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

Act current to 2014-10-27 and last amended on 2014-06-27. Previous Versions

Marginal note:Deduction for taxable dividends

 There may be deducted from the tax otherwise payable under this Part by an individual for a taxation year the total of

  • (a) 13/18 of the amount, if any, that is required by subparagraph 82(1)(b)(i) to be included in computing the individual’s income for the year; and

  • (b) the product of the amount, if any, that is required by subparagraph 82(1)(b)(ii) to be included in computing the individual’s income for the year multiplied by

    • (i) for the 2009 taxation year, 11/18,

    • (ii) for the 2010 taxation year, 10/17,

    • (iii) for the 2011 taxation year, 13/23, and

    • (iv) for taxation years after 2011, 6/11.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. R.S., 1985, c. 1 (5th Supp.), s. 121;
  • 2007, c. 2, s. 48;
  • 2008, c. 28, s. 17;
  • 2013, c. 33, s. 11.
Marginal note:Tax payable by inter vivos trust
  •  (1) Notwithstanding section 117, the tax payable under this Part for a taxation year by an inter vivos trust is the total of

    • (a) 29% of its amount taxable for the taxation year, and

    • (b) if the trust is a SIFT trust for the taxation year, the positive or negative amount determined by the formula

      A × B

      where

      A 
      is the positive or negative decimal fraction determined by the formula

      C + D - E

      where

      C 
      is the net corporate income tax rate in respect of the SIFT trust for the taxation year,
      D 
      is the provincial SIFT tax rate of the SIFT trust for the taxation year, and
      E 
      is the decimal fraction equivalent of the percentage rate of tax provided in paragraph (a) for the taxation year, and
      B 
      is the SIFT trust’s taxable SIFT trust distributions for the taxation year.
  • Marginal note:Deductions not permitted

    (1.1) No deduction may be made under section 118 in computing the tax payable by a trust for a taxation year.

  • Marginal note:Where subsection (1) does not apply

    (2) Subsection (1) does not apply for a taxation year of an inter vivos trust that is not a mutual fund trust and that

    • (a) was established before June 18, 1971;

    • (b) was resident in Canada on June 18, 1971 and without interruption thereafter until the end of the year;

    • (c) did not carry on any active business in the year;

    • (d) has not received any property by way of gift since June 18, 1971;

    • (d.1) was not a trust to which a contribution (as defined by section 94 as it reads for taxation years that end after 2006) was made after June 22, 2000;

    • (e) has not, after June 18, 1971, incurred

      • (i) any debt, or

      • (ii) any other obligation to pay an amount,

      to or guaranteed by, any person with whom any beneficiary of the trust was not dealing at arm’s length; and

    • (f) has not received any property after December 17, 1999, where

      • (i) the property was received as a result of a transfer from another trust,

      • (ii) subsection (1) applied to a taxation year of the other trust that began before the property was so received, and

      • (iii) no change in the beneficial ownership of the property resulted from the transfer.

  • Marginal note:Definitions

    (3) The following definitions apply in this section.

    “non-deductible distributions amount”

    « montant de distribution non déductible »

    “non-deductible distributions amount” for a taxation year has the meaning assigned by subsection 104(16).

    “taxable SIFT trust distributions”

    « montant de distribution imposable »

    “taxable SIFT trust distributions”, of a SIFT trust for a taxation year, means the lesser of

    • (a) its amount taxable for the taxation year, and

    • (b) the amount determined by the formula

      A/(1 - (B + C))

      where

      A 
      is its non-deductible distributions amount for the taxation year,
      B 
      is the net corporate income tax rate in respect of the SIFT trust for the taxation year, and
      C 
      is the provincial SIFT tax rate of the SIFT trust for the taxation year.
  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. R.S., 1985, c. 1 (5th Supp.), s. 122;
  • 2001, c. 17, s. 105;
  • 2007, c. 29, s. 12;
  • 2008, c. 28, s. 18;
  • 2013, c. 34, ss. 13, 257.