoted to charitable activities carried on by the organization itself,
(4) Subsection 149.1(1) of the Act is amended by adding the following in alphabetical order:
- charitable activities
charitable activities includes public policy dialogue and development activities carried on in furtherance of a charitable purpose; (activités de bienfaisance)
(5) The portion of subsection 149.1(1.1) of the Act before paragraph (a) is replaced by the following:
Marginal note:Exclusions
(1.1) For the purposes of paragraphs (2)(b), (3)(b) and (4)(b) and subsection (21), the following shall be deemed to be neither an amount expended in a taxation year on charitable activities nor a gift made to a qualified donee:
(6) Subsection 149.1(1.1) of the Act is amended by adding “and” at the end of paragraph (a) and by repealing paragraph (b).
(7) Paragraphs 149.1(6)(b) and (c) of the Act are replaced by the following:
(b) in any taxation year, it disburses not more than 50% of its income for that year to qualified donees; or
(c) it disburses income to a registered charity that the Minister has designated in writing as a charity associated with it.
(8) Subsections 149.1(6.1) and (6.2) of the Act are replaced by the following:
Marginal note:Charitable purposes
(6.1) For the purposes of the definition charitable foundation in subsection (1), a corporation or trust that devotes any part of its resources to the direct or indirect support of, or opposition to, any political party or candidate for public office shall not be considered to be constituted and operated exclusively for charitable purposes.
Marginal note:Charitable purposes
(6.2) For the purposes of the definition charitable organization in subsection (1), an organization that devotes any part of its resources to the direct or indirect support of, or opposition to, any political party or candidate for public office shall not be considered to be constituted and operated exclusively for charitable purposes.
(9) Subsection 149.1(6.201) of the Act is replaced by the following:
Marginal note:Activities of Canadian amateur athletic associations
(6.201) For the purposes of the definition Canadian amateur athletic association in subsection (1), an association that devotes any part of its resources to the direct or indirect support of, or opposition to, any political party or candidate for public office shall not be considered to devote that part of its resources to its exclusive purpose and exclusive function.
(10) Subsection 149.1(10) of the Act is replaced by the following:
Marginal note:Deemed charitable activity
(10) An amount paid by a charitable organization to a qualified donee that is not paid out of the income of the charitable organization is deemed to be a devotion of a resource of the charitable organization to a charitable activity carried on by it.
(11) Section 149.1 of the Act is amended by adding the following after subsection (10):
Marginal note:Public policy activities
(10.1) Subject to subsections (6.1) and (6.2), public policy dialogue and development activities carried on by an organization, corporation or trust in support of its stated purposes shall be considered to be carried on in furtherance of those purposes and not for any other purpose.
(12) Subsections (1), (2), (7) and (10) are deemed to have come into force
(a) on June 29, 2012 in respect of organizations, corporations and trusts that are registered charities on September 14, 2018 and in respect of associations that are registered Canadian amateur athletic associations on that date; and
(b) on September 14, 2018 in any other case.
(13) Subsections (3), (4), (6), (8) and (11) are deemed to have come into force
(a) on January 1, 2008 in respect of organizations, corporations and trusts that are registered charities on September 14, 2018; and
(b) on September 14, 2018 in any other case.
(14) Subsection (9) is deemed to have come into force
(a) on January 1, 2012 in respect of associations that are registered Canadian amateur athletic associations on September 14, 2018; and
(b) on September 14, 2018 in any other case.
18 (1) Paragraph 152(1)(b) of the Act is replaced by the following:
(b) the amount of tax, if any, deemed by subsection 120(2) or (2.2), 122.5(3), 122.51(2), 122.7(2) or (3), 122.8(4), 122.9(2), 125.4(3), 125.5(3), 127.1(1), 127.41(3) or 210.2(3) or (4) to be paid on account of the taxpayer’s tax payable under this Part for the year.
(2) Subparagraph 152(4)(b)(iii) of the French version of the Act is replaced by the following:
(iii) est établie par suite de la conclusion d’une opération impliquant le contribuable et une personne non-résidente avec laquelle il avait un lien de dépendance,
(3) Subparagraph 152(4)(b)(iii) of the Act is replaced by the following:
(iii) is made
(A) as a consequence of a transaction involving the taxpayer and a non-resident person with whom the taxpayer was not dealing at arm’s length, or
(B) in respect of any income, loss or other amount in relation to a foreign affiliate of the taxpayer,
(4) Subsection 152(4) of the Act is amended by adding the following after paragraph (b.3):
(b.4) the assessment, reassessment or additional assessment is made before the day that is six years after the end of the normal reassessment period for the taxpayer in respect of the year if
(i) a reassessment of tax for the year was required under subsection (6), or would have been so required if the taxpayer had claimed an amount by filing the prescribed form referred to in that subsection on or before the day referred to in that subsection, in order to take into account a deduction claimed under section 111 in respect of a loss for a subsequent taxation year,
(ii) an assessment, reassessment, additional assessment of tax or notification that no tax is payable for the subsequent taxation year referred to in subparagraph (i) was made or issued after the normal reassessment period in respect of the subsequent taxation year as a consequence of a transaction involving the taxpayer and a non-resident person with whom the taxpayer was not dealing at arm’s length, and
(iii) the assessment, reassessment, additional assessment or notification that no tax is payable referred to in subparagraph (ii) reduced the amount of the loss for the subsequent taxation year;
(5) The portion of subsection 152(4.01) of the Act before paragraph (a) is replaced by the following:
Marginal note:Extended period of assessment
(4.01) Notwithstanding subsections (4) and (5), an assessment, reassessment or additional assessment to which paragraph (4)(a), (b), (b.1), (b.3), (b.4) or (c) applies in respect of a taxpayer for a taxation year may be made after the taxpayer’s normal reassessment period in respect of the year to the extent that, but only to the extent that, it can reasonably be regarded as relating to,
(6) Subparagraph 152(4.01)(b)(iii) of the Act is replaced by the following:
(iii) the transaction, income, loss or other amount referred to in subparagraph (4)(b)(iii),
(7) Subsection 152(4.01) of the Act is amended by striking out “and” at the end of paragraph (b), by adding “and” at the end of paragraph (c) and by adding the following after paragraph (c):
(d) if paragraph (4)(b.4) applies to the assessment, reassessment or additional assessment, the reduction under subparagraph (4)(b.4)(iii).
(8) Paragraph 152(4.2)(b) of the Act is replaced by the following:
(b) redetermine the amount, if any, deemed by subsection 120(2) or (2.2), 122.5(3), 122.51(2), 122.7(2) or (3), 122.8(4), 122.9(2), 127.1(1), 127.41(3) or 210.2(3) or (4) to be paid on account of the taxpayer’s tax payable under this Part for the year or deemed by subsection 122.61(1) to be an overpayment on account of the taxpayer’s liability under this Part for the year.
(9) Subsections (1) and (8) apply to the 2018 and subsequent taxation years.
(10) Subsection (2) is deemed to have come into force on February 27, 2018.
(11) Subsections (3) and (6) apply to taxation years of a taxpayer that begin after February 26, 2018.
(12) Subsections (4), (5) and (7) apply in respect of a taxation year if a reassessment of tax for the year was required under subsection 152(6) of the Act, or would have been so required if the taxpayer had claimed an amount by filing the prescribed form referred to in that subsection on or before the day referred to in that subsection, in order to take into account a deduction claimed under section 111 of the Act in respect of a loss for a subsequent taxation year that ends after February 26, 2018.
19 (1) Subsection 163(2) of the Act is amended by adding the following after paragraph (c.3):
(c.4) the amount, if any, by which
(i) the total of all amounts each of which is an amount that would be deemed by section 122.8 to be paid by that person for the year or, where that person is the qualified relation of an individual for that year (within the meaning assigned by subsection 122.8(1)), by that individual, if that total were calculated by reference to the information provided in the person’s return of income (within the meaning assigned by subsection 122.8(1)) for the year
exceeds
(ii) the total of all amounts each of which is an amount that is deemed by section 122.8 to be paid by that person or by an individual of whom the person is the qualified relation for the year (within the meaning assigned by subsection 122.8(1)),
(2) Subsection (1) applies to the 2018 and subsequent taxation years.
20 (1) Subsection 188.2(2) of the Act is amended by adding “or” at the end of paragraph (d) and by replacing paragraphs (e) to (g) with the following:
(e) in the case of a person that is a registered charity or registered Canadian amateur athletic association, if the person devotes any part of its resources to the direct or indirect support of, or opposition to, any political party or candidate for public office.
(2) Subsection (1) is deemed to have come into force
(a) on June 29, 2012 in respect of organizations, corporations and trusts that are registered charities on September 14, 2018 and in respect of associations that are registered Canadian amateur athletic associations on that date; and
(b) on September 14, 2018 in any other case.
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