Budget Implementation Act, 2006, No. 2 (S.C. 2007, c. 2)

Assented to 2007-02-21

  •  (1) Section 249 of the Act is amended by adding the following after subsection (3):

    • Marginal note:Year end on status change

      (3.1) If at any time a corporation becomes or ceases to be a Canadian-controlled private corporation, otherwise than because of an acquisition of control to which subsection (4) would, if this Act were read without reference to this subsection, apply,

      • (a) subject to paragraph (c), the corporation’s taxation year that would, if this Act were read without reference to this subsection, include that time is deemed to end immediately before that time;

      • (b) a new taxation year of the corporation is deemed to begin at that time;

      • (c) notwithstanding subsections (1) and (3), the corporation’s taxation year that would, if this Act were read without reference to this subsection, have been its last taxation year that ended before that time is deemed instead to end immediately before that time if

        • (i) were this Act read without reference to this paragraph, that taxation year would, otherwise than because of paragraph 128(1)(d), section 128.1 and paragraphs 142.6(1)(a) or 149(10)(a), have ended within the 7-day period that ended immediately before that time,

        • (ii) within that 7-day period no person or group of persons acquired control of the corporation, and the corporation did not become or cease to be a Canadian-controlled private corporation, and

        • (iii) the corporation elects, in its return of income under Part I for that taxation year to have this paragraph apply; and

      • (d) for the purpose of determining the corporation’s fiscal period after that time, the corporation is deemed not to have established a fiscal period before that time.

  • (2) Subsection (1) applies to taxation years that end after 2005.

  •  (1) Section 260 of the Act is amended by adding the following after subsection (1):

    • Marginal note:Eligible dividend

      (1.1) This subsection applies to an amount if the amount is received by a person who is resident in Canada, the amount is deemed under subsection (5) to be a taxable dividend, and the amount is either

      • (a) received as compensation for an eligible dividend, within the meaning assigned by subsection 89(1); or

      • (b) received as compensation for a taxable dividend (other than an eligible dividend) paid by a corporation to a non-resident shareholder in circumstances where it is reasonable to consider that the corporation would, if that shareholder were resident in Canada, have designated the dividend to be an eligible dividend under subsection 89(14).

  • (2) The portion of subsection 260(5) of the Act after paragraph (b) is replaced by the following:

    as compensation for a taxable dividend paid on a share of the capital stock of a public corporation that is a qualified security shall, to the extent of the amount of that dividend, be deemed to have been received as a taxable dividend and, if subsection (1.1) applies to the amount, as an eligible dividend on the share from the corporation.

  • (3) Subsections (1) and (2) apply to amounts received as compensation for dividends paid after 2005.

PART 3AMENDMENTS RELATING TO THE EXCISE DUTIES ON CANADIAN WINE AND BEER

2002, c. 22Excise Act, 2001

  •  (1) Section 87 of the Excise Act, 2001 is amended by striking out the word “and” at the end of paragraph (a) and by adding the following after that paragraph:

    • (a.1) in the case of wine on which duty is not imposed because of paragraph 135(2)(a), before the wine is

      • (i) removed from the licensee’s premises,

      • (ii) consumed, or

      • (iii) made available for sale on the premises; and

  • (2) Subsection (1) is deemed to have come into force on July 1, 2006.

  •  (1) Subsection 134(3) of the Act is replaced by the following:

    • Marginal note:Exceptions

      (3) Subsection (1) does not apply to

      • (a) wine that is produced in Canada and composed wholly of agricultural or plant product grown in Canada; and

      • (b) wine that is produced by an individual for their personal use and that is consumed in the course of that use.

  • (2) Subsection (1) applies to wine taken for use after June 2006.

  •  (1) Paragraph 135(2)(a) of the Act is replaced by the following:

    • (a) produced in Canada and composed wholly of agricultural or plant product grown in Canada;

    • (a.1) produced and packaged by an individual for their personal use; or

  • (2) Subsection (1) applies to wine packaged after June 2006.

R.S., c. E-14Excise Act

  •  (1) Section 2 of the Excise Act is amended by adding the following in alphabetical order:

    “person”

    « personne »

    “person” means an individual, a partnership, a corporation, a trust, the estate of a deceased individual, a government or a body that is a society, a union, a club, an association, a commission or another organization of any kind;

  • (2) Subsection (1) is deemed to have come into force on July 1, 2006.

  •  (1) The Act is amended by adding the following after section 2.1:

    Marginal note:Related persons

    2.2 For the purposes of this Act, persons are related to each other if they are related persons within the meaning of subsections 251(2) to (6) of the Income Tax Act, except that

    • (a) a reference in those subsections to “corporation” shall be read as a reference to “corporation or partnership”; and

    • (b) a reference in those subsections to “shares” or “shareholders” shall, in respect of a partnership, be read as a reference to “rights” or “partners”, respectively.

    Marginal note:Associated persons
    • 2.3 (1) For the purposes of this Act, a particular corporation is associated with another corporation if, by reason of subsections 256(1) to (6) of the Income Tax Act, the particular corporation is associated with the other corporation for the purposes of that Act.

    • Marginal note:Corporations controlled by same person or group

      (2) For the purposes of this Act, a person other than a corporation is associated with a particular corporation if the particular corporation is controlled by the person or by a group of persons of which the person is a member and each of whom is associated with each of the others.

    • Marginal note:Partnership or trust

      (3) For the purposes of this Act, a person is associated with

      • (a) a partnership if the total of the shares of the profits of the partnership to which the person and all other persons who are associated with the person are entitled is more than half of the total profits of the partnership, or would be more than half of the total profits of the partnership if it had profits; and

      • (b) a trust if the total of the values of the interests in the trust of the person and all other persons who are associated with the person is more than half of the total value of all interests in the trust.

    • Marginal note:Association with third person

      (4) For the purposes of this Act, a person is associated with another person if each of them is associated with the same third person.

    Marginal note:Exception

    2.4 If a corporation that is a licensed brewer would otherwise be related to another corporation that is also a licensed brewer by reason that the corporations are controlled by individuals connected by blood relationship, marriage or common-law partnership or adoption, the corporations are deemed not to be related for the purposes of section 170.1 if it is established that they deal with each other at arm’s length.

  • (2) Subsection (1) is deemed to have come into force on July 1, 2006.

  •  (1) Subsection 170(1) of the Act is replaced by the following:

    Marginal note:Duties
    • 170. (1) There shall be imposed, levied and collected on every hectolitre of beer or malt liquor the duties of excise set out in Part II of the schedule, which duties shall be paid to the collector as provided in this Act.

  • (2) Subsection (1) is deemed to have come into force on July 1, 2006.

  •  (1) The Act is amended by adding the following after section 170:

    Marginal note:Reduced rates — production
    • 170.1 (1) With respect to the first 75,000 hectolitres of beer and malt liquor brewed in Canada per year by a licensed brewer and any person related or associated with the brewer, there shall be imposed, levied and collected on each of those hectolitres the duties of excise set out in Part II.1 of the schedule, which duties shall be paid to the collector as provided in this Act, and section 170 does not apply to those hectolitres.

    • Marginal note:Reduced rates — packaging

      (2) If the beer or malt liquor described by subsection (1) is packaged by a licensed brewer (in this subsection, referred to as the “packaging brewer”) other than the licensed brewer or related or associated person referred to in that subsection, there shall be imposed, levied and collected on every hectolitre of beer or malt liquor packaged by the packaging brewer duties of excise at the rates that applied to the beer or malt liquor under subsection (1).

    • Marginal note:Exclusion of exports and de-alcoholized beer

      (3) In subsection (1), the reference to “first 75,000 hectolitres of beer and malt liquor brewed in Canada” does not include

      • (a) beer or malt liquor that is exported or deemed to be exported under section 173; and

      • (b) beer or malt liquor containing not more than 0.5 % absolute ethyl alcohol by volume.

    • Marginal note:Treatment of contract production

      (4) If, at any time, beer or malt liquor is brewed by a licensed brewer for another licensed brewer under an agreement with the other brewer, subsection (1) applies as though it had been brewed by the brewer who has brewed the greater volume of beer and malt liquor during the year up to that time.

    • Marginal note:Election for related or associated licensees

      (5) If a licensed brewer is related or associated with one or more other licensed brewers, each of the brewers must file with the Minister an election in a form and manner satisfactory to the Minister that allocates the 75,000 hectolitre quantity amongst the brewers. The election must be filed no later than the filing due date of the first return in which the brewer reports duties that are imposed, levied and collected under subsection (1).

    • Marginal note:Brewer formed by business combination

      (6) For the purposes of this section, if, in a year, two or more brewers (each of which is referred to in this subsection as a “predecessor brewer”) are amalgamated, merged or otherwise combined to form a new brewer, the following rules apply:

      • (a) the aggregate production of beer and malt liquor of the new and predecessor brewers for that year will be used for the purposes of applying subsection (1);

      • (b) the new brewer must determine the amount of duty that would have been imposed, levied and collected under subsection (1) on the aggregate production; and

      • (c) the new brewer is liable for and must, within 60 days of the combination, report and pay any difference between the amount calculated under paragraph (b) and the amounts paid by the predecessor brewers.

  • (2) Subsection (1) is deemed to have come into force on July 1, 2006, except that, for 2006, every reference to “75,000” in section 170.1 of the Act, as enacted by subsection (1), shall be read as a reference to “37,500”.

 
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