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

Act current to 2014-06-12 and last amended on 2014-01-01. Previous Versions

Marginal note:Deemed not to be a private corporation

 Notwithstanding any other provision of this Act, an insurance corporation (other than a life insurance corporation) that would, but for this section, be a private corporation is deemed not to be a private corporation for the purposes of subsection 55(5), the definition “capital dividend account” in subsection 89(1) and sections 123.3 and 129.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. R.S., 1985, c. 1 (5th Supp.), s. 141.1;
  • 1998, c. 19, s. 162.

 [Repealed, 1997, c. 25, s. 40(1)]

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. R.S., 1985, c. 1 (5th Supp.), s. 142;
  • 1994, c. 7, Sch. II, s. 115;
  • 1997, c. 25, s. 40.

 [Repealed, 1997, c. 25, s. 40(1)]

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. R.S., 1985, c. 1 (5th Supp.), s. 142.1;
  • 1997, c. 25, s. 40.

Financial Institutions

Interpretation

Marginal note:Definitions
  •  (1) In this section and sections 142.3 to 142.7,

    “excluded property”

    « bien exclu »

    “excluded property” of a taxpayer for a taxation year means property, held at any time in the taxation year by the taxpayer, that is

    • (a) a share of the capital stock of a corporation if, at any time in the taxation year, the taxpayer has a significant interest in the corporation,

    • (b) a property that is, at all times in the taxation year at which the taxpayer held the property, a prescribed payment card corporation share of the taxpayer,

    • (c) if the taxpayer is an investment dealer, a property that is, at all times in the taxation year at which the taxpayer held the property, a prescribed securities exchange investment of the taxpayer,

    • (d) a share of the capital stock of a corporation if

      • (i) control of the corporation is, at any time (referred to in this paragraph as the “acquisition of control time”) that is in the 24-month period that begins immediately after the end of the year, acquired by

        • (A) the taxpayer,

        • (B) one or more persons related to the taxpayer (otherwise than by reason of a right referred to in paragraph 251(5)(b)), or

        • (C) the taxpayer and one or more persons described in clause (B), and

      • (ii) the taxpayer elects in writing to have subparagraph (i) apply and files the election with the Minister on or before the taxpayer’s filing-due date for the taxpayer’s taxation year that includes the acquisition of control time, or

    • (e) a prescribed property;

    “fair value property”

    « bien évalué à sa juste valeur »

    “fair value property” of a taxpayer for a taxation year means property, held at any time in the taxation year by the taxpayer, that is — or it is reasonable to expect would, if the taxpayer held the property at the end of the taxation year, be — valued (otherwise than solely because its fair value was less than its cost to the taxpayer or, if the property is a specified debt obligation, because of a default of the debtor) in accordance with generally accepted accounting principles, at its fair value (determined in accordance with those principles) in the taxpayer’s balance sheet as at the end of the taxation year;

    “financial institution”

    « institution financière »

    “financial institution” at any time means

    • (a) a corporation that is, at that time,

      • (i) a corporation referred to in any of paragraphs (a) to (e.1) of the definition “restricted financial institution” in subsection 248(1),

      • (ii) an investment dealer, or

      • (iii) a corporation controlled by one or more persons or partnerships each of which is a financial institution at that time, other than a corporation the control of which was acquired by reason of the default of a debtor where it is reasonable to consider that control is being retained solely for the purpose of minimizing any losses in respect of the debtor’s default, and

    • (b) a trust or partnership more than 50% of the fair market value of all interests in which are held at that time by one or more financial institutions,

    but does not include

    • (c) a corporation that is, at that time,

      • (i) an investment corporation,

      • (ii) a mortgage investment corporation,

      • (iii) a mutual fund corporation, or

      • (iv) a deposit insurance corporation (as defined in subsection 137.1(5)),

    • (d) a trust that is a mutual fund trust at that time, nor

    • (e) a prescribed person or partnership;

    “investment dealer”

    « courtier en valeurs mobilières »

    “investment dealer” at any time means a corporation that is, at that time, a registered securities dealer;

    “mark-to-market property”

    « bien évalué à la valeur du marché »

    “mark-to-market property” of a taxpayer for a taxation year means property (other than an excluded property) held at any time in the taxation year by the taxpayer that is

    • (a) a share,

    • (b) if the taxpayer is not an investment dealer, a specified debt obligation that is a fair value property of the taxpayer for the taxation year,

    • (c) if the taxpayer is an investment dealer, a specified debt obligation, or

    • (d) a tracking property of the taxpayer that is a fair value property of the taxpayer for the taxation year;

    “specified debt obligation”

    « titre de créance déterminé »

    “specified debt obligation” of a taxpayer means the interest held by the taxpayer in

    • (a) a loan, bond, debenture, mortgage, hypothecary claim, note, agreement of sale or any other similar indebtedness, or

    • (b) a debt obligation, where the taxpayer purchased the interest,

    other than an interest in

    • (c) an income bond, an income debenture, a small business development bond, a small business bond or a prescribed property, or

    • (d) an instrument issued by or made with a person to whom the taxpayer is related or with whom the taxpayer does not otherwise deal at arm’s length, or in which the taxpayer has a significant interest.

    “tracking property”

    « bien à évaluer »

    “tracking property” of a taxpayer means property of the taxpayer the fair market value of which is determined primarily by reference to one or more criteria in respect of property (referred to in this definition as “tracked property”) that, if owned by the taxpayer, would be mark-to-market property of the taxpayer, which criteria are

    • (a) the fair market value of the tracked property,

    • (b) the profits or gains from the disposition of the tracked property,

    • (c) the revenue, income or cash flow from the tracked property, or

    • (d) any other similar criteria in respect of the tracked property;

  • Marginal note:Significant interest

    (2) For the purposes of the definitions “excluded property” and “specified debt obligation” in subsection (1) and subsection 142.6(1.6), a taxpayer has a significant interest in a corporation at any time if

    • (a) the taxpayer is related (otherwise than because of a right referred to in paragraph 251(5)(b)) to the corporation at that time; or

    • (b) the taxpayer holds, at that time,

      • (i) shares of the corporation that give the taxpayer 10% or more of the votes that could be cast under all circumstances at an annual meeting of shareholders of the corporation, and

      • (ii) shares of the corporation having a fair market value of 10% or more of the fair market value of all the issued shares of the corporation.

  • Marginal note:Rules re significant interest

    (3) For the purpose of determining under subsection 142.2(2) whether a taxpayer has a significant interest in a corporation at any time,

    • (a) the taxpayer shall be deemed to hold each share that is held at that time by a person or partnership to whom the taxpayer is related (otherwise than because of a right referred to in paragraph 251(5)(b));

    • (b) a share of the corporation acquired by the taxpayer by reason of the default of a debtor shall be disregarded where it is reasonable to consider that the share is being retained for the purpose of minimizing any losses in respect of the debtor’s default; and

    • (c) a share of the corporation that is prescribed in respect of the taxpayer shall be disregarded.

  • Extension of meaning of “related”

    (4) For the purposes of this subsection and subsections (2) and (3), in determining if, at a particular time, a person or partnership is related to another person or partnership, the rules in section 251 are to be applied as if,

    • (a) a partnership (other than a partnership in respect of which any amount of the income or capital of the partnership that any entity may receive directly from the partnership at any time as a member of the partnership depends on the exercise by any entity of, or the failure by any entity to exercise, a discretionary power) were a corporation having capital stock of a single class divided into 100 issued shares and each member of the partnership owned, at the particular time, that proportion of the issued shares of that class that

      • (i) the fair market value of the member’s interest in the partnership at the particular time

      is of

      • (ii) the fair market value of all interests in the partnership at the particular time; and

    • (b) a trust (other than a trust in respect of which any amount of the income or capital of the trust that any entity may receive directly from the trust at any time as a beneficiary under the trust depends on the exercise by any entity of, or the failure by any entity to exercise, a discretionary power) were a corporation having capital stock of a single class divided into 100 issued shares and each beneficiary under the trust owned, at the particular time, that proportion of the issued shares of that class that

      • (i) the fair market value of the beneficiary’s beneficial interest in the trust at the particular time

      is of

      • (ii) the fair market value at that time of all beneficial interests in the trust.

  • (5) [Repealed, 2009, c. 2, s. 46]

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. 1995, c. 21, s. 58;
  • 1998, c. 19, s. 163;
  • 1999, c. 22, s. 57;
  • 2001, c. 17, ss. 136, 219;
  • 2009, c. 2, s. 46;
  • 2013, c. 40, s. 63.