Income Tax Regulations (C.R.C., c. 945)

Regulations are current to 2016-06-06 and last amended on 2016-02-26. Previous Versions

Income Tax Regulations

C.R.C., c. 945

INCOME TAX ACT

Income Tax Regulations

[Note: Application provisions are not included in the consolidated text; see relevant amending Acts and regulations.]

Short Title

 These Regulations may be cited as the Income Tax Regulations.

Interpretation

 In these Regulations, Act means the Income Tax Act.

PART ITax Deductions

Interpretation

  •  (1) In this Part and in Schedule I,

    employee

    employee means any person receiving remuneration; (employé)

    employer

    employer means any person paying remuneration; (employeur)

    estimated deductions

    estimated deductions means, in respect of a taxation year, the total of the amounts estimated to be deductible by an employee for the year under any of paragraphs 8(1)(f), (h), (h.1), (i) and (j) of the Act and determined by the employee for the purpose of completing the form referred to in subsection 107(2); (déductions estimatives)

    exemptions

    exemptions[Repealed, SOR/89-508, s. 1]

    pay period

    pay period includes

    • (a) a day,

    • (b) a week,

    • (c) a two week period,

    • (d) a semi-monthly period,

    • (e) a month,

    • (f) a four week period,

    • (g) one tenth of a calendar year, or

    • (h) one twenty-second of a calendar year; (période de paie)

    personal credits

    personal credits means, in respect of a particular taxation year, the greater of

    • (a) the amount referred to in paragraph 118(1)(c) of the Act, and

    • (b) the aggregate of the credits which the employee would be entitled to claim for the year under

      • (i) subsections 118(1), (2) and (3) of the Act if the description of A in those subsections were read as “is equal to one”,

      • (ii) subsections 118.3(1) and (2) of the Act if the description of A in subsection 118.3(1) of the Act were read as “is equal to one” and if subsection 118.3(1) of the Act were read without reference to paragraph (c) thereof,

      • (iii) subsections 118.5(1) and 118.6(2) of the Act if subsection 118.5(1) of the Act were read without reference to “the product obtained when the appropriate percentage for the year is multiplied by” and the description of A in subsection 118.6(2) of the Act were read as “is equal to one”, and after deducting from the aggregate of the amounts determined under those subsections the excess over $3,000 of the aggregate of amounts that the employee claims to expect to receive in the year on account of a scholarship, fellowship or bursary,

      • (iv) section 118.8 of the Act if the formula A + B - C in that section were read as

        (A + B) / C

        where

        A 
        is the value of A in that section,
        B 
        is the value of B in that section, and
        C 
        is the appropriate percentage for the year.
      • (v) section 118.9 of the Act if the formula A - B in section 118.81 of the Act were read as

        A / B

        where

        A 
        is the value of A set out in that section, and
        B 
        is the appropriate percentage for the year. (crédits d’impôts personnels)
    remuneration

    remuneration includes any payment that is

    • (a) in respect of

      • (i) salary or wages, or

      • (ii) commissions or other similar amounts fixed by reference to the volume of the sales made or the contracts negotiated (referred to as commissions in this Part)

    paid to an officer or employee or former officer or employee,

    • (a.1) in respect of an employee’s gratuities required under provincial legislation to be declared to the employee’s employer,

    • (b) a superannuation or pension benefit (including an annuity payment made pursuant to or under a superannuation or pension fund or plan) other than a distribution

      • (i) that is made from a pooled registered pension plan and is not required to be included in computing a taxpayer’s income under paragraph 56(1)(z.3) of the Act, or

      • (ii) that subsection 147.5(14) of the Act deems to have been made,

    • (b.1) an amount of a distribution out of or under a retirement compensation arrangement,

    • (c) a retiring allowance,

    • (d) a death benefit,

    • (e) a benefit under a supplementary unemployment benefit plan,

    • (f) a payment under a deferred profit sharing plan or a plan referred to in section 147 of the Act as a revoked plan, reduced, if applicable, by amounts determined under subsections 147(10.1), (11) and (12) of the Act,

    • (g) a benefit under the Employment Insurance Act,

    • (g.1) an amount that is required by paragraph 56(1)(a.3) of the Act to be included in computing a taxpayer’s income,

    • (h) an amount that is required by paragraph 56(1)(r) of the Act to be included in computing a taxpayer’s income, except the portion of the amount that relates to child care expenses and tuition costs,

    • (i) a payment made during the lifetime of an annuitant referred to in the definition annuitant in subsection 146(1) of the Act out of or under a registered retirement savings plan of that annuitant, other than

      • (i) a periodic annuity payment, or

      • (ii) a payment made by a person who has reasonable grounds to believe that the payment may be deducted under subsection 146(8.2) of the Act in computing the income of any taxpayer,

    • (j) a payment out of or under a plan referred to in subsection 146(12) of the Act as an amended plan other than

      • (i) a periodic annuity payment, or

      • (ii) where paragraph 146(12)(a) of the Act applied to the plan after May 25, 1976, a payment made in a year subsequent to the year in which that paragraph applied to the plan,

    • (j.1) a payment made during the lifetime of an annuitant referred to in the definition annuitant in subsection 146.3(1) of the Act under a registered retirement income fund of that annuitant, other than a particular payment to the extent that

      • (i) the particular payment is in respect of the minimum amount (in this paragraph having the meaning assigned by subsection 146.3(1) of the Act) under the fund for a year, or

      • (ii) where the fund governs a trust, the particular payment would be in respect of the minimum amount under the fund for a year if each amount that, at the beginning of the year, is scheduled to be paid after the time of the particular payment and in the year to the trust under an annuity contract that is held by the trust both at the beginning of the year and at the time of the particular payment, is paid to the trust in the year,

    • (k) a benefit described in section 5502,

    • (l) an amount as, on account or in lieu of payment of, or in satisfaction of, proceeds of the surrender, cancellation or redemption of an income-averaging annuity contract,

    • (m) in respect of an amount that can reasonably be regarded as having been received, in whole or in part, as consideration or partial consideration for entering into a contract of service, where the service is to be performed in Canada, or for an undertaking not to enter into such a contract with another party,

    • (n) a payment out of a registered education savings plan other than

      • (i) a refund of payments,

      • (ii) an educational assistance payment, or

      • (iii) an amount, up to $50,000, of an accumulated income payment that is made to a subscriber, as defined in subsection 204.94(1) of the Act, or if there is no subscriber at that time, that is made to a person that has been a spouse or common-law partner of an individual who was a subscriber, if

        • (A) that amount is transferred to an RRSP in which the annuitant is either the recipient of the payment or the recipient’s spouse or common-law partner, and

        • (B) it is reasonable for the person making the payment to believe that that amount is deductible for the year by the recipient of the payment within the limits provided for in subsection 146(5) or (5.1) of the Act; or

    • (o) an amount of a disability assistance payment made under a registered disability savings plan that is required by paragraph 56(1)(q.1) of the Act to be included in computing a taxpayer’s income; (rémunération)

    total remuneration

    total remuneration means, in respect of a taxation year, the total of all amounts each of which is an amount referred to in paragraph (a) or (a.1) of the definition remuneration. (rémunération totale)

  • (2) Where the amount of any credit referred to in paragraph (a) or (b) of the definition personal credits in subsection (1) is subject to an annual adjustment under section 117.1 of the Act, such amount shall, in a particular taxation year, be subject to that annual adjustment.

  • (3) For the purposes of this Part, where an employer deducts or withholds from a payment of remuneration to an employee one or more amounts each of which is

    • (a) a contribution to or under a pooled registered pension plan, a registered pension plan or a specified pension plan, or

    • (b) dues described in subparagraph 8(1)(i)(iv), (v) or (vi) of the Act paid on account of the employee,

    • (b.1) a contribution by the employee under subparagraph 8(1)(m.2) of the Act,

    • (c) a premium under a registered retirement savings plan, to the extent that the employer believes on reasonable grounds that the premium is deductible under paragraph 60(j.1) or subsection 146(5) or (5.1) of the Act in computing the employee’s income for the taxation year in which the payment of remuneration is made, or

    • (d) an amount that is deductible under paragraph 60(b) of the Act,

    the balance remaining after deducting or withholding this amount, as the case may be, shall be deemed to be the amount of that payment of remuneration.

  • (3.1) For the purposes of this Part, where an employee has claimed a deduction for a taxation year under paragraph 110.7(1)(b) of the Act as shown on the return most recently filed by the employee with the employee’s employer pursuant to subsection 227(2) of the Act, the amount of remuneration otherwise determined, including the amount deemed by subsection (3) to be the amount of that payment of remuneration, paid to the employee for a pay period shall be reduced by an amount equal to the amount of the deduction divided by the maximum number of pay periods in the year in respect of the appropriate pay period.

  • (3.2) [Repealed, SOR/2001-209, s. 1]

  • (4) For the purposes of this Part, where an employee is not required to report for work at any establishment of the employer, he shall be deemed to report for work

    • (a) in respect of remuneration that is salary, wages or commissions, at the establishment of the employer from which the remuneration is paid; or

    • (b) in respect of remuneration other than salary, wages or commissions, at the establishment of the employer in the province where the employee resides at the time the remuneration is paid but, if the employer does not have an establishment in that province at that time, he shall, for the purposes of this paragraph, be deemed to have an establishment in that province.

  • (5) For the purposes of this Part, where an employer deducts or withholds from a payment of remuneration to an employee an amount in respect of the acquisition by the employee of an approved share, as defined in subsection 127.4(1) of the Act, there shall be deducted from the amount determined under paragraph 102(1)(e) or (2)(e), as the case may be, in respect of that payment the lesser of

    • (a) $750, and

    • (b) 15% of the amount deducted or withheld in respect of the acquisition of an approved share.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/78-2, s. 1;
  • SOR/78-331, s. 1;
  • SOR/80-382, s. 1;
  • SOR/80-502, s. 1;
  • SOR/80-683, s. 1;
  • SOR/80-901, s. 1;
  • SOR/80-941, s. 1;
  • SOR/81-471, s. 1;
  • SOR/83-349, s. 1;
  • SOR/83-692, s. 1;
  • SOR/86-629, s. 1;
  • SOR/87-471, s. 1;
  • SOR/87-638, s. 1;
  • SOR/88-312, s. 1;
  • SOR/89-147, s. 1;
  • SOR/89-508, s. 1;
  • SOR/92-51, ss. 1, 8;
  • SOR/94-238, s. 1;
  • SOR/95-298, s. 1;
  • SOR/97-470, s. 1;
  • SOR/98-259, s. 1;
  • SOR/99-17, s. 1;
  • SOR/99-22, s. 1;
  • SOR/2000-63, s. 1;
  • SOR/2001-188, s. 14;
  • SOR/2001-209, s. 1;
  • SOR/2001-216, s. 10(F);
  • SOR/2001-221, s. 1;
  • SOR/2005-185, s. 1;
  • 2012, c. 27, s. 30, c. 31, s. 58;
  • SOR/2016-30, s. 1.

Deductions and Remittances

 Every person who makes a payment described in subsection 153(1) of the Act in a taxation year shall deduct or withhold therefrom, and remit to the Receiver General, such amount, if any, as is determined in accordance with rules prescribed in this Part.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/81-471, s. 2.

Periodic Payments

  •  (1) Except as otherwise provided in this Part, the amount to be deducted or withheld by an employer

    • (a) from any payment of remuneration (in this subsection referred to as the payment) made to an employee in his taxation year where he reports for work at an establishment of the employer in a province, in Canada beyond the limits of any province or outside Canada, and

    • (b) for any pay period in which the payment is made by the employer

    shall be determined for each payment in accordance with the following rules:

    • (c) an amount that is a notional remuneration for the year in respect of

      • (i) a payment to the employee, and

      • (ii) the amount, if any, of gratuities referred to in paragraph (a.1) of the definition remuneration in subsection 100(1)

      is deemed to be the amount determined by the formula

      A × B

      where

      A 
      is the amount that is deemed for the purpose of this paragraph to be the mid-point of the applicable range of remuneration for the pay period, as provided in Schedule I, in which falls the total of
      • (A) the payment referred to in subparagraph (i) made in the pay period, and

      • (B) the amount of gratuities referred to in subparagraph (ii) declared by the employee for the pay period, and

      B 
      is the maximum number of such pay periods in that year;
    • (d) if the employee is not resident in Canada at the time of the payment, no personal credits will be allowed for the purposes of this subsection and, if the employee is resident in Canada at the time of the payment, the employee’s personal credits for the year are deemed to be the mid-point of the range of amounts of personal credits for a taxation year as provided for in section 2 of Schedule I;

    • (e) an amount (in this subsection referred to as the notional tax for the year) shall be computed in respect of that employee by

      • (i) calculating the amount of tax payable for the year, as if that amount were calculated under subsection 117(2) of the Act and adjusted annually pursuant to section 117.1 of the Act, on the amount determined in accordance with paragraph (c) as if that amount represented the employee’s amount taxable for that year,

      and deducting the aggregate of

      • (ii) the amount determined in accordance with paragraph (d) multiplied by the appropriate percentage for the year,

      • (iii) an amount equal to

        • (A) the amount determined in accordance with paragraph (c) multiplied by the employee’s premium rate for the year under the Employment Insurance Act, not exceeding the maximum amount of the premiums payable by the employee for the year under that Act,

        multiplied by

        • (B) the appropriate percentage for the year, and

      • (iv) an amount equal to

        • (A) the product obtained when the difference between the amount determined in accordance with paragraph (c) and the amount determined under section 20 of the Canada Pension Plan for the year is multiplied by the employee’s contribution rate for the year under the Canada Pension Plan or under a provincial pension plan as defined in subsection 3(1) of that Act, not exceeding the maximum amount of such contributions payable by the employee for the year under the plan,

        multiplied by

        • (B) the appropriate percentage for the year;

    • (f) the amount determined in accordance with paragraph (e) shall be increased by, where applicable, the tax as determined under subsection 120(1) of the Act;

    • (g) where the amount of notional remuneration for the year is income earned in the Province of Quebec, the amount determined in accordance with paragraph (e) shall be reduced by an amount that is the aggregate of

      • (i) the amount that is deemed to be paid under subsection 120(2) of the Act as if there were no other source of income or loss for the year, and

      • (ii) the amount by which the amount referred to in subparagraph (i) is increased by virtue of section 27 of the Federal-Provincial Fiscal Arrangements and Federal Post-Secondary Education and Health Contributions Act; and

    • (h) [Repealed, SOR/92-667, s. 1]

    • (i) the amount to be deducted or withheld shall be computed by

      • (i) dividing the amount of the notional tax for the year by the maximum number of pay periods for the year in respect of the appropriate pay period, and

      • (ii) rounding the amount determined under subparagraph (i) to the nearest multiple of five cents or, if such amount is equidistant from two such multiples, to the higher multiple.

  • (2) Where an employee has elected pursuant to subsection 107(2) and has not revoked such election, the amount to be deducted or withheld by the employer from any payment of remuneration (in this subsection referred to as the payment) that is

    • (a) a payment in respect of commissions or is a combined payment of commissions and salary or wages, or

    • (b) a payment in respect of salary or wages where that employee receives a combined payment of commissions and salary or wages,

    made to that employee in his taxation year where he reports for work at an establishment of the employer in a province, in Canada beyond the limits of any province or outside Canada, shall be determined for each payment in accordance with the following rules:

    • (c) an employee’s estimated annual taxable income shall be determined by using the formula

      A - B

      where

      A 
      is the amount of that employee’s total remuneration in respect of the year as recorded by the employee on the form referred to in subsection 107(2), and
      B 
      is the amount of that employee’s expenses in respect of the year as recorded by that employee on that form;
    • (d) if the employee is not resident in Canada at the time of the payment, no personal credits will be allowed for the purposes of this subsection and if the employee is resident in Canada at the time of the payment, the employee’s personal credits for the year shall be the total claim amount as recorded by that employee on the return for the year referred to in subsection 107(1);

    • (e) an amount (in this subsection referred to as the notional tax for the year) shall be calculated in respect of that employee by using the formula

      C - [(D + E + F) × G] + H - I

      where

      C 
      is the amount of tax payable for the year, calculated as if that amount of tax were computed under subsection 117(2) of the Act and adjusted annually pursuant to section 117.1 of the Act, on the amount determined under paragraph (c) as if that amount represented the employee’s amount taxable for that year,
      D 
      is the amount determined in accordance with paragraph (d),
      E 
      is the amount determined in the description of A in paragraph (c) multiplied by the employee’s premium rate for the year under the Employment Insurance Act, not exceeding the maximum amount of the premiums payable by the employee for the year under that Act,
      F 
      is the amount determined in the description of A in paragraph (c) less the amount for the year determined under section 20 of the Canada Pension Plan multiplied by the employee’s contribution rate for the year under that Act or under a provincial pension plan as defined in section 3 of that Act, not exceeding the maximum amount of such contributions payable by the employee for the year under the plan,
      G 
      is the appropriate percentage for the year,
      H 
      is, where applicable, the tax as determined under subsection 120(1) of the Act,
      I 
      is, where the amount of total remuneration for the year is income earned in the Province of Quebec, an amount equal to the aggregate of
      • (i) the amount that would be deemed to have been paid under subsection 120(2) of the Act with respect to the employee if the notional tax for the year for the employee were determined without reference to the elements H, I and J in this formula and if that tax were that employee’s tax payable under Part I of the Act for that year, as if there were no other source of income or loss for the year, and

      • (ii) the amount by which the amount referred to in subparagraph (i) is increased by virtue of section 27 of the Federal-Provincial Fiscal Arrangements Act;

    • (f) the employee’s notional rate of tax for a year is calculated by dividing the amount determined under paragraph (e) by the amount referred to in the description of A in paragraph (c) in respect of that employee and expressed as a decimal fraction rounded to the nearest hundredth, or where the third digit is equidistant from two consecutive one-thousandths, to the higher thereof;

    • (g) the amount to be deducted or withheld in respect of any payment made to that employee shall be determined by multiplying the payment by the appropriate decimal fraction determined pursuant to paragraph (f).

    • (h) [Repealed, SOR/2001-221, s. 2]

  • (3) [Repealed, SOR/89-508, s. 2]

  • (4) [Repealed, SOR/81-471, s. 3]

  • (5) Notwithstanding subsections (1) and (2), no amount shall be deducted or withheld in the year by an employer from a payment of remuneration to an employee in respect of commissions earned by the employee in the immediately preceding year where those commissions were previously reported by the employer as remuneration of the employee in respect of that year on an information return.

  • (6) Despite subsection (1), no amount shall be deducted or withheld in the year by an employer from an amount determined in accordance with subparagraph 110(1)(f)(iii), (iv) or (v) of the Act.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/78-331, s. 2;
  • SOR/78-449, s. 1;
  • SOR/78-625, s. 1;
  • SOR/79-359, s. 1;
  • SOR/79-694, s. 1;
  • SOR/80-187, s. 1;
  • SOR/80-683, s. 2;
  • SOR/80-941, s. 2;
  • SOR/81-471, s. 3;
  • SOR/83-349, s. 2;
  • SOR/83-692, ss. 2 to 4;
  • SOR/84-913, s. 1;
  • SOR/84-966, s. 1;
  • SOR/85-453, ss. 1, 2;
  • SOR/86-629, s. 2;
  • SOR/87-471, s. 2;
  • SOR/88-310, s. 1;
  • SOR/89-508, s. 2;
  • SOR/90-161, s. 1;
  • SOR/91-150, s. 1;
  • SOR/91-279, s. 1;
  • SOR/91-536, s. 1;
  • SOR/92-138, s. 1;
  • SOR/92-667, s. 1;
  • SOR/94-238, s. 2;
  • SOR/94-569, s. 1;
  • SOR/98-259, s. 2;
  • SOR/99-17, s. 2;
  • SOR/2001-221, s. 2;
  • SOR/2005-185, s. 2;
  • 2014, c. 39, s. 78.

Non-Periodic Payments

  •  (1) Where a payment in respect of a bonus or retroactive increase in remuneration is made by an employer to an employee whose total remuneration from the employer (including the bonus or retroactive increase) may reasonably be expected not to exceed $5,000 in the taxation year of the employee in which the payment is made, the employer shall deduct or withhold, in the case of an employee who reports for work at an establishment of the employer

    • (a) in any province, 10 per cent, or

    • (b) in Canada beyond the limits of any province or outside Canada, 15 per cent,

    • (c) to (n) [Repealed, SOR/2001-221, s. 3]

    of such payment in lieu of the amount determined under section 102.

  • (2) Where a payment in respect of a bonus is made by an employer to an employee whose total remuneration from the employer (including the bonus) may reasonably be expected to exceed $5,000 in the taxation year of the employee in which the payment is made, the amount to be deducted or withheld therefrom by the employer is

    • (a) the amount determined under section 102 in respect of an assumed remuneration equal to the aggregate of

      • (i) the amount of regular remuneration paid by the employer to the employee in the pay period in which the remuneration is paid, and

      • (ii) an amount equal to the bonus payment divided by the number of pay periods in the taxation year of the employee in which the payment is made

    minus

    • (b) the amount determined under section 102 in respect of the amount of regular remuneration paid by the employer to the employee in the pay period

    multiplied by

    • (c) the number of pay periods in the taxation year of the employee in which the payment is made.

  • (3) Where a payment in respect of a retroactive increase in remuneration is made by an employer to an employee whose total remuneration from the employer (including the retroactive increase) may reasonably be expected to exceed $5,000 in the taxation year of the employee in which the payment is made, the amount to be deducted or withheld therefrom by the employer is

    • (a) the amount determined under section 102 in respect of the new rate of remuneration

    minus

    • (b) the amount determined under section 102 in respect of the previous rate of remuneration

    multiplied by

    • (c) the number of pay periods in respect of which the increase in remuneration is retroactive.

  • (4) Subject to subsection (5), where a lump sum payment is made by an employer to an employee who is a resident of Canada,

    • (a) if the payment does not exceed $5,000, the employer shall deduct or withhold therefrom, in the case of an employee who reports for work at an establishment of the employer

      • (i) in Quebec, 5 per cent,

      • (ii) in any other province, 7 per cent, or

      • (iii) in Canada beyond the limits of any province or outside Canada, 10 per cent,

      • (iv) to (xiv) [Repealed, SOR/2001-221, s. 3]

      of such payment in lieu of the amount determined under section 102;

    • (b) if the payment exceeds $5,000 but does not exceed $15,000, the employer shall deduct or withhold therefrom, in the case of an employee who reports for work at an establishment of the employer

      • (i) in Quebec, 10 per cent,

      • (ii) in any other province, 13 per cent, or

      • (iii) in Canada beyond the limits of any province or outside Canada, 20 per cent,

      • (iv) to (xiv) [Repealed, SOR/2001-221, s. 3]

      of such payment in lieu of the amount determined under section 102; and

    • (c) if the payment exceeds $15,000, the employer shall deduct or withhold therefrom, in the case of an employee who reports for work at an establishment of the employer

      • (i) in Quebec, 15 per cent,

      • (ii) in any other province, 20 per cent, or

      • (iii) in Canada beyond the limits of any province or outside Canada, 30 per cent,

      • (iv) to (xiv) [Repealed, SOR/2001-221, s. 3]

      of such payment in lieu of the amount determined under section 102.

  • (5) Where the payment referred to in subsection (4) would be pension income or qualified pension income of the employee in respect of which subsection 118(3) of the Act would apply if the definition pension income in subsection 118(7) of the Act were read without reference to subparagraphs (a)(ii) and (iii) thereof, the payment shall be deemed to be the amount of the payment minus

    • (a) where the payment does not exceed the amount taxable referred to in paragraph 117(2)(a) of the Act, as adjusted annually pursuant to section 117.1 of the Act, the lesser of $1,000 and the amount of the payment;

    • (b) where the payment exceeds the amount referred to in paragraph (a) but does not exceed $61,509, $727;

    • (c) where the payment exceeds $61,509 but does not exceed $100,000, $615; and

    • (d) where the payment exceeds $100,000, $552.

  • (6) For the purposes of subsection (4), a lump sum payment means a payment that is

    • (a) a payment described in subparagraph 40(1)(a)(i) or (iii) or paragraph 40(1)(c) of the Income Tax Application Rules,

    • (b) a payment under a deferred profit sharing plan or a plan referred to in section 147 of the Act as a revoked plan, except a payment referred to in subparagraph 147(2)(k)(v) of the Act,

    • (c) a payment made during the lifetime of an annuitant referred to in the definition annuitant in subsection 146(1) of the Act out of or under a registered retirement savings plan of that annuitant, other than

      • (i) a periodic annuity payment, or

      • (ii) a payment made by a person who has reasonable grounds to believe that the payment may be deducted under subsection 146(8.2) of the Act in computing the income of any taxpayer,

    • (d) a payment out of or under a plan referred to in subsection 146(12) of the Act as an amended plan other than

      • (i) a periodic annuity payment, or

      • (ii) where paragraph 146(12)(a) of the Act applied to the plan after May 25, 1976, a payment made in a year subsequent to the year in which that paragraph applied to the plan,

    • (d.1) a payment made during the lifetime of an annuitant referred to in the definition annuitant in subsection 146.3(1) of the Act under a registered retirement income fund of that annuitant, other than a payment to the extent that it is in respect of the minimum amount (within the meaning assigned by subsection 146.3(1) of the Act) under the fund for a year,

    • (e) a retiring allowance,

    • (f) a payment of an amount as, on account or in lieu of payment of, or in satisfaction of, proceeds of the surrender, cancellation or redemption of an income-averaging annuity contract, or

    • (g) a payment described in paragraph (n) of the definition remuneration in subsection 100(1).

  • (7) For the purposes of subsection 153(1) of the Act, the amount to be deducted or withheld by a person shall be 50 per cent

    • (a) of the contribution made by the person under a retirement compensation arrangement, other than

      • (i) a contribution made by the person as an employee,

      • (ii) a contribution made to a plan or arrangement that is a prescribed plan or arrangement for the purposes of subsection 207.6(6) of the Act, or

      • (iii) a contribution made by way of a transfer from another retirement compensation arrangement under circumstances in which subsection 207.6(7) of the Act applies; or

    • (b) of the payment by the person to a resident of Canada of an amount on account of the purchase price of an interest in a retirement compensation arrangement.

  • (8) Every employer making a payment described in paragraph (n) of the definition remuneration in subsection 100(1) shall withhold — in addition to any other amount required to be withheld under Part I of these Regulations — on account of the tax payable under Part X.5 of the Act, an amount equal to

    • (a) where the amount is paid in the province of Quebec, 12 per cent of the payment, and

    • (b) in any other case, 20 per cent of the payment.

  • (9) The amount to be deducted or withheld by a person from any payment of an amount described in paragraph 56(1)(z.4) of the Act is

    • (a) in the case of a payment to a resident of Quebec, 30% of the payment; or

    • (b) in the case of a payment to a resident of Canada who is not a resident of Quebec, 50% of the payment.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/78-2, s. 2;
  • SOR/78-331, s. 3;
  • SOR/78-449, s. 2;
  • SOR/78-625, s. 2;
  • SOR/79-359, s. 2;
  • SOR/79-694, s. 2;
  • SOR/80-382, s. 2;
  • SOR/80-502, s. 2;
  • SOR/80-683, s. 3;
  • SOR/80-901, s. 2;
  • SOR/80-941, s. 3;
  • SOR/81-471, s. 4;
  • SOR/83-349, s. 3;
  • SOR/83-360, s. 1;
  • SOR/83-692, s. 5;
  • SOR/84-223, s. 1;
  • SOR/84-913, s. 2;
  • SOR/85-979, s. 1;
  • SOR/86-629, s. 3;
  • SOR/87-256, s. 1;
  • SOR/87-471, s. 3;
  • SOR/87-638, s. 2;
  • SOR/88-153, s. 1;
  • SOR/88-310, s. 2;
  • SOR/89-147, s. 2;
  • SOR/89-508, s. 3;
  • SOR/90-161, s. 2;
  • SOR/91-150, s. 2;
  • SOR/91-279, s. 2;
  • SOR/91-536, s. 2;
  • SOR/92-51, s. 2;
  • SOR/92-138, s. 2;
  • SOR/92-667, s. 2;
  • SOR/93-399, s. 1;
  • SOR/94-238, s. 3;
  • SOR/94-569, s. 2;
  • SOR/94-686, s. 48;
  • SOR/96-205, s. 1;
  • SOR/96-464, s. 1;
  • SOR/97-137, s. 1;
  • SOR/97-531, s. 1;
  • SOR/99-17, s. 3;
  • SOR/99-18, s. 1;
  • SOR/99-22, s. 2;
  • SOR/2000-10, s. 1;
  • SOR/2000-12, s. 1;
  • SOR/2000-329, s. 1;
  • SOR/2001-216, s. 10(F);
  • SOR/2001-221, s. 3;
  • 2014, c. 20, s. 32.
  •  (1) For the purpose of the description of C in subsection (2), plan payment means

    • (a) in the case of a disability assistance payment that is a lifetime disability assistance payment, the total amount of all the lifetime disability assistance payments that have been made or that may reasonably be expected to be made to the employee under the plan in their taxation year and that the employer has reasonable grounds to believe are described in paragraph (o) of the definition remuneration in subsection 100(1); or

    • (b) in the case of a disability assistance payment that is other than a lifetime disability assistance payment, the amount of the payment that is made to the employee under the plan and that is described in paragraph (o) of the definition remuneration in subsection 100(1).

  • (2) If an employer makes a disability assistance payment under a registered disability savings plan to an employee who is a resident of Canada, the employer shall, in lieu of the amount determined under section 102, deduct or withhold from the payment an amount determined by the formula

    (A – B) × C

    where

    A 
    is the amount of the disability assistance payment that is made to the employee and that is described in paragraph (o) of the definition remuneration in subsection 100(1);
    B 
    is
    • (a) if the beneficiary of the plan is deceased, nil, or

    • (b) the amount by which the total of the following amounts exceeds the total amount of all the disability assistance payments previously made to the employee in their taxation year and that are described in paragraph (o) of the definition remuneration in subsection 100(1):

      • (i) the amount used under paragraph (c) of the description of B in subsection 118(1) of the Act for the taxation year, and

      • (ii) the amount used under the description of B in subsection 118.3(1) of the Act for the taxation year; and

    C 
    is
    • (a) if the plan payment does not exceed $5,000 and the amount is paid

      • (i) in Quebec, 5 per cent,

      • (ii) in any other province, 7 per cent, or

      • (iii) in Canada beyond the limits of any province or outside Canada, 10 per cent,

    • (b) if the plan payment exceeds $5,000 but does not exceed $15,000 and the amount is paid

      • (i) in Quebec, 10 per cent,

      • (ii) in any other province, 13 per cent, or

      • (iii) in Canada beyond the limits of any province or outside Canada, 20 per cent, or

    • (c) if the plan payment exceeds $15,000 and the amount is paid

      • (i) in Quebec, 15 per cent,

      • (ii) in any other province, 20 per cent, or

      • (iii) in Canada beyond the limits of any province or outside Canada, 30 per cent.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/2016-30, s. 2.

Deductions Not Required

  •  (1) [Repealed, SOR/2001-221, s. 4]

  • (2) No amount shall be deducted or withheld from a payment in accordance with any of sections 102 to 103.1 in respect of an employee who was neither employed nor resident in Canada at the time of payment except in respect of

    • (a) remuneration described in subparagraph 115(2)(e)(i) of the Act that is paid to a non-resident person who has in the year, or had in any previous year, ceased to be resident in Canada; or

    • (b) remuneration reasonably attributable to the duties of any office or employment performed or to be performed in Canada by the non-resident person.

  • (3) No amount shall be deducted or withheld from a payment made by a person during the lifetime of an annuitant referred to in paragraph (a) of the definition annuitant in subsection 146(1) of the Act out of or under a registered retirement savings plan of the annuitant where, at the time of the payment, the annuitant has certified in prescribed form to the person that

    • (a) a written agreement has been entered into to acquire a home by either

      • (i) the annuitant, or

      • (ii) a disabled person who is related to the annuitant and who is entitled to the credit for mental or physical impairment under subsection 118.3(1) of the Act;

    • (b) the annuitant intends that the home be used as a principal place of residence in Canada for the annuitant or the disabled person, as the case may be, within one year after its acquisition;

    • (c) the home has not been previously owned by the annuitant, the annuitant’s spouse or common-law partner, the disabled person or the spouse or common-law partner of that person;

    • (d) the annuitant was resident in Canada;

    • (e) the total amount of the payment and all other such payments received by the annuitant in respect of the home at or before the time of the payment does not exceed the dollar amount specified in paragraph (h) of the definition regular eligible amount in subsection 146.01(1) of the Act;

    • (f) except where the annuitant certifies that he or she is a disabled person entitled to the credit for mental or physical impairment under subsection 118.3(1) of the Act or certifies that the payment is being withdrawn for the benefit of such a disabled person, the annuitant is a qualifying homebuyer at the time of the certification; and

    • (g) where the annuitant has withdrawn an eligible amount, within the meaning assigned by subsection 146.01(1) of the Act, before the calendar year of the certification, the total of all eligible amounts received by the annuitant before that calendar year does not exceed the total of all amounts previously designated under subsection 146.01(3) of the Act or included in computing the annuitant’s income under subsection 146.01(4) or (5) of the Act.

  • (3.01) For the purpose of subsection (3), the annuitant is a qualifying homebuyer at a particular time unless

    • (a) the annuitant had an owner-occupied home in the period beginning on January 1 of the fourth calendar year preceding the particular time, and ending on the thirty-first day before the particular time; or

    • (b) the annuitant’s spouse or common-law partner, in the period referred to in paragraph (a), had an owner-occupied home that was inhabited by the annuitant at any time during the annuitant’s marriage to the spouse or the annuitant’s common-law partnership with the common-law partner.

  • (3.1) For the purpose of subsection (3.01), an individual shall be considered to have had an owner-occupied home at any time where the home was owned, whether jointly with another person or otherwise, by the individual at that time and inhabited by the individual as the individual’s principal place of residence at that time.

  • (4) For the purposes of subsections (3), (3.01) and (3.1), home means

    • (a) a housing unit;

    • (b) a share of the capital stock of a cooperative housing corporation, where the holder of the share is entitled to possession of a housing unit; and

    • (c) where the context so requires, the housing unit to which a share described in paragraph (b) relates.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/78-449, s. 3;
  • SOR/78-754, s. 1;
  • SOR/89-508, s. 4;
  • SOR/92-176, s. 1;
  • SOR/92-667, s. 3;
  • SOR/93-81, s. 1;
  • SOR/94-238, s. 4;
  • SOR/94-246, s. 1;
  • SOR/94-686, ss. 49(F), 79(F);
  • SOR/97-470, s. 2;
  • SOR/99-19, s. 1;
  • SOR/2001-188, ss. 1, 14;
  • SOR/2001-221, s. 4;
  • 2013, c. 34, s. 376;
  • SOR/2016-30, s. 3.

Lifelong Learning Plan

  •  (1) No amount shall be deducted or withheld from a payment made by a person during the lifetime of an annuitant referred to in paragraph (a) of the definition annuitant in subsection 146(1) of the Act out of or under a registered retirement savings plan of the annuitant where, at the time of the payment, the annuitant has certified in prescribed form to the person that

    • (a) at the time of certification, the annuitant or the annuitant’s spouse or common-law partner

      • (i) is a full-time student in a qualifying educational program,

      • (ii) is a part-time student in a qualifying educational program and is entitled to the credit for mental or physical impairment under subsection 118.3(1) of the Act, or

      • (iii) has received notification in writing of his or her entitlement, either absolutely or conditionally, to enrol before March of the year that follows the year of certification as

        • (A) a full-time student in a qualifying educational program, or

        • (B) a part-time student in a qualifying educational program where the annuitant or the annuitant’s spouse or common-law partner is entitled to the credit for mental or physical impairment under subsection 118.3(1) of the Act;

    • (b) the annuitant is resident in Canada;

    • (c) the total amount of the payment and all other such payments received by the annuitant for a year at or before that time does not exceed $10,000; and

    • (d) the total payments received by the annuitant do not exceed $20,000 throughout the period in which the annuitant participates in the Lifelong Learning Plan.

  • (2) For the purpose of subsection (1), a qualifying educational program means a qualifying educational program at a designated educational institution (as those expressions are defined in subsection 118.6(1) of the Act), except that a reference to a qualifying educational program shall be read

    • (a) without reference to paragraphs (a) and (b) of that definition; and

    • (b) as if the reference to “3 consecutive weeks” in that definition were a reference to “3 consecutive months”.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/99-19, s. 2;
  • SOR/2001-188, s. 14.

Non-Residents

  •  (1) Every person paying to a non-resident person a fee, commission or other amount in respect of services rendered in Canada, of any nature whatever, shall deduct or withhold 15 per cent of such payment.

  • (2) Subsection (1) does not apply to a payment

    • (a) described in the definition remuneration in subsection 100(1);

    • (b) made to a registered non-resident insurer (within the meaning assigned by section 804); or

    • (c) made to an authorized foreign bank in respect of its Canadian banking business.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/94-686, s. 49(F);
  • SOR/2009-302, s. 1.

Fishermen’s Election

  •  (1) Notwithstanding section 100, in this section,

    amount of remuneration

    amount of remuneration paid to a fisherman means

    • (a) where a boat crewed by one or more fishermen engaged in making a catch is owned, together with the gear, by a person, other than a member of the crew, to whom the catch is to be delivered for subsequent sale or other disposition, such portion of the proceeds from the disposition of the catch that is payable to the fisherman in accordance with an arrangement under which the proceeds of disposition of the catch are to be distributed (in this section referred to as a “share arrangement”),

    • (b) where the boat or gear used in making a catch is owned or leased by a fisherman who alone or with another individual engaged under a contract of service makes the catch, such portion of the proceeds from the disposition of the catch that remains after deducting therefrom

      • (i) the amount in respect of any portion of the catch not caught by the fisherman or the other individual,

      • (ii) the amount payable to the other individual under the contract of service, and

      • (iii) the amount of such proportionate share of the catch as is attributable to the expenses of the operation of the boat or its gear pursuant to their share arrangement,

    • (c) where a crew includes the owner of the boat or gear (in this paragraph referred to as the owner) and any other fisherman engaged in making a catch, such portion of the proceeds from the disposition of the catch that remains after deducting therefrom

      • (i) in the case of an owner,

        • (A) the amount in respect of that portion of the catch not caught by the crew or an owner,

        • (B) the aggregate of all amounts each of which is an amount payable to a crew member (other than the owner) pursuant to their share arrangement or to an individual engaged under a contract of service, and

        • (C) the amount of such proportionate share of the catch as is attributable to the expenses of the owner’s operation of the boat or its gear pursuant to their share arrangement, or

      • (ii) in the case of any other crew member, such proceeds from the disposition of the catch as is payable to him in accordance with their share arrangement, or

    • (d) in any other case, the proceeds of disposition of the catch payable to the fisherman; (montant de rémunération)

    catch

    catch means a catch of shell fish, crustaceans, aquatic animals or marine plants caught or taken from any body of water; (pêche)

    crew

    crew means one or more fishermen engaged in making a catch; (équipe)

    fisherman

    fisherman means an individual engaged in making a catch other than under a contract of service. (pêcheur)

  • (2) Every person paying at any time in a taxation year an amount of remuneration to a fisherman who, pursuant to paragraph 153(1)(n) of the Act, has elected for the year in prescribed form in respect of all such amounts shall deduct or withhold 20% of each such amount paid to the fisherman while the election is in force.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/83-692, s. 6;
  • SOR/88-165, s. 31(F).

Variations in Deductions

  •  (1) Where an employer makes a payment of remuneration to an employee in his taxation year

    • (a) for a period for which no provision is made in Schedule I, or

    • (b) for a pay period referred to in Schedule I in an amount that is greater than any amount provided for therein,

    • (c) and (d) [Repealed, SOR/2001-221, s. 5]

    the amount to be deducted or withheld by the employer from any such payment is that proportion of the payment that the tax that may reasonably be expected to be payable under the Act by the employee with respect to the aggregate of all remuneration that may reasonably be expected to be paid by the employer to the employee in respect of that taxation year is of such aggregate.

  • (2) and (3) [Repealed, SOR/84-913, s. 3]

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/80-941, s. 4;
  • SOR/81-471, s. 5;
  • SOR/83-349, s. 4;
  • SOR/83-692, s. 7;
  • SOR/84-913, s. 3;
  • SOR/85-453, s. 3;
  • SOR/89-508, s. 5;
  • SOR/2001-221, s. 5.

Employee’s Returns

  •  (1) The return required to be filed by an employee under subsection 227(2) of the Act shall be filed by the employee with the employer when the employee commences employment with that employer and a new return shall be filed thereunder within 7 days after the date on which a change occurs that may reasonably be expected to result in a change in the employee’s personal credits for the year.

  • (2) Notwithstanding subsection (1), where, in a year, an employee receives payments in respect of commissions or in respect of commissions and salary or wages, and the employee elects to file a prescribed form for the year in addition to the return referred to in that subsection, that form shall be filed with the employee’s continuing employer on or before January 31 of that year and, where applicable, within one month after the employee commences employment with a new employer or within one month after the date on which a change occurs that may reasonably be expected to result in a substantial change in the employee’s estimated total remuneration for the year or estimated deductions for the year.

  • (3) Where, in a taxation year, an employee has elected to file the prescribed form referred to in subsection (2) and has filed such form with his employer, the employee may at any time thereafter in the year revoke that election and such revocation is effective from the date that he notifies his employer in writing of his intention.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/80-941, s. 5;
  • SOR/81-471, s. 6;
  • SOR/89-508, s. 6;
  • SOR/2001-221, s. 6.

Remittances to Receiver General

  •  (1) Subject to subsections (1.1) to (1.13), amounts deducted or withheld in a month under subsection 153(1) of the Act shall be remitted to the Receiver General on or before the 15th day of the following month.

  • (1.1) Subject to subsection (1.11), where the average monthly withholding amount of an employer for the second calendar year preceding a particular calendar year is

    • (a) equal to or greater than $25,000 and less than $100,000, all amounts deducted or withheld from payments described in the definition remuneration in subsection 100(1) that are made in a month in the particular calendar year by the employer shall be remitted to the Receiver General

      • (i) in respect of payments made before the 16th day of the month, on or before the 25th day of the month, and

      • (ii) in respect of payments made after the 15th day of the month, on or before the 10th day of the following month; or

    • (b) equal to or greater than $100,000, all amounts deducted or withheld from payments described in the definition remuneration in subsection 100(1) that are made in a month in the particular calendar year by the employer shall be remitted to the Receiver General on or before the third day, not including a Saturday or holiday, after the end of the following periods in which the payments were made,

      • (i) the period beginning on the first day and ending on the 7th day of the month,

      • (ii) the period beginning on the 8th day and ending on the 14th day of the month,

      • (iii) the period beginning on the 15th day and ending on the 21st day of the month, and

      • (iv) the period beginning on the 22nd day and ending on the last day of the month.

  • (1.11) Where an employer referred to in paragraph (1.1)(a) or (b) would otherwise be required to remit in accordance with that paragraph the amounts withheld or deducted under subsection 153(1) of the Act in respect of a particular calendar year, the employer may elect to remit those amounts

    • (a) in accordance with subsection (1), if the average monthly withholding amount of the employer for the calendar year preceding the particular calendar year is less than $25,000 and the employer has advised the Minister that the employer has so elected; or

    • (b) if the average monthly withholding amount of the employer for the calendar year preceding the particular calendar year is equal to or greater than $25,000 and less than $100,000 and the employer has advised the Minister that the employer has so elected,

      • (i) in respect of payments made before the 16th day of a month in the particular calendar year, on or before the 25th day of the month, and

      • (ii) in respect of payments made after the 15th day of a month in particular calendar year, on or before the 10th day of the following month.

  • (1.12) If at any time

    • (a) the average monthly withholding amount in respect of an employer for either the first or the second calendar year before the particular calendar year that includes that time is less than $3,000,

    • (b) throughout the 12-month period before that time, the employer has remitted, on or before the day on or before which the amounts were required to be remitted, all amounts each of which was required to be remitted under subsection 153(1) of the Act, under subsection 21(1) of the Canada Pension Plan, under subsection 82(1) of the Employment Insurance Act or under Part IX of the Excise Tax Act, and

    • (c) throughout the 12-month period before that time, the employer has filed all returns each of which was required to be filed under this Act or Part IX of the Excise Tax Act on or before the day on or before which those returns were required to be filed under those Acts,

    all amounts deducted or withheld from payments described in the definition remuneration in subsection 100(1) that are made by the employer in a month that ends after that time and that is in the particular calendar year may be remitted to the Receiver General

    • (d) in respect of such payments made in January, February and March of the particular calendar year, on or before the 15th day of April of the particular year,

    • (e) in respect of such payments made in April, May and June of the particular calendar year, on or before the 15th day of July of the particular year,

    • (f) in respect of such payments made in July, August and September of the particular calendar year, on or before the 15th day of October of the particular year, and

    • (g) in respect of such payments made in October, November and December of the particular calendar year, on or before the 15th day of January of the year following the particular year.

  • (1.13) If an employer is a new employer throughout a particular month in a particular calendar year, all amounts deducted or withheld from payments described in the definition remuneration in subsection 100(1) that are made by the employer in the month may be remitted to the Receiver General

    • (a) in respect of such payments made in January, February and March of the particular calendar year, on or before the 15th day of April of the particular calendar year;

    • (b) in respect of such payments made in April, May and June of the particular calendar year, on or before the 15th day of July of the particular calendar year;

    • (c) in respect of such payments made in July, August and September of the particular calendar year, on or before the 15th day of October of the particular calendar year; and

    • (d) in respect of such payments made in October, November and December of the particular calendar year, on or before the 15th day of January of the year following the particular calendar year.

  • (1.2) For the purposes of this section, average monthly withholding amount, in respect of an employer for a particular calendar year, is the quotient obtained when

    • (a) the aggregate of all amounts each of which is an amount required to be remitted with respect to the particular year under

      • (i) subsection 153(1) of the Act and a similar provision of a law of a province which imposes a tax upon the income of individuals, where the province has entered into an agreement with the Minister of Finance for the collection of taxes payable to the province, in respect of payments described in the definition remuneration in subsection 100(1),

      • (ii) subsection 21(1) of the Canada Pension Plan, or

      • (iii) subsection 82(1) of the Employment Insurance Act,

      by the employer or, where the employer is a corporation, by each corporation associated with the corporation in a taxation year of the employer ending in the second calendar year following the particular year

    is divided by

    • (b) the number of months in the particular year, not exceeding twelve, for which such amounts were required to be remitted by the employer and, where the employer is a corporation, by each corporation associated with it in a taxation year of the employer ending in the second calendar year following the particular year.

  • (1.21) For the purposes of subsection (1.4), the monthly withholding amount, in respect of an employer for a month, is the total of all amounts each of which is an amount required to be remitted with respect to the month by the employer or, if the employer is a corporation, by each corporation associated with the corporation, under

    • (a) subsection 153(1) of the Act and a similar provision of a law of a province which imposes a tax upon the income of individuals, if the province has entered into an agreement with the Minister of Finance for the collection of taxes payable to the province, in respect of payments described in the definition remuneration in subsection 100(1);

    • (b) subsection 21(1) of the Canada Pension Plan; or

    • (c) subsection 82(1) of the Employment Insurance Act.

  • (1.3) For the purposes of subsection (1.2), where a particular employer that is a corporation has acquired in a taxation year of the corporation ending in a particular calendar year all or substantially all of the property of another employer used by the other employer in a business

    • (a) in a transaction in respect of which an election was made under subsection 85(1) or (2) of the Act,

    • (b) by virtue of an amalgamation within the meaning assigned to that term by section 87 of the Act, or

    • (c) as the result of a winding-up in respect of which subsection 88(1) of the Act is applicable,

    the other employer shall be deemed to be a corporation associated with the particular employer in the taxation year and each taxation year ending at any time in the next two following calendar years.

  • (1.4) For the purposes of subsection (1.13) an employer

    • (a) becomes a new employer at the beginning of any month after 2015 in which the employer first becomes an employer; and

    • (b) ceases to be a new employer at a specified time in a particular year, if in a particular month the employer does not meet any of the following conditions:

      • (i) the monthly withholding amount in respect of the employer for the particular month is less than $1,000,

      • (ii) throughout the 12-month period before that time, the employer has remitted, on or before the day on or before which the amounts were required to be remitted, all amounts each of which was required to be remitted under subsection 153(1) of the Act, subsection 21(1) of the Canada Pension Plan, subsection 82(1) of the Employment Insurance Act or Part IX of the Excise Tax Act, and

      • (iii) throughout the 12-month period before that time, the employer has filed all returns each of which was required to be filed under the Act or Part IX of the Excise Tax Act on or before the day on or before which those returns were required to be filed under those Acts.

  • (1.41) For the purposes of subsection (1.4), the specified time is the end of

    • (a) March of the particular year, if the particular month is January, February or March of that year;

    • (b) June of the particular year, if the particular month is April, May or June of that year;

    • (c) September of the particular year, if the particular month is July, August or September of that year; and

    • (d) December of the particular year, if the particular month is October, November or December of that year.

  • (2) Where an employer has ceased to carry on business, any amount deducted or withheld under subsection 153(1) of the Act that has not been remitted to the Receiver General shall be paid within 7 days of the day when the employer ceased to carry on business.

  • (3) Remittances made to the Receiver General under subsection 153(1) of the Act shall be accompanied by a return in prescribed form.

  • (4) Amounts deducted or withheld under subsection 153(4) of the Act shall be remitted to the Receiver General within 60 days after the end of the taxation year subsequent to the 12-month period referred to in that subsection.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/87-718, s. 1;
  • SOR/88-165, s. 31(F);
  • SOR/89-579, s. 1;
  • SOR/91-536, s. 3;
  • SOR/93-93, s. 1;
  • SOR/94-686, s. 79(F);
  • SOR/97-472, s. 3;
  • SOR/99-17, s. 4;
  • 2007, c. 35, s. 71;
  • 2014, c. 20, s. 33;
  • 2015, c. 36, s. 20.

Elections to Increase Deductions

  •  (1) Any election under subsection 153(1.2) of the Act shall be made by filing with the person making the payment or class of payments referred to therein (in this section referred to as the payer) the form prescribed by the Minister for that purpose.

  • (2) A taxpayer who has made an election in the manner prescribed by subsection (1) may require that the amount deducted or withheld pursuant to that election be varied by filing with the payer the form prescribed by the Minister for that purpose.

  • (3) An election made in the manner prescribed by subsection (1) or a variation made pursuant to subsection (2) need not be taken into account by the payer in respect of the first payment to be made to the taxpayer after the election or variation, as the case may be, unless the election or variation, as the case may be, is made within such time, in advance of the payment, as may reasonably be required by the payer.

Prescribed Persons

  •  (1) The following are prescribed persons for the purposes of subsection 153(1) of the Act:

    • (a) an employer who is required, under subsection 153(1) of the Act and in accordance with paragraph 108(1.1)(b), to remit amounts deducted or withheld; and

    • (b) a person or partnership who, acting on behalf of one or more employers, remits the following amounts in a particular calendar year and whose average monthly remittance, in respect of those amounts, for the second calendar year preceding the particular calendar year, is equal to or greater than $50,000,

      • (i) amounts required to be remitted under subsection 153(1) of the Act and a similar provision of a law of a province that imposes a tax on the income of individuals, where the province has entered into an agreement with the Minister of Finance for the collection of taxes payable to the province, in respect of payments described in the definition remuneration in subsection 100(1),

      • (ii) amounts required to be remitted under subsection 21(1) of the Canada Pension Plan, and

      • (iii) amounts required to be remitted under subsection 82(1) of the Employment Insurance Act or subsection 53(1) of the Unemployment Insurance Act.

  • (2) For the purposes of paragraph (1)(b), the average monthly remittance made by a person or partnership on behalf of all the employers for whom that person or partnership is acting, for the second calendar year preceding the particular calendar year, is the quotient obtained when the aggregate, for that preceding year, of all amounts referred to in subparagraphs (1)(b)(i) to (iii) remitted by the person or partnership on behalf of those employers is divided by the number of months, in that preceding year, for which the person or partnership remitted those amounts.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/93-535, s. 1;
  • SOR/99-17, s. 5.

PART IIInformation Returns

Remuneration and Benefits

  •  (1) Every person who makes a payment described in subsection 153(1) of the Act (other than an annuity payment in respect of an interest in an annuity contract to which subsection 201(5) applies) shall make an information return in prescribed form in respect of the payment unless an information return in respect of the payment has been made under sections 202, 214, 237 or 238.

  • (2) Every person who makes a payment as or on account of, or who confers a benefit or allocates an amount that is,

    • (a) a scholarship, fellowship or bursary, or a prize for achievement in a field of endeavour ordinarily carried on by the recipient thereof (other than a prize prescribed by section 7700),

    • (b) a grant to enable the recipient thereof to carry on research or any similar work,

    • (b.1) an amount that is required by paragraph 56(1)(n.1) of the Act to be included in computing a taxpayer’s income,

    • (c) an amount that is required by paragraph 56(1)(r) of the Act to be included in computing a taxpayer’s income,

    • (d) a benefit under regulations made under an appropriation Act providing for a scheme of transitional assistance benefits to persons employed in the production of products to which the Canada-United States Agreement on Automotive Products, signed on January 16, 1965, applies,

    • (e) a benefit described in section 5502,

    • (f) an amount payable to a taxpayer on a periodic basis in respect of the loss of all or any part of his income from an office or employment, pursuant to

      • (i) a sickness or accident insurance plan,

      • (ii) a disability insurance plan, or

      • (iii) an income maintenance insurance plan,

      to or under which his employer has made a contribution,

    • (g) an amount or benefit the value of which is required by paragraph 6(1)(a), (e) or (h) or subsection 6(9) of the Act to be included in computing a taxpayer’s income from an office or employment, other than a payment referred to in subsection (1),

    • (h) a benefit the amount of which is required by virtue of subsection 15(5) of the Act to be included in computing a shareholder’s income,

    • (i) a benefit deemed by subsection 15(9) of the Act to be a benefit conferred on a shareholder by a corporation, or

    • (j) a payment out of a registered education savings plan, other than a refund of payments,

    shall make an information return in prescribed form in respect of such payment or benefit except where subsection (3) or (4) applies with respect to the payment or benefit.

  • (3) Where a benefit is included in computing a taxpayer’s income from an office or employment pursuant to paragraph 6(1)(a) or (e) of the Act in respect of an automobile made available to the taxpayer or to a person related to the taxpayer by a person related to the taxpayer’s employer, the employer shall make an information return in prescribed form in respect of the benefit.

  • (4) Where a benefit is included in computing the income of a shareholder of a corporation by virtue of subsection 15(5) of the Act in respect of an automobile made available to the shareholder or to a person related to the shareholder by a person related to the corporation, the corporation shall make an information return in prescribed form in respect of the benefit.

  • (5) Where a particular qualifying person (within the meaning assigned by subsection 7(7) of the Act) has agreed to sell or issue a security (within the meaning assigned by that subsection) of the particular qualifying person (or of a qualifying person with which it does not deal at arm’s length) to a taxpayer who is an employee of the particular qualifying person (or of a qualifying person with which it does not deal at arm’s length) and the taxpayer has acquired the security under the agreement in circumstances to which subsection 7(8) of the Act applied, each of the particular qualifying person, the qualifying person of which the security is acquired and the qualifying person which is the taxpayer’s employer shall, for the particular taxation year in which the security is acquired, make an information return in the prescribed form in respect of the benefit from employment that the taxpayer would be deemed to have received in the particular taxation year in respect of the acquisition of the security if the Act were read without reference to subsection 7(8) and, for this purpose, an information return made by one of the qualifying persons in respect of the taxpayer’s acquisition of the security is deemed to have been made by each of the qualifying persons.

  • (6) Every person who makes a payment as or on account of an amount that is required by subsection 56(6) of the Act to be included in computing a taxpayer’s income shall make an information return in prescribed form in respect of that payment.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/78-909, s. 1;
  • SOR/79-939, s. 1;
  • SOR/81-936, s. 1;
  • SOR/83-866, s. 1;
  • SOR/83-867, s. 1;
  • SOR/88-165, s. 31(F);
  • SOR/89-473, s. 1;
  • SOR/94-686, s. 79(F);
  • SOR/95-298, s. 2;
  • SOR/99-17, s. 6;
  • SOR/99-22, s. 3;
  • SOR/2003-5, s. 1;
  • SOR/2003-328, s. 1;
  • SOR/2011-188, s. 1(F);
  • SOR/2015-170, s. 1.

Investment Income

  •  (1) Every person who makes a payment to a resident of Canada as or on account of

    • (a) a dividend or an amount deemed by the Act to be a dividend (other than a dividend deemed to have been paid to a person under any of subsections 84(1) to (4) of the Act where, pursuant to subsection 84(8) of the Act, those subsections do not apply to deem the dividend to have been received by the person),

    • (b) interest (other than the portion of the interest to which any of subsections (4) to (4.2) applies)

      • (i) on a fully registered bond or debenture,

      • (ii) in respect of

        • (A) money on loan to,

        • (B) money on deposit with, or

        • (C) property of any kind deposited or placed with,

        a corporation, association, organization or institution,

      • (iii) in respect of an account with an investment dealer or broker,

      • (iv) paid by an insurer in connection with an insurance policy or an annuity contract, or

      • (v) on an amount owing in respect of compensation for property expropriated,

    • (c) a royalty payment in respect of the use of a work or invention or a right to take natural resources,

    • (d) a payment referred to in subsection 16(1) of the Act that can reasonably be regarded as being in part a payment of interest or other payment of an income nature and in part a payment of a capital nature, where the payment is made by a corporation, association, organization or institution,

    • (e) an amount paid from a person’s NISA Fund No. 2, or

    • (f) an amount that is required by subsection 148.1(3) of the Act to be added in computing a person’s income for a taxation year

    shall make an information return in prescribed form in respect of the portion of such payment for which an information return has not previously been made under this section.

  • (2) Every person who receives as nominee or agent for a person resident in Canada a payment to which subsection (1) applies shall make an information return in prescribed form in respect of such payment.

  • (3) Where a person negotiates a bearer coupon, warrant or cheque representing interest or dividends referred to in subsection 234(1) of the Act for another person resident in Canada and the name of the beneficial owner of the interest or dividends is not disclosed on an ownership certificate completed pursuant to that subsection, the person negotiating the coupon, warrant or cheque, as the case may be, shall make an information return in prescribed form in respect of the payment received.

  • (4) A person or partnership that is indebted in a calendar year under a debt obligation in respect of which subsection 12(4) of the Act and paragraph (1)(b) apply with respect to a taxpayer shall make an information return in prescribed form in respect of the amount that would, if the year were a taxation year of the taxpayer, be included as interest in respect of the debt obligation in computing the taxpayer’s income for the year.

  • (4.1) A person or partnership that is indebted in a calendar year under an indexed debt obligation in respect of which paragraph (1)(b) applies shall, for each taxpayer who holds an interest in the debt obligation at any time in the year, make an information return in prescribed form in respect of the amount that would, if the year were a taxation year of the taxpayer, be included as interest in respect of the debt obligation in computing the taxpayer’s income for the year.

  • (4.2) Where, at any time in a calendar year, a person or partnership holds, as nominee or agent for a taxpayer resident in Canada, an interest in a debt obligation referred to in paragraph (1)(b) that is

    • (a) an obligation in respect of which subsection 12(4) of the Act applies with respect to the taxpayer, or

    • (b) an indexed debt obligation,

    that person or partnership shall make an information return in prescribed form in respect of the amount that would, if the year were a taxation year of the taxpayer, be included as interest in respect of the debt obligation in computing the taxpayer’s income for the year.

  • (5) Every insurer, within the meaning assigned by paragraph 148(10)(a) of the Act, who is a party to a life insurance policy in respect of which an amount is to be included in computing a taxpayer’s income under subsection 12.2(1) or (5) of the Act shall make an information return in prescribed form in respect of that amount.

  • (5.1) Subsection (5) applies to an insurer in respect of an LIA policy in respect of a calendar year only if

    • (a) the insurer is notified in writing  —  before the end of the calendar year and by, or on behalf, of the policyholder  —  that the policy is an LIA policy; or

    • (b) it is reasonable to conclude that the insurer knew, or ought to have known, before the end of the calendar year, that the policy is an LIA policy.

  • (6) Every person who makes a payment to, or acts as a nominee or agent for, an individual resident in Canada in respect of the disposition or redemption of a debt obligation in bearer form shall make an information return in prescribed form in respect of the transaction indicating the proceeds of disposition or the redemption amount and such other information as may be required by the prescribed form.

  • (7) For the purposes of subsection (6), debt obligation in bearer form means any debt obligation in bearer form other than

    • (a) a debt obligation that is redeemed for the amount for which the debt obligation was issued;

    • (b) a debt obligation described in paragraph 7000(1)(b); and

    • (c) a coupon, warrant or cheque referred to in subsection 207(1).

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/79-939, s. 2;
  • SOR/83-866, s. 2;
  • SOR/83-867, s. 2;
  • SOR/86-426, s. 1;
  • SOR/86-1092, s. 1(F);
  • SOR/88-165, s. 31(F);
  • SOR/88-554, s. 1;
  • SOR/91-123, s. 1;
  • SOR/93-527, s. 1;
  • SOR/94-686, ss. 1(F), 78(F), 79(F);
  • SOR/96-283, s. 1;
  • SOR/96-435, s. 1;
  • SOR/2010-93, s. 1;
  • 2013, c. 40, s. 96.

Payments to Non-Residents

  •  (1) In addition to any other return required by the Act or these Regulations, every person resident in Canada shall make an information return in prescribed form in respect of any amount that the person pays or credits, or is deemed under Part I, XIII or XIII.2 of the Act to pay or credit, to a non-resident person as, on account or in lieu of payment of, or in satisfaction of,

    • (a) a management or administration fee or charge;

    • (b) interest;

    • (c) income of or from an estate or trust;

    • (d) rent, royalty or a similar payment referred to in paragraph 212(1)(d) of the Act, including any payment described in any of subparagraphs 212(1)(d)(i) to (viii) of the Act;

    • (e) a timber royalty as described in paragraph 212(1)(e) of the Act;

    • (f) an assessable distribution, as defined in subsection 218.3(1) of the Act;

    • (g) a dividend, including a patronage dividend as described in paragraph 212(1) (g) of the Act; or

    • (h) a payment for a right in or to the use of

      • (i) a motion picture film, or

      • (ii) a film or video tape for use in connection with television.

    • (i) [Repealed, SOR/88-165, s. 1]

  • (1.1) Every person who pays or credits an amount, or provides a benefit to or on behalf of a person who is either a non-resident individual who is an actor or that is a corporation related to such an individual, for the provision in Canada of acting services of the actor in a film or video production, shall, in addition to any other return required by the Act or these Regulations, make an information return in prescribed form in respect of such payment, credit or benefit.

  • (2) Every person resident in Canada who pays or credits, or is deemed by Part I or Part XIII of the Act to pay or credit, to a non-resident person an amount as, on account or in lieu of payment of, or in satisfaction of,

    • (a) a payment of a superannuation or pension benefit,

    • (b) a payment of any allowance or benefit described in any of subparagraphs 56(1)(a)(ii) to (vi) of the Act,

    • (c) a payment by a trustee under a registered supplementary unemployment benefit plan,

    • (d) a payment out of or under a registered retirement savings plan or a plan referred to in subsection 146(12) of the Act as an amended plan,

    • (e) a payment under a deferred profit sharing plan or a plan referred to in subsection 147(15) of the Act as a revoked plan,

    • (f) a payment under an income-averaging annuity contract, any proceeds of the surrender, cancellation, redemption, sale or other disposition of an income-averaging annuity contract, or any amount deemed by subsection 61.1(1) of the Act to have been received by the non-resident person as proceeds of the disposition of an income-averaging annuity contract,

    • (g) an annuity payment not described in any other paragraph of this subsection or subsection (1),

    • (h) a payment to which paragraph 212(1)(p) of the Act applies,

    • (i) a payment out of or under a registered retirement income fund,

    • (j) a payment that is or that would be, if paragraph 212(1)(r) of the Act were read without reference to subparagraph 212(1)(r)(ii), a payment described in that paragraph in respect of a registered education savings plan,

    • (k) a grant under a program prescribed for the purposes of paragraph 212(1)(s) of the Act,

    • (l) a payment described in paragraph 212(1)(j) of the Act in respect of a retirement compensation arrangement,

    • (m) a payment described in paragraph 212(1)(v) or (x) of the Act, or

    • (n) a payment described in paragraph 212(1)(r.1) of the Act,

    shall, in addition to any other return required by the Act or these Regulations, make an information return in prescribed form in respect of such amount.

  • (2.1) Every person resident in Canada who pays an amount to a non-resident person from a NISA Fund No. 2 shall, in addition to any other return required by the Act or these Regulations, make an information return in prescribed form in respect of the amount.

  • (3) Every person who is paid or credited with an amount referred to in subsection (1), (2) or (2.1) for or on behalf of a non-resident person shall make an information return in prescribed form in respect of the amount.

  • (4) A non-resident person who is deemed, under subsection 212(13) of the Act, to be a person resident in Canada for the purposes of section 212 of the Act shall be deemed, in the same circumstances, to be a person resident in Canada for the purposes of subsections (1) and (2).

  • (5) A partnership that is deemed, under paragraph 212(13.1)(a) of the Act, to be a person resident in Canada for the purposes of Part XIII of the Act shall be deemed, in the same circumstances, to be a person resident in Canada for the purposes of subsections (1) and (2).

  • (6) A non-resident person who is deemed, under subsection 212(13.2) of the Act, to be a person resident in Canada for the purposes of Part XIII of the Act shall be deemed, in the same circumstances, to be a person resident in Canada for the purposes of subsections (1) and (2).

  • (6.1) A trust that is deemed by subsection 94(3) of the Act to be resident in Canada for a taxation year for the purposes of computing its income, is deemed, in respect of amounts (other than an exempt amount as defined in subsection 94(1) of the Act) paid or credited by it, to be a person resident in Canada for the taxation year for the purposes of subsections (1) and (2).

  • (7) Subject to subsection (8), an information return required under this section shall be filed on or before March 31 and shall be in respect of the preceding calendar year.

  • (8) Where an amount referred to in subsection (1) or (2) is income of or from an estate or trust, the information return required under this section in respect thereof shall be filed within 90 days from the end of the taxation year of the estate or trust in which the amount was paid or credited and shall be in respect of that taxation year.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/79-487, s. 1;
  • SOR/80-382, ss. 3, 4;
  • SOR/81-936, s. 2;
  • SOR/83-866, s. 3;
  • SOR/86-522, s. 1;
  • SOR/88-165, ss. 1, 31(F);
  • SOR/88-395, s. 1;
  • SOR/93-527, s. 2;
  • SOR/94-686, ss. 50(F), 78(F);
  • SOR/99-22, s. 4;
  • SOR/2000-13, s. 1;
  • SOR/2001-216, s. 10(F);
  • SOR/2003-5, s. 2;
  • SOR/2005-123, s. 1;
  • 2009, c. 2, s. 83;
  • SOR/2011-188, s. 2;
  • 2013, c. 34, s. 27;
  • 2014, c. 20, s. 34;
  • SOR/2016-30, s. 4.

 [Repealed, SOR/2003-5, s. 3]

Estates and Trusts

  •  (1) Every person having the control of, or receiving income, gains or profits in a fiduciary capacity, or in a capacity analogous to a fiduciary capacity, shall make a return in prescribed form in respect thereof.

  • (2) The return required under this section shall be filed within 90 days from the end of the taxation year and shall be in respect of the taxation year.

  • (3) Subsection (1) does not require a trust to make a return for a taxation year at the end of which it is

    • (a) governed by a deferred profit sharing plan or by a plan referred to in subsection 147(15) of the Act as a revoked plan;

    • (b) governed by an employees profit sharing plan;

    • (c) a registered charity;

    • (d) governed by an eligible funeral arrangement;

    • (d.1) a cemetery care trust;

    • (e) governed by a registered education savings plan;

    • (f) governed by a TFSA or by an arrangement that is deemed by paragraph 146.2(9)(a) of the Act to be a TFSA; or

    • (g) governed by a registered disability savings plan, except if paragraph 146.4(5)(a) or (b) of the Act applies.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/88-165, s. 31(F);
  • SOR/94-686, s. 51(F);
  • SOR/96-283, s. 2;
  • SOR/99-22, s. 5;
  • SOR/2000-13, s. 2;
  • SOR/2001-216, s. 10(F);
  • 2009, c. 2, s. 84;
  • SOR/2016-30, s. 5.

Interpretation

  •  (1) The following definitions apply in this section.

    public investment trust

    public investment trust, at any time, means a public trust all or substantially all of the fair market value of the property of which is, at that time, attributable to the fair market value of property of the trust that is

    • (a) units of public trusts;

    • (b) partnership interests in public partnerships (as defined in subsection 229.1(1));

    • (c) shares of the capital stock of public corporations; or

    • (d) any combination of properties referred to in paragraphs (a) to (c). (fiducie de placement ouverte)

    public trust

    public trust, at any time, means a mutual fund trust the units of which are, at that time, listed on a designated stock exchange in Canada. (fiducie ouverte)

Required Information Disclosure

  • (2) A trust that is, at any time in a taxation year of the trust, a public trust shall, within the time required by subsection (3),

    • (a) make public, in prescribed form, information in respect of the trust for the taxation year by posting that prescribed form, in a manner that is accessible to the general public, on the Internet website of CDS Innovations Inc.; and

    • (b) notify the Minister in writing as to when the posting of the prescribed form, as required by paragraph (a), has been made.

Required Disclosure Time

  • (3) The time required for a public trust to satisfy the requirements of subsection (2) in respect of the public trust for a taxation year of the public trust is

    • (a) subject to paragraph (b), on or before the day that is 60 days after the end of the taxation year; and

    • (b) where the public trust is, at any time in the taxation year, a public investment trust, on or before the day that is 67 days after the end of the calendar year in which the taxation year ends.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. 2007, c. 35, s. 72.

Date Returns to be Filed

  •  (1) All returns required under this Part shall be filed with the Minister without notice or demand and, unless otherwise specifically provided, on or before the last day of February in each year and shall be in respect of the preceding calendar year.

  • (2) Where a person who is required to make a return under this Part discontinues his business or activity, the return shall be filed within 30 days of the day of the discontinuance of the business or activity and shall be in respect of any calendar year or a portion thereof prior to the discontinuance of the business or activity for which a return has not previously been filed.

  • (3) For the purpose of subsection 162(7.01) of the Act, the following types of information returns are prescribed:

    Government Service Contract PaymentsT1204
    International Electronic Funds Transfer Report
    International Exchange of Information on Financial Accounts Information Return (Part XVIII of the Act)
    Past Service Pension Adjustment (PSPA) Exempt from CertificationT215
    Pension Adjustment Reversal (PAR)T10
    Pooled Registered Pension Plan (PRPP) Information Return
    Registered Retirement Savings Plan (RRSP) Contribution Information Return
    Statement of Amounts Paid or Credited to Non-residents of CanadaNR4
    Statement of BenefitsT5007
    Statement of Canada Pension Plan BenefitsT4A(P)
    Statement of Contract PaymentsT5018
    Statement of Distributions from a Retirement Compensation Arrangement (RCA)T4A-RCA
    Statement of Employee Profit Sharing Plan Allocations and PaymentsT4PS
    Statement of Employment Insurance and Other BenefitsT4E
    Statement of Farm-support PaymentsAGR-1
    Statement of Fees, Commissions, or Other Amounts Paid to Non-residents for Services Rendered in CanadaT4A-NR
    Statement of Income from a Registered Retirement Income FundT4RIF
    Statement of Investment IncomeT5
    Statement of Old Age SecurityT4A(OAS)
    Statement of Pension, Retirement, Annuity and Other IncomeT4A
    Statement of Registered Retirement Savings Plan (RRSP) IncomeT4RSP
    Statement of Remuneration PaidT4
    Statement of Securities TransactionsT5008
    Statement of Trust Income Allocations and DesignationsT3
    Tax-free Savings Account (TFSA) Annual Information Return
    Universal Child Care Benefit StatementRC62
  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/2013-199, s. 1;
  • SOR/2015-170, s. 2.

Electronic Filing

  •  (1) For the purpose of subsection 162(7.02) of the Act, the following types of information returns are prescribed and must be filed by Internet if more than 50 information returns of that type are required to be filed for a calendar year:

    Government Service Contract PaymentsT1204
    International Electronic Funds Transfer Report
    Part XVIII Information Return — International Exchange of Information on Financial Accounts
    Pooled Registered Pension Plan (PRPP) Information Return
    Registered Retirement Savings Plan (RRSP) Contribution Information Return
    Registered Retirement Savings Plans and Registered Retirement Income Funds Non-qualified Investments
    Statement of Amounts Paid or Credited to Non-residents of CanadaNR4
    Statement of BenefitsT5007
    Statement of Canada Pension Plan BenefitsT4A(P)
    Statement of Contract PaymentsT5018
    Statement of Employment Insurance and Other BenefitsT4E
    Statement of Farm-support PaymentsAGR-1
    Statement of Fees, Commissions, or Other Amounts Paid to Non-residents for Services Rendered in CanadaT4A-NR
    Statement of Income from a Registered Retirement Income Fund (RIF)T4RIF
    Statement of Investment IncomeT5
    Statement of Old Age SecurityT4A(OAS)
    Statement of Partnership IncomeT5013
    Statement of Pension, Retirement, Annuity and Other IncomeT4A
    Statement of Remuneration PaidT4
    Statement of Registered Retirement Savings Plan (RRSP) IncomeT4RSP
    Statement of Securities TransactionsT5008
    Statement of Trust Income Allocations and DesignationsT3
    Tax-free Savings Account (TFSA) Annual Information Return
    Universal Child Care Benefit StatementRC62
  • (2) For purposes of subsection 150.1(2.1) of the Act, a prescribed corporation is any corporation whose gross revenue exceeds $1 million except

    • (a) an insurance corporation as defined in subsection 248(1) of the Act;

    • (b) a non-resident corporation;

    • (c) a corporation reporting in functional currency as defined in subsection 261(1) of the Act; or

    • (d) a corporation that is exempt under section 149 of the Act from tax payable.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/99-20, s. 1;
  • SOR/2011-295, s. 1;
  • SOR/2015-140, s. 1.

Legal Representatives and Others

  •  (1) Where a person, who is required to make a return under this Part, has died, such return shall be filed by his legal representative within 90 days of the date of death and shall be in respect of any calendar year or a portion thereof prior to the date of death for which a return has not previously been filed.

  • (2) Every trustee in bankruptcy, assignee, liquidator, curator, receiver, trustee or committee and every agent or other person administering, managing, winding-up, controlling or otherwise dealing with the property, business, estate or income of a person who has not filed a return as required by this Part shall file such return.

Ownership Certificates

  •  (1) An ownership certificate completed pursuant to section 234 of the Act shall be delivered to the debtor or encashing agent at the time the coupon, warrant or cheque referred to in that section is negotiated.

  • (2) The debtor or encashing agent to whom an ownership certificate has been delivered pursuant to subsection (1) shall forward it to the Minister on or before the 15th day of the month following the month the coupon, warrant or cheque, as the case may be, was negotiated.

  • (3) The operation of section 234 of the Act is extended to a bearer coupon or warrant negotiated by or on behalf of a non-resident person who is subject to tax under Part XIII of the Act in respect of such a coupon or warrant.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/94-686, s. 50(F).

 [Repealed, SOR/2010-93, s. 2]

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/83-866, s. 4;
  • SOR/88-165, s. 31(F);
  • SOR/2010-93, s. 2.

Distribution of Taxpayers Portions of Returns

  •  (1) A person who is required by section 200, 201, 202, 204, 212, 214, 215, 217 or 218, subsection 223(2) or section 228, 229, 230, 232, 233 or 234 to make an information return shall forward to each taxpayer to whom the return relates two copies of the portion of the return that relates to that taxpayer.

  • (2) The copies referred to in subsection (1) shall be sent to the taxpayer at his last known address or delivered to him in person, on or before the date the return is required to be filed with the Minister.

  • (3) A person may send a document, as required under subsection (1), in an electronic format if the person has received the express consent of the taxpayer, and in that case, the person shall send a single copy to the taxpayer, on or before the date on which the return referred to in subsection (1) is to be filed with the Minister.

  • (4) In subsection (3), express consent means consent given in writing or in an electronic format.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/85-160, s. 1;
  • SOR/87-512, s. 1;
  • SOR/89-519, s. 1;
  • SOR/92-455, s. 1;
  • SOR/93-527, s. 3;
  • SOR/2003-5, s. 4;
  • 2009, c. 2, s. 85;
  • SOR/2010-93, s. 3.

Tax Deduction Information

 Every person who makes a payment described in section 153 of the Act, or who pays or credits, or is deemed by any of Part I, XIII and XIII.2 of the Act to have paid or credited, an amount described in that section, Part XIII or XIII.2 of the Act, shall, on demand by registered letter from the Minister, make an information return in prescribed form containing the information required in the return and shall file the return with the Minister within such reasonable time as is stipulated in the registered letter.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/88-165, s. 31(F);
  • SOR/2011-188, s. 3.

Accrued Bond Interest

  •  (1) Every financial company making a payment in respect of accrued interest by virtue of redemption, assignment or other transfer of a bond, debenture or similar security (other than an income bond, an income debenture or an investment contract in respect of which subsection 201(4) applies) shall make an information return in prescribed form.

  • (2) The return referred to in subsection (1) shall be forwarded to the Minister on or before the 15th day of the month following the month in which the payment referred to in subsection (1) is made.

  • (3) For the purposes of this section, a financial company includes a bank, an investment dealer, a stockbroker, a trust company and an insurance company.

  • (4) The provisions of subsection (1) do not apply to a payment made by one financial company to another financial company.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/88-165, s. 31(F);
  • SOR/91-123, s. 2;
  • SOR/94-686, s. 52(F).

Employees Profit Sharing Plans

  •  (1) Every trustee of an employees profit sharing plan shall make an information return in prescribed form.

  • (2) Notwithstanding subsection (1), the return required under this section may be filed by the employer instead of by the trustee.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/88-165, s. 31(F).

Pooled Registered Pension Plans

 An administrator of a PRPP must file with the Minister an information return for each calendar year in prescribed form in respect of the PRPP

  • (a) if an agreement concerning annual information returns has been entered into by the Minister and an authority responsible for the supervision of the PRPP under the Pooled Registered Pension Plans Act or a similar law of a province, on or before the day on which an information return required by that authority is to be filed for the calendar year; and

  • (b) in any other case, on or before May 1 of the following calendar year.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/88-165, s. 31(F);
  • SOR/94-686, s. 79(F);
  • SOR/2010-93, s. 4;
  • 2012, c. 31, s. 59.

Registered Retirement Savings Plans

  •  (1) Every person who pays an amount that is required by subsection 146(8) of the Act to be included in computing the income of a taxpayer for a taxation year shall make an information return in prescribed form.

  • (2) If, in a taxation year, subsection 146(7), (9) or (10) of the Act or, in relation to a non-qualified investment, subsection 207.04(1) or (4) of the Act applies in respect of a trust governed by a registered retirement savings plan, the trustee of the plan shall make an information return in prescribed form.

  • (3) Where, in respect of an amended plan referred to in subsection 146(12) of the Act, an amount is required to be included in computing the income of a taxpayer for a taxation year, the issuer of the plan shall make an information return in prescribed form.

  • (4) Where subsection 146(8.8) of the Act deems an amount to be received by an annuitant as a benefit out of or under a registered retirement savings plan and such amount is required by subsection 146(8) of the Act to be included in computing the income of that annuitant for a taxation year, the issuer of the plan shall make an information return in prescribed form.

  • (5) If a payment or transfer of property to which paragraph 146(16)(b) of the Act applies is made from a plan, the issuer of the plan shall make an information return in prescribed form in respect of the payment or transfer.

  • (6) Where an amount may be deducted under subsection 146(8.92) of the Act in computing the income of a deceased annuitant under a registered retirement savings plan, the issuer of the plan shall make an information return in prescribed form in respect of the amount.

  • (7) In this section, annuitant and issuer have the meanings assigned by subsection 146(1) of the Act.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/80-502, s. 3;
  • SOR/83-866, s. 5;
  • SOR/88-165, s. 31(F);
  • SOR/92-51, s. 3;
  • SOR/2001-188, s. 2;
  • SOR/2003-5, s. 5;
  • SOR/2005-264, s. 1;
  • 2009, c. 2, s. 86;
  • 2011, c. 24, s. 76.
  •  (1) The issuer of a registered retirement savings plan shall make an information return in prescribed form in respect of the amounts that have been paid by the annuitant, or by the spouse or common-law partner of the annuitant, under the plan in a contribution year

    • (a) as consideration for any contract referred to in paragraph (a) of the definition retirement savings plan in subsection 146(1) of the Act to pay a retirement income; or

    • (b) as a contribution or deposit referred to in paragraph (b) of that definition for the purpose stated in that paragraph.

  • (2) For greater certainty and for the purposes of subsection (1), amounts that have been paid do not include amounts that have been paid or transferred under the plan in accordance with subsection 146(16) of the Act, or those that have been transferred under the plan in accordance with any of subsections 146(21), 146.3(14), 147(19) or 147.3(1), (4) or (5) to (7) of the Act.

  • (3) The return shall be filed with the Minister on or before the 1st day of May of the year in which the contribution year ends and shall be in respect of the contribution year.

  • (4) The following definitions apply in this section.

    contribution year

    contribution year means the period beginning on the 61st day of one year and ending on the 60th day of the following year. (année de contribution)

    issuer

    issuer has the same meaning as in subsection 146(1) of the Act, with any modifications that the circumstances require. (émetteur)

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/2005-123, s. 2.

Registered Retirement Income Funds

  •  (1) In this section, annuitant and carrier have the meanings assigned by subsection 146.3(1) of the Act.

  • (2) Every carrier of a registered retirement income fund who pays out of or under it an amount any portion of which is required under subsection 146.3(5) of the Act to be included in computing the income of a taxpayer shall make an information return in prescribed form in respect of the amount.

  • (3) If subsection 146.3(4), (7) or (10) of the Act or, in relation to a non-qualified investment, subsection 207.04(1) or (4) of the Act applies in respect of any transaction or event with respect to property of a registered retirement income fund, the carrier of the fund shall make an information return in prescribed form in respect of the transaction or event.

  • (4) Where an amount is deemed under subsection 146.3(6) or (12) of the Act to be received by an annuitant out of or under a registered retirement income fund, the carrier of the fund shall make an information return in prescribed form in respect of the amount.

  • (5) If a transfer of an amount to which subsection 146.3(14) of the Act applies is made from a fund, the carrier of the fund shall make an information return in prescribed form in respect of the transfer.

  • (6) Where an amount may be deducted under subsection 146.3(6.3) of the Act in computing the income of a deceased annuitant under a registered retirement income fund, the carrier of the fund shall make an information return in prescribed form in respect of the amount.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/84-948, s. 1;
  • SOR/84-967, s. 1;
  • SOR/88-165, s. 31(F);
  • SOR/2003-5, s. 6;
  • SOR/2005-264, s. 2;
  • 2009, c. 2, s. 87;
  • 2011, c. 24, s. 77.

 [Repealed, 2011, c. 24, s. 78]

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/81-936, s. 3(F);
  • SOR/86-1092, s. 2;
  • SOR/94-686, s. 81(F);
  • 2011, c. 24, s. 78.

Dispositon of Interest in Annuities and Life Insurance Policies

  •  (1) In this section,

    disposition

    disposition has the meaning assigned by subsection 148(9) of the Act and includes anything deemed to be a disposition of a life insurance policy under subsection 148(2) of the Act; (disposition)

    insurer

    insurer has the meaning assigned by paragraph 148(10)(a) of the Act; (assureur)

    life insurance policy

    life insurance policy[Repealed, SOR/2011-188, s. 4]

  • (2) Where by reason of a disposition of an interest in a life insurance policy an amount is required, pursuant to paragraph 56(1)(j) of the Act, to be included in computing the income of a taxpayer and the insurer that is the issuer of the policy is a party to, or is notified in writing of, the disposition, the insurer shall make an information return in prescribed form in respect of the amount.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/78-449, s. 4;
  • SOR/84-967, s. 2;
  • SOR/88-165, s. 31(F);
  • SOR/2003-5, s. 7;
  • SOR/2010-93, s. 5(F);
  • SOR/2011-188, s. 4.

Patronage Payments

  •  (1) Every person who, within the meaning of section 135 of the Act, makes payments to residents of Canada pursuant to an allocation in proportion to patronage shall make an information return in prescribed form in respect of payments so made.

  • (2) Every person who receives a payment referred to in subsection (1) as nominee or agent for another person resident in Canada shall make an information return in prescribed form in respect of the payment so received.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/88-165, s. 31(F).

 [Repealed, SOR/2003-5, s. 8]

Cash Bonus Payments on Canada Savings Bonds

  •  (1) Every person authorized to redeem Canada Savings Bonds (in this section referred to as the “redemption agent”) who pays an amount in respect of a Canada Savings Bond as a cash bonus that the Government of Canada has undertaken to pay (other than an amount of interest, bonus or principal agreed to be paid at the time of the issue of the bond under the terms of the bond) shall make an information return in prescribed form in respect of such payment.

  • (2) Every redemption agent required by subsection (1) to make an information return shall

    • (a) issue to the payee, at the time the cash bonus is paid, two copies of the portion of the return relating to him; and

    • (b) file the return with the Minister on or before the 15th day of the month following the month in which the cash bonus was paid.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/88-165, s. 31(F).

Qualified Investments

[SOR/2005-264, s. 3]
  •  (1) In this section, reporting person means

    • (a) a mutual fund corporation;

    • (b) an investment corporation;

    • (c) a mutual fund trust;

    • (d) and (e) [Repealed, SOR/2005-264, s. 4]

    • (f) a trust that would be a mutual fund trust if Part XLVIII were read without reference to paragraph 4801(b); or

    • (g) [Repealed, SOR/2005-264, s. 4]

    • (h) a small business investment trust (within the meaning assigned by subsection 5103(1)).

    • (i) [Repealed, SOR/2005-264, s. 4]

  • (2) Where in any taxation year a reporting person (other than a registered investment) claims that a share of its capital stock issued by it, or an interest as a beneficiary under it, is a qualified investment under section 146, 146.1, 146.3, 204, 205 or 207.01 of the Act, the reporting person shall, in respect of the year and within 90 days after the end of the year, make an information return in prescribed form.

  • (3) [Repealed, SOR/2005-264, s. 4]

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/85-160, s. 2;
  • SOR/88-165, s. 31(F);
  • SOR/94-686, s. 79(F);
  • SOR/2000-62, s. 1;
  • SOR/2001-216, s. 1;
  • SOR/2005-264, s. 4;
  • 2007, c. 35, s. 125;
  • 2009, c. 2, s. 88;
  • SOR/2010-93, s. 6(E).

 [Repealed, SOR/2000-62, s. 1]

TFSAs

  •  (1) An issuer of a TFSA shall make an information return for each calendar year in prescribed form in respect of the TFSA.

  • (2) An issuer of a TFSA who makes a payment of an amount that is required because of paragraph 146.2(9)(b) of the Act to be included in computing the income of a taxpayer for a taxation year shall make an information return in prescribed form.

  • (3) An issuer of a TFSA that governs a trust shall notify the holder of the TFSA in prescribed form and manner before March of a calendar year if, at any time during the preceding calendar year,

    • (a) the trust acquires or disposes of property that is a non-qualified investment for the trust; or

    • (b) property held by the trust becomes or ceases to be a non-qualified investment for the trust.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/83-866, s. 6;
  • SOR/86-522, s. 2;
  • SOR/88-165, s. 31(F);
  • 2009, c. 2, s. 89.

Canadian Home Insulation Program and Canada Oil Substitution Program

 Where an amount has been paid to a person pursuant to a program prescribed for the purposes of paragraphs 12(1)(u), 56(1)(s) and 212(1)(s) of the Act, the payor shall

  • (a) make an information return in prescribed form in respect of such payment; and

  • (b) forward to the person at his latest known address on or before the date the return is required to be filed with the Minister two copies of the portion of the return relating to that person.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/78-348, s. 1;
  • SOR/81-936, s. 4;
  • SOR/88-165, s. 31(F).

Certified Films and Video Tapes

  •  (1) Where principal photography or taping of a film or tape (within the meanings assigned by subsection 1100(21)) has occurred during a year or has been completed within 60 days after the end of the year, the producer of the film or tape or production company that produced the film or tape, or an agent of the producer or production company, shall

    • (a) make an information return in prescribed form in respect of any person who owns an interest in the film or tape at the end of the year; and

    • (b) forward to the person referred to in paragraph (a) at his latest known address on or before the date the return is required to be filed with the Minister two copies of the portion of the return relating to that person.

  • (2) The return required under this section shall be filed on or before March 31st and shall be in respect of the preceding calendar year.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/82-182, s. 1;
  • SOR/88-165, s. 31(F).

Scientific Research Tax Credits

  •  (1) In this section,

    administrator

    administrator has the meaning assigned by paragraph 47.1(1)(a) of the Act; (administrateur)

    designated security

    designated security means a security issued or granted by a corporation in respect of which the corporation has designated an amount pursuant to subsection 194(4) of the Act; (titre désigné)

    first purchaser

    first purchaser in relation to a designated security, means the first person (other than a trader or dealer in securities) to be the registered holder of the designated security; (premier acheteur)

    security

    security means

    • (a) a share of the capital stock of a corporation,

    • (b) a debt obligation issued by a corporation, or

    • (c) a right granted by a corporation under a scientific research financing contract; (titre)

    trader or dealer in securities

    trader or dealer in securities has the meaning assigned by paragraph 47.1(1)(l) of the Act. (négociant ou courtier en valeurs)

  • (2) Each corporation that has designated an amount under subsection 194(4) of the Act in respect of a security issued or granted by it shall make an information return in prescribed form in respect of each such security.

  • (3) Each trader or dealer in securities who has acquired and disposed of a designated security during the course of the primary distribution thereof pursuant to a public offering shall make an information return in prescribed form in respect of each such designated security.

  • (4) Each bank, credit union and trust company that, as agent, acquired a designated security for the first purchaser thereof shall make an information return in prescribed form in respect of each such designated security.

  • (5) Each trader or dealer in securities who, as administrator of an indexed security investment plan, acquired a designated security for the first purchaser thereof shall make an information return in prescribed form in respect of each such designated security.

  • (6) Notwithstanting subsection 205(1), any return required to be made

    • (a) under subsection (2), in respect of a security issued by a corporation before March 1, 1984,

    • (b) under subsection (3), in respect of a designated security disposed of as described in subsection (3) before March 1, 1984, or

    • (c) under subsection (4) or (5), in respect of a designated security acquired as described in subsection (4) or (5), as the case may be, before March 1, 1984,

    shall be filed on or before March 31, 1984.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/85-160, s. 3;
  • SOR/88-165, s. 31(F);
  • SOR/94-686, ss. 52(F), 79(F).

Share Purchase Tax Credits

  •  (1) In this section,

    administrator

    administrator has the meaning assigned by paragraph 47.1(1)(a) of the Act; (administrateur)

    designated share

    designated share means a share of the capital stock of a corporation in respect of which the corporation has designated an amount pursuant to subsection 192(4) of the Act; (action désignée)

    first purchaser

    first purchaser, in relation to a designated share, means the first person (other than a trader or dealer in securities) to be the registered holder of the share; (premier acheteur)

    trader or dealer in securities

    trader or dealer in securities has the meaning assigned by paragraph 47.1(1)(l) of the Act. (négociant ou courtier en valeurs)

  • (2) Each corporation that has designated an amount under subsection 192(4) of the Act in respect of a share issued by it shall make an information return in prescribed form in respect of each such share.

  • (3) Each trader or dealer in securities who has acquired and disposed of a designated share during the course of the primary distribution thereof pursuant to a public offering shall make an information return in prescribed form in respect of each such designated share.

  • (4) Each bank, credit union and trust company that, as agent, acquired a designated share for the first purchaser thereof shall make an information return in prescribed form in respect of each such designated share.

  • (5) Each trader or dealer in securities who, as administrator of an indexed security investment plan, acquired a designated share for the first purchaser thereof shall make an information return in prescribed form in respect of each such designated share.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/85-160, s. 3;
  • SOR/88-165, s. 31(F);
  • SOR/94-686, ss. 52(F), 79(F).

Resource Flow-Through Shares

  •  (1) Each corporation that has renounced an amount under subsection 66(12.6), (12.601), (12.62) or (12.64) of the Act to a person shall make an information return in prescribed form in respect of the amount renounced.

  • (2) The return required under subsection (1) shall be filed with the Minister together with the prescribed form required to be filed under subsection 66(12.7) of the Act in respect of the amount renounced.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/87-512, s. 2;
  • SOR/94-686, s. 79(F);
  • SOR/96-199, s. 1.

Partnership Return

[SOR/94-686, s. 78(F)]
  •  (1) Every member, of a partnership that carries on a business in Canada at any time in a fiscal period of the partnership (other than a member that is, because of subsection 115.2(2) of the Act, not considered to be carrying on business in Canada at that time), or of a partnership that is at any time in a fiscal period of the partnership, a Canadian partnership or a SIFT partnership, shall make for that period an information return in prescribed form containing the following information:

    • (a) the income or loss of the partnership for the fiscal period;

    • (b) the name, address and, in the case of an individual, the social insurance number of each member of the partnership who is entitled to a share referred to in paragraph (c) or (d) for the fiscal period;

    • (c) the share of each member of the income or loss of the partnership for the fiscal period;

    • (d) the share of each member for the fiscal period of each deduction, credit or other amount in respect of the partnership that is relevant in determining the member’s income, taxable income, tax payable or other amount under the Act;

    • (e) the prescribed information contained in the form prescribed for the purposes of subsection 37(1) of the Act, where the partnership has made an expenditure in respect of scientific research and experimental development in the fiscal period; and

    • (f) such other information as may be required by the prescribed form.

  • (2) For the purposes of subsection (1), an information return made by any member of a partnership shall be deemed to have been made by each member of the partnership.

  • (3) Every person who holds an interest in a partnership as nominee or agent for another person shall make an information return in prescribed form in respect of that interest.

  • (4) [Repealed, SOR/93-443, s. 1]

  • (5) Subject to subsection (6), a return required by this section shall be filed with the Minister without notice or demand

    • (a) in the case of a fiscal period of a partnership all the members of which are corporations throughout the fiscal period, within five months after the end of the fiscal period;

    • (b) in the case of a fiscal period of a partnership all the members of which are individuals throughout the fiscal period, on or before the last day of March in the calendar year immediately following the calendar year in which the fiscal period ended or with which the fiscal period ended coincidentally; and

    • (c) in the case of any other fiscal period of a partnership, on or before the earlier of

      • (i) the day that is five months after the end of the fiscal period, and

      • (ii) the last day of March in the calendar year immediately following the calendar year in which the fiscal period ended or with which the fiscal period ended coincidentally.

  • (6) Where a partnership discontinues its business or activity, the return required under this section shall be filed, in respect of any fiscal period or portion thereof prior to the discontinuance of the business or activity for which a return has not previously been filed under this section, on or before the earlier of

    • (a) the day that is 90 days after the discontinuance of the business or activity, and

    • (b) the day the return is required to be filed under subsection (5).

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/89-519, s. 2;
  • SOR/93-443, s. 1;
  • SOR/94-686, ss. 53(F), 78(F), 79(F), 81(F);
  • 2007, c. 29, s. 30;
  • 2013, c. 34, s. 377.

Definitions

  •  (1) The definitions in this subsection apply in this section.

    public investment partnership

    public investment partnership, at any time, means a public partnership all or substantially all of the fair market value of the property of which is, at that time, attributable to the fair market value of property of the partnership that is

    • (a) units of public trusts (as defined in subsection 204.1(1));

    • (b) partnership interests in public partnerships;

    • (c) shares of the capital stock of public corporations; or

    • (d) any combination of properties referred to in paragraphs (a) to (c). (société de personnes de placement ouverte)

    public partnership

    public partnership, at any time, means a partnership the partnership interests in which are, at that time, listed on a designated stock exchange in Canada if, at that time, the partnership carries on a business in Canada or is a Canadian partnership. (société de personnes ouverte)

Required Information Disclosure

  • (2) Every member of a partnership that is, at any time in a fiscal period of the partnership, a public partnership shall, within the time required by subsection (3),

    • (a) make public, in prescribed form, information in respect of the public partnership for the fiscal period by posting the prescribed form, in a manner that is accessible to the general public, on the Internet website of CDS Innovations Inc.; and

    • (b) notify the Minister in writing as to when the posting of the prescribed form, as required by paragraph (a), has been made.

Required Disclosure Time

  • (3) The time required for the members of a public partnership to satisfy the requirements of subsection (2) in respect of the public partnership for a fiscal period of the public partnership is

    • (a) subject to paragraph (b), on or before the day that is the earlier of

      • (i) 60 days after the end of the calendar year in which the fiscal period ends, and

      • (ii) four months after the end of the fiscal period; and

    • (b) where the public partnership is, at any time in the fiscal period, a public investment partnership, on or before the day that is 67 days after the end of the calendar year in which the fiscal period ends.

Obligation Fulfilled by One Partner Deemed Fulfilled by All

  • (4) Every member of a partnership that is required to satisfy the requirements of subsection (2) in respect of the partnership for a fiscal period of the partnership will be deemed to have satisfied those requirements if a particular member of the partnership, who has authority to act for the partnership, has satisfied those requirements in respect of the partnership for the fiscal period.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. 2007, c. 35, s. 73.

Security Transactions

  •  (1) In this section,

    publicly traded

    publicly traded means, with respect to any security,

    • (a) a security that is listed or posted for trading on a stock exchange, commodity exchange, futures exchange or any other exchange, or

    • (b) a security in respect of the sale and distribution of which a prospectus, registration statement or similar document has been filed with a public authority; (négocié sur le marché)

    sale

    sale includes the granting of an option and a short sale; (vente)

    security

    security means

    • (a) a publicly traded share of the capital stock of a corporation,

    • (b) a publicly traded debt obligation,

    • (c) a debt obligation of or guaranteed by

      • (i) the Government of Canada,

      • (ii) the government of a province or an agent thereof,

      • (iii) a municipality in Canada,

      • (iv) a municipal or public body performing a function of government in Canada, or

      • (v) the government of a foreign country or of a political subdivision of a foreign country or a local authority of such a government,

    • (d) a publicly traded interest in a trust,

    • (e) a publicly traded interest in a partnership,

    • (f) an option or contract in respect of any property described in any of paragraphs (a) to (e), or

    • (g) a publicly traded option or contract in respect of any property including any commodity, financial futures, foreign currency or precious metal or in respect of any index relating to any property; (titre)

    trader or dealer in securities

    trader or dealer in securities means

    • (a) a person who is registered or licensed under the laws of a province to trade in securities, or

    • (b) a person who in the ordinary course of business makes sales of securities as agent on behalf of others. (négociant ou courtier en valeurs)

  • (2) Every trader or dealer in securities who, in a calendar year, purchases a security as principal or sells a security as agent for any vendor shall make an information return for the year in prescribed form in respect of the purchase or sale.

  • (3) Every person (other than an individual who is not a trust) who in a calendar year redeems, acquires or cancels in any manner whatever any securities issued by that person shall make an information return for the year in prescribed form in respect of each such transaction, other than a transaction to which section 51, 51.1, 86 (if there is no consideration receivable other than new shares) or 87 or subsection 98(3) or (6) of the Act applies.

  • (4) Subsection (3) applies to

    • (a) Her Majesty in right of Canada or a province;

    • (b) a municipal or public body performing a function of government in Canada; and

    • (c) an agent of a person referred to in paragraph (a) or (b).

  • (5) Every person who, in the ordinary course of a business of buying and selling precious metals in the form of certificates, bullion or coins, makes a payment in a calendar year to another person in respect of a sale by that other person of any such property shall make an information return for that year in prescribed form in respect of each such sale.

  • (6) Every person who, while acting as nominee or agent for another person in respect of a sale or other transaction to which subsection (2), (3) or (5) applies, receives the proceeds of the sale or other transaction shall, where the transaction is carried out in the name of the nominee or agent, make an information return in prescribed form in respect of the sale or other transaction.

  • (7) This section does not apply in respect of

    • (a) a purchase of a security by a trader or dealer in securities from another trader or dealer in securities other than a non-resident trader or dealer in securities;

    • (b) a sale of currencies or precious metals in the form of jewellery, works of art or numismatic coins;

    • (c) a sale of precious metals by a person who, in the ordinary course of business, produces or sells precious metals in bulk or in commercial quantities;

    • (d) a sale of securities by a trader or dealer in securities on behalf of a person who is exempt from tax under Part I of the Act; or

    • (e) a redemption by the issuer or an agent of the issuer of a debt obligation where

      • (i) the debt obligation was issued for its principal amount,

      • (ii) the redemption satisfies all of the issuer’s obligations in respect of the debt obligation,

      • (iii) each person with an interest in the debt obligation is entitled in respect thereof to a proportion of all payments of principal equal to the proportion to which the person is entitled of all payments other than principal, and

      • (iv) an information return is required under another section of this Part to be made as a result of the redemption in respect of each person with an interest in the debt obligation.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/89-519, s. 2;
  • SOR/94-686, ss. 54(F), 78(F), 79(F);
  • SOR/2003-5, s. 9.

 [Repealed, SOR/2011-188, s. 5]

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/89-519, s. 2;
  • SOR/92-51, s. 8;
  • SOR/2000-248, s. 1;
  • SOR/2001-295, s. 1(E);
  • SOR/2003-5, s. 10;
  • SOR/2011-188, s. 5.

Worker’s Compensation

  •  (1) Every person who pays an amount in respect of compensation described in subparagraph 110(1)(f)(ii) of the Act shall make an information return in prescribed form in respect of that payment.

  • (2) Where a worker’s compensation board, or a similar body, adjudicates a claim for compensation described in subparagraph 110(1)(f)(ii) of the Act and stipulates the amount of the award, that board or body shall make an information return in prescribed form in respect of the amount of the award.

  • (3) A return required under this section must be filed on or before the last day of February of each year and shall be in respect of

    • (a) the preceding calendar year, if the return is required under subsection (1); and

    • (b) the amount of the award that pertains to the preceding calendar year, if the return is required under subsection (2).

  • (4) Subsections (1) and (2) are not applicable in respect of a payment or an award in respect of

    • (a) medical expenses incurred by or on behalf of the employee;

    • (b) funeral expenses in respect of the employee;

    • (c) legal expenses in respect of the employee;

    • (d) job training or counselling of the employee; or

    • (e) the death of the employee, other than periodic payments made after the death of the employee.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/92-455, s. 2.

Social Assistance

  •  (1) Every person who makes a payment described in paragraph 56(1)(u) of the Act shall make an information return in prescribed form in respect of the payment.

  • (2) Subsection (1) is not applicable in respect of a payment that

    • (a) is in respect of medical expenses incurred by or on behalf of the payee;

    • (b) is in respect of child care expenses, as defined in subsection 63(3) of the Act, incurred by or on behalf of the payee or a person related to the payee;

    • (c) is in respect of funeral expenses in respect of a person related to the payee;

    • (d) is in respect of legal expenses incurred by or on behalf of the payee or a person related to the payee;

    • (e) is in respect of job training or counselling of the payee or a person related to the payee;

    • (f) is paid in a particular year as a part of a series of payments, the total of which in the particular year does not exceed $500; or

    • (g) is not a part of a series of payments.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/92-455, s. 2;
  • SOR/2010-93, s. 7.

Farm Support Payments

  •  (1) Every government, municipality or municipal or other public body (in sections 235 and 236 referred to as the “government payer”) or producer organization or association that makes a payment of an amount that is a farm support payment (other than an amount paid out of a net income stabilization account) to a person or partnership shall make an information return in prescribed form in respect of the amount.

  • (2) For the purposes of subsection (1) farm support payment includes

    • (a) a payment that is computed with respect to an area of farm land;

    • (b) a payment that is made in respect of a unit of farm commodity grown or disposed of or a farm animal raised or disposed of; and

    • (c) a rebate of, or compensation for, all or a portion of

      • (i) a cost or capital cost incurred in respect of farming, or

      • (ii) unsowed or unplanted land or crops, or destroyed crops, farm animals or other farm output.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/93-527, s. 4;
  • SOR/94-686, s. 78(F).

Identifier Information

 Every corporation or trust for which an information return is required to be made under these Regulations by a government payer or by a producer organization or association shall provide its legal name, address and income tax identification number to the government payer or the producer organization or association, as the case may be.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/93-527, s. 4;
  • SOR/94-686, s. 79(F).

 Every person who is a member of a partnership for which an information return is required to be made under these Regulations by a government payer or by a producer organization or association shall provide the government payer or the producer organization or association, as the case may be, with the following information:

  • (a) the person’s legal name, address and Social Insurance Number, or, where the person is a trust or is not an individual, the person’s income tax identification number; and

  • (b) the partnership’s name and business address.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/93-527, s. 4;
  • SOR/94-686, s. 78(F).

Contract for Goods and Services

  •  (1) The definitions in this subsection apply in this section.

    federal body

    federal body means a department or a Crown corporation, within the meaning of section 2 of the Financial Administration Act. (organisme fédéral)

    payee

    payee means a person or partnership to whom an amount is paid or credited in respect of goods for sale or lease, or services rendered, by or on behalf of the person or the partnership. (bénéficiaire)

  • (2) A federal body that pays or credits an amount to a payee shall file an information return in prescribed form in respect of the amount on or before March 31 in each year in respect of the preceding calendar year.

  • (3) Subsection (2) does not apply in respect of an amount

    • (a) all or substantially all of which is paid or credited in the year in respect of goods for sale or lease by the payee;

    • (b) to which section 212 of the Act applies;

    • (c) that is not required to be included in computing the income of the payee, if the payee is an employee of the federal body;

    • (d) that is paid or credited in respect of services rendered outside Canada by a payee who was not resident in Canada during the period in which the services were rendered; or

    • (e) that is paid or credited in respect of a program administered under the Witness Protection Program Act or any other similar program.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/99-21, s. 1;
  • SOR/2003-5, s. 11.

Reporting of Payments in respect of Construction Activities

  •  (1) In this section, construction activities includes the erection, excavation, installation, alteration, modification, repair, improvement, demolition, destruction, dismantling or removal of all or any part of a building, structure, surface or sub-surface construction, or any similar property.

  • (2) Every person or partnership that pays or credits, in a reporting period, an amount in respect of goods or services rendered on their behalf in the course of construction activities shall make an information return in the prescribed form in respect of that amount, if the person’s or partnership’s business income for that reporting period is derived primarily from those activities.

  • (3) The reporting period may be either on a calendar year basis or a fiscal period basis. Once a period is chosen, it cannot be changed for subsequent years, unless the Minister authorizes it.

  • (4) The return shall be filed within six months after the end of the reporting period to which it pertains.

  • (5) Subsection (2) does not apply in respect of an amount

    • (a) all of which is paid or credited in the reporting period in respect of goods for sale or lease by the person or partnership;

    • (b) to which section 212 of the Act applies; or

    • (c) that is paid or credited in respect of services rendered outside Canada by a person or partnership who was not resident in Canada during the period in which the services were rendered.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/2000-9, s. 1;
  • SOR/2003-5, s. 11.

PART IIIAnnuities and Life Insurance Policies

Capital Element of Annuity Payments

  •  (1) For the purposes of paragraphs 32.1(3)(b) and 60(a) of the Act, where an annuity is paid under a contract (other than an income-averaging annuity contract or an annuity contract purchased pursuant to a deferred profit sharing plan or pursuant to a plan referred to in subsection 147(15) of the Act as a “revoked plan”) at a particular time, that part of the annuity payment determined in prescribed manner to be a return of capital is that proportion of a taxpayer’s interest in the annuity payment that the adjusted purchase price of the taxpayer’s interest in the contract at that particular time is of his interest, immediately before the commencement under the contract of payments to which paragraph 56(1)(d) of the Act applies, in the total of the payments

    • (a) to be made under the contract, in the case of a contract for a term of years certain; or

    • (b) expected to be made under the contract, in the case of a contract under which the continuation of the payments depends in whole or in part on the survival of an individual.

  • (1.1) For the purposes of subsections (1) and (2), “annuity payment” does not include any portion of a payment under a contract the amount of which cannot be reasonably determined immediately before the commencement of payments under the contract except where the payment of such portion cannot be so determined because the continuation of the annuity payments under the contract depends in whole or in part on the survival of an individual.

  • (2) For the purposes of this section, if the continuance of the annuity payments under a contract depends in whole or in part on the survival of an individual,

    • (a) the total of the payments expected to be made under the contract is

      • (i) in the case of a contract that provides for equal payments and does not provide for a guaranteed period of payment, to be equal to the product obtained by multiplying the total of the annuity payments expected to be received throughout a year under the contract by the complete expectations of life determined

        • (A) using the table of mortality known as the 1971 Individual Annuity Mortality Table as published in Volume XXIII of the Transactions of the Society of Actuaries, if the annuity rates in respect of the contract were fixed and determined before 2017, and

          • (I) annuity payments under the contract commenced before 2017, or

          • (II) on December 31, 2016, the contract would be a prescribed annuity contract if paragraph 304(1)(c) were read without reference to its subparagraph (i) and the contract cannot be terminated other than on the death of an individual on whose life payments under the contract are contingent, and

        • (B) in any other case, using the table of mortality known as the Annuity 2000 Basic Table as published in the Transactions of Society of Actuaries, 1995–96 Reports, and

      • (ii) in any other case, to be calculated in accordance with subparagraph (i) with such modifications as the circumstances may require;

    • (b) the age of the individual on any particular date as of which a calculation is being made is

      • (i) if the life insured was determined by the insurer that issued the contract to be a substandard life at the time the contract was issued and the Annuity 2000 Basic Table as published in the Transactions of Society of Actuaries, 1995–96 Reports applies to determine the total of the payments expected to be made under the contract, the age that is equal to the total of the age used for the purpose of determining the annuity rate under the policy at the date of issue of the contract and the number determined by subtracting the calendar year in which the contract was issued from the calendar year in which the particular date occurs, and

      • (ii) in any other case, determined by subtracting the calendar year of the individual’s birth from the calendar year in which the particular date occurs; and

    • (c) if, in the event of the death of the individual before the annual payments total a stated sum, the contract provides that the unpaid balance of the stated sum is to be paid in a lump sum or instalments, then for the purpose of determining the expected term of the contract, the contract is deemed to provide for the continuance of the payments under the contract for a minimum term certain equal to the nearest whole number of years required to complete the payment of the stated sum.

  • (3) Where

    • (a) an annuity contract is a life annuity contract entered into before November 17, 1978 under which the annuity payments commence on the death of an individual,

    • (a.1) [Repealed, SOR/83-865, s. 1]

    • (b) an annuity contract (other than an annuity contract described in paragraph (a)) is

      • (i) a life annuity contract entered into before October 23, 1968, or

      • (ii) any other annuity contract entered into before January 4, 1968,

      under which the annuity payments commence

      • (iii) on the expiration of a term of years, and

      • (iv) before the later of January 1, 1970 and the tax anniversary date of the annuity contract,

    the adjusted purchase price of a taxpayer’s interest in the annuity contract shall be

    • (c) the lump sum, if any, that the person entitled to the annuity payments might have accepted in lieu thereof, at the date the annuity payments commence;

    • (d) if no lump sum described in paragraph (c) is provided for in the contract, the sum ascertainable from the contract as the present value of the annuity at the date the annuity payments commence; and

    • (e) if no lump sum described in paragraph (c) is provided for in the contract and no sum is ascertainable under paragraph (d),

      • (i) in the case of a contract issued under the Government Annuities Act, the premiums paid, accumulated with interest at the rate of four per cent per annum to the date the annuity payments commence, and

      • (ii) in the case of any other contract, the present value of the annuity payments at the date on which payments under the contract commence, computed by applying

        • (A) a rate of interest of four per cent per annum where the payments commence before 1972 and 5 1/2 per cent per annum where the payments commence after 1971, and

        • (B) the provisions of subsection (2) where the payments depend on the survival of a person.

  • (4) Where an annuity contract would be described in paragraph (3)(b) if the reference in subparagraph (iv) thereof to “before the later of” were read as a reference to “on or after the later of”, the adjusted purchase price of a taxpayer’s interest in the annuity contract at a particular time shall be the greater of

    • (a) the aggregate of

      • (i) the amount that would be determined in respect of that interest under paragraph (3)(c), (d) or (e), as the case may be, if the date referred to therein was the tax anniversary date of the contract and not the date the annuity payments commence, and

      • (ii) the adjusted purchase price that would be determined in respect of that interest if the expression “before that time” in the descriptions of A, B, C, D and H in the definition adjusted cost basis in subsection 148(9) of the Act were read as “before that time and after the tax anniversary date”; and

    • (b) the amount determined under paragraph (2)(b) in respect of that interest.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/82-499, s. 1;
  • SOR/82-874, s. 1(E);
  • SOR/83-865, s. 1;
  • SOR/2001-216, s. 10(F);
  • SOR/2011-188, s. 6;
  • 2014, c. 39, s. 79.

Life Annuity Contracts

  •  (1) For the purposes of this Part and section 148 of the Act, life annuity contract means a contract under which a person authorized under the laws of Canada or of a province to carry on in Canada an annuities business agrees to make annuity payments to one person or partnership (in this section referred to as “the annuitant”) or jointly to two or more annuitants, which annuity payments are, under the terms of the contract,

    • (a) to be paid annually or at more frequent periodic intervals;

    • (b) to commence on a specified day; and

    • (c) to continue throughout the lifetime of one or more individuals (each of whom is referred to in this section as “the identified individual”).

  • (2) For the purposes of subsection (1), a contract shall not fail to be a life annuity contract by reason that

    • (a) the contract provides that the annuity payments may be assigned by the annuitant or owner;

    • (b) the contract provides for annuity payments to be made for a period ending on the death of the identified individual or for a specified period of not less than 10 years, whichever is the lesser;

    • (c) the contract provides for annuity payments to be made for a specified period or throughout the lifetime of the identified individual, whichever is longer, to the annuitant and, if the specified period is longer, to a specified person after that period;

    • (d) the contract provides, in addition to the annuity payments to be made throughout the lifetime of the identified individual, for a payment to be made on the death of the identified individual;

    • (e) the contract provides that the date

      • (i) on which the annuity payments commence, or

      • (ii) on which the contract holder becomes entitled to proceeds of the disposition,

      may be changed with respect to the whole contract or any portion thereof at the option of the annuitant or owner; or

    • (f) the contract provides that all or a portion of the proceeds payable at any particular time under the contract may be received in the form of an annuity contract other than a life annuity contract.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/80-341, s. 1;
  • SOR/82-499, s. 2;
  • SOR/83-865, s. 2;
  • SOR/2011-188, s. 7.

 [Repealed, SOR/83-865, s. 3]

  •  (1) Where in a taxation year the rights of a holder under an annuity contract cease upon termination or cancellation of the contract and

    • (a) the aggregate of all amounts, each of which is an amount in respect of the contract that was included in computing the income of the holder for the year or any previous taxation year by virtue of subsection 12(3) of the Act

    exceeds the aggregate of

    • (b) such proportion of the amount determined under paragraph (a) that the annuity payments made under the contract before the rights of the holder have ceased is of the total of the payments expected to be made under the contract, and

    • (c) the aggregate of all amounts, each of which is an amount in respect of the contract that was deductible in computing the income of the holder for the year or any previous year by virtue of subsection (2),

    the amount of such excess may be deducted by the holder under subsection 20(19) of the Act in computing his income for the year.

  • (2) For the purposes of subsection 20(19) of the Act, where an annuity contract was acquired after December 19, 1980 and annuity payments under the contract commenced before 1982, the amount that may be deducted by a holder under that subsection in respect of an annuity contract for a taxation year is that proportion of

    • (a) the aggregate of all amounts, each of which is an amount that was included in computing the income of the holder for any previous taxation year by virtue of subsection 12(3) of the Act in respect of the contract

    that

    • (b) the aggregate of all annuity payments received by the holder in the year in respect of the contract

    is of

    • (c) the total of the payments determined under paragraph 300(1)(a) or (b) in respect of the holder’s interest in the contract.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/82-499, s. 3;
  • SOR/83-865, s. 4.

Prescribed Annuity Contracts

  •  (1) For the purposes of this Part and of subsections 12.2(1) and 20(20) and paragraph 148(2)(b) of the Act, prescribed annuity contract, for a taxation year, means

    • (a) an annuity contract that is, or is issued pursuant to, an arrangement described in any of paragraphs 148(1)(a) to (b.3) and (d) of the Act;

    • (b) an annuity contract described in paragraph 148(1)(c) or (e) of the Act; and

    • (c) an annuity contract

      • (i) under which annuity payments have commenced in the taxation year or a preceding taxation year,

      • (ii) issued by any one of the following (referred to in this section as the “issuer”):

        • (A) a life insurance corporation,

        • (B) a registered charity,

        • (C) a corporation referred to in any of paragraphs (a) to (c) of the definition specified financial institution in subsection 248(1) of the Act,

        • (D) a corporation referred to in subparagraph (b)(ii) of the definition retirement savings plan in subsection 146(1) of the Act, and

        • (E) a corporation (other than a mutual fund corporation or a mortgage investment corporation) the principal business of which is the making of loans,

      • (iii) each holder of which

        • (A) is

          • (I) an individual other than a trust,

          • (II) a trust described in paragraph 104(4)(a) of the Act (in this paragraph referred to as a “specified trust”),

          • (III) a trust that is a qualified disability trust (as defined in subsection 122(3) of the Act) for the taxation year in which the annuity is issued, or

          • (IV) if the annuity is issued before 2016, a trust that is a testamentary trust at the time the annuity is issued,

        • (B) is an annuitant under the contract, and

        • (C) throughout the taxation year, dealt at arm’s length with the issuer,

      • (iv) the terms and conditions of which require that, from the time the contract meets the requirements of this paragraph,

        • (A) all payments made out of the contract be equal annuity payments made at regular intervals but not less frequently than annually, subject to the holder’s right to vary the frequency and quantum of payments to be made out of the contract in any taxation year without altering the present value at the beginning of the year of the total payments to be made in that year out of the contract,

        • (B) the annuity payments thereunder continue for a fixed term or

          • (I) if the holder is an individual (other than a trust), for the life of the first holder or until the day of the later of the death of the first holder and the death of any of the spouse, common-law partner, former spouse, former common-law partner, brothers and sisters (in this subparagraph referred to as “the survivor”) of the first holder, or

          • (II) if the holder is a trust

            1. in the case of a specified trust, for the life of an individual referred to in paragraph 104(4)(a) of the Act who is entitled to receive all of the income of the trust that arose before the individual’s death, or, in the case of a joint spousal or common-law partner trust, until the day of the later of the death of the individual and the death of the beneficiary under the trust who is the individual’s spouse or common-law partner,

            2. in the case of a qualified disability trust, for the life of an individual who is an electing beneficiary (as defined in subsection 122(3) of the Act) of the trust for the taxation year in which the annuity is issued,

            3. in the case of a trust (other than a qualified disability trust or specified trust) where the annuity is issued before October 24, 2012, for the life of an individual who is entitled to receive income from the trust, and

            4. in the case of a trust (other than a qualified disability trust or specified trust) where the annuity is issued after October 23, 2012, for the life of an individual who was entitled when the contract was first held to receive all of the trust’s income that is from an amount received by the trust on or before the individual’s death as a payment under the annuity,

        • (C) if the annuity payments are to be made over a term that is guaranteed or fixed, the guaranteed or fixed term not exceed 91 years minus the age, when the contract was first held, in whole years of the following individual:

          • (I) if the holder is not a trust, the individual who is

            1. in the case of a joint and last survivor annuity, the younger of the first holder and the survivor,

            2. in the case of a contract that is held jointly, the younger of the first holders, and

            3. in any other case, the first holder,

          • (II) if the holder is a specified trust, the individual who is

            1. in the case of a joint and last survivor annuity held by a joint spousal or common-law partner trust, the younger of the individuals referred to in paragraph 104(4)(a) of the Act who are in combination entitled to receive all of the income of the trust that arose before the later of their deaths, and

            2. in the case of an annuity that is not a joint and last survivor annuity, the individual referred to in paragraph 104(4)(a) of the Act who is entitled to receive all of the income of the trust that arose before the individual’s death,

          • (III) if the holder is a qualified disability trust, an individual who is an electing beneficiary of the trust for the taxation year in which the annuity is issued, and

          • (IV) if the holder is a trust (other than a qualified disability trust or specified trust) and the annuity is issued before 2016, the individual who was the youngest beneficiary under the trust when the contract was first held,

        • (D) no loans exist under the contract,

        • (E) the holder’s rights under the contract not be disposed of otherwise than

          • (I) if the holder is an individual, on the holder’s death,

          • (II) if the holder is a specified trust (other than a joint spousal or common-law partner trust), on the death of the individual referred to in paragraph 104(4)(a) of the Act who is entitled to receive all of the income of the trust that arose before the individual’s death,

          • (III) if the holder is a specified trust that is a joint spousal or common-law partner trust, on the later of the deaths of the individuals referred to in paragraph 104(4)(a) of the Act who are in combination entitled to receive all of the income of the trust that arose before the later of their deaths, and

          • (IV) if the holder is a trust, other than a specified trust, and the contract is first held after October 2011, on the earlier of

            1. the time at which the trust ceases to be a testamentary trust, and

            2. the death of the individual referred to in subclause (B)(II) or (C)(III) or (IV), as the case may be, in respect of the trust, and

        • (F) no payments be made out of the contract other than as permitted by this section,

      • (v) none of the terms and conditions of which provide for any recourse against the issuer for failure to make any payment under the contract, and

      • (vi) where annuity payments under the contract have commenced

        • (A) before 1987, in respect of which a holder thereof has notified the issuer in writing, before the end of the taxation year, that the contract is to be treated as a prescribed annuity contract,

        • (B) after 1986, in respect of which a holder thereof has not notified the issuer in writing, before the end of the taxation year in which the annuity payments under the contract commenced, that the contract is not to be treated as a prescribed annuity contract, or

        • (C) after 1986, in respect of which a holder thereof has notified the issuer in writing, before the end of the taxation year in which the annuity payments under the contract commenced, that the contract is not to be treated as a prescribed annuity contract and a holder thereof has rescinded the notification by so notifying the issuer in writing before the end of the taxation year.

  • (2) Notwithstanding subsection (1), an annuity contract shall not fail to be a prescribed annuity contract by reason that

    • (a) where the contract provides for a joint and last survivor annuity or is held jointly, the terms and conditions thereof provide that there will be a decrease in the amount of the annuity payments to be made under the contract from the time of death of one of the annuitants thereunder;

    • (b) the terms and conditions thereof provide that where the holder thereof dies at or before the time he attains the age of 91 years, the contract will terminate and an amount will be paid out of the contract not exceeding the amount, if any, by which the total premiums paid under the contract exceeds the total annuity payments made under the contract;

    • (c) where the annuity payments are to be made over a term that is guaranteed or fixed, the terms and conditions thereof provide that as a consequence of the death of the holder thereof during the guaranteed or fixed term any payments that, but for the death of the holder, would be made during the term may be commuted into a single payment; or

    • (d) the terms and conditions thereof, as they read on December 1, 1982 and at all subsequent times, provide that the holder participates in the investment earnings of the issuer and that the amount of such participation is to be paid within 60 days after the end of the year in respect of which it is determined.

  • (3) For the purposes of this section, the annuitant under an annuity contract is deemed to be the holder of the contract where

    • (a) the contract is held by another person in trust for the annuitant; or

    • (b) the contract was acquired by the annuitant under a group term life insurance policy under which life insurance was effected on the life of another person in respect of, in the course of, or by virtue of the office or employment or former office or employment of that other person.

  • (4) In this section, annuitant under an annuity contract, at any time, means a person who, at that time, is entitled to receive annuity payments under the contract.

  • (5) For the purpose of this section, spouse and former spouse of a particular individual include another individual who is a party to a void or voidable marriage with the particular individual.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/82-499, s. 3;
  • SOR/83-865, s. 5;
  • SOR/86-488, s. 1;
  • SOR/88-165, s. 2;
  • SOR/88-319, s. 1;
  • SOR/94-415, s. 1;
  • SOR/94-686, s. 2(F);
  • SOR/2001-188, s. 3;
  • SOR/2001-216, s. 10(F);
  • SOR/2007-116, s. 1;
  • 2009, c. 2, s. 90;
  • SOR/2009-222, s. 1;
  • SOR/2011-188, s. 8;
  • 2012, c. 31, s. 60;
  • 2013, c. 34, s. 378;
  • 2014, c. 39, s. 80.

 [Repealed, SOR/2011-188, s. 9]

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/83-865, s. 5;
  • SOR/2011-188, s. 9.

Exempt Policies

  •  (1) For the purposes of this Part and subsection 12.2(11) of the Act, exempt policy at any time means a life insurance policy (other than an annuity contract, LIA policy or a deposit administration fund policy) in respect of which the following conditions are met at that time:

    • (a) if that time is a policy anniversary of the policy, the accumulating fund of the policy at that time (determined without regard to any policy loan) does not exceed the total of the accumulating funds at that time of the exemption test policies issued at or before that time in respect of the policy;

    • (b) assuming that the terms and conditions of the policy do not change from those in effect on the last policy anniversary of the policy at or before that time and, where necessary, making reasonable assumptions about all other factors (including, in the case of a participating life insurance policy within the meaning assigned by subsection 138(12) of the Act, the assumption that the amounts of dividends paid will be as shown in the dividend scale),

      • (i) if the policy is issued before 2017, it is reasonable to expect that the condition in paragraph (a) will be met on each policy anniversary of the policy on which the policy could remain in force after that time and before the endowment date of the exemption test policies issued in respect of the policy, and

      • (ii) if the policy is issued after 2016, it is reasonable to expect — without reference to any automatic adjustments under the policy that may be made after that time to ensure that the policy is an exempt policy and, where applicable, making projections using the most recent values that are used to calculate the accumulating fund in respect of the policy or in respect of each exemption test policy issued in respect of a coverage under the policy, as the case may be — that the condition in paragraph (a) will be met on the policy’s next policy anniversary;

    • (c) the condition in paragraph (a) was met on all policy anniversaries of the policy before that time; and

    • (d) the condition in paragraph (b) was met at all times on and after the first policy anniversary of the policy and before that time.

  • (2) For the purposes of subsection (1), a life insurance policy that is an exempt policy on its first policy anniversary shall be deemed to have been an exempt policy from the time of its issue until that anniversary.

  • (3) For the purposes of this section and section 307,

    • (a) in the case of a life insurance policy issued before 2017 or at a particular time determined under subsection 148(11) of the Act, a separate exemption test policy is deemed, subject to subsection (7), to be issued in respect of the life insurance policy

      • (i) on the date of issue of the life insurance policy, and

      • (ii) on each policy anniversary (that ends before the particular time, if any, determined under subsection 148(11) of the Act in respect of the policy) of the life insurance policy on which

        • (A) the amount of the benefit on death under the life insurance policy

        exceeds

        • (B) 108% of the amount of the benefit on death under the life insurance policy on the later of the life insurance policy’s date of issue and the date of the life insurance policy’s preceding policy anniversary, if any; and

    • (b) in the case of a life insurance policy issued after 2016 (including, for greater certainty, at a particular time determined under subsection 148(11) of the Act in respect of the policy), a separate exemption test policy is deemed, subject to subsection (7), to be issued in respect of each coverage under the life insurance policy

      • (i) unless the particular time when the policy is issued is determined under subsection 148(11) of the Act and the coverage was issued before the particular time, on the date of

        • (A) issue of the life insurance policy, if the coverage is issued before the first policy anniversary of the life insurance policy,

        • (B) issue of the coverage, if the coverage is issued on a policy anniversary of the life insurance policy, or

        • (C) the life insurance policy’s preceding policy anniversary, if the coverage is issued on any date that is after the policy’s first policy anniversary and that is not a policy anniversary,

      • (ii) on each policy anniversary of the life insurance policy (except that, if a particular time when the policy is issued has been determined under subsection 148(11) of the Act, only on a policy anniversary that ends at or after the particular time) on which

        • (A) the amount of the benefit on death under the coverage on that policy anniversary

        exceeds

        • (B) 108% of the amount of the benefit on death under the coverage, on the later of the coverage’s date of issue and the date of the life insurance policy’s preceding policy anniversary (or, if there is no preceding policy anniversary, the coverage’s date of issue), and

      • (iii) on each policy anniversary of the life insurance policy (except that, if a particular time when the policy is issued has been determined under subsection 148(11) of the Act, only on a policy anniversary that ends at or after the particular time) — except to the extent that another exemption test policy has been issued on that date under this subparagraph in respect of a coverage under the life insurance policy — on which

        • (A) the amount by which the fund value benefit under the life insurance policy on that policy anniversary exceeds the fund value benefit under the life insurance policy on the life insurance policy’s preceding policy anniversary (or, if there is no preceding policy anniversary, the date of issue of the policy)

        exceeds

        • (B) the amount by which

          • (I) 8% of the amount of the benefit on death under the life insurance policy on the life insurance policy’s preceding policy anniversary (or, if there is no preceding policy anniversary, the date of issue of the policy)

          exceeds

          • (II) the total of all amounts each of which is, in respect of a coverage under the policy, the lesser of

            1. the amount by which the amount of the benefit on death under the coverage on that policy anniversary exceeds the amount of the benefit on death under the coverage on the later of the coverage’s date of issue and the date of the life insurance policy’s preceding policy anniversary (or, if there is no preceding policy anniversary, the coverage’s date of issue), and

            2. 8% of the amount of the benefit on death under the coverage on the later of the coverage’s date of issue and the date of the life insurance policy’s preceding policy anniversary (or, if there is no preceding policy anniversary, the coverage’s date of issue).

  • (4) Subject to subsection (10), for the purpose of determining whether the condition in paragraph (1)(a) is met on a policy anniversary of a life insurance policy, each exemption test policy issued in respect of the life insurance policy, or in respect of a coverage under the life insurance policy, is deemed

    • (a) to have a benefit on death that is uniform throughout the term of the exemption test policy and that, subject to subsection (5), is equal to

      • (i) if the date on which the exemption test policy is issued is determined by subparagraph (3)(a)(i), the amount by which the amount on that policy anniversary of the benefit on death under the life insurance policy exceeds the total of all amounts each of which is the amount, if any, on that policy anniversary of the benefit on death under another exemption test policy issued on or before that policy anniversary in respect of the life insurance policy,

      • (ii) if the date on which the exemption test policy is issued is determined by subparagraph (3)(a)(ii), the amount of the excess referred to in that subparagraph on that date in respect of the life insurance policy,

      • (iii) if the date on which the exemption test policy is issued is determined by subparagraph (3)(b)(i), the amount determined by the formula

        A + B – C

        where

        A 
        is the amount on that policy anniversary of the benefit on death under the coverage,
        B 
        is
        • (A) if the benefit on death under the life insurance policy includes a fund value benefit on that policy anniversary, the portion of the fund value benefit on that policy anniversary that is equal to the lesser of

          • (I) the maximum amount of the fund value benefit that could be payable on that policy anniversary if no other coverage were offered under the life insurance policy and the life insurance policy were an exempt policy, and

          • (II) the amount by which the fund value benefit on that policy anniversary exceeds the total of all amounts each of which is the portion of the fund value benefit allocated to other coverages under the life insurance policy, and

        • (B) in any other case, nil, and

        C 
        is the total of all amounts each of which is the amount, if any, on that policy anniversary of the benefit on death under another exemption test policy issued on or before that policy anniversary in respect of the coverage,
      • (iv) if the date on which the exemption test policy is issued is determined by subparagraph (3)(b)(ii), the amount of the excess referred to in that subparagraph on that date in respect of the coverage, and

      • (v) if the date on which the exemption test policy is issued is determined by subparagraph (3)(b)(iii), the lesser of

        • (A) the amount by which the amount determined under clause (3)(b)(iii)(A) exceeds the amount determined under clause (3)(b)(iii)(B) on that date in respect of the coverage, and

        • (B) the amount determined in respect of the coverage under subclause (A)(I) of the description of B in subparagraph (iii) on that date; and

    • (b) to pay the amount of its benefit on death on the earlier of

      • (i) if the life insurance policy

        • (A) is issued before 2017, the date of death of the individual whose life is insured under the life insurance policy, or

        • (B) is issued after 2016,

          • (I) if two or more lives are jointly insured under the coverage, the date at which the benefit would be payable as a result of the death of any of the lives, and

          • (II) in any other case, the date of death of the individual whose life is insured under the coverage, and

      • (ii) the exemption test policy’s endowment date.

  • (5) Subject to subsection (10), for the purpose of determining the amount of a benefit on death under an exemption test policy,

    • (a) if the exemption test policy is issued in respect of a life insurance policy issued before 2017 and at any time the amount of a benefit on death under the life insurance policy is reduced, a particular amount that is equal to the reduction is to be applied at that time to reduce the amount of the benefit on death under each exemption test policy issued before that time in respect of the life insurance policy (other than the exemption test policy the date of issue of which is determined under subparagraph (3)(a)(i)) in the order in which the dates of their issuance are proximate to that time, by an amount equal to the lesser of

      • (i) the portion, if any, of the particular amount not applied to reduce the benefit on death under one or more other such exemption test policies, and

      • (ii) the amount, immediately before that time, of the benefit on death under the relevant exemption test policy; and

    • (b) if the exemption test policy is issued in respect of a coverage under a life insurance policy issued after 2016 and at any time there is a particular reduction in the amount of a benefit on death under the coverage, or the portion, if any, of the fund value benefit referred to in clause (A) of the description of B in subparagraph (4)(a)(iii) in respect of the coverage, the amount of the benefit on death under each exemption test policy issued before that time in respect of the coverage (other than the exemption test policy the date of issue of which is determined under subparagraph (3)(b)(i)) is reduced at that time by an amount equal to the least of

      • (i) the particular reduction,

      • (ii) the amount, immediately before that time, of the benefit on death under the relevant exemption test policy, and

      • (iii) the portion, if any, of the particular reduction not applied to reduce the benefit on death under one or more other such exemption test policies issued on or after the date of issue of the relevant exemption test policy.

  • (6) Subsection (7) applies at any time in respect of a life insurance policy if

    • (a) that time is on its tenth or a later policy anniversary;

    • (b) the accumulating fund (computed without regard to any amount payable in respect of a policy loan) in respect of the policy at that time exceeds 250% of the accumulating fund (computed without regard to any amount payable in respect of a policy loan) in respect of the policy on its third preceding policy anniversary; and

    • (c) where that time is after 2016,

      • (i) the accumulating fund (computed without regard to any amount payable in respect of a policy loan) in respect of the policy at that time exceeds the total of all amounts each of which is

        • (A) if the policy is issued before 2017, 3/20 of the accumulating fund, at that time, in respect of an exemption test policy issued in respect of the policy, and

        • (B) if the policy is issued after 2016, 3/8 of the accumulating fund, at that time, in respect of an exemption test policy issued in respect of a coverage under the policy, and

      • (ii) subsection (7) did not apply on any of the policy’s six preceding policy anniversaries.

  • (7) If this subsection applies at any time in respect of a life insurance policy, each exemption test policy issued before that time in respect of the life insurance policy is at and after that time deemed to be issued (except for purposes of this subsection, paragraph (4)(a) and subsection (5))

    • (a) on the later of

      • (i) the date of the third preceding policy anniversary described in paragraph (6)(b) in respect of the policy, and

      • (ii) the date on which it was deemed by subsection (3) to be issued (determined immediately before that time); and

    • (b) not at any other time.

  • (8) A life insurance policy that would, in the absence of this subsection, cease (other than by reason of its conversion into an annuity contract) on a policy anniversary of the policy to be an exempt policy is deemed to be an exempt policy on that policy anniversary if

    • (a) had that policy anniversary occurred on the particular day that is 60 days after that policy anniversary, the policy would have been an exempt policy on the particular day; or

    • (b) the person whose life is insured under the policy dies on that policy anniversary or within 60 days after that policy anniversary.

  • (9) A life insurance policy (other than an annuity contract or deposit administration fund policy) issued before December 2, 1982 is deemed to be an exempt policy at all times from the date of its issue until the first time after December 1, 1982 at which

    • (a) a prescribed premium is paid by a taxpayer in respect of an interest, last acquired before December 2, 1982, in the policy; or

    • (b) an interest in the policy is acquired by a taxpayer from the person who held the interest continuously since December 1, 1982.

  • (10) If a particular time when a life insurance policy is issued has been determined under subsection 148(11) of the Act, in applying subsections (4) and (5) at or after the particular time to an exemption test policy issued before the particular time in respect of the policy,

    • (a) subparagraphs (4)(a)(iii) and (iv), and not subparagraph (4)(a)(i) or (ii), apply to the exemption test policy; and

    • (b) for greater certainty, paragraph (5)(b), and not paragraph (5)(a), applies to the exemption test policy.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/83-865, s. 5;
  • SOR/94-415, s. 2;
  • SOR/94-686, ss. 55(F), 56(F);
  • 2013, c. 40, s. 97;
  • 2014, c. 39, s. 81.

Accumulating Funds

  •  (1) For the purposes of this Part and sections 12.2 and 148 of the Act, accumulating fund, at any particular time, means

    • (a) in respect of a taxpayer’s interest in an annuity contract (other than a contract issued by a life insurer), the amount that is the greater of

      • (i) the amount, if any, by which the cash surrender value of the taxpayer’s interest at that time exceeds the amount payable, if any, in respect of a loan outstanding at that time made under the contract in respect of the interest, and

      • (ii) the amount, if any, by which

        • (A) the present value at that time of future payments to be made out of the contract in respect of the taxpayer’s interest

        exceeds

        • (B) the total of

          • (I) the present value at that time of future premiums to be paid under the contract in respect of the taxpayer’s interest, and

          • (II) the amount payable, if any, in respect of a loan outstanding at that time, made under the contract in respect of the taxpayer’s interest;

    • (b) in respect of a taxpayer’s interest in a life insurance policy (other than an exemption test policy or an annuity contract to which paragraph (1)(a) applies), the product obtained when,

      • (i) where the policy is not a deposit administration fund policy and the particular time is immediately after the death of any person on whose life the life insurance policy is issued or effected, the aggregate of the maximum amounts that could be determined by the life insurer immediately before the death in respect of the policy under paragraph 1401(1)(c) and subparagraph 1401(1)(d)(i) if the mortality rates used were adjusted to reflect the assumption that the death would occur at the time and in the manner that it did occur, and

      • (ii) in any other case, the maximum amount that could be determined at that particular time by the life insurer under paragraph 1401(1)(a), computed as though there were only one deposit administration fund policy, or under paragraph 1401(1)(c), as the case may be, in respect of the policy

      is multiplied by

      • (iii) the taxpayer’s proportionate interest in the policy; and

    • (c) in respect of an exemption test policy,

      • (i) if the particular time is during the exemption test policy’s pay period, the amount determined by the formula

        A × B/C

        where

        A 
        is the amount that would be determined under subparagraph (ii) in respect of the exemption test policy
        • (A) if the exemption test policy’s pay period is determined by subparagraph (b)(i) or (ii) of the definition pay period in section 310, on the first policy anniversary that is on or after the day on which the individual whose life is insured would, if the individual survived, attain the age of 105 years, as defined under the terms of the policy, and

        • (B) in any other case, on the exemption test policy’s policy anniversary represented by the adjectival form of the number of years in its pay period,

        B 
        is the number of years since the exemption test policy was issued, and
        C 
        is the number of years in the exemption test policy’s pay period,
      • (ii) if the particular time is after the exemption test policy’s pay period and before its endowment date, the amount that is the present value at the particular time of the future benefit on death under the exemption test policy, and

      • (iii) if the particular time is on or after the exemption test policy’s endowment date and the relevant life insurance policy is issued after 2016, the amount that is the benefit on death under the exemption test policy at the particular time.

  • (2) For the purposes of subsection (1), when computing the accumulating fund in respect of

    • (a) an interest described in paragraph (1)(a), the amounts determined under clauses (1)(a)(ii)(A) and (B) are to be computed using,

      • (i) where an interest rate for a period used by the issuer when the contract was issued in determining the terms of the contract was less than any rate so used for a subsequent period, the single rate that would, if it applied for each period, have produced the same terms, and

      • (ii) in any other case, the rates used by the issuer when the contract was issued in determining the terms of the contract;

    • (b) an interest described in paragraph (1)(b) in respect of a life insurance policy issued before 2017 or an annuity contract, if an interest rate used for a period by a life insurer in computing the relevant amounts in paragraph 1403(1)(a) or (b) is determined under paragraph 1403(1)(c), (d) or (e), as the case may be, and that rate is less than an interest rate so determined for a subsequent period, the single rate that could, if it applied for each period, have been used in determining the premiums for the policy is to be used;

    • (c) an exemption test policy issued in respect of a life insurance policy issued before 2017,

      • (i) the rates of interest and mortality used and the age of the person whose life is insured shall be the same as those used in computing the amounts described in paragraph 1403(1)(a) or (b) in respect of the life insurance policy in respect of which the exemption test policy was issued except that

        • (A) where the life insurance policy is one to which paragraph 1403(1)(e) applies and the amount determined under subparagraph 1401(1)(c)(i) in respect of that policy is greater than the amount determined under subparagraph 1401(1)(c)(ii) in respect thereof, the rates of interest and mortality used may be those used in computing the cash surrender values of that policy, and

        • (B) where an interest rate for a period otherwise determined under this subparagraph in respect of that interest is less than an interest rate so determined for a subsequent period, the single rate that could, if it applied for each period, have been used in determining the premiums for the life insurance policy shall be used, and

      • (ii) notwithstanding subparagraph (i),

        • (A) where the rates referred to in subparagraph (i) do not exist, the minimum guaranteed rates of interest used under the life insurance policy to determine cash surrender values and the rates of mortality under the Commissioners 1958 Standard Ordinary Mortality Table, as published in Volume X of the Transactions of the Society of Actuaries, relevant to the person whose life is insured under the life insurance policy shall be used, or

        • (B) where, in respect of the life insurance policy, the particular period over which the amount determined under clause (B) of the description of A in subparagraph 1401(1)(c)(ii) does not extend to the exemption test policy’s endowment date, the weighted arithmetic mean of the interest rates used to determine the amount is to be used for the period that is after the particular period and before that date,

      • (iii) notwithstanding subparagraphs (i) and (ii), no rate of interest used for the purpose of determining the accumulating fund in respect of an exemption test policy issued in respect of the life insurance policy is to be less than

        • (A) if the life insurance policy is issued after April 1985, 4% per annum, and

        • (B) if the life insurance policy is issued before May 1985, 3% per annum, and

      • (iv) each amount of a benefit on death is to be determined net of any portion in respect of the benefit on death of the exemption test policy related to a segregated fund; and

    • (d) an exemption test policy issued in respect of a coverage under a life insurance policy issued after 2016,

      • (i) the rates of interest and mortality used and the age of the individual whose life is insured under the coverage are to be the same as those used in computing amounts under paragraph 1401(1)(c) in respect of the policy, and

      • (ii) each amount of a benefit on death is to be determined net of any portion in respect of the benefit on death of the exemption test policy related to a segregated fund.

  • (3) and (4) [Repealed, 2014, c. 39, s. 82]

  • (5) In this section, any amount determined by reference to section 1401 shall be determined

    • (a) without regard to section 1402; and

    • (b) as if each reference to “policy loan” in section 1401 were read as a reference to “policy loan, as defined in subsection 148(9) of the Act,”.

    • (c) [Repealed, 2014, c. 39, s. 82]

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/83-865, s. 5;
  • SOR/84-948, s. 2;
  • SOR/91-290, s. 1;
  • SOR/94-686, ss. 3(F), 55(F);
  • SOR/2011-188, s. 10;
  • 2014, c. 39, s. 82.

Net Cost of Pure Insurance and Mortality Gains And Losses

  •   (1) For the purposes of subparagraph 20(1)(e.2)(ii) and paragraph (a) of the description of L in the definition adjusted cost basis in subsection 148(9) of the Act, the net cost of pure insurance for a year in respect of a taxpayer’s interest in a life insurance policy is

    • (a) if, determined at the end of the year, the policy was issued before 2017, the amount determined by the formula

      A × (B – C)

      where

      A 
      is the probability, computed on the basis of the rates of mortality under the 1969–75 mortality tables of the Canadian Institute of Actuaries published in Volume XVI of the Proceedings of the Canadian Institute of Actuaries, or on the basis described in subsection (1.1), that an individual who has the same relevant characteristics as the individual whose life is insured will die in the year,
      B 
      is the benefit on death in respect of the interest at the end of the year, and
      C 
      is the accumulating fund (determined without regard to any amount payable in respect of the policy loan) in respect of the interest at the end of the year or the interest’s cash surrender value at the end of the year, depending on the method regularly followed by the life insurer in computing amounts under this subsection; and
    • (b) if, determined at the end of the year, the policy was issued after 2016, the total of all amounts each of which is an amount determined in respect of a coverage in respect of the interest by the formula

      A × (B – C)

      where

      A 
      is the probability, computed on the basis of the rates of mortality determined in accordance with paragraph 1401(4)(b), or on the basis described in subsection (1.2), that an individual whose life is insured under the coverage will die in the year,
      B 
      is the benefit on death under the coverage in respect of the interest at the end of the year, and
      C 
      is the amount determined by the formula

      D + E

      where

      D 
      is the portion, in respect of the coverage in respect of the interest, of the amount that would be the present value, determined for the purposes of section 307, on the last policy anniversary that is on or before the last day of the year, of the fund value of the coverage if the fund value of the coverage were equal to the fund value of the coverage at the end of the year, and
      E 
      is the portion, in respect of the coverage in respect of the interest, of the amount that would be determined, on that policy anniversary, for paragraph (a) of the description of C in the definition net premium reserve in subsection 1401(3) in respect of the coverage, if the benefit on death under the coverage, and the fund value of the coverage, on that policy anniversary were equal to the benefit on death under the coverage and the fund value of the coverage, respectively, at the end of the year.
  • (1.1) If premiums for a life insurance policy do not depend directly on smoking or sex classification, the probability referred to in paragraph (1)(a) may be determined using rates of mortality otherwise determined, provided that for each age for the policy, the expected value of the aggregate net cost of pure insurance, calculated using those rates of mortality, is equal to the expected value of the aggregate net cost of pure insurance, calculated using the rates of mortality under the 1969–75 mortality tables of the Canadian Institute of Actuaries published in Volume XVI of the Proceedings of the Canadian Institute of Actuaries.

  • (1.2) If premiums or costs of insurance charges for a coverage under a life insurance policy do not depend directly on smoking or sex classification, the probability referred to in paragraph (1)(b) may be determined using rates of mortality otherwise determined, provided that for each age for the coverage, the expected value of the aggregate net cost of pure insurance, calculated using those rates of mortality, is equal to the expected value of the aggregate net cost of pure insurance, calculated using the rates of mortality that would be calculated under paragraph (1)(b) in respect of the coverage using the mortality tables described in paragraph 1401(4)(b).

  • (2) Subject to subsection (4), for the purposes of this section and of the description of G in the definition adjusted cost basis in subsection 148(9) of the Act, a mortality gain immediately before the end of any calendar year after 1982 in respect of a taxpayer’s interest in a life annuity contract means such reasonable amount in respect of the taxpayer’s interest in the life annuity contract at that time that the life insurer determines to be the increase to the accumulating fund in respect of the interest that occurred during that year as a consequence of the survival to the end of the year of one or more of the annuitants under the life annuity contract.

  • (3) Subject to subsection (4), for the purposes of this section and of paragraph (c) of the description of L in the definition adjusted cost basis in subsection 148(9) of the Act, a mortality loss immediately before a particular time after 1982 in respect of an interest in a life annuity contract disposed of immediately after that particular time as a consequence of the death of an annuitant under the life annuity contract means such reasonable amount that the life insurer determines to be the decrease, as a consequence of the death, in the accumulating fund in respect of the interest assuming that, in determining such decrease, the accumulating fund immediately after the death is determined in the manner described in subparagraph 307(1)(b)(i).

  • (4) In determining an amount for a year in respect of an interest in a life annuity contract under subsection (2) or (3), the expected value of the mortality gains in respect of the interest for the year shall be equal to the expected value of the mortality losses in respect of the interest for the year and the mortality rates for the year used in computing those expected values shall be those that would be relevant to the interest and that are specified under such of paragraphs 1403(1)(c), (d) and (e) as are applicable.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/83-865, s. 5;
  • SOR/91-290, s. 2;
  • SOR/94-415, s. 3;
  • SOR/94-686, s. 55(F);
  • SOR/2011-188, s. 11;
  • 2014, c. 39, s. 83.

Prescribed Premiums and Prescribed Increases

[SOR/2011-188, s. 12(F)]
  •  (1) For the purposes of this section and section 306, and of subsection 89(2) of the Act, a premium at any time under a life insurance policy is a “prescribed premium” if the total amount of one or more premiums paid at that time under the policy exceeds the amount of premium that, under the policy, was scheduled to be paid at that time and that was fixed and determined on or before December 1, 1982, adjusted for such of the following transactions and events that have occurred after that date in respect of the policy:

    • (a) a change in underwriting class;

    • (b) a change in premium due to a change in frequency of premium payments within a year that does not alter the present value, at the beginning of the year, of the total premiums to be paid under the policy in the year;

    • (c) an addition or deletion of accidental death or guaranteed purchase option benefits or disability benefits that provide for annuity payments or waiver of premiums;

    • (d) a premium adjustment as a result of interest, mortality or expense considerations, or of a change in the benefit on death under the policy relating to an increase in the Consumer Price Index (as published by Statistics Canada under the authority of the Statistics Act) where such adjustment

      • (i) is made by the life insurer on a class basis pursuant to the policy’s terms as they read on December 1, 1982, and

      • (ii) is not made as a result of the exercise of a conversion privilege under the policy;

    • (e) a change arising from the provision of an additional benefit on death under a participating life insurance policy, as defined in subsection 138(12) of the Act, as, on account or in lieu of payment of, or in satisfaction of

      • (i) policy dividends or other distributions of the life insurer’s income from its participating life insurance business, or

      • (ii) interest earned on policy dividends that are held on deposit by the life insurer;

    • (f) redating lapsed policies, if the policy was reinstated not later than 60 days after the end of the calendar year in which the lapse occurred, or redating for policy loan indebtedness;

    • (g) a change in premium due to a correction of erroneous information contained in the application for the policy;

    • (h) payment of a premium after its due date, or payment of a premium no more than 30 days before its due date, as established on or before December 1, 1982; and

    • (i) the payment of interest described in paragraph (a) of the definition premium in subsection 148(9) of the Act.

  • (2) For the purposes of subsections 12.2(9) and 89(2) of the Act, a “prescribed increase” in a benefit on death under a life insurance policy has occurred at any time where the amount of the benefit on death under the policy at that time exceeds the amount of the benefit on death at that time under the policy that was fixed and determined on or before December 1, 1982, adjusted for such of the following transactions and events that have occurred after that date in respect of the policy:

    • (a) an increase resulting from a change described in paragraph (1)(e);

    • (b) a change as a result of interest, mortality or expense considerations, or an increase in the Consumer Price Index (as published by Statistics Canada under the authority of the Statistics Act) where such change is made by the life insurer on a class basis pursuant to the policy’s terms as they read on December 1, 1982;

    • (c) an increase in consequence of the prepayment of premiums (other than prescribed premiums) under the policy where such increase does not exceed the aggregate of the premiums that would otherwise have been paid;

    • (d) an increase in respect of a policy for which

      • (i) the benefit on death was, at December 1, 1982, a specific mathematical function of the policy’s cash surrender value or factors including the policy’s cash surrender value, and

      • (ii) that function has not changed since that date,

      unless any part of such increase is attributable to a prescribed premium paid in respect of a policy or to income earned on such a premium; and

    • (e) an increase that is granted by the life insurer on a class basis without consideration and not pursuant to any term of the contract.

  • (3) For the purposes of subsections (1) and (2), a life insurance policy that is issued as a result of the exercise of a renewal privilege provided under the terms of another policy as they read on December 1, 1982 shall be deemed to be a continuation of that other policy.

  • (4) For the purposes of subsection (2), a life insurance policy that is issued as a result of the exercise of a conversion privilege provided under the terms of another policy as they read on December 1, 1982 shall be deemed to be a continuation of that other policy except that any portion of the policy relating to the portion of the benefit on death, immediately before the conversion, that arose as a consequence of an event occurring after December 1, 1982 and described in paragraph (1)(e) shall be deemed to be a separate life insurance policy issued at the time of the conversion.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/83-865, s. 5;
  • SOR/88-165, s. 30(F);
  • SOR/94-686, s. 55(F);
  • SOR/2011-188, s. 13;
  • 2013, c. 34, s. 379.

Income from participating life insurance businesses

 For the purpose of subparagraph 309(1)(e)(i), in computing a life insurer’s income for a taxation year from its participating life insurance business carried on in Canada,

  • (a) there shall be included the amount determined by the formula

    A × B/C

    where

    A 
    is the insurer’s gross Canadian life investment income (in this section as defined in subsection 2400(1)) for the year,
    B 
    is the total of
    • (i) the insurer’s mean maximum tax actuarial reserve (in this section as defined in subsection 2400(1)) for the year in respect of participating life insurance policies in Canada, and

    • (ii) 1/2 of the total of

      • (A) all amounts on deposit with the insurer as at the end of the year in respect of policies described in subparagraph (i), and

      • (B) all amounts on deposit with the insurer as at the end of the immediately preceding taxation year in respect of policies described in subparagraph (i), and

    C 
    the total of all amounts, each of which is
    • (i) the insurer’s mean maximum tax actuarial reserve for the year in respect of a class of life insurance policies in Canada, or

    • (ii) 1/2 of the total of

      • (A) all amounts on deposit with the insurer as at the end of the year in respect of a class of policies described in subparagraph (i), and

      • (B) all amounts on deposit with the insurer as at the end of the immediately preceding taxation year in respect of a class of policies described in subparagraph (i);

  • (b) there shall be included

    • (i) the insurer’s maximum tax actuarial reserve for the immediately preceding taxation year in respect of participating life insurance policies in Canada, and

    • (ii) the maximum amount deductible by the insurer under subparagraph 138(3)(a)(ii) of the Act in computing its income for the immediately preceding taxation year in respect of participating life insurance policies in Canada;

  • (c) there shall not be included any amount in respect of the insurer’s participating life insurance policies in Canada that was deducted under subparagraph 138(3)(a)(i) or (ii) of the Act in computing its income for the immediately preceding taxation year;

  • (d) subject to paragraph (a),

    • (i) there shall not be included any amount

      • (A) as a reserve that was deducted under paragraph 20(1)(l) of the Act in computing the insurer’s income for the immediately preceding taxation year, or

      • (B) that was included in determining the insurer’s gross Canadian life investment income for the year, and

    • (ii) no deduction shall be made in respect of any amount

      • (A) taken into account in determining the insurer’s gross Canadian life investment income for the year, or

      • (B) deductible under paragraph 20(1)(l) of the Act in computing the insurer’s income for the year;

  • (e) there shall be deducted

    • (i) the insurer’s maximum tax actuarial reserve for the year in respect of participating life insurance policies in Canada, and

    • (ii) the maximum amount deductible by the insurer under subparagraph 138(3)(a)(ii) of the Act in computing its income for the year in respect of participating life insurance policies in Canada;

  • (f) no deduction shall be made in respect of any amount deductible under subparagraph 138(3)(a)(iii) of the Act in computing the insurer’s income for the year;

  • (g) except as otherwise provided in paragraph (e), no deduction shall be made in respect of a reserve deductible under subparagraph 138(3)(a)(i) or (ii) of the Act in computing the insurer’s income for the year; and

  • (h) except as otherwise provided in this section, the provisions of the Act relating to the computation of income from a source shall apply.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. 2013, c. 34, s. 380.

Interpretation

 The following definitions apply for the purposes of this section and sections 300, 301 and 304 to 309.

adjusted purchase price

prix d’achat rajusté

adjusted purchase price, of a taxpayer’s interest in an annuity contract at any time, means, subject to subsections 300(3) and (4), the amount that would be determined at that time in respect of the interest under the definition adjusted cost basis in subsection 148(9) of the Act if the formula in that definition were read without reference to K. (prix d’achat rajusté)

amount payable

montant payable

amount payable has the same meaning as in subsection 138(12) of the Act. (montant payable)

benefit on death

prestation de décès

benefit on death has the same meaning as in subsection 1401(3). (prestation de décès)

cash surrender value

valeur de rachat

cash surrender value has the same meaning as in subsection 148(9) of the Act. (valeur de rachat)

coverage

protection

coverage, under a life insurance policy,

  • (a) for the purposes of section 306, means all life insurance (other than a fund value benefit) under the policy in respect of a specific life, or two or more specific lives jointly insured; and

  • (b) for the purposes of sections 307 and 308, has the same meaning as in subsection 1401(3). (protection)

endowment date

date d’échéance

endowment date, of an exemption test policy, means

  • (a) where the exemption test policy is issued in respect of a life insurance policy issued before 2017, the later of

    • (i) 10 years after the date of issue of the life insurance policy, and

    • (ii) the first policy anniversary that is on or after the day on which the individual whose life is insured under the life insurance policy would, if the individual survived, attain the age of 85 years, as defined under the terms of the policy; and

  • (b) where the exemption test policy is issued in respect of a coverage under a life insurance policy issued after 2016,

    • (i) if two or more lives are jointly insured under the coverage, the date that would be determined under subparagraph (ii) using the equivalent single age, determined on the coverage’s date of issue and in accordance with accepted actuarial principles and practices, that reasonably approximates the mortality rates of those lives, and

    • (ii) in any other case, the later of

      • (A) the earlier of

        • (I) 15 years after the date of issue of the exemption test policy, and

        • (II) the first policy anniversary that is on or after the day on which the individual whose life is insured under the coverage would, if the individual survived, attain the age of 105 years, as defined under the terms of the policy, and

      • (B) the first policy anniversary that is on or after the day on which the individual whose life is insured under the coverage would, if the individual survived, attain the age of 90 years, as defined under the terms of the policy. (date d’échéance)

fund value benefit

bénéfice au titre de la valeur du fonds

fund value benefit has the same meaning as in subsection 1401(3). (bénéfice au titre de la valeur du fonds)

fund value of a coverage

valeur du fonds d’une protection

fund value of a coverage has the same meaning as in subsection 1401(3). (valeur du fonds d’une protection)

pay period

période de paiement

pay period, of an exemption test policy, means

  • (a) where the exemption test policy is issued in respect of a life insurance policy issued before 2017,

    • (i) if on the date of issue of the exemption test policy, the individual whose life is insured has attained the age of 66 years, as defined under the terms of the policy, but not the age of 75 years, as defined under the terms of the policy, the period that starts on that date and that ends after the number of years obtained when the number of years by which the age of the individual exceeds 65 years, as defined under the terms of the policy, is subtracted from 20,

    • (ii) if on the date of issue of the exemption test policy, the individual whose life is insured has attained the age of 75 years, as defined under the terms of the policy, the 10-year period that starts on that date, and

    • (iii) in any other case, the 20-year period that starts on the date of issue of the exemption test policy; and

  • (b) where the exemption test policy is issued in respect of a coverage under a life insurance policy issued after 2016,

    • (i) subject to subparagraph (ii), if the individual whose life is insured under the coverage would, if the individual survived, attain the age of 105 years, as defined under the terms of the policy, within the eight-year period that starts on the date of issue of the exemption test policy, the period that starts on that date and that ends on the first policy anniversary that is on or after the day on which the individual would, if the individual survived, attain the age of 105 years, as defined under the terms of the policy,

    • (ii) if two or more lives are jointly insured under the coverage and an individual of an age equal to the equivalent single age on the date of the issue of the coverage would, if the individual survived, attain the age of 105 years, as defined under the terms of the policy, within the eight-year period that starts on the date of issue of the exemption test policy, the period that starts on that date and that ends on the first policy anniversary that is on or after the day on which the individual would, if the individual survived, attain the age of 105 years, as defined under the terms of the policy, and

    • (iii) in any other case, the eight-year period that starts on the date of issue of the exemption test policy. (période de paiement)

policy anniversary

anniversaire de la police

policy anniversary includes, in the case of a life insurance policy that is in existence throughout a calendar year and that would not otherwise have a policy anniversary for the calendar year, the end of the calendar year. (anniversaire de la police)

policy loan

avance sur police

policy loan has the same meaning as in subsection 148(9) of the Act. (avance sur police)

proceeds of the disposition

produit de la disposition

proceeds of the disposition has the same meaning as in subsection 148(9) of the Act. (produit de la disposition)

tax anniversary date

jour anniversaire d’imposition

tax anniversary date, in relation to an annuity contract, means the second anniversary date of the contract to occur after October 22, 1968. (jour anniversaire d’imposition)

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/83-865, s. 5;
  • SOR/94-686, s. 55(F);
  • SOR/2011-188, s. 14;
  • 2014, c. 39, s. 84.

PART IVTaxable Income Earned in a Province by a Corporation

[SOR/94-686, s. 79(F)]

Interpretation

  •  (1) In applying the definition taxable income earned in the year in a province in subsection 124(4) of the Act for a corporation’s taxation year

    • (a) the prescribed rules referred to in that definition are the rules in this Part; and

    • (b) the amount determined under those prescribed rules means the total of all amounts each of which is the taxable income of the corporation earned in the taxation year in a particular province as determined under this Part.

  • (1.1) [Repealed, 2013, c. 33, s. 32]

  • (2) For the purposes of this Part, permanent establishment in respect of a corporation means a fixed place of business of the corporation, including an office, a branch, a mine, an oil well, a farm, a timberland, a factory, a workshop or a warehouse, and

    • (a) where the corporation does not have any fixed place of business it means the principal place in which the corporation’s business is conducted;

    • (b) where a corporation carries on business through an employee or agent, established in a particular place, who has general authority to contract for his employer or principal or who has a stock of merchandise owned by his employer or principal from which he regularly fills orders which he receives, the corporation shall be deemed to have a permanent establishment in that place;

    • (c) an insurance corporation is deemed to have a permanent establishment in each province and country in which the corporation is registered or licensed to do business;

    • (d) where a corporation, otherwise having a permanent establishment in Canada, owns land in a province, such land shall be deemed to be a permanent establishment;

    • (e) where a corporation uses substantial machinery or equipment in a particular place at any time in a taxation year it shall be deemed to have a permanent establishment in that place;

    • (e.1) if, but for this paragraph, a corporation would not have a permanent establishment, the corporation is deemed to have a permanent establishment at the place designated in its incorporating documents or bylaws as its head office or registered office;

    • (f) the fact that a corporation has business dealings through a commission agent, broker or other independent agent or maintains an office solely for the purchase of merchandise shall not of itself be held to mean that the corporation has a permanent establishment; and

    • (g) the fact that a corporation has a subsidiary controlled corporation in a place or a subsidiary controlled corporation engaged in trade or business in a place shall not of itself be held to mean that the corporation is operating a permanent establishment in that place.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/78-772, s. 1;
  • SOR/81-267, s. 1;
  • SOR/86-390, s. 1;
  • SOR/94-140, s. 1;
  • SOR/94-686, ss. 4(F), 57(F), 79(F);
  • 2009, c. 2, s. 91;
  • SOR/2010-93, s. 8(F);
  • 2013, c. 33, s. 32.

Computation of Taxable Income

 This Part applies to determine the amount of taxable income of a corporation earned in a taxation year in a particular province.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/94-686, s. 79(F);
  • 2009, c. 2, s. 92.

General Rules

  •  (1) Where, in a taxation year, a corporation had a permanent establishment in a particular province and had no permanent establishment outside that province, the whole of its taxable income for the year shall be deemed to have been earned therein.

  • (2) Where, in a taxation year, a corporation had no permanent establishment in a particular province, no part of its taxable income for the year shall be deemed to have been earned therein.

  • (3) Except as otherwise provided, where, in a taxation year, a corporation had a permanent establishment in a province and a permanent establishment outside that province, the amount of its taxable income that shall be deemed to have been earned in the year in the province is

    • (a) in any case other than a case specified in paragraph (b) or (c), 1/2 the aggregate of

      • (i) that proportion of its taxable income for the year that the gross revenue for the year reasonably attributable to the permanent establishment in the province is of its total gross revenue for the year, and

      • (ii) that proportion of its taxable income for the year that the aggregate of the salaries and wages paid in the year by the corporation to employees of the permanent establishment in the province is of the aggregate of all salaries and wages paid in the year by the corporation;

    • (b) in any case where the gross revenue for the year of the corporation is nil, that proportion of its taxable income for the year that the aggregate of the salaries and wages paid in the year by the corporation to employees of the permanent establishment in the province is of the aggregate of all salaries and wages paid in the year by the corporation; and

    • (c) in any case where the aggregate of the salaries and wages paid in the year by the corporation is nil, that proportion of its taxable income for the year that the gross revenue for the year reasonably attributable to the permanent establishment in the province is of its total gross revenue for the year.

  • (4) For the purpose of determining the gross revenue for the year reasonably attributable to a permanent establishment in a province or country other than Canada, within the meaning of subsection (3), the following rules shall apply:

    • (a) where the destination of a shipment of merchandise to a customer to whom the merchandise is sold is in the particular province or country, the gross revenue derived therefrom shall be attributable to the permanent establishment in the province or country;

    • (b) except as provided in paragraph (c), where the destination of a shipment of merchandise to a customer to whom the merchandise is sold is in a province or country other than Canada in which the taxpayer has no permanent establishment, if the person negotiating the sale may reasonably be regarded as being attached to the permanent establishment in the particular province or country, the gross revenue derived therefrom shall be attributable to that permanent establishment;

    • (c) where the destination of a shipment of merchandise to a customer to whom the merchandise is sold is in a country other than Canada in which the taxpayer has no permanent establishment,

      • (i) if the merchandise was produced or manufactured or produced and manufactured, entirely in the particular province by the taxpayer, the gross revenue derived therefrom shall be attributable to the permanent establishment in the province, or

      • (ii) if the merchandise was produced or manufactured, or produced and manufactured, partly in the particular province and partly in another place by the taxpayer, the gross revenue derived therefrom attributable to the permanent establishment in the province shall be that proportion thereof that the salaries and wages paid in the year to employees of the permanent establishment in the province where the merchandise was partly produced or manufactured (or partly produced and manufactured) is of the aggregate of the salaries and wages paid in the year to employees of the permanent establishments where the merchandise was produced or manufactured (or produced and manufactured);

    • (d) where a customer to whom merchandise is sold instructs that shipment be made to some other person and the customer’s office with which the sale was negotiated is located in the particular province or country, the gross revenue derived therefrom shall be attributable to the permanent establishment in the province or country;

    • (e) except as provided in paragraph (f), where a customer to whom merchandise is sold instructs that shipment be made to some other person and the customer’s office with which the sale was negotiated is located in a province or country other than Canada in which the taxpayer has no permanent establishment, if the person negotiating the sale may reasonably be regarded as being attached to the permanent establishment in the particular province or country, the gross revenue derived therefrom shall be attributable to that permanent establishment;

    • (f) where a customer to whom merchandise is sold instructs that shipment be made to some other person and the customer’s office with which the sale was negotiated is located in a country other than Canada in which the taxpayer has no permanent establishment,

      • (i) if the merchandise was produced or manufactured, or produced and manufactured, entirely in the particular province by the taxpayer, the gross revenue derived therefrom shall be attributable to the permanent establishment in the province, or

      • (ii) if the merchandise was produced or manufactured, or produced and manufactured, partly in the particular province and partly in another place by the taxpayer, the gross revenue derived therefrom attributable to the permanent establishment in the province shall be that proportion thereof that the salaries and wages paid in the year to employees of the permanent establishment in the province where the merchandise was partly produced or manufactured (or partly produced and manufactured) is of the aggregate of the salaries and wages paid in the year to employees of the permanent establishments where the merchandise was produced or manufactured (or produced and manufactured);

    • (g) where gross revenue is derived from services rendered in the particular province or country, the gross revenue shall be attributable to the permanent establishment in the province or country;

    • (h) where gross revenue is derived from services rendered in a province or country other than Canada in which the taxpayer has no permanent establishment, if the person negotiating the contract may reasonably be regarded as being attached to the permanent establishment of the taxpayer in the particular province or country, the gross revenue shall be attributable to that permanent establishment;

    • (i) where standing timber or the right to cut standing timber is sold and the timber limit on which the timber is standing is in the particular province or country, the gross revenue from such sale shall be attributable to the permanent establishment of the taxpayer in the province or country; and

    • (j) gross revenue which arises from leasing land owned by the taxpayer in a province and which is included in computing its income under Part I of the Act shall be attributable to the permanent establishment, if any, of the taxpayer in the province where the land is situated.

  • (4.1) For the purposes of subsections (3) and (4), where, in a taxation year,

    • (a) the destination of a shipment of merchandise to a customer to whom the merchandise is sold by a corporation is in a country other than Canada or the customer to whom merchandise is sold by a corporation instructs that the shipment of merchandise be made by the corporation to another person and the customer’s office with which the sale was negotiated is located in a country other than Canada,

    • (b) the corporation has a permanent establishment in the other country, and

    • (c) the corporation is not subject to taxation on its income under the laws of the other country, or its gross revenue derived from the sale is not included in computing the income or profit or other base for income or profits taxation by the other country, because of

      • (i) the provisions of any taxing statute of the other country, or

      • (ii) the operation of any tax treaty or convention between Canada and the other country,

    the following rules apply:

    • (d) with respect to the gross revenue derived from the sale,

      • (i) paragraphs (4)(a) and (d) do not apply,

      • (ii) that portion of paragraph (4)(c) preceding subparagraph (i) thereof shall be read as follows:

        • “(c) where the destination of a shipment of merchandise to a customer to whom the merchandise is sold is in a country other than Canada,” and

      • (iii) that portion of paragraph (4)(f) preceding subparagraph (i) thereof shall be read as follows:

        • “(f) where a customer to whom the merchandise is sold instructs that shipment be made to some other person and the customer’s office with which the sale was negotiated is located in a country other than Canada,”; and

    • (e) for the purposes of subparagraph (3)(a)(ii), paragraph (3)(b) and subparagraphs (4)(c)(ii) and (f)(ii), salaries and wages paid in the year to employees of any permanent establishment of the corporation located in that other country” shall be deemed to be nil.

  • (5) For the purposes of subsection (3), “gross revenue” does not include interest on bonds, debentures or mortgages, dividends on shares of capital stock, or rentals or royalties from property that is not used in connection with the principal business operations of the corporation.

  • (6) For the purposes of subsection (3), where part of the corporation’s operations were conducted in partnership with one or more other persons

    • (a) the corporation’s gross revenue for the year, and

    • (b) the salaries and wages paid in the year by the corporation,

    shall include, in respect of those operations, only that proportion of

    • (c) the total gross revenue of the partnership for its fiscal period ending in or coinciding with the year, and

    • (d) the total salaries and wages paid by the partnership in its fiscal period ending in or coinciding with the year,

    respectively, that

    • (e) the corporation’s share of the income or loss of the partnership for the fiscal period ending in or coinciding with the year,

    is of

    • (f) the total income or loss of the partnership for the fiscal period ending in or coinciding with the year.

  • (7) Where a corporation pays a fee to another person under an agreement pursuant to which that other person or employees of that other person perform services for the corporation that would normally be performed by employees of the corporation, the fee so paid shall be deemed to be salary paid in the year by the corporation and that part of the fee that may reasonably be regarded as payment in respect of services rendered at a particular permanent establishment of the corporation shall be deemed to be salary paid to an employee of that permanent establishment.

  • (8) For the purposes of subsection (7), a fee does not include a commission paid to a person who is not an employee of the corporation.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/80-949, s. 1;
  • SOR/94-327, s. 1;
  • SOR/94-686, ss. 78(F), 79(F), 81(F);
  • SOR/2010-93, s. 9(F);
  • SOR/2011-195, s. 1(F).

Central Paymaster

  •  (1) In this Part, if an individual (referred to in this section as the “employee”) is employed by a person (referred to in this section as the “employer”) and performs a service in a particular province for the benefit of or on behalf of a corporation that is not the employer, an amount that may reasonably be regarded as equal to the amount of salary or wages earned by the employee for the service (referred to in this section as the “particular salary”) is deemed to be salary paid by the corporation to an employee of the corporation in the corporation’s taxation year in which the particular salary is paid if

    • (a) at the time the service is performed,

      • (i) the corporation and the employer do not deal at arm’s length, and

      • (ii) the corporation has a permanent establishment in the particular province;

    • (b) the service

      • (i) is performed by the employee in the normal course of the employee’s employment by the employer,

      • (ii) is performed for the benefit of or on behalf of the corporation in the ordinary course of a business carried on by the corporation, and

      • (iii) is of a type that could reasonably be expected to be performed by employees of the corporation in the ordinary course of the business referred to in subparagraph (ii); and

    • (c) the amount is not otherwise included in the aggregate, determined for the purposes of this Part, of the salaries and wages paid by the corporation.

  • (2) In this Part, an amount deemed under subsection (1) to be salary paid by a corporation to an employee of the corporation for a service performed in a particular province is deemed to have been paid,

    • (a) if the service was performed at one or more permanent establishments of the corporation in the particular province, to an employee of the permanent establishment or establishments; or

    • (b) if paragraph (a) does not apply, to an employee of any other permanent establishment (as is reasonably determined in the circumstances) of the corporation in the particular province.

  • (3) In determining under this Part the amount of salaries and wages paid in a year by an employer, there shall be deducted the total of all amounts each of which is a particular salary paid by the employer in the year.

  • (4) Despite subparagraph (1)(a)(i), this section applies to a corporation and an employer that deal at arm’s length if the Minister determines that the corporation and the employer have entered into an arrangement the purpose of which is to reduce, through the provision of services as described in subsection (1), the total amount of income tax payable by the corporation under a law of the particular province referred to in subsection (1).

  • (5) For the purposes of this section, a partnership is deemed to be a corporation and the corporation’s taxation year is deemed to be the partnership’s fiscal period.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/78-772, s. 2;
  • SOR/94-686, s. 79(F);
  • 2009, c. 2, s. 93.

 [Repealed, 2009, c. 2, s. 93]

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/81-267, s. 2;
  • SOR/94-686, s. 79(F);
  • 2009, c. 2, s. 93.

Insurance Corporations

  •  (1) Notwithstanding subsections 402(3) and (4), the amount of taxable income that shall be deemed to have been earned in a taxation year in a particular province by an insurance corporation is that proportion of its taxable income for the year that the aggregate of

    • (a) its net premiums for the year in respect of insurance on property situated in the province, and

    • (b) its net premiums for the year in respect of insurance, other than on property, from contracts with persons resident in the province,

    is of the total of such of its net premiums for the year as are included in computing its income for the purposes of Part I of the Act.

  • (2) In this section, net premiums of a corporation for a taxation year means the aggregate of the gross premiums received by the corporation in the year (other than consideration received for annuities), minus the aggregate for the year of

    • (a) premiums paid for reinsurance,

    • (b) dividends or rebates paid or credited to policyholders, and

    • (c) rebates or returned premiums paid in respect of the cancellation of policies,

    by the corporation.

  • (3) For the purposes of subsection (1), where an insurance corporation had no permanent establishment in a taxation year in a particular province,

    • (a) each net premium for that year in respect of insurance on property situated in the particular province shall be deemed to be a net premium in respect of insurance on property situated in the province in which the permanent establishment of the corporation to which the net premium is reasonably attributable is situated; and

    • (b) each net premium for that year in respect of insurance, other than on property, from contracts with persons resident in the particular province shall be deemed to be a net premium in respect of insurance, other than on property, from contracts with persons resident in the province in which the permanent establishment of the corporation to which the net premium is reasonably attributable is situated.

  • (4) For the purposes of subsection (1), if in a taxation year an insurance corporation has no permanent establishment in a particular country other than Canada, but provides insurance on property in the particular country or has a contract for insurance, other than on property, with a person resident in the particular country, each net premium for the taxation year in respect of the insurance is deemed to be a net premium in respect of insurance on property situated in, or from contracts with persons resident in, as the case may be, the province in Canada or country other than Canada in which is situated the permanent establishment of the corporation to which the net premium is reasonably attributable in the circumstances.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/94-686, ss. 5(F), 57(F);
  • 2009, c. 2, s. 94.

Banks

[SOR/2009-302, s. 2]
  •  (1) Notwithstanding subsections 402(3) and (4), the amount of taxable income that is deemed to have been earned by a bank in a taxation year in a province in which it had a permanent establishment is 1/3 of the total of

    • (a) that proportion of its taxable income for the year that the aggregate of the salaries and wages paid in the year by the bank to employees of its permanent establishment in the province is of the aggregate of all salaries and wages paid in the year by the bank; and

    • (b) twice that proportion of its taxable income for the year that the aggregate amount of loans and deposits of its permanent establishment in the province for the year is of the aggregate amount of all loans and deposits of the bank for the year.

  • (2) For the purposes of subsection (1), the amount of loans for a taxation year is 1/12 of the aggregate of the amounts outstanding, on the loans made by the bank, at the close of business on the last day of each month in the year.

  • (3) For the purposes of subsection (1), the amount of deposits for a taxation year is 1/12 of the aggregate of the amounts on deposit with the bank at the close of business on the last day of each month in the year.

  • (4) For the purposes of subsections (2) and (3), loans and deposits do not include bonds, stocks, debentures, items in transit and deposits in favour of Her Majesty in right of Canada.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/80-949, s. 2;
  • SOR/2009-302, s. 3.

Trust and Loan Corporations

[SOR/94-686, s. 79(F)]
  •  (1) Notwithstanding subsections 402(3) and (4), the amount of taxable income that shall be deemed to have been earned in a taxation year by a trust and loan corporation, trust corporation or loan corporation in a province in which it had a permanent establishment is that proportion of its taxable income for the year that the gross revenue for the year of its permanent establishment in the province is of the total gross revenue for the year of the corporation.

  • (2) In subsection (1), gross revenue for the year of its permanent establishment in the province means the aggregate of the gross revenue of the corporation for the year arising from

    • (a) loans secured by lands situated in the province;

    • (b) loans, not secured by land, to persons residing in the province;

    • (c) loans

      • (i) to persons residing in a province or country other than Canada in which the corporation has no permanent establishment, and

      • (ii) administered by a permanent establishment in the province,

      except loans secured by land situated in a province or country other than Canada in which the corporation has a permanent establishment; and

    • (d) business conducted at the permanent establishment in the province, other than revenue in respect of loans.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/80-949, s. 3;
  • SOR/94-686, s. 79(F);
  • SOR/2011-195, s. 2(F).

Railway Corporations

[SOR/94-686, s. 57(F)]
  •  (1) Notwithstanding subsections 402(3) and (4), the amount of taxable income that shall be deemed to have been earned by a railway corporation in a taxation year in a province in which it had a permanent establishment is, unless subsection (2) applies, 1/2 the aggregate of

    • (a) that proportion of the taxable income of the corporation for the year that the equated track miles of the corporation in the province is of the equated track miles of the corporation in Canada; and

    • (b) that proportion of the taxable income of the corporation for the year that the gross ton miles of the corporation for the year in the province is of the gross ton miles of the corporation for the year in Canada.

  • (2) Where a corporation to which subsection (1) would apply, if this subsection did not apply thereto, operates an airline service, ships or hotels or receives substantial revenues that are petroleum or natural gas royalties, or does a combination of two or more of those things, the amount of its taxable income that shall be deemed to have been earned in a taxation year in a province in which it had a permanent establishment is the aggregate of the amounts computed

    • (a) by applying the provisions of section 407 to that part of its taxable income for the year that may reasonably be considered to have arisen from the operation of the airline service;

    • (b) by applying the provisions of section 410 to that part of its taxable income for the year that may reasonably be considered to have arisen from the operation of the ships;

    • (c) by applying the provisions of section 402 to that part of its taxable income for the year that may reasonably be considered to have arisen from the operation of the hotels;

    • (d) by applying the provisions of section 402 to that part of its taxable income for the year that may reasonably be considered to have arisen from the ownership by the taxpayer of petroleum or natural gas rights or any interest therein; and

    • (e) by applying the provisions of subsection (1) to the remaining portion of its taxable income for the year.

  • (3) In this section, equated track miles in a specified place means the aggregate of

    • (a) the number of miles of first main track,

    • (b) 80 per cent of the number of miles of other main tracks, and

    • (c) 50 per cent of the number of miles of yard tracks and sidings,

    in that place.

  • (4) For the purpose of making an allocation under paragraph (2)(b), a reference in section 410 to “salaries and wages paid in the year by the corporation to employees” shall be read as a reference to salaries and wages paid by the corporation to employees employed in the operation of permanent establishments (other than ships) maintained for the shipping business.

  • (5) For the purpose of making an allocation under paragraph (2)(c),

    • (a) a reference in section 402 to “gross revenue for the year reasonably attributable to the permanent establishment in the province” shall be read as a reference to the gross revenue of the taxpayer from operating hotels therein;

    • (b) a reference in section 402 to “total gross revenue for the year” shall be read as a reference to the total gross revenue of the taxpayer for the year from operating hotels; and

    • (c) a reference in section 402 to “salaries and wages paid in the year by the corporation to employees” shall be read as a reference to salaries and wages paid to employees engaged in the operations of its hotels.

  • (6) Notwithstanding subsection 402(5), for the purpose of making an allocation under paragraph (2)(d),

    • (a) a reference in section 402 to “gross revenue for the year reasonably attributable to the permanent establishment in the province” shall be read as a reference to the gross revenue of the taxpayer from the ownership by the taxpayer of petroleum and natural gas rights in lands in the province and any interest therein;

    • (b) a reference in section 402 to “total gross revenue for the year” shall be read as a reference to the total gross revenue of the taxpayer from ownership by the taxpayer of petroleum and natural gas rights and any interest therein; and

    • (c) a reference in section 402 to “salaries and wages paid in the year by the corporation to employees” shall be read as a reference to salaries and wages paid to employees employed in connection with the corporation’s petroleum and natural gas rights and interests therein.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/80-949, s. 4;
  • SOR/94-686, ss. 57(F), 79(F);
  • SOR/2011-195, s. 3(F).

Airline Corporations

  •  (1) Notwithstanding subsections 402(3) and (4), the amount of taxable income that shall be deemed to have been earned in a taxation year by an airline corporation in a province in which it had a permanent establishment is the amount that is equal to 1/4 of the aggregate of

    • (a) that proportion of its taxable income for the year that the capital cost of all the corporation’s fixed assets, except aircraft, in the province at the end of the year is of the capital cost of all its fixed assets, except aircraft, in Canada at the end of the year; and

    • (b) that proportion of its taxable income for the year that three times the number of revenue plane miles flown by its aircraft during the year in the province is of the total of all amounts, each of which is the total number of revenue plane miles flown by its aircraft during the year in a province in which the corporation had a permanent establishment.

  • (2) For the purposes of this section, “revenue plane miles flown” shall be weighted according to take-off weight of the aircraft operated.

  • (3) For the purposes of this section, take-off weight of an aircraft means

    • (a) for an aircraft in respect of which an application form for a Certificate of Airworthiness has been submitted to and accepted by the Department of Transport, the maximum permissible take-off weight, in pounds, shown on the form; and

    • (b) for any other aircraft, the weight, in pounds, that may reasonably be considered to be the equivalent of the weight referred to in paragraph (a).

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/78-326, s. 1;
  • SOR/80-949, s. 5;
  • SOR/94-327, s. 2;
  • SOR/94-686, s. 6(F);
  • 2013, c. 34, s. 381.

Grain Elevator Operators

 Notwithstanding subsections 402(3) and (4), the amount of taxable income of a corporation whose chief business is the operation of grain elevators that shall be deemed to have been earned by that corporation in a taxation year in a province in which it had a permanent establishment is 1/2 of the aggregate of

  • (a) that proportion of its taxable income for the year that the number of bushels of grain received in the year in the elevators operated by the corporation in the province is of the total number of bushels of grain received in the year in all the elevators operated by the corporation; and

  • (b) that proportion of its taxable income for the year that the aggregate of salaries and wages paid in the year by the corporation to employees of its permanent establishment in the province is of the aggregate of all salaries and wages paid in the year by the corporation.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/80-949, s. 6;
  • SOR/94-686, s. 79(F).

Bus and Truck Operators

 Notwithstanding subsections 402(3) and (4), the amount of taxable income of a corporation whose chief business is the transportation of goods or passengers (other than by the operation of a railway, ship or airline service) that shall be deemed to have been earned by that corporation in a taxation year in a province in which it had a permanent establishment is 1/2 of the aggregate of

  • (a) that proportion of its taxable income for the year that the number of kilometres driven by the corporation’s vehicles, whether owned or leased, on roads in the province in the year is of the total number of kilometres driven by those vehicles in the year on roads other than roads in provinces or countries in which the corporation had no permanent establishment; and

  • (b) that proportion of its taxable income for the year that the aggregate of salaries and wages paid in the year by the corporation to employees of its permanent establishment in the province is of the aggregate of all salaries and wages paid in the year by the corporation.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/80-949, s. 7;
  • SOR/86-585, s. 1;
  • SOR/94-686, s. 79(F).

Ship Operators

  •  (1) Notwithstanding subsections 402(3) and (4), the amount of taxable income of a corporation whose chief business is the operation of ships that shall be deemed to have been earned by the corporation in a taxation year in a province in which it had a permanent establishment is the aggregate of,

    • (a) that proportion of its allocable income for the year that its port-call-tonnage in the province is of its total port-call-tonnage in all the provinces in which it had a permanent establishment; and

    • (b) if its taxable income for the year exceeds its allocable income for the year, that proportion of the excess that the aggregate of the salaries and wages paid in the year by the corporation to employees of the permanent establishment (other than a ship) in the province is of the aggregate of salaries and wages paid in the year by the corporation to employees of its permanent establishments (other than ships) in Canada.

  • (2) In this section,

    • (a) allocable income for the year means that proportion of the taxable income of the corporation for the year that its total port-call-tonnage in Canada is of its total port-call-tonnage in all countries; and

    • (b) port-call-tonnage in a province or country means the aggregate of the products obtained by multiplying, for each ship operated by the corporation, the number of calls made in the year by that ship at ports in that province or country by the number of tons of the registered net tonnage of that ship.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/80-949, s. 7;
  • SOR/94-686, s. 79(F).

Pipeline Operators

 Notwithstanding subsections 402(3) and (4), the amount of taxable income of a corporation whose chief business is the operation of a pipeline that shall be deemed to have been earned by that corporation in a taxation year in a province in which it had a permanent establishment is 1/2 of the aggregate of

  • (a) that proportion of its taxable income for the year that the number of miles of pipeline of the corporation in the province is of the number of miles of pipeline of the corporation in all the provinces in which it had a permanent establishment; and

  • (b) that proportion of its taxable income for the year that the aggregate of the salaries and wages paid in the year by the corporation to employees of its permanent establishment in the province is of the aggregate of salaries and wages paid in the year by the corporation to employees of its permanent establishments in Canada.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/80-949, s. 7;
  • SOR/94-686, s. 79(F).

Divided Businesses

 Where part of the business of a corporation for a taxation year, other than a corporation described in section 403, 404, 405, 406, 407, 408, 409, 410 or 411, consisted of operations normally conducted by a corporation described in one of those sections, the corporation and the Minister may agree to determine the amount of taxable income deemed to have been earned in the year in a particular province to be the aggregate of the amounts computed

  • (a) by applying the provisions of such of those sections as would have been applicable if it had been a corporation described therein to the portion of its taxable income for the year that might reasonably be considered to have arisen from that part of the business; and

  • (b) by applying the provisions of section 402 to the remaining portion of its taxable income for the year.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/94-686, s. 79(F).

Non-Resident Corporations

[SOR/94-686, s. 79(F)]
  •  (1) In this Part, if a corporation is not resident in Canada

    • (a) “salaries and wages paid in the year” by the corporation does not include salaries and wages paid to employees of a permanent establishment outside Canada; and

    • (b) “taxable income” of the corporation is deemed to refer to the corporation’s taxable income earned in Canada.

  • (2) For the purposes of paragraph 402(3)(a), where a corporation is not resident in Canada, “total gross revenue for the year” of the corporation does not include gross revenue reasonably attributable to a permanent establishment outside Canada.

  • (3) For the purpose of paragraph 404(1)(b), in the case of an authorized foreign bank, “all loans and deposits of the bank for the year” is to be read as a reference to “all loans and deposits of the bank for the year in respect of its Canadian banking business”.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/94-686, s. 79(F);
  • 2009, c. 2, s. 95;
  • SOR/2009-302, s. 4;
  • SOR/2011-195, s. 4(F);
  • 2013, c. 33, s. 33.

 [Repealed, 2013, c. 33, s. 34]

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. 2009, c. 2, s. 96;
  • 2013, c. 33, s. 34.

Provincial SIFT Tax Rate

  •  (1) The following definitions apply in this section.

    general corporate income tax rate

    general corporate income tax rate, in a province for a taxation year, means

    • (a) for Quebec, 0%;

    • (b) for the Newfoundland offshore area, the highest percentage rate of tax imposed under the laws of Newfoundland and Labrador on the taxable income of a public corporation earned in the taxation year in Newfoundland and Labrador;

    • (c) for the Nova Scotia offshore area, the highest percentage rate of tax imposed under the laws of Nova Scotia on the taxable income of a public corporation earned in the taxation year in Nova Scotia; and

    • (d) for each other province, the highest percentage rate of tax imposed under the laws of the province on the taxable income of a public corporation earned in the taxation year in the province. (taux général d’imposition du revenu des sociétés)

    province

    province includes the Newfoundland offshore area and the Nova Scotia offshore area. (province)

    taxable SIFT distributions

    taxable SIFT distributions, for a taxation year, means

    • (a) in the case of a SIFT trust, its non-deductible distributions amount for the taxation year; and

    • (b) in the case of a SIFT partnership, its taxable non-portfolio earnings for the taxation year. (montant des distributions imposables)

  • (2) In determining the amount of a SIFT trust’s or SIFT partnership’s taxable SIFT distributions for a taxation year earned in a province

    • (a) except as provided in paragraph (b), this Part applies in respect of the SIFT trust or SIFT partnership as though

      • (i) each reference to “corporation” (other than in the expression “subsidiary controlled corporation”) were read as a reference to “SIFT trust” or “SIFT partnership”, as the case may be,

      • (ii) each reference to “taxable income” were read as a reference to “taxable SIFT distributions”,

      • (iii) each reference to “its incorporating documents or bylaws” were read as a reference to “the agreement governing the SIFT trust” or “the agreement governing the SIFT partnership”, as the case may be, and

      • (iv) “subsidiary controlled corporation” in respect of a SIFT trust or a SIFT partnership meant a corporation more than 50% of the issued share capital of which (having full voting rights under all circumstances) belongs to the SIFT trust or SIFT partnership, as the case may be; and

    • (b) subsection 400(1), section 401, subsections 402(1) and (2) and sections 403 to 413 do not apply.

  • (3) Subject to subsection (4), in applying the definition provincial SIFT tax rate in subsection 248(1) of the Act in respect of a SIFT trust or SIFT partnership for a taxation year, the prescribed amount determined in respect of the SIFT trust or SIFT partnership for the taxation year is

    • (a) if the SIFT trust or SIFT partnership has no permanent establishment in a province in the taxation year, 0.10;

    • (b) if the SIFT trust or SIFT partnership has a permanent establishment in a province in the taxation year and has no permanent establishment outside that province in the taxation year, the decimal fraction equivalent of the general corporate income tax rate in the province for the taxation year; and

    • (c) if the SIFT trust or SIFT partnership has a permanent establishment in the taxation year in a province, and has a permanent establishment outside that province in the taxation year, the amount, expressed as a decimal fraction, determined by the formula

      A + B

      where

      A 
      is the total of all amounts, if any, each of which is in respect of a province in which the SIFT trust or SIFT partnership has a permanent establishment in the taxation year and is determined by the formula

      C/D × E

      where

      C 
      is its taxable SIFT distributions for the taxation year earned in the province,
      D 
      is its total taxable SIFT distributions for the taxation year, and
      E 
      is the decimal fraction equivalent of the general corporate income tax rate in the province for the taxation year, and
      B 
      is the amount determined by the formula

      (1 – F/D) × 0.1

      where

      F 
      is the total of all amounts each of which is an amount determined under the description of C in the description of A in respect of a province in which the SIFT trust or SIFT partnership has a permanent establishment in the taxation year.
  • (4) If a SIFT trust or a SIFT partnership has a permanent establishment in Quebec in a taxation year, paragraph (a) of the definition general corporate income tax rate in subsection (1) does not apply in determining the prescribed amount under subsection (3) in respect of the SIFT trust or the SIFT partnership for the taxation year for the purposes of applying the definition provincial SIFT tax rate in determining:

    • (a) in the case of the SIFT partnership, the amount of a dividend deemed by paragraph 96(1.11)(b) of the Act to have been received by it in the taxation year; and

    • (b) in the case of the SIFT trust, the amount of its taxable SIFT trust distributions for the taxation year.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/85-741, s. 1;
  • SOR/94-686, s. 79(F);
  • 2009, c. 2, s. 97.

 [Repealed, 2009, c. 2, s. 97]

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/85-741, s. 1;
  • 2009, c. 2, s. 97.

PART VNon-resident-owned Investment Corporations

[SOR/94-686, s. 79(F)]

Elections

 Any election by a corporation to be taxed under section 133 of the Act shall be made by forwarding by registered mail to the Director — Taxation at the District Office of the Department of National Revenue, Taxation that serves the area in which the head office of the corporation is located the following documents:

  • (a) a letter stating that the corporation elects to be taxed under the said section 133;

  • (b) a certified copy of the resolution of the directors of the corporation authorizing the election to be made; and

  • (c) a certified list showing

    • (i) the names and addresses of the registered shareholders and the number of shares of each class held by each,

    • (ii) the names and addresses of the holders of the corporation’s bonds, debentures, or other funded indebtedness, if any, and

    • (iii) the names and addresses of the beneficial owners of shares, bonds, debentures, or other funded indebtedness in cases where the registered shareholders or holders, as the case may be, are not the beneficial owners.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/83-268, s. 1;
  • SOR/94-686, ss. 7(F), 79(F).

Elections Revoked

 Any election to be taxed under section 133 of the Act shall be revoked by a corporation by forwarding by registered mail to the Deputy Minister of National Revenue for Taxation at Ottawa the following documents in duplicate:

  • (a) a letter stating that the corporation revokes its election; and

  • (b) a certified copy of the resolution of the directors of the corporation authorizing the election to be revoked.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/94-686, s. 79(F).

Certificates of Changes of Ownership

 A corporation which is taxable under section 133 of the Act shall attach to its return of income required to be filed under subsection 150(1) of the Act, a certified statement showing any changes during the taxation year in the information referred to in paragraph 500(c).

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/94-686, s. 79(F).

 [Repealed, SOR/80-140, s. 1]

PART VIElections

 For the purposes of paragraphs 220(3.2)(a) and (b) of the Act, the following are prescribed provisions:

  • (a) section 21 of the Act;

  • (b) subsections 13(4), (7.4) and (29), 14(6), 20(24), 44(1) and (6), 45(2) and (3), 50(1), 53(2.1), 56.4(13), 70(6.2), (9.01), (9.11), (9.21) and (9.31), 72(2), 73(1), 80.1(1), 82(3), 83(2), 104(14), 107(2.001), 143(2), 146.01(7), 146.02(7), 164(6) and (6.1), 184(3), 251.2(6) and 256(9) of the Act;

  • (c) paragraphs 12(2.2)(b), 66.7(7)(c), (d) and (e) and (8)(c), (d) and (e), 80.01(4)(c), 86.1(2)(f) and 128.1(4)(d), (6)(a) and (c), (7)(d) and (g) and (8)(c) of the Act;

  • (d) subsections 1103(1), (2) and (2d) and 5907(2.1) of these Regulations.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/92-265, s. 1;
  • SOR/93-530, s. 1;
  • SOR/95-367, s. 1;
  • SOR/96-128, s. 1;
  • SOR/97-471, s. 1;
  • SOR/99-17, s. 7;
  • SOR/2001-216, s. 2;
  • SOR/2002-144, s. 1;
  • SOR/2005-123, s. 3;
  • SOR/2005-185, s. 3;
  • SOR/2006-200, s. 1;
  • SOR/2010-96, s. 1;
  • 2013, c. 34, s. 382, c. 40, s. 98.

PART VIILogging Taxes on Income

[SOR/78-377, s. 1]

Logging

  •  (1) Except as provided in subsection (2), for the purposes of paragraph 127(2)(a) of the Act income for the year from logging operations in the province means the aggregate of

    • (a) where standing timber is cut in the province by the taxpayer or logs cut from standing timber in the province are acquired by the taxpayer and the logs so obtained are sold by the taxpayer in the province before or on delivery to a sawmill, pulp or paper plant or other place for processing logs, the taxpayer’s income for the year from the sale, other than any portion thereof that was included in computing the taxpayer’s income from logging operations in the province for a previous year;

    • (b) where standing timber in the province or the right to cut standing timber in the province is sold by the taxpayer, the taxpayer’s income for the year from the sale, other than any portion thereof that was included in computing the taxpayer’s income from logging operations in the province for a previous year;

    • (c) where standing timber is cut in the province by the taxpayer or logs cut from standing timber in the province are acquired by the taxpayer, if the logs so obtained are

      • (i) exported from the province and are sold by him prior to or on delivery to a sawmill, pulp or paper plant or other place for processing logs, or

      • (ii) exported from Canada,

      the amount computed by deducting from the value, as determined by the province, of the logs so exported in the year, the aggregate of the costs of acquiring, cutting, transporting and selling the logs; and

    • (d) where standing timber is cut in the province by the taxpayer or logs cut from standing timber in the province are acquired by the taxpayer, if the logs are processed by the taxpayer or by a person on his behalf in a sawmill, pulp or paper plant or other place for processing logs in Canada, the income of the taxpayer for the year from all sources minus the aggregate of

      • (i) his income from sources other than logging operations carried on in Canada and other than the processing in Canada by him or on his behalf and sale by him of logs, timber and products produced therefrom,

      • (ii) each amount included in the aggregate determined under this subsection by virtue of paragraph (a), (b) or (c), and

      • (iii) an amount equal to eight per cent of the original cost to him of properties described in Schedule II used by him in the year in the processing of logs or products derived therefrom or, if the amount so determined is greater than 65 per cent of the income remaining after making the deductions under subparagraphs (i) and (ii), 65 per cent of the income so remaining or, if the amount so determined is less than 35 per cent of the income so remaining, 35 per cent of the income so remaining.

  • (2) Where the taxpayer cuts standing timber or acquires logs cut from standing timber in more than one province, for the purposes of paragraph 127(2)(a) of the Act income for the year from logging operations in the province means the aggregate of

    • (a) the amounts determined in respect of that province in accordance with paragraphs (1)(a), (b) and (c); and

    • (b) where the logs are processed by the taxpayer or by a person on his behalf in a sawmill, pulp or paper plant or other place for processing logs in Canada, an amount equal to the proportion of the income of the taxpayer for the year from all sources minus the aggregate of

      • (i) his income from sources other than logging operations carried on in Canada and other than the processing in Canada by him or on his behalf and sale by him of logs, timber and products produced therefrom,

      • (ii) the aggregate of amounts determined in respect of each province in accordance with paragraphs (1)(a), (b) and (c), and

      • (iii) an amount equal to eight per cent of the original cost to him of properties described in Schedule II used by him in the year in the processing of logs or products derived therefrom or, if the amount so determined is greater than 65 per cent of the income remaining after making the deductions under subparagraphs (i) and (ii), 65 per cent of the income so remaining or, if the amount so determined is less than 35 per cent of the income so remaining, 35 per cent of the income so remaining,

      that

      • (iv) the quantity of standing timber cut in the province in the year by the taxpayer and logs cut from standing timber in the province acquired by the taxpayer in the year,

      is of

      • (v) the total quantity of standing timber cut and logs acquired in the year by the taxpayer.

  • (3) For the purpose of the definition logging tax in subsection 127(2) of the Act, each of the following is declared to be a tax of general application on income from logging operations:

    • (a) the tax imposed by the Province of British Columbia under the Logging Tax Act, R.S.B.C. 1996, c. 277; and

    • (b) the tax imposed by the Province of Quebec under Part VII of the Taxation Act, R.S.Q., c. I-3.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/83-20, s. 1;
  • SOR/87-668, s. 1;
  • SOR/92-516, s. 1;
  • SOR/2010-93, s. 10.

 [Repealed, SOR/78-377, s. 2]

PART VIIINon-resident Taxes

Registered Non-Resident Insurers

 Subsections 215(1), (2) and (3) of the Act do not apply to amounts paid or credited to a registered non-resident insurer.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/79-424, s. 1;
  • SOR/2009-302, s. 5.

Filing of Returns by Registered Non-resident Insurers

 A taxpayer that is a registered non-resident insurer in a taxation year shall file a return for the taxation year in prescribed form with the Minister on or before its filing-due date for the taxation year.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/79-424, s. 1;
  • SOR/88-165, s. 31(F);
  • SOR/90-661, s. 1;
  • SOR/2009-302, ss. 5, 14.

Amounts Taxable

 The amounts that are taxable under Part XIII of the Act in a taxation year of a taxpayer that is a registered non-resident insurer in the taxation year are amounts paid or credited to the taxpayer in the taxation year other than amounts included under Part I of the Act in computing the taxpayer’s income from a business carried on by it in Canada.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/79-424, s. 1;
  • SOR/2009-302, s. 5.

Payment of Tax by Registered Non-resident Insurers

 A taxpayer that is a registered non-resident insurer in a taxation year shall pay to the Receiver General, on or before its filing-due date for the taxation year, the tax payable by it under Part XIII of the Act in the taxation year.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/79-424, s. 1;
  • SOR/2009-302, ss. 5, 14.

 [Repealed, SOR/2009-302, s. 5]

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/2009-302, s. 5.

Interpretation

 In this Part, registered non-resident insurer means a non-resident corporation approved to carry on business in Canada under the Insurance Companies Act.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/79-424, s. 1;
  • SOR/94-686, s. 79(F);
  • SOR/2000-413, s. 1.

Other Non-Resident Persons

[SOR/94-686, s. 50(F)]

 Subject to section 802, every non-resident person who carries on business in Canada is taxable under Part XIII of the Act on all amounts otherwise taxable under that Part except those amounts that

  • (a) may reasonably be attributed to the business carried on by the person through a permanent establishment (within the meaning assigned by section 8201) in Canada; or

  • (b) are required by subparagraph 115(1)(a)(iii.3) of the Act to be included in computing the person’s taxable income earned in Canada for the year.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/81-656, s. 1;
  • SOR/84-948, s. 3;
  • SOR/88-165, s. 3;
  • SOR/94-686, ss. 50(F), 79(F);
  • SOR/2009-302, s. 6.

Payee Certificate

 If a person (in this section referred to as the “payee”) files an application under this section with the Minister in respect of the anticipated payment or crediting of an amount to the payee, and the Minister determines that the amount is an amount described in paragraph 805(a) or (b), the Minister shall issue to the payee a certificate that records that determination.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/2009-302, s. 6.

International Organizations and Agencies

 For the purposes of clause 212(1)(b)(ii)(B) of the Act, the following international organizations and agencies are hereby prescribed:

  • (a) Bank for International Settlements;

  • (b) European Fund;

  • (c) International Bank for Reconstruction and Development;

  • (d) International Development Association;

  • (e) International Finance Corporation; and

  • (f) International Monetary Fund.

 For the purposes of subparagraph 212(1)(b)(x) of the Act, the Bank for International Settlements and the European Bank for Reconstruction and Development are prescribed international agencies.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/88-165, s. 4;
  • SOR/94-188, s. 1.

Prescribed Obligation

 For the purposes of the definition participating debt interest in subsection 212(3) of the Act, an obligation is a prescribed obligation if it is an indexed debt obligation and no amount payable in respect of it is

  • (a) contingent or dependent upon the use of, or production from, property in Canada; or

  • (b) computed by reference to

    • (i) revenue, profit, cash flow, commodity price or any other similar criterion, other than a change in the purchasing power of money, or

    • (ii) dividends paid or payable to shareholders of any class of shares.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/93-345, s. 1;
  • SOR/94-686, s. 79(F);
  • SOR/96-435, s. 2;
  • 2013, c. 40, s. 99.

Identification of Obligations

 For the purposes of subsection 240(2) of the Act, the letters “AX” or the letter “F”, as the case may be, shall be clearly and indelibly printed in gothic or similar style capital letters of seven point or larger size either as a prefix to the coupon number or on the lower right hand corner of each coupon or other writing issued in evidence of a right to interest on an obligation referred to in that subsection.

Allowances in Respect of Investment in Property in Canada

  •  (1) For the purposes of paragraph 219(1)(j) of the Act, the allowance of a corporation (other than an authorized foreign bank) for a taxation year in respect of its investment in property in Canada is prescribed to be the amount, if any, by which

    • (a) the corporation’s qualified investment in property in Canada at the end of the year,

    exceeds

    • (b) the amount determined under this paragraph for the immediately preceding taxation year.

  • (1.1) Notwithstanding subsections (1) and (8), for the purpose of paragraph 219(1)(j) of the Act, the allowance of a corporation that becomes resident in Canada at any time is, in respect of its investment in property in Canada for its last taxation year that ends before that time, prescribed to be nil.

  • (2) For the purposes of subsection (1), where, at the end of a taxation year, a corporation is not a member of a partnership that was carrying on business in Canada at any time in the year, the corporation’s “qualified investment in property in Canada at the end of the year” is the amount, if any, by which the aggregate of

    • (a) the cost amount to the corporation, at the end of the year, of land in Canada owned by it at that time for the purpose of gaining or producing income from a business carried on by it in Canada, other than land that is

      • (i) described in the corporation’s inventory,

      • (ii) depreciable property,

      • (iii) a Canadian resource property, or

      • (iv) land the cost of which is or was deductible in computing the corporation’s income,

    • (b) an amount equal to the aggregate of the cost amount to the corporation, immediately after the end of the year, of each depreciable property in Canada owned by it for the purpose of gaining or producing income from a business carried on by it in Canada,

    • (c) an amount equal to 4/3 of the cumulative eligible capital of the corporation immediately after the end of the year in respect of each business carried on by it in Canada,

    • (d) where the corporation is not a principal-business corporation, within the meaning assigned by subsection 66(15) of the Act, an amount equal to the total of the corporation’s

      • (i) Canadian exploration and development expenses incurred by the corporation before the end of the year, except to the extent that those expenses were deducted in computing the corporation’s income for the year or for a previous taxation year, and

      • (ii) cumulative Canadian exploration expense, within the meaning assigned by subsection 66.1(6) of the Act, at the end of the year minus any deduction under subsection 66.1(3) of the Act in computing the corporation’s income for the year,

    • (d.1) an amount equal to the corporation’s cumulative Canadian development expense, within the meaning assigned by subsection 66.2(5) of the Act, at the end of the year minus any deduction under subsection 66.2(2) of the Act in computing the corporation’s income for the year,

    • (d.2) an amount equal to the corporation’s cumulative Canadian oil and gas property expense, within the meaning assigned by subsection 66.4(5) of the Act, at the end of the year minus any deduction under subsection 66.4(2) of the Act in computing the corporation’s income for the year,

    • (e) an amount equal to the aggregate of the cost amount to the corporation at the end of the year of each debt owing to it, or any other right of the corporation to receive an amount, that was outstanding as a result of the disposition by it of property in respect of which an amount would be included, by virtue of paragraph (a), (b), (c) or (h), in its qualified investment in property in Canada at the end of the year if the property had not been disposed of by it before the end of that year,

    • (f) an amount equal to the aggregate of the cost amount to the corporation at the end of the year of each property, other than a Canadian resource property, that was described in the corporation’s inventory in respect of a business carried on by it in Canada,

    • (g) an amount equal to the aggregate of the cost amount to the corporation at the end of the year of each debt (other than a debt referred to in paragraph (e) or a debt the amount of which was deducted under paragraph 20(1)(p) of the Act in computing the corporation’s income for the year) owing to it

      • (i) in respect of any transaction by virtue of which an amount has been included in computing its income for the year or for a previous year from a business carried on by it in Canada, or

      • (ii) where any part of its ordinary business carried on in Canada was the lending of money, in respect of a loan made by the corporation in the ordinary course of that part of its business, and

    • (h) [Repealed, SOR/2009-302, s. 7]

    • (i) an amount equal to the allowable liquid assets of the corporation at the end of the year,

    exceeds the aggregate of

    • (j) an amount equal to the total of all amounts each of which is an amount deducted under paragraph 20(1)(l), (l.1) or (n) of the Act in computing the corporation’s income for the year from a business carried on by the corporation in Canada,

    • (k) an amount equal to the aggregate of all amounts each of which is an amount deducted by the corporation in the year under subparagraph 40(1)(a)(iii) or 44(1)(e)(iii) of the Act in respect of a debt referred to in paragraph (e);

    • (l) an amount equal to the aggregate of each amount owing by the corporation at the end of the year on account of

      • (i) the purchase price of property that is referred to in paragraph (a), (b) or (f) or that would be so referred to but for the fact that it has been disposed of before the end of the year,

      • (ii) Canadian exploration and development expenses, Canadian exploration expense, Canadian development expense or Canadian oil and gas property expense,

      • (iii) an eligible capital expenditure made or incurred by the corporation before the end of the year in respect of a business carried on by it in Canada, or

      • (iv) any other outlay or expense made or incurred by the corporation to the extent that it was deducted in computing its income for the year or for a previous taxation year from a business carried on by it in Canada;

    • (m) an amount equal to the aggregate of all amounts each of which is an amount equal to that proportion of the amount owing (other than an amount owing on account of an outlay or expense referred to in paragraph (l)) by the corporation at the end of the year on account of an obligation outstanding at any time in the year in respect of which interest is stipulated to be payable by it that

      • (i) the interest paid or payable on the obligation by the corporation in respect of the year that is deductible, or would be deductible but for subsection 18(2), (3.1) or (4) or section 21 of the Act, in computing its income for the year from a business carried on by it in Canada,

      is of

      • (ii) the interest paid or payable on the obligation by the corporation in respect of the year;

    • (n) the amount, if any, by which

      • (i) the amount (referred to in this paragraph as “Part I liability”), if any, by which the tax payable for the year by the corporation under Part I of the Act exceeds the amount, if any, paid by the corporation before the end of the year on account thereof,

      exceeds

      • (ii) that proportion of the Part I liability that the amount, if any, in respect of the corporation for the year that is the lesser of

        • (A) the amount, if any, by which the total of all amounts each of which is a taxable capital gain of the corporation for the year from a disposition of a taxable Canadian property that was not used or held by it in the year in the course of carrying on business in Canada exceeds the total of all amounts each of which is an allowable capital loss of the corporation for the year from a disposition of such a property, and

        • (B) the amount that would be determined under clause (A) for the year if it were read without reference to the expression “that was not used or held by it in the year in the course of carrying on business in Canada”,

        is of the corporation’s taxable income earned in Canada for the year; and

      • (iii) [Repealed, SOR/2009-302, s. 7]

    • (o) the amount, if any, by which

      • (i) the amount (referred to in this paragraph as “provincial tax liability”), if any, by which any income taxes payable for the year by the corporation to the government of a province (to the extent that such taxes were not deductible under Part I of the Act in computing the corporation’s income for the year from a business carried on by it in Canada) exceeds the amount, if any, paid by the corporation before the end of the year on account thereof,

      exceeds

      • (ii) that proportion of the provincial tax liability that the amount, if any, in respect of the corporation for the year that is the lesser of

        • (A) the amount, if any, by which the total of all amounts each of which is a taxable capital gain of the corporation for the year from a disposition of a taxable Canadian property that was not used or held by it in the year in the course of carrying on business in Canada exceeds the total of all amounts each of which is an allowable capital loss of the corporation for the year from a disposition of such a property, and

        • (B) the amount that would be determined under clause (A) for the year if it were read without reference to the expression “that was not used or held by it in the year in the course of carrying on business in Canada”,

        is of the corporation’s taxable income earned in Canada for the year.

      • (iii) [Repealed, SOR/2009-302, s. 7]

    • (p) [Repealed, SOR/2009-302, s. 7]

  • (3) For the purposes of paragraph (2)(i), the “allowable liquid assets of the corporation at the end of the year” is an amount equal to the lesser of

    • (a) the aggregate of

      • (i) the amount of Canadian currency owned by the corporation at the end of that year,

      • (ii) the balance standing to the credit of the corporation at the end of that year as or on account of amounts deposited with a branch or other office in Canada of

        • (A) a bank,

        • (B) a corporation licenced or otherwise authorized under the laws of Canada or a province to carry on in Canada the business of offering to the public its services as trustee, or

        • (C) a credit union, and

      • (iii) an amount equal to the aggregate of the cost amount to the corporation at the end of that year of each bond, debenture, bill, note, mortgage or similar obligation that was not described in the corporation’s inventory in respect of a business carried on by it in Canada (other than a debt referred to in paragraph (2)(e) or (g) or a debt the amount of which was deducted under paragraph 20(1)(p) of the Act in computing the corporation’s income for the year), that was issued by a person resident in Canada with whom the corporation was dealing at arm’s length and that matures within one year after the date on which it was acquired by the corporation,

      to the extent that such amounts are attributable to the profits of the corporation from carrying on a business in Canada, or are used or held by the corporation in the year in the course of carrying on a business in Canada; and

    • (b) an amount equal to 4/3 of the quotient obtained by dividing

      • (i) the aggregate of all amounts that would otherwise be determined under subparagraphs (a)(i), (ii) and (iii) if the references therein to “at the end of that year” were read as references to “at the end of each month in that year”,

      by

      • (ii) the number of months in that year.

  • (4) For the purposes of subsection (1), where, at the end of a taxation year, a corporation is a member of a partnership that was carrying on business in Canada at any time in that year, the corporation’s qualified investment in property in Canada at the end of the year is an amount equal to the aggregate of

    • (a) the amount, if any, that would be determined under subsection (2) if the corporation were not, at the end of the year, a member of a partnership that was carrying on business in Canada at any time in the year; and

    • (b) an amount equal to the portion of the amount of the partnership’s qualified investment in property in Canada at the end of the last fiscal period of the partnership ending in the taxation year of the corporation that may reasonably be attributed to the corporation, having regard to all the circumstances including the rights the corporation would have, if the partnership ceased to exist, to share in the distribution of the property owned by the partnership for the purpose of gaining or producing income from a business carried on by it in Canada.

  • (5) For the purposes of subsection (4), a partnership’s “qualified investment in property in Canada” at the end of a fiscal period is the amount, if any, by which the aggregate of

    • (a) the cost amount to the partnership, at the end of the fiscal period, of land in Canada owned by it at that time for the purpose of gaining or producing income from a business carried on by it in Canada, other than land that is

      • (i) described in the inventory of the partnership,

      • (ii) depreciable property,

      • (iii) a Canadian resource property, or

      • (iv) land the cost of which is or was deductible in computing the income of the partnership or the income of a member of the partnership,

    • (b) an amount equal to the aggregate of the cost amount to the partnership, immediately after the end of the fiscal period, of each depreciable property in Canada owned by it for the purpose of gaining or producing income from a business carried on by it in Canada,

    • (c) an amount equal to 4/3 of the cumulative eligible capital of the partnership immediately after the end of the fiscal period in respect of each business carried on by it in Canada,

    • (d) an amount equal to the aggregate of the cost amount to the partnership at the end of the fiscal period of each debt owing to it, or any other right of the partnership to receive an amount, that was outstanding as a result of the disposition by it of property in respect of which an amount would be included, by virtue of paragraph (a), (b) or (c), in its qualified investment in property in Canada at the end of the fiscal period if the property had not been disposed of by it before the end of that fiscal period,

    • (e) an amount equal to the aggregate of the cost amount to the partnership at the end of the fiscal period of each property, other than a Canadian resource property, that was described in the partnership’s inventory in respect of a business carried on by it in Canada,

    • (f) an amount equal to the aggregate of the cost amount to the partnership at the end of the fiscal period of each debt (other than a debt referred to in paragraph (d) or a debt the amount of which was deducted under paragraph 20(1)(p) of the Act in computing the partnership’s income for the fiscal period) owing to it

      • (i) in respect of any transaction by virtue of which an amount has been included in computing its income for the fiscal period or for a previous fiscal period or in computing the income of a member of the partnership for a previous taxation year from a business carried on in Canada by the partnership, or

      • (ii) where any part of its ordinary business carried on in Canada was the lending of money, in respect of a loan made by the partnership in the ordinary course of that part of its business, and

    • (g) an amount equal to the allowable liquid assets of the partnership at the end of the fiscal period,

    exceeds the aggregate of

    • (h) an amount equal to the total of all amounts each of which is an amount deducted under paragraph 20(1)(l), (l.1) or (n) of the Act in computing the partnership’s income for the fiscal period from a business carried on by the partnership in Canada;

    • (i) an amount equal to the aggregate of all amounts each of which is an amount deducted by the partnership in the fiscal period under subparagraph 40(1)(a)(iii) or 44(1)(e)(iii) of the Act in respect of a debt referred to in paragraph (d);

    • (j) an amount equal to the aggregate of each amount owing by the partnership at the end of the fiscal period on account of

      • (i) the purchase price of property that is referred to in paragraph (a), (b) or (e) or that would be so referred to but for the fact that it has been disposed of before the end of the fiscal period,

      • (ii) Canadian exploration and development expenses, Canadian exploration expense, Canadian development expense or Canadian oil and gas property expense,

      • (iii) an eligible capital expenditure made or incurred by the partnership before the end of the fiscal period in respect of a business carried on by it in Canada, or

      • (iv) any other outlay or expense made or incurred by the partnership to the extent that it was deducted in computing its income for the fiscal period or for a previous fiscal period, or in computing the income of a member of the partnership for a previous taxation year, from a business carried on in Canada by the partnership; and

    • (k) an amount equal to the aggregate of all amounts each of which is an amount equal to that proportion of the amount owing (other than an amount owing on account of an outlay or expense referred to in paragraph (j)) by the partnership at the end of the fiscal period on account of an obligation outstanding at any time in the period in respect of which interest is stipulated to be payable by it that

      • (i) the interest paid or payable on the obligation by the partnership in respect of the fiscal period that is deductible, or would be deductible but for subsection 18(2) or (3.1) or section 21 of the Act, in computing its income for the fiscal period from a business carried on by it in Canada,

      is of

      • (ii) the interest paid or payable on the obligation by the partnership in respect of the fiscal period.

  • (6) For the purposes of paragraph (5)(g), the “allowable liquid assets of the partnership at the end of the fiscal period” is an amount equal to the lesser of

    • (a) the total of the following amounts (to the extent that those amounts are attributable to the profits of the partnership from carrying on a business in Canada, or are used or held by the partnership in the year in the course of carrying on a business in Canada):

      • (i) the amount of Canadian currency owned by the partnership at the end of that fiscal period,

      • (ii) the balance standing to the credit of the partnership at the end of that fiscal period as or on account of amounts deposited with a branch or other office in Canada of

        • (A) a bank,

        • (B) a corporation licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada the business of offering to the public its services as trustee, or

        • (C) a credit union, and

      • (iii) an amount equal to the aggregate of the cost amount to the partnership at the end of that fiscal period of each bond, debenture, bill, note, mortgage, hypothec or similar obligation that was not described in the partnership’s inventory in respect of a business carried on by it in Canada (other than a debt referred to in paragraph (5)(d) or (f) or a debt the amount of which was deducted under paragraph 20(1)(p) of the Act in computing the partnership’s income for the fiscal period), that was issued by a person resident in Canada with whom all the members of the partnership were dealing at arm’s length and that matures within one year after the date on which it was acquired by the partnership; and

    • (b) an amount equal to 4/3 of the quotient obtained by dividing

      • (i) the aggregate of all amounts that would otherwise be determined under subparagraphs (a)(i), (ii) and (iii) if the references therein to “at the end of that fiscal period” were read as references to “at the end of each month in that fiscal period”,

      by

      • (ii) the number of months in that fiscal period.

  • (7) Subsections (4) to (6) shall be read and construed as if each of the assumptions in paragraphs 96(1)(a) to (g) of the Act were made.

  • (8) For the purpose of paragraph 219(1)(j) of the Act, the allowance of an authorized foreign bank for a taxation year in respect of its investment in property in Canada is prescribed to be the amount, if any, by which

    • (a) the average of all amounts, each of which is the amount for a calculation period (within the meaning assigned by subsection 20.2(1) of the Act) of the bank for the year that is the greater of

      • (i) the amount determined by the formula

        0.05 × A

        where

        A 
        is the amount of the element A in the formulae in subsection 20.2(3) of the Act for the period, and
      • (ii) the amount by which

        • (A) the total of the cost amount to the bank, at the end of the period (or, in the case of depreciable property or eligible capital property, immediately after the end of the year), of each asset in respect of the bank’s Canadian banking business that is an asset recorded in the books of account of the business in a manner consistent with the manner in which it is required to be treated for the purpose of the branch financial statements (within the meaning assigned by subsection 20.2(1) of the Act) for the year

        exceeds

        • (B) the amount equal to the total of

          • (I) the amount determined by the formula

            L + BA

            where

            L 
            is the amount of the element L in the formulae in subsection 20.2(3) of the Act for the period, and
            BA 
            is the amount of the element BA in the formulae in subsection 20.2(3) of the Act for the period, and
          • (II) the amount claimed by the bank under clause 20.2(3)(b)(ii)(A) of the Act

    exceeds

    • (b) the total of all amounts each of which is an amount that would be determined under paragraph (2)(j), (k), (n) or (o) if that provision applied to the bank for the year, except to the extent that the amount reflects a liability of the bank that has been included in the element L in the formulae in subsection 20.2(3) of the Act for the bank’s last calculation period for the year.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/81-656, s. 2;
  • SOR/84-948, s. 4;
  • SOR/90-258, s. 1;
  • SOR/91-78, s. 2;
  • SOR/93-395, s. 1;
  • SOR/94-686, ss. 8(F), 47, 58 to 61(F), 62, 63 to 65(F), 78(F), 79(F), 81(F);
  • SOR/2009-302, s. 7;
  • SOR/2010-93, s. 11.

Reduction of Certain Amounts to be Deducted or Withheld

  •  (1) Subject to subsection (2), where a non-resident person (in this section referred to as the “payee”) has filed with the Minister the payee’s required statement for the year, the amount otherwise required by subsections 215(1) to (3) of the Act to be deducted or withheld from any qualifying payment paid or credited by a person resident in Canada (in this section referred to as the “payer”) to the payee in the year and after the required statement for the year was so filed is hereby reduced by the amount determined in accordance with the following rules:

    • (a) determine the amount by which

      • (i) the amount that would, if the payee does not make an election in respect of the year under section 217 of the Act, be the tax payable by the payee under Part XIII of the Act on the aggregate of the amounts estimated by him in his required statement for the year pursuant to paragraph (a) of the definition required statement in subsection (4),

      exceeds

      • (ii) the amount that would, if the payee makes the election referred to in subparagraph (i), be the tax payable (on the assumption that no portion of the payee’s income for the year was income earned in the year in a province) by the payee under Part I of the Act on his estimated taxable income calculated by him in his required statement for the year pursuant to paragraph (b) of the definition required statement in subsection (4),

    • (b) determine the percentage that the amount determined under paragraph (a) is of the aggregate of the amounts estimated by him in his required statement for the year pursuant to paragraph (a) of the definition required statement in subsection (4),

    • (c) where the determination of a percentage under paragraph (b) results in a fraction, disregard the fraction for the purposes of paragraph (d),

    • (d) multiply the percentage determined under paragraph (b) by the amount of the qualifying payment,

    and the product obtained under paragraph (d) is the amount by which the amount required to be deducted or withheld is reduced.

  • (2) Subsection (1) does not apply to reduce the amount to be deducted or withheld from a qualifying payment if, after the qualifying payment has been paid or credited by the payer, the aggregate of all qualifying payments that the payer has paid or credited to the payee in the year would exceed the amount estimated, in respect of that payer, by the payee in his required statement for the year pursuant to paragraph (a) of the definition required statement in subsection (4).

  • (3) Where a payee has filed with the Minister a written notice indicating that certain information or estimates in the payee’s required statement for the year are incorrect and setting out the correct information or estimates that should be substituted therefor or where the Minister is satisfied that certain information or estimates in a payee’s required statement for the year are incorrect and that the Minister has the correct information or estimates that should be substituted therefor, for the purposes of making the calculations in subsection (1) with respect to any qualifying payment paid or credited to the payee after the time when he has filed that notice or after the time when the Minister is so satisfied, as the case may be, the incorrect information or estimates shall be disregarded and the required statement for the year shall be deemed to contain only the correct information or estimates.

  • (4) In this section,

    qualifying payment

    qualifying payment in relation to a non-resident person means any amount

    • (a) paid or credited, or to be paid or credited, to him as, on account or in lieu of payment of, or in satisfaction of, any amount described in paragraph 212(1)(f) or (h) or in any of paragraphs 212(1)(j), (k), (l), (m) or (q) of the Act, and

    • (b) on which tax under Part XIII of the Act is, or would be, but for an election by him under section 217 of the Act, payable by him; (paiement admissible)

    required statement

    required statement of a payee for a taxation year means a written statement signed by him that contains, in respect of the payee,

    • (a) the name and address of each payer of a qualifying payment in the year and, in respect of each such payer, an estimate by the payee of the aggregate of such qualifying payments, and

    • (b) a calculation by him of his estimated taxable income earned in Canada for the year, on the assumption that he makes the election in respect of the year under section 217 of the Act, and such information as may be necessary for the purpose of estimating such income. (état exigé)

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/81-656, s. 3;
  • SOR/94-686, s. 50(F).

 [Repealed, SOR/2009-302, s. 8]

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/94-686, s. 57(F);
  • SOR/2009-302, s. 8.

PART IX[Repealed, SOR/2003-5, s. 13]

PART XElections in Respect of Deceased Taxpayers

Property Dispositions

  •  (1) Any election under subsection 164(6) of the Act shall be made by the legal representative of a deceased taxpayer by filing with the Minister the following documents:

    • (a) a letter from the legal representative specifying

      • (i) the part of the one or more capital losses from the disposition of properties, if any, under paragraph 164(6)(c) of the Act, and

      • (ii) the part of the amount, if any, under paragraph 164(6)(d) of the Act

      in respect of which the election is made;

    • (b) where an amount is specified under subparagraph (a)(i), a schedule of the capital losses and capital gains referred to in paragraph 164(6)(a) of the Act;

    • (c) where an amount is specified under subparagraph (a)(ii),

      • (i) a schedule of the amounts of undepreciated capital cost described in paragraph 164(6)(b) of the Act,

      • (ii) a statement of the amount that, but for subsection 164(6) of the Act, would be the non-capital loss of the estate for its first taxation year, and

      • (iii) a statement of the amount that, but for subsection 164(6) of the Act, would be the farm loss of the estate for its first taxation year.

    • (d) and (e) [Repealed, SOR/88-165, s. 5]

  • (2) The documents referred to in subsection (1) shall be filed not later than the day that is the later of

    • (a) the last day provided by the Act for the filing of a return that the legal representative of a deceased taxpayer is required or has elected to file under the Act in respect of the income of that deceased taxpayer for the taxation year in which he died; and

    • (b) the day the return of the income for the first taxation year of the deceased taxpayer’s estate is required to be filed under paragraph 150(1)(c) of the Act.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/85-696, s. 1;
  • SOR/88-165, s. 5.

Realization of Options

  •  (1) An election under subsection 164(6.1) of the Act shall be made by the legal representative of a deceased taxpayer by filing with the Minister a letter from the legal representative setting out the following:

    • (a) the amount of the benefit referred to in subparagraph 164(6.1)(a)(i) of the Act;

    • (b) the value of the right, and the amount paid for the right, referred to in subparagraph 164(6.1)(a)(ii) of the Act;

    • (c) the deducted amount, referred to in subparagraph 164(6.1)(a)(iii) of the Act; and

    • (d) the amount of the loss referred to in paragraph 164(6.1)(b) of the Act.

  • (2) The letter shall be filed not later than the day that is the later of

    • (a) the last day provided by the Act for the filing of a return that the legal representative of a deceased taxpayer is required or has elected to file under the Act in respect of the income of that deceased taxpayer for the taxation year in which he or she died, and

    • (b) the day the return of the income for the first taxation year of the deceased taxpayer’s estate is required to be filed under paragraph 150(1)(c) of the Act.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/2005-123, s. 4.

Annual Instalments

 Any election by a deceased taxpayer’s legal representative under subsection 159(5) of the Act shall be made by filing with the Minister the prescribed form on or before the day on or before which payment of the first of the “equal consecutive annual instalments” referred to in that subsection is required to be made.

PART XICapital Cost Allowances

DIVISION IDeductions Allowed

  •  (1) For the purposes of paragraphs 8(1)(j) and (p) and 20(1)(a) of the Act, the following deductions are allowed in computing a taxpayer’s income for each taxation year:

    Rates

    • (a) subject to subsection (2), such amount as the taxpayer may claim in respect of property of each of the following classes in Schedule II not exceeding in respect of property

      • (i) of Class 1, 4 per cent,

      • (ii) of Class 2, 6 per cent,

      • (iii) of Class 3, 5 per cent,

      • (iv) of Class 4, 6 per cent,

      • (v) of Class 5, 10 per cent,

      • (vi) of Class 6, 10 per cent,

      • (vii) of Class 7, 15 per cent,

      • (viii) of Class 8, 20 per cent,

      • (ix) of Class 9, 25 per cent,

      • (x) of Class 10, 30 per cent,

      • (x.1) of Class 10.1, 30 per cent,

      • (xi) of Class 11, 35 per cent,

      • (xii) of Class 12, 100 per cent,

      • (xiii) of Class 16, 40 per cent,

      • (xiv) of Class 17, 8 per cent,

      • (xv) of Class 18, 60 per cent,

      • (xvi) of Class 22, 50 per cent,

      • (xvii) of Class 23, 100 per cent,

      • (xviii) of Class 25, 100 per cent,

      • (xix) of Class 26, 5 per cent,

      • (xx) of Class 28, 30 per cent,

      • (xxi) of Class 30, 40 per cent,

      • (xxii) of Class 31, 5 per cent,

      • (xxiii) of Class 32, 10 per cent,

      • (xxiv) of Class 33, 15 per cent,

      • (xxv) of Class 35, 7 per cent,

      • (xxvi) of Class 37, 15 per cent,

      • (xxvii) of Class 41, 25 per cent,

      • (xxvii.1) of Class 41.1, 25 per cent,

      • (xxvii.2) of Class 41.2, 25 per cent,

      • (xxviii) of Class 42, 12 per cent,

      • (xxix) of Class 43, 30 per cent,

      • (xxix.1) of Class 43.1, 30 per cent,

      • (xxix.2) of Class 43.2, 50 per cent,

      • (xxx) of Class 44, 25 per cent,

      • (xxxi) of Class 45, 45 per cent,

      • (xxxii) of Class 46, 30 per cent,

      • (xxxiii) of Class 47, 8 per cent,

      • (xxxiv) of Class 48, 15 per cent,

      • (xxxv) of Class 49, 8 per cent,

      • (xxxvi) of Class 50, 55 per cent,

      • (xxxvii) of Class 51, 6 per cent,

      • (xxxviii) of Class 52, 100 per cent, and

      • (xxxix) of Class 53, 50 per cent,

      of the undepreciated capital cost to the taxpayer as of the end of the taxation year (before making any deduction under this subsection for the taxation year) of property of the class;

    Class 1

    • (a.1) where a separate class is prescribed by subsection 1101(5b.1) for a property of a taxpayer that is a building and at least 90 per cent of the floor space of the building is used at the end of the taxation year for the manufacturing or processing in Canada of goods for sale or lease, such amount as the taxpayer may claim not exceeding six per cent of the undepreciated capital cost to the taxpayer of the property of that class as of the end of the taxation year (before making any deduction under this subsection for the taxation year);

    • (a.2) where a separate class is prescribed by subsection 1101(5b.1) for a property of a taxpayer that is a building, at least 90 per cent of the floor space of the building is used at the end of the taxation year for a non-residential use in Canada and an additional allowance is not allowed for the year under paragraph (a.1) in respect of the property, such amount as the taxpayer may claim not exceeding two per cent of the undepreciated capital cost to the taxpayer of the property of that class as of the end of the taxation year (before making any deduction under this subsection for the taxation year);

    • (a.3) any additional amount that the taxpayer may claim in respect of property that is used as part of an eligible liquefaction facility for which a separate class is prescribed by subsection 1101(5b.2), not exceeding the lesser of

      • (i) the income for the taxation year from the taxpayer’s eligible liquefaction activities in respect of the eligible liquefaction facility (taking into consideration any deduction under paragraph (yb) and before making any deduction under this paragraph), and

      • (ii) 6% of the undepreciated capital cost to the taxpayer of property of that separate class as of the end of the taxation year (before making any deduction under this subsection for the taxation year);

    Class 13

    • (b) such amount as the taxpayer may claim in respect of the capital cost to the taxpayer of property of Class 13 in Schedule II, not exceeding

      • (i) where the capital cost of the property, other than property described in subparagraph (2)(a)(v), (vi) or (vii), was incurred in the taxation year and after November 12, 1981, 50 per cent of the amount for the year calculated in accordance with Schedule III, and

      • (ii) in any other case, the amount for the year calculated in accordance with Schedule III,

      and, for the purposes of this paragraph and Schedule III, the capital cost to a taxpayer of a property shall be deemed to have been incurred at the time at which the property became available for use by the taxpayer;

    Class 14

    • (c) such amount as he may claim in respect of property of Class 14 in Schedule II not exceeding the lesser of

      • (i) the aggregate of the amounts for the year obtained by apportioning the capital cost to him of each property over the life of the property remaining at the time the cost was incurred, and

      • (ii) the undepreciated capital cost to him as of the end of the taxation year (before making any deduction under this subsection for the taxation year) of property of the class;

    In Lieu of Double Depreciation

    • (d) such additional amount as he may claim not exceeding in the case of property described in each of the classes in Schedule II, the lesser of

      • (i) one-half the amount that would have been allowed to him in respect of property of that class under subparagraph 6(n)(ii) of the Income War Tax Act if that act were applicable to the taxation year, and

      • (ii) the undepreciated capital cost to him as of the end of the taxation year (before making any deduction under this paragraph for the taxation year) of property of the class;

    Timber Limits and Cutting Rights

    • (e) such amount as he may claim not exceeding the amount calculated in accordance with Schedule VI in respect of the capital cost to him of a property, other than a timber resource property, that is a timber limit or a right to cut timber from a limit;

    Class 15

    • (f) such amount as he may claim not exceeding the amount calculated in accordance with Schedule IV in respect of the capital cost to him of property of Class 15 in Schedule II;

    Industrial Mineral Mines

    • (g) such amount as he may claim not exceeding the amount calculated in accordance with Schedule V in respect of the capital cost to him of a property that is an industrial mineral mine or a right to remove industrial minerals from an industrial mineral mine;

    • (h) [Repealed, SOR/78-377, s. 3]

    Additional Allowances — Fishing Vessels

    • (i) such additional amount as he may claim in the case of property of a separate class prescribed by subsection 1101(2) not exceeding the lesser of

      • (i) the amount by which the depreciation that could have been taken on the property, if the Orders in Council referred to in that subsection were applicable to the taxation year, exceeds the amount allowed under paragraph (a) in respect of the property, and

      • (ii) the undepreciated capital cost to him as of the end of the taxation year (before making any deduction under this paragraph for the taxation year) of property of the class;

    Additional Allowances — Classes 1, 2, 3, and 6

    Additional Allowances — Certified Productions

    • (l) such additional amount as he may claim in respect of property for which a separate class is prescribed by subsection 1101(5k) not exceeding the lesser of

      • (i) the aggregate of his income for the year from that property and from property described in paragraph (n) of Class 12 in Schedule II, determined before making any deduction under this paragraph, and

      • (ii) the undepreciated capital cost to him of property of that separate class as of the end of the year before making any deduction under this paragraph for the year;

    Additional Allowance — Canadian Film or Video Production

    • (m) such additional amount as the taxpayer claims in respect of property for which a separate class is prescribed by subsection 1101(5k.1) not exceeding the lesser of

      • (i) the taxpayer’s income for the year from the property, determined before making any deduction under this paragraph, and

      • (ii) the undepreciated capital cost to the taxpayer of the property of that separate class at the end of the year (before making any deduction under this paragraph for the year and computed without reference to subsection (2));

    Class 19

    • (n) where the taxpayer is a corporation that had a degree of Canadian ownership in the taxation year, or is an individual who was resident in Canada in the taxation year for not less than 183 days, such amount as he may claim in respect of property of Class 19 in Schedule II that was acquired in a particular taxation year not exceeding the lesser of

      • (i) 50 per cent of the capital cost thereof to him, and

      • (ii) the amount by which the capital cost thereof to him exceeds the aggregate of the amounts deducted in respect thereof in computing his income for previous taxation years,

      but the aggregate of amounts deductible for a taxation year in respect of property acquired in each of the particular taxation years, under this paragraph, shall not exceed the undepreciated capital cost to him as of the end of the taxation year (before making any deduction under this subsection for the taxation year) of property of the class;

    • (o) where the taxpayer is not entitled to make a deduction under paragraph (n) in computing his income for a taxation year, such amount as he may claim in respect of property of Class 19 in Schedule II not exceeding 20 per cent of the undepreciated capital cost to him as of the end of the taxation year (before making any deduction under this subsection for the taxation year) of property of the class;

    Class 20

    • (p) such amount as he may claim in respect of property of Class 20 in Schedule II that was acquired in a particular taxation year not exceeding the lesser of

      • (i) 20 per cent of the capital cost thereof to him, and

      • (ii) the amount by which the capital cost thereof to him exceeds the aggregate of the amounts deducted in respect thereof in computing his income for previous taxation years,

      but the aggregate of amounts deductible for a taxation year in respect of property acquired in each of the particular taxation years, under this paragraph, shall not exceed the undepreciated capital cost to him as of the end of the taxation year (before making any deduction under this subsection for the taxation year) of property of the class;

    Class 21

    • (q) such amount as he may claim in respect of property of Class 21 in Schedule II that was acquired in a particular taxation year not exceeding the lesser of

      • (i) 50 per cent of the capital cost thereof to him, and

      • (ii) the amount by which the capital cost thereof to him exceeds the aggregate of the amounts deducted in respect thereof in computing his income for previous taxation years,

      but the aggregate of amounts deductible for a taxation year in respect of property acquired in each of the particular taxation years, under this paragraph, shall not exceed the undepreciated capital cost to him as of the end of the taxation year (before making any deduction under this subsection for the taxation year) of property of the class;

    • (r) to (sa) [Repealed, SOR/78-377, s. 3]

    Additional Allowances — Grain Storage Facilities

    • (sb) such additional amount as he may claim in respect of property included in Class 3, 6 or 8 in Schedule II

      • (i) that is

        • (A) a grain elevator situated in that part of Canada that is defined in section 2 of the Canada Grain Act as the “Eastern Division” the principal use of which

          • (I) is the receiving of grain directly from producers for storage or forwarding or both,

          • (II) is the receiving and storing of grain for direct manufacture or processing into other products, or

          • (III) has been certified by the Minister of Agriculture to be the receiving of grain that has not been officially inspected or weighed,

        • (B) an addition to a grain elevator described in clause (A),

        • (C) fixed machinery installed in a grain elevator in respect of which, or in respect of an addition to which, an additional amount has been or may be claimed under this paragraph,

        • (D) fixed machinery, designed for the purpose of drying grain, installed in a grain elevator described in clause (A),

        • (E) machinery designed for the purpose of drying grain on a farm, or

        • (F) a building or other structure designed for the purpose of storing grain on a farm,

      • (ii) that was acquired by the taxpayer in the taxation year or in one of the three immediately preceding taxation years, at a time that was after April 1, 1972 but before August 1, 1974, and

      • (iii) that was not used for any purpose whatever before it was acquired by the taxpayer,

      not exceeding the lesser of

      • (iv) where the property is included in Class 3, 22 per cent of the capital cost thereof, where the property is included in Class 6, 20 per cent of the capital cost thereof or where the property is included in Class 8,

        • (A) 14 per cent of the capital cost thereof in the case of property referred to in clause (i)(C), (D) or (F), and

        • (B) 14 per cent of the lesser of $15,000 and the capital cost thereof in the case of property described in clause (i)(E), and

      • (v) the undepreciated capital cost to him as of the end of the taxation year (before making any deduction under this paragraph for the taxation year) of property of the class;

    Classes 24, 27, 29 and 34

    • (t) for the taxation year that includes November 12, 1981, such amount as he may claim in respect of property of each of Classes 24, 27, 29 and 34 in Schedule II not exceeding the aggregate of

      • (i) 50 per cent of the lesser of

        • (A) the capital cost to him of all designated property of the class acquired by him in the year, and

        • (B) the undepreciated capital cost to him of property of the class as of the end of the year (computed as if no amount were included in respect of property, other than designated property of the class, acquired after November 12, 1981 and before making any deduction under this paragraph for the year),

      • (ii) the amount, if any, by which the amount determined under clause (i)(B) in respect of the class exceeds the amount determined under clause (i)(A) in respect of the class, and

      • (iii) the lesser of

        • (A) 25 per cent of the capital cost to him of all property, other than designated property, of the class acquired by him in the year, and

        • (B) the undepreciated capital cost to him of property of the class as of the end of the year (before making any deduction under this paragraph for the year);

    • (ta) for taxation years commencing after November 12, 1981, such amount as he may claim in respect of property of each of Classes 24, 27, 29 and 34 in Schedule II not exceeding the aggregate of

      • (i) the aggregate of

        • (A) the lesser of

          • (I) 50 per cent of the capital cost to him of all designated property of the class acquired by him in the year, and

          • (II) the undepreciated capital cost to him of property of the class as of the end of the year (before making any deduction under this paragraph for the year and, where any of the property referred to in subclause (I) was acquired by virtue of a specified transaction, computed as if no amount were included in respect of property, other than designated property of the class acquired by him in the year), and

        • (B) 25 per cent of the lesser of

          • (I) the undepreciated capital cost to him of property of the class as of the end of the year (computed as if no amount were included in respect of designated property of the class acquired by him in the year and before making any deduction under this paragraph for the year), and

          • (II) the capital cost to him of all property, other than designated property, of the class acquired by him in the year, and

      • (ii) the lesser of

        • (A) the amount, if any, by which

          • (I) the undepreciated capital cost to him of property of the class as of the end of the year (before making any deduction under this paragraph for the year)

          exceeds

          • (II) the capital cost to him of all property of the class acquired by him in the year, and

        • (B) an amount equal to the aggregate of

          • (I) 50 per cent of the capital cost to him of all property of the class acquired by him in the immediately preceding taxation year, other than designated property of the class acquired in a specified transaction, and

          • (II) the amount, if any, by which the amount determined under clause (A) for the year with respect to the class exceeds the aggregate of 75 per cent of the capital cost to him of all property, other than designated property, of the class acquired by him in the immediately preceding taxation year and 50 per cent of the capital cost to him of designated property of the class acquired by him in the immediately preceding taxation year, other than designated property of the class acquired in a specified transaction,

      and for the purposes of this paragraph and paragraph (t), designated property of a class means

      • (iii) property of the class acquired by him before November 13, 1981,

      • (iv) property deemed to be designated property of the class by virtue of paragraph (2.1)(g) or (2.2)(j), and

      • (v) property described in subparagraph (2)(a)(v), (vi) or (vii),

      and, for the purposes of this paragraph,

      • (vi) specified transaction means a transaction to which subsection 85(5), 87(1), 88(1), 97(4) or 98(3) or (5) of the Act applies, and

      • (vii) subject to paragraph (2.2)(j), a property shall be deemed to have been acquired by a taxpayer at the time at which the property became available for use by the taxpayer;

    • (u) [Repealed, SOR/78-377, s. 3]

    Canadian Vessels

    • (v) such amount as the taxpayer may claim in respect of property that is

      • (i) a vessel described in subsection 1101(2a),

      • (ii) included in a separate prescribed class because of subsection 13(14) of the Act, or

      • (iii) a property that has been constituted a prescribed class by subsection 24(2) of Chapter 91 of the Statutes of Canada, 1966-67,

      not exceeding the lesser of

      • (iv) where the property, other than property described in subparagraph (2)(a)(v), (vi) or (vii), was acquired in the taxation year and after November 12, 1981, 16 2/3 per cent of the capital cost thereof to the taxpayer and, in any other case, 33 1/3 per cent of the capital cost thereof to the taxpayer, and

      • (v) the undepreciated capital cost to the taxpayer as of the end of the taxation year (before making any deduction under this paragraph for the taxation year) of property of the class,

      and, for the purposes of subparagraph (iv), a property shall be deemed to have been acquired by a taxpayer at the time at which the property became available for use by the taxpayer for the purposes of the Act;

    Additional Allowances — Offshore Drilling Vessels

    • (va) such additional amount as he may claim in respect of property for which a separate class is prescribed by subsection 1101(2b) not exceeding 15 per cent of the undepreciated capital cost to him of property of that class as of the end of the taxation year (before making any deduction under this subsection for the taxation year);

    Additional Allowances — Class 28

    • (w) subject to section 1100A, such additional amount as he may claim in respect of property described in Class 28 acquired for the purpose of gaining or producing income from a mine or in respect of property acquired for the purpose of gaining or producing income from a mine and for which a separate class is prescribed by subsection 1101 (4a), not exceeding the lesser of

      • (i) the taxpayer’s income for the taxation year from the mine, before making any deduction under this paragraph, paragraph (x), (y), (y.1), (y.2), (ya), (ya.1) or (ya.2), section 65, 66, 66.1, 66.2 or 66.7 of the Act or section 29 of the Income Tax Application Rules, and

      • (ii) the undepreciated capital cost to the taxpayer of property of that class as of the end of the taxation year (computed without reference to subsection (2) and before making any deduction under this paragraph for the taxation year);

    • (x) subject to section 1100A, such additional amount as he may claim in respect of property acquired for the purpose of gaining or producing income from more than one mine and for which a separate class is prescribed by subsection 1101(4b), not exceeding the lesser of

      • (i) the taxpayer’s income for the taxation year from the mines, before making any deduction under this paragraph, paragraph (ya), (ya.1) or (ya.2), section 65, 66, 66.1, 66.2 or 66.7 of the Act or section 29 of the Income Tax Application Rules, and

      • (ii) the undepreciated capital cost to him of property of that class as of the end of the taxation year (before making any deduction under this paragraph for the taxation year);

    Additional Allowances — Class 41

    • (y) such additional amount as the taxpayer may claim in respect of property acquired for the purpose of gaining or producing income from a mine and for which a separate class is prescribed by subsection 1101(4c), not exceeding the lesser of

      • (i) the taxpayer’s income for the taxation year from the mine, before making any deduction under this paragraph, paragraph (x), (ya), (ya.1) or (ya.2), section 65, 66, 66.1, 66.2 or 66.7 of the Act or section 29 of the Income Tax Application Rules, and

      • (ii) the undepreciated capital cost to the taxpayer of property of that class as of the end of a taxation year (computed without reference to subsection (2) and before making any deduction under this paragraph for the taxation year);

    Additional Allowances — Class 41.1

    • (y.1) such additional amount as the taxpayer may claim in respect of property acquired for the purpose of gaining or producing income from a mine and for which a separate class is prescribed by subsection 1101(4e), not exceeding the amount determined by the formula

      A × B

      where

      A 
      is the lesser of
      • (i) the taxpayer’s income for the taxation year from the mine, before making any deduction under this paragraph, paragraph (x), (y), (y.2), (ya), (ya.1) or (ya.2), section 65, 66, 66.1, 66.2 or 66.7 of the Act or section 29 of the Income Tax Application Rules, and

      • (ii) the undepreciated capital cost to the taxpayer of property of that class as of the end of the taxation year computed

        • (A) without reference to subsection (2),

        • (B) after making any deduction under paragraph (a) for the taxation year, and

        • (C) before making any deduction under this paragraph; and

      B 
      is the percentage that is the total of
      • (i) that proportion of 100% that the number of days in the taxation year that are before 2011 is of the number of days in the taxation year,

      • (ii) that proportion of 90% that the number of days in the taxation year that are in 2011 is of the number of days in the taxation year,

      • (iii) that proportion of 80% that the number of days in the taxation year that are in 2012 is of the number of days in the taxation year,

      • (iv) that proportion of 60% that the number of days in the taxation year that are in 2013 is of the number of days in the taxation year,

      • (v) that proportion of 30% that the number of days in the taxation year that are in 2014 is of the number of days in the taxation year, and

      • (vi) 0%, if one or more days in the year are after 2014;

    Additional Allowances  —  Class 41.2  —  Single Mine Properties

    • (y.2) such additional amount as the taxpayer may claim in respect of property acquired for the purpose of gaining or producing income from a mine and for which a separate class is prescribed by subsection 1101(4g), not exceeding the amount determined by the formula

      A × B

      where

      A 
      is the lesser of
      • (i) the taxpayer’s income for the taxation year from the mine, before making any deduction under this paragraph, paragraph (x), (y), (ya), (ya.1) or (ya.2), section 65, 66, 66.1, 66.2 or 66.7 of the Act or section 29 of the Income Tax Application Rules, and

      • (ii) the undepreciated capital cost to the taxpayer of property of that class as of the end of the year computed

        • (A) without reference to subsection (2),

        • (B) after making any deduction under paragraph (a) for the year, and

        • (C) before making any deduction under this paragraph, and

      B 
      is the percentage that is the total of
      • (i) that proportion of 100% that the number of days in the year that are before 2017 is of the number of days in the year,

      • (ii) that proportion of 90% that the number of days in the year that are in 2017 is of the number of days in the year,

      • (iii) that proportion of 80% that the number of days in the year that are in 2018 is of the number of days in the year,

      • (iv) that proportion of 60% that the number of days in the year that are in 2019 is of the number of days in the year,

      • (v) that proportion of 30% that the number of days in the year that are in 2020 is of the number of days in the year, and

      • (vi) 0%, if one or more days in the year are after 2020;

    • (ya) such additional amount as the taxpayer may claim in respect of property acquired for the purpose of gaining or producing income from more than one mine and for which a separate class is prescribed by subsection 1101(4d), not exceeding the lesser of

      • (i) the taxpayer’s income for the year from the mines, before making any deduction under this paragraph, section 65, 66, 66.1, 66.2 or 66.7 of the Act or section 29 of the Income Tax Application Rules, and

      • (ii) the undepreciated capital cost to the taxpayer of property of that class as of the end of the taxation year (computed without reference to subsection (2) and before making any deduction under this paragraph for the taxation year);

    Additional Allowances — Class 41.1 — Multiple Mine Properties

    • (ya.1) such additional amount as the taxpayer may claim in respect of property acquired for the purpose of gaining or producing income from more than one mine and for which a separate class is prescribed by subsection 1101(4f), not exceeding the amount determined by the formula

      A × B

      where

      A 
      is the lesser of
      • (i) the taxpayer’s income for the taxation year from the mines, before making any deduction under this paragraph, paragraph (ya) or (ya.2), section 65, 66, 66.1, 66.2 or 66.7 of the Act or section 29 of the Income Tax Application Rules, and

      • (ii) the undepreciated capital cost to the taxpayer of property of that class as of the end of the taxation year computed

        • (A) without reference to subsection (2),

        • (B) after making any deduction under paragraph (a) for the taxation year, and

        • (C) before making any deduction under this paragraph; and

      B 
      is the percentage that is the total of
      • (i) that proportion of 100% that the number of days in the taxation year that are before 2011 is of the number of days in the taxation year,

      • (ii) that proportion of 90% that the number of days in the taxation year that are in 2011 is of the number of days in the taxation year,

      • (iii) that proportion of 80% that the number of days in the taxation year that are in 2012 is of the number of days in the taxation year,

      • (iv) that proportion of 60% that the number of days in the taxation year that are in 2013 is of the number of days in the taxation year,

      • (v) that proportion of 30% that the number of days in the taxation year that are in 2014 is of the number of days in the taxation year, and

      • (vi) 0%, if one or more days in the year are after 2014;

    Additional allowances Class 41.2  —  Multiple Mine Properties

    • (ya.2) such additional amount as the taxpayer may claim in respect of a property acquired for the purpose of gaining or producing income from more than one mine and for which a separate class is prescribed by subsection 1101(4h), not exceeding the amount determined by the formula

      A × B

      where

      A 
      is the lesser of
      • (i) the taxpayer’s income for the taxation year from the mines, before making any deduction under this paragraph, paragraph (ya), section 65, 66, 66.1, 66.2 or 66.7 of the Act or section 29 of the Income Tax Application Rules, and

      • (ii) the undepreciated capital cost to the taxpayer of property of that class as of the end of the year computed

        • (A) without reference to subsection (2),

        • (B) after making any deduction under paragraph (a) for the year, and

        • (C) before making any deduction under this paragraph, and

      B 
      is the percentage that is the total of
      • (i) that proportion of 100% that the number of days in the year that are before 2017 is of the number of days in the year,

      • (ii) that proportion of 90% that the number of days in the year that are in 2017 is of the number of days in the year,

      • (iii) that proportion of 80% that the number of days in the year that are in 2018 is of the number of days in the year,

      • (iv) that proportion of 60% that the number of days in the year that are in 2019 is of the number of days in the year,

      • (v) that proportion of 30% that the number of days in the year that are in 2020 is of the number of days in the year, and

      • (vi) 0%, if one or more days in the year are after 2020;

    Additional Allowance — Class 47

    • (yb) any additional amount as the taxpayer may claim in respect of property used as part of an eligible liquefaction facility for which a separate class is prescribed by subsection 1101(4i), not exceeding the lesser of

      • (i) the income for the taxation year from the taxpayer’s eligible liquefaction activities in respect of the eligible liquefaction facility (taking into consideration any deduction under paragraph (a.3) and before making any deduction under this paragraph), and

      • (ii) 22% of the undepreciated capital cost to the taxpayer of property of that separate class as of the end of the taxation year (before making any deduction under this subsection for the taxation year);

    Additional Allowances — Railway Cars

    • (z) such additional amount as the taxpayer may claim in respect of property for which a separate class is prescribed by paragraph 1101(5d)(c) not exceeding eight per cent of the undepreciated capital cost to the taxpayer of property of that class as of the end of the taxation year (before making any deduction under this subsection for the taxation year);

    • (z.1a) such additional amount as the taxpayer may claim in respect of property for which a separate class is prescribed by paragraph 1101(5d)(d), (e) or (f), not exceeding six per cent of the undepreciated capital cost to the taxpayer of property of that class as of the end of the taxation year (before making any deduction under this subsection for the taxation year);

    • (z.1b) where throughout the taxation year the taxpayer was a common carrier that owned and operated a railway, such additional amount as the taxpayer may claim in respect of property for which a separate class is prescribed by subsection 1101(5d.1), not exceeding three per cent of the undepreciated capital cost to the taxpayer of property of that class as of the end of the year (before making any deduction under this subsection for the year);

    • (z.1c) where throughout the taxation year the taxpayer was a common carrier that owned and operated a railway, such additional amount as the taxpayer may claim in respect of property for which a separate class is prescribed by subsection 1101(5d.2), not exceeding six percent of the undepreciated capital cost to the taxpayer of property of that class as of the end of the year (before making any deduction under this subsection for the year);

    Additional Allowances — Railway Track and Related Property

    • (za) such additional amount as he may claim in respect of property for which a separate class is prescribed by subsection 1101(5e) not exceeding 4% of the undepreciated capital cost to him of property of that class as of the end of the taxation year (before making any deduction under this subsection for the taxation year);

    • (za.1) where throughout the taxation year the taxpayer was a common carrier that owned and operated a railway, such additional amount as the taxpayer may claim in respect of property for which a separate class is prescribed by subsection 1101(5e.1), not exceeding six per cent of the undepreciated capital cost to the taxpayer of property of that class as of the end of the year (before making any deduction under this subsection for the year);

    • (za.2) where throughout the taxation year the taxpayer was a common carrier that owned and operated a railway, such additional amount as the taxpayer may claim in respect of property for which a separate class is prescribed by subsection 1101(5e.2), not exceeding five per cent of the undepreciated capital cost to the taxpayer of property of that class as of the end of the year (before making any deduction under this subsection for the year);

    • (zb) such additional amount as he may claim in respect of property for which a separate class is prescribed by subsection 1101(5f) not exceeding 3% of the undepreciated capital cost to him of property of that class as of the end of the taxation year (before making any deduction under this subsection for the taxation year);

    Additional Allowances — Railway Expansion and Modernization Property

    • (zc) where the taxpayer owns and operates a railway as a common carrier, such additional amount as he may claim in respect of property of a class in Schedule II (in this paragraph referred to as “designated property” of the class)

      • (i) that is

        • (A) included in Class 1 in Schedule II by virtue of paragraph (h) or (i) of that Class,

        • (B) a bridge, culvert, subway or tunnel included in Class 1 in Schedule II that is ancillary to railway track and grading,

        • (C) a trestle included in Class 3 in Schedule II that is ancillary to railway track and grading,

        • (D) included in Class 6 in Schedule II by virtue of paragraph (j) of that Class,

        • (E) machinery or equipment included in Class 8 in Schedule II that is ancillary to

          • (I) railway track and grading, or

          • (II) railway traffic control or signalling equipment, including switching, block signalling, interlocking, crossing protection, detection, speed control or retarding equipment, but not including property that is principally electronic equipment or systems software therefor,

        • (F) machinery or equipment included in Class 8 in Schedule II that

          • (I) was acquired principally for the purpose of maintaining or servicing, or

          • (II) is ancillary to and used as part of,

          a railway locomotive or railway car,

        • (G) included in Class 10 in Schedule II by virtue of subparagraph (m)(i), (ii) or (iii) of that Class,

        • (H) included in Class 28 in Schedule II by virtue of subparagraph (d)(ii) of that Class (other than property referred to in subparagraph (m)(iv) of Class 10), or

        • (I) included in Class 35 in Schedule II,

      • (ii) that was acquired by him principally for use in or is situated in Canada,

      • (iii) that was acquired by him in respect of the railway in the taxation year or in one of the four immediately preceding taxation years, at a time that was after April 10, 1978 but before 1988, and

      • (iv) that was not used for any purpose whatever before it was acquired by him,

      not exceeding the lesser of

      • (v) six per cent of the aggregate of the capital cost to him of the designated property of the class, and

      • (vi) the undepreciated capital cost to him as of the end of the taxation year (after making all deductions claimed by him under other provisions of this subsection for the taxation year but before making any deduction under this paragraph for the taxation year) of property of the class.

    Class 38

    • (zd) such amount as the taxpayer may claim in respect of property of Class 38 in Schedule II not exceeding that percentage which is the aggregate of

      • (i) that proportion of 40 per cent that the number of days in the taxation year that are in 1988 is of the number of days in the taxation year that are after 1987,

      • (ii) that proportion of 35 per cent that the number of days in the taxation year that are in 1989 is of the number of days in the taxation year, and

      • (iii) that proportion of 30 per cent that the number of days in the taxation year that are after 1989 is of the number of days in the taxation year

      of the undepreciated capital cost to the taxpayer of property of that class as of the end of the taxation year (before making any deduction under this paragraph for the taxation year);

    Class 39

    • (ze) such amount as the taxpayer may claim in respect of property of Class 39 in Schedule II not exceeding that percentage which is the aggregate of

      • (i) that proportion of 40 per cent that the number of days in the taxation year that are in 1988 is of the number of days in the taxation year that are after 1987,

      • (ii) that proportion of 35 per cent that the number of days in the taxation year that are in 1989 is of the number of days in the taxation year,

      • (iii) that proportion of 30 per cent that the number of days in the taxation year that are in 1990 is of the number of days in the taxation year, and

      • (iv) that proportion of 25 per cent that the number of days in the taxation year that are after 1990 is of the number of days in the taxation year

      of the undepreciated capital cost to the taxpayer of property of that class as of the end of the taxation year (before making any deduction under this paragraph for the taxation year);

    Class 40

    • (zf) such amount as the taxpayer may claim in respect of property of Class 40 in Schedule II not exceeding that percentage which is the aggregate of

      • (i) that proportion of 40 per cent that the number of days in the taxation year that are in 1988 is of the number of days in the taxation year that are after 1987,

      • (ii) that proportion of 35 per cent that the number of days in the taxation year that are in 1989 is of the number of days in the taxation year, and

      • (iii) that proportion of 30 per cent that the number of days in the taxation year that are in 1990 is of the number of days in the taxation year

      of the undepreciated capital cost to the taxpayer of property of that class as of the end of the taxation year (before making any deduction under this paragraph for the taxation year);

    Additional Allowance — Year 2000 Computer Hardware and Systems Software

    • (zg) where the taxpayer

      • (i) has elected for the year in prescribed manner,

      • (ii) was not in the year a large corporation, as defined in subsection 225.1(8) of the Act, or a partnership any member of which was such a corporation in a taxation year that included any time that is in the partnership’s year, and

      • (iii) acquired property included in paragraph (f) of Class 10 in Schedule II

        • (A) in the year,

        • (B) after 1997 and before November 1999, and

        • (C) for the purpose of replacing property that was acquired before 1998 that has a material risk of malfunctioning because of the change of the calendar year to 2000 and that is described in paragraph (f) of Class 10, or paragraph (o) of Class 12, in Schedule II,

      such additional amount as the taxpayer claims in respect of all property described in subparagraph (iii) not exceeding the least of

      • (iv) the amount, if any, by which $50,000 exceeds the total of

        • (A) the total of all amounts each of which is an amount claimed by the taxpayer under this paragraph for a preceding taxation year,

        • (B) the total of all amounts each of which is an amount claimed by the taxpayer for the year or a preceding taxation year under paragraph (zh), and

        • (C) the total of all amounts each of which is an amount claimed under this paragraph or paragraph (zh) by a corporation for a taxation year in which it was associated with the taxpayer,

      • (v) 85% of the capital cost to the taxpayer of all property described in subparagraph (iii), and

      • (vi) the undepreciated capital cost to the taxpayer as of the end of the year (computed without reference to subsection (2) and after making all deductions claimed under other provisions of this subsection for the year but before making any deduction under this paragraph for the year) of property included in Class 10 in Schedule II; and

    Additional Allowance — Year 2000 Computer Software

    • (zh) where the taxpayer

      • (i) has elected for the year in prescribed manner,

      • (ii) was not in the year a large corporation, as defined in subsection 225.1(8) of the Act, or a partnership any member of which was such a corporation in a taxation year that included any time that is in the partnership’s year, and

      • (iii) acquired property included in paragraph (o) of Class 12 in Schedule II

        • (A) in the year,

        • (B) after 1997 and before November 1999, and

        • (C) for the purpose of replacing property that was acquired before 1998 that has a material risk of malfunctioning because of the change of the calendar year to 2000 and that is described in paragraph (f) of Class 10, or paragraph (o) of Class 12, in Schedule II,

      such additional amount as the taxpayer claims in respect of all property described in subparagraph (iii) not exceeding the least of

      • (iv) the amount, if any, by which $50,000 exceeds the total of

        • (A) the total of all amounts each of which is an amount claimed by the taxpayer under this paragraph for a preceding taxation year,

        • (B) the total of all amounts each of which is an amount claimed by the taxpayer for the year or a preceding taxation year under paragraph (zg), and

        • (C) the total of all amounts each of which is an amount claimed under this paragraph or paragraph (zg) by a corporation for a taxation year in which it was associated with the taxpayer,

      • (v) 50% of the capital cost to the taxpayer of all property described in subparagraph (iii), and

      • (vi) the undepreciated capital cost to the taxpayer as of the end of the year (computed without reference to subsection (2) and after making all deductions claimed under other provisions of this subsection for the year but before making any deduction under this paragraph for the year) of property included in Class 12 in Schedule II.

  • (1.1) Notwithstanding subsections (1) and (3), the amount deductible by a taxpayer for a taxation year in respect of a property that is a specified leasing property at the end of the year is the lesser of

    • (a) the amount, if any, by which the aggregate of

      • (i) all amounts that would be considered to be repayments in the year or a preceding year on account of the principal amount of a loan made by the taxpayer if

        • (A) the taxpayer had made the loan at the time that the property last became a specified leasing property and in a principal amount equal to the fair market value of the property at that time,

        • (B) interest had been charged on the principal amount of the loan outstanding from time to time at the rate, determined in accordance with section 4302, in effect at the earlier of

          • (I) the time, if any, before the time referred to in subclause (II), at which the taxpayer last entered into an agreement to lease the property, and

          • (II) the time that the property last became a specified leasing property

          (or, where a particular lease provides that the amount paid or payable by the lessee of the property for the use of, or the right to use, the property varies according to prevailing interest rates in effect from time to time, and the taxpayer so elects, in respect of all of the property that is the subject of the particular lease, in the taxpayer’s return of income under Part I of the Act for the taxation year of the taxpayer in which the particular lease was entered into, the rate determined in accordance with section 4302 that is in effect at the beginning of the period for which the interest is being calculated), compounded semi-annually not in advance, and

        • (C) the amounts that were received or receivable by the taxpayer before the end of the year for the use of, or the right to use, the property before the end of the year and after the time it last became a specified leasing property were blended payments of principal and interest, calculated in accordance with clause (B), on the loan applied firstly on account of interest on principal, secondly on account of interest on unpaid interest, and thirdly on account of principal, and

      • (ii) the amount that would have been deductible under this section for the taxation year (in this subparagraph referred to as the “particular year”) that includes the time (in this subparagraph referred to as the “particular time”) at which the property last became a specified leasing property of the taxpayer, if

        • (A) the property had been transferred to a separate prescribed class at the later of

          • (I) the beginning of the particular year, and

          • (II) the time at which the property was acquired by the taxpayer,

        • (B) the particular year had ended immediately before the particular time, and

        • (C) where the property was not a specified leasing property immediately before the particular time, subsection (3) had applied,

      exceeds

      • (iii) the aggregate of all amounts deducted by the taxpayer in respect of the property by reason of this subsection before the commencement of the year and after the time at which it last became a specified leasing property; and

    • (b) the amount, if any, by which,

      • (i) the aggregate of all amounts that would have been deducted by the taxpayer under this Part in respect of the property under paragraph 20(1)(a) of the Act in computing the income of the taxpayer for the year and all preceding taxation years had this subsection and subsections (11) and (15) not applied, and had the taxpayer, in each such year, deducted under paragraph 20(1)(a) of the Act the maximum amount allowed under this Part, read without reference to this subsection and subsections (11) and (15), in respect of the property,

      exceeds

      • (ii) the total depreciation allowed to the taxpayer before the commencement of the year in respect of the property.

  • (1.11) In this section and subsection 1101(5n), specified leasing property of a taxpayer at any time means depreciable property (other than exempt property) that is

    • (a) used at that time by the taxpayer or a person with whom the taxpayer does not deal at arm’s length principally for the purpose of gaining or producing gross revenue that is rent or leasing revenue,

    • (b) the subject of a lease at that time to a person with whom the taxpayer deals at arm’s length and that, at the time the lease was entered into, was a lease for a term of more than one year, and

    • (c) the subject of a lease of property where the tangible property, other than exempt property, that was the subject of the lease had, at the time the lease was entered into, an aggregate fair market value in excess of $25,000,

    but, for greater certainty, does not include intangible property, or for civil law incorporeal property, (including systems software and property referred to in paragraph (w) of Class 10 or paragraph (n) or (o) of Class 12 in Schedule II).

  • (1.12) Notwithstanding subsections (1) and (1.1), where, in a taxation year, a taxpayer has acquired a property that was not used by the taxpayer for any purpose in that year and the first use of the property by the taxpayer is a lease of the property in respect of which subsection (1.1) applies, the amount allowed to the taxpayer under subsection (1) in respect of the property for the year shall be deemed to be nil.

  • (1.13) For the purposes of this section,

    • (a) exempt property means

      • (i) general purpose office furniture or office equipment included in Class 8 in Schedule II (including, for greater certainty, mobile office equipment such as cellular telephones and pagers) or general purpose electronic data processing equipment and ancillary data processing equipment, included in paragraph (f) of Class 10 in Schedule II, other than any individual piece thereof having a capital cost to the taxpayer in excess of $1,000,000,

      • (i.1) general-purpose electronic data processing equipment and ancillary data processing equipment, included in Class 45, 50 or 52 in Schedule II, other than any individual item of that type of equipment having a capital cost to the taxpayer in excess of $1,000,000,

      • (ii) furniture, appliances, television receivers, radio receivers, telephones, furnaces, hot-water heaters and other similar properties, designed for residential use,

      • (iii) a property that is a motor vehicle that is designed or adapted primarily to carry individuals on highways and streets and that has a seating capacity for not more than the driver and eight passengers, or a motor vehicle of a type commonly called a van or pick-up truck, or a similar vehicle,

      • (iv) a truck or tractor that is designed for hauling freight on highways,

      • (v) a trailer that is designed for hauling freight and to be hauled under normal operating conditions by a truck or tractor described in subparagraph (iv),

      • (vi) a building or part thereof included in Class 1, 3, 6, 20, 31 or 32 in Schedule II (including component parts such as electric wiring, plumbing, sprinkler systems, air-conditioning equipment, heating equipment, lighting fixtures, elevators and escalators) other than a building or part thereof leased primarily to a lessee that is

        • (A) a person who is exempt from tax by reason of section 149 of the Act,

        • (B) a person who uses the building in the course of carrying on a business the income from which is exempt from tax under Part I of the Act by reason of any provision of the Act, or

        • (C) a Canadian government, municipality or other Canadian public authority,

        who owned the building or part thereof at any time before the commencement of the lease (other than at any time during a period ending not later than one year after the later of the date the construction of the building or part thereof was completed and the date the building or part thereof was acquired by the lessee),

      • (vii) vessel mooring space, and

      • (viii) property that is included in Class 35 in Schedule II,

      and for the purposes of subparagraph (i), where a property is owned by two or more persons or partnerships, or any combination thereof, the capital cost of the property to each such person or partnership shall be deemed to be the total of all amounts each of which is the capital cost of the property to such a person or partnership;

    • (a.1) notwithstanding paragraph (a), “exempt property” does not include property that is the subject of a lease if that property had, at the time the lease was entered into, an aggregate fair market value in excess of $1,000,000 and the lessee of the property is

      • (i) a person who is exempt from tax by reason of section 149 of the Act,

      • (ii) a person who uses the property in the course of carrying on a business, the income from which is exempt from tax under Part I of the Act by reason of any provision of the Act,

      • (iii) a Canadian government, or

      • (iv) a person not resident in Canada, except if the person uses the property primarily in the course of carrying on a business in Canada that is not a treaty-protected business;

    • (a.2) for the purposes of paragraph (a.1), if it is reasonable, having regard to all the circumstances, to conclude that one of the main reasons for the existence of two or more leases was to avoid the application of paragraph (a.1) by reason of each such lease being a lease of property where the property that was the subject of the lease had an aggregate fair market value, at the time the lease was entered into, not in excess of $1,000,000, each such lease shall be deemed to be a lease of property that had, at the time the lease was entered into, an aggregate fair market value in excess of $1,000,000;

    • (b) property shall be deemed to be the subject of a lease for a term of more than one year at any time where, at that time

      • (i) the property had been leased by the lessee thereunder, a person with whom the lessee does not deal at arm’s length, or any combination thereof, for a period of more than one year ending at that time, or

      • (ii) it is reasonable, having regard to all the circumstances, to conclude that the lessor thereunder knew or ought to have known that the lessee thereunder, a person with whom the lessee does not deal at arm’s length, or any combination thereof, would lease the property for more than one year; and

    • (c) for the purposes of paragraph (1.11)(c), where it is reasonable, having regard to all the circumstances, to conclude that one of the main reasons for the existence of two or more leases was to avoid the application of subsection (1.1) by reason of each such lease being a lease of property where the tangible property, other than exempt property, that was the subject of the lease had an aggregate fair market value, at the time the lease was entered into, not in excess of $25,000, each such lease shall be deemed to be a lease of tangible property that had, at the time the lease was entered into, an aggregate fair market value in excess of $25,000.

  • (1.14) For the purposes of subsection (1.11) and notwithstanding subsection (1.13), where a taxpayer referred to in subsection (16) so elects in the taxpayer’s return of income under Part I of the Act for a taxation year in respect of the year and all subsequent taxation years, all of the property of the taxpayer that is the subject of leases entered into in those years shall be deemed not to be exempt property for those years and the aggregate fair market value of all of the tangible property that is the subject of each such lease shall be deemed to have been, at the time the lease was entered into, in excess of $25,000.

  • (1.15) Subject to subsection (1.16) and for the purposes of subsection (1.11), where at any time a taxpayer acquires property that is the subject of a lease with a remaining term at that time of more than one year from a person with whom the taxpayer was dealing at arm’s length, the taxpayer shall be deemed to have entered into a lease of the property at that time for a term of more than one year.

  • (1.16) Where, at any time, a taxpayer acquires from a person with whom the taxpayer is not dealing at arm’s length, or by virtue of an amalgamation (within the meaning assigned by subsection 87(1) of the Act), property that was specified leasing property of the person from whom, the taxpayer acquired it, the taxpayer shall, for the purposes of paragraph (1.1)(a) and for the purpose of computing the income of the taxpayer in respect of the lease for any period after the particular time, be deemed to be the same person as, and a continuation of, that person.

  • (1.17) For the purposes of subsections (1.1) and (1.11), where at any particular time a property (in this subsection referred to as a “replacement property”) is provided by a taxpayer to a lessee for the remaining term of a lease as a replacement for a similar property of the taxpayer (in this subsection referred to as the “original property”) that was leased by the taxpayer to the lessee, and the amount payable by the lessee for the use of, or the right to use, the replacement property is the same as the amount that was so payable in respect of the original property, the following rules apply:

    • (a) the replacement property shall be deemed to have been leased by the taxpayer to the lessee at the same time and for the same term as the original property;

    • (b) the amount of the loan referred to in clause (1.1)(a)(i)(A) shall be deemed to be equal to the amount of that loan determined in respect of the original property;

    • (c) the amount determined under subparagraph (1.1)(a)(ii) in respect of the replacement property shall be deemed to be equal to the amount so determined in respect of the original property;

    • (d) all amounts received or receivable by the taxpayer for the use of, or the right to use, the original property before the particular time shall be deemed to have been received or receivable, as the case may be, by the taxpayer for the use of, or the right to use, the replacement property; and

    • (e) the original property shall be deemed to have ceased to be subject to the lease at the particular time.

  • (1.18) For the purposes of subsection (1.1), where for any period of time any amount that would have been received or receivable by a taxpayer during that period in respect of the use of, or the right to use, a property of the taxpayer during that period is not received or receivable by the taxpayer as a consequence of a breakdown of the property during that period and before the lease of that property is terminated, that amount shall be deemed to have been received or receivable, as the case may be, by the taxpayer.

  • (1.19) For the purposes of subsections (1.1) and (1.11), where at any particular time

    • (a) an addition or alteration (in this subsection referred to as “additional property”) is made by a taxpayer to a property (in this subsection referred to as the “original property”) of the taxpayer that is a specified leasing property at the particular time, and

    • (b) as a consequence of the addition or alteration, the aggregate amount receivable by the taxpayer after the particular time for the use of, or the right to use, the original property and the additional property exceeds the amount so receivable in respect of the original property,

    the following rules apply:

    • (c) the taxpayer shall be deemed to have leased the additional property to the lessee at the particular time,

    • (d) the term of the lease of the additional property shall be deemed to be greater than one year,

    • (e) the prescribed rate in effect at the particular time in respect of the additional property shall be deemed to be equal to the prescribed rate in effect in respect of the lease of the original property at the particular time,

    • (f) subsection (1.11) shall be read without reference to paragraph (c) thereof in respect of the additional property, and

    • (g) the excess described in paragraph (b) shall be deemed to be an amount receivable by the taxpayer for the use of, or the right to use, the additional property.

  • (1.2) For the purposes of subsections (1.1) and (1.11), where at any time

    • (a) a lease (in this subsection referred to as the “original lease”) of property is renegotiated in the course of a bona fide renegotiation, and

    • (b) as a result of the renegotiation, the amount paid or payable by the lessee of the property for the use of, or the right to use, the property is altered in respect of a period after that time (otherwise than by reason of an addition or alteration to which subsection (1.19) applies),

    the following rules apply:

    • (c) the original lease shall be deemed to have expired and the renegotiated lease shall be deemed to be a new lease of the property entered into at that time, and

    • (d) paragraph (1.13)(b) shall not apply in respect of any period before that time during which the property was leased by the lessee or a person with whom the lessee did not deal at arm’s length.

  • (1.3) For the purposes of subsections (1.1) and (1.11), where a taxpayer leases to another person a building or part thereof that is not exempt property, the references to “one year” in paragraphs (1.11)(b) and (1.13)(b), subsection (1.15) and paragraph (1.19)(d) shall in respect of that building or part thereof be read as references to “three years”.

Property Acquired in the Year

  • (2) The amount that a taxpayer may deduct for a taxation year under subsection (1) in respect of property of a class in Schedule II is to be determined as if the undepreciated capital cost to the taxpayer at the end of the taxation year (before making any deduction under subsection (1) for the taxation year) of property of the class were reduced by an amount equal to 50 per cent of the amount, if any, by which

    • (a) the total of all amounts, each of which is an amount added

      • (i) because of element A in the definition undepreciated capital cost in subsection 13(21) of the Act in respect of property that was acquired in the year or that became available for use by the taxpayer in the year, or

      • (ii) because of element C or D in the definition undepreciated capital cost in subsection 13(21) of the Act in respect of an amount that was repaid in the year,

      to the undepreciated capital cost to the taxpayer of property of a class in Schedule II, other than

      • (iii) property included in paragraph (1)(v), in paragraph (w) of Class 10 or in any of paragraphs (a) to (c), (e) to (i), (k), (l) and (p) to (s) of Class 12,

      • (iv) property included in any of Classes 13, 14, 15, 23, 24, 27, 29, 34 and 52,

      • (v) where the taxpayer was a corporation described in subsection (16) throughout the year, property that was specified leasing property of the taxpayer at that time,

      • (vi) property that was deemed to have been acquired by the taxpayer in a preceding taxation year by reason of the application of paragraph 16.1(1)(b) of the Act in respect of a lease to which the property was subject immediately before the time at which the taxpayer last acquired the property, and

      • (vii) property considered to have become available for use by the taxpayer in the year by reason of paragraph 13(27)(b) or (28)(c) of the Act

    exceeds

    • (b) the total of all amounts, each of which is an amount deducted from the undepreciated capital cost to the taxpayer of property of the class

      • (i) because of element F or G in the definition undepreciated capital cost in subsection 13(21) of the Act in respect of property disposed of in the year, or

      • (ii) because of element J in the definition undepreciated capital cost in subsection 13(21) of the Act in respect of an amount the taxpayer received or was entitled to receive in the year.

  • (2.1) Where a taxpayer has, after November 12, 1981 and before 1983, acquired or incurred a capital cost in respect of a property of a class in Schedule II and

    • (a) he was obligated to acquire the property under the terms of an agreement in writing entered into before November 13, 1981 (or, where the property is a property described in Class 31 in Schedule II, before 1982),

    • (b) he or a person with whom he was not dealing at arm’s length commenced the construction, manufacture or production of the property before November 13, 1981 (or, where the property is a property described in Class 31 in Schedule II, before 1982),

    • (c) he or a person with whom he was not dealing at arm’s length had made arrangements, evidenced in writing for the construction, manufacture or production of the property that were substantially advanced before November 13, 1981 and the construction, manufacture or production commenced before June 1, 1982, or

    • (d) he was obligated to acquire the property under the terms of an agreement in writing entered into before June 1, 1982 where arrangements, evidenced in writing, for the acquisition or leasing of the property were substantially advanced before November 13, 1981,

    the following rules apply:

    • (e) no amount shall be included under paragraph (2)(a) in respect of the property;

    • (f) where the property is a property to which paragraph (1)(b) applies, that paragraph shall be read, in respect of the property, as “such amount, not exceeding the amount for the year calculated in accordance with Schedule III, as he may claim in respect of the capital cost to him of property of Class 13 in Schedule II”;

    • (g) where the property is a property of a class to which paragraph (1)(t) or (ta) applies, the property shall be deemed to be designated property of the class; and

    • (h) where the property is a property described in paragraph (1)(v), subparagraph (iv) thereof shall be read, in respect of the property, as “33 1/3 per cent of the capital cost thereof to him, and”.

  • (2.2) Where a property of a class in Schedule II is acquired by a taxpayer

    • (a) in the course of a reorganization in respect of which, if a dividend were received by a corporation in the course of the reorganization, subsection 55(2) of the Act would not be applicable to the dividend by reason of the application of paragraph 55(3)(b) of the Act, or

    • (b) to (d) [Repealed, SOR/90-22, s. 1]

    • (e) from a person with whom the taxpayer was not dealing at arm’s length (otherwise than by virtue of a right referred to in paragraph 251(5)(b) of the Act) at the time the property was acquired,

    and where

    • (f) the property was depreciable property of the person from whom it was acquired and was owned continuously by that person for the period from

      • (i) a day that was at least 364 days before the end of the taxation year of the taxpayer during which he acquired the property, or

      • (ii) November 12, 1981

      to the day it was acquired by the taxpayer, or

    • (g) the rules provided in subsection (2.1) or this subsection applied in respect of the property for the purpose of determining the allowance under subsection (1) to which the person from whom the taxpayer acquired the property was entitled,

    the following rules apply:

    • (h) no amount shall be included under paragraph (2)(a) in respect of the property;

    • (i) where the property is a property to which paragraph (1)(b) applies, that paragraph shall be read, in respect of the property, as “such amount, not exceeding the amount for the year calculated in accordance with Schedule III, as he may claim in respect of the capital cost to him of property of Class 13 in Schedule II”;

    • (j) where the property is a property of a class to which paragraph (1)(ta) applies,

      • (i) the property shall be deemed to be designated property of the class,

      • (ii) for the purposes of computing the amount determined under paragraph (1)(ta) for any taxation year of the taxpayer ending after the time the property was actually acquired by the taxpayer, the property shall be deemed, other than for the purposes of paragraph (f), to have been acquired by the taxpayer immediately after the commencement of the taxpayer’s first taxation year that commenced after the time that is the earlier of

        • (A) the time the property was last acquired by the transferor of the property, and

        • (B) where the property was transferred in a series of transfers to which this subsection applies, the time the property was last acquired by the first transferor in that series,

        unless

        • (C) where clause (A) applies, the property was acquired by the taxpayer before the end of the taxation year of the transferor of the property that includes the time at which that transferor acquired the property, or

        • (D) where clause (B) applies, the property was acquired by the taxpayer before the end of the taxation year of the first transferor that includes the time at which that transferor acquired the property,

      • (iii) where the taxpayer is a corporation that was incorporated or otherwise formed after the end of the transferor’s, or where applicable, the first transferor’s, taxation year in which the transferor last acquired the property, the taxpayer shall be deemed, for the purposes of subparagraph (ii),

        • (A) to have been in existence throughout the period commencing immediately before the end of that year and ending immediately after the taxpayer was incorporated or otherwise formed, and

        • (B) to have had, throughout the period referred to in clause (A), fiscal periods ending on the day of the year on which the taxpayer’s first fiscal period ended, and

      • (iv) the property shall be deemed to have become available for use by the taxpayer at the earlier of

        • (A) the time it became available for use by the taxpayer, and

        • (B) if applicable,

          • (I) the time it became available for use by the person from whom the taxpayer acquired the property, determined without reference to paragraphs 13(27)(c) and (28)(d) of the Act, or

          • (II) the time it became available for use by the first transferor in a series of transfers of the same property to which this subsection applies, determined without reference to paragraphs 13(27)(c) and (28)(d) of the Act; and

    • (k) where the property is a property described in paragraph (1)(v), subparagraph (iv) thereof shall be read, in respect of the property, as “33 1/3 per cent of the capital cost thereof to him, and”.

  • (2.21) Where a taxpayer is deemed by a provision of the Act to have disposed of and acquired or reacquired a property,

    • (a) for the purposes of paragraph (2.2)(e) and subsections (19), 1101(lad) and 1102(14) and (14.1), the acquisition or reacquisition shall be deemed to have been from a person with whom the taxpayer was not dealing at arm’s length at the time of the acquisition or reacquisition; and

    • (b) for the purposes of paragraphs (2.2)(f) and (g), the taxpayer shall be deemed to be the person from whom the taxpayer acquired or reacquired the property.

  • (2.3) Where a taxpayer has disposed of a property and, by virtue of paragraph (2.2)(h), no amount is required to be included under paragraph (2)(a) in respect of the property by the person that acquired the property, no amount shall be included by the taxpayer under paragraph (2)(b) in respect of the disposition of the property.

  • (2.4) For the purposes of subsection (2), where a taxpayer has disposed of property described in Class 10 of Schedule II that would qualify as property described in paragraph (e) of Class 16 of Schedule II if the property had been acquired by the taxpayer after November 12, 1981, the proceeds of disposition of the property shall be deemed to be proceeds of disposition of property described in Class 16 of Schedule II and not of property described in Class 10 of Schedule II.

  • (2.5) Where in a particular taxation year a taxpayer disposes of a property included in Class 10.1 in Schedule II that was owned by the taxpayer at the end of the immediately preceding taxation year,

    • (a) the deduction allowed under subsection (1) in respect of the property in computing the taxpayer’s income for the year shall be determined as if the property had not been disposed of in the particular year and the number of days in the particular year were one-half of the number of days in the particular year otherwise determined; and

    • (b) no amount shall be deducted under subsection (1) in respect of the property in computing the taxpayer’s income for any subsequent taxation year.

Taxation Years Less Than 12 Months

  • (3) Where a taxation year is less than 12 months, the amount allowed as a deduction under this section, other than under any of paragraphs (1)(c), (e), (f), (g), (l), (m), (w), (x), (y), (ya), (zg) and (zh), shall not exceed that proportion of the maximum amount otherwise allowable that the number of days in the taxation year is of 365.

  • (4) Reserved.

  • (5) [Repealed, SOR/78-377, s. 6]

Employee’s Automobile or Aircraft

  • (6) [Repealed, SOR/91-673, s. 1]

  • (7) Reserved.

Railway Sidings

  • (8) Where a taxpayer, other than an operator of a railway system, has made a capital expenditure pursuant to a contract or arrangement with an operator of a railway system under which a railway siding that does not become the taxpayer’s property is constructed to provide service to the taxpayer’s place of business or to a property acquired by the taxpayer for the purpose of gaining or producing income, there is hereby allowed to the taxpayer, in computing income for the taxation year from the business or property, as the case may be, a deduction equal to such amount as he may claim not exceeding four per cent of the amount remaining, if any, after deducting from the capital expenditure the aggregate of all amounts previously allowed as deductions in respect of the expenditure.

Patents

  • (9) Where a part or all of the cost of a patent is determined by reference to the use of the patent, in lieu of the deduction allowed under paragraph (1)(c), a taxpayer, in computing his income for a taxation year from a business or property, as the case may be, may deduct such amount as he may claim in respect of property of Class 14 in Schedule II not exceeding the lesser of

    • (a) the aggregate of

      • (i) that part of the capital cost determined by reference to the use of the patent in the year, and

      • (ii) the amount that would be computed under subparagraph (1)(c)(i) if the capital cost of the patent did not include the amounts determined by reference to the use of the patent in that year and previous years; and

    • (b) the undepreciated capital cost to him as of the end of the taxation year (before making any deduction under this subsection for the taxation year) of property of the class.

  • (9.1) Where a part or all of the capital cost to a taxpayer of property that is a patent, or a right to use patented information, is determined by reference to the use of the property and that property is included in Class 44 in Schedule II, in lieu of the deduction allowed under paragraph (1)(a), there may be deducted in computing the taxpayer’s income for a taxation year from a business or property such amount as the taxpayer may claim in respect of property of the class not exceeding the lesser of

    • (a) the total of

      • (i) that part of the capital cost that is determined by reference to the use of the property in the year, and

      • (ii) the amount that would be deductible for the year by reason of paragraph (1)(a) in respect of property of the class if the capital cost of property of the class did not include the amounts determined under subparagraph (i) for the year and preceding taxation years; and

    • (b) the undepreciated capital cost to the taxpayer as of the end of the taxation year (before making any deduction under this subsection for the taxation year) of property of the class.

  • (10) Reserved.

Rental Properties

  • (11) Notwithstanding subsection (1), in no case shall the aggregate of deductions, each of which is a deduction in respect of property of a prescribed class owned by a taxpayer that includes rental property owned by him, otherwise allowed to the taxpayer by virtue of subsection (1) in computing his income for a taxation year, exceed the amount, if any, by which

    • (a) the aggregate of amounts each of which is

      • (i) his income for the year from renting or leasing a rental property owned by him, computed without regard to paragraph 20(1)(a) of the Act, or

      • (ii) the income of a partnership for the year from renting or leasing a rental property of the partnership, to the extent of the taxpayer’s share of such income,

    exceeds

    • (b) the aggregate of amounts each of which is

      • (i) his loss for the year from renting or leasing a rental property owned by him, computed without regard to paragraph 20(1)(a) of the Act, or

      • (ii) the loss of a partnership for the year from renting or leasing a rental property of the partnership, to the extent of the taxpayer’s share of such loss.

  • (12) Subject to subsection (13), subsection (11) does not apply in respect of a taxation year of a taxpayer that was, throughout the year,

    • (a) a life insurance corporation, or a corporation whose principal business was the leasing, rental, development or sale, or any combination thereof, of real property owned by it; or

    • (b) a partnership each member of which was

      • (i) a corporation described in paragraph (a), or

      • (ii) another partnership described in this paragraph.

  • (13) For the purposes of subsection (11), where a taxpayer or partnership has a leasehold interest in a property that is property of Class 1, 3 or 6 in Schedule II by virtue of subsection 1102(5) and the property is leased by the taxpayer or partnership to a person who owns the land, an interest therein or an option in respect thereof, on which the property is situated, this section shall be read without reference to subsection (12) with respect to that property.

  • (14) In this section and section 1101, rental property of a taxpayer or a partnership means

    • (a) a building owned by the taxpayer or the partnership, whether owned jointly with another person or otherwise, or

    • (b) a leasehold interest in real property, if the leasehold interest is property of Class 1, 3, 6 or 13 in Schedule II and is owned by the taxpayer or the partnership,

    if, in the taxation year in respect of which the expression is being applied, the property was used by the taxpayer or the partnership principally for the purpose of gaining or producing gross revenue that is rent, but, for greater certainty, does not include a property leased by the taxpayer or the partnership to a lessee, in the ordinary course of the taxpayer’s or partnership’s business of selling goods or rendering services, under an agreement by which the lessee undertakes to use the property to carry on the business of selling, or promoting the sale of, the taxpayer’s or partnership’s goods or services.

  • (14.1) For the purposes of subsection (14), gross revenue derived in a taxation year from

    • (a) the right of a person or partnership, other than the owner of a property, to use or occupy the property or a part thereof, and

    • (b) services offered to a person or partnership that are ancillary to the use or occupation by the person or partnership of the property or the part thereof

    shall be considered to be rent derived in that year from the property.

  • (14.2) Subsection (14.1) does not apply in any particular taxation year to property owned by

    • (a) a corporation, where the property is used in a business carried on in the year by the corporation;

    • (b) an individual, where the property is used in a business carried on in the year by the individual in which he is personally active on a continuous basis throughout that portion of the year during which the business is ordinarily carried on; or

    • (c) a partnership, where the property is used in a business carried on in the year by the partnership if at least 2/3 of the income or loss, as the case may be, of the partnership for the year is included in the determination of the income of

      • (i) members of the partnership who are individuals that are personally active in the business of the partnership on a continuous basis throughout that portion of the year during which the business is ordinarily carried on, and

      • (ii) members of the partnership that are corporations.

Leasing Properties

  • (15) Notwithstanding subsection (1), in no case shall the aggregate of deductions, each of which is a deduction in respect of property of a prescribed class that is leasing property owned by a taxpayer, otherwise allowed to the taxpayer under subsection (1) in computing his income for a taxation year, exceed the amount, if any, by which

    • (a) the aggregate of amounts each of which is

      • (i) his income for the year from renting, leasing or earning royalties from, a leasing property or a property that would be a leasing property but for subsection (18), (19) or (20) where such property is owned by him, computed without regard to paragraph 20(1)(a) of the Act, or

      • (ii) the income of a partnership for the year from renting, leasing or earning royalties from, a leasing property or a property that would be a leasing property but for subsection (18), (19) or (20) where such property is owned by the partnership, to the extent of the taxpayer’s share of such income,

    exceeds

    • (b) the aggregate of amounts each of which is

      • (i) his loss for the year from renting, leasing or earning royalties from, a property referred to in subparagraph (a)(i), computed without regard to paragraph 20(1)(a) of the Act, or

      • (ii) the loss of a partnership for the year from renting, leasing or earning royalties from, a property referred to in subparagraph (a)(ii), to the extent of the taxpayer’s share of such loss.

  • (16) Subsection (15) does not apply in respect of a taxation year of a taxpayer that was, throughout the year,

    • (a) a corporation whose principal business was

      • (i) renting or leasing of leasing property or property that would be leasing property but for subsection (18), (19) or (20), or

      • (ii) renting or leasing of property referred to in subparagraph (i) combined with selling and servicing of property of the same general type and description,

      if the gross revenue of the corporation for the year from such principal business was not less than 90 per cent of the gross revenue of the corporation for the year from all sources; or

    • (b) a partnership each member of which was

      • (i) a corporation described in paragraph (a), or

      • (ii) another partnership described in this paragraph.

  • (17) Subject to subsection (18), in this section and section 1101, leasing property of a taxpayer or a partnership means depreciable property other than

    • (a) rental property,

    • (b) computer tax shelter property, or

    • (c) property referred to in paragraph (w) of Class 10 or in paragraph (n) of Class 12 in Schedule II,

    where such property is owned by the taxpayer or the partnership, whether jointly with another person or otherwise, if, in the taxation year in respect of which the expression is being applied, the property was used by the taxpayer or the partnership principally for the purpose of gaining or producing gross revenue that is rent, royalty or leasing revenue, but for greater certainty, does not include a property leased by the taxpayer or the partnership to a lessee, in the ordinary course of the taxpayer’s or partnership’s business of selling goods or rendering services, under an agreement by which the lessee undertakes to use the property to carry on the business of selling, or promoting the sale of, the taxpayer’s or partnership’s goods or services.

  • (17.1) For the purposes of subsection (17), where, in a taxation year, a taxpayer or a partnership has acquired a property

    • (a) that was not used for any purpose in that year, and

    • (b) the first use of the property by the taxpayer or the partnership was principally for the purpose of gaining or producing gross revenue that is rent, royalty or leasing revenue,

    the property shall be deemed to have been used in the taxation year in which it was acquired principally for the purpose of gaining or producing gross revenue that is rent, royalty or leasing revenue.

  • (17.2) For the purposes of subsections (1.11) and (17), gross revenue derived in a taxation year from

    • (a) the right of a person or partnership, other than the owner of a property, to use or occupy the property or a part thereof, and

    • (b) services offered to a person or partnership that are ancillary to the use or occupation by the person or partnership of the property or the part thereof

    shall be considered to be rent derived in the year from the property.

  • (17.3) Subsection (17.2) does not apply in any particular taxation year to property owned by

    • (a) a corporation, where the property is used in a business carried on in the year by the corporation;

    • (b) an individual, where the property is used in a business carried on in the year by the individual in which he is personally active on a continuous basis throughout that portion of the year during which the business is ordinarily carried on; or

    • (c) a partnership, where the property is used in a business carried on in the year by the partnership if at least 2/3 of the income or loss, as the case may be, of the partnership for the year is included in the determination of the income of

      • (i) members of the partnership who are individuals that are personally active in the business of the partnership on a continuous basis throughout that portion of the year during which the business is ordinarily carried on, and

      • (ii) members of the partnership that are corporations.

  • (18) Leasing property of a taxpayer or a partnership referred to in subsection (17) does not include

    • (a) property that the taxpayer or the partnership acquired before May 26, 1976 or was obligated to acquire under the terms of an agreement in writing entered into before May 26, 1976;

    • (b) property the construction, manufacture or production of which was commenced by the taxpayer or the partnership before May 26, 1976 or was commenced under an agreement in writing entered into by the taxpayer or the partnership before May 26, 1976; or

    • (c) property that the taxpayer or the partnership acquired on or before December 31, 1976 or was obligated to acquire under the terms of an agreement in writing entered into on or before December 31, 1976, if

      • (i) arrangements, evidenced by writing, respecting the acquisition, construction, manufacture or production of the property had been substantially advanced before May 26, 1976, and

      • (ii) the taxpayer or the partnership had before May 26, 1976 demonstrated a bona fide intention to acquire the property for the purpose of gaining or producing gross revenue that is rent, royalty or leasing revenue.

  • (19) Notwithstanding subsection (17), a property acquired by a taxpayer

    • (a) in the course of a reorganization in respect of which, if a dividend were received by a corporation in the course of the reorganization, subsection 55(2) of the Act would not be applicable to the dividend by reason of the application of paragraph 55(3)(b) of the Act, or

    • (a.1) [Repealed, SOR/90-22, s. 1]

    • (b) from a person with whom the taxpayer was not dealing at arm’s length (otherwise than by virtue of a right referred to in paragraph 251(5)(b) of the Act) at the time the property was acquired,

    • (c) [Repealed, SOR/90-22, s. 1]

    that would otherwise be leasing property of the taxpayer, shall be deemed not to be leasing property of the taxpayer if immediately before it was so acquired by the taxpayer, it was, by virtue of subsection (18) or (20) or this subsection, not a leasing property of the person from whom the property was so acquired.

  • (20) Notwithstanding subsection (17), a property acquired by a taxpayer or partnership that is a replacement property (within the meaning assigned by subsection 13(4) of the Act), that would otherwise be a leasing property of the taxpayer or partnership, shall be deemed not to be a leasing property of the taxpayer or partnership if the property replaced, referred to in paragraph 13(4)(a) or (b) of the Act, was, by reason of subsection (18) or (19) or this subsection, not a leasing property of the taxpayer or partnership immediately before it was disposed of by the taxpayer or partnership.

Computer Tax Shelter Property

  • (20.1) The total of all amounts each of which is a deduction in respect of computer tax shelter property allowed to the taxpayer under subsection (1) in computing a taxpayer’s income for a taxation year shall not exceed the amount, if any, by which

    • (a) the total of all amounts each of which is

      • (i) the taxpayer’s income for the year from a business in which computer tax shelter property owned by the taxpayer is used, computed without reference to any deduction under subsection (1) in respect of such property, or

      • (ii) the income of a partnership from a business in which computer tax shelter property of the partnership is used, to the extent of the share of such income that is included in computing the taxpayer’s income for the year,

    exceeds

    • (b) the total of all amounts each of which is

      • (i) a loss of the taxpayer from a business in which computer tax shelter property owned by the taxpayer is used, computed without reference to any deduction under subsection (1) in respect of such property, or

      • (ii) a loss of a partnership from a business in which computer tax shelter property of the partnership is used, to the extent of the share of such loss that is included in computing the taxpayer’s income for the year.

  • (20.2) For the purpose of this Part, computer tax shelter property of a person or partnership is depreciable property of a prescribed class in Schedule II that is computer software or property described in Class 50 or 52 where

    • (a) the person’s or partnership’s interest in the property is a tax shelter investment (as defined by subsection 143.2(1) of the Act) determined without reference to subsection (20.1); or

    • (b) an interest in the person or partnership is a tax shelter investment (as defined by subsection 143.2(1) of the Act) determined without reference to subsection (20.1).

Certified Films and Video Tapes

  • (21) Notwithstanding subsection (1), where a taxpayer (in this subsection and subsection (22) referred to as the “investor”) has acquired property of Class 10 or 12 in Schedule II that is a certified feature film or certified production (in this subsection and subsection (22) referred to as the “film or tape”), in no case shall the deduction in respect of property of that class otherwise allowed to the investor by virtue of subsection (1) in computing the investor’s income for a particular taxation year exceed the amount that it would be if the capital cost to the investor of the film or tape were reduced by the aggregate of amounts, each of which is

    • (a) where the principal photography or taping of the film or tape is not completed before the end of the particular taxation year, the amount, if any, by which

      • (i) the capital cost to the investor of the film or tape as of the end of the year

      exceeds the aggregate of

      • (ii) where the principal photography or taping of the film or tape is completed within 60 days after the end of the year, the amount that may reasonably be considered to be the investor’s proportionate share of the production costs incurred in respect of the film or tape before the end of the year,

      • (iii) where the principal photography or taping of the film or tape is not completed within 60 days after the end of the year, the amount that may reasonably be considered to be the investor’s proportionate share of the lesser of

        • (A) the production costs incurred in respect of the film or tape before the end of the year, and

        • (B) the proportion of the production costs incurred to the date the principal photography or taping is completed that the percentage of the principal photography or taping completed as of the end of the year, as certified by the Minister of Communications, is of 100 per cent, and

      • (iv) the total of amounts determined under paragraphs (b) to (e) in respect of the film or tape as of the end of the year;

    • (b) where, at any time before the later of

      • (i) the date the principal photography or taping of the film or tape is completed, and

      • (ii) the date the investor acquired the film or tape,

      a revenue guarantee (other than a revenue guarantee that is certified by the Minister of Communications to be a guarantee under which the person who agrees to provide the revenue is a licensed broadcaster or bona fide film or tape distributor) is entered into in respect of the film or tape whereby it may reasonably be considered certain, having regard to all the circumstances, that the investor will receive revenue under the terms of the revenue guarantee, the amount, if any, that may reasonably be considered to be the portion of the revenue that has not been included in the investor’s income in the particular taxation year or a previous taxation year;

    • (c) where, at any time, a revenue guarantee, other than

      • (i) a revenue guarantee in respect of which paragraph (b) applies, or

      • (ii) a revenue guarantee under which the person (in this subsection referred to as the “guarantor”) who agrees to provide the revenue under the terms of the guarantee is a person who does not deal at arm’s length with either the investor or the person from whom the investor acquired the film or tape (in this subsection referred to as the “vendor”) and in respect of which the Minister of Communications certifies that

        • (A) the guarantor is a licenced broadcaster or bona fide film or tape distributor, and

        • (B) the cost of the film or tape does not include any amount for or in respect of the guarantee,

      is entered into in respect of the film or tape, the amount, if any, that may reasonably be considered to be the portion of the revenue that is to be received by the investor under the terms of the revenue guarantee that has not been included in the investor’s income in the particular taxation year or a preceding taxation year, if

      • (iii) the guarantor and the investor are not dealing at arm’s length,

      • (iv) the vendor and the guarantor are not dealing at arm’s length, or

      • (v) the vendor or a person not dealing at arm’s length with the vendor undertakes in any way, directly or indirectly, to fulfill all or any part of the guarantor’s obligations under the terms of the revenue guarantee;

    • (d) where, at any time, a revenue guarantee, other than a revenue guarantee in respect of which paragraph (b) or (c) applies, is entered into in respect of the film or tape, the amount, if any, that may reasonably be considered to be the portion of the revenue that is to be received by the investor under the terms of the revenue guarantee that

      • (i) is not due to the investor until a time that is more than four years after the first day on which the guarantor has the right to the use of the film or tape, and

      • (ii) has not been included in the investor’s income in the particular taxation year or a previous taxation year; and

    • (e) the portion of any debt obligation of the investor outstanding at the end of the particular year that is convertible into an interest in the film or tape or in the investor.

  • (21.1) Notwithstanding subsection (1), where a taxpayer has acquired property described in paragraph (s) of Class 10 in Schedule II, or in paragraph (m) of Class 12 of Schedule II, the deduction in respect of the property otherwise allowed to the taxpayer under subsection (1) in computing the taxpayer’s income for a taxation year shall not exceed the amount that it would be if the capital cost to the taxpayer of the property were reduced by the portion of any debt obligation of the taxpayer outstanding at the end of the year that is convertible into an interest in the property or in the taxpayer.

  • (22) Notwithstanding subsection (1), where an investor has acquired a film or tape after his 1977 taxation year and before 1979 and the principal photography or taping in respect of the film or tape is completed after a particular taxation year and not later than March 1, 1979, in no case shall the deduction in respect of property of Class 12 in Schedule II otherwise allowed to the investor by virtue of subsection (1) in computing his income for the particular taxation year exceed the amount, otherwise determined, if the capital cost to the investor of the film or tape were reduced by the amount, if any, by which

    • (a) the capital cost to the investor of the film or tape as of the end of the year

    exceeds

    • (b) the amount that may reasonably be considered to be the investor’s proportionate share of the production costs incurred in respect of the film or tape to March 1, 1979.

  • (23) For the purposes of paragraph (21)(a),

    • (a) in respect of a film or tape acquired in 1987, other than a film or tape in respect of which paragraph (b) applies, the references in paragraph (21)(a) to “within 60 days after the end of the year” shall be read as references to “before July, 1988”; and

    • (b) in respect of a film or tape acquired in 1987 or 1988 that is included in paragraph (n) of Class 12 in Schedule II and that is part of a series of films or tapes that includes another property included in that paragraph, the references in paragraph (21)(a) to “within 60 days after the end of the year” shall be read as references to “before 1989”.

Specified Energy Property

  • (24) Notwithstanding subsection (1), in no case shall the total of deductions, each of which is a deduction in respect of property of Class 34, 43.1, 43.2, 47 or 48 in Schedule II that is specified energy property owned by a taxpayer, otherwise allowed to the taxpayer under subsection (1) in computing the taxpayer’s income for a taxation year, exceed the amount, if any, by which

    • (a) the total of all amounts each of which is

      • (i) the total of

        • (A) the amount that would be the income of the taxpayer for the year from property described in Class 34, 43.1, 43.2, 47 or 48 in Schedule II (other than specified energy property), or from the business of selling the product of that property, if that income were calculated after deducting the maximum amount allowable in respect of the property for the year under paragraph 20(1)(a) of the Act, and

        • (B) the taxpayer’s income for the year from specified energy property or from the business of selling the product of that property, computed without regard to paragraph 20(1)(a) of the Act, or

      • (ii) the total of

        • (A) the taxpayer’s share of the amount that would be the income of a partnership for the year from property described in Class 34, 43.1, 43.2, 47 or 48 in Schedule II (other than specified energy property), or from the business of selling the product of that property, if that income were calculated after deducting the maximum amount allowable in respect of the property for the year under paragraph 20(1)(a) of the Act, and

        • (B) the income of a partnership for the year from specified energy property or from the business of selling the product of that property of the partnership, to the extent of the taxpayer’s share of that income,

    exceeds

    • (b) the total of all amounts each of which is

      • (i) the taxpayer’s loss for the year from specified energy property or from the business of selling the product of that property, computed without regard to paragraph 20(1)(a) of the Act, or

      • (ii) the loss of a partnership for the year from specified energy property or from the business of selling the product of that property of the partnership, to the extent of the taxpayer’s share of that loss.

  • (25) Subject to subsections (27) to (29), in this section and section 1101, specified energy property of a taxpayer or partnership (in this subsection referred to as “the owner”) for a taxation year means property of Class 34 in Schedule II acquired by the owner after February 9, 1988 and property of Class 43.1, 43.2, 47 or 48 in Schedule II, other than a particular property

    • (a) acquired to be used by the owner primarily for the purpose of gaining or producing income from a business carried on in Canada (other than the business of selling the product of the particular property) or from another property situated in Canada, or

    • (b) leased in the year, in the ordinary course of carrying on a business of the owner in Canada, to

      • (i) a person who can reasonably be expected to use the property primarily for the purpose of gaining or producing income from a business carried on in Canada (other than the business of selling the product of the particular property) or from another property situated in Canada, or

      • (ii) a corporation or partnership described in subsection (26),

      where the owner was

      • (iii) a corporation whose principal business was, throughout the year,

        • (A) the renting or leasing of leasing property or property that would be leasing property but for subsection (18), (19) or (20),

        • (B) the renting or leasing of property referred to in clause (A) combined with the selling and servicing of property of the same general type and description, or

        • (C) the manufacturing of property described in Class 34, 43.1, 43.2, 47 or 48 in Schedule II that it sells or leases,

        and the gross revenue of the corporation for the year from that principal business was not less than 90 per cent of the gross revenue of the corporation for the year from all sources, or

      • (iv) a partnership each member of which was

        • (A) a corporation described in subparagraph (iii) or paragraph (26)(a), or

        • (B) another partnership described in this subparagraph.

  • (26) Subsection (24) does not apply to a taxation year of a taxpayer that was, throughout the year,

    • (a) a corporation whose principal business throughout the year was

      • (i) manufacturing or processing,

      • (ii) mining operations, or

      • (iii) the sale, distribution or production of electricity, natural gas, oil, steam, heat or any other form of energy or potential energy; or

    • (b) a partnership each member of which was

      • (i) a corporation described in paragraph (a), or

      • (ii) another partnership described in this paragraph.

  • (27) Specified energy property of a person or partnership does not include property acquired by the person or partnership after February 9, 1988 and before 1990

    • (a) pursuant to an obligation in writing entered into by the person or partnership before February 10, 1988;

    • (b) pursuant to the terms of a prospectus, preliminary prospectus, registration statement or offering memorandum filed before February 10, 1988 with a public authority in Canada pursuant to and in accordance with the securities legislation of any province;

    • (c) pursuant to the terms of an offering memorandum distributed as part of an offering of securities where

      • (i) the offering memorandum contained a complete or substantially complete description of the securities contemplated in the offering as well as the terms and conditions of the offering of the securities,

      • (ii) the offering memorandum was distributed before February 10, 1988,

      • (iii) solicitations in respect of the sale of the securities contemplated by the offering memorandum were made before February 10, 1988, and

      • (iv) the sale of the securities was substantially in accordance with the offering memorandum; or

    • (d) as part of a project where, before February 10, 1988,

      • (i) some of the machinery or equipment to be used in the project had been acquired, or agreements in writing for the acquisition of that machinery or equipment had been entered into, by or on behalf of the person or partnership, and

      • (ii) an approval had been received by or on behalf of the person or partnership from a government environmental authority in respect of the location of the project.

  • (28) A property acquired by a taxpayer

    • (a) in the course of a reorganization in respect of which, if a dividend were received by a corporation in the course of the reorganization, subsection 55(2) of the Act would not be applicable to the dividend by reason of the application of paragraph 55(3)(b) of the Act, or

    • (b) from a person with whom the taxpayer was not dealing at arm’s length (otherwise than by virtue of a right referred to in paragraph 251(5)(b) of the Act) at the time the property was acquired

    that would otherwise be specified energy property of the taxpayer shall be deemed not to be specified energy property of the taxpayer if, immediately before it was so acquired by the taxpayer, it was not, by virtue of subsection (27), this subsection or subsection (29), specified energy property of the person from whom the property was so acquired.

  • (29) A property acquired by a taxpayer or partnership that is a replacement property (within the meaning assigned by subsection 13(4) of the Act), that would otherwise be specified energy property of the taxpayer or partnership, shall be deemed not to be specified energy property of the taxpayer or partnership if the property replaced, referred to in paragraph 13(4)(a) or (b) of the Act, was, by virtue of subsection (27), (28) or this subsection, not specified energy property of the taxpayer or partnership immediately before it was disposed of by the taxpayer or partnership.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/78-137, s. 1;
  • SOR/78-377, ss. 3 to 6;
  • SOR/78-948, s. 1;
  • SOR/79-427, s. 1;
  • SOR/80-942, s. 1;
  • SOR/81-470, s. 1;
  • SOR/82-265, s. 1;
  • SOR/83-340, s. 1;
  • SOR/83-432, s. 1;
  • SOR/84-454, s. 1;
  • SOR/84-948, s. 5;
  • SOR/85-13, s. 1;
  • SOR/85-174, s. 1;
  • SOR/86-254, s. 1;
  • SOR/86-1092, ss. 3(F), 4(F);
  • SOR/86-1136, s. 1;
  • SOR/88-392, s. 1;
  • SOR/89-27, s. 1;
  • SOR/90-22, s. 1;
  • SOR/90-257, s. 1;
  • SOR/90-670, s. 1;
  • SOR/91-196, s. 1;
  • SOR/91-673, s. 1;
  • SOR/92-681, s. 3;
  • SOR/94-128, s. 1;
  • SOR/94-140, s. 2;
  • SOR/94-169, s. 1;
  • SOR/94-170, s. 1;
  • SOR/94-686, ss. 9(F), 48, 58(F), 78(F), 79(F), 81(F);
  • SOR/95-244, s. 1;
  • SOR/97-377, s. 1;
  • SOR/99-179, s. 1;
  • SOR/2000-248, s. 2;
  • SOR/2005-126, s. 1;
  • SOR/2005-371, s. 1;
  • SOR/2005-414, s. 1;
  • SOR/2006-117, s. 1;
  • SOR/2007-19, s. 1;
  • SOR/2009-115, s. 1;
  • SOR/2009-126, s. 1;
  • SOR/2010-93, s. 12;
  • SOR/2011-9, s. 1;
  • 2013, c. 34, s. 383, c. 40, s. 100;
  • 2015, c. 36, s. 21;
  • SOR/2015-117, s. 1.

Exempt Mining Income

  •  (1) [Repealed, SOR/88-165, s. 6]

  • (2) Any election under subparagraph 13(21)(f)(vi) of the Act in respect of property of a prescribed class acquired by a corporation for the purpose of gaining or producing income from a mine shall be made by filing with the Minister, not later than the day on or before which the corporation is required to file a return of income pursuant to section 150 of the Act for its taxation year in which the exempt period in respect of the mine ended, one of the following documents in duplicate:

    • (a) where the directors of the corporation are legally entitled to administer the affairs of the corporation, a certified copy of their resolution authorizing the election to be made in respect of that class; and

    • (b) where the directors of the corporation are not legally entitled to administer the affairs of the corporation, a certified copy of the authorization of the making of the election in respect of that class by the person or persons legally entitled to administer the affairs of the corporation.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/78-377, s. 7;
  • SOR/78-493, s. 1(F);
  • SOR/79-426, s. 1;
  • SOR/88-165, s. 6;
  • SOR/94-686, s. 79(F).

DIVISION IISeparate Classes

Businesses and Properties

  •  (1) Where more than one property of a taxpayer is described in the same class in Schedule II and where

    • (a) one of the properties was acquired for the purpose of gaining or producing income from a business, and

    • (b) one of the properties was acquired for the purpose of gaining or producing income from another business or from the property,

    a separate class is hereby prescribed for the properties that

    • (c) were acquired for the purpose of gaining or producing income from each business; and

    • (d) would otherwise be included in the class.

  • (1a) For the purposes of subsection (1),

    • (a) a life insurance business, and

    • (b) an insurance business other than a life insurance business,

    shall each be regarded as a separate business.

  • (1ab) Where, at the end of 1971, more than one property of a taxpayer who was a member of a partnership at that time is described in the same class in Schedule II and where

    • (a) one of the properties can reasonably be regarded to be the interest of the taxpayer in a depreciable property that is partnership property of the partnership, and

    • (b) one of the properties is property other than property referred to in paragraph (a),

    a separate class is hereby prescribed for all properties each of which

    • (c) is a property referred to in paragraph (a); and

    • (d) would otherwise be included in the class.

  • (1ac) Subject to subsection (5h), where more than one property of a taxpayer is described in the same class in Schedule II, and one or more of the properties is a rental property of the taxpayer the capital cost of which to the taxpayer was not less than $50,000, a separate class is hereby prescribed for each such rental property of the taxpayer that would otherwise be included in the same class, other than a rental property that was acquired by the taxpayer before 1972 or that is

    • (a) a building or an interest therein, or

    • (b) a leasehold interest acquired by the taxpayer by reason of the fact that the taxpayer erected a building on leased land,

    erection of which building was commenced by the taxpayer before 1972 or pursuant to an agreement in writing entered into by the taxpayer before 1972.

  • (1ad) Notwithstanding subsection (1ac), a rental property acquired by a taxpayer

    • (a) in the course of a reorganization in respect of which, if a dividend were received by a corporation in the course of the reorganization, subsection 55(2) of the Act would not be applicable to the dividend by reason of the application of paragraph 55(3)(b) of the Act, or

    • (a.1) [Repealed, SOR/90-22, s. 2]

    • (b) from a person with whom the taxpayer was not dealing at arm’s length (otherwise than by virtue of a right referred to in paragraph 251(5)(b) of the Act) at the time the property was acquired,

    • (c) [Repealed, SOR/90-22, s. 2]

    that would otherwise be rental property of the taxpayer of a separate class prescribed under subsection (1ac), shall be deemed not to be property of a separate class prescribed under that subsection if, immediately before it was so acquired by the taxpayer, it was a rental property of the person from whom the property was so acquired of a prescribed class other than a separate class prescribed under that subsection.

  • (1ae) Except in the case of a corporation or partnership described in subsection 1100(12), where more than one property of a taxpayer is described in the same class in Schedule II and where

    • (a) one of the properties is a rental property other than a property of a separate class prescribed under subsection (1ac), and

    • (b) one of the properties is a property other than rental property,

    a separate class is hereby prescribed for properties that

    • (c) are described in paragraph (a); and

    • (d) would otherwise be included in the class.

  • (1af) A separate class is hereby prescribed for each property included in Class 10.1 in Schedule II.

  • (1ag) If more than one property of a taxpayer is described in the same class in Schedule II, and one or more of the properties is a property in respect of which the taxpayer is a transferee that has elected under subsection 13(4.2) of the Act (each of which is referred to in this subsection as an “elected property”), a separate class is prescribed for each elected property of the taxpayer that would otherwise be included in the same class.

  • (1b) and (1c) [Repealed, SOR/79-670, s. 1]

Fishing Vessels

  • (2) Where a property of a taxpayer that would otherwise be included in Class 7 in Schedule II is a property in respect of which a depreciation allowance could have been taken under Order in Council

    • (a) P.C. 2798 of April 10, 1942,

    • (b) P.C. 7580 of August 26, 1942, as amended by P.C. 3297 of April 22, 1943, or

    • (c) P.C. 3979 of June 1, 1944,

    if those Orders in Council were applicable to the taxation year, a separate class is hereby prescribed for each property, including the furniture, fittings and equipment attached thereto.

Canadian Vessels

  • (2a) A separate class is hereby prescribed for each vessel of a taxpayer, including the furniture, fittings, radiocommunication equipment and other equipment attached thereto, that

    • (a) was constructed in Canada;

    • (b) is registered in Canada; and

    • (c) had not been used for any purpose whatever before it was acquired by the taxpayer.

Offshore Drilling Vessels

  • (2b) A separate class is hereby prescribed for all vessels described in Class 7 in Schedule II, including the furniture, fittings, radiocommunication equipment and other equipment attached thereto, acquired by a taxpayer

    • (a) after May 25, 1976 and designed principally for the purpose of

      • (i) determining the existence, location, extent or quality of accumulations of petroleum or natural gas (other than mineral resources), or

      • (ii) drilling oil or gas wells; or

    • (b) after May 22, 1979 and designed principally for the purpose of determining the existence, location, extent or quality of mineral resources.

Vessels and a Structured Financing Facility

  • (2c) Subsections (2a) and (2b) do not apply to a vessel, nor to the furniture, fittings, radio communications equipment and other equipment attached to the vessel, if a structured financing facility relating to any such property has been agreed to by the Minister of Industry under the Department of Industry Act.

Timber Limits and Cutting Rights

  • (3) For the purposes of this Part and Schedules IV and VI, each property of a taxpayer that is

    • (a) a timber limit other than a timber resource property, or

    • (b) a right to cut timber from a limit other than a right that is a timber resource property,

    is hereby prescribed to be a separate class of property.

Industrial Mineral Mines

  • (4) For the purposes of this Part and Schedule V, where a taxpayer has

    • (a) more than one industrial mineral mine in respect of which he may claim an allowance under paragraph 1100(1)(g),

    • (b) more than one right to remove industrial minerals from an industrial mineral mine in respect of which he may claim an allowance under that paragraph, or

    • (c) both such a mine and a right,

    each such industrial mineral mine and each such right to remove industrial minerals from an industrial mineral mine is hereby prescribed to be a separate class of property.

Class 28 — Single Mine Properties

  • (4a) If one or more properties of a taxpayer are described in Class 28 of Schedule II and some or all of the properties were acquired for the purpose of gaining or producing income from one mine and not from any other mine (which properties are referred to as “single mine properties” in this subsection), a separate class is prescribed for the single mine properties that

    • (a) were acquired for the purpose of gaining or producing income from that mine;

    • (b) would otherwise be included in Class 28; and

    • (c) are not included in a separate class by reason of subsection (4b).

Class 28 — Multiple Mine Properties

  • (4b) If more than one property of a taxpayer is described in Class 28 in Schedule II and some or all of the properties were acquired for the purpose of gaining or producing income from particular mines and not from any other mine (which properties are referred to as “multiple mine properties” in this subsection), a separate class is prescribed for the multiple mine properties that

    • (a) were acquired for the purpose of gaining or producing income from the particular mines; and

    • (b) would otherwise be included in Class 28.

Class 41 — Single Mine Properties

  • (4c) If one or more properties of a taxpayer are described in paragraph (a), (a.1) or (a.2) of Class 41 of Schedule II and some or all of the properties were acquired for the purpose of gaining or producing income from one mine and not from any other mine (which properties are referred to as “single mine properties” in this subsection), a separate class is prescribed for the single mine properties that

    • (a) were acquired for the purpose of gaining or producing income from that mine;

    • (b) would otherwise be included in Class 41; and

    • (c) are not included in a separate class by reason of subsection (4d).

Class 41 — Multiple Mine Properties

  • (4d) If more than one property of a taxpayer is described in paragraph (a), (a.1) or (a.2) of Class 41 in Schedule II and some or all of the properties were acquired for the purpose of gaining or producing income from particular mines and not from any other mine (which properties are referred to as “multiple mine properties” in this subsection), a separate class is prescribed for the multiple mine properties that

    • (a) were acquired for the purpose of gaining or producing income from the particular mines; and

    • (b) would otherwise be included in Class 41.

Class 41.1 — Single Mine Properties

  • (4e) If one or more properties of a taxpayer are described in paragraph (a) of Class 41.1 of Schedule II and some or all of the properties were acquired for the purpose of gaining or producing income from one mine and not from any other mine (which properties are referred to as “single mine properties” in this subsection), a separate class is prescribed for the single mine properties that

    • (a) were acquired for the purpose of gaining or producing income from that mine;

    • (b) would otherwise be included in Class 41.1, because of paragraph (a) of that class; and

    • (c) are not included in a separate class by reason of subsection (4f).

Class 41.1 — Multiple Mine Properties

  • (4f) If more than one property of a taxpayer is described in paragraph (a) of Class 41.1 in Schedule II and some or all of the properties were acquired for the purpose of gaining or producing income from particular mines and not from any other mine (which properties are referred to as “multiple mine properties” in this subsection), a separate class is prescribed for the multiple mine properties that

    • (a) were acquired for the purpose of gaining or producing income from the particular mines; and

    • (b) would otherwise be included in Class 41.1 because of paragraph (a) of that class.

Class 41.2  —  Single Mine Properties

  • (4g) If one or more properties of a taxpayer are described in paragraph (a) of Class 41.2 of Schedule II and some or all of the properties were acquired for the purpose of gaining or producing income from one mine and not from any other mine (in this subsection referred to as “single mine properties”), a separate class is prescribed for the single mine properties that

    • (a) were acquired for the purpose of gaining or producing income from that mine;

    • (b) would otherwise be included in Class 41.2 because of paragraph (a) of that class; and

    • (c) are not included in a separate class because of subsection (4h).

Class 41.2  —  Multiple Mine Properties

  • (4h) If more than one property of a taxpayer is described in paragraph (a) of Class 41.2 in Schedule II and some or all of the properties were acquired for the purpose of gaining or producing income from particular mines and not from any other mine (in this subsection referred to as “multiple mine properties”), a separate class is prescribed for the multiple mine properties that

    • (a) were acquired for the purpose of gaining or producing income from the particular mines; and

    • (b) would otherwise be included in Class 41.2 because of paragraph (a) of that class.

Class 47 — Liquefaction Equipment

  • (4i) If a taxpayer acquires property that is eligible liquefaction equipment to be used as part of an eligible liquefaction facility of the taxpayer, a separate class is prescribed for those properties that were acquired for the purpose of gaining or producing income from that eligible liquefaction facility.

Lease Option Agreements

  • (5) Where, by virtue of an agreement, contract or arrangement entered into on or after May 31, 1954, a taxpayer is deemed by section 18 of the Income Tax Act, as enacted by the Statutes of Canada, 1958, Chapter 32, subsection 8(1), to have acquired a property, a separate class is hereby prescribed for each such property and if the taxpayer subsequently actually acquires the property it shall be included in the same class.

Telecommunication Spacecraft

  • (5a) For the purposes of this Part, each property of a taxpayer that is an unmanned telecommunication spacecraft described in paragraph (f.2) of Class 10 or in Class 30 in Schedule II is hereby prescribed to be a separate class of property.

Multiple-Unit Residential Buildings

  • (5b) For the purposes of this Part, when any property of a taxpayer is a property of Class 31 or 32 in Schedule II and the capital cost of that property to the taxpayer was not less than $50,000, a separate class is hereby prescribed for each such property of the taxpayer that would otherwise be included in the same class.

Eligible Non-Residential Building

  • (5b.1) For the purposes of this Part, a separate class is prescribed for each eligible non-residential building (other than an eligible liquefaction building) of a taxpayer in respect of which the taxpayer has (by letter attached to the return of income of the taxpayer filed with the Minister in accordance with section 150 of the Act for the taxation year in which the building is acquired) elected that this subsection apply.

Liquefaction Buildings

  • (5b.2) If a taxpayer acquires property that is an eligible liquefaction building to be used as part of an eligible liquefaction facility of the taxpayer, a separate class is prescribed for those properties that were acquired for the purpose of gaining or producing income from that eligible liquefaction facility.

Leasing Properties

  • (5c) For the purposes of this Part, except in the case of a corporation or partnership described in subsection 1100(16), where more than one property of a taxpayer is described in the same class in Schedule II and where

    • (a) one of the properties is a leasing property, and

    • (b) one of the properties is a property other than a leasing property,

    a separate class is hereby prescribed for properties that

    • (c) are described in paragraph (a); and

    • (d) would otherwise be included in the class.

Railway Cars

  • (5d) Where more than one property of a taxpayer is a railway car included in Class 35 in Schedule II that was rented, leased or used by the taxpayer in Canada in the taxation year, other than a railway car owned by a corporation, or a partnership any member of which is a corporation, that

    • (a) was at any time in that taxation year a common carrier that owned or operated a railway, or

    • (b) rented or leased the railway cars at any time in that taxation year, by one or more transactions between persons not dealing at arm’s length, to an associated corporation that was, at that time, a common carrier that owned or operated a railway,

    a separate class is prescribed

    • (c) for all such properties acquired by the taxpayer before February 3, 1990 (other than such properties acquired for rent or lease to another person),

    • (d) for all such properties acquired by the taxpayer after February 2, 1990 (other than such properties acquired for rent or lease to another person),

    • (e) for all such properties acquired by the taxpayer before April 27, 1989 for rent or lease to another person, and

    • (f) for all such properties acquired by the taxpayer after April 26, 1989 for rent or lease to another person.

  • (5d.1) A separate class is hereby prescribed for all property included in Class 35 in Schedule II acquired at a time after December 6, 1991 and before February 28, 2000 by a taxpayer that was at that time a common carrier that owned and operated a railway.

  • (5d.2) A separate class is hereby prescribed for all property included in Class 35 in Schedule II acquired at a time after February 27, 2000 by a taxpayer that was at that time a common carrier that owned and operated a railway.

Railway Track and Related Property

  • (5e) A separate class is hereby prescribed for all property included in Class 1 in Schedule II acquired by a taxpayer after March 31, 1977 and before 1988 that is

    • (a) railway track and grading, including components such as rails, ballast, ties and other track material;

    • (b) railway traffic control or signalling equipment, including switching, block signalling, interlocking, crossing protection, detection, speed control or retarding equipment, but not including property that is principally electronic equipment or systems software therefor; or

    • (c) a bridge, culvert, subway or tunnel that is ancillary to railway track and grading.

  • (5e.1) A separate class is hereby prescribed for all property included in Class 1 in Schedule II acquired at a time after December 6, 1991 by a taxpayer that was at that time a common carrier that owned and operated a railway, where the property is

    • (a) railway track and grading, including components such as rails, ballast, ties and other track material;

    • (b) railway traffic control or signalling equipment, including switching, block signalling, interlocking, crossing protection, detection, speed control or retarding equipment, but not including property that is principally electronic equipment or systems software therefor; or

    • (c) a bridge, culvert, subway or tunnel that is ancillary to railway track and grading.

  • (5e.2) A separate class is hereby prescribed for all trestles included in Class 3 in Schedule II acquired at a time after December 6, 1991 by a taxpayer that was at that time a common carrier that owned and operated a railway, where the trestles are ancillary to railway track and grading.

  • (5f) A separate class is hereby prescribed for all trestles included in Class 3 in Schedule II acquired by a taxpayer after March 31, 1977 and before 1988 that are ancillary to railway track and grading.

Deemed Depreciable Property

  • (5g) A separate class is hereby prescribed for each property of a taxpayer described in Class 36 in Schedule II.

Leasehold Interest in Real Properties

  • (5h) For the purposes of this Part, where more than one property of a taxpayer is described in the same class in Schedule II and where

    • (a) one of the properties is a leasehold interest in real property described in subsection 1100(13), and

    • (b) one of the properties is a property other than a leasehold interest in real property described in subsection 1100(13),

    a separate class is hereby prescribed for properties that

    • (c) are described in paragraph (a); and

    • (d) would otherwise be included in the class.

Pipelines

  • (5i) A separate class is hereby prescribed for each property of a taxpayer described in Class 2 in Schedule II that is

    • (a) a pipeline the construction of which was commenced after 1984 and completed after September 1, 1985 and the capital cost of which to the taxpayer is not less than $10,000,000,

    • (b) a pipeline that has been extended or converted where the extension or conversion was completed after September 1, 1985 and the capital cost to the taxpayer of the extension or the cost to him of the conversion, as the case may be, is not less than $10,000,000, or

    • (c) a pipeline that has been extended and converted as part of a single program of extension and conversion of the pipeline where the program was completed after September 1, 1985 and the aggregate of the capital cost to the taxpayer of the extension and the cost to him of the conversion is not less than $10,000,000,

    and in respect of which the taxpayer has, by letter attached to the return of his income filed with the Minister in accordance with section 150 of the Act for the taxation year in which the construction, extension, conversion or program, as the case may be, was completed, elected that this subsection apply.

  • (5j) An election under subsection (5i), (5l) or (5o) shall be effective from the first day of the taxation year in respect of which the election is made and shall continue to be effective for all subsequent taxation years.

Certified Productions

  • (5k) A separate class is hereby prescribed for all property of a taxpayer included in Class 10 of Schedule II by reason of paragraph (w) thereof.

Canadian Film or Video Production

  • (5k.1) A separate class is hereby prescribed for all property of a corporation included in Class 10 in Schedule II because of paragraph (x) of that Class that is property

    • (a) in respect of which the corporation is deemed under subsection 125.4(3) of the Act to have paid an amount on account of its tax payable under Part I of the Act for a taxation year; or

    • (b) acquired by the corporation from another corporation where

      • (i) the other corporation is deemed under subsection 125.4(3) of the Act to have paid an amount on account of its tax payable under Part I of the Act for a taxation year in respect of the property, and

      • (ii) the corporations were related to each other throughout the period that began when the other corporation first incurred a qualified labour expenditure (as defined in subsection 125.4(1) of the Act) in respect of the property and ended when the other corporation disposed of the property to the corporation.

Class 38 — Property and Outdoor Advertising Signs

  • (51) A separate class is hereby prescribed for each property of a taxpayer described in Class 38 in Schedule II or in paragraph (1) of Class 8 in Schedule II in respect of which the taxpayer has, by letter attached to the return of income of the taxpayer filed with the Minister in accordance with section 150 of the Act for the taxation year in which the property was acquired, elected that this subsection apply.

Specified Energy Property

  • (5m) Where, for any taxation year, a property of a taxpayer or partnership is a specified energy property, a separate class is prescribed in respect of that property for that and subsequent taxation years.

  • (5n) Notwithstanding subsection (5c), where at the end of any taxation year a property of a taxpayer is specified leasing property, a separate class is prescribed in respect of that property (including any additions or alterations to that property included in the same class in Schedule II) for that year and all subsequent taxation years.

  • (5o) A separate class is prescribed for one or more properties of a class in Schedule II that are exempt properties, as defined in paragraph 1100(1.13)(a), of a taxpayer referred to in subsection 1100(16) in respect of which the taxpayer has, by letter attached to the return of income of the taxpayer filed with the Minister in accordance with section 150 of the Act for the taxation year in which the property or properties were acquired, elected that this subsection apply.

Rapidly Depreciating Electronic Equipment

  • (5p) Subject to subsection (5q), a separate class is prescribed for one or more properties of a taxpayer acquired in a taxation year and included in the year in Class 8 in Schedule II, where each of the properties has a capital cost to the taxpayer of at least $1,000 and is

    • (a) computer software;

    • (b) a photocopier; or

    • (c) office equipment that is electronic communications equipment, such as a facsimile transmission device or telephone equipment.

  • (5q) Each of subsections (5p) and (5s) apply to a property or properties of a taxpayer only if the taxpayer has (by letter attached to the taxpayer’s return of income filed with the Minister in accordance with section 150 of the Act for the taxation year in which the property or properties were acquired) elected that the subsection apply to the property or properties, as the case may be.

Computer Tax Shelter Property

  • (5r) For the purpose of this Part, where

    • (a) more than one property of a taxpayer is described in the same class in Schedule II,

    • (b) one of the properties is a computer tax shelter property, and

    • (c) one of the properties is not a computer tax shelter property,

    for properties that are described in paragraph (b) and that would otherwise be included in the class, a separate class is prescribed.

Manufacturing or Processing Property

  • (5s) Subject to subsection (5q), a separate class is prescribed for one or more properties of a taxpayer

    • (a) that were acquired in a taxation year and included in the year in Class 43 in Schedule II because of paragraph (a) of that Class; and

    • (b) that had a capital cost to the taxpayer of at least $1,000.

  • (5t) [Repealed, SOR/2006-117, s. 2]

Equipment Related to Transmission Pipelines

  • (5u) A separate class is prescribed for one or more properties of a taxpayer that is property included in Class 7 in Schedule II because of paragraph (j) or (k) of that Class if the taxpayer has (by letter attached to the taxpayer’s return of income filed with the Minister in accordance with section 150 of the Act for the taxation year in which the property or properties were acquired) elected that this subsection apply to the property or properties.

Transmission Pipelines

  • (5v) A separate class is prescribed for one or more properties of a taxpayer that is property included in Class 49 in Schedule II if the taxpayer has (by letter attached to the taxpayer’s return of income filed with the Minister in accordance with section 150 of the Act for the taxation year in which the property or properties were acquired) elected that this subsection apply to the property or properties.

Reference

  • (6) A reference in this Part to a class in Schedule II includes a reference to the corresponding separate classes prescribed by this section.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/78-137, s. 2;
  • SOR/79-426, s. 2;
  • SOR/79-670, s. 1;
  • SOR/80-618, s. 1;
  • SOR/81-244, s. 1;
  • SOR/82-265, s. 2;
  • SOR/84-454, s. 2;
  • SOR/84-948, s. 6;
  • SOR/86-156, s. 1;
  • SOR/88-392, s. 2;
  • SOR/89-27, s. 2;
  • SOR/90-22, s. 2;
  • SOR/90-257, s. 2;
  • SOR/91-196, s. 2;
  • SOR/91-673, s. 2;
  • SOR/94-140, s. 3;
  • SOR/94-170, s. 2;
  • SOR/94-686, ss. 58(F), 78(F), 79(F);
  • SOR/98-97, s. 1;
  • SOR/2000-248, s. 3;
  • SOR/2005-126, s. 2;
  • SOR/2005-371, s. 2;
  • SOR/2005-414, s. 2;
  • SOR/2006-117, s. 2;
  • SOR/2009-115, ss. 2, 13;
  • SOR/2009-126, s. 2;
  • SOR/2010-93, s. 13(F);
  • SOR/2011-9, s. 2;
  • 2013, c. 34, s. 384, c. 40, 101;
  • SOR/2015-117, s. 2.

DIVISION IIIProperty Rules

Property Not Included

  •  (1) The classes of property described in this Part and in Schedule II shall be deemed not to include property

    • (a) the cost of which would be deductible in computing the taxpayer’s income if the Act were read without reference to sections 66 to 66.4 of the Act;

    • (a.1) the cost of which is included in the taxpayer’s Canadian renewable and conservation expense (within the meaning assigned by section 1219);

    • (b) that is described in the taxpayer’s inventory;

    • (c) that was not acquired by the taxpayer for the purpose of gaining or producing income;

    • (d) that was acquired by an expenditure in respect of which the taxpayer is allowed a deduction in computing income under section 37 of the Act;

    • (e) that was acquired by the taxpayer after November 12, 1981, other than property acquired from a person with whom the taxpayer was not dealing at arm’s length (otherwise than by virtue of a right referred to in paragraph 251(5)(b) of the Act) at the time the property was acquired if the property was acquired in the circumstances where subsection (14) applies, and is

      • (i) a print, etching, drawing, painting, sculpture, or other similar work of art, the cost of which to the taxpayer was not less than $200,

      • (ii) a hand-woven tapestry or carpet or a handmade appliqué, the cost of which to the taxpayer was not less than $215 per square metre,

      • (iii) an engraving, etching, lithograph, woodcut, map or chart, made before 1900, or

      • (iv) antique furniture, or any other antique object, produced more than 100 years before the date it was acquired, the cost of which to the taxpayer was not less than $1,000,

      other than any property described in subparagraph (i) or (ii) where the individual who created the property was a Canadian (within the meaning assigned by paragraph 1104(10)(a)) at the time the property was created;

    • (f) that is property referred to in paragraph 18(1)(l) of the Act acquired after December 31, 1974, an outlay or expense for the use or maintenance of which is not deductible by virtue of that paragraph;

    • (g) in respect of which an allowance is claimed and permitted under Part XVII;

    • (h) that is a passenger automobile acquired after June 13, 1963 and before January 1, 1966, the cost to the taxpayer of which, minus the initial transportation charges and retail sales tax in respect thereof, exceeded $5,000, unless the automobile was acquired by a person before June 14, 1963 and has by one or more transactions between persons not dealing at arm’s length become vested in the taxpayer;

    • (i) that was deemed by section 18 of the Income Tax Act, as enacted by the Statutes of Canada, 1958, Chapter 32, subsection 8(1), to have been acquired by the taxpayer and that did not vest in the taxpayer before the 1963 taxation year;

    • (j) of a life insurer, that is property used by it in, or held by it in the course of, carrying on an insurance business outside Canada; or

    • (k) that is linefill in a pipeline.

Partnership Property
  • [SOR/94-686, s. 78(F)]

  • (1a) Where the taxpayer is a member of a partnership, the classes of property described in this Part and in Schedule II shall be deemed not to include any property that is an interest of the taxpayer in depreciable property that is partnership property of the partnership.

Land

  • (2) The classes of property described in Schedule II shall be deemed not to include the land upon which a property described therein was constructed or is situated.

Non-Residents

  • (3) Where the taxpayer is a non-resident person, the classes of property described in this Part and in Schedule II shall, except for the purpose of determining the foreign accrual property income of the taxpayer for the purposes of subdivision i of Division B of Part I of the Act, be deemed not to include property that is situated outside Canada.

Improvements or Alterations to Leased Properties

  • (4) Subject to subsection (5), capital cost for the purposes of paragraph 1100(1)(b) includes any amount expended by a taxpayer for or in respect of an improvement or alteration to a leased property.

Buildings on Leased Properties

  • (5) Where the taxpayer has a leasehold interest in a property, a reference in Schedule II to a property that is a building or other structure shall include a reference to that leasehold interest to the extent that that interest

    • (a) was acquired by reason of the fact that the taxpayer

      • (i) erected a building or structure on leased land,

      • (ii) made an addition to a leased building or structure, or

      • (iii) made alterations to a leased building or structure that substantially changed the nature of the property; or

    • (b) was acquired after 1975 or, in the case of any property of Class 31 or 32, after November 18, 1974, from a former lessee who had acquired it by reason of the fact that he or a lessee before him

      • (i) erected a building or structure on leased land,

      • (ii) made an addition to a leased building or structure, or

      • (iii) made alterations to a leased building or structure that substantially changed the nature of the property.

  • (5.1) Where a taxpayer has acquired a property that would, if the property had been acquired by a person with whom the taxpayer was not dealing at arm’s length at the time the property was acquired by the taxpayer, be described in paragraph (5)(a) or (b) in respect of that person, a reference in Schedule II to a property that is a building or other structure shall, in respect of the taxpayer, include a reference to that property.

Leasehold Interests Acquired Before 1949

  • (6) For the purposes of paragraphs 2(a) and (b) of Schedule III, where an item of capital cost has been incurred before the commencement of the taxpayer’s 1949 taxation year, there shall be added to the capital cost of each item the amount that has been allowed in respect thereof as depreciation under the Income War Tax Act and has been deducted from the original cost to arrive at the capital cost of the item.

River Improvements

  • (7) For the purposes of paragraph 1100(1)(f), capital cost includes an amount expended on river improvements by the taxpayer for the purpose of facilitating the removal of timber from a timber limit.

Electrical Plant Used for Mining

  • (8) Where the generating or distributing equipment and plant (including structures) of a producer or distributor of electrical energy were acquired for the purpose of providing power to a consumer for use by the consumer in the operation in Canada of a mine, ore mill, smelter, metal refinery or any combination thereof and at least 80 per cent of the producer’s or distributor’s output of electrical energy

    • (a) for his 1948 and 1949 taxation years, or

    • (b) for his first two taxation years in which he sold power,

    whichever period is later, was sold to the consumer for that purpose, the property shall be included in

    • (c) Class 10 in Schedule II if it is property acquired

      • (i) before 1988, or

      • (ii) before 1990

        • (A) pursuant to an obligation in writing entered into by the taxpayer before June 18, 1987,

        • (B) that was under construction by or on behalf of the taxpayer on June 18, 1987, or

        • (C) that is machinery or equipment that is a fixed and integral part of a building, structure, plant facility or other property that was under construction by or on behalf of the taxpayer on June 18, 1987, or

    • (d) Class 41, 41.1 or 41.2 in Schedule II in any other case, unless the property would otherwise be included in Class 43.1 or 43.2 in Schedule II and the taxpayer has, by a letter filed with the taxpayer’s return of income filed with the Minister in accordance with section 150 of the Act for the taxation year in which the property was acquired, elected to include the property in Class 43.1 or 43.2, as the case may be.

  • (9) Where a taxpayer has acquired generating or distributing equipment and plant (including structures) for the purpose of providing power for his own consumption in operating a mine, ore mill, smelter, metal refinery or any combination thereof and at least 80 per cent of the output of electrical energy was so used

    • (a) in his 1948 and 1949 taxation years, or

    • (b) in the first two taxation years in which he so produced power,

    whichever period is the later, the property shall be included in

    • (c) Class 10 in Schedule II if it is property acquired

      • (i) before 1988, or

      • (ii) before 1990

        • (A) pursuant to an obligation in writing entered into by the taxpayer before June 18, 1987,

        • (B) that was under construction by or on behalf of the taxpayer on June 18, 1987, or

        • (C) that is machinery or equipment that is a fixed and integral part of a building, structure, plant facility or other property that was under construction by or on behalf of the taxpayer on June 18, 1987, or

    • (d) Class 41, 41.1 or 41.2 in Schedule II in any other case, unless the property would otherwise be included in Class 43.1 or 43.2 in Schedule II and the taxpayer has, by a letter filed with the taxpayer’s return of income filed with the Minister in accordance with section 150 of the Act for the taxation year in which the property was acquired, elected to include the property in Class 43.1 or 43.2, as the case may be.

  • (9.1) In their application to generating or distributing equipment and plant (including structures) that were acquired by the taxpayer before November 8, 1969, subsections (8) and (9) shall be read without reference to a “metal refinery”.

  • (9.2) Where a taxpayer acquires property after November 7, 1969 from a person with whom he was not dealing at arm’s length that is property referred to in subsection (8) or (9), notwithstanding those subsections, that property shall not be included in Class 10 in Schedule II by the taxpayer unless the property had been included in that class by the person from whom it was acquired, by virtue of subsection (8) or (9) as it read in its application before November 8, 1969.

  • (10) [Repealed, 2013, c. 40, s. 102]

Passenger Automobiles

  • (11) In paragraph (1)(h),

    cost to the taxpayer

    cost to the taxpayer of an automobile means, except as provided in subsections (12) and (13),

    • (a) except in any case coming under paragraph (b) or (c), the capital cost to the taxpayer of the automobile,

    • (b) except in any case coming under paragraph (c), where the automobile was acquired by a person (in this section referred to as the “original owner”) after June 13, 1963, and has, by one or more transactions between persons not dealing at arm’s length, become vested in the taxpayer, the greater of

      • (i) the actual cost to the taxpayer, and

      • (ii) the actual cost to the original owner, and

    • (c) where the automobile was acquired by the taxpayer outside Canada for use in connection with a permanent establishment, as defined for the purposes of Part IV or Part XXVI, outside Canada, the lesser of

      • (i) the actual cost to the taxpayer, and

      • (ii) the amount that such an automobile would ordinarily cost the taxpayer if he purchased it from a dealer in automobiles in Canada for use in Canada; (coût pour le contribuable)

    initial transportation charges

    initial transportation charges in respect of an automobile means the costs incurred by a dealer in automobiles for transporting the automobile (before it had been used for any purpose whatever) from,

    • (a) in the case of an automobile manufactured in Canada, the manufacturer’s plant, and

    • (b) in any other case, the place in Canada, if any, at which the automobile was received or stored by a wholesale distributor,

    to the dealer’s place of business; (frais de transport initiaux)

    passenger automobile

    passenger automobile means a vehicle, other than an ambulance or hearse, that was designed to carry not more than nine persons, and that is

    • (a) an automobile designed primarily for carrying persons on highways and streets, except an automobile that

      • (i) is designed to accommodate and is equipped with auxiliary folding seats installed between the front and the rear seats,

      • (ii) was acquired by a person carrying on the business of operating a taxi or automobile rental service, or arranging and managing funerals, for use in such business, and

      • (iii) is not a vehicle described in paragraph (b), or

    • (b) a station wagon or substantially similar vehicle; (automobile à voyageurs)

    retail sales tax

    retail sales tax in respect of an automobile means the aggregate of municipal and provincial retail sales taxes payable in respect of the purchase of the automobile by the taxpayer. (taxe de vente ou détail)

  • (12) For the purposes of paragraph (1)(h), where an automobile is owned by two or more persons or by partners, a reference to “cost to the taxpayer” shall be deemed to be a reference to the aggregate of the cost, as defined in subsection (11), to each such person or partner.

  • (13) In determining the cost to the taxpayer for the purposes of paragraph (1)(h), subsection 13(7) of the Act shall not apply unless the automobile was acquired by gift.

Property Acquired by Transfer, Amalgamation or Winding-Up

  • (14) Subject to subsections (14.11) and (14.12), for the purposes of this Part and Schedule II, if a property is acquired by a taxpayer

    • (a) in the course of a reorganization in respect of which, if a dividend were received by a corporation in the course of the reorganization, subsection 55(2) of the Act would not be applicable to the dividend by reason of the application of paragraph 55(3)(b) of the Act, or

    • (a.1) to (c) [Repealed, SOR/90-22, s. 3]

    • (d) from a person with whom the taxpayer was not dealing at arm’s length (otherwise than by virtue of a right referred to in paragraph 251(5)(b) of the Act) at the time the property was acquired, and

    • (e) [Repealed, SOR/90-22, s. 3]

    the property, immediately before it was so acquired by the taxpayer, was property of a prescribed class or a separate prescribed class of the person from whom it was so acquired, the property shall be deemed to be property of that same prescribed class or separate prescribed class, as the case may be, of the taxpayer.

  • (14.1) For the purposes of this Part and Schedule II, if a taxpayer has acquired, after May 25, 1976, property of a class in Schedule II (in this subsection referred to as the “present class”), that had been previously owned before May 26, 1976 by the taxpayer or by a person with whom the taxpayer was not dealing at arm’s length (otherwise than by virtue of a right referred to in paragraph 251(5)(b) of the Act) at the time the property was acquired, and at the time the property was previously so owned it was a property of a different class (other than Class 28 or 41) in Schedule II (in this subsection referred to as the “former class”), the property is deemed to be property of the former class and not to be property of the present class.

  • (14.11) If, after March 18, 2007, a taxpayer acquires an oil sands property in circumstances to which subsection (14) applies and the property was depreciable property that was included in Class 41, because of paragraph (a), (a.1) or (a.2) of that Class, by the person or partnership from whom the taxpayer acquired the property, the following rules apply:

    • (a) there may be included in Class 41 of the taxpayer only that portion of the property the capital cost of which portion to the taxpayer is the lesser of the undepreciated capital cost of Class 41 of that person or partnership immediately before the disposition of the property by the person or partnership and the amount, if any, by which that undepreciated capital cost is reduced as a result of that disposition; and

    • (b) there shall be included in Class 41.1 of the taxpayer that portion, if any, of the property that is not the portion included in Class 41 of the taxpayer under paragraph (a).

  • (14.12) If, after March 20, 2013, a taxpayer acquires a property (other than an oil sands property) in circumstances to which subsection (14) applies and the property was depreciable property that was included in Class 41, because of paragraph (a) or (a.1) of that Class, by the person or partnership from whom the taxpayer acquired the property, the following rules apply:

    • (a) there may be included in Class 41 of the taxpayer only that portion of the property the capital cost of which portion to the taxpayer is the lesser of the undepreciated capital cost of Class 41 of that person or partnership immediately before the disposition of the property by the person or partnership and the amount, if any, by which that undepreciated capital cost is reduced as a result of that disposition; and

    • (b) there shall be included in Class 41.2 of the taxpayer that portion, if any, of the property that is not the portion included in Class 41 of the taxpayer under paragraph (a).

Townsite Costs

  • (14.2) For the purpose of paragraph 13(7.5)(a) of the Act, a property is prescribed in respect of a taxpayer where the property would, if it had been acquired by the taxpayer, be property included in Class 10 in Schedule II because of paragraph (l) of that Class.

Surface Construction and Bridges

  • (14.3) For the purpose of paragraph 13(7.5)(b) of the Act, prescribed property is any of

    • (a) a road (other than a specified temporary access road), sidewalk, airplane runway, parking area, storage area or similar surface construction;

    • (b) a bridge; and

    • (c) a property that is ancillary to any property described in paragraph (a) or (b).

Manufacturing and Processing Enterprises

  • (15) For the purposes of subsection 13(10) of the Act,

    • (a) property is hereby prescribed that is

      • (i) a building included in Class 3 or 6 in Schedule II, or

      • (ii) machinery or equipment included in Class 8 in Schedule II,

      except

      • (iii) property that may reasonably be regarded as having been acquired for the purpose of producing coal from a coal mine or oil, gas, metals or industrial minerals from a resource referred to in section 1201 as it read immediately before it was repealed by section 2 of Order in Council P.C. 1975-1323 of June 12, 1975, or

      • (iv) property acquired for use outside Canada; and

    • (b) a business carried on by the taxpayer is hereby prescribed as a manufacturing or processing business if,

      • (i) for the fiscal period in which the property was acquired, or

      • (ii) for the fiscal period in which a reasonable volume of business was first carried on,

      whichever was later, the revenue received by the taxpayer, in the course of carrying on the business from

      • (iii) the sale of goods processed or manufactured by the taxpayer in Canada,

      • (iv) the leasing or renting of goods that were processed or manufactured by the taxpayer in Canada,

      • (v) advertisements in a newspaper or magazine that was produced by the taxpayer in Canada, and

      • (vi) construction carried on by the taxpayer in Canada,

      was not less than 2/3 of the revenue of the business for the period.

  • (16) For the purposes of paragraph (15)(b), revenue means gross revenue minus the aggregate of

    • (a) amounts that were paid or credited in the period, to customers of the business, in relation to such revenue as a bonus, rebate or discount or for returned or damaged goods; and

    • (b) amounts included therein by virtue of section 13 or subsection 23(1) of the Act.

Election for Certain Manufacturing or Processing Equipments

  • (16.1) A taxpayer who acquires a property after March 18, 2007 and before 2016 that is manufacturing or processing machinery or equipment may (by letter attached to the return of income of the taxpayer filed with the Minister in accordance with section 150 of the Act for the taxation year in which the property is acquired) elect to include the property in Class 29 in Schedule II if

    • (a) Class 43.1 or 43.2 in Schedule II would otherwise apply to the property; and

    • (b) Class 29 in Schedule II would apply to the property if that schedule were read without reference to Classes 43.1 and 43.2.

Recreational Property

  • (17) Property referred to in paragraph (1)(f) does not include

    • (a) any property that the taxpayer was obligated to acquire under the terms of an agreement in writing entered into before November 13, 1974; or

    • (b) any property the construction of which was

      • (i) commenced by the taxpayer before November 13, 1974 or commenced under an agreement in writing entered into by the taxpayer before November 13, 1974, and

      • (ii) completed substantially according to plans and specifications agreed to by the taxpayer before November 13, 1974.

  • (18) [Repealed, SOR/99-179, s. 2]

Additions and Alterations

  • (19) For the purposes of this Part and Schedule II, where

    • (a) a taxpayer acquired a property that is included in a class in Schedule II (in this subsection referred to as the “actual class”),

    • (b) the taxpayer acquires property that is an addition or alteration to the property referred to in paragraph (a),

    • (c) the property that is the addition or alteration referred to in paragraph (b) would have been property of the actual class if it had been acquired by the taxpayer at the time he acquired the property referred to in paragraph (a), and

    • (d) the property referred to in paragraph (a) would have been property of a class in Schedule II (in this subsection referred to as the “present class”) that is different from the actual class if it had been acquired by the taxpayer at the time he acquired the addition or alteration referred to in paragraph (b),

    the addition or alteration referred to in paragraph (b) shall, except as otherwise provided in this Part or in Schedule II, be deemed to be an acquisition by the taxpayer of property of the present class.

  • (19.1) For the purposes of this Part and Schedule II, if subsection (19.2) applies to the refurbishment or reconditioning of a railway locomotive of a taxpayer, any property acquired by the taxpayer after February 25, 2008 that is incorporated into the locomotive in the course of the refurbishment or reconditioning is, except as otherwise provided in this Part or in Schedule II, deemed to be included in paragraph (y) of Class 10 in Schedule II.

  • (19.2) This subsection applies to the refurbishment or reconditioning of a railway locomotive, of a taxpayer, that

    • (a) is included in a class in Schedule II other than Class 10; and

    • (b) would be included in Class 10 in Schedule II if it had not been used or acquired for use for any purpose by any taxpayer before February 26, 2008.

Non-arm’s Length Exception

  • (20) For the purposes of subsections 1100(2.2) and (19), 1101(lad) and 1102(14) (in this subsection referred to as the “relevant subsections”), where, but for this subsection, a taxpayer would be considered to be dealing not at arm’s length with another person as a result of a transaction or series of transactions the principal purpose of which may reasonably be considered to have been to cause one or more of the relevant subsections to apply in respect of the acquisition of a property, the taxpayer shall be considered to be dealing at arm’s length with the other person in respect of the acquisition of that property.

  • (21) Where a taxpayer has acquired a property described in Class 43.1 of Schedule II in circumstances in which clauses (b)(iii)(A) and (B) or (e)(iii)(A) and (B) of that class apply,

    • (a) the portion of the property, determined by reference to capital cost, that is equal to or less than the capital cost of the property to the person from whom the property was acquired, is included in that class; and

    • (b) the portion of the property, if any, determined by reference to capital cost, that is in excess of the capital cost of the property to the person from whom it was acquired, shall not be included in that class.

  • (22) Where a taxpayer has acquired a property that is described in Class 43.2 in Schedule II in circumstances in which clauses (b)(iii)(A) and (B) or (e)(iii)(A) and (B) of Class 43.1 in Schedule II apply and the property was included in Class 43.2 in Schedule II of the person from whom the taxpayer acquired the property,

    • (a) the portion of the property, determined by reference to capital cost, that is equal to or less than the capital cost of the property to the person from whom the property was acquired is included in Class 43.2 in Schedule II; and

    • (b) the portion of the property, if any, determined by reference to capital cost, that is in excess of the capital cost of the property to the person from whom it was acquired shall not be included in Class 43.1 or 43.2 in Schedule II.

Rules for Additions to and Alterations of Certain Buildings

  • (23) For the purposes of applying paragraphs 1100(1)(a.1) and (a.2) and subsection 1101(5b.1), the capital cost of an addition to or an alteration of a taxpayer’s building is deemed to be the capital cost to the taxpayer of a separate building if the building to which the addition or alteration was made is not included in a separate class under subsection 1101(5b.1).

  • (24) If an addition or an alteration is deemed to be a separate building under subsection (23), the references in paragraphs 1100(1) (a.1) and (a.2) to “the floor space of the building” are to be read as references to “the total floor space of the separate building and the building to which the addition or alteration was made”.

Acquisition Costs of Certain Buildings

  • (25) For the purposes of this Part and Schedule II, if an eligible non-residential building of a taxpayer was under construction on March 19, 2007, the portion, if any, of the capital cost of the building that was incurred by the taxpayer before March 19, 2007 is deemed to have been incurred by the taxpayer on March 19, 2007 unless the taxpayer elects (by letter attached to the taxpayer’s return of income filed with the Minister in accordance with section 150 of the Act for the taxation year in which the building was acquired) that this subsection not apply to that cost.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/78-377, s. 8;
  • SOR/78-502, s. 1;
  • SOR/78-949, s. 1;
  • SOR/79-670, s. 2;
  • SOR/83-340, s. 2;
  • SOR/84-948, s. 7;
  • SOR/86-1092, s. 5(F);
  • SOR/88-392, s. 3;
  • SOR/90-22, s. 3;
  • SOR/94-140, s. 4;
  • SOR/94-686, ss. 10(F), 49(F), 58(F), 66(F), 78(F), 79(F), 81(F);
  • SOR/97-377, s. 2;
  • SOR/99-179, s. 2;
  • SOR/2000-327, s. 1;
  • SOR/2006-117, s. 3;
  • SOR/2009-115, ss. 3, 13;
  • SOR/2009-126, s. 3;
  • SOR/2011-9, s. 3;
  • SOR/2011-195, s. 5(F);
  • 2013, c. 33, s. 35, c. 40, 102.

DIVISION IVInclusions In and Transfers Between Classes

Elections to Include Properties in Class 1

  •  (1) In respect of properties otherwise included in any of Classes 2 to 10, 11 and 12 in Schedule II, a taxpayer may elect to include in Class 1 in Schedule II all such properties acquired for the purpose of gaining or producing income from the same business.

Elections to Include Properties in Class 2, 4 or 17

  • (2) Where the chief depreciable properties of a taxpayer are included in Class 2, 4 or 17 in Schedule II, the taxpayer may elect to include in Class 2, 4 or 17 in Schedule II, as the case may be, a property that would otherwise be included in another class in Schedule II and that was acquired by him before May 26, 1976 for the purpose of gaining or producing income from the same business as that for which those properties otherwise included in the said Class 2, 4 or 17 were acquired.

Elections to Include Properties in Class 8

  • (2a) In respect of properties otherwise included in Class 19 or 21 in Schedule II, a taxpayer may, by letter attached to the return of his income for a taxation year filed with the Minister in accordance with section 150 of the Act, elect to include in Class 8 in Schedule II all properties of the said Class 19 or all properties of the said Class 21, as the case may be, owned by him at the commencement of the year.

Elections to Include Properties in Class 37

  • (2b) In respect of properties that would have been included in Class 37 in Schedule II had they been acquired after the date on which Class 37 became effective, a taxpayer may, by letter attached to the return of his income for a taxation year filed with the Minister in accordance with section 150 of the Act, elect to include in Class 37 all such properties acquired by the taxpayer before that date.

Elections to Make Certain Transfers

  • (2c) Where a taxpayer has acquired, after May 25, 1976, all or any part of a property of a class in Schedule II (in this subsection referred to as “present class”) and the property or part thereof, if it had been acquired before May 26, 1976, would have been property of a different class in Schedule II (in this subsection referred to as the “former class”) and

    • (a) he was obligated to acquire the property under the terms of an agreement in writing entered into before May 26, 1976,

    • (b) he commenced the construction, manufacture or production of the property before May 26, 1976 or the construction, manufacture or production of the property was commenced under an agreement in writing entered into by him before May 26, 1976, or

    • (c) he acquired the property on or before December 31, 1976 or he was obligated to acquire the property under the terms of an agreement in writing entered into on or before December 31, 1976, if

      • (i) arrangements, evidenced by writing, respecting the acquisition, construction, manufacture or production of the property had been substantially advanced before May 26, 1976, and

      • (ii) he had, before May 26, 1976, demonstrated a bona fide intention to acquire the property,

    the taxpayer may, by letter attached to the return of his income filed with the Minister in accordance with section 150 of the Act, for the taxation year in which the property was acquired or for the immediately following taxation year, elect to transfer in the year of acquisition

    • (d) the property or the part thereof, acquired after May 25, 1976, from the present class to the former class; or

    • (e) the part of the property acquired before May 26, 1976, from the former class to the present class.

  • (2d) Where a taxpayer has

    • (a) disposed of a property (in this subsection referred to as the “former property”) of a class in Schedule II (in this subsection referred to as the “former class”), and

    • (b) before the end of the taxation year in which the former property was disposed of, acquired property (in this subsection referred to as the “new property”) of a class in Schedule II (in this subsection referred to as the “present class”) and the present class is neither

      • (i) the former class, nor

      • (ii) a separate class described in section 1101, other than subsection 1101(5d),

    such that

    • (c) if the former property had been acquired at the time that the new property was acquired and from the person from whom the new property was acquired, the former property would have been included in the present class, and

    • (d) if the new property had been acquired at the time that the former property was acquired and from the person from whom the former property was acquired, the new property would have been included in the former class,

    the taxpayer may, by letter attached to the return of income of the taxpayer filed with the Minister in accordance with section 150 of the Act in respect of the taxation year in which the former property was disposed of, elect to transfer the former property from the former class to the present class in the year of its disposition and, for greater certainty, the transfer shall be considered to have been made before the disposition of the property.

Transfers from Class 40 to Class 10

  • (2e) For the purposes of this Part and Schedule II, where property of a taxpayer would otherwise be included in Class 40 in Schedule II, all such properties owned by the taxpayer shall be transferred from Class 40 to Class 10 immediately after the commencement of the first taxation year of the taxpayer commencing after 1989.

Elections to Include Properties in Class 1, 3 or 6

  • (2f) In respect of properties otherwise included in Class 20 in Schedule II, a taxpayer may, by letter attached to the return of income of the taxpayer for a taxation year filed with the Minister in accordance with section 150 of the Act, elect to include in Class 1, 3 or 6 in Schedule II, as specified in the letter, all properties of Class 20 in Schedule II owned by the taxpayer at the commencement of the year.

Transfers to Class 8, Class 10 or Class 43
  • [SOR/2005-371, s. 3]

  • (2g) For the purposes of this Part and Schedule II, where one or more properties of a taxpayer are included in a separate class pursuant to an election filed by the taxpayer in accordance with subsection 1101(5q), all the properties in that class immediately after the beginning of the taxpayer’s fifth taxation year beginning after the end of the first taxation year in which a property of the class became available for use by the taxpayer for the purposes of subsection 13(26) of the Act shall be transferred immediately after the beginning of that fifth taxation year from the separate class to the class in which the property would, but for the election, have been included.

Elections Not to Include Properties in Class 44

  • (2h) A taxpayer may, by letter attached to the taxpayer’s return of income filed with the Minister in accordance with section 150 of the Act for the taxation year in which a property was acquired, elect not to include the property in Class 44 in Schedule II.

Election to Include Properties in Class 35

  • (2i) In respect of any property otherwise included in Class 7 in Schedule II because of paragraph (h) of that Class and to which paragraph 1100(1)(z.1a) and subsection 1101(5d), or paragraph 1100(1)(z.1c) and subsection 1101(5d.2), would apply if Class 35 of that Schedule applied to the property, the taxpayer may (by letter attached to the taxpayer’s return of income filed with the Minister in accordance with section 150 of the Act for the taxation year in which the property was acquired) elect to include the property in Class 35 rather than in Class 7.

Election Rules

  • (3) To be effective in respect of a taxation year, an election under this section must be made not later than the last day on which the taxpayer may file a return of his income for the taxation year in accordance with section 150 of the Act.

  • (4) An election under paragraph 1102(8)(d) or (9)(d) or this section shall be effective from the first day of the taxation year in respect of which the election is made and shall continue to be effective for all subsequent taxation years.

  • (5) An election under subsection (1) or (2) shall be made by sending a letter to that effect by registered mail to the Tax Centre at which the taxpayer customarily files the returns required by section 150 of the Act.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/78-377, s. 9;
  • SOR/82-265, s. 3;
  • SOR/83-340, s. 3;
  • SOR/90-22, s. 4;
  • SOR/91-196, s. 3;
  • SOR/91-673, s. 3;
  • SOR/94-170, s. 3;
  • SOR/97-377, s. 3;
  • SOR/2005-371, s. 3;
  • SOR/2007-116, s. 2.

DIVISION VInterpretation

Definitions

  •  (1) Where the taxpayer is an individual and his income for the taxation year includes income from a business the fiscal period of which does not coincide with the calendar year, in respect of the depreciable properties acquired for the purpose of gaining or producing income from the business, a reference in this Part to

    end of the taxation year

    end of the taxation year shall be deemed to be a reference to the end of the fiscal period of the business; (la fin de l’année d’imposition)

    taxation year

    taxation year shall be deemed to be a reference to the fiscal period of the business. (l’année d’imposition)

  • (2) In this Part and in Schedule II,

    bitumen development phase

    bitumen development phase of a taxpayer’s oil sands project means a development phase that expands the oil sands project’s capacity to extract and initially process tar sands to produce bitumen or a similar product; (phase de mise en valeur du bitume)

    certified feature film

    certified feature film means a motion picture film certified by the Minister of Communications to be a film of not less than 75 minutes running time in respect of which all photography or art work specifically required for the production thereof and all film editing therefor were commenced after November 18, 1974, and either the film was completed before May 26, 1976, or the photography or art work was commenced before May 26, 1976, and certified by him to be

    • (a) a film the production of which is contemplated in a coproduction agreement entered into between Canada and another country, or

    • (b) a film in respect of which

      • (i) the person who performed the duties of producer was a Canadian,

      • (ii) no fewer than 2/3 in number of all the persons each of whom

        • (A) was a person who performed the duties of director, screenwriter, music composer, art director, picture editor or director of photography, or

        • (B) was the individual in respect of whose services as an actor or actress in respect of the film the highest remuneration or the second highest remuneration was paid or payable,

        were Canadians,

      • (iii) not less than 75 per cent of the aggregate of the remuneration paid or payable to persons for services provided in respect of the film (other than remuneration paid or payable to or in respect of the persons referred to in subparagraphs (i) and (ii) or remuneration paid or payable for processing and final preparation of the film) was paid or payable to Canadians,

      • (iv) not less than 75 per cent of the aggregate of costs incurred for processing and final preparation of the film including laboratory work, sound recording, sound editing and picture editing (other than remuneration paid or payable to or in respect of persons referred to in subparagraphs (i), (ii) and (iii)), was incurred in respect of services rendered in Canada, and

      • (v) the copyright protecting its use in Canada is beneficially owned

        • (A) by a person who is either a Canadian or a corporation incorporated under the laws of Canada or a province, or

        • (B) jointly or otherwise by two or more persons described in clause (A),

    other than a film

    • (c) acquired after the day that is the earlier of

      • (i) the day of its first commercial use, and

      • (ii) 12 months after the day the principal photography thereof is completed, or

    • (d) in respect of which certification under this definition has been revoked by the Minister of Communications as provided in paragraph (10)(b); (long métrage portant visa)

    certified production

    certified production, in respect of a particular taxation year, means a motion picture film or video tape certified by the Minister of Communications to be a film or tape in respect of which all photography, taping or art work required specifically for the production thereof and all film or tape editing therefor were commenced after May 25, 1976, certified by him to be a film or tape in respect of which the principal photography or taping thereof was commenced before the end of the particular taxation year or was completed no later than 60 days after the end of that year and certified by him to be

    • (a) a film or tape the production of which is contemplated in a coproduction agreement entered into between Canada and another country, or

    • (b) a film or tape in respect of which

      • (i) the individual who performed the duties of producer was a Canadian,

      • (ii) the Minister of Communications has allotted not less than an aggregate of six units of production, not less than two of which were allotted by virtue of clause (A) or (B) and not less than one of which was allotted by virtue of clause (C) or (D), for individuals who provided services in respect of the film or tape, in the following manner:

        • (A) for the director, two units of production,

        • (B) for the screenwriter, two units of production,

        • (C) for the actor or actress in respect of whose services for the film or tape the highest remuneration was paid or payable (unless in the opinion of the Minister of Communications the individual did not perform a major role in the film or tape), one unit of production,

        • (D) for the actor or actress in respect of whose services for the film or tape the second highest remuneration was paid or payable (unless in the opinion of the Minister of Communications the individual did not perform a major role in the film or tape), one unit of production,

        • (E) for the art director, one unit of production,

        • (F) for the director of photography, one unit of production,

        • (G) for the music composer, one unit of production, and

        • (H) for the picture editor, one unit of production,

        shall be allotted, provided the individual in respect of such allotment was a Canadian,

      • (iii) not less than 75 per cent of the aggregate of all costs (other than costs determined by reference to the amount of income from the film or tape) paid or payable to persons for services provided in respect of producing the film or tape (other than remuneration paid or payable to, or in respect of, individuals referred to in subparagraph (i) or (ii), costs referred to in subparagraph (iv) incurred for processing and final preparation of the film or tape, and amounts paid or payable in respect of insurance, financing, brokerage, legal and accounting fees and similar amounts) was paid or payable to, or in respect of services provided by, Canadians, and

      • (iv) not less than 75 per cent of the aggregate of all costs (other than costs determined by reference to the amount of income from the film or tape) incurred for processing and final preparation of the film or tape, including laboratory work, sound re-recording, sound editing and picture editing (other than remuneration paid or payable to, or in respect of, individuals referred to in subparagraph (i) or (ii)) was incurred in respect of services provided in Canada,

    other than a film or tape

    • (c) acquired after the day that is the earlier of

      • (i) the day of its first commercial use, and

      • (ii) 12 months after the day the principal photography or taping thereof is completed,

    • (d) acquired by a taxpayer who has not paid in cash, as of the end of the particular taxation year, to the person from whom he acquired the film or tape, at least 5 per cent of the capital cost to the taxpayer of the film or tape as of the end of the year,

    • (e) acquired by a taxpayer who has issued in payment or part payment thereof, a bond, debenture, bill, note, mortgage or similar obligation in respect of which an amount is not due until a time that is more than four years after the end of the taxation year in which the taxpayer acquired the film or tape,

    • (f) acquired from a non-resident, or

    • (g) in respect of which certification under this definition has been revoked by the Minister of Communications as provided in paragraph (10)(b),

    and, for the purposes of the application of this definition,

    • (h) in respect of a film or tape acquired in 1987, other than a film or tape in respect of which paragraph (i) applies, the reference in this definition to “commenced before the end of the particular taxation year or was completed no later than 60 days after the end of that year” shall be read as a reference to “commenced before the end of 1987 or was completed before July, 1988”; and

    • (i) in respect of a film or tape acquired in 1987 or 1988 that is included in paragraph (n) of Class 12 in Schedule II and that is part of a series of films or tapes that includes another property included in that paragraph, the reference in this definition to “commenced before the end of the particular taxation year or was completed no later than 60 days after the end of that year” shall be read as a reference to “completed before 1989”; (production portant visa)

    certified short production

    certified short production[Repealed, SOR/86-254, s. 2]

    completion

    completion of a specified development phase of a taxpayer’s oil sands project means the first attainment of a level of average output, attributable to the specified development phase and measured over a sixty day period, equal to at least 60% of the planned level of average daily output (as determined in paragraph (b) of the definition specified development phase) in respect of that phase; (achèvement)

    computer software

    computer software includes systems software and a right or licence to use computer software; (logiciel)

    data network infrastructure equipment

    data network infrastructure equipment means network infrastructure equipment that controls, transfers, modulates or directs data, and that operates in support of telecommunications applications such as e-mail, instant messaging, audio- and video-over-Internet Protocol or Web browsing, Web searching and Web hosting, including data switches, multiplexers, routers, remote access servers, hubs, domain name servers, and modems, but does not include

    • (a) network equipment (other than radio network equipment) that operates in support of telecommunications applications, if the bandwidth made available by that equipment to a single end-user of the network is 64 kilobits per second or less in either direction,

    • (b) radio network equipment that operates in support of wireless telecommunications applications unless the equipment supports digital transmission on a radio channel,

    • (c) network equipment that operates in support of broadcast telecommunications applications and that is unidirectional,

    • (d) network equipment that is end-user equipment, including telephone sets, personal digital assistants and facsimile transmission devices,

    • (e) equipment that is described in paragraph (f.2) or (v) of Class 10, or in any of Classes 45, 50 and 52, in Schedule II,

    • (f) wires or cables, or similar property, and

    • (g) structures; (matériel d’infrastructure pour réseaux de données)

    designated asset

    designated asset in respect of a development phase of a taxpayer’s oil sands project, means a property that is a building, a structure, machinery or equipment and is, or is an integral and substantial part of,

    • (a) in the case of a bitumen development phase,

      • (i) a crusher,

      • (ii) a froth treatment plant,

      • (iii) a primary separation unit,

      • (iv) a steam generation plant,

      • (v) a cogeneration plant, or

      • (vi) a water treatment plant, or

    • (b) in the case of an upgrading development phase,

      • (i) a gasifier unit,

      • (ii) a vacuum distillation unit,

      • (iii) a hydrocracker unit,

      • (iv) a hydrotreater unit,

      • (v) a hydroprocessor unit, or

      • (vi) a coker; (bien désigné)

    designated overburden removal cost

    designated overburden removal cost of a taxpayer means any cost incurred by him in respect of clearing or removing overburden from a mine in Canada owned or operated by him where the cost

    • (a) was incurred after November 16, 1978 and before 1988,

    • (b) was incurred after the mine came into production in reasonable commercial quantities,

    • (c) as of the end of the taxation year in which the cost was incurred, has not been deducted by the taxpayer in computing his income, and

    • (d) is not deductible, in whole or in part, by the taxpayer in computing his income for a taxation year subsequent to the taxation year in which the cost was incurred, other than by virtue of paragraph 20(1)(a) of the Act. (coût désigné d’enlèvement des terrains de couverture)

    designated underground storage cost

    designated underground storage cost of a taxpayer means any cost incurred by him after December 11, 1979 in respect of developing a well, mine or other similar underground property for the storage in Canada of petroleum, natural gas or other related hydrocarbons; (coût désigné de stockage souterrain)

    development phase

    development phase of a taxpayer’s oil sands project means the acquisition, construction, fabrication or installation of a group of assets, by or on behalf of the taxpayer, that may reasonably be considered to constitute a discrete expansion in the capacity of the oil sands project when complete (including, for greater certainty, the initiation of a new oil sands project); (phase de mise en valeur)

    eligible liquefaction building

    eligible liquefaction building of a taxpayer, in respect of an eligible liquefaction facility of the taxpayer, means property (other than property that has been used or acquired for use for any purpose before it was acquired by the taxpayer or a residential building ) acquired by the taxpayer after February 19, 2015 and before 2025 that is included in Class 1 in Schedule II because of paragraph (q) of that Class and that is used as part of the eligible liquefaction facility; (bâtiment de liquéfaction admissible)

    eligible liquefaction equipment

    eligible liquefaction equipment in respect of an eligible liquefaction facility of a taxpayer, means property of the taxpayer that is used in connection with the liquefaction of natural gas and that

    • (a) is acquired by the taxpayer after February 19, 2015 and before 2025,

    • (b) is included in Class 47 in Schedule II because of paragraph (b) of that Class,

    • (c) has not been used or acquired for use for any purpose before it was acquired by the taxpayer,

    • (d) is not excluded equipment, and

    • (e) is used as part of the eligible liquefaction facility; (matériel de liquéfaction admissible)

    eligible liquefaction facility

    eligible liquefaction facility of a taxpayer means a self-contained system located in Canada — including buildings, structures and equipment — that is used or intended to be used by the taxpayer for the purpose of liquefying natural gas; (installation de liquéfaction admissible)

    eligible mine development property

    eligible mine development property means a property acquired by a taxpayer after March 20, 2013 and before 2018 for the purpose of gaining or producing income

    • (a) from a new mine or an expansion of a mine, if the property was acquired under a written agreement entered into by the taxpayer before March 21, 2013,

    • (b) from a new mine, if

      • (i) the construction of the new mine was started by, or on behalf of, the taxpayer before March 21, 2013 (and for this purpose construction does not include obtaining permits or regulatory approvals, conducting environmental assessments, community consultations or impact benefit studies, and similar activities), or

      • (ii) the engineering and design work for the construction of the new mine, as evidenced in writing, was started by, or on behalf of, the taxpayer before March 21, 2013 (and for this purpose engineering and design work does not include obtaining permits or regulatory approvals, conducting environmental assessments, community consultations or impact benefit studies, and similar activities), or

    • (c) from an expansion of a mine, if

      • (i) the construction for the expansion of the mine was started by, or on behalf of, the taxpayer before March 21, 2013 (and for this purpose construction does not include obtaining permits or regulatory approvals, conducting environmental assessments, community consultations or impact benefit studies, and similar activities), or

      • (ii) the engineering and design work for the construction of the expansion of the mine, as evidenced in writing, was started by, or on behalf of, the taxpayer before March 21, 2013 (and for this purpose engineering and design work does not include obtaining permits or regulatory approvals, conducting environmental assessments, community consultations or impact benefit studies, and similar activities); (bien admissible à l’aménagement d’une mine)

    eligible non-residential building

    eligible non-residential building means a taxpayer’s building (other than a building that was used, or acquired for use, by any person or partnership before March 19, 2007) that is located in Canada, that is included in Class 1 in Schedule II and that is acquired by the taxpayer on or after March 19, 2007 to be used by the taxpayer, or a lessee of the taxpayer, for a non-residential use; (bâtiment non résidentiel admissible)

    excluded equipment

    excluded equipment means

    • (a) pipelines (other than pipelines used to move natural gas, or its components that are extracted, within an eligible liquefaction facility during the liquefaction process or used to move liquefied natural gas),

    • (b) equipment used exclusively to regasify liquefied natural gas, and

    • (c) electrical generation equipment; (matériel non admissible)

    gas or oil well equipment

    gas or oil well equipment includes

    • (a) equipment, structures and pipelines, other than a well casing, acquired to be used in a gas or oil field in the production therefrom of natural gas or crude oil, and

    • (b) a pipeline acquired to be used solely for transmitting gas to a natural gas processing plant,

    but does not include

    • (c) equipment or structures acquired for the refining of oil or the processing of natural gas including the separation therefrom of liquid hydrocarbons, sulphur or other joint products or by-products, or

    • (d) a pipeline for removal or for collection for immediate removal of natural gas or crude oil from a gas or oil field except a pipeline referred to in paragraph (b); (matériel de puits de gaz ou de pétrole)

    general-purpose electronic data processing equipment

    general-purpose electronic data processing equipment means electronic equipment that, in its operation, requires an internally stored computer program that

    • (a) is executed by the equipment,

    • (b) can be altered by the user of the equipment,

    • (c) instructs the equipment to read and select, alter or store data from an external medium such as a card, disk or tape, and

    • (d) depends upon the characteristics of the data being processed to determine the sequence of its execution; (matériel électronique universel de traitement de l’information)

    oil sands project

    oil sands project of a taxpayer means an undertaking by the taxpayer for the extraction of tar sands from a mineral resource owned by the taxpayer, which undertaking may include the processing of the tar sands to a stage that is not beyond the crude oil stage or its equivalent; (projet de sables bitumineux)

    oil sands property

    oil sands property of a taxpayer means property acquired by the taxpayer for the purpose of earning income from an oil sands project of the taxpayer; (bien de sables bitumineux)

    ore

    ore includes ore from a mineral resource that has been processed to any stage that is prior to the prime metal stage or its equivalent; (minerai)

    preliminary work activity

    preliminary work activity means activity that is preliminary to the acquisition, construction, fabrication or installation by or on behalf of a taxpayer of designated assets in respect of the taxpayer’s oil sands project including, without limiting the generality of the foregoing, the following activities:

    • (a) obtaining permits or regulatory approvals,

    • (b) performing design or engineering work,

    • (c) conducting feasibility studies,

    • (d) conducting environmental assessments,

    • (e) clearing or excavating land,

    • (f) building roads, and

    • (g) entering into contracts; (travaux préliminaires)

    railway system

    railway system includes a railway owned or operated by a common carrier, together with all buildings, rolling stock, equipment and other properties pertaining thereto, but does not include a tramway; (réseau de chemin de fer)

    specified development phase

    specified development phase of a taxpayer’s oil sands project means a bitumen development phase or an upgrading development phase of the oil sands project which can reasonably be expected to result in a planned level of average daily output (where that output is bitumen or a similar product in the case of a bitumen development phase, or synthetic crude oil or a similar product in the case of an upgrading development phase), and in respect of which phase,

    • (a) not including any preliminary work activity, one or more designated assets was, before March 19, 2007,

      • (i) acquired by the taxpayer, or

      • (ii) in the process of being constructed, fabricated or installed, by or on behalf of the taxpayer, and

    • (b) the planned level of average daily output is the lesser of,

      • (i) the level that was the demonstrated intention of the taxpayer as of March 19, 2007 to produce from the specified development phase, and

      • (ii) the maximum level of output associated with the design capacity, as of March 19, 2007, of the designated asset referred to in paragraph (a); (phase de mise en valeur déterminée)

    specified oil sands property

    specified oil sands property of a taxpayer means oil sands property, acquired by the taxpayer before 2012, the taxpayer’s use of which is reasonably required

    • (a) for a specified development phase of an oil sands project of the taxpayer to reach completion; or

    • (b) as part of a bitumen development phase of an oil sands project of the taxpayer,

      • (i) to the extent that the output from the bitumen development phase is required for an upgrading development phase that is a specified development phase of the oil sands project to reach completion, and it is reasonable to conclude that all or substantially all of the output from the bitumen development phase will be so used; and

      • (ii) where it was the demonstrated intention of the taxpayer as of March 19, 2007 to produce, from a mineral resource owned by the taxpayer, the bitumen feedstock required for the upgrading development phase to reach completion; (bien de sables bitumineux déterminé)

    specified temporary access road

    specified temporary access road means

    • (a) a temporary access road to an oil or gas well in Canada, and

    • (b) a temporary access road the cost of which would, if the definition Canadian exploration expense in subsection 66.1(6) of the Act were read without reference to paragraphs (k.1) and (l) of that definition, be a Canadian exploration expense because of paragraph (f) or (g) of that definition; (route d’accès temporaire déterminée)

    systems software

    systems software means a combination of computer programs and associated procedures, related technical documentation and data that

    • (a) performs compilation, assembly, mapping, management or processing of other programs,

    • (b) facilitates the functioning of a computer system by other programs,

    • (c) provides service or utility functions such as media conversion, sorting, merging, system accounting, performance measurement, system diagnostics or programming aids,

    • (d) provides general support functions such as data management, report generation or security control, or

    • (e) provides general capability to meet widespread categories of problem solving or processing requirements where the specific attributes of the work to be performed are introduced mainly in the form of parameters, constants or descriptors rather than in program logic,

    and includes a right or licence to use such a combination of computer programs and associated procedures, related technical documentation and data; (logiciel d’exploitation)

    tar sands ore

    tar sands ore means ore extracted from a deposit of bituminous sands or oil shales; (minerai de sables asphaltiques)

    telegraph system

    telegraph system includes the buildings, structures, general plant and communication and other equipment pertaining thereto; (réseau de télégraphe)

    telephone system

    telephone system includes the buildings, structures, general plant and communication and other equipment pertaining thereto; (réseau de téléphone)

    television commercial message

    television commercial message means a commercial message as defined in the Television Broadcasting Regulations, 1987 made under the Broadcasting Act; (message publicitaire pour la télévision)

    tramway or trolley bus system

    tramway or trolley bus system includes the buildings, structures, rolling stock, general plant and equipment pertaining thereto and where buses other than trolley buses are operated in connection therewith includes the properties pertaining to those bus operations. (réseau de tramway ou d’autobus à trolley)

    upgrading development phase

    upgrading development phase of a taxpayer’s oil sands project means a development phase that expands the oil sands project’s capacity to process bitumen or a similar feedstock (all or substantially all of which is from a mineral resource owned by the taxpayer) to the crude oil stage or its equivalent. (phase de valorisation)

  • (3) Except as otherwise provided in subsection (6), in this Part and in Schedules II and V,

    industrial mineral mine

    industrial mineral mine includes a peat bog or deposit of peat but does not include a mineral resource; (mine de minéral industriel)

    mineral

    mineral includes peat; (minéral)

    mining

    mining includes the harvesting of peat. (exploitation minière)

  • (4) [Repealed, SOR/79-670, s. 3]

Mining

  • (5) For the purposes of paragraphs 1100(1)(w) to (ya.2), subsections 1101(4a) to (4h) and Classes 10, 28 and 41 to 41.2 of Schedule II, a taxpayer’s income from a mine, or any expression referring to a taxpayer’s income from a mine, includes income reasonably attributable to

    • (a) the processing by the taxpayer of

      • (i) ore (other than iron ore or tar sands ore) all or substantially all of which is from a mineral resource owned by the taxpayer to any stage that is not beyond the prime metal stage or its equivalent,

      • (ii) iron ore all or substantially all of which is from a mineral resource owned by the taxpayer to any stage that is not beyond the pellet stage or its equivalent,

      • (iii) tar sands ore all or substantially all of which is from a mineral resource owned by the taxpayer to any stage that is not beyond the crude oil stage or its equivalent, or

      • (iv) material extracted by a well, all or substantially all of which is from a deposit of bituminous sands or oil shales owned by the taxpayer, to any stage that is not beyond the crude oil stage or its equivalent;

    • (b) the production by the taxpayer of material from a deposit of bituminous sands or oil shales; and

    • (c) the transportation by the taxpayer of

      • (i) output, other than iron ore or tar sands ore, from a mineral resource owned by the taxpayer that has been processed by him to any stage that is not beyond the prime metal stage or its equivalent,

      • (ii) iron ore from a mineral resource owned by the taxpayer that has been processed by him to any stage that is not beyond the pellet stage or its equivalent, or

      • (iii) tar sands ore from a mineral resource owned by the taxpayer that has been processed by him to any stage that is not beyond the crude oil stage or its equivalent,

      to the extent that such transportation is effected through the use of property of the taxpayer that is included in Class 10 in Schedule II because of paragraph (m) thereof or that would be so included if that paragraph were read without reference to subparagraph (v) thereof and if Class 41 in Schedule II were read without the reference therein to that paragraph.

  • (5.1) For the purposes of Classes 41 to 41.2 of Schedule II, a taxpayer’s gross revenue from a mine includes

    • (a) revenue reasonably attributable to the processing by the taxpayer of

      • (i) ore (other than iron ore or tar sands ore) from a mineral resource owned by the taxpayer to any stage that is not beyond the prime metal stage or its equivalent,

      • (ii) iron ore from a mineral resource owned by the taxpayer to any stage that is not beyond the pellet stage or its equivalent,

      • (iii) tar sands ore from a mineral resource owned by the taxpayer to any stage that is not beyond the crude oil stage or its equivalent, and

      • (iv) material extracted by a well from a mineral resource owned by the taxpayer that is a deposit of bituminous sands or oil shales to any stage that is not beyond the crude oil stage or its equivalent;

    • (b) the amount, if any, by which any revenue reasonably attributable to the processing by the taxpayer of

      • (i) ore (other than iron ore or tar sands ore) from a mineral resource not owned by the taxpayer, to any stage that is not beyond the prime metal stage or its equivalent,

      • (ii) iron ore from a mineral resource not owned by the taxpayer to any stage that is not beyond the pellet stage or its equivalent,

      • (iii) tar sands ore from a mineral resource not owned by the taxpayer to any stage that is not beyond the crude oil stage or its equivalent, and

      • (iv) material extracted by a well from a mineral resource not owned by the taxpayer that is a deposit of bituminous sands or oil shales to any stage that is not beyond the crude oil stage or its equivalent

      exceeds the cost to the taxpayer of the ore or material processed; and

    • (c) revenue reasonably attributable to the production by the taxpayer of material from a deposit of bituminous sands or oil shales.

  • (5.2) For the purpose of subsection (5.1), “gross revenue from a mine” does not include revenue reasonably attributable to the addition of diluent, for the purpose of transportation, to material extracted from a deposit of bituminous sands or oil shales.

  • (6) For the purposes of Class 10 in Schedule II,

    • (a) income from a mine includes income reasonably attributable to the processing of

      • (i) ore, other than iron ore or tar sands ore, from a mineral resource not owned by the taxpayer to any stage that is not beyond the prime metal stage or its equivalent,

      • (ii) iron ore from a mineral resource not owned by the taxpayer to any stage that is not beyond the pellet stage or its equivalent,

      • (iii) tar sands ore from a mineral resource not owned by the taxpayer to any stage that is not beyond the crude oil stage or its equivalent, or

      • (iv) material extracted by a well from a mineral resource not owned by the taxpayer that is a deposit of bituminous sands or oil shales to any stage that is not beyond the crude oil stage or its equivalent; and

    • (b) mine includes a well for the extraction of material from a deposit of bituminous sands or oil shales or from a deposit of calcium chloride, halite or sylvite.

  • (6.1) [Repealed, SOR/99-179, s. 3]

  • (7) For the purposes of paragraphs 1100(1)(w) to (ya.2), subsections 1101(4a) to (4h) and 1102(8) and (9), section 1107 and Classes 12, 28 and 41 to 41.2 of Schedule II,

    • (a) mine includes

      • (i) a well for the extraction of material from a deposit of bituminous sands or oil shales or from a deposit of calcium chloride, halite or sylvite, and

      • (ii) a pit for the extraction of kaolin or tar sands ore,

      but does not include

      • (iii) an oil or gas well, or

      • (iv) a sand pit, gravel pit, clay pit, shale pit, peat bog, deposit of peat or a stone quarry (other than a kaolin pit or a deposit of bituminous sands or oil shales);

    • (b) all wells of a taxpayer for the extraction of material from one or more deposits of calcium chloride, halite or sylvite, the material produced from which is sent to the same plant for processing, are deemed to be one mine of the taxpayer; and

    • (c) all wells of a taxpayer for the extraction of material from a deposit of bituminous sands or oil shales that the Minister, in consultation with the Minister of Natural Resources, determines constitute one project, are deemed to be one mine of the taxpayer.

  • (8) For the purposes of subsection (7), stone quarry includes a mine producing dimension stone or crushed rock for use as aggregates or for other construction purposes.

  • (8.1) For greater certainty, for the purposes of paragraphs (c) and (e) of Class 28 and paragraph (a) of Classes 41 to 41.2 in Schedule II, production means production in reasonable commercial quantities.

Manufacturing or Processing

  • (9) For the purposes of paragraph 1100(1)(a.1), subsection 1100(26) and Class 29 in Schedule II, “manufacturing or processing” does not include

    • (a) farming or fishing;

    • (b) logging;

    • (c) construction;

    • (d) operating an oil or gas well or extracting petroleum or natural gas from a natural accumulation thereof;

    • (e) extracting minerals from a mineral resource;

    • (f) processing of

      • (i) ore, other than iron ore or tar sands ore, from a mineral resource to any stage that is not beyond the prime metal stage or its equivalent,

      • (ii) iron ore from a mineral resource to any stage that is not beyond the pellet stage or its equivalent, or

      • (iii) tar sands ore from a mineral resource to any stage that is not beyond the crude oil stage or its equivalent;

    • (g) producing industrial minerals;

    • (h) producing or processing electrical energy or steam, for sale;

    • (i) processing natural gas as part of the business of selling or distributing gas in the course of operating a public utility;

    • (j) processing heavy crude oil recovered from a natural reservoir in Canada to a stage that is not beyond the crude oil stage or its equivalent; or

    • (k) Canadian field processing.

Certified Films and Video Tapes

  • (10) For the purposes of subsection 1100(21) and the definitions certified feature film and certified production and in subsection (2),

    • (a) Canadian means an individual who was, at all relevant times,

      • (i) a Canadian citizen as defined in the Citizenship Act, or

      • (ii) a permanent resident within the meaning of the Immigration Act, 1976;

    • (b) a motion picture film or video tape that has been certified by

      • (i) the Secretary of State, or

      • (ii) the Minister of Communications

      as a certified feature film or certified production, as the case may be, may have its certification revoked by the Minister of Communications where an incorrect statement was made in the furnishing of information for the purpose of obtaining that certification and a certification that has been so revoked is void from the time of its issue;

    • (c) “remuneration” does not include an amount determined by reference to the amount of income from a motion picture film or video tape;

    • (c.1) revenue guarantee means a contract or other arrangement under the terms of which a taxpayer has a right to receive a minimum rental revenue or other fixed revenue in respect of a right to the use, in any manner whatever, of a certified feature film or certified production;

    • (c.2) a screenwriter shall be deemed to be an individual who is a Canadian where

      • (i) each individual involved in the preparation of the screenplay is a Canadian, or

      • (ii) the principal screenwriter is an individual who is a Canadian and

        • (A) the screenplay for the motion picture film or video tape is based upon a work authored by a Canadian,

        • (B) copyright in the work subsists in Canada, and

        • (C) the work is published in Canada;

    • (d) unit of production means a measure used by the Minister of Communications in determining the weight to be given for each individual Canadian referred to in subparagraph (b)(ii) of the definition certified production in subsection (2) who provides services in respect of a motion picture film or video tape; and

    • (e) where each individual who performed a service in respect of a motion picture film or video tape as the

      • (i) director,

      • (ii) screenwriter,

      • (iii) actor or actress in respect of whose services for the film or tape the highest remuneration was paid or payable,

      • (iv) actor or actress in respect of whose services for the film or tape the second highest remuneration was paid or payable,

      • (v) art director,

      • (vi) director of photoghraphy,

      • (vii) music composer, or

      • (viii) picture editor

      was a Canadian, the Minister of Communications shall be deemed to have allotted six units of production in respect of the film or tape for the purposes of the definition certified production in subsection (2).

Certified Class 34 Properties

  • (11) For the purposes of paragraph (h) of Class 34 in Schedule II, a certificate issued under

    • (a) subparagraph (d)(i) of that class may be revoked by the Minister of Industry, Trade and Commerce, or

    • (b) subparagraph (d)(ii) or paragraph (g) of that class, as the case may be, may be revoked by the Minister of Energy, Mines and Resources

    where

    • (c) an incorrect statement was made in the furnishing of information for the purpose of obtaining the certificate, or

    • (d) the taxpayer does not conform to the plan described in subparagraph (d)(i) or (d)(ii) of that class, as the case may be,

    and a certificate that has been so revoked shall be void from the time of its issue.

Amusement Parks

  • (12) For the purposes of Class 37 in Schedule II, amusement park means a park open to the public where amusements, rides and audio-visual attractions are permanently situated.

Classes 43.1 and 43.2 — Energy Conservation Property
  • [SOR/2006-117, s. 4]

  • (13) The definitions in this subsection apply for the purposes of this subsection, subsections (14) to (17) and Classes 43.1 and 43.2 in Schedule II.

    basic oxygen furnace gas

    basic oxygen furnace gas means the gas that is produced intermittently in a basic oxygen furnace of a steel mill by the chemical reaction of carbon in molten steel and pure oxygen. (gaz de convertisseur basique à oxygène)

    biogas

    biogas means the gas produced by the anaerobic digestion of organic waste that is food and animal waste, manure, plant residue, pulp and paper by-product, separated organics, wood waste or sludge from an eligible sewage treatment facility. (biogaz)

    bio-oil

    bio-oil means liquid fuel that is created from wood waste or plant residues using a thermo-chemical conversion process that takes place in the absence of oxygen. (bio-huile)

    blast furnace gas

    blast furnace gas means the gas produced in a blast furnace of a steel mill, by the chemical reaction of carbon (in the form of coke, coal or natural gas), the oxygen in air and iron ore. (gaz de haut fourneau)

    digester gas

    digester gas means a mixture of gases that are produced from the decomposition of organic waste in a digester and that are extracted from an eligible sewage treatment facility for that organic waste. (gaz de digesteur)

    distribution equipment

    distribution equipment means equipment (other than transmission equipment) used to distribute electrical energy generated by electrical generating equipment. (matériel de distribution)

    district energy equipment

    district energy equipment means property that is part of a district energy system and that consists of pipes or pumps used to collect and distribute an energy transfer medium, meters, control equipment, chillers and heat exchangers that are attached to the main distribution line of a district energy system, but does not include

    • (a) property used to distribute water that is for consumption, disposal or treatment; or

    • (b) property that is part of the internal heating or cooling system of a building. (équipement de réseau énergétique de quartier)

    district energy system

    district energy system means a system that is used primarily to provide heating or cooling by continuously circulating, from a central generation unit to one or more buildings through a system of interconnected pipes, an energy transfer medium that is heated or cooled using thermal energy. (réseau énergétique de quartier)

    eligible landfill site

    eligible landfill site means a landfill site that is situated in Canada, or a former landfill site that is situated in Canada, and, if a permit or licence in respect of the site is or was required under any law of Canada or of a province, for which the permit or licence has been issued. (site d’enfouissement admissible)

    eligible sewage treatment facility

    eligible sewage treatment facility means a sewage treatment facility that is situated in Canada and for which a permit or licence is issued under any law of Canada or of a province. (installation admissible de traitement des eaux usées)

    eligible waste fuel

    eligible waste fuel means biogas, bio-oil, digester gas, landfill gas, municipal waste, plant residue, pulp and paper waste and wood waste. (combustible résiduaire admissible)

    eligible waste management facility

    eligible waste management facility means a waste management facility that is situated in Canada and for which a permit or licence is issued under any law of Canada or of a province. (installation admissible de gestion des déchets)

    enhanced combined cycle system

    enhanced combined cycle system means an electrical generating system in which thermal waste from one or more natural gas compressor systems is recovered and used to contribute at least 20 per cent of the energy input of a combined cycle process in order to enhance the generation of electricity, but does not include the natural gas compressor systems. (système à cycles combinés amélioré)

    food and animal waste

    food and animal waste means organic waste that is disposed of in accordance with the laws of Canada or a province and that is

    • (a) generated during the preparation or processing of food or beverage for human or animal consumption;

    • (b) food or beverage that is no longer fit for human or animal consumption; or

    • (c) animal remains. (déchets alimentaires et animaux)

    food waste

    food waste[Repealed, 2010, c. 25, s. 76]

    fossil fuel

    fossil fuel means a fuel that is petroleum, natural gas or related hydrocarbons, basic oxygen furnace gas, blast furnace gas, coal, coal gas, coke, coke oven gas, lignite or peat. (combustible fossile)

    landfill gas

    landfill gas means a mixture of gases that are produced from the decomposition of organic waste and that are extracted from an eligible landfill site. (gaz d’enfouissement)

    municipal waste

    municipal waste means the combustible portion of waste material (other than waste material that is considered to be toxic or hazardous waste pursuant to any law of Canada or of a province) that is generated in Canada and that is accepted at an eligible landfill site or an eligible waste management facility and that, when burned to generate energy, emits only those fluids or other emissions that are in compliance with the law of Canada or of a province. (déchets municipaux)

    plant residue

    plant residue means residue of plants (not including wood waste and waste that no longer has the chemical properties of the plants of which it is a residue) that would otherwise be waste material and that is used

    • (a) in a system that converts biomass into bio-oil or biogas; or

    • (b) as an eligible waste fuel. (résidus végétaux)

    producer gas

    gaz de gazéification

    producer gas means fuel the composition of which, excluding its water content, is all or substantially all non-condensable gases that is generated primarily from eligible waste fuel using a thermo-chemical conversion process and that is not generated using any fuels other than eligible waste fuel or fossil fuel. (gaz de gazéification)

    pulp and paper by-product

    pulp and paper by-product means tall oil soaps and crude tall oil that are produced as by-products of the processing of wood into pulp or paper and the by-product of a pulp or paper plant’s effluent treatment or its de-inking processes. (sous-produit d’usine de pâtes ou papiers)

    pulp and paper waste

    pulp and paper waste means

    • (a) tall oil soaps, crude tall oil and turpentine that are produced as by-products of the processing of wood into pulp or paper; and

    • (b) the by-product of a pulp or paper plant’s effluent treatment, or its de-inking processes, if that by-product has a solid content of at least 40 per cent before combustion. (déchets d’usines de pâtes ou papiers)

    separated organics

    separated organics means organic waste (other than waste that is considered to be toxic or hazardous waste under any law of Canada or a province) that could, but for its use in a system that converts biomass into biogas, be disposed of in an eligible waste management facility or eligible landfill site. (matières organiques séparées)

    solution gas

    solution gas means a fossil fuel that is gas that would otherwise be flared and has been extracted from a solution of gas and produced oil. (gaz dissous)

    spent pulping liquor

    spent pulping liquor means the by-product of a chemical process of transforming wood into pulp, consisting of wood residue and pulping agents. (liqueur résiduaire)

    thermal waste

    thermal waste means waste heat energy extracted from a distinct point of rejection in an industrial process that would otherwise

    • (a) be vented to the atmosphere or transferred to a liquid; and

    • (b) not be used for a useful purpose. (déchets thermiques)

    transmission equipment

    transmission equipment means equipment used to transmit more than 75 per cent of the annual electrical energy generated by electrical generating equipment, but does not include a building. (matériel de transmission)

    wood waste

    wood waste includes scrap wood, sawdust, wood chips, bark, limbs, saw-ends and hog fuel, but does not include spent pulping liquor and any waste that no longer has the physical or chemical properties of wood. (déchets de bois)

  • (14) Where property of a taxpayer is not operating in the manner required by paragraph (c) of Class 43.1, or paragraph (a) of Class 43.2, in Schedule II solely because of a deficiency, failing or shutdown that is beyond the control of the taxpayer of the system of which it is a part and that previously operated in the manner required by that paragraph, as the case may be, that property is deemed, for the purpose of that paragraph, to be operating in the manner required under that paragraph during the period of the deficiency, failing or shutdown, if the taxpayer makes all reasonable efforts to rectify the circumstances within a reasonable time.

  • (15) For the purpose of subsection (14), a taxpayer’s system referred to in that subsection that has at any particular time operated in the manner required by paragraph (c) of Class 43.1, or paragraph (a) of Class 43.2, in Schedule II includes at any time after the particular time a property of another person or partnership if

    • (a) the property would reasonably be considered to be part of the taxpayer’s system were the property owned by the taxpayer;

    • (b) the property utilizes steam obtained from the taxpayer’s system primarily in an industrial process (other than the generation of electrical energy);

    • (c) the operation of the property is necessary for the taxpayer’s system to operate in the manner required by paragraph (c) of Class 43.1, or paragraph (a) of Class 43.2, in Schedule II, as the case may be; and

    • (d) at the time that the taxpayer’s system first became operational, the deficiency, failing or shutdown in the operation of the property could not reasonably have been anticipated by the taxpayer to occur within five years after that time.

  • (16) For the purpose of subsection (14), a district energy system is deemed to satisfy the requirements of paragraph (c) of Class 43.1, or paragraph (a) of Class 43.2, in Schedule II, as the case may be, if the electrical cogeneration equipment that produces the thermal energy used by the system is deemed by subsection (14) to meet the requirements of paragraph (c) of Class 43.1, or paragraph (a) of Class 43.2, in Schedule II, as the case may be.

  • (17) A property that would otherwise be eligible for inclusion in Class 43.1 or Class 43.2 in Schedule II by a taxpayer is deemed not to be eligible for inclusion in either of those classes if

    • (a) the property is included in Class 43.1 because of its subparagraph (c)(i) or is described in any of subparagraphs (d)(viii), (ix), (xi), (xiii), (xiv) and (xvi) of Class 43.1 and paragraph (a) of Class 43.2; and

    • (b) at the time the property becomes available for use by the taxpayer, the taxpayer has not satisfied the requirements of all environmental laws, by-laws and regulations

      • (i) of Canada, a province or a municipality in Canada, or

      • (ii) of a municipal or public body performing a function of government in Canada

      applicable in respect of the property.

Classes 1 and 47 — Liquefaction Property

  • (18) For the purposes of paragraphs 1100(1)(a.3) and (yb), a taxpayer’s income for a taxation year from eligible liquefaction activities in respect of an eligible liquefaction facility of the taxpayer is determined as if

    • (a) the taxpayer carried on a separate business

      • (i) the only income of which is any combination of:

        • (A) in the case of natural gas that is owned by the taxpayer at the time it enters the taxpayer’s eligible liquefaction facility, income from the sale by the taxpayer of the natural gas that has been liquefied, whether sold as liquefied natural gas or regasified natural gas, and

        • (B) in any other case, income reasonably attributable to the liquefaction of natural gas at the taxpayer’s eligible liquefaction facility, and

      • (ii) in respect of which the only permitted deductions in computing the separate business’ income are those deductions that are attributable to income described in subparagraph (i) and, in the case of income described in clause (i)(A), that are reasonably attributable to income derived after the natural gas enters the eligible liquefaction facility; and

    • (b) in the case of income described in clause (a)(i)(A), the taxpayer acquired the natural gas that has been liquefied at a cost equal to the fair market value of the natural gas at the time it entered the eligible liquefaction facility.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/78-137, s. 3;
  • SOR/78-502, s. 2;
  • SOR/78-948, ss. 2, 3;
  • SOR/79-426, s. 3;
  • SOR/79-670, s. 3;
  • SOR/80-418, s. 1;
  • SOR/80-618, s. 2(F);
  • SOR/80-926, s. 1;
  • SOR/80-935, s. 1;
  • SOR/80-942, s. 2;
  • SOR/81-974, s. 1;
  • SOR/81-1026, s. 1;
  • SOR/82-265, s. 4;
  • SOR/83-855, s. 1;
  • SOR/84-265, s. 1;
  • SOR/85-174, s. 2;
  • SOR/86-254, s. 2;
  • SOR/86-1092, s. 6(F);
  • SOR/89-27, s. 3;
  • SOR/90-22, s. 5;
  • SOR/91-79, s. 1;
  • SOR/94-169, s. 2;
  • SOR/94-686, ss. 11(F), 62, 81(F);
  • SOR/95-244, s. 2;
  • SOR/96-200, s. 1;
  • SOR/96-451, s. 1;
  • SOR/97-377, s. 4;
  • SOR/98-97, s. 2;
  • SOR/99-179, s. 3;
  • SOR/2000-327, s. 2;
  • SOR/2001-295, s. 2(E);
  • SOR/2005-371, s. 4;
  • SOR/2005-414, s. 3;
  • SOR/2005-415, s. 1;
  • SOR/2006-117, s. 4;
  • SOR/2006-249, s. 1;
  • SOR/2007-19, s. 2;
  • SOR/2009-115, s. 4;
  • SOR/2009-126, s. 4;
  • 2010, c. 25, s. 76;
  • SOR/2010-93, s. 14;
  • 2011, c. 24, s. 79;
  • SOR/2011-9, s. 4;
  • SOR/2011-195, s. 6(F);
  • 2012, c. 31, s. 61;
  • 2013, c. 40, s. 103;
  • 2014, c. 39, s. 85;
  • SOR/2015-117, s. 3.

DIVISION VIClasses Prescribed

 The classes of property provided in this Part and in Schedule II are hereby prescribed for the purposes of the Act.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/82-265, s. 5;
  • SOR/96-228, s. 1.

DIVISION VIICertificates Issued by the Minister of Canadian Heritage

Interpretation

  •  (1) The following definitions apply in this Division and in paragraph (x) of Class 10 in Schedule II.

    application for a certificate of completion

    demande de certificat d’achèvement

    application for a certificate of completion, in respect of a film or video production, means an application by a prescribed taxable Canadian corporation in respect of the production, filed with the Minister of Canadian Heritage before the day (in this Division referred to as “the production’s application deadline”) that is the later of

    • (a) the day that is 24 months after the end of the corporation’s taxation year in which the production’s principal photography began, or

    • (b) the day that is 18 months after the day referred to in paragraph (a), if the corporation has filed, with the Canada Revenue Agency, and provided to the Minister of Canadian Heritage a copy of, a waiver described in subparagraph 152(4)(a)(ii) of the Act, within the normal reassessment period for the corporation in respect of the first and second taxation years ending after the production’s principal photography began. (demande de certificat d’achèvement)

    Canadian

    Canadien

    Canadian means a person that is

    Canadian government film agency

    agence cinématographique d’État

    Canadian government film agency means a federal or provincial government agency whose mandate is related to the provision of assistance to film productions in Canada. (agence cinématographique d’État)

    certificate of completion

    certificat d’achèvement

    certificate of completion, in respect of a film or video production of a corporation, means a certificate certifying that the production has been completed, issued by the Minister of Canadian Heritage before the day (in this Division referred to as “the production’s certification deadline”) that is six months after the production’s application deadline. (certificat d’achèvement)

    copyright owner

    titulaire du droit d’auteur

    copyright owner, of a film or video production, at any time means

    • (a) the maker, as defined in section 2 of the Copyright Act, who at that time owns copyright, in relation to the production, within the meaning of section 3 of that Act; or

    • (b) a person to whom that copyright has been assigned, under an assignment described in section 13 of the Copyright Act, either wholly or partially, by the maker or by another owner to whom this paragraph applied before the assignment. (titulaire du droit d’auteur)

    excluded production

    production exclue

    excluded production means a film or video production, of a particular corporation that is a prescribed taxable Canadian corporation,

    • (a) in respect of which

      • (i) the particular corporation has not filed an application for a certificate of completion before the production’s application deadline,

      • (ii) a certificate of completion has not been issued before the production’s certification deadline,

      • (iii) if the production is not a treaty co-production, a person (other than the particular corporation or a prescribed person)

        • (A) is a copyright owner of the production for any commercial exploitation purposes at any time during the 25-year period that begins at the earliest time after the production was completed that it is commercially exploitable, or

        • (B) controls the initial licensing of commercial exploitation,

      • (iv) there is not an agreement in writing, for consideration at fair market value, to have the production shown in Canada within the 2-year period that begins at the earliest time after the production was completed that it is commercially exploitable,

        • (A) with a corporation that is a Canadian and is a distributor of film or video productions, or

        • (B) with a corporation that holds a broadcasting license issued by the Canadian Radio-television and Telecommunications Commission for television markets, or

      • (v) distribution is made in Canada within the 2-year period that begins at the earliest time after the production was completed that it is commercially exploitable by a person that is not a Canadian, or

    • (b) that is

      • (i) news, current events or public affairs programming, or a programme that includes weather or market reports,

      • (ii) a talk show,

      • (iii) a production in respect of a game, questionnaire or contest (other than a production directed primarily at minors),

      • (iv) a sports event or activity,

      • (v) a gala presentation or an awards show,

      • (vi) a production that solicits funds,

      • (vii) reality television,

      • (viii) pornography,

      • (ix) advertising,

      • (x) a production produced primarily for industrial, corporate or institutional purposes, or

      • (xi) a production, other than a documentary, all or substantially all of which consists of stock footage. (production exclue)

    producer

    producteur

    producer means a producer of a film or video production, except that it does not include a person unless the person is the individual who

    • (a) controls and is the central decision maker in respect of the production;

    • (b) is directly responsible for the acquisition of the production story or screenplay and the development, creative and financial control and exploitation of the production; and

    • (c) is identified in the production as being the producer of the production. (producteur)

    remuneration

    rémunération

    remuneration means remuneration other than an amount determined by reference to profits or revenues. (rémunération)

    twinning arrangement

    convention de jumelage

    twinning arrangement means the pairing of two distinct film or video productions, one of which is a Canadian film or video production and the other of which is a foreign film or video production. (convention de jumelage)

Prescribed Taxable Canadian Corporation

  • (2) For the purposes of section 125.4 of the Act and this Division, prescribed taxable Canadian corporation means a taxable Canadian corporation that is a Canadian, other than a corporation that is

    • (a) controlled directly or indirectly in any manner whatever by one or more persons all or part of whose taxable income is exempt from tax under Part I of the Act; or

    • (b) a prescribed labour-sponsored venture capital corporation, as defined in section 6701.

Treaty Co-production

  • (3) For the purpose of this Division, treaty co-production means a film or video production whose production is contemplated under any of the following instruments, and to which the instrument applies:

    • (a) a co-production treaty entered into between Canada and another State;

    • (b) the Memorandum of Understanding between the Government of Canada and the Government of the Hong Kong Special Administrative Region of the People’s Republic of China on Film and Television Co-Production;

    • (c) the Common Statement of Policy on Film, Television and Video Co-Productions between Japan and Canada;

    • (d) the Memorandum of Understanding between the Government of Canada and the Government of the Republic of Korea on Television Co-Production; and

    • (e) the Memorandum of Understanding between the Government of Canada and the Government of the Republic of Malta on Audio-Visual Relations.

Canadian Film or Video Production

  • (4) Subject to subsections (6) to (9), for the purposes of section 125.4 of the Act, this Part and Schedule II, Canadian film or video production means a film or video production, other than an excluded production, of a prescribed taxable Canadian corporation in respect of which the Minister of Canadian Heritage has issued a certificate (other than a certificate that has been revoked under subsection 125.4(6) of the Act) and that is

    • (a) a treaty co-production; or

    • (b) a film or video production

      • (i) whose producer is a Canadian at all times during its production,

      • (ii) in respect of which the Minister of Canadian Heritage has allotted not less than six points in accordance with subsection (5),

      • (iii) in respect of which not less than 75% of the total of all costs for services provided in respect of producing the production (other than excluded costs) was payable in respect of services provided to or by individuals who are Canadians, and for the purpose of this subparagraph, excluded costs are

        • (A) costs determined by reference to the amount of income from the production,

        • (B) remuneration payable to, or in respect of, the producer or individuals described in any of subparagraphs (5)(a)(i) to (viii) and (b)(i) to (vi) and paragraph (5)(c) (including any individuals that would be described in paragraph (5)(c) if they were Canadians),

        • (C) amounts payable in respect of insurance, financing, brokerage, legal and accounting fees, and similar amounts, and

        • (D) costs described in subparagraph (iv), and

      • (iv) in respect of which not less than 75% of the total of all costs incurred for the post-production of the production, including laboratory work, sound re-recording, sound editing and picture editing, (other than costs that are determined by reference to the amount of income from the production and remuneration that is payable to, or in respect of, the producer or individuals described in any of subparagraphs (5)(a)(i) to (viii) and (b)(i) to (vi) and paragraph (5)(c), including any individuals that would be described in paragraph (5)(c) if they were Canadians) was incurred in respect of services provided in Canada.

  • (5) For the purposes of this Division, the Minister of Canadian Heritage shall allot, in respect of a film or video production

    • (a) that is not an animation production, in respect of each of the following persons if that person is an individual who is a Canadian,

      • (i) for the director, two points,

      • (ii) for the screenwriter, two points,

      • (iii) for the lead performer for whose services the highest remuneration was payable, one point,

      • (iv) for the lead performer for whose services the second highest remuneration was payable, one point,

      • (v) for the art director, one point,

      • (vi) for the director of photography, one point,

      • (vii) for the music composer, one point, and

      • (viii) for the picture editor, one point;

    • (b) that is an animation production, in respect of each of the following persons if that person is an individual who is a Canadian,

      • (i) for the director, one point,

      • (ii) for the lead voice for which the highest or second highest remuneration was payable, one point,

      • (iii) for the design supervisor, one point,

      • (iv) for the camera operator where the camera operation is done in Canada, one point,

      • (v) for the music composer, one point, and

      • (vi) for the picture editor, one point;

    • (c) that is an animation production, one point if both the principal screenwriter and the storyboard supervisor are individuals who are Canadians; and

    • (d) that is an animation production, in respect of each of the following places if that place is in Canada,

      • (i) for the place where the layout and background work is done, one point,

      • (ii) for the place where the key animation is done, one point, and

      • (iii) for the place where the assistant animation and in-betweening is done, one point.

  • (6) A production (other than a production that is an animation production or a treaty co-production) is a Canadian film or video production only if there is allotted in respect of the production two points under subparagraph (5)(a)(i) or (ii) and one point under subparagraph (5)(a)(iii) or (iv).

  • (7) An animation production (other than a production that is a treaty co-production) is a Canadian film or video production only if there is allotted, in respect of the production,

    • (a) one point under subparagraph (5)(b)(i) or paragraph (5)(c);

    • (b) one point under subparagraph (5)(b)(ii); and

    • (c) one point under subparagraph (5)(d)(ii).

Lead performer/screenwriter

  • (8) For the purposes of this Division,

    • (a) a lead performer in respect of a production is an actor or actress who has a leading role in the production having regard to the performer’s remuneration, billing and time on screen;

    • (b) a lead voice in respect of an animation production is the voice of the individual who has a leading role in the production having regard to the length of time that the individual’s voice is heard in the production and the individual’s remuneration; and

    • (c) where a person who is not a Canadian participates in the writing and preparation of the screenplay for a production, the screenwriter is not a Canadian unless the principal screenwriter is an individual who is otherwise a Canadian, the screenplay for the production is based upon a work authored by a Canadian, and the work is published in Canada.

Documentary Production

  • (9) A documentary production that is not an excluded production, and that is allotted less than six points because one or more of the positions referred to in paragraph (5)(a) is unoccupied, is a Canadian film or video production if all of the positions described in that paragraph that are occupied in respect of the production are occupied by individuals who are Canadians.

Prescribed Person

  • (10) For the purpose of section 125.4 of the Act and this Division, prescribed person means any of the following:

    • (a) a corporation that holds a television, specialty or pay-television broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission;

    • (b) a corporation that holds a broadcast undertaking licence and that provides production funding as a result of a “significant benefits” commitment given to the Canadian Radio-television and Telecommunications Commission;

    • (c) a person to which paragraph 149(1)(l) of the Act applies and that has a fund that is used to finance Canadian film or video productions;

    • (d) a Canadian government film agency;

    • (e) in respect of a film or video production, a non-resident person that does not carry on a business in Canada through a permanent establishment in Canada and whose interest (or, for civil law, right) in the production is acquired to comply with the certification requirements of a treaty co-production twinning arrangement;

    • (f) a person

      • (i) to which paragraph 149(1)(f) of the Act applies,

      • (ii) that has a fund that is used to finance Canadian film or video productions, all or substantially all of which financing is provided by way of a direct ownership interest (or, for civil law, right) in those productions, and

      • (iii) that, after 1996, has received donations only from persons described in any of paragraphs (a) to (e);

    • (g) a prescribed taxable Canadian corporation;

    • (h) an individual who is a Canadian; and

    • (i) a partnership, each member of which is described in any of paragraphs (a) to (h).

Prescribed Amount

  • (11) For the purpose of the definition assistance in subsection 125.4(1) of the Act, prescribed amount means an amount paid or payable to a taxpayer under the License Fee Program of the Canadian Television Fund or as a licence-fee top-up contribution from the Canada Media Fund.

Copyright Owner

  • (12) For the purpose of the definition copyright owner in subsection (1),

    • (a) the right of a person to share in the revenues from or proceeds of disposition of an interest or, for civil law, a right, in a film or video production is not, in and by itself, an interest or right as a copyright owner of the production; and

    • (b) for greater certainty, a grant of an exclusive licence, within the meaning assigned by the Copyright Act, is not an assignment of a copyright.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/2005-126, s. 3;
  • SOR/2010-96, s. 2;
  • 2013, c. 34, s. 385;
  • SOR/2015-61, s. 1.

DIVISION VIIIDetermination of Viscosity and Density

 For the purpose of the definition bituminous sands in subsection 248(1) of the Act, viscosity or density of hydrocarbons shall be determined using a number of individual samples (constituting a representative sampling of that deposit or those deposits, as the case may be, from which the taxpayer is committed to produce by means of one mine) tested

  • (a) at atmospheric pressure;

  • (b) at a temperature of 15.6 degrees Celsius; and

  • (c) free of solution gas.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/98-97, s. 3.

PART XIIResource and Processing Allowances

 For the purposes of section 65 of the Act, there may be deducted in computing the income of a taxpayer for a taxation year such of the amounts determined in accordance with sections 1201 to 1209 and 1212 as are applicable.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/79-245, s. 1.

Earned Depletion Allowances

 In computing a taxpayer’s income for a taxation year there may be deducted such amount as he may claim not exceeding the lesser of

  • (a) the aggregate of

    • (i) 25 per cent of the amount, if any, by which the taxpayer’s resource profits for the year exceed four times the total of amounts, if any, deducted under subsection 1202(2) in computing the taxpayer’s income for the year, and

    • (ii) the amount, if any, by which the aggregate of amounts included in computing the taxpayer’s income for the year under paragraphs 59(3.3)(a) and (b) of the Act exceeds the aggregate of amounts, if any, that may reasonably be considered to have been deducted under subsection 1202(2) by reason of subparagraph (b)(ii) thereof in computing the taxpayer’s income for the year; and

  • (b) the aggregate of

    • (i) the taxpayer’s earned depletion base as of the end of the year, and

    • (ii) the amount, if any, by which

      • (A) the aggregate determined under paragraph 1202(4)(a) in respect of the taxpayer for the year

      exceeds

      • (B) the amount, if any, by which

        • (I) the aggregate of all amounts that would be determined under paragraphs 1205(1)(e) to (k)

        exceeds

        • (II) 33 1/3 per cent of the aggregate of all amounts that would be determined under paragraphs 1205(1)(a) to (d.2)

        in computing the taxpayer’s earned depletion base as of the end of the year.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/78-502, s. 3;
  • SOR/81-974, s. 2;
  • SOR/91-79, s. 2;
  • SOR/99-179, s. 4.
  •  (1) For the purposes of computing the earned depletion base of a corporation, control of which has been acquired under circumstances described in subsection 66(11) of the Act, the amount by which the earned depletion base of the corporation at the time referred to in that subsection exceeds the aggregate of amounts otherwise deducted under section 1201 in computing its income for taxation years ending after that time and before control was so acquired shall be deemed to have been deducted under section 1201 by the corporation in computing its income for taxation years ending before such acquisition of control.

  • (2) Subject to subsections (5) and (6), where after November 7, 1969 a corporation (in this subsection referred to as the “successor”) acquired a particular property (whether by way of a purchase, amalgamation, merger, winding-up or otherwise), there may be deducted by the successor in computing its income for a taxation year an amount not exceeding the aggregate of all amounts each of which is an amount determined in respect of an original owner of the particular property that is the lesser of

    • (a) the earned depletion base of the original owner immediately after the original owner disposed of the particular property (determined as if, in the case of a disposition after April 28, 1978 as a result of an amalgamation described in section 87 of the Act, the original owner existed after the time of disposition and no property was acquired or disposed of in the course of the amalgamation) to the extent of the amount thereof that was not

      • (i) deducted by the original owner or any predecessor owner of the particular property in computing income for any taxation year,

      • (ii) deducted by the successor in computing income for a preceding taxation year, or

      • (iii) otherwise deducted by the successor in computing income for the taxation year, and

    • (b) 25 per cent of the amount, if any, by which

      • (i) the part of the successor’s income for the year that can reasonably be regarded as attributable to

        • (A) the part of any amount included under paragraph 59(3.2)(c) of the Act in computing its income for the year that can reasonably be regarded as attributable to the disposition by it in the year or a preceding taxation year of any interest in or right to the particular property, to the extent that the proceeds of the disposition have not been included in determining an amount under this clause, paragraph (7)(g), clause 29(25)(d)(i)(A) of the Income Tax Application Rules or clause 66.7(1)(b)(i)(A) or (3)(b)(i)(A) or paragraph 66.7(10)(g) of the Act for a preceding taxation year,

        • (B) its reserve amount for the year in respect of the original owner and each predecessor owner, if any, of the particular property,

        • (C) production from the particular property, or

        • (D) processing described in subparagraph 1204(1)(b)(iii), (iv) or (v) with the particular property

        computed as if no deduction were allowed under section 29 of the Income Tax Application Rules or under any of sections 65 to 66.7 of the Act and as if that income did not include any amount designated under clause 66.7(2)(b)(ii)(A) of the Act,

      exceeds

      • (ii) the total of

        • (A) four times the total of all other amounts deducted under this subsection for the year that can reasonably be regarded as attributable to the part of the successor’s income for the year described in subparagraph (i), and

        • (B) the total of all amounts each of which is an amount deducted under subsection 66.7(1), (3), (4) or (5) of the Act or subsection 29(25) of the Income Tax Application Rules for the year that can reasonably be regarded as attributable to the part of the successor’s income for the year described in subparagraph (i).

  • (3) Where in a taxation year ending after February 17, 1987 an original owner of a property disposes of the property in circumstances in which subsection (2) applies,

    • (a) the amount of the earned depletion base of the original owner determined immediately after the time of that disposition shall be deducted in determining the earned depletion base of the original owner at any time after the time that is immediately after the disposition;

    • (b) for the purposes of paragraph (2)(a), the earned depletion base of the original owner determined immediately after the original owner disposed of the property that was deducted in computing the original owner’s income for the year shall be deemed to be equal to the lesser of

      • (i) the amount deducted in respect of the disposition under paragraph (a), and

      • (ii) the amount, if any, by which

        • (A) the specified amount determined under subsection (4) in respect of the original owner for the year

        exceeds

        • (B) the aggregate of all amounts each of which is an amount determined under this paragraph in respect of any disposition made by the original owner before the disposition and in the year; and

    • (c) for greater certainty, any amount (other than the amount determined under paragraph (b)) that was deducted under section 1201 by the original owner for the year or a subsequent taxation year shall, for the purposes of paragraph (2)(a), be deemed not to be in respect of the earned depletion base of the original owner determined immediately after the original owner disposed of the particular property.

  • (4) Where in a taxation year ending after February 17, 1987 an original owner of a property disposes of the property in circumstances in which subsection (2) applies, the lesser of

    • (a) the total of all amounts each of which is the amount, if any, by which

      • (i) an amount deducted under paragraph (3)(a) in respect of such a disposition in the year by the original owner

      exceeds

      • (ii) the amount, if any, designated by the original owner in a prescribed form filed with the Minister within six months after the end of the year in respect of the amount determined under subparagraph (i), and

    • (b) the amount, if any, deducted under section 1201 in computing the income of the original owner for the taxation year

    is the specified amount in respect of the original owner for the year for the purposes of paragraphs (3)(b) and 1205(1)(d.2).

  • (5) Subsections (2), 1203(3), 1207(7) and 1212(4) do not apply

    • (a) in respect of a property acquired by way of an amalgamation or winding-up to which section 1214 applies;

    • (b) to permit, in respect of the acquisition by a corporation before February 18, 1987 of a property, a deduction by the corporation of an amount that the corporation would not have been entitled to deduct under this Part, if this Part, as it read in its application to taxation years ending before February 18, 1987, applied to taxation years ending after February 17, 1987; or

    • (c) in respect of a property acquired by purchase, amalgamation, merger, winding-up or otherwise, from a person who is exempt from tax under Part I of the Act on that person’s taxable income.

  • (6) Subsections (2), 1203(3), 1207(7) and 1212(4) apply only to a corporation that has acquired a particular property

    • (a) where it acquired the particular property in a taxation year commencing before 1985 and, at the time it acquired the particular property, the corporation acquired the specified property of the person from whom it acquired the particular property;

    • (b) where it acquired the particular property from a person in a taxation year commencing after 1984 and, at the time it acquired the particular property, the corporation acquired

      • (i) all or substantially all of the Canadian resource properties of that person, or

      • (ii) where subparagraph (i) does not apply, the specified property of the person;

    • (c) where it acquired (other than in circumstances in which subparagraph (b)(ii) applies) the particular property after November 16, 1978 and in a taxation year ending before February 18, 1987 by any means other than by way of an amalgamation or winding-up and it and the person from whom it acquired the particular property have filed with the Minister a joint election under and in accordance with any of subsections 66(6), 66.1(4), 66.1(5), 66.2(3), 66.2(4), 66.4(3), and 66.4(4) of the Act as those subsections read in their application to that year;

    • (d) where it acquired the particular property after June 5, 1987 by way of an amalgamation or winding-up (other than in circumstances in which subparagraph (b)(ii) applies) and it has filed an election in the form prescribed for the purposes of paragraph 66.7(7)(c) of the Act with the Minister on or before the day on or before which the corporation is required to file a return of income pursuant to section 150 of the Act for its taxation year in which it acquired the particular property;

    • (e) where it acquired the particular property (other than by means of an amalgamation or winding-up or in circumstances in which subparagraph (b)(ii) applies) in a taxation year ending after February 17, 1987 and it and the person from whom it acquired the particular property have filed a joint election in the form prescribed for the purposes of paragraph 66.7(7)(e) of the Act with the Minister on or before the earlier of the days on or before which either of them is required to file a return of income pursuant to section 150 of the Act in respect of the irrespective taxation years that include the time of acquisition of the particular property; and

    • (f) where it acquired (other than by way of an amalgamation or winding-up) the particular property in circumstances in which subparagraph (b)(ii) applies and it and the person from whom it acquired the particular property agree to have subsection (2), 1203(3), 1207(7) or 1212(4), as the case may be, apply to them and notify the Minister in writing of the agreement in their returns of income under Part I of the Act for their respective taxation years that include the time of acquisition of the particular property.

  • (7) Where at any time after November 12, 1981

    • (a) control of a corporation is considered for the purposes of subsection 66.7(10) of the Act to have been acquired by a person or group of persons, or

    • (b) a corporation ceases to be exempt from tax under Part I of the Act on its taxable income,

    for the purposes of section 1201, this section and section 1205,

    • (c) the corporation shall be deemed after that time to be a successor (within the meaning assigned by subsection (2)) that had, at that time, acquired all the properties owned by the corporation immediately before that time from an original owner thereof;

    • (d) a joint election shall be deemed to have been filed in accordance with subsection (6) in respect of the acquisition;

    • (e) the earned depletion base of the corporation immediately before that time shall be deemed not to be the earned depletion base of the corporation immediately after that time but to be the earned depletion base of the original owner immediately after that time;

    • (f) [Repealed, SOR/93-120, s. 1]

    • (g) where the corporation (in this paragraph referred to as the “transferee”) was, immediately before and at that time,

      • (i) a parent corporation (within the meaning assigned by subsection 87(1.4) of the Act), or

      • (ii) a subsidiary wholly-owned corporation (within the meaning assigned by subsection 87(1.4) of the Act)

      of a particular corporation (in this paragraph referred to as the “transferor”), if both corporations agree to have this paragraph apply to them in respect of a taxation year of the transferor ending after that time and notify the Minister in writing of the agreement in the return of income under Part I of the Act of the transferor for that year, the transferor may, if throughout that year the transferee was such a parent corporation or subsidiary wholly-owned corporation of the transferor, designate in favour of the transferee, in respect of that year, for the purpose of making a deduction under subsection (2) in respect of expenditures incurred by the transferee before that time and when it was such a parent corporation or subsidiary wholly-owned corporation of the transferor, an amount not exceeding such portion of the amount that would be its income for the year, if no deductions were allowed under any of section 29 of the Income Tax Application Rules, and sections 65 to 66.7 of the Act, that may reasonably be regarded as being attributable to

      • (iii) the production from Canadian resource properties owned by the transferor immediately before that time,

      • (iv) the disposition in the year of any Canadian resource properties owned by the transferor immediately before that time, and

      • (v) such processing as is described in subparagraph 1204(1)(b)(iii), (iv), or (v) with property owned by the transferor immediately before that time

      to the extent that such portion of the amount so designated is not designated under this paragraph in favour of any other taxpayer or under paragraph 66.7(10)(g) of the Act in favour of any taxpayer, and the amount so designated shall be deemed, for the purposes of determining the amount under subsection (2),

      • (vi) to be income from the sources described in subparagraph (iii), (iv) or (v), as the case may be, of the transferee for its taxation year in which that taxation year of the transferor ends, and

      • (vii) not to be income from the sources described in subparagraph (iii), (iv) or (v), as the case may be, of the transferor for that year;

    • (h) where, immediately before and at that time, the corporation (in this paragraph referred to as the “transferee”) and another corporation (in this paragraph referred to as the “transferor”) were both subsidiary wholly-owned corporations (within the meaning assigned by subsection 87(1.4) of the Act) of a particular parent corporation (within the meaning assigned by subsection 87(1.4) of the Act), if the transferee and the transferor agree to have this paragraph apply to them in respect of a taxation year of the transferor ending after that time and notify the Minister in writing of the agreement in the return of income under Part I of the Act of the transferor for that year, paragraph (g) shall apply for that year to the transferee and transferor as though one were the parent corporation (within the meaning assigned by subsection 87(1.4) of the Act) of the other; and

    • (i) where that time is after January 15, 1987 and at that time the corporation was a member of a partnership that owned a property at that time

      • (i) for the purposes of paragraph (c), the corporation shall be deemed to have owned immediately before that time that portion of the property owned by the partnership at that time that is equal to its percentage share of the aggregate of amounts that would be paid to all members of the partnership if it were wound up at that time, and

      • (ii) for the purposes of clauses (2)(b)(i)(C) and (D) for a taxation year ending after that time, the lesser of

        • (A) its share of the part of the income of the partnership for the fiscal period of the partnership ending in the year that may reasonably be regarded as being attributable to the production from the property or to such processing as is described in subparagraph 1204(1)(b)(iii), (iv) or (v) with the property, and

        • (B) an amount that would be determined under clause (A) for the year if its share of the income of the partnership for the fiscal year of the partnership were determined on the basis of the percentage share referred to in subparagraph (i)

        shall be deemed to be income of the corporation for the year that may reasonably be attributable to production from the property or to such processing as is described in subparagraph 1204(1)(b)(iii), (iv) or (v) with the property.

  • (8) For the purposes of subsections (1) and (7), where a corporation acquired control of another corporation after November 12, 1981 and before 1983 by reason of the acquisition of shares of the other corporation pursuant to an agreement in writing concluded on or before November 12, 1981, the corporation shall be deemed to have acquired such control on or before November 12, 1981.

  • (9) Where, at any time,

    • (a) control of a taxpayer that is a corporation has been acquired by a person or group of persons,

    • (b) a taxpayer has disposed of all or substantially all of the taxpayer’s Canadian resource properties, or

    • (c) a taxpayer has disposed of the specified property of the taxpayer,

    and, before that time, the taxpayer or a partnership of which the taxpayer was a member acquired a property and it may reasonably be considered that one of the main purposes of the acquisition was to avoid any limitation provided in subsection (2) on the deduction in respect of the earned depletion base of the taxpayer or of a corporation referred to as a transferee in paragraph (7)(g) or (h), the taxpayer or the partnership, as the case may be, shall be deemed, for the purposes of applying subsection (2) to or in respect of the taxpayer, not to have acquired the property.

  • (10) Where in a particular taxation year a predecessor owner of a property disposes of it to a corporation in circumstances in which subsection (2) applies, for the purposes of applying subsection (2) to the predecessor owner for a taxation year ending after February 17, 1987 in respect of its acquisition of the property, the predecessor owner shall be deemed, after the disposition, never to have acquired the property except for the purposes of making a deduction under subsection (2) for the particular year.

  • (11) Where at any time a property is acquired by a person in circumstances in which subsection (2) does not apply, every person who was an original owner or predecessor owner of the property by reason of having disposed of the property before that time shall, for the purposes of applying this Part to or in respect of the person or any other person who after that time acquires the property, be deemed after that time not to be an original owner or predecessor owner of the property by reason of having disposed of the property before that time.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/78-502, s. 4;
  • SOR/79-245, s. 2;
  • SOR/80-418, s. 2;
  • SOR/81-974, s. 3;
  • SOR/85-174, s. 3;
  • SOR/85-696, ss. 2, 3;
  • SOR/86-1092, s. 7;
  • SOR/90-113, s. 1;
  • SOR/90-733, s. 1;
  • SOR/91-79, s. 3;
  • SOR/93-120, s. 1;
  • SOR/94-686, ss. 48, 67(F), 78(F), 79(F), 81(F);
  • SOR/99-179, s. 5;
  • SOR/2001-187, s. 1.

Mining Exploration Depletion

  •  (1) In computing a taxpayer’s income for a taxation year there may be deducted such amount as he may claim not exceeding the lesser of

    • (a) the amount, if any, by which

      • (i) the aggregate of

        • (A) 25 per cent of his income for the year, computed in accordance with Part I of the Act without reference to paragraph 59(3.3)(f) thereof and on the assumption that no deduction were allowed under section 65 thereof, and

        • (B) the amount, if any, included in computing his income for the year by virtue of paragraph 59(3.3)(f) of the Act

      exceeds

      • (ii) the aggregate of amounts deducted under sections 1201, 1202, 1207 and 1212 in computing his income for the year; and

    • (b) his mining exploration depletion base as of the end of the year (before making any deduction under this subsection for the year).

  • (2) For the purposes of this section, mining exploration depletion base of a taxpayer as of a particular time means the amount by which the aggregate of

    • (a) 33 1/3 per cent of the amount by which

      • (i) the aggregate of all amounts each of which was the stated percentage of an expenditure that is, or but for paragraph 66(12.61)(b) of the Act would be, incurred by the taxpayer after April 19, 1983 and before the particular time and each of which was a Canadian exploration expense

        • (A) described in subparagraph 66.1(6) (a)(iii) of the Act, or

        • (B) that would have been described in subparagraph 66.1(6) (a)(iv) or (v) of the Act if the references in those subparagraphs to “any of subparagraphs (i) to (iii.1)” were read as “subparagraph (iii)”,

        other than an expense described in clause (A) or (B) that was

        • (C) an expense renounced by the taxpayer under subsection 66(10.1) or (12.6) of the Act,

        • (D) an amount that was a Canadian exploration and development overhead expense of the taxpayer,

        • (E) an amount that was in respect of financing, including any cost incurred prior to the commencement of carrying on a business, or

        • (F) an eligible expense within the meaning of the Canadian Exploration Incentive Program Act in respect of which the taxpayer, a partnership of which the taxpayer was a member or a principal-business corporation of which the taxpayer was a shareholder, has received, is deemed to have received, is entitled to receive or may reasonably be expected to receive at any time an incentive under that Act,

      exceeds

      • (ii) the aggregate of all amounts each of which is the stated percentage of an amount of assistance (within the meaning assigned by paragraph 66(15)(a.1) of the Act) that any person has received, is entitled to receive or, at any time, becomes entitled to receive in respect of an expense that would be described in subparagraph (i) if that subparagraph were read without reference to clause (C) thereof, other than such an amount in respect of an expense renounced under subsection 66(10.1) or (12.6) of the Act

        • (A) by a corporation in favour of the taxpayer, where the amount of that assistance is excluded from the aggregate in respect of which the expense is so renounced, or

        • (B) by the taxpayer, where the amount of that assistance is not excluded from the aggregate in respect of which the expense is so renounced, and

    • (b) where the taxpayer is a successor corporation, any amount required by paragraph (3)(a) to be added before the particular time in computing the taxpayer’s mining exploration depletion base

    exceeds the aggregate of

    • (c) all amounts each of which is an amount deducted by the taxpayer under subsection (1) in computing his income for a taxation year ending before the particular time; and

    • (d) where the taxpayer is a predecessor, all amounts required by paragraph (3)(b) to be deducted before the particular time in computing the taxpayer’s mining exploration depletion base.

  • (3) Subject to subsections 1202(5) and (6), where a corporation (in this section referred to as the “successor corporation”) has at any time (in this subsection referred to as the “time of acquisition”) after April 19, 1983 and in a taxation year (in this subsection referred to as the “transaction year”) acquired a property from another person (in this subsection referred to as the “predecessor”), the following rules apply:

    • (a) for the purpose of computing the mining exploration depletion base of the successor corporation as of any time after the time of acquisition, there shall be added an amount equal to the amount required by paragraph (b) to be deducted in computing the mining exploration depletion base of the predecessor; and

    • (b) for the purpose of computing the mining exploration depletion base of the predecessor as of any time after the transaction year of the predecessor, there shall be deducted the amount, if any, by which

      • (i) the mining exploration depletion base of the predecessor immediately after the time of acquisition (assuming for this purpose that, in the case of an acquisition as a result of an amalgamation described in section 87 of the Act, the predecessor existed after the time of acquisition and no property was acquired or disposed of in the course of the amalgamation)

      exceeds

      • (ii) the amount, if any, deducted under subsection (1) in computing the income of the predecessor for the transaction year of the predecessor.

  • (3.1) [Repealed, SOR/91-79, s. 4]

  • (4) For greater certainty, where an expense incurred before a particular time is included in the aggregate calculated under subparagraph (2)(a)(i) in respect of a taxpayer and subsequent to the particular time any person becomes entitled to receive an amount of assistance (within the meaning assigned by paragraph 66(15)(a.1) of the Act) that is included in the aggregate calculated under subparagraph (2)(a)(ii), the stated percentage of the amount of assistance shall be included in the amounts referred to in subparagraph (2)(a)(ii) in respect of the taxpayer at the time the expense was incurred.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/81-974, s. 4;
  • SOR/85-174, s. 4;
  • SOR/85-696, ss. 2, 4;
  • SOR/90-113, s. 2;
  • SOR/90-733, s. 2;
  • SOR/91-79, s. 4;
  • SOR/94-686, ss. 78(F), 79(F).

Resource Profits

  •  (1) For the purposes of this Part, gross resource profits of a taxpayer for a taxation year means the amount, if any, by which the total of

    • (a) the amount, if any, by which the aggregate of

      • (i) the aggregate of amounts, if any, that would be included in computing the taxpayer’s income for the year by virtue of subsection 59(2) and paragraphs 59(3.2)(b) and 59.1(b) of the Act if subsection 59(2) were read without reference to subsection 64(1) therein, and

      • (i.1) the amount, if any, by which the amount included in computing his income for the year by virtue of paragraph 59(3.2)(c) of the Act exceeds the proceeds of disposition of property described in clause 66(15)(c)(ii)(A) of the Act that became receivable in the year or a preceding taxation year and after December 31, 1982 to the extent that such proceeds have not been deducted in determining the amount under this subparagraph for a preceding taxation year

      exceeds

      • (ii) the aggregate of amounts, if any, deducted in computing his income for the year by virtue of paragraph 59.1(a) and subsections 64(1.1) and (1.2) of the Act,

    • (b) the amount, if any, of the aggregate of his incomes for the year from

      • (i) the production of petroleum, natural gas, related hydrocarbons or sulphur from

        • (A) oil or gas wells in Canada operated by the taxpayer, or

        • (B) natural accumulations (other than mineral resources) of petroleum or natural gas in Canada operated by the taxpayer,

      • (ii) the production and processing in Canada of

        • (A) ore, other than iron ore or tar sands ore, from mineral resources in Canada operated by him to any stage that is not beyond the prime metal stage or its equivalent,

        • (B) iron ore from mineral resources in Canada operated by him to any stage that is not beyond the pellet stage or its equivalent, and

        • (C) tar sands ore from mineral resources in Canada operated by him to any stage that is not beyond the crude oil stage or its equivalent,

      • (iii) the processing in Canada of

        • (A) ore, other than iron ore or tar sands ore, from mineral resources in Canada not operated by him to any stage that is not beyond the prime metal stage or its equivalent,

        • (B) iron ore from mineral resources in Canada not operated by him to any stage that is not beyond the pellet stage or its equivalent, and

        • (C) tar sands ore from mineral resources in Canada not operated by him to any stage that is not beyond the crude oil stage or its equivalent,

      • (iv) the processing in Canada of

        • (A) ore, other than iron ore or tar sands ore, from mineral resources outside Canada to any stage that is not beyond the prime metal stage or its equivalent,

        • (B) iron ore from mineral resources outside Canada to any stage that is not beyond the pellet stage or its equivalent, and

        • (C) tar sands ore from mineral resources outside Canada to any stage that is not beyond the crude oil stage or its equivalent,

      • (v) the processing in Canada of heavy crude oil recovered from an oil or gas well in Canada to any stage that is not beyond the crude oil stage or its equivalent, and

      • (vi) Canadian field processing,

    • (b.1) the total of all amounts (other than an amount included because of paragraph (b) in computing the taxpayer’s gross resource profits for the year) each of which is an amount included in computing the taxpayer’s income for the year as a rental or royalty computed by reference to the amount or value of production from a natural accumulation of petroleum or natural gas in Canada, an oil or gas well in Canada or a mineral resource in Canada, and

    • (c) if the taxpayer owns all the issued and outstanding shares of the capital stock of a railway company throughout the year, the amount that may reasonably be considered to be the railway company’s income for its taxation year ending in the year from the transportation of such of the taxpayer’s ore as is described in clause (b)(ii)(A), (B) or (C),

    exceeds the aggregate of the taxpayer’s losses for the year from the sources described in paragraph (b), where the taxpayer’s incomes and losses are computed in accordance with the Act on the assumption that the taxpayer had during the year no incomes or losses except from those sources and was allowed no deductions in computing the taxpayer’s income for the year other than

    • (d) amounts deductible under section 66 of the Act (other than amounts in respect of foreign exploration and development expenses) or subsection 17(2) or (6) or section 29 of the Income Tax Application Rules, for the year;

    • (e) the amounts deductible or deducted, as the case may be, under section 66.1, 66.2 (other than an amount that is in respect of a property described in clause 66(15)(c)(ii)(A) of the Act), 66.4, 66.5 or 66.7 (other than subsection (2) thereof) of the Act for the year; and

    • (f) any other deductions for the year that can reasonably be regarded as applicable to the sources of income described in paragraph (b) or (b.1), other than a deduction under paragraph 20(1)(ss) or (tt) of the Act or section 1201 or subsection 1202(2), 1203(1), 1207(1) or 1212(1).

  • (1.1) For the purposes of this Part, resource profits of a taxpayer for a taxation year means the amount, if any, by which the taxpayer’s gross resource profits for the year exceeds the total of

    • (a) all amounts deducted in computing the taxpayer’s income for the year other than

      • (i) an amount deducted in computing the taxpayer’s gross resource profits for the year,

      • (ii) an amount deducted under any of section 8, paragraphs 20(1)(ss) and (tt), sections 60 to 64 and subsections 66(4), 66.7(2) and 104(6) and (12) of the Act and section 1201 and subsections 1202(2), 1203(1), 1207(1) and 1212(1) in computing the taxpayer’s income for the year,

      • (iii) an amount deducted under section 66.2 of the Act in computing the taxpayer’s income for the year, to the extent that it is attributable to any right, licence or privilege to store underground petroleum, natural gas or related hydrocarbons in Canada,

      • (iv) an amount deducted in computing the taxpayer’s income for the year from a business, or other source, that does not include any resource activity of the taxpayer, and

      • (v) an amount deducted in computing the taxpayer’s income for the year, to the extent that the amount

        • (A) relates to an activity

          • (I) that is not a resource activity of the taxpayer, and

          • (II) that is

            1. the production, processing, manufacturing, distribution, marketing, transportation or sale of any property,

            2. carried out for the purpose of earning income from property, or

            3. the rendering of a service by the taxpayer to another person for the purpose of earning income of the taxpayer, and

        • (B) does not relate to a resource activity of the taxpayer,

    • (b) all amounts each of which is the amount, if any, by which

      • (i) the amount that would have been charged to the taxpayer by a person or partnership with whom the taxpayer was not dealing at arm’s length if the taxpayer and that person or partnership had been dealing at arm’s length

        • (A) for the use after March 6, 1996 and in the year of a property (other than money) owned by that person or partnership, or

        • (B) for the provision after March 6, 1996 and in the year by that person or partnership of a service to the taxpayer

      exceeds the total of

      • (ii) the amount charged to the taxpayer for the use of that property or the provision of that service in that period, and

      • (iii) the portion of the amount described in subparagraph (i) that, if it had been charged, would not have been deductible in computing the taxpayer’s resource profits, and

    • (c) where the year ends after February 21, 1994, all amounts added under subsection 80(13) of the Act in computing the taxpayer’s gross resource profits for the year.

  • (1.2) For the purposes of paragraph (1.1)(b) and this subsection,

    • (a) a taxpayer is considered not to deal at arm’s length with a partnership where the taxpayer does not deal at arm’s length with any member of the partnership;

    • (b) a partnership is considered not to deal at arm’s length with another partnership where any member of the first partnership does not deal at arm’s length with any member of the second partnership;

    • (c) where a taxpayer is a member, or is deemed by this paragraph to be a member, of a partnership that is a member of another partnership, the taxpayer is deemed to be a member of the other partnership; and

    • (d) the provision of a service to a taxpayer does not include the provision of a service by an individual in the individual’s capacity as an employee of the taxpayer.

  • (2) For greater certainty, for the purposes of this section, in computing the income or loss of a trust for a taxation year from the sources described in paragraphs (1)(b) and (b.1), no deduction shall be made in respect of amounts deductible by the trust pursuant to subsection 104(6) or (12) of the Act.

  • (3) A taxpayer’s income or loss from a source described in paragraph (1)(b) does not include

    • (a) any income or loss derived from transporting, transmitting or processing (other than processing described in clause (1)(b)(ii)(C), (iii)(C) or (iv)(C) or subparagraph (1)(b)(v) or (vi)) petroleum, natural gas or related hydrocarbons or sulphur from a natural accumulation of petroleum or natural gas;

    • (b) any income or loss arising because of the application of paragraph 12(1)(z.1) or (z.2) or section 107.3 of the Act; and

    • (c) any income or loss that can reasonably be attributable to a service rendered by the taxpayer (other than processing described in subparagraph (1)(b)(iii), (iv), (v) or (vi) or activities carried out by the taxpayer as a coal mine operator).

  • (4) and (5) [Repealed, SOR/2007-19, s. 3]

  • (6) [Repealed, SOR/96-451, s. 2]

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/78-502, s. 5;
  • SOR/79-245, s. 3;
  • SOR/80-132, s. 1;
  • SOR/81-158, s. 1;
  • SOR/81-974, s. 5;
  • SOR/85-174, s. 5;
  • SOR/90-113, s. 3;
  • SOR/91-79, s. 5;
  • SOR/94-686, s. 48;
  • SOR/96-451, s. 2;
  • SOR/99-179, s. 6;
  • SOR/2007-19, s. 3.

Earned Depletion Base

  •  (1) For the purposes of this Part earned depletion base of a taxpayer as of a particular time means the amount by which 33 1/3 per cent of the aggregate of

    • (a) all amounts, in respect of expenditures (other than expenditures to acquire property under circumstances that entitled the taxpayer to a deduction under sectio