Income Tax Amendments Act, 2000 (S.C. 2001, c. 17)
Full Document:
Assented to 2001-06-14
115. (1) Subsection 125.4(2) of the Act is amended by striking out the word “and” at the end of paragraph (a), by adding the word “and” at the end of paragraph (b) and by adding the following after paragraph (b):
(c) that definition does not apply to an amount to which section 37 applies.
(2) Subsection (1) applies after November 1999.
116. (1) The portion of the definition “eligible production corporation” in subsection 125.5(1) of the Act after paragraph (b) and before paragraph (c) is replaced by the following:
except a corporation that is, at any time in the year,
(2) Subsection (1) applies after November 1999.
117. (1) Clause 126(1)(b)(ii)(A) of the Act is replaced by the following:
(A) the amount, if any, by which,
(I) if the taxpayer was resident in Canada throughout the year, the taxpayer’s income for the year computed without reference to paragraph 20(1)(ww), and
(II) if the taxpayer was non-resident at any time in the year, the amount determined under paragraph 114(a) in respect of the taxpayer for the year
exceeds
(III) the total of all amounts each of which is an amount deducted under section 110.6 or paragraph 111(1)(b), or deductible under any of paragraphs 110(1)(d) to (d.3), (f) and (j) and sections 112 and 113, in computing the taxpayer’s taxable income for the year, and
(2) Section 126 of the Act is amended by adding the following after subsection (1):
Marginal note:Authorized foreign bank
(1.1) In applying subsections 20(12) and (12.1) and this section in respect of an authorized foreign bank,
(a) the bank is deemed, for the purposes of subsections (1), (4) to (5), (6) and (7), to be resident in Canada in respect of its Canadian banking business;
(b) the references in subsection 20(12) and paragraph (1)(a) to “country other than Canada” shall be read as a reference to “country that is neither Canada nor a country in which the taxpayer is resident at any time in the taxation year”;
(c) the reference in subparagraph (1)(b)(i) to “from sources in that country” shall be read as a reference to “in respect of its Canadian banking business from sources in that country”;
(d) subparagraph (1)(b)(ii) shall be read as follows:
“(ii) the lesser of
(A) the taxpayer’s taxable income earned in Canada for the year, and
(B) the total of the taxpayer’s income for the year from its Canadian banking business and the amount determined in respect of the taxpayer under subparagraph 115(1)(a)(vii) for the year.”;
(e) in computing the non-business income tax paid by the bank for a taxation year to the government of a country other than Canada, there shall be included only taxes that relate to amounts that are included in computing the bank’s taxable income earned in Canada from its Canadian banking business; and
(f) the definition “tax-exempt income” in subsection (7) shall be read as follows:
- “tax-exempt income”
““tax-exempt income” means income of a taxpayer from a source in a particular country in respect of which
(a) the taxpayer is, because of a comprehensive agreement or convention for the elimination of double taxation on income, which has the force of law in the particular country and to which a country in which the taxpayer is resident is a party, entitled to an exemption from all income or profits taxes, imposed in the particular country, to which the agreement or convention applies, and
(b) no income or profits tax to which the agreement or convention does not apply is imposed in the particular country;”.
(3) Clause 126(2.1)(a)(ii)(A) of the Act is replaced by the following:
(A) the amount, if any, by which
(I) if the taxpayer is resident in Canada throughout the year, the taxpayer’s income for the year computed without reference to paragraph 20(1)(ww), and
(II) if the taxpayer is non-resident at any time in the year, the amount determined under paragraph 114(a) in respect of the taxpayer for the year
exceeds
(III) the total of all amounts each of which is an amount deducted under section 110.6 or paragraph 111(1)(b), or deductible under any of paragraphs 110(1)(d) to (d.3), (f) and (j) and sections 112 and 113, in computing the taxpayer’s taxable income for the year, and
(4) The portion of subsection 126(2.2) of the Act before paragraph (b) is replaced by the following:
Marginal note:Non-resident’s foreign tax deduction
(2.2) If at any time in a taxation year a taxpayer who is not at that time resident in Canada disposes of a property that was deemed by subsection 48(2), as it read in its application before 1993, or by paragraph 128.1(4)(e), as it read in its application before October 2, 1996, to be taxable Canadian property of the taxpayer, the taxpayer may deduct from the tax for the year otherwise payable under this Part by the taxpayer an amount equal to the lesser of
(a) the amount of any non-business-income tax paid by the taxpayer for the year to the government of a country other than Canada that can reasonably be regarded as having been paid by the taxpayer in respect of any gain or profit from the disposition of the property, and
(5) Subparagraph 126(2.2)(b)(ii) of the Act is replaced by the following:
(ii) if the taxpayer is non-resident throughout the year, the taxpayer’s taxable income earned in Canada for the year determined without reference to paragraphs 115(1)(d) to (f), and
(iii) if the taxpayer is resident in Canada at any time in the year, the amount that would have been the taxpayer’s taxable income earned in Canada for the year if the part of the year throughout which the taxpayer was non-resident were the whole taxation year.
(6) Section 126 of the Act is amended by adding the following after subsection (2.2):
Marginal note:Former resident — deduction
(2.21) If at any particular time in a particular taxation year a non-resident individual disposes of a property that the individual last acquired because of the application, at any time (in this subsection referred to as the “acquisition time”) after October 1, 1996, of paragraph 128.1(4)(c), there may be deducted from the individual’s tax otherwise payable under this Part for the year (in this subsection referred to as the “emigration year”) that includes the time immediately before the acquisition time an amount not exceeding the lesser of
(a) the total of all amounts each of which is the amount of any business-income tax or non-business-income tax paid by the individual for the particular year
(i) where the property is real property situated in a country other than Canada,
(A) to the government of that country, or
(B) to the government of a country with which Canada has a tax treaty at the particular time and in which the individual is resident at the particular time, or
(ii) where the property is not real property, to the government of a country with which Canada has a tax treaty at the particular time and in which the individual is resident at the particular time,
that can reasonably be regarded as having been paid in respect of that portion of any gain or profit from the disposition of the property that accrued while the individual was resident in Canada and before the time the individual last ceased to be resident in Canada, and
(b) the amount, if any, by which
(i) the amount of tax under this Part that was, after taking into account the application of this subsection in respect of dispositions that occurred before the particular time, otherwise payable by the individual for the emigration year
exceeds
(ii) the amount of such tax that would have been payable if the property had not been deemed by subsection 128.1(4) to have been disposed of in the emigration year.
Marginal note:Former resident — trust beneficiary
(2.22) If at any particular time in a particular taxation year a non-resident individual disposes of a property that the individual last acquired at any time (in this subsection referred to as the “acquisition time”) on a distribution after October 1, 1996 to which paragraphs 107(2)(a) to (c) do not apply only because of subsection 107(5), the trust may deduct from its tax otherwise payable under this Part for the year (in this subsection referred to as the “distribution year”) that includes the acquisition time an amount not exceeding the lesser of
(a) the total of all amounts each of which is the amount of any business-income tax or non-business-income tax paid by the individual for the particular year
(i) where the property is real property situated in a country other than Canada,
(A) to the government of that country, or
(B) to the government of a country with which Canada has a tax treaty at the particular time and in which the individual is resident at the particular time, or
(ii) where the property is not real property, to the government of a country with which Canada has a tax treaty at the particular time and in which the individual is resident at the particular time,
that can reasonably be regarded as having been paid in respect of that portion of any gain or profit from the disposition of the property that accrued before the distribution and after the latest of the times, before the distribution, at which
(iii) the trust became resident in Canada,
(iv) the individual became a beneficiary under the trust, or
(v) the trust acquired the property, and
(b) the amount, if any, by which
(i) the amount of tax under this Part that was, after taking into account the application of this subsection in respect of dispositions that occurred before the particular time, otherwise payable by the trust for the distribution year
exceeds
(ii) the amount of such tax that would have been payable by the trust for the distribution year if the property had not been distributed to the individual.
Marginal note:Where foreign credit available
(2.23) For the purposes of subsections (2.21) and (2.22), in computing, in respect of the disposition of a property by an individual in a taxation year, the total amount of taxes paid by the individual for the year to one or more governments of countries other than Canada, there shall be deducted any tax credit (or other reduction in the amount of a tax) to which the individual was entitled for the year, under the law of any of those countries or under a tax treaty between Canada and any of those countries, because of taxes paid or payable by the individual under this Act in respect of the disposition or a previous disposition of the property.
(7) Paragraphs 126(2.3)(b) and (c) of the Act are replaced by the following:
(b) no amount may be claimed under paragraph (2)(a) in computing a taxpayer’s tax payable under this Part for a particular taxation year in respect of the taxpayer’s unused foreign tax credit in respect of a country for a taxation year until the taxpayer’s unused foreign tax credits in respect of that country for taxation years preceding the taxation year that may be claimed for the particular taxation year have been claimed; and
(c) an amount in respect of a taxpayer’s unused foreign tax credit in respect of a country for a taxation year may be claimed under paragraph (2)(a) in computing the taxpayer’s tax payable under this Part for a particular taxation year only to the extent that it exceeds the aggregate of all amounts each of which is the amount that may reasonably be considered to have been claimed in respect of that unused foreign tax credit in computing the taxpayer’s tax payable under this Part for a taxation year preceding the particular taxation year.
(8) Subparagraphs 126(3)(a)(i) and (ii) of the Act are replaced by the following:
(i) for the year, if the individual is resident in Canada throughout the year, and
(ii) for the part of the year throughout which the individual was resident in Canada, if the individual is non-resident at any time in the year,
(9) Paragraph 126(3)(b) of the Act is replaced by the following:
(b) the amount, if any, by which
(i) if the taxpayer is resident in Canada throughout the year, the taxpayer’s income for the year computed without reference to paragraph 20(1)(ww), and
(ii) if the taxpayer is non-resident at any time in the year, the amount determined under paragraph 114(a) in respect of the taxpayer for the year
exceeds
(iii) the total of all amounts each of which is an amount deducted under section 110.6 or paragraph 111(1)(b), or deductible under any of paragraphs 110(1)(d) to (d.3), (f) and (j), in computing the taxpayer’s taxable income for the year, and
(10) Subsections 126(4) and (4.1) of the Act are replaced by the following:
Marginal note:Portion of foreign tax not included
(4) For the purposes of this Act, an income or profits tax paid by a person resident in Canada to the government of a country other than Canada does not include a tax, or that portion of a tax, imposed by that government that would not be imposed if the person were not entitled under section 113 or this section to a deduction in respect of the tax or that portion of the tax.
Marginal note:No economic profit
(4.1) If a taxpayer acquires a property, other than a capital property, at any time after February 23, 1998 and it is reasonable to expect at that time that the taxpayer will not realize an economic profit in respect of the property for the period that begins at that time and ends when the taxpayer next disposes of the property, the total amount of all income or profits taxes (referred to as the “foreign tax” for the purpose of subsection 20(12.1)) in respect of the property for the period, and in respect of related transactions, paid by the taxpayer for any year to the government of any country other than Canada, is not included in computing the taxpayer’s business-income tax or non-business-income tax for any taxation year.
(11) Paragraph 126(4.4)(a) of the Act is replaced by the following:
(a) a disposition or acquisition of property deemed to be made by subsection 10(12) or (13), 14(14) or (15) or 45(1), section 70 or 128.1, paragraph 132.2(1)(f), subsection 138(11.3), 142.5(2) or 142.6(1.1) or (1.2), paragraph 142.6(1)(b) or subsection 149(10) is not a disposition or acquisition, as the case may be; and
(12) Subsection 126(5) of the Act is replaced by the following:
Marginal note:Foreign oil and gas levies
(5) A taxpayer who is resident in Canada throughout a taxation year and carries on a foreign oil and gas business in a taxing country in the year is deemed for the purposes of this section to have paid in the year as an income or profits tax to the government of the taxing country an amount equal to the lesser of
(a) the amount, if any, by which
(i) 40% of the taxpayer’s income from the business in the taxing country for the year
exceeds
(ii) the total of all amounts that would, but for this subsection, be income or profits taxes paid in the year in respect of the business to the government of the taxing country, and
(b) the taxpayer’s production tax amount for the business in the taxing country for the year.
(13) Subsection 126(6) of the Act is replaced by the following:
Marginal note:Rules of construction
(6) For the purposes of this section,
(a) the government of a country other than Canada includes the government of a state, province or other political subdivision of that country;
(b) where a taxpayer’s income for a taxation year is in whole or in part from sources in more than one country other than Canada, subsections (1) and (2) shall be read as providing for separate deductions in respect of each of the countries other than Canada; and
(c) if any income from a source in a particular country would be tax-exempt income but for the fact that a portion of the income is subject to an income or profits tax imposed by the government of a country other than Canada, the portion is deemed to be income from a separate source in the particular country.
(14) The definitions “qualifying incomes” and “qualifying losses” in subsection 126(7) of the Act are replaced by the following:
“qualifying incomes”
« revenus admissibles »
“qualifying incomes” of a taxpayer from sources in a country means incomes from sources in the country, determined in accordance with subsection (9);
“qualifying losses”
« pertes admissibles »
“qualifying losses” of a taxpayer from sources in a country means losses from sources in the country, determined in accordance with subsection (9);
(15) The definitions “tax for the year otherwise payable under this Part” and “unused foreign tax credit” in subsection 126(7) of the Act are replaced by the following:
“tax for the year otherwise payable under this Part”
« impôt payable par ailleurs pour l’année en vertu de la présente partie »
“tax for the year otherwise payable under this Part” by a taxpayer means
(a) in paragraph (1)(b) and subsection (3), the amount determined by the formula
A – B
where
- A
- is the amount that would be the tax payable under this Part for the year by the taxpayer if that tax were determined without reference to section 120.3 and before making any deduction under any of sections 121, 122.3, 125 to 127.41 and, if the taxpayer is a Canadian-controlled private corporation throughout the year, section 123.4, and
- B
- is the amounts deemed by subsections 120(2) and (2.2) to have been paid on account of tax payable under this Part by the taxpayer,
(b) in subparagraph (2)(c)(i) and paragraph (2.2)(b), the amount that would be the tax payable under this Part for the year by the taxpayer if that tax were determined without reference to sections 120.3 and 123.3 and before making any deduction under any of sections 121 and 122.3, subsection 123.4(3), and sections 124 to 127.41, and
(c) in subsection (2.1), the amount that would be the tax payable under this Part for the year by the taxpayer if that tax were determined without reference to subsection 120(1) and sections 120.3 and 123.3 and before making any deduction under any of sections 121 and 122.3, subsection 123.4(3) and sections 124 to 127.41;
“unused foreign tax credit”
« fraction inutilisée du crédit pour impôt étranger »
“unused foreign tax credit” of a taxpayer in respect of a country for a taxation year means the amount, if any, by which
(a) the business-income tax paid by the taxpayer for the year in respect of businesses carried on by the taxpayer in that country
exceeds
(b) the amount, if any, deductible under subsection (2) in respect of that country in computing the taxpayer’s tax payable under this Part for the year.
(16) The portion of the definition “business-income tax” in subsection 126(7) of the Act before paragraph (a) is replaced by the following:
“business-income tax”
« impôt sur le revenu tiré d’une entreprise »
“business-income tax” paid by a taxpayer for a taxation year in respect of businesses carried on by the taxpayer in a country other than Canada (in this definition referred to as the “business country”) means, subject to subsections (4.1) and (4.2), the portion of any income or profits tax paid by the taxpayer for the year to the government of a country other than Canada that can reasonably be regarded as tax in respect of the income of the taxpayer from a business carried on by the taxpayer in the business country, but does not include a tax, or the portion of a tax, that can reasonably be regarded as relating to an amount that
(17) Paragraph (b) of the definition “economic profit” in subsection 126(7) of the Act is replaced by the following:
(b) income or profits taxes payable by the taxpayer for any year to the government of a country other than Canada, in respect of the property for the period or in respect of a related transaction, or
(18) The portion of the definition “non-business-income tax” in subsection 126(7) of the Act before paragraph (a) is replaced by the following:
“non-business-income tax”
« impôt sur le revenu ne provenant pas d’une entreprise »
“non-business-income tax” paid by a taxpayer for a taxation year to the government of a country other than Canada means, subject to subsections (4.1) and (4.2), the portion of any income or profits tax paid by the taxpayer for the year to the government of that country that
(19) Subsection 126(7) of the Act is amended by adding the following in alphabetical order:
“commercial obligation”
« obligation commerciale »
“commercial obligation” in respect of a taxpayer’s foreign oil and gas business in a country means an obligation of the taxpayer to a particular person, undertaken in the course of carrying on the business or in contemplation of the business, if the law of the country would have allowed the taxpayer to undertake an obligation, on substantially the same terms, to a person other than the particular person;
“foreign oil and gas business”
« entreprise pétrolière et gazière à l’étranger »
“foreign oil and gas business” of a taxpayer means a business, carried on by the taxpayer in a taxing country, the principal activity of which is the extraction from natural accumulations, or from oil or gas wells, of petroleum, natural gas or related hydrocarbons;
“production tax amount”
« impôt sur la production »
“production tax amount” of a taxpayer for a foreign oil and gas business carried on by the taxpayer in a taxing country for a taxation year means the total of all amounts each of which
(a) became receivable in the year by the government of the country because of an obligation (other than a commercial obligation) of the taxpayer, in respect of the business, to the government or an agent or instrumentality of the government,
(b) is computed by reference to the amount by which
(i) the amount or value of petroleum, natural gas or related hydrocarbons produced or extracted by the taxpayer in the course of carrying on the business in the year
exceeds
(ii) an allowance or other deduction that
(A) is deductible, under the agreement or law that creates the obligation described in paragraph (a), in computing the amount receivable by the government of the country, and
(B) is intended to take into account the taxpayer’s operating and capital costs of that production or extraction, and can reasonably be considered to have that effect,
(c) would not, if this Act were read without reference to subsection (5), be an income or profits tax, and
(d) is not identified as a royalty under the agreement that creates the obligation or under any law of the country;
“taxing country”
« pays taxateur »
“taxing country” means a country (other than Canada) the government of which regularly imposes, in respect of income from businesses carried on in the country, a levy or charge of general application that would, if this Act were read without reference to subsection (5), be an income or profits tax;
(20) Subsection 126(8) of the Act is repealed.
(21) Section 126 of the Act is amended by adding the following after subsection (8):
Marginal note:Computation of qualifying incomes and losses
(9) The qualifying incomes and qualifying losses for a taxation year of a taxpayer from sources in a country shall be determined
(a) without reference to
(i) any portion of income that was deductible under subparagraph 110(1)(f)(i) in computing the taxpayer’s taxable income,
(ii) for the purpose of subparagraph (1)(b)(i), any portion of income in respect of which an amount was deducted under section 110.6 in computing the taxpayer’s income, or
(iii) any income or loss from a source in the country if any income of the taxpayer from the source would be tax-exempt income; and
(b) as if the total of all amounts each of which is that portion of an amount deducted under subsection 66(4), 66.21(4), 66.7(2) or 66.7(2.3) in computing those qualifying incomes and qualifying losses for the year that applies to those sources were the greater of
(i) the total of all amounts each of which is that portion of an amount deducted under subsection 66(4), 66.21(4), 66.7(2) or 66.7(2.3) in computing the taxpayer’s income for the year that applies to those sources, and
(ii) the total of
(A) the portion of the maximum amount that would be deductible under subsection 66(4) in computing the taxpayer’s income for the year that applies to those sources if the amount determined under subparagraph 66(4)(b)(ii) for the taxpayer in respect of the year were equal to the amount, if any, by which the total of
(I) the taxpayer’s foreign resource income (within the meaning assigned by subsection 66.21(1)) for the year in respect of the country, determined as if the taxpayer had claimed the maximum amounts deductible for the year under subsections 66.7(2) and (2.3), and
(II) all amounts each of which would have been an amount included in computing the taxpayer’s income for the year under subsection 59(1) in respect of a disposition of a foreign resource property in respect of the country, determined as if each amount determined under subparagraph 59(1)(b)(ii) were nil,
exceeds
(III) the total of all amounts each of which is a portion of an amount (other than a portion that results in a reduction of the amount otherwise determined under subclause (I)) that applies to those sources and that would be deducted under subsection 66.7(2) in computing the taxpayer’s income for the year if the maximum amounts deductible for the year under that subsection were deducted,
(B) the maximum amount that would be deductible under subsection 66.21(4) in respect of those sources in computing the taxpayer’s income for the year if
(I) the amount deducted under subsection 66(4) in respect of those sources in computing the taxpayer’s income for the year were the amount determined under clause (A),
(II) the amounts deducted under subsections 66.7(2) and (2.3) in respect of those sources in computing the taxpayer’s income for the year were the maximum amounts deductible under those subsections,
(III) for the purposes of the definition “cumulative foreign resource expense” in subsection 66.21(1), the total of the amounts designated under subparagraph 59(1)(b)(ii) for the year in respect of dispositions by the taxpayer of foreign resource properties in respect of the country in the year were the maximum total that could be so designated without any reduction in the maximum amount that would be determined under clause (A) in respect of the taxpayer for the year in respect of the country if no assumption had been made under subclause (A)(II) in respect of designations made under subparagraph 59(1)(b)(ii), and
(IV) the amount determined under paragraph 66.21(4)(b) were nil, and
(C) the total of all amounts each of which is the maximum amount, applicable to one of those sources, that is deductible under subsection 66.7(2) or (2.3) in computing the taxpayer’s income for the year.
(22) Subsections (1), (3), (5), (8) and (9) apply to the 1998 and subsequent taxation years except that, in their application to the 1998 and 1999 taxation years, subclauses 126(1)(b)(ii)(A)(I) and (2.1)(a)(ii)(A)(I) and subparagraph 126(3)(b)(i) of the Act, as enacted by subsections (1), (3) and (9), respectively, shall be read without reference to the expression “computed without reference to paragraph 20(1)(ww)”.
(23) Subsections (2), (10), (11), (13), (16) to (18) and (20) apply after June 27, 1999.
(24) Subsections (4) and (6) apply to the 1996 and subsequent taxation years.
(25) Subsections (7) and (15) apply to the 2001 and subsequent taxation years.
(26) Subsections (12), (14), (19) and (21) apply to taxation years of a taxpayer that begin after the earlier of
(a) December 31, 1999; and
(b) where, for the purposes of this subsection, a date is designated in writing by the taxpayer and the designation is filed with the Minister of National Revenue on or before the taxpayer’s filing-due date for the taxpayer’s taxation year that includes the day on which this Act receives royal assent, the later of
(i) the date so designated, and
(ii) December 31, 1994.
- Date modified: