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

Act current to 2017-03-20 and last amended on 2017-02-01. Previous Versions

Marginal note:Taxable capital employed in Canada

 For the purposes of this Part, the taxable capital employed in Canada of a financial institution for a taxation year is,

  • (a) in the case of a financial institution other than a life insurance corporation, that proportion of its taxable capital for the year that its Canadian assets at the end of the year is of its total assets at the end of the year;

  • (b) in the case of a life insurance corporation that was resident in Canada at any time in the year, the total of

    • (i) that proportion of the amount, if any, by which the total of

      • (A) its taxable capital for the year, and

      • (B) the amount prescribed for the year in respect of the corporation

      exceeds

      • (C) the amount prescribed for the year in respect of the corporation

      that its Canadian reserve liabilities as at the end of the year is of the total of

      • (D) its total reserve liabilities as at the end of the year, and

      • (E) the amount prescribed for the year in respect of the corporation; and

    • (ii) [Repealed, 2009, c. 2, s. 63]

  • (c) in the case of a life insurance corporation that was non-resident throughout the year, its taxable capital for the year.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. R.S., 1985, c. 1 (5th Supp.), s. 190.11;
  • 1994, c. 7, Sch. II, s. 158, c. 21, s. 88;
  • 2009, c. 2, s. 63.
Marginal note:Taxable capital

 For the purposes of this Part, the taxable capital of a corporation for a taxation year is the amount, if any, by which its capital for the year exceeds the total determined under section 190.14 in respect of its investments for the year in financial institutions related to it.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. 1986, c. 6, s. 100;
  • 1990, c. 39, s. 50.
Marginal note:Capital

 For the purposes of this Part, the capital of a financial institution for a taxation year is,

  • (a) in the case of a financial institution, other than an authorized foreign bank or a life insurance corporation, the amount, if any, by which the total at the end of the year of

    • (i) the amount of its long-term debt,

    • (ii) the amount of its capital stock (or, in the case of an institution incorporated without share capital, the amount of its members’ contributions), retained earnings, contributed surplus and any other surpluses, and

    • (iii) the amount of its reserves, except to the extent that they were deducted in computing its income under Part I for the year,

    exceeds the total at the end of the year of

    • (iv) the amount of its deferred tax debit balance, and

    • (v) the amount of any deficit deducted in computing its shareholders’ equity (including, for this purpose, the amount of any provision for the redemption of preferred shares);

  • (b) in the case of a life insurance corporation that was resident in Canada at any time in the year, the amount, if any, by which the total at the end of the year of

    • (i) the amount of its long-term debt, and

    • (ii) the amount of its capital stock (or, in the case of an insurance corporation incorporated without share capital, the amount of its members’ contributions), retained earnings, contributed surplus and any other surpluses

    exceeds the total at the end of the year of

    • (iii) the amount of its deferred tax debit balance, and

    • (iv) the amount of any deficit deducted in computing its shareholders’ equity (including, for this purpose, the amount of any provision for the redemption of preferred shares);

  • (c) in the case of a life insurance corporation that was non-resident throughout the year, the total at the end of the year of

    • (i) the amount that is the greater of

      • (A) the amount, if any, by which

        • (I) its surplus funds derived from operations (as defined in subsection 138(12)) as of the end of the year, computed as if no tax were payable under Part I.3 or this Part for the year

        exceeds the total of all amounts each of which is

        • (II) an amount on which it was required to pay, or would but for subsection 219(5.2) have been required to pay, tax under Part XIV for a preceding taxation year, except the portion, if any, of the amount on which tax was payable, or would have been payable, because of subparagraph 219(4)(a)(i.1), and

        • (III) an amount on which it was required to pay, or would but for subsection 219(5.2) have been required to pay, tax under subsection 219(5.1) for the year because of the transfer of an insurance business to which subsection 138(11.5) or 138(11.92) has applied, and

      • (B) its attributed surplus for the year,

    • (ii) any other surpluses relating to its insurance businesses carried on in Canada,

    • (iii) the amount of its long-term debt that can reasonably be regarded as relating to its insurance businesses carried on in Canada; and

    • (iv) [Repealed, 2009, c. 2, s. 64]

  • (d) in the case of an authorized foreign bank, the total of

    • (i) 10% of the total of all amounts, each of which is the risk-weighted amount at the end of the year of an on-balance sheet asset or an off-balance sheet exposure of the bank in respect of its Canadian banking business that the bank would be required to report under the OSFI risk-weighting guidelines if those guidelines applied and required a report at that time, and

    • (ii) the total of all amounts, each of which is an amount at the end of the year in respect of the bank’s Canadian banking business that

      • (A) if the bank were a bank listed in Schedule II to the Bank Act, would be required under the risk-based capital adequacy guidelines issued by the Superintendent of Financial Institutions and applicable at that time to be deducted from the bank’s capital in determining the amount of capital available to satisfy the Superintendent’s requirement that capital equal a particular proportion of risk-weighted assets and exposures, and

      • (B) is not an amount in respect of a loss protection facility required to be deducted from capital under the Superintendent’s guidelines respecting asset securitization applicable at that time.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. R.S., 1985, c. 1 (5th Supp.), s. 190.13;
  • 1994, c. 7, Sch. II, s. 159, c. 21, s. 89;
  • 1998, c. 19, s. 203;
  • 2001, c. 17, s. 166;
  • 2009, c. 2, s. 64;
  • 2013, c. 34, s. 330.
Marginal note:Investment in related institutions
  •  (1) A corporation’s investment for a taxation year in a financial institution related to it is

    • (a) in the case of a corporation that was resident in Canada at any time in the year, the total of all amounts each of which is the carrying value (or in the case of contributed surplus, the amount) at the end of the year of an eligible investment of the corporation in the financial institution;

    • (b) in the case of a life insurance corporation that was non-resident throughout the year, the total of all amounts each of which is the carrying value (or is, in the case of contributed surplus, the amount) at the end of the year of an eligible investment of the corporation in the financial institution that was used or held by the corporation in the year in the course of carrying on an insurance business in Canada (or that, in the case of contributed surplus, was contributed by the corporation in the course of carrying on that business); and

    • (c) in the case of a corporation that is an authorized foreign bank, the total of all amounts each of which is the amount at the end of the year, before the application of risk weights, that would be required to be reported under the OSFI risk-weighting guidelines if those guidelines applied and required a report at that time, of an eligible investment of the corporation in the financial institution that was used or held by the corporation in the year in the course of carrying on its Canadian banking business or, in the case of an eligible investment that is contributed surplus of the financial institution at the end of the year, the amount of the surplus contributed by the corporation in the course of carrying on that business.

  • Marginal note:Interpretation

    (2) For the purpose of subsection (1), an eligible investment of a corporation in a financial institution is a share of the capital stock or long-term debt (and, where the corporation is an insurance corporation, is non-segregated property within the meaning assigned by subsection 138(12)) of the financial institution or any surplus of the financial institution contributed by the corporation (other than an amount otherwise included as a share or debt) if the financial institution at the end of the year is

    • (a) related to the corporation; and

    • (b) resident in Canada or can reasonably be regarded as using the surplus or the proceeds of the share or debt in a business carried on by the financial institution through a permanent establishment (as defined by regulation) in Canada.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. R.S., 1985, c. 1 (5th Supp.), s. 190.14;
  • 1994, c. 7, Sch. II, s. 159, c. 21, s. 90;
  • 2001, c. 17, s. 167.
 
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