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

Act current to 2017-09-27 and last amended on 2017-07-01. Previous Versions

Marginal note:Return
  •  (1) Every corporation liable to pay tax under this Part for a taxation year shall, on or before the day on or before which it is required to file its return of income under Part I for the year, file with the Minister a return for the year under this Part in prescribed form.

  • Marginal note:Provisions applicable to Part

    (2) Subsections 150(2) and 150(3), sections 152, 158 and 159, subsections 160.1(1) and 161(1) and 161(11), sections 162 to 167 and Division J of Part I are applicable to this Part with such modifications as the circumstances require.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. 1987, c. 46, s. 57.

PART IIIAdditional Tax on Excessive Elections

Marginal note:Tax on excessive elections
  •  (2) If a corporation has elected in accordance with subsection 83(2), 130.1(4) or 131(1) in respect of the full amount of any dividend payable by it on shares of any class of its capital stock (in this section referred to as the “original dividend”) and the full amount of the original dividend exceeds the portion of the original dividend deemed by that subsection to be a capital dividend or capital gains dividend, as the case may be, the corporation shall, at the time of the election, pay a tax under this Part equal to 3/5 of the excess.

  • (2.1) [Repealed, 2013, c. 34, s. 327]

  • Marginal note:Election to treat excess as separate dividend

    (3) If, in respect of an original dividend payable at a particular time, a corporation would, but for this subsection, be required to pay a tax under this Part in respect of an excess referred to in subsection (2), and the corporation elects in prescribed manner on or before the day that is 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, the following rules apply:

    • (a) the portion of the original dividend deemed by subsection 83(2), 130.1(4) or 131(1) to be a capital dividend or capital gains dividend, as the case may be, is deemed for the purposes of this Act to be the amount of a separate dividend that became payable at the particular time;

    • (b) if the corporation identifies in its election any part of the excess, that part is, for the purposes of any election under subsection 83(2), 130.1(4) or 131(1) in respect of that part, and, where the corporation has so elected, for all purposes of this Act, deemed to be the amount of a separate dividend that became payable immediately after the particular time;

    • (c) the amount by which the excess exceeds any portion deemed by paragraph (b) to be a separate dividend for all purposes of this Act is deemed to be a separate taxable dividend that became payable at the particular time; and

    • (d) each person who held any of the issued shares of the class of shares of the capital stock of the corporation in respect of which the original dividend was paid is deemed

      • (i) not to have received any portion of the original dividend, and

      • (ii) to have received, at the time that any separate dividend determined under any of paragraphs (a) to (c) became payable, the proportion of that dividend that the number of shares of that class held by the person at the particular time is of the number of shares of that class outstanding at the particular time except that, for the purpose of Part ​XIII, the separate dividend is deemed to be paid on the day that the election in respect of this subsection is made.

  • (3.1) and (3.2) [Repealed, 2013, c. 34, s. 327]

  • Marginal note:Concurrence with election

    (4) An election under subsection (3) is valid only if

    • (a) it is made with the concurrence of the corporation and all its shareholders

      • (i) who received or were entitled to receive all or any portion of the original dividend, and

      • (ii) whose addresses were known to the corporation; and

    • (b) either

      • (i) it is made on or before the day that is 30 months after the day on which the original dividend became payable, or

      • (ii) each shareholder described in subparagraph (a)(i) concurs with the election, in which case, notwithstanding subsections 152(4) to (5), any assessment of the tax, interest and penalties payable by each of those shareholders for any taxation year shall be made that is necessary to take the corporation’s election into account.

  • Marginal note:Exception for non-taxable shareholders

    (5) If each person who, in respect of an election made under subsection (3), is deemed by subsection (3) to have received a dividend at a particular time is also, at the particular time, a person all of whose taxable income is exempt from tax under Part I,

    • (a) subsection (4) does not apply to the election; and

    • (b) the election is valid only if it is made on or before the day that is 30 months after the day on which the original dividend became payable.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. R.S., 1985, c. 1 (5th Supp.), s. 184;
  • 1994, c. 7, Sch. II, s. 152;
  • 2010, c. 25, s. 48;
  • 2013, c. 34, s. 327.
Marginal note:Assessment of tax
  •  (1) The Minister shall, with all due dispatch, examine each election made by a corporation in accordance with subsection 83(2), 130.1(4) or 131(1), assess the tax, if any, payable under this Part in respect of the election and send a notice of assessment to the corporation.

  • Marginal note:Payment of tax and interest

    (2) Where an election has been made by a corporation in accordance with subsection 83(2), 130.1(4) or 131(1) and the Minister mails a notice of assessment under this Part in respect of the election, that part of the amount assessed then remaining unpaid and interest thereon at the prescribed rate computed from the day of the election to the day of payment is payable forthwith by the corporation to the Receiver General.

  • Marginal note:Provisions applicable to Part

    (3) Subsections 152(3), 152(4), 152(5), 152(7) and 152(8) and 161(11), sections 163 to 167 and Division J of Part I are applicable to this Part with such modifications as the circumstances require.

  • Marginal note:Joint and several, or solidary, liability from excessive elections

    (4) Each person who has received a dividend from a corporation in respect of which the corporation elected under subsection 83(2), 130.1(4) or 131(1) is jointly and severally, or solidarily, liable with the corporation to pay that proportion of the corporation’s tax payable under this Part because of the election that

    • (a) the amount of the dividend received by the person

    is of

    • (b) the full amount of the dividend in respect of which the election was made,

    but nothing in this subsection limits the liability of any person under any other provision of this Act.

  • Marginal note:Assessment

    (5) The Minister may, at any time after the last day on which a corporation may make an election under subsection 184(3) in respect of a dividend, assess a person in respect of any amount payable under subsection 185(4) in respect of the dividend, and the provisions of Division I of Part I apply, with such modifications as the circumstances require, to an assessment made under this subsection as though it were made under section 152.

  • Marginal note:Rules applicable

    (6) If under subsection (4) a corporation and another person have become jointly and severally, or solidarily, liable to pay part or all of the corporation’s tax payable under this Part in respect of a dividend described in that subsection,

    • (a) a payment at any time by the other person on account of the liability shall, to the extent of the payment, discharge their liability after that time; and

    • (b) a payment at any time by the corporation on account of its liability shall discharge the other person’s liability only to the extent of the amount determined by the formula

      (A - B) × C/D

      where

      A
      is the total of
      • (i) the amount of the corporation’s liability, immediately before that time, under this Part in respect of the full amount of the dividend, and

      • (ii) the amount of the payment,

      B
      is the amount of the corporation’s liability, immediately before that time, under this Act,
      C
      is the amount of the dividend received by the other person, and
      D
      is the full amount of the dividend.
  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. R.S., 1985, c. 1 (5th Supp.), s. 185;
  • 1994, c. 7, Sch. II, s. 153;
  • 2013, c. 34, s. 150.

PART III.1Additional Tax on Excessive Eligible Dividend Designations

Marginal note:Tax on excessive eligible dividend designations
  •  (1) A corporation that has made an excessive eligible dividend designation in respect of an eligible dividend paid by it at any time in a taxation year shall, on or before the corporation’s balance-due day for the taxation year, pay a tax under this Part for the taxation year equal to the total of

    • (a) 20% of the excessive eligible dividend designation, and

    • (b) if the excessive eligible dividend designation arises because of the application of paragraph (c) of the definition excessive eligible dividend designation in subsection 89(1), 10% of the excessive eligible dividend designation.

  • 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:

    • (a) notwithstanding the definition eligible dividend in subsection 89(1), the amount of the original dividend paid by the corporation is deemed to be the amount, if any, by which

      • (i) the amount of the original dividend, determined without reference to this subsection

      exceeds

      • (ii) the amount claimed by the corporation in the election not exceeding the excessive eligible dividend designation, determined without reference to this subsection;

    • (b) an amount equal to the amount claimed by the corporation in the election is deemed to be a separate taxable dividend (other than an eligible dividend) that was paid by the corporation immediately before the particular time;

    • (c) each shareholder of the corporation who at the particular time held any of the issued shares of the class of shares in respect of which the original dividend was paid is deemed

      • (i) not to have received the original dividend, and

      • (ii) to have received at the particular time

        • (A) as an eligible dividend, the shareholder’s pro rata portion of the amount of any dividend determined under paragraph (a), and

        • (B) as a taxable dividend (other than an eligible dividend) the shareholder’s pro rata portion of the amount of any dividend determined under paragraph (b); and

    • (d) a shareholder’s pro rata portion of a dividend paid at any time on a class of the shares of the capital stock of a corporation is that proportion of the dividend that the number of shares of that class held by the shareholder at that time is of the number of shares of that class outstanding at that time.

  • Marginal note:Concurrence with election

    (3) An election under subsection (2) in respect of an original dividend is valid only if

    • (a) it is made with the concurrence of the corporation and all its shareholders

      • (i) who received or were entitled to receive all or any portion of the original dividend, and

      • (ii) whose addresses were known to the corporation; and

    • (b) either

      • (i) it is made on or before the day that is 30 months after the day on which the original dividend was paid, or

      • (ii) each shareholder described in subparagraph (a)(i) concurs with the election, in which case, notwithstanding subsections 152(4) to (5), any assessment of the tax, interest and penalties payable by each of those shareholders for any taxation year shall be made that is necessary to take the corporation’s election into account.

  • Marginal note:Exception for non-taxable shareholders

    (4) If each shareholder who, in respect of an election made under subsection (2), is deemed by subsection (2) to have received a dividend at a particular time is also, at the particular time, a person all of whose taxable income is exempt from tax under Part I,

    • (a) subsection (3) does not apply to the election; and

    • (b) the election is valid only if it is made on or before the day that is 30 months after the day on which the original dividend was paid.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. 2007, c. 2, s. 51;
  • 2010, c. 25, s. 49.
 
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