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

Act current to 2014-11-25 and last amended on 2014-11-01. Previous Versions

Marginal note:Tax non-payable by non-resident person
  •  (1) Tax is not payable by a non-resident person under subsection 212(2) on a dividend in respect of a share of the capital stock of a foreign business corporation if not less than 90% of the total of the received or receivable by it that are required to be included in computing its income for the taxation year in which the dividend was paid was received or receivable in respect of the operation by it of public utilities or from mining, transporting and processing of ore in a country in which

    • (a) if the non-resident person is an individual, the non-resident person resides; or

    • (b) if the non-resident person is a corporation, individuals who own more than 50% of its share capital (having full voting rights under all circumstances) reside.

  • Marginal note:Idem

    (2) For the purposes of this section, if 90% of the total of the received or receivable by a corporation that are required to be included in computing its income for a taxation year was received or receivable in respect of the operation by it of public utilities or from the mining, transporting and processing of ore, an amount received or receivable in that year from that corporation by another corporation shall, if it is required to be included in computing the receiving corporation’s income for the year, be deemed to have been received by the receiving corporation in respect of the operation by it of public utilities or from the mining, transporting and processing of ore by it in the country in which the public utilities were operated or the mining, transporting and processing of ore was carried out by the payer corporation.

  • Marginal note:Corporation deemed to be foreign business corporation

    (3) For the purposes of this section, a corporation shall be deemed to be a foreign business corporation at a particular time if it would have been a foreign business corporation within the meaning of section 71 of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952 (as that section read in its application to the 1971 taxation year), for the taxation year of the corporation in which the particular time occurred, if that section had been applicable to that taxation year.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. 1970-71-72, c. 63, s. 1“213”.
Marginal note:No deductions
  •  (1) The tax payable under section 212 is payable on the amounts described therein without any deduction from those whatever.

  • Marginal note:Income and capital combined

    (2) Where paragraph 16(1)(b) would, if Part I were applicable, result in a part of an amount being included in computing the income of a non-resident person, that part of the amount shall, for the purposes of this Part, be deemed to have been paid or credited to the non-resident person in respect of property, services or otherwise, depending on the nature of that part of the amount.

  • Marginal note:Deemed payments

    (3) For the purposes of this Part,

    • (a) where section 15 or subsection 56(2) would, if Part I were applicable, require an amount to be included in computing a taxpayer’s income, that amount shall be deemed to have been paid to the taxpayer as a dividend from a corporation resident in Canada;

    • (b) where paragraph 56(1)(f) would, if Part I were applicable, require an amount to be included in computing an individual’s income, that amount shall be deemed to have been paid to the individual under an income-averaging annuity contract;

    • (b.1) where paragraph 56(1)(y) would, if Part I were applicable, require an amount to be included in computing a taxpayer’s income, that amount shall be deemed to have been paid to the taxpayer to acquire an interest in a retirement compensation arrangement;

    • (c) where, because of subsection 146(8.1), 146(8.8), 146(8.91), 146(9), 146(10) or 146(12), an amount would, if Part I applied, be required to be included in computing a taxpayer’s income, that amount shall be deemed to have been paid to the taxpayer as a payment under a registered retirement savings plan or an amended plan (within the meaning assigned by subsection 146(12)), as the case may be;

    • (d) where, by virtue of subsection 147(10), 147(13) or 147(15), an amount would, if Part I were applicable, be required to be included in computing a taxpayer’s income, that amount shall be deemed to have been paid to the taxpayer as a payment under a deferred profit sharing plan or a plan referred to in subsection 147(15) as a “revoked plan”, as the case may be;

    • (e) where subsection 130.1(2) would, if Part I were applicable, deem an amount received by a shareholder of a mortgage investment corporation to have been received by the shareholder as interest, that amount shall be deemed to have been paid to the shareholder as interest on a bond issued after 1971;

    • (f) where subsection 104(13) would, if Part I were applicable, require any part of an amount payable by a trust in its taxation year to a beneficiary to be included in computing the income of the non-resident person who is a beneficiary of the trust, that part is deemed to be an amount paid or credited to that person as income of or from the trust

      • (i) on, or at, the earliest of

        • (A) the day on which the amount was paid or credited,

        • (B) the day that is 90 days after the end of the taxation year, and

        • (C) if the taxation year is deemed by subparagraph 128.1(4)(a)(i) to end after July 25, 2012, the time that is immediately before the end of the taxation year, and

      • (ii) not at any later time;

    • (f.1) where paragraph 132.1(1)(d) would, if Part I were applicable, require an amount to be included in computing a taxpayer’s income for a taxation year by reason of a designation by a mutual fund trust under subsection 132.1(1), that amount shall be deemed to be an amount paid or credited to that person as income of or from the trust on the day of the designation;

    • (g) where an individual who is a beneficiary under a fund, plan or trust that was a registered home ownership savings plan (within the meanings assigned by subparagraphs 146.2(1)(a) and (h) of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, as they read in their application to the 1985 taxation year) on December 31, 1985 dies, an amount equal to the fair market value of the property in the fund, plan or trust at the time of death shall be deemed, for the purposes of section 212, to have been paid to the individual at the time of death as a payment out of or under a fund, plan or trust that was at the end of 1985 a registered home ownership savings plan;

    • (i) where, because of subsection 146.3(4), 146.3(6), 146.3(6.1), 146.3(7) or 146.3(11), an amount would, if Part I applied, be required to be included in computing a taxpayer’s income, that amount shall be deemed to have been paid to the taxpayer as a payment under a registered retirement income fund;

    • (j[Repealed, 1998, c. 19, s. 63(1)]

    • (k) where, because of subsection 143.1(2), an amount distributed at any time by an amateur athlete trust would, if Part I were applicable, be required to be included in computing an individual’s income, that amount shall be deemed to have been paid at that time to the individual as a payment in respect of an amateur athlete trust; and

    • (l) where, because of subsection 12(10.2), an amount would at any particular time, if Part I were applicable, be required to be included in computing a taxpayer’s income, that amount shall be deemed to have been paid by Her Majesty in right of Canada at that time to the taxpayer out of the taxpayer’s NISA Fund No. 2.

  • Marginal note:Time of deemed payment

    (3.1) Except as otherwise expressly provided, each amount deemed by subsection 214(3) to have been paid shall be deemed to have been paid at the time of the event or transaction as a consequence of which the amount would, if Part I were applicable, be required to be included in computing a taxpayer’s income.

  • Marginal note:Securities

    (4) Where, if section 76 were applicable in computing a non-resident person’s income, that section would require an amount to be included in computing the income, that amount shall, for the purpose of this Part, be deemed to have been, at the time the non-resident person received the security, right, certificate or other evidence of indebtedness, paid to the non-resident person on account of the debt in respect of which the non-resident person received it.

  • Marginal note:Interpretation

    (5) Subsection 214(4) is enacted for greater certainty and shall not be construed as limiting the generality of the other provisions of this Part defining on which tax is payable.

  • Marginal note:Deemed interest

    (6) Where, in respect of interest stipulated to be payable, on a bond, debenture, bill, note, mortgage, hypothecary claim or similar obligation that has been assigned or otherwise transferred by a non-resident person to a person resident in Canada, subsection 20(14) would, if Part I were applicable, require an amount to be included in computing the transferor’s income, that amount is, for the purposes of this Part, deemed to be a payment of interest on that obligation made by the transferee to the transferor at the time of the assignment or other transfer of the obligation, if

    • (a) the obligation was issued by a person resident in Canada;

    • (b) the obligation was not an obligation described in paragraph 214(8)(a) or 214(8)(b); and

    • (c) the assignment or other transfer is not an assignment or other transfer referred to in paragraph 214(7.1)(b).

  • Marginal note:Sale of obligation

    (7) Where

    • (a) a non-resident person has at any time assigned or otherwise transferred to a person resident in Canada a bond, debenture, bill, note, mortgage, hypothecary claim or similar obligation issued by a person resident in Canada,

    • (b) the obligation was not an excluded obligation, and

    • (c) the assignment or other transfer is not an assignment or other transfer referred to in paragraph 214(7.1)(b),

    the amount, if any, by which

    • (d) the price for which the obligation was assigned or otherwise transferred at that time,

    exceeds

    • (e) the price for which the obligation was issued,

    shall, for the purposes of this Part, be deemed to be a payment of interest on that obligation made by the person resident in Canada to the non-resident person at that time.

  • Marginal note:Idem

    (7.1) Where

    • (a) a person resident in Canada has at a particular time assigned or otherwise transferred an obligation to a non-resident person,

    • (b) the non-resident person has at a subsequent time assigned or otherwise transferred the obligation back to the person resident in Canada, and

    • (c) subsection 214(6) or 214(7) would apply with respect to the assignment or other transfer referred to in paragraph 214(7.1)(b), if those subsections were read without reference to paragraphs 214(6)(c) and 214(7)(c),

    the amount, if any, by which

    • (d) the price for which the obligation was assigned or otherwise transferred at the subsequent time,

    exceeds

    • (e) the price for which the obligation was assigned or otherwise transferred at the particular time,

    shall, for the purposes of this Part, be deemed to be a payment of interest on that obligation made by the person resident in Canada to the non-resident person at the subsequent time.

  • Meaning of “excluded obligation”

    (8) For the purposes of subsection (7), “excluded obligation” means any bond, debenture, bill, note, mortgage, hypothecary claim or similar obligation

    • (a) that is described in paragraph (a) of the definition “fully exempt interest” in subsection 212(3), or on which the interest would have been exempt under subparagraph 212(1)(b)(iii) or (vii) as they applied to the 2007 taxation year;

    • (b) that is prescribed to be a public issue security; or

    • (c) that is not an indexed debt obligation and that was issued for an amount not less than 97% of the principal amount thereof, and the yield from which, expressed in terms of an annual rate on the amount for which the obligation was issued (which annual rate shall, if the terms of the obligation or any agreement relating thereto conferred on the holder thereof a right to demand payment of the principal amount of the obligation or the amount outstanding as or on account of the principal amount thereof, as the case may be, before the maturity of the obligation, be calculated on the basis of the yield that produces the highest annual rate obtainable either on the maturity of the obligation or conditional on the exercise of any such right) does not exceed 4/3 of the interest stipulated to be payable on the obligation, expressed in terms of an annual rate on

      • (i) the principal amount thereof, if no amount is payable on account of the principal amount before the maturity of the obligation, and

      • (ii) the amount outstanding from time to time as or on account of the principal amount thereof, in any other case.

  • Marginal note:Deemed resident

    (9) Where

    • (a) the assignment or other transfer of an obligation to a non-resident person carrying on business in Canada would be described in subsection 214(6) or 214(7) if those subsections were read without reference to paragraphs 214(6)(c) and 214(7)(c) and if that non-resident person were a person resident in Canada, and

    • (b) that non-resident person

      • (i) may deduct, under subsection 20(14), in computing the non-resident person’s taxable income earned in Canada for a taxation year an amount in respect of interest on the obligation, or

      • (ii) may deduct, under Part I, in computing the non-resident person’s taxable income earned in Canada for a taxation year an amount in respect of any amount paid on account of the principal amount of the obligation,

    the non-resident person shall, with respect to the assignment or other transfer of the obligation, be deemed, for thepurposes of this Part, to be a person resident in Canada.

  • Marginal note:Reduction of tax

    (10) Where a non-resident person has assigned or otherwise transferred to a person resident in Canada an obligation

    • (a) on which an amount of interest was deemed by subsection 214(6) or 214(7) to have been paid, and

    • (b) that the non-resident person had previously acquired from a person resident in Canada,

    the amount of the tax under this Part that the non-resident person is liable to pay in respect thereof shall be deemed, for the purpose of subsection 227(6), to be that proportion of the tax the non-resident person would otherwise have been liable to pay in respect thereof that

    • (c) the number of days in the period commencing with the day the obligation was last acquired by the non-resident person from a person resident in Canada and ending with the day the obligation was last assigned or otherwise transferred by the non-resident person to a person resident in Canada

    is of

    • (d) the number of days in the period commencing with the day the obligation was issued and ending with the day the obligation was last assigned or otherwise transferred by the non-resident person to a person resident in Canada.

  • (11) [Repealed, 2007, c. 35, s. 60]

  • Marginal note:Where s. (2) does not apply

    (12) Subsection 214(2) does not apply in respect of a payment to a non-resident person under any obligation in respect of which that person is liable to pay tax under this Part by reason of subsection 214(7) or 214(7.1).

  • Marginal note:Regulations respecting residents

    (13) The Governor in Council may make general or special regulations, for the purposes of this Part, prescribing

    • (a) who is or has been at any time resident in Canada;

    • (b) where a person was resident in Canada as well as in some other place, what amounts are taxable under this Part; and

    • (c) where a non-resident person carried on business in Canada, what are taxable under this Part or what portion of the tax under this Part is payable by that person.

  • Marginal note:Assignment of obligation

    (14) For the purposes of this section, any transaction or event by which an obligation held by a non-resident person is redeemed in whole or in part or is cancelled shall be deemed to be an assignment of the obligation by the non-resident person.

  • Marginal note:Standby charges and guarantee fees

    (15) For the purposes of this Part,

    • (a) where a non-resident person has entered into an agreement under the terms of which the non-resident person agrees to guarantee the repayment, in whole or in part, of the principal amount of a bond, debenture, bill, note, mortgage, hypothecary claim or similar obligation of a person resident in Canada, any amount paid or credited as consideration for the guarantee is deemed to be a payment of interest on that obligation; and

    • (b) where a non-resident person has entered into an agreement under the terms of which the non-resident person agrees to lend money, or to make money available, to a person resident in Canada, any amount paid or credited as consideration for so agreeing to lend money or to make money available shall, if the non-resident person would be liable to tax under this Part in respect of interest payable on any obligation issued under the terms of the agreement on the date it was entered into, be deemed to be a payment of interest.

  • Marginal note:Deemed dividends

    (16) For the purposes of this Part,

    • (a) an amount paid or credited as interest by a corporation resident in Canada, or by a partnership, in a taxation year of the corporation to a non-resident person is deemed to have been paid by the corporation as a dividend, and not to have been paid or credited by the corporation or the partnership as interest, to the extent that an amount in respect of the interest

      • (i) is not deductible in computing the income of the corporation for the year because of subsection 18(4), or

      • (ii) is included in computing the income of the corporation for the year under paragraph 12(1)(l.1); and

    • (b) to the extent that amounts paid or credited to a non-resident person in the year are deemed by paragraph (a) to have been paid by a corporation as dividends, the corporation may designate in its return of income under Part I for the year which amounts paid or credited as interest to the non-resident person in the year are deemed to have been paid as dividends and not as interest.

  • Marginal note:Deemed interest payments

    (17) For the purposes of subsection (16),

    • (a) interest payable (other than interest payable pursuant to a legal obligation to pay interest on an amount of interest) by a corporation resident in Canada, or by a partnership, in respect of a taxation year of the corporation, but that has not been paid or credited in the year, is deemed to have been paid immediately before the end of the year and not to have been paid or credited at any other time; and

    • (b) if subsection (6) or (7) deems a payment of interest to have been made to a non-resident person in respect of a debt or other obligation of a corporation, interest that, at the time of the transfer or assignment, is payable by the corporation in respect of the debt or other obligation and has not been paid or credited is deemed to have been paid by the corporation immediately before that time to the non-resident person.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. R.S., 1985, c. 1 (5th Supp.), s. 214;
  • 1994, c. 7, Sch. II, s. 176, Sch. VIII, s. 125, c. 21, s. 98;
  • 1998, c. 19, s. 63;
  • 2001, c. 17, s. 227;
  • 2007, c. 35, s. 60;
  • 2012, c. 31, s. 50;
  • 2013, c. 34, s. 348(F), c. 40, s. 83.