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

Act current to 2015-07-09 and last amended on 2015-06-30. Previous Versions

Marginal note:Amounts included in income of deposit insurance corporation
  •  (1) For the purpose of computing the income for a taxation year of a taxpayer that is a deposit insurance corporation, the following rules apply:

    • (a) the corporation’s income shall, except as otherwise provided in this section, be computed in accordance with the rules applicable in computing income for the purposes of this Part; and

    • (b) there shall be included in computing the corporation’s income such of the following amounts as are applicable:

      • (i) the total of profits or gains made in the year by the corporation in respect of bonds, debentures, mortgages, hypothecary claims, notes or other similar obligations owned by it that were disposed of by it in the year, and

      • (ii) the total of each such portion of each amount, if any, by which the principal amount, at the time it was acquired by the corporation, of a bond, debenture, mortgage, hypothecary claim, note or other similar obligation owned by the corporation at the end of the year exceeds the cost to the corporation of acquiring it as was included by the corporation in computing its profit for the year.

  • Marginal note:Amounts not included in income

    (2) The following amounts shall not be included in computing the income of a deposit insurance corporation for a taxation year:

    • (a) any premium or assessment received, or receivable, by the corporation in the year from a member institution; and

    • (b) any amount received by the corporation in the year from another deposit insurance corporation to the extent that that amount can reasonably be considered to have been paid out of amounts referred to in paragraph (a) received by that other deposit insurance corporation in any taxation year.

  • Marginal note:Amounts deductible in computing income of deposit insurance corporation

    (3) There may be deducted in computing the income for a taxation year of a taxpayer that is a deposit insurance corporation such of the following amounts as are applicable:

    • (a) the total of losses sustained in the year by the corporation in respect of bonds, debentures, mortgages, hypothecary claims, notes or other similar obligations owned by it and issued by a person other than a member institution that were disposed of by it in the year;

    • (b) the total of each such portion of each amount, if any, by which the cost to the corporation of acquiring a bond, debenture, mortgage, hypothecary claim, note or other similar obligation owned by the corporation at the end of the year exceeds the principal amount of the bond, debenture, mortgage, hypothecary claim, note or other similar obligation, as the case may be, at the time it was so acquired as was deducted by the corporation in computing its profit for the year;

    • (d) the total of all expenses incurred by the taxpayer in collecting premiums or assessments from member institutions;

    • (e) the total of all expenses incurred by the taxpayer

      • (i) in the performance of its duties as curator of a bank, or as liquidator or receiver of a member institution when duly appointed as such a curator, liquidator or receiver,

      • (ii) in the course of making or causing to be made such inspections as may reasonably be considered to be appropriate for the purposes of assessing the solvency or financial stability of a member institution, and

      • (iii) in supervising or administering a member institution in financial difficulty; and

    • (f) the total of all amounts each of which is an amount that is not otherwise deductible by the taxpayer for the year or any other taxation year and that is

      • (i) an amount paid by the taxpayer in the year pursuant to a legal obligation to pay interest on borrowed money used

        • (A) to lend money to, or otherwise provide assistance to, a member institution in financial difficulty,

        • (B) to assist in the payment of any losses suffered by members or depositors of a member institution in financial difficulty,

        • (C) to lend money to a subsidiary wholly-owned corporation of the taxpayer where the subsidiary is deemed by subsection 137.1(5.1) to be a deposit insurance corporation,

        • (D) to acquire property from a member institution in financial difficulty, or

        • (E) to acquire shares of the capital stock of a member institution in financial difficulty, or

      • (ii) an amount paid by the taxpayer in the year pursuant to a legal obligation to pay interest on an amount that would be deductible under subparagraph 137.1(3)(f)(i) if it were paid in the year.

  • Marginal note:Limitation on deduction

    (4) No deduction shall be made in computing the income for a taxation year of a taxpayer that is a deposit insurance corporation in respect of

    • (a) any grant, subsidy or other assistance to member institutions provided by it;

    • (b) an amount equal to the amount, if any, by which the amount paid or payable by it to acquire property exceeds the fair market value of the property at the time it was so acquired;

    • (c) any amounts paid to its member institutions as allocations in proportion to any amounts described in subsection 137.1(2);

    • (d) any amount paid by it to another deposit insurance corporation that is, because of paragraph (2)(b), not included in computing the income of that other deposit insurance corporation; or

    • (e) any amount that may otherwise be deductible under paragraph 20(1)(p) in respect of debts owing to it by any of its member institutions that has not been included in computing its income for the year or a preceding taxation year.

  • Marginal note:Definitions

    (5) In this section,

    “deposit insurance corporation”

    « compagnie d’assurance-dépôts »

    “deposit insurance corporation” means

    • (a) a corporation that was incorporated by or under a law of Canada or a province respecting the establishment of a stabilization fund or board if

      • (i) it was incorporated primarily

        • (A) to provide or administer a stabilization, liquidity or mutual aid fund for credit unions, and

        • (B) to assist in the payment of any losses suffered by members of credit unions in liquidation, and

      • (ii) throughout any taxation year in respect of which the expression is being applied,

        • (A) it was a Canadian corporation, and

        • (B) the cost amount to the corporation of its investment property was at least 50% of the cost amount to it of all its property (other than a debt obligation of, or a share of the capital stock of, a member institution issued by the member institution at a time when it was in financial difficulty, or

    • (b) a corporation incorporated by the Canada Deposit Insurance Corporation Act;

    “investment property”

    « bien de placement »

    “investment property” means

    • (a) bonds, debentures, mortgages, hypothecary claims, notes or other similar obligations

      • (i) of or guaranteed by the Government of Canada,

      • (ii) of the government of a province or an agent thereof,

      • (iii) of a municipality in Canada or a municipal or public body performing a function of government in Canada,

      • (iv) of a corporation, commission or association not less than 90% of the shares or capital of which is owned by Her Majesty in right of a province or by a Canadian municipality, or of a subsidiary wholly-owned corporation that is subsidiary to such a corporation, commission or association, or

      • (v) of an educational institution or a hospital if repayment of the principal amount thereof and payment of the interest thereon is to be made, or is guaranteed, assured or otherwise specifically provided for or secured by the government of a province,

    • (b) any deposits, deposit certificates or guaranteed investment certificates with

      • (i) a bank,

      • (ii) a corporation licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada the business of offering to the public its services as trustee, or

      • (iii) a credit union or central that is a member of the Canadian Payments Association or a credit union that is a shareholder or member of a central that is a member of the Canadian Payments Association,

    • (c) any money of the corporation, and

    • (d) in relation to a particular deposit insurance corporation, debt obligations of, and shares of the capital stock of, a subsidiary wholly-owned corporation of the particular corporation where the subsidiary is deemed by subsection 137.1(5.1) to be a deposit insurance corporation;

    “member institution”

    « institution membre »

    “member institution”, in relation to a particular deposit insurance corporation, means

    • (a) a corporation whose liabilities in respect of deposits are insured by, or

    • (b) a credit union that is qualified for assistance from

    that deposit insurance corporation.

  • Marginal note:Deeming provision

    (5.1) For the purposes of this section, other than subsection 137.1(2), paragraph 137.1(3)(d), subparagraph 137.1(3)(e)(i), subsection 137.1(9) and paragraph 11(a), a subsidiary wholly-owned corporation of a particular corporation described in the definition “deposit insurance corporation” in subsection 137.1(5) shall be deemed to be a deposit insurance corporation, and any member institution of the particular corporation shall be deemed to be a member institution of the subsidiary, where all or substantially all of the property of the subsidiary has at all times since the subsidiary was incorporated consisted of

    • (a) investment property;

    • (b) shares of the capital stock of a member institution of the particular corporation obtained by the subsidiary at a time when the member institution was in financial difficulty;

    • (c) debt obligations issued by a member institution of the particular corporation at a time when the member institution was in financial difficulty;

    • (d) property acquired from a member institution of the particular corporation at a time when the member institution was in financial difficulty; or

    • (e) any combination of property described in paragraphs 137.1(5.1)(a) to 137.1(5.1)(d).

  • Marginal note:Deemed not to be a private corporation

    (6) Notwithstanding any other provision of this Act, a deposit insurance corporation that would, but for this subsection, be a private corporation shall be deemed not to be a private corporation.

  • Marginal note:Deposit insurance corporation deemed not a credit union

    (7) Notwithstanding any other provision of this Act, a deposit insurance corporation that would, but for this subsection, be a credit union shall be deemed not to be a credit union.

  • Marginal note:Deemed compliance

    (8) For the purposes of subsection 137.1(5), a corporation shall be deemed to have complied with clause (a)(ii)(B) of the definition “deposit insurance corporation” in subsection 137.1(5) throughout the 1975 taxation year if it complied with that clause on the last day of that taxation year.

  • Marginal note:Special tax rate

    (9) The tax payable under this Part by a corporation for a taxation year throughout which it was a deposit insurance corporation (other than a corporation incorporated under the Canada Deposit Insurance Corporation Act) is the amount determined by the formula:

    (38% - A) × B

    where

    A 
    is the rate that would, if subsection 125(1.1) applied to the corporation for the taxation year, be the corporation’s small business deduction rate for the taxation year within the meaning assigned by that subsection; and
    B 
    is the corporation’s taxable income for the taxation year.
  • Marginal note:Amounts paid by a deposit insurance corporation

    (10) Where in a taxation year a taxpayer is a member institution, there shall be included in computing its income for the year the total of all amounts each of which is

    • (a) an amount received by the taxpayer in the year from a deposit insurance corporation that is an amount described in any of paragraphs 137.1(4)(a) to 137.1(4)(c), to the extent that the taxpayer has not repaid the amount to the deposit insurance corporation in the year,

    • (b) an amount received from a deposit insurance corporation in the year by a depositor or member of the taxpayer as, on account of, in lieu of payment of, or in satisfaction of, deposits with, or share capital of, the taxpayer, to the extent that the taxpayer has not repaid the amount to the deposit insurance corporation in the year, or

    • (c) the amount by which

      • (i) the principal amount of any obligation of the taxpayer to pay an amount to a deposit insurance corporation that is settled or extinguished in the year without any payment by the taxpayer or by the payment by the taxpayer of an amount less than the principal amount

      exceeds

      • (ii) the amount, if any, paid by the taxpayer on the settlement or extinguishment of the obligation

      to the extent that the excess is not otherwise required to be included in computing the taxpayer’s income for the year or a preceding taxation year.

  • Marginal note:Principal amount of an obligation to pay interest

    (10.1) For the purposes of paragraph 137.1(10)(c), an amount of interest payable by a member institution to a deposit insurance corporation on an obligation shall be deemed to have a principal amount equal to that amount.

  • Marginal note:Deduction by member institutions

    (11) There may be deducted in computing the income for a taxation year of a taxpayer that is a member institution such of the following amounts as are applicable:

    • (a) any amount paid or payable by the taxpayer in the year that is described in subsection 137.1(2) to the extent that it was not deducted in computing the taxpayer’s income for a preceding taxation year; and

    • (b) any amount repaid by the taxpayer in the year to a deposit insurance corporation on account of an amount described in paragraph 137.1(10)(a) or 137.1(10)(b) that was received in a preceding taxation year to the extent that it was not, by reason of subsection 137.1(12), excluded from the taxpayer’s income for the preceding year.

  • Marginal note:Repayment excluded

    (12) Where

    • (a) a member institution has in a taxation year repaid an amount to a deposit insurance corporation on account of an amount that was included by virtue of paragraph 137.1(10)(a) or 137.1(10)(b) in computing its income for a preceding taxation year,

    • (b) the member institution has filed its return of income required by section 150 for the preceding year, and

    • (c) on or before the day on or before which the member institution is required by section 150 to file a return of income for the taxation year, it has filed an amended return for the preceding year excluding from its income for that year the amount repaid,

    the amount repaid shall be excluded from the amount otherwise included by virtue of paragraph 137.1(10)(a) or 137.1(10)(b) in computing the member institution’s income for the preceding year and the Minister shall make such reassessment of the tax, interest and penalties payable by the member institution for preceding taxation years as is necessary to give effect to the exclusion.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. R.S., 1985, c. 1 (5th Supp.), s. 137.1;
  • 1994, c. 21, s. 65;
  • 2001, c. 17, s. 216;
  • 2007, c. 2, s. 38;
  • 2013, c. 34, s. 285.