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

Definition of taxation year

  •  (1) In this Act, except as expressly otherwise provided, a taxation year is

    • (a) in the case of a corporation or Canadian resident partnership, a fiscal period;

    • (b) in the case of a graduated rate estate, the period for which the accounts of the estate are made up for purposes of assessment under this Act; and

    • (c) in any other case, a calendar year.

  • Marginal note:References to calendar year

    (1.1) When a taxation year is referred to by reference to a calendar year, the reference is to the taxation year or taxation years that coincide with, or that end in, that calendar year.

  • Marginal note:References to certain taxation years and fiscal periods

    (2) For the purposes of this Act,

    • (a) a reference to a taxation year ending in another year includes a reference to a taxation year ending coincidentally with that other year; and

    • (b) a reference to a fiscal period ending in a taxation year includes a reference to a fiscal period ending coincidentally with that year.

  • Marginal note:Fiscal period exceeding 365 days

    (3) If a fiscal period of a corporation exceeds 365 days and for that reason the corporation does not have a taxation year that ends in a particular calendar year, for the purposes of this Act,

    • (a) the corporation’s first taxation year that would otherwise end in the immediately following calendar year is deemed to end on the last day of the particular calendar year and its next taxation year is deemed to commence on the first day of the immediately following calendar year; and

    • (b) the corporation’s first fiscal period that would otherwise end in the immediately following calendar year is deemed to end on the last day of the particular calendar year and its next fiscal period is deemed to commence on the first day of the immediately following calendar year.

  • Marginal note:Year end on status change

    (3.1) If at any time a corporation becomes or ceases to be a Canadian-controlled private corporation, otherwise than because of an acquisition of control to which subsection (4) would, if this Act were read without reference to this subsection, apply,

    • (a) subject to paragraph (c), the corporation’s taxation year that would, if this Act were read without reference to this subsection, include that time is deemed to end immediately before that time;

    • (b) a new taxation year of the corporation is deemed to begin at that time;

    • (c) notwithstanding subsections (1) and (3), the corporation’s taxation year that would, if this Act were read without reference to this subsection, have been its last taxation year that ended before that time is deemed instead to end immediately before that time if

      • (i) were this Act read without reference to this paragraph, that taxation year would, otherwise than because of paragraph 128(1)(d), section 128.1 and paragraphs 142.6(1)(a) or 149(10)(a), have ended within the 7-day period that ended immediately before that time,

      • (ii) within that 7-day period no person or group of persons acquired control of the corporation, and the corporation did not become or cease to be a Canadian-controlled private corporation, and

      • (iii) the corporation elects, in its return of income under Part I for that taxation year to have this paragraph apply; and

    • (d) for the purpose of determining the corporation’s fiscal period after that time, the corporation is deemed not to have established a fiscal period before that time.

  • Marginal note:Loss restriction event  —  year end

    (4) If at any time a taxpayer is subject to a loss restriction event (other than a foreign affiliate, of a taxpayer resident in Canada, that did not carry on a business in Canada at any time in its last taxation year that began before that time), then for the purposes of this Act,

    • (a) subject to paragraph (b), the taxpayer’s taxation year that would, but for this paragraph, have included that time is deemed to end immediately before that time, a new taxation year of the taxpayer is deemed to begin at that time and, for the purpose of determining the taxpayer’s fiscal period after that time, the taxpayer is deemed not to have established a fiscal period before that time; and

    • (b) subject to paragraph 128(1)(d), section 128.1 and paragraphs 142.6(1)(a) and 149(10)(a), and notwithstanding subsections (1) and (3), if the taxpayer is a corporation and the taxpayer’s taxation year that would, but for this subsection, have been its last taxation year that ended before that time, would, but for this paragraph, have ended within the seven-day period that ended immediately before that time, that taxation year is, except if the taxpayer is subject to a loss restriction event within that period, deemed to end immediately before that time, provided that the taxpayer so elects in its return of income under Part I for that taxation year.

  • Marginal note:Trust transition from graduated rate estate

    (4.1) For a particular trust that is a testamentary trust,

    • (a) its taxation year that otherwise includes a particular time is deemed to end immediately before the particular time if

      • (i) the particular trust is an estate and the particular time is the first time after 2015 at which the estate is not a graduated rate estate, or

      • (ii) the particular trust is not an estate and the particular time is immediately after 2015; and

    • (b) if the particular trust exists at the particular time,

      • (i) a new taxation year of the particular trust is deemed to begin at the particular time, and

      • (ii) for the purpose of determining the particular trust’s fiscal period after the particular time, the particular trust is deemed not to have established a fiscal period before that time.

  • Marginal note:Graduated rate estate

    (5) The period for which the accounts of a graduated rate estate are made up for the purposes of an assessment under this Act may not exceed 12 months, and no change in the time when that period ends may be made for the purposes of this Act without the concurrence of the Minister.

  • (6) [Repealed, 2014, c. 39, s. 72]

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. R.S., 1985, c. 1 (5th Supp.), s. 249;
  • 1994, c. 7, Sch. II, s. 193, c. 21, s. 110;
  • 1995, c. 3, s. 53, c. 21, s. 60;
  • 2007, c. 2, s. 53, c. 29, s. 29;
  • 2013, c. 34, s. 359, c. 40, s. 90;
  • 2014, c. 39, s. 72;
  • 2016, c. 12, s. 64.

Definition of fiscal period

  •  (1) For the purposes of this Act, a fiscal period of a business or a property of a person or partnership means the period for which the person’s or partnership’s accounts in respect of the business or property are made up for purposes of assessment under this Act, but no fiscal period may end

    • (a) in the case of a corporation, more than 53 weeks after the period began,

    • (b) in the case of

      • (i) an individual (other than an individual to whom section 149 or 149.1 applies or a trust),

      • (i.1) a trust (other than a mutual fund trust if the fiscal period is one to which paragraph 132.11(1)(c) applies or a graduated rate estate),

      • (ii) a partnership of which

        • (A) an individual (other than an individual to whom section 149 or 149.1 applies or a graduated rate estate),

        • (B) a professional corporation, or

        • (C) a partnership to which this subparagraph applies,

        would, if the fiscal period ended at the end of the calendar year in which the period began, be a member of the partnership in the period, or

      • (iii) a professional corporation that would, if the fiscal period ended at the end of the calendar year in which the period began, be in the period a member of a partnership to which subparagraph 249.1(1)(b)(ii) applies,

      after the end of the calendar year in which the period began unless, in the case of a business, the business is not carried on in Canada,

    • (c) in the case of a partnership (other than a partnership to which subparagraph (b)(ii) or subsection (9) applies) that is a member of a partnership or has a member that is a partnership, after the end of the calendar year in which it began, if at the end of the calendar year

      • (i) a corporation has a significant interest, as defined in section 34.2, in the partnership,

      • (ii) the partnership is a member of another partnership in which a corporation has a significant interest as defined in section 34.2,

      • (iii) a membership interest in the partnership is held directly, or indirectly through one or more partnerships, by a partnership described in subparagraph (i) or (ii), or

      • (iv) the partnership holds directly, or indirectly through one or more partnerships, a membership interest in a partnership described in any of subparagraphs (i) to (iii), or

    • (d) in any other case, more than 12 months after the period began,

    and, for the purpose of this subsection, the activities of a person to whom section 149 or 149.1 applies are deemed to be a business.

  • Marginal note:Not a member of a partnership

    (2) For the purpose of subparagraph 249.1(1)(b)(ii) and subsection 249.1(4), a person or partnership that would not have a share of any income or loss of a partnership for a fiscal period of the partnership, if the period ended at the end of the calendar year in which the period began, is deemed not to be a member of the partnership in that fiscal period.

  • Marginal note:Subsequent fiscal periods

    (3) Where a fiscal period of a business or a property of a person or partnership ends at any time, the subsequent fiscal period, if any, of the business or property of the person or partnership is deemed to begin immediately after that time.

  • Marginal note:Alternative method

    (4) Paragraph 249.1(1)(b) does not apply to a fiscal period of a business carried on, throughout the period of time that began at the beginning of the fiscal period and ended at the end of the calendar year in which the fiscal period began,

    • (a) by an individual (otherwise than as a member of a partnership), or

    • (b) by an individual as a member of a partnership, where throughout that period

      • (i) each member of the partnership is an individual, and

      • (ii) the partnership is not a member of another partnership,

    where

    • (c) in the case of an individual

      • (i) who is referred to in paragraph 249.1(4)(a), or

      • (ii) who is a member of a partnership no member of which is a graduated rate estate,

      an election in prescribed form to have paragraph 249.1(1)(b) not apply is filed with the Minister by the individual on or before the individual’s filing-due date, and with the individual’s return of income under Part I, for the taxation year that includes the first day of the first fiscal period of the business that begins after 1994, and

    • (d) in the case of an individual who is a member of a partnership a member of which is a graduated rate estate, an election in prescribed form to have paragraph (1)(b) not apply is filed with the Minister by the individual on or before the earliest of the filing-due dates of the members of the partnership for a taxation year that includes the first day of the first fiscal period of the business that begins after 1994.

  • Marginal note:Alternative method not applicable to tax shelter investments

    (5) Subsection 249.1(4) does not apply to a particular fiscal period of a business where, in a preceding fiscal period or throughout the period of time that began at the beginning of the particular period and ended at the end of the calendar year in which the particular period began, the expenditures made in the course of carrying on the business were primarily the cost or capital cost of tax shelter investments (as defined in subsection 143.2(1)).

  • Marginal note:Revocation of election

    (6) Subsection 249.1(4) does not apply to fiscal periods of a business carried on by an individual that begin after the beginning of a particular taxation year of the individual where

    • (a) an election in prescribed form to revoke an election filed under subsection 249.1(4) in respect of the business is filed with the Minister; and

    • (b) the election to revoke is filed

      • (i) in the case of an individual

        • (A) who is not a member of a partnership, or

        • (B) who is a member of a partnership no member of which is a graduated rate estate,

      by the individual on or before the individual’s filing-due date, and with the individual’s return of income under Part I, for the particular taxation year, and

      • (ii) in the case of an individual who is a member of a partnership a member of which is a graduated rate estate, by the individual on or before the earliest of the filing-due dates of the members of the partnership for a taxation year that includes the first day of the first fiscal period of the business that begins after the beginning of the particular year.

  • Marginal note:Change of fiscal period

    (7) No change in the time when a fiscal period ends may be made for the purposes of this Act without the concurrence of the Minister.

  • Marginal note:Single-tier fiscal period alignment

    (8) The members of a partnership that has a fiscal period that begins before March 22, 2011 and that would, if this Act were read without reference to this subsection and subsection (10), end on a day after March 22, 2011, may elect to end that fiscal period on a particular day that is before the day on which the fiscal period would otherwise end (in this subsection and subsection (10) referred to as a “single-tier alignment election”) if

    • (a) each member of the partnership is, on the particular day, a corporation that is not a professional corporation;

    • (b) the partnership is not, on the particular day, a member of another partnership;

    • (c) at least one member of the partnership is, on the particular day, a corporation that has a significant interest, as defined in section 34.2, in the partnership;

    • (d) at least one member of the partnership referred to in paragraph (c) has a taxation year that ends on a day that differs from the day on which the fiscal period of the partnership would end if this Act were read without reference to this subsection and subsection (10);

    • (e) the particular day is after March 22, 2011 and no later than the latest day that is the last day of the first taxation year that ends after March 22, 2011 of any corporation that has been a member of the partnership continuously since March 21, 2011; and

    • (f) subsection (10) applies to the single-tier alignment election.

  • Marginal note:Multi-tier fiscal period alignment — one-time election

    (9) The members of a partnership to which paragraph (1)(c) would apply if it were read without reference to this subsection may elect (in this subsection and subsections (10) and (11) referred to as a “multi-tier alignment election”) to end a fiscal period of the partnership on a particular day if

    • (a) as a consequence of the multi-tier alignment election, the fiscal period of the partnership, and of each other partnership described in relation to the partnership by any of subparagraphs (1)(c)(ii) to (iv), ends on the particular day;

    • (b) the particular day is before March 22, 2012; and

    • (c) subsection (10) applies to the multi-tier alignment election.

  • Marginal note:Conditions to align a partnership fiscal period

    (10) This subsection applies to a single-tier alignment election or a multi-tier alignment election, as the case may be, for a partnership if

    • (a) the election is filed in writing and in prescribed form with the Minister

      • (i) in the case of a single-tier alignment election, by a corporation that is a member of the partnership on or before the day that is the earliest filing-due date of any corporation that is a member of the partnership for its first taxation year ending after March 22, 2011, and

      • (ii) in the case of a multi-tier alignment election,

        • (A) by a corporation that is a member of the partnership, or of a partnership described in relation to the partnership by any of subparagraphs (1)(c)(ii) to (iv), and

        • (B) on or before the day that is the earliest filing-due date of any corporation that is a member of a partnership referred to in clause (A) for the first taxation year of the corporation ending after March 22, 2011;

    • (b) as a consequence of the election, the fiscal period of each partnership to which the election applies is 12 months or less;

    • (c) the election was made by a corporation that has the authority to act for the members of the partnership and each member of any other partnership described in relation to the partnership in subparagraph (1)(c)(ii) to (iv); and

    • (d) no other election is filed with the Minister to end the fiscal period of the partnership, or of any other partnership described in relation to the partnership in subparagraph (1)(c)(ii) to (iv), on a day other than the particular day referred to in subsection (8) or (9), as the case may be.

  • Marginal note:Deemed multi-tier alignment election

    (11) For the purposes of this Act, if paragraph (1)(c) applies to end the fiscal period of a partnership on December 31, 2011, a multi-tier alignment election under subsection (9) is deemed to have been made to end the fiscal period of the partnership on December 31, 2011.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. 1996, c. 21, s. 61;
  • 1998, c. 19, s. 240;
  • 1999, c. 22, s. 81;
  • 2001, c. 17, s. 189;
  • 2011, c. 24, s. 73;
  • 2013, c. 34, s. 360;
  • 2014, c. 39, s. 73.
 
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