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

Full Document:  

Act current to 2022-09-22 and last amended on 2022-09-01. Previous Versions

PART IIncome Tax (continued)

DIVISION JAppeals to the Tax Court of Canada and the Federal Court of Appeal (continued)

Marginal note:References to Tax Court of Canada

  •  (1) Where the Minister and a taxpayer agree in writing that a question of law, fact or mixed law and fact arising under this Act, in respect of any assessment, proposed assessment, determination or proposed determination, should be determined by the Tax Court of Canada, that question shall be determined by that Court.

  • Marginal note:Time during consideration not to count

    (2) The time between the day on which proceedings are instituted in the Tax Court of Canada to have a question determined pursuant to subsection 173(1) and the day on which the question is finally determined shall not be counted in the computation of

    • (a) the periods determined under subsection 152(4),

    • (b) the time for service of a notice of objection to an assessment under section 165, or

    • (c) the time within which an appeal may be instituted under section 169,

    for the purpose of making an assessment of the tax payable by the taxpayer who agreed in writing to the determination of the question, for the purpose of serving a notice of objection thereto or for the purpose of instituting an appeal therefrom, as the case may be.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1970-71-72, c. 63, s. 1“173”
  • 1984, c. 1, s. 89, c. 45, s. 73
  • 1988, c. 61, s. 19
  • 1990, c. 39, s. 45

Marginal note:Common questions

  •  (1) The Minister may apply to the Tax Court of Canada for a determination of a question if the Minister is of the opinion that the question is common to assessments or proposed assessments in respect of two or more taxpayers and is a question of law, fact or mixed law and fact arising out of

    • (a) one and the same transaction or occurrence or series of transactions or occurrences; or

    • (b) substantially similar transactions or occurrences or series of transactions or occurrences.

  • Marginal note:Application to Court

    (2) An application under subsection (1)

    • (a) shall set out

      • (i) the question in respect of which the Minister requests a determination,

      • (ii) the names of the taxpayers that the Minister seeks to have bound by the determination of the question, and

      • (iii) the facts and reasons on which the Minister relies and on which the Minister based or intends to base assessments of tax payable by each of the taxpayers named in the application; and

    • (b) shall be served by the Minister on each of the taxpayers named in the application and on any other persons who, in the opinion of the Tax Court of Canada, are likely to be affected by the determination of the question,

      • (i) by sending a copy to each taxpayer so named and each other person so likely to be affected, or

      • (ii) on ex parte application by the Minister, in accordance with the directions of the Court.

  • Marginal note:Determination of question by Tax Court

    (3) If the Tax Court of Canada is satisfied that a question set out in an application under this section is common to assessments or proposed assessments in respect of two or more taxpayers who have been served with a copy of the application, the Tax Court of Canada may

    • (a) make an order naming the taxpayers in respect of whom the question will be determined;

    • (b) if one or more of the taxpayers so served has or have appealed an assessment to the Tax Court of Canada in respect of which the question is relevant, make an order joining a party or parties to that or those appeals as it considers appropriate; and

    • (c) proceed to determine the question in such manner as it considers appropriate.

  • Marginal note:Determination final and conclusive

    (4) Subject to subsection (4.1), if a question set out in an application under this section is determined by the Tax Court of Canada, the determination is final and conclusive for the purposes of any assessments of tax payable by the taxpayers named in the order made under paragraph (3)(a).

  • Marginal note:Appeal

    (4.1) If a question set out in an application under this section is determined by the Tax Court of Canada, an appeal from the determination may, in accordance with the provisions of the Tax Court of Canada Act or the Federal Courts Act, as they relate to appeals from decisions of the Tax Court of Canada to the Federal Court of Appeal, be made by

    • (a) the Minister; or

    • (b) any taxpayer named in an order of the Court made under paragraph (3)(a) if

      • (i) the question arises out of one and the same transaction or occurrence or series of transactions or occurrences,

      • (ii) the taxpayer has appealed an assessment to the Tax Court of Canada in respect of which the question is relevant, or

      • (iii) the taxpayer has been granted leave by a judge of the Federal Court of Appeal.

  • Marginal note:Binding to appeal

    (4.2) Any taxpayer named in an order made under paragraph (3)(a) in respect of a question is bound by any determination in respect of the question under an appeal made to the Federal Court of Appeal or the Supreme Court of Canada.

  • Marginal note:Time during consideration of question not counted

    (5) The time between the day on which an application under this section is served on a taxpayer pursuant to subsection 174(2) and

    • (a) in the case of a taxpayer named in an order of the Tax Court of Canada pursuant to subsection 174(3), the day on which the determination becomes final and conclusive and not subject to any appeal, or

    • (b) in the case of any other taxpayer, the day on which the taxpayer is served with notice that the taxpayer has not been named in an order of the Tax Court of Canada pursuant to subsection 174(3),

    shall not be counted in the computation of

    • (c) the periods determined under subsection 152(4),

    • (d) the time for service of a notice of objection to an assessment under section 165, or

    • (e) the time within which an appeal may be instituted under section 169,

    for the purpose of making an assessment of the tax, interest or penalties payable by the taxpayer, serving a notice of objection thereto or instituting an appeal therefrom, as the case may be.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • R.S., 1985, c. 1 (5th Supp.), s. 174
  • 2002, c. 8, s. 182
  • 2013, c. 33, s. 19

Marginal note:Institution of appeals

 An appeal to the Tax Court of Canada under this Act, other than one referred to in section 18 of the Tax Court of Canada Act, shall be instituted in the manner set out in that Act or in any rules made under that Act.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • R.S., 1985, c. 1 (5th Supp.), s. 175
  • 1994, c. 7, Sch. VIII, s. 101

 [Repealed, 2013, c. 34, s. 323]

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • R.S., 1985, c. 1 (5th Supp.), s. 176
  • 2002, c. 8, s. 149
  • 2013, c. 34, s. 323

Marginal note:Hearings in camera

 Proceedings in the Federal Court of Appeal under this Division may, on the application of the taxpayer, be held in camera if the taxpayer establishes to the satisfaction of the Court that the circumstances of the case justify in camera proceedings.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • R.S., 1985, c. 1 (5th Supp.), s. 179
  • 2002, c. 8, s. 184

Marginal note:No reasonable grounds for appeal

 Where the Tax Court of Canada disposes of an appeal by a taxpayer in respect of an amount payable under this Part or where such an appeal has been discontinued or dismissed without trial, the Court may, on the application of the Minister and whether or not it awards costs, order the taxpayer to pay to the Receiver General an amount not exceeding 10% of any part of the amount that was in controversy in respect of which the Court determines that there were no reasonable grounds for the appeal, if in the opinion of the Court one of the main purposes for instituting or maintaining any part of the appeal was to defer the payment of any amount payable under this Part.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • R.S., 1985, c. 1 (5th Supp.), s. 179.1
  • 1994, c. 7, Sch. VIII, s. 102

Marginal note:Appeals to Federal Court of Appeal

  •  (1) An appeal to the Federal Court of Appeal pursuant to subsection 172(3) may be instituted by filing a notice of appeal in the Court within 30 days from

    • (a) the day on which the Minister notifies a person under subsection 165(3) of the Minister’s action in respect of a notice of objection filed under subsection 168(4),

    • (b) [Repealed, 2011, c. 24, s. 55]

    • (c) the mailing of notice to the administrator of the registered pension plan under subsection 147.1(11),

    • (c.1) the sending of a notice to a promoter of a registered education savings plan under subsection 146.1(12.1),

    • (c.2) the mailing of notice to the administrator of the pooled registered pension plan under subsection 147.5(24), or

    • (d) the time the decision of the Minister to refuse the application for acceptance of the amendment to the registered pension plan or pooled registered pension plan was mailed, or otherwise communicated in writing, by the Minister to any person,

    as the case may be, or within such further time as the Court of Appeal or a judge thereof may, either before or after the expiration of those 30 days, fix or allow.

  • Marginal note:No jurisdiction in a Tax Court of Canada or Federal Court

    (2) Neither the Tax Court of Canada nor the Federal Court has jurisdiction to entertain any proceeding in respect of a decision of the Minister from which an appeal may be instituted under this section.

  • Marginal note:Summary disposition of appeal

    (3) An appeal to the Federal Court of Appeal instituted under this section shall be heard and determined in a summary way.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • R.S., 1985, c. 1 (5th Supp.), s. 180
  • 1994, c. 7, Sch. II, s. 142
  • 1998, c. 19, s. 47
  • 2002, c. 8, s. 183
  • 2005, c. 19, s. 40
  • 2011, c. 24, s. 55
  • 2012, c. 31, s. 42

PART I.01Tax in Respect of Stock Option Benefit Deferral

Marginal note:Election — special tax and relief for deferral of stock option benefits

  •  (1) A taxpayer may make an election in prescribed form to have subsection (2) apply for a taxation year in respect of particular securities if

    • (a) the taxpayer elected to have subsection 7(8) apply, as that subsection applied before 4:00 p.m. Eastern Standard Time, March 4, 2010, in respect of the particular securities; and

    • (b) the taxpayer has, in the year and before 2015, disposed of the particular securities; and

    • (c) the election under this subsection is filed

      • (i) if the taxpayer has disposed of the particular securities before 2010, on or before the taxpayer’s filing-due date for 2010, and

      • (ii) in any other case, on or before the taxpayer’s filing-due date for the year of disposition of the particular securities.

  • Marginal note:Effect of election

    (2) If a taxpayer makes an election under subsection (1) for a taxation year in respect of particular securities, the following rules apply:

    • (a) paragraph 110(1)(d) shall be read without reference to the phrase “1/2 of” in respect of the amount of the benefit deemed by subsection 7(1) to have been received by the taxpayer in the year in respect of the particular securities;

    • (b) the taxpayer is deemed to have realized a capital gain for the year equal to the lesser of

      • (i) the amount that is deductible by the taxpayer under paragraph 110(1)(d), as modified by paragraph (a), and

      • (ii) the taxpayer’s capital loss in respect of the disposition of the particular securities;

    • (c) the taxpayer is liable to pay a tax for the year equal to

      • (i) in the case of a taxpayer resident in the Province of Quebec at the end of the year, 2/3 of the taxpayer’s proceeds of disposition (as defined in section 54, but determined without reference to subsection 73(1)) of the particular securities, and

      • (ii) in any other case, the taxpayer’s proceeds of disposition (as defined in section 54, but determined without reference to subsection 73(1)) of the particular securities;

    • (d) to the extent that the taxation year is outside the normal reassessment period (as defined in subsection 152(3.1)), the election is deemed to be an application for reassessment under subsection 152(4.2);

    • (e) notwithstanding subsection 152(4) and as the circumstances require, the Minister shall re-determine the taxpayer’s net capital loss (as defined in subsection 111(8)) for the taxation year and reassess any taxation year in which an amount has been deducted under paragraph 111(1)(b).

    • (f) subparagraph 127.52(1)(h)(ii) is to be read as “the amount deducted under paragraph 110(1)(d)” for the year in respect of the particular securities; and

    • (g) notwithstanding subsection 152(4) and as the circumstances require, the Minister shall re-determine the taxpayer’s additional tax under subsection 120.2(3) for the taxation year and reassess any taxation year in which an amount has been deducted under subsection 120.2(1).

  • Marginal note:Non-application for employment insurance purposes

    (3) An amount included under subsection (2)(b) in computing a person’s income under Part I of this Act for a taxation year shall not be included in determining the income of the person for the year under Part VII of the Employment Insurance Act.

  • Marginal note:Provisions applicable to this Part

    (4) Subsection 150(3), sections 150.1 to 152, 155 to 156.1 and 158 to 167 and Division J of Part I apply to this Part with any modifications that the circumstances require.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 2010, c. 25, s. 46
  • 2011, c. 24, s. 56

PART I.1Individual Surtax

 [Repealed, 2001, c. 17, s. 161(1)]

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • R.S., 1985, c. 1 (5th Supp.), s. 180.1
  • 1994, c. 7, Sch. II, s. 143, Sch. VIII, s. 103, c. 8, s. 28
  • 1999, c. 22, s. 67
  • 2000, c. 19, s. 52
  • 2001, c. 17, ss. 160, 161

PART I.2Tax on Old Age Security Benefits

Marginal note:Definitions

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

    adjusted income

    adjusted income of an individual for a taxation year means the amount that would be the individual’s income under Part I for the year if in computing that income no amount were

    • (a) included

      • (i) under paragraph 56(1)(q.1) or subsection 56(6),

      • (ii) in respect of a gain from a disposition of property to which section 79 applies, or

      • (iii) in respect of a gain described in subsection 40(3.21), or

    • (b) deductible under paragraph 20(1)(ww) or 60(w), (y) or (z). (revenu modifié)

    base taxation year

    base taxation year in relation to a month, means

    • (a) where the month is any of the first 6 months of a calendar year, the taxation year that ended on December 31 of the second preceding calendar year, and

    • (b) where the month is any of the last 6 months of a calendar year, the taxation year that ended on December 31 of the preceding calendar year. (année de base)

    return of income

    return of income in respect of an individual for a taxation year means

    • (a) where the individual was resident in Canada throughout the year, the individual’s return of income (other than a return of income filed under subsection 70(2) or 104(23), paragraph 128(2)(e) or subsection 150(4)) that is filed or required to be filed under Part I for the year, and

    • (b) in any other case, a prescribed form containing prescribed information. (déclaration de revenu)

  • Marginal note:Tax payable

    (2) Every individual shall pay a tax under this Part for each taxation year equal to the amount determined by the formula

    A(1 - B)

    where

    A
    is the lesser of
    • (a) the amount, if any, by which

      • (i) the total of all amounts each of which is the amount of any pension, supplement or spouse’s or commmon-law partner’s allowance under the Old Age Security Act included in computing the individual’s income under Part I for the year

      exceeds

      • (ii) the amount of any deduction allowed under subparagraph 60(n)(i) in computing the individual’s income under Part I for the year, and

    • (b) 15% of the amount, if any, by which the individual’s adjusted income for the year exceeds $50,000; and

    B
    is the rate of tax payable by the individual under Part XIII on amounts described in paragraph (a) of the description of A.
  • Marginal note:Withholding

    (3) Where at any time Her Majesty pays an amount described in paragraph (a) of the description of A in subsection 180.2(2) in respect of a month to an individual, there shall be deducted or withheld from that amount on account of the individual’s tax payable under this Part for the year the amount determined under subsection 180.2(4) in respect of that amount.

  • Marginal note:Determination of amount to be withheld

    (4) The amount determined in respect of a particular amount described in subsection 180.2(3) is

    • (a) where the individual has filed a return of income for the base taxation year in relation to the month in which the particular amount is paid, the lesser of

      • (i) the amount by which the particular amount exceeds the amount of tax payable under Part XIII by the individual on the particular amount, and

      • (ii) the amount determined by the formula

        (0.0125A - $665)(1 - B)

        where

        A
        is the individual’s adjusted income for the base taxation year, and
        B
        is the rate of tax payable under Part XIII by the individual on the particular amount;
    • (b) where the individual has not filed a return of income for the base taxation year in relation to the month and

      • (i) the Minister has demanded under subsection 150(2) that the individual file the return, or

      • (ii) the individual was non-resident at any time in the base taxation year,

      the amount by which the particular amount exceeds the amount of tax payable under Part XIII by the individual on the particular amount; and

    • (c) in any other case, nil.

  • Marginal note:Return

    (5) Every individual liable to pay tax under this Part for a taxation year shall

    • (a) file with the Minister, without notice or demand therefor,

      • (i) where the individual is resident in Canada throughout the taxation year, a return for the year under this Part in prescribed form and containing prescribed information on or before the individual’s filing-due date for the year, and

      • (ii) in any other case, a return of income for the year on or before the individual’s balance-due day for the year; and

    • (b) pay the individual’s tax payable under this Part for the year on or before the individual’s balance-due day for the year.

  • Marginal note:Provisions applicable to this Part

    (6) Subsection 150(3), sections 150.1, 151 and 152, subsections 153(1.1), 153(1.2) and 153(3), sections 155 to 156.1 and 158 to 167 and Division J of Part I apply to this Part with any modifications that the circumstances require.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • R.S., 1985, c. 1 (5th Supp.), s. 180.2
  • 1994, c. 7, Sch. II, s. 144, Sch. VII, s. 21
  • 1996, c. 21, s. 46
  • 2000, c. 12, s. 142
  • 2001, c. 17, s. 162
  • 2006, c. 4, s. 178
  • 2007, c. 35, s. 119
  • 2010, c. 25, s. 47
  • 2018, c. 12, s. 28
 
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