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

Act current to 2014-08-05 and last amended on 2014-06-27. Previous Versions

Marginal note:Application to other taxes

 Instead of making a refund to which a trust is entitled under subsection 198(4) or 198(5) or 199(2), the Minister may, where the trust is liable or about to become liable to make another payment under this Act, apply the amount of the refund or any part thereof to that other liability and notify a trustee of the trust of that action.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. 1970-71-72, c. 63, s. 1“203”.
Marginal note:Definitions

 In this Part,

“debt obligation”

« titre de créance »

“debt obligation” means a bond, debenture, note or similar obligation;

“equity share”

« action à revenu variable »

“equity share” means

  • (a) a share, other than an excluded share or a non-participating share, the owner of which has, as owner thereof, a right

    • (i) to a dividend, and

    • (ii) to a part of the surplus of the corporation after repayment of capital and payment of dividend arrears on the redemption of the share, a reduction of the capital of the corporation or the winding-up of the corporation,

    at least as great, in any event, as the right of the owner of any other share, other than a non-participating share, of the corporation, when the magnitude of the right in each case is expressed as a rate based on the paid-up capital value of the share to which the right relates, or

  • (b) a share, other than an excluded share or a non-participating share, the owner of which has, as owner thereof, a right

    • (i) to a dividend, after a dividend at a rate not in excess of 12% per annum of the paid-up capital value of each share has been paid to the owners of shares of a class other than the class to which that share belongs, and

    • (ii) to a part of the surplus of the corporation after repayment of capital and payment of dividend arrears on the redemption of the share, a reduction of the capital of the corporation or the winding-up of the corporation, after a payment of a part of the surplus at a rate not in excess of 10% of the paid-up capital value of each share has been made to the owners of shares of a class other than the class to which that share belongs,

    at least as great, in any event, as the right of the owner of any other share, other than a non-participating share, of the corporation, when the magnitude of the right in each case is expressed as a rate based on the paid-up capital value of the share to which the right relates;

“excluded property”

« bien exclu »

“excluded property”, in relation to a trust governed by a deferred profit sharing plan or revoked plan, means a debt obligation or bankers’ acceptance issued by

  • (a) an employer by whom payments are made in trust to a trustee under the plan for the benefit of beneficiaries under the plan, or

  • (b) a corporation with whom that employer does not deal at arm’s length;

“excluded share”

« action exclue »

“excluded share” means each share of the capital stock of a private corporation where

  • (a) the paid-up capital of the corporation that is represented by all its issued and outstanding shares that would, but for this definition, be equity shares is less than 50% of the paid-up capital of the corporation that is represented by all its issued and outstanding shares other than non-participating shares, or

  • (b) a non-participating share of the corporation is issued and outstanding and the owner of which has, as owner thereof, a right to a dividend

    • (i) at a fixed annual rate in excess of 12%, or

    • (ii) at an annual rate not in excess of a fixed maximum annual rate, if the fixed maximum annual rate is in excess of 12%,

    when the right to the dividend is expressed as a rate based on the paid-up capital value of the share to which the right relates;

“initial base”

« base initiale »

“initial base” of a trust means the total of the values of all initial non-qualified investments held by the trust on December 21, 1966 when each such investment is valued at the lower of

  • (a) its cost to the trust, and

  • (b) its fair market value on December 21, 1966;

“initial non-qualified investment”

« placement initial non admissible »

“initial non-qualified investment” of a trust means an investment held by the trust on December 21, 1966 that was, on that date, a non-qualified investment but does not include

  • (a) any interest in a life insurance policy, or

  • (b) an equity share that would be a qualified investment if the date of acquisition of the share were December 21, 1966;

“non-participating share”

« action non participante »

“non-participating share” means

  • (a) in the case of a private corporation, a share the owner of which is not entitled to receive, as owner thereof, any dividend, other than a dividend, whether cumulative or not,

    • (i) at a fixed annual rate or amount, or

    • (ii) at an annual rate or amount not in excess of a fixed annual rate or amount, and

  • (b) in the case of a corporation other than a private corporation, any share other than a common share;

“non-qualified investment”

« placement non admissible »

“non-qualified investment” means property that is not a qualified investment for a trust governed by a deferred profit sharing plan or revoked plan within the meaning of the definition “qualified investment” in this subsection;

“paid-up capital value”

« valeur en capital versé »

“paid-up capital value” of a share means the amount determined by the formula

A/B

where

A 
is the paid-up capital of the corporation that is represented by the shares of the class to which that share belongs, and
B 
is the number of shares of that class that are in fact issued and outstanding;

“qualified investment”

« placement admissible »

“qualified investment” for a trust governed by a deferred profit sharing plan or revoked plan means, with the exception of excluded property in relation to the trust,

  • (a) money (other than money the fair market value of which exceeds its stated value as legal tender in the country of issuance or money that is held for its numismatic value) and deposits (within the meaning assigned by the Canada Deposit Insurance Corporation Act or with a branch in Canada of a bank) of such money standing to the credit of the trust,

  • (b) debt obligations described in paragraph (a) of the definition “fully exempt interest” in subsection 212(3),

  • (c) debt obligations issued by

    • (i) a corporation, mutual fund trust or limited partnership the shares or units of which are listed on a designated stock exchange in Canada,

    • (ii) a corporation the shares of which are listed on a designated stock exchange outside Canada, or

    • (iii) an authorized foreign bank and payable at a branch in Canada of the bank,

  • (c.1) debt obligations that meet the following criteria, namely,

    • (i) any of

      • (A) the debt obligations had, at the time of acquisition by the trust, an investment grade rating with a prescribed credit rating agency,

      • (B) the debt obligations have an investment grade rating with a prescribed credit rating agency, or

      • (C) the debt obligations were acquired by the trust in exchange for debt obligations that satisfied the condition in clause (A) and as part of a proposal to, or an arrangement with, the creditors of the issuer of the debt obligations that has been approved by a court under the Bankruptcy and Insolvency Act or the Companies’ Creditors Arrangement Act, and

    • (ii) either

      • (A) the debt obligations were issued as part of a single issue of debt of at least $25 million, or

      • (B) in the case of debt obligations that are issued on a continuous basis under a debt issuance program, the issuer of the debt obligations had issued and outstanding debt under the program of at least $25 million,

  • (d) securities (other than futures contracts or other derivative instruments in respect of which the holder’s risk of loss may exceed the holder’s cost) that are listed on a designated stock exchange,

  • (e) equity shares of a corporation by which, before the date of acquisition by the trust of the shares, payments have been made in trust to a trustee under the plan for the benefit of beneficiaries thereunder, if the shares are of a class in respect of which

    • (i) there is no restriction on their transferability, and

    • (ii) in each of 4 taxation years of the corporation in the period of the corporation’s 5 consecutive taxation years that ended less than 12 months before the date of acquisition of the shares by the trust, and in the corporation’s last taxation year in that period, the corporation

      • (A) paid a dividend on each share of the class of an amount not less than 4% of the cost per share of the shares to the trust, or

      • (B) had earnings attributable to the shares of the class of an amount not less than the amount obtained when 4% of the cost per share to the trust of the shares is multiplied by the total number of shares of the class that were outstanding immediately after the acquisition,

  • (f) guaranteed investment certificates issued by a trust company incorporated under the laws of Canada or of a province,

  • (g) investment contracts described in subparagraph (b)(ii) of the definition “retirement savings plan” in subsection 146(1) and issued by a corporation approved by the Governor in Council for the purposes of that subparagraph, and

  • (h) prescribed investments;

  • (i[Repealed, 2007, c. 29, s. 26]

“revoked plan”

« régime dont l’agrément est retiré »

“revoked plan” means a deferred profit sharing plan the registration of which has been revoked by the Minister pursuant to subsection 147(14) or 147(14.1).

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. R.S., 1985, c. 1 (5th Supp.), s. 204;
  • 1994, c. 7, Sch. III, s. 20(F);
  • 2001, c. 17, ss. 168, 223;
  • 2007, c. 29, s. 26, c. 35, s. 57;
  • 2009, c. 2, s. 66.