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

Act current to 2016-01-25 and last amended on 2015-12-31. Previous Versions

Marginal note:Tax for failure to reacquire certain shares

 If a particular amount is payable under a prescribed provision of a provincial law for a taxation year of an individual as determined for the purposes of that provincial law (referred to in this section as the “relevant provincial year”), and an amount has been included in the computation of the labour-sponsored funds tax credit of the individual under subsection 127.4(6) in respect of an approved share that has been disposed of by a qualifying trust in respect of the individual, the individual shall pay a tax for the taxation year in which the relevant provincial year ends equal to the amount deducted by the individual under subsection 127.4(2) in respect of the share.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. 2013, c. 34, s. 345, c. 40, s. 81.
Marginal note:Return
  •  (1) Every person that is liable to pay tax under this Part for a taxation year shall, not later than the day on or before which the person is required by section 150 to file a return of income for the year under Part I, file with the Minister a return for the year under this Part in prescribed form containing an estimate of the tax payable by the person for the year.

  • Marginal note:Provisions applicable to this Part

    (2) Subsections 150(2) and (3), sections 152, 158 and 159, subsections 161(1) and (11), sections 162 to 167 and Division J of Part I apply to this Part, with any modifications that the circumstances require.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. 2013, c. 34, s. 345.

 [Repealed, 2013, c. 34, s. 346]

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. 1997, c. 25, s. 62;
  • 2000, c. 19, s. 63;
  • 2013, c. 34, s. 346.

PART XII.6Tax on Flow-through Shares

Marginal note:Tax imposed
  •  (1) Every corporation shall pay a tax under this Part in respect of each month (other than January) in a calendar year equal to the amount determined by the formula

    (A + B/2 - C - D/2) × (E/12 + F/10)

    where

    A 
    is the total of all amounts each of which is an amount that the corporation purported to renounce in the year under subsection 66(12.6) or 66(12.601) because of the application of subsection 66(12.66) (other than an amount purported to be renounced in respect of expenses incurred or to be incurred in connection with production or potential production in a province where a tax, similar to the tax provided under this Part, is payable by the corporation under the laws of the province as a consequence of the failure to incur the expenses that were purported to be renounced);
    B 
    is the total of all amounts each of which is an amount that the corporation purported to renounce in the year under subsection 66(12.6) or 66(12.601) because of the application of subsection 66(12.66) and that is not included in the value of A;
    C 
    is the total of all expenses described in paragraph 66(12.66)(b) that are
    • (a) made or incurred by the end of the month by the corporation, and

    • (b) in respect of the purported renunciations in respect of which an amount is included in the value of A;

    D 
    is the total of all expenses described in paragraph 66(12.66)(b) that are
    • (a) made or incurred by the end of the month by the corporation, and

    • (b) in respect of the purported renunciations in respect of which an amount is included in the value of B;

    E 
    is the rate of interest prescribed for the purpose of subsection 164(3) for the month; and
    F 
    is
    • (a) one, where the month is December, and

    • (b) nil, in any other case.

  • Marginal note:Return and payment of tax

    (2) A corporation liable to tax under this Part in respect of one or more months in a calendar year shall, before March of the following calendar year,

    • (a) file with the Minister a return for the year under this Part in prescribed form containing an estimate of the tax payable under this Part by it in respect of each month in the year; and

    • (b) pay to the Receiver General the amount of tax payable under this Part by it in respect of each month in the year.

  • Marginal note:Provisions applicable to Part

    (3) Subsections 150(2) and 150(3), sections 152, 158 and 159, subsections 161(1) and 161(11), sections 162 to 167 and Division J of Part I apply to this Part, with any modifications that the circumstances require.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. 1997, c. 25, s. 62.

PART XIIITax on Income from Canada of Non-resident Persons

Marginal note:Tax
  •  (1) Every non-resident person shall pay an income tax of 25% on every amount that a person resident in Canada pays or credits, or is deemed by Part I to pay or credit, to the non-resident person as, on account or in lieu of payment of, or in satisfaction of,

    • Marginal note:Management fee

      (a) a management or administration fee or charge;

    • Marginal note:Interest

      (b) interest that

      • (i) is not fully exempt interest and is paid or payable

        • (A) to a person with whom the payer is not dealing at arm’s length, or

        • (B) in respect of a debt or other obligation to pay an amount to a person with whom the payer is not dealing at arm’s length, or

      • (ii) is participating debt interest;

    • Marginal note:Estate or trust income

      (c) income of or from an estate or a trust to the extent that the amount

      • (i) is included in computing the income of the non-resident person under subsection 104(13), except to the extent that the amount is deemed by subsection 104(21) to be a taxable capital gain of the non-resident person, or

      • (ii) can reasonably be considered (having regard to all the circumstances including the terms and conditions of the estate or trust arrangement) to be a distribution of, or derived from, an amount received by the estate or trust as, on account of, in lieu of payment of or in satisfaction of, a dividend on a share of the capital stock of a corporation resident in Canada, other than a taxable dividend;

    • Marginal note:Rents, royalties, etc.

      (d) rent, royalty or similar payment, including, but not so as to restrict the generality of the foregoing, any payment

      • (i) for the use of or for the right to use in Canada any property, invention, trade-name, patent, trade-mark, design or model, plan, secret formula, process or other thing whatever,

      • (ii) for information concerning industrial, commercial or scientific experience where the total amount payable as consideration for that information is dependent in whole or in part on

        • (A) the use to be made of, or the benefit to be derived from, that information,

        • (B) production or sales of goods or services, or

        • (C) profits,

      • (iii) for services of an industrial, commercial or scientific character performed by a non-resident person where the total amount payable as consideration for those services is dependent in whole or in part on

        • (A) the use to be made of, or the benefit to be derived from, those services,

        • (B) production or sales of goods or services, or

        • (C) profits,

        but not including a payment made for services performed in connection with the sale of property or the negotiation of a contract,

      • (iv) unless paragraph (i) applies to the amount, made pursuant to an agreement between a person resident in Canada and a non-resident person under which the non-resident person agrees not to use or not to permit any other person to use any thing referred to in subparagraph (i) or any information referred to in subparagraph (ii), or

      • (v) that was dependent on the use of or production from property in Canada whether or not it was an instalment on the sale price of the property, but not including an instalment on the sale price of agricultural land,

      but not including

      • (vi) a royalty or similar payment on or in respect of a copyright in respect of the production or reproduction of any literary, dramatic, musical or artistic work,

      • (vii) a payment in respect of the use by a railway company or by a person whose principal business is that of a common carrier of property that is railway rolling stock as defined in the definition rolling stock in section 2 of the Railway Act

        • (A) if the payment is made for the use of that property for a period or periods not expected to exceed in the aggregate 90 days in any 12 month period, or

        • (B) in any other case, if the payment is made pursuant to an agreement in writing entered into before November 19, 1974;

      • (viii) a payment made under a bona fide cost-sharing arrangement under which the person making the payment shares on a reasonable basis with one or more non-resident persons research and development expenses in exchange for an interest, or for civil law a right, in any or all property or other things of value that may result therefrom,

      • (ix) a rental payment for the use of or the right to use outside Canada any tangible, or for civil law corporeal, property,

      • (x) any payment made to a person with whom the payer is dealing at arm’s length, to the extent that the amount thereof is deductible in computing the income of the payer under Part I from a business carried on by the payer in a country other than Canada,

      • (xi) a payment made to a person with whom the payer is dealing at arm’s length for the use of or the right to use property that is

        • (A) an aircraft,

        • (B) furniture, fittings or equipment attached to an aircraft,

        • (C) a spare part for property described in clause 212(1)(d)(xi)(A) or 212(1)(d)(xi)(B),

        • (D) air navigation equipment utilized in the provision of services under the Civil Air Navigation Services Commercialization Act or computer software the use of which is necessary for the operation of that equipment that is used by the payer for no other purpose; or

      • (xii) an amount to which subsection (5) would apply if that subsection were read without reference to “to the extent that the amount relates to that use or reproduction”;

    • Marginal note:Timber royalties

      (e) a timber royalty in respect of a timber resource property or a timber limit in Canada (which, for the purposes of this Part, includes any consideration for a right under or pursuant to which a right to cut or take timber from a timber resource property or a timber limit in Canada is obtained or derived, to the extent that the consideration is dependent on, or computed by reference to, the amount of timber cut or taken);

    • (f) [Repealed, 1997, c. 25, s. 63(1)]

    • Marginal note:Patronage dividend

      (g) a patronage dividend, that is, a payment made pursuant to an allocation in proportion to patronage as defined by section 135 or an amount that would, under subsection 135(7), be included in computing the non-resident person’s income if that person were resident in Canada;

    • Marginal note:Pension benefits

      (h) a payment of a superannuation or pension benefit, other than

      • (i) [Repealed, 1996, c. 21, s. 55(1)]

      • (ii) an amount distributed from a pooled registered pension plan that has been designated by the administrator of the plan in accordance with subsection 147.5(18),

      • (iii) an amount or payment referred to in subsection 81(1) to the extent that that amount or payment would not, if the non-resident person had been resident in Canada throughout the taxation year in which the payment was made, be included in computing that person’s income,

      • (iii.1) the portion of the payment that is transferred by the payer on behalf of the non-resident person, pursuant to an authorization in prescribed form, to a pooled registered pension plan, registered pension plan, registered retirement savings plan or registered retirement income fund and that

        • (A) because of any of subsections 146(21), 147.3(9) and 147.5(22) would not, if the non-resident person had been resident in Canada throughout the taxation year in which the payment was made, be included in computing the non-resident person’s income, or

        • (B) by reason of paragraph 60(j) or 60(j.2) would, if the non-resident person had been resident in Canada throughout the year, be deductible in computing the non-resident person’s income for the year,

      • (iii.2) an amount referred to in paragraph 110(1)(f) to the extent that the amount would, if the non-resident person had been resident in Canada throughout the taxation year in which the amount was paid, be deductible in computing that person’s taxable income or that of the spouse or common-law partner of that person,

      • (iv) in the case of a payment described in section 57, that portion of the payment that would, by virtue of that section, not be included in the recipient’s income for the taxation year in which it was received, if the recipient were resident in Canada throughout that year, or

      • (iv.1) the portion of the payment that is transferred by the payer on behalf of the non-resident person, pursuant to an authorization in prescribed form, to acquire an annuity contract in circumstances to which subsection 146(21) applies,

      except such portion, if any, of the payment as may reasonably be regarded as attributable to services rendered by the person, to or in respect of whom the payment is made, in taxation years

      • (v) during which the person at no time was resident in Canada, and

      • (vi) throughout which the person was not employed, or was only occasionally employed, in Canada;

    • Marginal note:Restrictive covenant amount

      (i) an amount that would, if the non-resident person had been resident in Canada throughout the taxation year in which the amount was received or receivable, be required by paragraph 56(1)(m) or subsection 56.4(2) to be included in computing the non-resident person’s income for the taxation year;

    • Marginal note:Benefits

      (j) any benefit described in any of subparagraphs 56(1)(a)(iii) to 56(1)(a)(vi), any amount described in paragraph 56(1)(x) or 56(1)(z) (other than an amount transferred under circumstances in which subsection 207.6(7) applies) or the purchase price of an interest in a retirement compensation arrangement;

    • Marginal note:Retiring allowances

      (j.1) a payment of any allowance described in subparagraph 56(1)(a)(ii), except

      • (i) such portion, if any, of the payment as may reasonably be regarded as attributable to services rendered by the person, to or in respect of whom the payment is made, in taxation years

        • (A) during which the person at no time was resident in Canada, and

        • (B) throughout which the person was not employed, or was only occasionally employed, in Canada, and

      • (ii) the portion of the payment transferred by the payer on behalf of the non-resident person pursuant to an authorization in prescribed form to a registered pension plan or to a registered retirement savings plan under which the non-resident person is the annuitant (within the meaning assigned by subsection 146(1)) that would, if the non-resident person had been resident in Canada throughout the year, be deductible in computing the income of the non-resident person by virtue of paragraph 60(j.1);

    • Marginal note:Supplementary unemployment benefit plan payments

      (k) a payment by a trustee under a registered supplementary unemployment benefit plan;

    • Marginal note:Registered retirement savings plan payments

      (l) a payment out of or under a registered retirement savings plan or a plan referred to in subsection 146(12) as an “amended plan” that would, if the non-resident person had been resident in Canada throughout the taxation year in which the payment was made, be required by section 146 to be included in computing the income of the non-resident person for the year, other than the portion thereof that

      • (i) has been transferred by the payer on behalf of the non-resident person pursuant to an authorization in prescribed form

        • (A) to a registered retirement savings plan under which the non-resident person is the annuitant (within the meaning assigned by subsection 146(1)),

        • (B) to acquire an annuity described in subparagraph 60(l)(ii) under which the non-resident person is the annuitant, or

        • (C) to a carrier (within the meaning assigned by subsection 146.3(1)) as consideration for a registered retirement income fund under which the non-resident person is the annuitant (within the meaning assigned by subsection 146.3(1)), and

      • (ii) would, if the non-resident person had been resident in Canada throughout the year, be deductible in computing the income of the non-resident person for the year by virtue of paragraph 60(l);

    • Marginal note:Deferred profit sharing plan payments

      (m) a payment under a deferred profit sharing plan or a plan referred to in subsection 147(15) as a “revoked plan” that would, if the non-resident person had been resident in Canada throughout the taxation year in which the payment was made, be required by section 147, if it were read without reference to subsections 147(10.1) and 147(20), to be included in computing the non-resident person’s income for the year, other than the portion thereof that is transferred by the payer on behalf of the non-resident person, pursuant to an authorization in prescribed form, to a registered pension plan or registered retirement savings plan and that

      • (i) by reason of subsection 147(20) would not, if the non-resident person had been resident in Canada throughout the year, be included in computing the non-resident person’s income, or

      • (ii) by reason of paragraph 60(j.2) would, if the non-resident person had been resident in Canada throughout the year, be deductible in computing the non-resident person’s income for the year;

    • Marginal note:Income-averaging annuity contract payments

      (n) a payment under an income-averaging annuity contract, any proceeds of the surrender, cancellation, redemption, sale or other disposition of an income-averaging annuity contract, or any amount deemed by subsection 61.1(1) to have been received by the non-resident person as proceeds of the disposition of an income-averaging annuity contract;

    • Marginal note:Other annuity payments

      (o) a payment under an annuity contract (other than a payment in respect of an annuity issued in the course of carrying on a life insurance business in a country other than Canada) to the extent of the amount in respect of the interest of the non-resident person in the contract that, if the non-resident person had been resident in Canada throughout the taxation year in which the payment was made,

      • (i) would be required to be included in computing the income of the non-resident person for the year, and

      • (ii) would not be deductible in computing that income;

    • Marginal note:Former TFSA

      (p) an amount that would, if the non-resident person had been resident in Canada at the time at which the amount was paid, be required by paragraph 12(1)(z.5) to be included in computing the non-resident person’s income for the taxation year that includes that time;

    • Marginal note:Registered retirement income fund payments

      (q) a payment out of or under a registered retirement income fund that would, if the non-resident person had been resident in Canada throughout the taxation year in which the payment was made, be required by section 146.3 to be included in computing the non-resident person’s income for the year, other than the portion thereof that

      • (i) has been transferred by the payer on behalf of the non-resident person pursuant to an authorization in prescribed form

        • (A) to a registered retirement savings plan under which the non-resident person is the annuitant (within the meaning assigned by subsection 146(1)),

        • (B) to acquire an annuity described in subparagraph 60(l)(ii) under which the non-resident person is the annuitant, or

        • (C) to a carrier (within the meaning assigned by subsection 146.3(1)) as consideration for a registered retirement income fund under which the non-resident person is the annuitant (within the meaning assigned by subsection 146.3(1)), and

      • (ii) would, if the non-resident person had been resident in Canada throughout the year, be deductible in computing the non-resident person’s income for the year by reason of paragraph 60(l);

    • Marginal note:Registered education savings plan

      (r) a payment that is

      • (i) required by paragraph 56(1)(q) to be included in computing the non-resident person’s income under Part I for a taxation year, and

      • (ii) not required to be included in computing the non-resident person’s taxable income or taxable income earned in Canada for the year;

    • Marginal note:Registered disability savings plan

      (r.1) an amount that would, if the non-resident person had been resident in Canada throughout the taxation year in which the amount was paid, be required by paragraph 56(1)(q.1) to be included in computing the non-resident person’s income for the taxation year;

    • Marginal note:Home insulation or energy conversion grants

      (s) a grant under a prescribed program of the Government of Canada relating to home insulation or energy conversion;

    • Marginal note:NISA Fund No. 2 payments

      (t) a payment out of a NISA Fund No. 2 to the extent that that amount would, if Part I applied, be required by subsection 12(10.2) to be included in computing the person’s income for a taxation year;

    • Marginal note:Amateur athlete trust payments

      (u) a payment in respect of an amateur athlete trust that would, if Part I applied, be required by section 143.1 to be included in computing the person’s income for a taxation year;

    • Marginal note:Payments under an eligible funeral arrangement

      (v) a payment made by a custodian (within the meaning assigned by subsection 148.1(1)) of an arrangement that was, at the time it was established, an eligible funeral arrangement, to the extent that such amount would, if the non-resident person were resident in Canada, be included because of subsection 148.1(3) in computing the person’s income;

    • (w) a payment out of a trust that is, or was, at any time, an employee life and health trust, except to the extent that it is a payment of a designated employee benefit (as defined by subsection 144.1(1)); or

    • Marginal note:Tax informant program

      (x) a payment of an amount described in paragraph 56(1)(z.4).

  • Marginal note:Tax on dividends

    (2) Every non-resident person shall pay an income tax of 25% on every amount that a corporation resident in Canada pays or credits, or is deemed by Part I or Part XIV to pay or credit, to the non-resident person as, on account or in lieu of payment of, or in satisfaction of,

    • (a) a taxable dividend (other than a capital gains dividend within the meaning assigned by subsection 130.1(4), 131(1) or 133(7.1)); or

    • (b) a capital dividend.

  • Marginal note:Exempt dividends

    (2.1) Subsection (2) does not apply to an amount paid or credited, by a borrower, under a securities lending arrangement if

    • (a) the amount is deemed by subparagraph 260(8)(c)(i) to be a dividend;

    • (b) the securities lending arrangement was entered into by the borrower in the course of carrying on a business outside Canada; and

    • (c) the security that is transferred or lent to the borrower under the securities lending arrangement is a share of a class of the capital stock of a non-resident corporation.

  • Marginal note:Interest — definitions

    (3) The following definitions apply for the purpose of paragraph (1)(b).

    fully exempt interest

    intérêts entièrement exonérés

    fully exempt interest means

    • (a) interest that is paid or payable on a bond, debenture, note, mortgage, hypothecary claim or similar debt obligation

      • (i) of, or guaranteed (otherwise than by being insured by the Canada Deposit Insurance Corporation) by, the Government of Canada,

      • (ii) of the government of a province,

      • (iii) of an agent of a province,

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

      • (v) of a corporation, commission or association to which any of paragraphs 149(1)(d) to (d.6) applies, or

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

    • (b) interest that is paid or payable on a mortgage, hypothecary claim or similar debt obligation secured by, or on an agreement for sale or similar obligation with respect to, real property situated outside Canada or an interest in any such real property, or to immovables situated outside Canada or a real right in any such immovable, except to the extent that the interest payable on the obligation is deductible in computing the income of the payer under Part I from a business carried on by the payer in Canada or from property other than real or immovable property situated outside Canada;

    • (c) interest that is paid or payable to a prescribed international organization or agency; or

    • (d) an amount paid or payable or credited under a securities lending arrangement that is deemed by subparagraph 260(8)(c)(i) to be a payment made by a borrower to a lender of interest, if

      • (i) the securities lending arrangement was entered into by the borrower in the course of carrying on a business outside Canada, and

      • (ii) the security that is transferred or lent to the borrower under the securities lending arrangement is described in paragraph (b) or (c) of the definition qualified security in subsection 260(1) and issued by a non-resident issuer. (intérêts entièrement exonérés)

    participating debt interest

    intérêts sur des créances participatives

    participating debt interest means interest (other than interest described in any of paragraphs (b) to (d) of the definition fully exempt interest) that is paid or payable on an obligation, other than a prescribed obligation, all or any portion of which interest is contingent or dependent on the use of or production from property in Canada or is computed by reference to revenue, profit, cash flow, commodity price or any other similar criterion or by reference to dividends paid or payable to shareholders of any class of shares of the capital stock of a corporation. (intérêts sur des créances participatives)

  • Marginal note:Back-to-back loan arrangement

    (3.1) Subsections (3.2) and (3.3) apply at any time in respect of a taxpayer if

    • (a) the taxpayer pays or credits a particular amount at that time on account or in lieu of payment of, or in satisfaction of, interest (determined without reference to paragraph 18(6.1)(b) and subsection 214(16)) in respect of a particular debt or other obligation to pay an amount to a person or partnership (in this subsection referred to as the “intermediary”);

    • (b) the intermediary is not

      • (i) a person resident in Canada that does not deal at arm’s length with the taxpayer, or

      • (ii) a partnership each member of which is a person described in subparagraph (i);

    • (c) at any time in the period during which the interest accrued (in subsections (3.2) and (3.3) referred to as the “relevant period”), the intermediary, or a person or partnership that does not deal at arm’s length with the intermediary,

      • (i) has an amount outstanding as or on account of a debt or other obligation to pay an amount to a non-resident person that meets any of the following conditions (in this subsection and subsection (3.2) referred to as the “intermediary debt”):

        • (A) recourse in respect of the debt or other obligation is limited in whole or in part, either immediately or in the future and either absolutely or contingently, to the particular debt or other obligation, or

        • (B) it can reasonably be concluded that all or a portion of the particular debt or other obligation became owing, or was permitted to remain owing, because

          • (I) all or a portion of the debt or other obligation was entered into or was permitted to remain outstanding, or

          • (II) the intermediary anticipated that all or a portion of the debt or other obligation would become owing or remain outstanding, or

      • (ii) has a specified right (as defined in subsection 18(5)) in respect of a particular property that was granted directly or indirectly by a non-resident person and

        • (A) the existence of the specified right is required under the terms and conditions of the particular debt or other obligation, or

        • (B) it can reasonably be concluded that all or a portion of the particular debt or other obligation became owing, or was permitted to remain owing, because

          • (I) the specified right was granted, or

          • (II) the intermediary anticipated that the specified right would be granted;

    • (d) the tax that would be payable under this Part in respect of the particular amount, if the particular amount were paid or credited to the non-resident person rather than the intermediary, is greater than the tax payable under this Part (determined without reference to this subsection and subsection (3.2)) in respect of the particular amount; and

    • (e) the total of all amounts — each of which is, in respect of the particular debt or other obligation, an amount outstanding as or on account of an intermediary debt or the fair market value of a particular property described in subparagraph (c)(ii) — is equal to at least 25% of the total of

      • (i) the amount outstanding as or on account of the particular debt or other obligation, and

      • (ii) the total of all amounts each of which is an amount (other than the amount described in subparagraph (i)) that the taxpayer, or a person or partnership that does not deal at arm’s length with the taxpayer, has outstanding as or on account of a debt or other obligation to pay an amount to the intermediary under the agreement, or an agreement that is connected to the agreement, under which the particular debt or other obligation was entered into where

        • (A) the intermediary is granted a security interest (as defined in subsection 18(5)) in respect of a property that is the intermediary debt or the particular property, as the case may be, and the security interest secures the payment of two or more debts or other obligations that include the debt or other obligation and the particular debt or other obligation, and

        • (B) each security interest that secures the payment of a debt or other obligation referred to in clause (A) secures the payment of every debt or other obligation referred to in that clause.

  • Marginal note:Back-to-back loan arrangement

    (3.2) If this subsection applies at any time in respect of a taxpayer, then for the purposes of paragraph (1)(b), the taxpayer is deemed, at that time, to pay interest to a non-resident person referred to in subparagraph (3.1)(c)(i) or (ii), the amount of which is determined by the formula

    [(A × B/C) – D] × (E – F)/E

    where

    A 
    is the particular amount referred to in paragraph (3.1)(a);
    B 
    is the average of all amounts each of which is the lesser of
    • (i) the amount of the particular debt or other obligation referred to in paragraph (3.1)(a) outstanding at a particular time in the relevant period; and

    • (ii) the total of all amounts each of which is at that particular time

      • (A) an amount outstanding as or on account of an intermediary debt, in respect of the particular debt or other obligation, that is owed to the non-resident person,

      • (B) the fair market value of a particular property referred to in subparagraph (3.1)(c)(ii) in respect of the particular debt or other obligation, or

      • (C) if neither clause (A) nor (B) applies at that particular time, nil;

    C 
    is the average of all amounts each of which is the amount of the particular debt or other obligation outstanding at a time in the relevant period;
    D 
    is the portion, if any, of the particular amount deemed by subsection 214(16) to have been paid by the taxpayer as a dividend;
    E 
    is the rate of tax (determined without reference to subsection 214(16)) that would be imposed under this Part on the particular amount if the particular amount were paid by the taxpayer to the non-resident person at that time; and
    F 
    is the rate of tax (determined without reference to subsection 214(16)) imposed under this Part on the intermediary in respect of all or the portion of the particular amount paid or credited to the intermediary.
  • Marginal note:Back-to-back loan arrangement

    (3.3) If subsection (3.2) applies at any time to deem a taxpayer to pay interest at that time to more than one non-resident person referred to in subparagraph (3.1)(c)(i) or (ii) in respect of a particular debt or other obligation and the total of all amounts determined (without reference to this subsection) for B in subsection (3.2) in respect of the particular debt or other obligation exceeds the average of all amounts each of which is the amount of the particular debt or other obligation outstanding at a time in the relevant period, then the taxpayer may reduce the amount determined for B in respect of one or more of the non-resident persons by one or more amounts designated by the taxpayer, as is reasonable in the circumstances, the total of which designated amounts shall not be greater than that excess.

  • Interpretation of management or administration fee or charge

    (4) For the purpose of paragraph 212(1)(a), management or administration fee or charge does not include any amount paid or credited or deemed by Part I to have been paid or credited to a non-resident person as, on account or in lieu of payment of, or in satisfaction of,

    • (a) a service performed by the non-resident person if, at the time the non-resident person performed the service

      • (i) the service was performed in the ordinary course of a business carried on by the non-resident person that included the performance of such a service for a fee, and

      • (ii) the non-resident person and the payer were dealing with each other at arm’s length, or

    • (b) a specific expense incurred by the non-resident person for the performance of a service that was for the benefit of the payer,

    to the extent that the amount so paid or credited was reasonable in the circumstances.

  • Marginal note:Motion picture films

    (5) Every non-resident person shall pay an income tax of 25% on every amount that a person resident in Canada pays or credits, or is deemed by Part I to pay or credit, to the non-resident person as, on account or in lieu of payment of, or in satisfaction of, payment for a right in or to the use of

    • (a) a motion picture film, or

    • (b) a film, video tape or other means of reproduction for use in connection with television (other than solely in connection with and as part of a news program produced in Canada),

    that has been, or is to be, used or reproduced in Canada to the extent that the amount relates to that use or reproduction.

  • Marginal note:Acting services

    (5.1) Notwithstanding any regulation made under paragraph 214(13)(c), every person who is either a non-resident individual who is an actor or that is a corporation related to such an individual shall pay an income tax of 23% on every amount paid or credited, or provided as a benefit, to or on behalf of the person for the provision in Canada of the acting services of the actor in a film or video production.

  • Marginal note:Relief from double taxation

    (5.2) Where a corporation is liable to tax under subsection (5.1) in respect of an amount for acting services of an actor (in this subsection referred to as the “corporation payment”) and the corporation pays, credits or provides as a benefit to the actor an amount for those acting services (in this subsection referred to as the “actor payment”), no tax is payable under subsection (5.1) with respect to the actor payment except to the extent that it exceeds the corporation payment.

  • Marginal note:Reduction of withholding

    (5.3) If the Minister is satisfied that the deduction or withholding otherwise required by section 215 from an amount described in subsection (5.1), would cause undue hardship, the Minister may determine a lesser amount to be deducted or withheld and that lesser amount is deemed to be the amount so required to be deducted or withheld.

  • Marginal note:Interest on provincial bonds from wholly-owned subsidiaries

    (6) Where an amount described by subsection 212(1) relates to interest on bonds or other obligations of or guaranteed by Her Majesty in right of a province or interest on bonds or other obligations provision for the payment of which was made by a statute of a provincial legislature, the tax payable under subsection 212(1) is 5% of that amount.

  • Marginal note:Where s. (6) does not apply

    (7) Subsection 212(6) does not apply to interest on any bond or other obligation described therein that was issued after December 20, 1960, except any such bond or other obligation for the issue of which arrangements were made on or before that day with a dealer in securities, if the existence of the arrangements for the issue of the bond or other obligation can be established by evidence in writing given or made on or before that day.

  • Marginal note:Bonds issued after December 20, 1960 in exchange for earlier bonds

    (8) For the purposes of this Part, where any bond, except a bond to which clause 212(1)(b)(ii)(C) applies, was issued after December 20, 1960 in exchange for a bond issued on or before that day, it shall, if the terms on which the bond for which it was exchanged was issued conferred on the holder thereof the right to make the exchange, be deemed to have been issued on or before December 20, 1960.

  • Marginal note:Exemptions

    (9) Where

    • (a) a dividend or interest is received by a trust from a non-resident-owned investment corporation,

    • (b) an amount (in this subsection referred to as the “royalty payment”) is received by a trust as, on account of, in lieu of payment of or in satisfaction of, a royalty on or in respect of a copyright in respect of the production or reproduction of any literary, dramatic, musical or artistic work,

    • (c) interest is received by a mutual fund trust maintained primarily for the benefit of non-resident persons, or

    • (d) a dividend or interest is received by a trust that is created under a reinsurance trust agreement

      • (i) to which a regulatory authority — being the Superintendent of Financial Institutions or a provincial regulatory authority having powers similar to those of the Superintendent — is a party, and

      • (ii) that accords with guidelines issued by the regulatory authority relating to reinsurance arrangements with unregistered insurers

    and a particular amount is paid or credited to a non-resident person as income of or from the trust and can reasonably be regarded as having been derived from the dividend, interest or royalty payment, as the case may be, no tax is payable because of paragraph 212(1)(c) as a consequence of the payment or crediting of the particular amount if no tax would have been payable under this Part in respect of the dividend, interest or royalty payment, as the case may be, if it had been paid directly to the non-resident person instead of to the trust.

  • Marginal note:Trust beneficiaries residing outside of Canada

    (10) Where all the beneficiaries of a trust established before 1949 reside, during a taxation year, in one country other than Canada and all amounts included in computing the income of the trust for the taxation year were received from persons resident in that country, no tax is payable under paragraph 212(1)(c) on an amount paid or credited in the taxation year to a beneficiary as income of or from the trust.

  • Marginal note:Payment to beneficiary as income of trust

    (11) An amount paid or credited by a trust or an estate to a beneficiary or other person beneficially interested therein shall be deemed, for the purpose of paragraph 212(1)(c) and without limiting the generality thereof, to have been paid or credited as income of the trust or estate, regardless of the source from which the trust or estate derived it.

  • Marginal note:Deemed payments to spouse, etc.

    (12) Where by reason of subsection 56(4) or 56(4.1) or any of sections 74.1 to 75 of this Act or section 74 of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, there is included in computing a taxpayer’s income under Part I for a taxation year an amount paid or credited to a non-resident person in the year, no tax is payable under this section on that amount.

  • Marginal note:Rent and other payments

    (13) For the purposes of this section, where a non-resident person pays or credits an amount as, on account or in lieu of payment of, or in satisfaction of,

    • (a) rent for the use in Canada of property (other than property that is rolling stock as defined in section 2 of the Railway Act),

    • (b) a timber royalty in respect of a timber resource property or a timber limit in Canada,

    • (c) a payment of a superannuation or pension benefit under a registered pension plan or of a distribution to one or more persons out of or under a retirement compensation arrangement,

    • (d) a payment of a retiring allowance or a death benefit to the extent that the payment is deductible in computing the payer’s taxable income earned in Canada,

    • (e) a payment described in any of paragraphs 212(1)(k) to 212(1)(n), 212(1)(q) and 212(1)(v),

    • (f) interest on any mortgage, hypothecary claim or other indebtedness entered into or issued or modified after March 31, 1977 and secured by real property situated in Canada or an interest therein, or by immovables situated in Canada or real rights therein, to the extent that the amount so paid or credited is deductible in computing the non-resident person’s taxable income earned in Canada or the amount on which the non-resident person is liable to pay tax under Part I, or

    • (g) an amount to which paragraph (1)(i) would apply if the amount paid or credited were paid or credited by a person resident in Canada, and that amount affects, or is intended to affect, in any way whatever,

      • (i) the acquisition or provision of property or services in Canada,

      • (ii) the acquisition or provision of property or services outside Canada by a person resident in Canada, or

      • (iii) the acquisition or provision outside Canada of a taxable Canadian property,

    the non-resident person shall be deemed in respect of that payment to be a person resident in Canada.

  • Marginal note:Application of Part XIII tax where payer or payee is a partnership

    (13.1) For the purposes of this Part, other than section 216,

    • (a) where a partnership pays or credits an amount to a non-resident person, the partnership shall, in respect of the portion of that amount that is deductible, or that would but for section 21 be deductible in computing the amount of the income or loss, as the case may be, referred to in paragraph 96(1)(f) or 96(1)(g) if the references therein to “a particular place” and “that particular place” were read as references to “Canada”, be deemed to be a person resident in Canada;

    • (a.1) where a partnership pays, credits or provides to a non-resident person an amount described in subsection (5.1), the partnership is deemed in respect of the amount to be a person; and

    • (b) where a person resident in Canada pays or credits an amount to a partnership (other than a Canadian partnership within the meaning assigned by section 102), the partnership shall be deemed, in respect of that payment, to be a non-resident person.

  • Marginal note:Application of Part XIII tax — non-resident operates in Canada

    (13.2) For the purposes of this Part, a particular non-resident person, who in a taxation year pays or credits to another non-resident person an amount other than an amount to which subsection (13) applies, is deemed to be a person resident in Canada in respect of the portion of the amount that is deductible in computing the particular non-resident person’s taxable income earned in Canada for any taxation year from a source that is neither a treaty-protected business nor a treaty-protected property.

  • Marginal note:Application of Part XIII to authorized foreign bank

    (13.3) An authorized foreign bank is deemed to be resident in Canada for the purposes of

    • (a) this Part, in respect of any amount paid or credited to or by the bank in respect of its Canadian banking business; and

    • (b) the application in paragraph (13.1)(b) of the definition Canadian partnership in respect of a partnership interest held by the bank in the course of its Canadian banking business.

  • (14) [Repealed, 2007, c. 35, s. 59]

  • Marginal note:Certain obligations

    (15) For the purposes of subparagraph (1)(b)(ii), after November 18, 1974 interest on a bond, debenture, note, mortgage, hypothecary claim or similar obligation that is insured by the Canada Deposit Insurance Corporation is deemed not to be interest with respect to an obligation guaranteed by the Government of Canada.

  • Marginal note:Payments for temporary use of rolling stock

    (16) Clause 212(1)(d)(vii)(A) does not apply to a payment in a year for the temporary use of railway rolling stock by a railway company to a person resident in a country other than Canada unless that country grants substantially similar relief for the year to the company in respect of payments received by it for the temporary use by a person resident in that country of railway rolling stock.

  • Marginal note:Exception

    (17) This section is not applicable to payments out of or under an employee benefit plan or employee trust.

  • Marginal note:Payments to the International Olympic Committee and the International Paralympic Committee

    (17.1) Notwithstanding subsections (1) and (2),

    • (a) the International Olympic Committee is not taxable under this Part on any amount paid or credited to it, after 2005 and before 2011, in respect of the 2010 Olympic Winter Games, and

    • (b) the International Paralympic Committee is not taxable under this Part on any amount paid or credited to it, after 2005 and before 2011, in respect of the 2010 Paralympic Winter Games.

  • Marginal note:Undertaking

    (18) Every person who in a taxation year is a prescribed financial institution or a person resident in Canada who is a registered securities dealer shall on demand from the Minister, served personally or by registered letter, file within such reasonable time as may be stipulated in the demand, an undertaking in prescribed form relating to the avoidance of payment of tax under this Part.

  • Marginal note:Tax on registered securities dealers

    (19) Every taxpayer who is a registered securities dealer resident in Canada shall pay a tax under this Part equal to the amount determined by the formula

    1/365 × .25 × (A - B) × C

    where

    A 
    is the total of all amounts each of which is the amount of money provided before the end of a day to the taxpayer (and not returned or repaid before the end of the day) by or on behalf of a non-resident person as collateral or as consideration for a security that was lent or transferred under a designated securities lending arrangement,
    B 
    is the total of
    • (a) all amounts each of which is the amount of money provided before the end of the day by or on behalf of the taxpayer (and not returned or repaid before the end of the day) to a non-resident person as collateral or as consideration for a security that is described in paragraph (a) of the definition fully exempt interest in subsection (3), or that is an obligation of the government of any country, province, state, municipality or other political subdivision, and that was lent or transferred under a securities lending arrangement, and

    • (b) the greater of

      • (i) 10 times the greatest amount determined, under the laws of the province or provinces in which the taxpayer is a registered securities dealer, to be the capital employed by the taxpayer at the end of the day, and

      • (ii) 20 times the greatest amount of capital required, under the laws of the province or provinces in which the taxpayer is a registered securities dealer, to be maintained by the taxpayer as a margin in respect of securities described in paragraph (a) of the definition fully exempt interest in subsection (3), or that is an obligation of the government of any country, province, state, municipality or other political subdivision, at the end of the day, and

    C 
    is the prescribed rate of interest in effect for the day,

    and shall remit that amount to the Receiver General on or before the 15th day of the month after the month in which the day occurs.

  • Marginal note:Designated SLA

    (20) For the purpose of subsection (19), a designated securities lending arrangement is a securities lending arrangement

    • (a) under which

      • (i) the lender is a prescribed financial institution or a registered securities dealer resident in Canada,

      • (ii) the particular security lent or transferred is an obligation described in paragraph (a) of the definition fully exempt interest in subsection (3) or an obligation of the government of any country, prov- ince, state, municipality or other political subdivision,

      • (iii) the amount of money provided to the lender at any time during the term of the arrangement either as collateral or as consideration for the particular security does not exceed 110% of the fair market value at that time of the particular security; and

    • (b) that was neither intended, nor made as a part of a series of securities lending arrangements, loans or other transactions that was intended, to be in effect for more than 270 days.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. R.S., 1985, c. 1 (5th Supp.), s. 212;
  • 1994, c. 7, Sch. II, s. 174, Sch. VI, s. 10, Sch. VIII, s. 123, c. 21, ss. 97, 137;
  • 1995, c. 21, ss. 64, 73;
  • 1996, c. 21, s. 55;
  • 1997, c. 25, s. 63;
  • 1998, c. 19, ss. 62, 216;
  • 1999, c. 22, s. 75;
  • 2000, c. 12, s. 142;
  • 2001, c. 17, ss. 173, 226;
  • 2007, c. 35, ss. 59, 121;
  • 2009, c. 2, s. 73;
  • 2010, c. 25, s. 64;
  • 2012, c. 31, s. 48;
  • 2013, c. 34, ss. 157, 347;
  • 2014, c. 20, s. 26, c. 39, s. 64.
 
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