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

Act current to 2016-09-18 and last amended on 2016-07-01. Previous Versions

Marginal note:Tax payable on excess TFSA amount

 If, at any time in a calendar month, an individual has an excess TFSA amount, the individual shall, in respect of that month, pay a tax under this Part equal to 1% of the highest such amount in that month.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. 2008, c. 28, s. 31.
Marginal note:Tax payable on non-resident contributions

 If, at a particular time, a non-resident individual makes a contribution under a TFSA (other than a contribution that is a qualifying transfer or an exempt contribution), the individual shall pay a tax under this Part equal to 1% of the amount of the contribution in respect of each month that ends after the particular time and before the earlier of

  • (a) the first time after the particular time at which the amount of the contribution is equalled or exceeded by the total of all amounts each of which is a distribution

    • (i) that is made after the particular time under a TFSA of which the individual is the holder, and

    • (ii) that the individual designates in prescribed manner to be a distribution in connection with the contribution and not in connection with any other contribution, and

  • (b) the time at which the individual becomes resident in Canada.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. 2008, c. 28, s. 31;
  • 2009, c. 2, s. 69.
Marginal note:Tax payable on prohibited or non-qualified investment
  •  (1) The controlling individual of a registered plan that governs a trust shall pay a tax under this Part for a calendar year if, at any time in the year, the trust acquires property that is a prohibited investment, or a non-qualified investment, for the trust.

  • Marginal note:Amount of tax payable

    (2) The amount of tax payable in respect of each property described in subsection (1) is 50% of the fair market value of the property at the time referred to in that subsection.

  • Marginal note:Both prohibited and non-qualified investment

    (3) For the purposes of this section and subsections 146(10.1), 146.2(6), 146.3(9) and 207.01(6), if a trust governed by a registered plan holds property at any time that is, for the trust, both a prohibited investment and a non-qualified investment, the property is deemed at that time not to be a non-qualified investment, but remains a prohibited investment, for the trust.

  • Marginal note:Refund of tax on disposition of investment

    (4) If in a calendar year a trust governed by a registered plan disposes of a property in respect of which a tax is imposed under subsection (1) on the controlling individual of the registered plan, the controlling individual is entitled to a refund for the year of an amount equal to

    • (a) except where paragraph (b) applies, the amount of the tax so imposed; or

    • (b) nil,

      • (i) if it is reasonable to consider that the controlling individual knew, or ought to have known, at the time the property was acquired by the trust, that it was, or would become, a property described in subsection (1), or

      • (ii) if the property is not disposed of by the trust before the end of the calendar year following the calendar year in which the tax arose, or any later time that the Minister considers reasonable in the circumstances.

  • (5) [Repealed, 2013, c. 40, s. 75]

  • (6) and (7) [Repealed, 2010, c. 25, s. 58]

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. 2008, c. 28, s. 31;
  • 2009, c. 2, s. 70;
  • 2010, c. 25, s. 58;
  • 2011, c. 24, s. 65;
  • 2013, c. 40, s. 75.
Marginal note:Tax payable in respect of advantage
  •  (1) A tax is payable under this Part for a calendar year if, in the year, an advantage in relation to a registered plan is extended to, or is received or receivable by, the controlling individual of the registered plan, a trust governed by the registered plan, or any other person who does not deal at arm’s length with the controlling individual.

  • Marginal note:Amount of tax payable

    (2) The amount of tax payable in respect of an advantage described in subsection (1) is

    • (a) in the case of a benefit, the fair market value of the benefit;

    • (b) in the case of a loan or an indebtedness, the amount of the loan or indebtedness; and

    • (c) in the case of an RRSP strip, the amount of the RRSP strip.

  • Marginal note:Liability for tax

    (3) The controlling individual of a registered plan in connection with which a tax is imposed under subsection (1) is liable to pay the tax except that, if the advantage is extended by the issuer or carrier of the registered plan or by a person with whom the issuer or carrier is not dealing at arm’s length, the issuer or carrier, and not the controlling individual, is liable to pay the tax.

  • Marginal note:Transitional rule

    (4) If an individual so elects before March 2, 2013 in prescribed form, subsection (1) does not apply in respect of any advantage that is an amount included in the calculation of the transitional prohibited investment benefit of the individual for a taxation year provided that the transitional prohibited investment benefit

    • (a) is paid to the individual, from a RRIF or RRSP of the individual, on or before the later of April 2, 2013 and the day that is 90 days after the end of the taxation year; and

    • (b) is not paid by way of transfer to another RRIF or RRSP of the individual.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. 2008, c. 28, s. 31;
  • 2010, c. 25, s. 59;
  • 2011, c. 24, s. 66;
  • 2013, c. 40, s. 76.
Marginal note:Waiver of tax payable
  •  (1) If an individual would otherwise be liable to pay a tax under this Part because of section 207.02 or 207.03, the Minister may waive or cancel all or part of the liability if

    • (a) the individual establishes to the satisfaction of the Minister that the liability arose as a consequence of a reasonable error; and

    • (b) one or more distributions are made without delay under a TFSA of which the individual is the holder, the total amount of which is not less than the total of

      • (i) the amount in respect of which the individual would otherwise be liable to pay the tax, and

      • (ii) income (including a capital gain) that is reasonably attributable, directly or indirectly, to the amount described in subparagraph (i).

  • Marginal note:Waiver of tax payable

    (2) If a person would otherwise be liable to pay a tax under this Part because of subsection 207.04(1) or section 207.05, the Minister may waive or cancel all or part of the liability where the Minister considers it just and equitable to do so having regard to all the circumstances, including

    • (a) whether the tax arose as a consequence of reasonable error;

    • (b) the extent to which the transaction or series of transactions that gave rise to the tax also gave rise to another tax under this Act; and

    • (c) the extent to which payments have been made from the person’s registered plan.

  • (3) [Repealed, 2013, c. 40, s. 77]

  • Marginal note:Other powers of Minister

    (4) The Minister may notify the controlling individual of a registered plan that the controlling individual must cause a payment to be made from the registered plan to the controlling individual within 90 days of receipt of the notice, the amount of which is not less than the amount of specified non-qualified investment income in respect of the registered plan.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. 2008, c. 28, s. 31;
  • 2009, c. 2, s. 71;
  • 2010, c. 25, s. 60;
  • 2011, c. 24, s. 67;
  • 2013, c. 40, s. 77.
Marginal note:Income inclusion

 A holder of a TFSA shall include in computing the holder’s income for a taxation year under Part I any portion of a distribution made in the year that is described in subparagraph (a)(ii) of the definition specified distribution in subsection 207.01(1) or subparagraph 207.06(1)(b)(ii) or that is specified by the Minister as part of an agreement to waive or cancel a liability for tax under this Part.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. 2010, c. 25, s. 61;
  • 2013, c. 40, s. 78.
 
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