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

 [Repealed, 2009, c. 2, s. 6]

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. 2007, c. 35, s. 12;
  • 2009, c. 2, s. 6.
Marginal note:Definitions
  •  (1) The following definitions apply in this section.

    “entity”

    « entité »

    “entity” has the same meaning as in subsection 122.1(1).

    “equity value”

    « valeur des capitaux propres »

    “equity value” has the same meaning as in subsection 122.1(1).

    “real estate investment trust”

    « fiducie de placement immobilier »

    “real estate investment trust” has the same meaning as in subsection 122.1(1).

    “security”

    « titre »

    “security”, of an entity, means

    • (a) a liability of the entity;

    • (b) if the entity is a corporation,

      • (i) a share of the capital stock of the corporation, and

      • (ii) a right to control in any manner whatever the voting rights of a share of the capital stock of the corporation if it can reasonably be concluded that one of the reasons that a person or partnership holds the right to control is to avoid the application of subsection (3) or 12.6(3);

    • (c) if the entity is a trust, an income or a capital interest in the trust; and

    • (d) if the entity is a partnership, an interest as a member of the partnership.

    “stapled security”

    « titre agrafé »

    “stapled security”, of a particular entity at any time, means a particular security of the particular entity if at that time

    • (a) another security (referred to in this section as the “reference security”)

      • (i) is or may be required to be transferred together or concurrently with the particular security as a term or condition of the particular security, the reference security, or an agreement or arrangement to which the particular entity (or if the reference security is a security of another entity, the other entity) is a party, or

      • (ii) is listed or traded with the particular security on a stock exchange or other public market under a single trading symbol;

    • (b) the particular security or the reference security is listed or traded on a stock exchange or other public market; and

    • (c) any of the following applies:

      • (i) the reference security and the particular security are securities of the particular entity and the particular entity is a corporation, SIFT partnership or SIFT trust,

      • (ii) the reference security is a security of another entity, one of the particular entity or the other entity is a subsidiary of the other, and the particular entity or the other entity is a corporation, SIFT partnership or SIFT trust, or

      • (iii) the reference security is a security of another entity and the particular entity or the other entity is a real estate investment trust or a subsidiary of a real estate investment trust.

    “subsidiary”

    « filiale »

    “subsidiary”, of a particular entity at any time, means

    • (a) an entity in which the particular entity holds at that time securities that have a total fair market value greater than 10% of the equity value of the entity; and

    • (b) an entity that at that time is a subsidiary of an entity that is a subsidiary of the particular entity.

    “transition period”

    « période de transition »

    “transition period”, of an entity, means

    • (a) if one or more securities of the entity would have been stapled securities of the entity on October 31, 2006 and July 19, 2011 had the definition “stapled security” in this subsection come into force on October 31, 2006, the period that begins on July 20, 2011 and ends on the earliest of

      • (i) January 1, 2016,

      • (ii) the first day after July 20, 2011 on which any of those securities is materially altered, and

      • (iii) the first day after July 20, 2011 on which any security of the entity becomes a stapled security other than by way of

        • (A) a transaction

          • (I) that is completed under the terms of an agreement in writing entered into before July 20, 2011 if no party to the agreement may be excused from completing the transaction as a result of amendments to this Act, and

          • (II) that is not the issuance of a security in satisfaction of a right to enforce payment of an amount by the entity, or

        • (B) the issuance of the security in satisfaction of a right to enforce payment of an amount that became payable by the entity on another security of the entity before July 20, 2011, if the other security was a stapled security on July 20, 2011 and the issuance was made under a term or condition of the other security in effect on July 20, 2011;

    • (b) if paragraph (a) does not apply to the entity and one or more securities of the entity would have been stapled securities of the entity on July 19, 2011 had the definition “stapled security” in this subsection come into force on July 19, 2011, the period that begins on July 20, 2011 and ends on the earliest of

      • (i) July 20, 2012,

      • (ii) the first day after July 20, 2011 on which any of those securities is materially altered, and

      • (iii) the first day after July 20, 2011 on which any security of the entity becomes a stapled security other than by way of

        • (A) a transaction

          • (I) that is completed under the terms of an agreement in writing entered into before July 20, 2011 if no party to the agreement may be excused from completing the transaction as a result of amendments to this Act, and

          • (II) that is not the issuance of a security in satisfaction of a right to enforce payment of an amount by the entity, or

        • (B) the issuance of the security in satisfaction of a right to enforce payment of an amount that became payable by the entity on another security of the entity before July 20, 2011, if the other security was a stapled security on July 20, 2011 and the issuance was made under a term or condition of the other security in effect on July 20, 2011; and

    • (c) in any other case, if the entity is a subsidiary of another entity on July 20, 2011 and the other entity has a transition period, the period that begins on July 20, 2011 and ends on the earliest of

      • (i) the day on which the other entity’s transition period ends,

      • (ii) the first day after July 20, 2011 on which the entity ceases to be a subsidiary of the other entity, and

      • (iii) the first day after July 20, 2011 on which any security of the entity becomes a stapled security other than by way of

        • (A) a transaction

          • (I) that is completed under the terms of an agreement in writing entered into before July 20, 2011 if no party to the agreement may be excused from completing the transaction as a result of amendments to this Act, and

          • (II) that is not the issuance of a security in satisfaction of a right to enforce payment of an amount by the entity, or

        • (B) the issuance of the security in satisfaction of a right to enforce payment of an amount that became payable by the entity on another security of the entity before July 20, 2011, if the other security was a stapled security on July 20, 2011 and the issuance was made under a term or condition of the other security in effect on July 20, 2011.

  • Marginal note:Property representing security

    (2) For the purpose of determining whether a particular security of an entity is a stapled security, if a receipt or similar property (referred to in this subsection as the “receipt”) represents all or a portion of the particular security and the receipt would be described in paragraphs (a) and (b) of the definition “stapled security” in subsection (1) if it were a security of the entity, then

    • (a) the particular security is deemed to be described in those paragraphs; and

    • (b) a security that would be a reference security in respect of the receipt is deemed to be a reference security in respect of the particular security.

  • Marginal note:Amounts not deductible

    (3) Notwithstanding any other provision of this Act, in computing the income of a particular entity for a taxation year from a business or property, no deduction may be made in respect of an amount

    • (a) that is paid or payable after July 19, 2011, unless the amount is paid or payable in respect of the entity’s transition period; and

    • (b) that is

      • (i) interest paid or payable on a liability of the particular entity that is a stapled security, unless each reference security in respect of the stapled security is a liability, or

      • (ii) if a security of the particular entity, a subsidiary of the particular entity or an entity of which the particular entity is a subsidiary is a reference security in respect of a stapled security of a real estate investment trust or a subsidiary of a real estate investment trust, an amount paid or payable to

        • (A) the real estate investment trust,

        • (B) a subsidiary of the real estate investment trust, or

        • (C) any person or partnership on condition that any person or partnership pays or makes payable an amount to the real estate investment trust or a subsidiary of the real estate investment trust.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. 2013, c. 40, s. 10.