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

Act current to 2017-05-11 and last amended on 2017-05-01. Previous Versions

Marginal note:Application of s. 138.1

 In respect of life insurance policies for which all or any part of an insurer’s reserves vary in amount depending on the fair market value of a specified group of properties, the rules contained in section 138.1 apply for the purposes of this Part.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. 1977-78, c. 1, s. 69.

PART XIII.1Additional Tax on Authorized Foreign Banks

Marginal note:Branch interest tax
  •  (1) Every authorized foreign bank shall pay a tax under this Part for each taxation year equal to 25% of its taxable interest expense for the year.

  • Marginal note:Taxable interest expense

    (2) The taxable interest expense of an authorized foreign bank for a taxation year is 15% of the amount, if any, by which

    • (a) the total of all amounts on account of interest that are deducted under section 20.2 in computing the bank’s income for the year from its Canadian banking business

    exceeds

    • (b) the total of all amounts that are included in paragraph (a) and that are in respect of a liability of the bank to another person or partnership.

  • Marginal note:Where tax not payable

    (3) No tax is payable under this Part for a taxation year by an authorized foreign bank if

    • (a) the bank is resident in a country with which Canada has a tax treaty at the end of the year; and

    • (b) no tax similar to the tax under this Part would be payable in that country for the year by a bank resident in Canada carrying on business in that country during the year.

  • Marginal note:Rate limitation

    (4) Notwithstanding any other provision of this Act, the reference in subsection (1) to 25% shall, in respect of a taxation year of an authorized foreign bank that is resident in a country with which Canada has a tax treaty on the last day of the year, be read as a reference to,

    • (a) if the treaty specifies the maximum rate of tax that Canada may impose under this Part for the year on residents of that country, that rate;

    • (b) if the treaty does not specify a maximum rate as described in paragraph (a) but does specify the maximum rate of tax that Canada may impose on a payment of interest in the year by a person resident in Canada to a related person resident in that country, that rate; and

    • (c) in any other case, 25%.

  • Marginal note:Provisions applicable to Part

    (5) Sections 150 to 152, 158, 159, 160.1 and 161 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. 2001, c. 17, s. 176.

PART XIII.2Non-resident Investors in Canadian Mutual Funds

Marginal note:Definitions
  •  (1) The following definitions apply in this Part.

    assessable distribution

    distribution déterminée

    assessable distribution, in respect of a Canadian property mutual fund investment, means the portion of any amount that is paid or credited (otherwise than as a SIFT trust wind-up event), by the mutual fund that issued the investment, to a non-resident investor who holds the investment, and that is not otherwise subject to tax under Part I or Part XIII. (distribution déterminée)

    Canadian property mutual fund investment

    placement collectif en biens canadiens

    Canadian property mutual fund investment means a share of the capital stock of a mutual fund corporation, or a unit of a mutual fund trust, if

    • (a) the share or unit is listed on a designated stock exchange; and

    • (b) more than 50% of the fair market value of the share or unit is attributable to one or more properties each of which is real property in Canada, a Canadian resource property or a timber resource property. (placement collectif en biens canadiens)

    Canadian property mutual fund loss

    perte collective en biens canadiens

    Canadian property mutual fund loss — of a non-resident investor for a taxation year for which the non-resident investor has filed, on or before their filing-due date for the taxation year, a return of income under this Part in prescribed form, in respect of a Canadian property mutual fund investment — means the lesser of

    • (a) the non-resident investor’s loss (for greater certainty as determined under section 40) for the taxation year from the disposition of the Canadian property mutual fund investment, and

    • (b) the total of all assessable distributions that were paid or credited on the Canadian property mutual fund investment after the non-resident investor last acquired the investment and at or before the time of the disposition. (perte collective en biens canadiens)

    non-resident investor

    investisseur non résident

    non-resident investor means a non-resident person or a partnership other than a Canadian partnership. (investisseur non résident)

    unused Canadian property mutual fund loss

    perte collective en biens canadiens inutilisée

    unused Canadian property mutual fund loss, of a non-resident investor for a taxation year, means the portion of the total of the non-resident investor’s Canadian mutual fund property losses for preceding taxation years that has neither reduced under subsection (3) the amount of tax payable, nor increased under subsection (5) the amount of a refund of tax paid, under this Part for any preceding taxation year. (perte collective en biens canadiens inutilisée)

  • Marginal note:Tax payable

    (2) If at any time a person (referred to in this section as the “payer”) pays or credits, to a non-resident investor who holds a Canadian property mutual fund investment, an amount as, on account of, in lieu of payment of or in satisfaction of, an assessable distribution,

    • (a) the non-resident investor is deemed for the purposes of this Act, other than section 150, to have disposed at that time, for proceeds equal to the amount of the assessable distribution, of a property

      • (i) that is a taxable Canadian property the adjusted cost base of which to the non-resident investor immediately before that time is nil, and

      • (ii) that is in all other respects identical to the Canadian property mutual fund investment;

    • (b) the non-resident investor is liable to pay an income tax of 15% on the amount of any gain (for greater certainty as determined under section 40) from the disposition; and

    • (c) the payer shall, notwithstanding any agreement or law to the contrary,

      • (i) deduct or withhold 15% from the amount paid or credited,

      • (ii) immediately remit that amount to the Receiver General on behalf of the non-resident investor on account of the tax, and

      • (iii) submit with the remittance a statement in prescribed form.

  • Marginal note:Use of losses

    (3) If a non-resident investor files, on or before their filing-due date for a taxation year, a return of income under this Part in prescribed form for the taxation year, the non-resident investor is liable, instead of paying tax under paragraph (2)(b) in respect of any amount paid or credited in the taxation year, to pay an income tax of 15% for the taxation year on the amount, if any, by which

    • (a) the total of the non-resident investor’s gains under subsection (2) for the taxation year

    exceeds

    • (b) the total of the non-resident investor’s Canadian property mutual fund losses for the year and the non-resident investor’s unused Canadian property mutual fund loss for the taxation year.

  • Marginal note:Deemed tax paid

    (4) If a non-resident investor files, on or before their filing-due date for a taxation year, a return of income under this Part in prescribed form for the taxation year, any amount that is remitted to the Receiver General in respect of an assessable distribution paid or credited to the non-resident investor in the taxation year is deemed to have been paid on account of the non-resident investor’s tax under subsection (3) for the taxation year.

  • Marginal note:Refund

    (5) The amount, if any, by which the total of all amounts paid on account of a non-resident investor’s tax under subsection (3) for a taxation year exceeds the non-resident investor’s liability for tax under this Part for the taxation year shall be refunded to the non-resident investor.

  • Marginal note:Excess loss — carryback

    (6) If a non-resident investor files, on or before their filing-due date for a taxation year, a return of income under this Part in prescribed form for the taxation year, the Minister shall refund to the non-resident investor an amount equal to the lesser of

    • (a) the total amount of tax under this Part paid by the non-resident investor in each of the three preceding taxation years, to the extent that the Minister has not previously refunded that tax, and

    • (b) 15% of the amount, if any, by which

      • (i) the total of the non-resident investor’s Canadian property mutual fund losses for the taxation year and the non-resident investor’s unused Canadian property mutual fund loss for the taxation year

      exceeds

      • (ii) the total of all assessable distributions paid or credited to the non-resident investor in the taxation year.

  • Marginal note:Ordering

    (7) In applying subsection (6), amounts of tax are to be considered to be refunded in the order in which they were paid.

  • Marginal note:Partnership filing-due date

    (8) For the purposes of this Part, the taxation year of a partnership is its fiscal period and the filing-due date for the taxation year is to be determined as if the partnership were a corporation.

  • Marginal note:Partnership — member resident in Canada

    (9) If a non-resident investor is a partnership a member of which is resident in Canada, the portion of the tax paid by the partnership under this Part in respect of an assessable distribution paid or credited to the partnership in a particular taxation year of the partnership (or, if the partnership files a return of income for the particular taxation year in accordance with subsection (3), the portion of the tax paid by the partnership under that subsection for the taxation year) that can reasonably be considered to be the member’s share is deemed

    • (a) to be an amount paid on account of that member’s liability for tax under Part I for that member’s taxation year in which the particular taxation year of the partnership ends; and

    • (b) except for the purposes of this subsection, to be neither a tax paid on account of the partnership’s tax under this Part nor a tax paid by the partnership.

  • Marginal note:Provisions applicable

    (10) Section 150.1, subsections 161(1), (7) and (11), sections 162 to 167, Division J of Part I, paragraph 214(3)(f), subsections 215(2), (3) and (6) and sections 227 and 227.1 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. 2005, c. 19, s. 47;
  • 2007, c. 35, s. 68;
  • 2009, c. 2, s. 74.
 
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